Why San Antonio Should Retie the Knot with Germany

As San Antonio mayor, Julián Castro has traveled to Mexico, Great Britain, Israel, India, South Korea and China. Sooner or later, he’ll likely travel to Japan, home to Toyota and other multinational companies such as Toshiba that have shown an interest in doing business here.

The mayor ought to put Germany high on his list. It’s the missing link in San Antonio’s evolving globalization strategy. Germany invested $215 billion in the United States in 2011, according to a 2012 Congressional Research Service report, making it the fourth leading source of direct foreign investment in the U.S. Texas ranks among the top states benefitting from that investment.

Most readers would probably fail the test if asked what countries make the greatest direct foreign investment in the United States. Only Great Britain, Japan, and the Netherlands invest more than Germany here. China and India, both destinations for recent San Antonio delegations, together accounted for less than $10 billion in direct U.S. investment in 2011. They have attracted millions of American jobs, and export back a disproportionate amount of goods and services, but they invest very little here.

More than 570,000 U.S. workers are employed at 3,500 German-owned businesses in the U.S., numbers only surpassed by British and Japanese owned companies, according to the Representative of German Industry and Trade (RGIT) in Washington, DC. (Click here to download the RGIT fact sheet, a PDF.)

“All the talk is about China, but Germany and San Antonio have ties that go way back, and all the Germans that come here love our city,” said San Antonio lawyer and longtime Honorary German Consul Bernard “Ben” Buecker. “China and India aren’t going to invest in San Antonio. The German opportunity is real, but we have to go there and convince the Germans we want a partnership. Right now, Germany is way down the list of importance in this city, which is unfortunate.”

One of every 14 German direct investment projects in the U.S. occurs in Texas, according to the RGIT. While Texas benefits enormously from German investment, San Antonio lags, despite being the only major city in the state with significant historical and cultural ties to Germany. Those ties have withered from neglect and have never led to economic investment. Houston, Dallas and Austin draw far more German investment than San Antonio.

There are no active initiatives underway locally to pursue closer ties, although economic development officials with the City are considering joining a TexasOne delegation from the governor’s office traveling to Germany later this Spring.

In his recent State of the Union speech, President Obama singled out Germany, Europe’s alpha economy and export producer, in his call for stronger trans-Atlantic economic ties. Anecdotally, the president cited stateside investment by Siemens USA, which recently established a new gas turbine plant in Charlotte, North Carolina, just a few miles from where the Democratic National Convention was held and Castro delivered the keynote address.

Obama noted that infrastructure improvements made by Charlotte helped close the deal. San Antonians can take heart since many of the same improvements are underway here: airport expansion, rail improvements, and education reforms that enhance workforce development and produce more job-ready workers. The Washington Post published an interesting account of the Siemens deal before the November election.

“And tonight, I am announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union – because trade that is free and fair across the Atlantic supports millions of good-paying American jobs,” Obama said in his speech.

How Germans Helped Build San Antonio

In some respects, Germany seems like a lost opportunity, one San Antonio has failed to exploit over the years. After Mexico, no country has had a more lasting impact on our development as a multicultural community than Germany.  A wave of immigration in the mid-19th century led to the founding of New Braunfels, Fredericksburg, Comfort, and eventually a neighborhood here once known as Kaiser Wilhelm, better known today as historic King William.

Tens of thousands of Germans immigrated to Texas in the decades before and after the Civil War, and by and large, they prospered, both in the cities and in rural ranching communities. Some estimates report that one-third of San Antonio was of German origin in the 1880s. Even today, nearly one family in five in San Antonio considers itself of German origin.

The German imprint on San Antonio is everywhere, if you look for it, and all but invisible if you don’t care. German culture clubs hang on, even as membership declines, the victim of aging participants, a decline in German language classes in area schools, and the passage of generations.

The Beethoven Maennechor remains the heart and soul of present-day German culture in San Antonio, but the organization’s men’s and women’s choirs offer only occasional performances. Beethoven Halle und Garten remains a popular Southtown destination, especially on First Friday.

St. Joseph’s Catholic Church, located on East Commerce Street, was established in 1868 by German immigrants who wanted to worship in their native language. The church’s stained glass windows from Munich were recently restored. The all-male choir, San Antonio Liederkranz , founded in 1892, still makes its home there, performing at the 11 a.m. Mass every fourth Sunday. Its Midnight Mass performance is especially noteworthy.

Hermann Sons, a German fraternal society and insurance provider, was organized here in 1860 and still counts 73,000 active members, all of whom are required to purchase a life insurance policy.

The Witte Museum and the Institute of Texan Cultures feature permanent collections recalling the city’s German history. The artifacts on display are historically impressive, but modest in scale.

The Menger Hotel hearkens back to the arrival of its namesake family from Germany in the 1840s, built next to the Alamo on the site of the city’s first brewery. In time, German beer brewers multiplied and helped define the city. Today, the city’s most prominent mixed use development is at the Pearl, once the city’s signature German brewery.

San Antonio’s historic neighborhoods include many streets named after pioneer German families, and here and there, German landmarks survive, including the Edward Steves Homestead in King William, which now serves as a museum and headquarters of the San Antonio Conservation Society. The landmark tower of C.H. Guenther & Son Pioneer Flour Mills still stands sentinel on King William’s southern boundary as it has for generations.

Shilo’s, a German-owned saloon until Prohibition forced it to move and become a German Delicatessen, still serves a standing-room only crowd at lunch. Beethoven Halle und Garten, Magnolia Pancake Haus, and a few other restaurants also offer affordable German fare, but there is no fine German dining establishment in San Antonio.

For the most part, the city’s German heritage and history is a fading black and white photograph. City fathers over the generations never leveraged cultural connections into economic ties.

Hans Boas, a University of Texas at Austin professor and German linguist,  has been studying German Texas and working to record its unique language for years as speakers slowly disappear and the dialect dies out. A story published last month by the Global Post chronicles that effort and let’s German speakers around the world listen to Texas Hill Country dialect (if audio player does not appear, please refresh your browser window):

German Companies Operating in or near San Antonio

The most significant German investment in the San Antonio area is operated by Continental, a Hanover, Germany-based global automotive supplier. Its factory in Seguin, acquired in 2006 from Motorola, manufactures power train modules and now employs more than 1,300. One in five vehicles sold in the U.S.  includes power train modules built by the Continental plant.

Kathryn Maxwell, a company spokeswoman, said an additional 300 employees are being added in the next few years.  Continental also maintain a small tire-testing facility in Uvalde.

Other German firms have local operations here of varying sizes.

KACO new energy, a leading manufacturer of photovoltaic inverters, arrived in San Antonio last year as a partner of OCI Solar, which has agreed to bring a total of 800 jobs to San Antonio as part of a deal with CPS Energy to build five solar plants around the state that together will generate 400-megawatts of solar energy. KACO has committed to hiring 70 people and begin manufacturing by June. It’s headquarters is in Neckarsulm, near Stuttgart, and is home to many of Germany’s renewable energy companies.

Turner Construction Co., a family owned company acquired in 1999 by Hochtief, based in Essen, Germany, employes 50 people and many more subcontractors in its San Antonio office, according to Vice President and General Manager Mike Kaiman. The company’s historic restoration of the Kress Building on East Houston Street for the Federal Realty Investment Trust was selected by the Downtown Alliance and the San Antonio Business Journal as the Historic Restoration Project of the Year in 2011. Turner is currently overseeing five school renovations totaling $70 million that are part of the San Antonio Independent School District bond program.

Dräger Safety Diagnostics, a medical and safety technology  company based in Lübeck, Germany, is among those listed by the City as having a presence here, which appears to be limited to a local service center operating out of an office suite. The company manufactures various safety devices, including ignition interlock systems that monitor vehicle operators convicted of driving while under the influence.

For a more complete picture of German investment in Texas, click on this link maintained by the governor’s office.

The arrival of  Trader Joe’s grocery store at the Quarry Village  has added nominally to the German investment presence here, though few customers realize that the California chain was purchased by now-deceased German billionaire businessman Theo Albrecht in 1979. Today, Trader Joe’s is controlled by the same family trust that owns Aldi, the giant German supermarket chain that boasts, “We don’t match other stores’ prices because that would mean raising our own.”

Trader Joe’s is opening multiple stores throughout Texas. One employee told me the company is looking at a possible second location at or near the Rim, and “is aware” of city incentives being offered for the opening of a downtown grocery.

The German investment presence in San Antonio remains small, but four years ago, then-Mayor Phil Hardberger and various other officials and business leaders traveled to Germany to renew the historic relationship and pursue new economic ties. They came home with an agreement, but it fell victim to the recession and bad timing.

Coming tomorrow: San Antonio’s failed relationship with Dresden and how to build a new alliance.

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