Companies find refuge from recession in Valley

McALLEN — International companies uprooted by the nationwide recession are planting roots in the Rio Grande Valley.

ALPS Automotive Inc., Fujitsu Ten Corp. and Panasonic Electronic Devices Corp. are moving large portions of their businesses from the Midwest and the South to McAllen. The three auto parts suppliers have had a presence in Reynosa for years, but want to cut costs as auto sales sag.

And two more companies are currently considering moves to the area, said Keith Patridge, president and CEO of the McAllen Economic Development Corp.

Automobile production in North America declined by half from June 2008 to June 2009, reported J.D. Power Automotive Forecasting.

"The automotive sales fell off the end of the table, basically," said Larry Kutsch, vice president of corporate strategy and administration at Fujitsu Ten.

The company is moving its distribution and logistics operations from Rushville, Ind., to a newly leased building on Ware Road.

The move, which should be complete by the end of September, will create 32 new jobs in McAllen while the company has laid off 43 people in Indiana.

Cheaper labor and proximity to the plant in Reynosa will allow Fujitsu Ten to streamline operations and reduce costs, Kutsch said.

Panasonic has found itself in a similar situation.

The company — which produces speakers, switches and censors — announced last week it will move its headquarters from Knoxville, Tenn. to McAllen.

It is also moving its speaker assembly operation from Forks of the River, Tenn., to its manufacturing plant in Reynosa.

The speaker assembly operations move should be complete by December. Headquarters will open in April of 2010, said Clark Brandon, a company spokesman.

Panasonic never thought it would move to McAllen until the recession struck.

The shrinkage of business has made it necessary to consolidate operations, Brandon said.

Like Panasonic, ALPS Automotive was skeptical about relocating support operations to the area.

"When we started it was tough to find qualified people," said Charlie Inoue, general manager and vice president of manufacturing for ALPS.

ALPS decided to move its support operations — quality control, customer services, planning and purchasing — from Detroit to McAllen when it learned the MEDC was working to create a college-educated workforce.

And the recession has accelerated the move, Inoue said.

The MEDC has been cooperating with the engineering department at University of Texas Pan-American to prepare Valley residents for careers with these companies.

The department graduated four engineers when it opened in 1995. It now graduates 100 engineers a year.

"It’s a steady flow of new graduates coming out that attracts companies," said Edwin LeMaster, founder and dean of the engineering department.

And companies are increasingly turning to UTPA for research and development.

Lariza Navarro is graduate student working on a project at UTPA sponsored by Amsted Rail, a company that manufactures railroad parts. The project is trying to find a way to prevent railroad bearings from overheating when they hit a bump.

Navarro moved from Mexico City to McAllen and got her undergraduate degree in mechanical engineering at UTPA. Although she has not decided what she will do after she finishes graduate school in December, she sees a future in the Valley.

"The Valley is growing and I see opportunity in it," she said.

And LeMaster believes in the future companies won’t just be moving here — they will be founded here.

"We have half a dozen pending patents at the moment," LeMaster said. "We expect spin-off start ups as a result. That should be a benefit to community."