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Salinas: Lack of power has cost RGV steel-related projects

AUSTIN, Texas – The Rio Grande Valley has lost out on major steel-related projects over the years because it does not have enough electrical power, Gilberto Salinas told the Texas House Select Committee on Economic Competitiveness.

Salinas, representing the Greater Brownsville Incentives Corporation, testified mostly about SpaceX, STARGATE, the importance of having a trained workforce, and offering incentive packages to lure companies to Texas. However, he was asked to speak about the Valley’s electricity capacity by state Rep. René Oliveira.

“Gilbert, I want to go to one of the issues that concerned me during the session. Chairman (Charlie) Geren may remember when we were trying to get some new electricity and power and energy down in the Brownsville area. And, I think this is a problem from El Paso to Brownsville. Are we losing any economic opportunities on the border, in our area, because of lack of electricity and energy being able?” Oliveira asked.

Oliveira, D-Brownsville, is a member of the House Select Committee on Economic Competitiveness. Over the years he has warned that the Valley does not produce enough electricity to meet projected population growth.

In his response to Oliveira’s question, Salinas said there is a three-part answer.

“One is our population is growing. We’re one of the fastest-growing regions, not just in the state of Texas, but in the U.S. So, there is a lack of capacity, and our population is expected to double here in the next couple of decades, so, I mean, we’re already behind,” Salinas said.

“The second one is, you know, look at what a major catastrophic event did to Houston. I mean, this is the fourth, soon to be the third, largest city in the United States. So, you can imagine something like that down south where we’re at.

“And, then tying that back into industry, I personally, in my 11 almost 12 years of doing economic development, we have lost out. Our region has lost out to seven steel – major steel – related projects due to the lack of power because we just did not have that capacity.

“Just to give you an example, a steel operation – a steel mill – they’ll use upward of 300 to 400 megawatts of power. That’s how much the entire City of Brownsville uses. So, you know, in short to answer your question, yes, we have. And, I’ve worked on these case studies – and at the end of the day, we have everything going for us except the power.”

Oliveira responded that ratepayers of Texas would have to pay for a new power line to come to the Valley.

“Right now, we’ve got two – well, I believe three – lines that are coming down. We need that additional line. But, really, because we are the state of Texas and we have our own grid, we tend to be pretty proud of the fact that we’re self-sustaining,” Salinas said. “But, when it comes down to the Valley and the Brownsville area, we’re not self-sustaining. And, that’s something that, in a perfect world, that’s what we would need, you know. Because of the King Ranch being kind of like a buffer zone, it kind of…”

Oliveira said King Ranch is as large as some states.

“Yeah. Exactly. And, that means we’re, in essence, kind of like our own little island. So, we need to be sustainable in that regard,” Salinas replied.

The Port of Brownsville is hoping to land a $1.5 billion, advanced flex steel mill project with Arkansas-based Big River Steel.

Workforce Development and Incentive Packages


170424-spacex

The Greater Brownsville Incentives Corporation is the economic development arm of the City of Brownsville, along with the Brownsville Community Improvement Corporation. Representing GBIC, Salinas was asked to testify about the House select committee on how Texas can become more economically competitive.

“From our standpoint in South Texas, we see that our state’s long-term economic growth hinges on two factors, and that is increasing our skills set, specifically for the middle skills, and, No. 2, retaining an economic incentives toolbox,” Salina said.

Salinas said economic development is becoming more complex. “We no longer have a linear path as it pertains to work in particular projects,” he said. He then focused on SpaceX.

“One particular project that I started working on a few years ago was by the name of SpaceX. They are building a very unique – it’s the world’s first commercial orbital rocket launch facility at Boca Chica Beach, which is just on the outskirts of Brownsville, Texas. No doubt this has brought the biggest project we’ve landed in Brownsville in recent history and the first – and I’ll be the first one to tell you that ‘hey, look, this is – this couldn’t have been done without an aggressive incentives toolbox.”

The incentives programs, Brownsville tapped into to help land SpaceX included the Texas Enterprise Fund and the Spaceport Trust Fund. Salinas said the latter was “extremely vital” in landing SpaceX. He also cited the former Emerging Technology Fund, and the Local Job Creation Intent incentive programs.

“The geographic location of our area was a driver for the project, but it was also the driver for our competition, which was Florida, Georgia and Puerto Rico. I’m here to note and basically to say that, look, incentives really helped sway the decision and give Brownsville an opportunity to stay in the game.”

Salinas said the impact of SpaceX would be about $100 million in capital investment, and the potential of 500 direct jobs over a 10-year period.

“However, we’re going to be benefiting from this particular project for decades to come, in addition to job creation and capital investment. That includes suppliers, – we already have one supplier that’s officially moved into the area in the aerospace sector – educational opportunities from grammar school all the way up to the university level; internships; and then opportunities for entrepreneurs, and, now, really developing an innovation corridor; and then tourism, retail and commercial activity associated with all these different launches.”

As a result of working on the SpaceX project, Salinas said Brownsville was able to secure funding for the STARGATE facility.

“This is a partnership between our organization, SpaceX as well as the University of Texas – then Brownsville, now Rio Grande Valley. This is a ground tracking station, which currently is under construction, and it’s going to be used by SpaceX to track its vehicles and its capsules once it’s traveling in space. When SpaceX is not using it, then the university is going to be using this for their astrophysics division. So, a great example of a public-private partnership.”

A huge benefit of having SpaceX launch rockets from Boca Chica beach will be in branding, Salinas said.

“One of the most important benefits that this particular project has given our community is instant image brand recognition. Brownsville is now in the same breath as SpaceX. Basically, in the same sentence as Mr. Elon Musk,” Salinas said.

“We’re already seeing the benefits of that. So, there’s really no secret to the recruitment of SpaceX in Brownsville. We’re a city of 200,000 by the border and by the sea. We’re just very diligent in working a particular project – the leadership at the local level as well as the state level – and just being creative with the incentives toolbox that we had at our disposition back then.”
Musk is the founder of SpaceX and Tesla.

Automotive Sector

Salinas told the House select committee he would like to switch gears and talk about the manufacturing sector, especially the automotive sector.

“Texas has two automotive assembly plants, and we’re really due for a third one. We’ve been working closely with the governor’s economic development team in prior years in coming up with different scenarios in how to really try to get an automotive assembly plant – one, for the state of Texas, but, of course, for us it would be down in Brownsville,” Salinas said.

“We are in the middle of three automotive corridors: the traditional Midwest, which is Detroit, where you have your big three; then you have Mexico’s automotive corridor, and that’s where you have the Querétaro, Silao and Bajío region, and then the emerging Southeast corridor – Tennessee, the Carolinas, Alabama. Our location is very suitable to providing access to all these key markets in North America, and, really, tapping into our extensive supplier base,” Salinas said.

Middle Skills


Salinas said when looking at the big picture, it is encouraging to have two neighboring countries, the United States and Mexico, whose gross domestic product and population are growing.

“These are the two elements that are needed to continue making our country a superpower in the world, and Texas is right smack in the middle of those exponential growth forces. But, our weakness is our labor force in the sense that it’s our middle skill set that we have a lot of concerns with, and I’ve kind of heard Mr. Sharp mention that and some of the individuals with the community colleges,” Salinas said.

Salinas was referring to Texas A&M University Chancellor John Sharp, who testified before him.

“We’re hearing it from current companies that are coming into the area. They’re saying they can’t either find the workforce that they need, or they can’t retain the workforce that they’re currently hiring. So, the areas in a nutshell, areas with better educated workers are the ones that will be achieving that, reaching that long-term success,” Salinas said.

Amazon


Salinas noted that many of those who testified before him had touched on Amazon’s plans to build a new corporate headquarters.

“As economic developers, we’re now seeing a shift in the internal site-selection process of these companies. It used to be where presidents, CEOs and the CFOs of these major companies would make the decision as to where a company was going to locate. And, in this case, Jeff Bezos – believe it or not – he’s not going to be making the decision as to where this company is going. It’s going to be his HR department that will be deciding where, which means economic development is changing. Now these companies – these forward-thinking companies – are looking at places with people. These companies are looking at places that have these amenities and this environment to retain a highly dynamic workforce,” Salinas said.

Jeff Bezos is CEO of Amazon.

“I think someone was asking about how do we retain some of our brightest. Well, this is one of the ways that we can address that. And, dare I use the word millennials. I mean, these are, this is the workforce that these forward companies are looking for. So, in closing, no incentives program will attractive companies without us really meeting their basic needs, which is a skilled workforce and creating an environment for these companies to locate and to thrive,” Salinas said.

“However, without a competitive economic development toolbox – if I can use that term – we’re going to be shut out of the site-selection process. In a perfect world, we wouldn’t use them, but other states are using them. So, in order for us to be in the game, we need to have that.”

Salinas concluded his testimony by repeating that economic development is no longer a linear path.

“It’s no longer just about jobs and capital investment. It’s now about building places, providing a certain environment for people, which, in turn, will be attracting those companies. And, we have a lot going for ourselves here in the state of Texas. I’m a proud Texan, myself, but now is most definitely not the time to back off.”

Source: Rio Grande Guardian

Editor’s Note: The main image accompanying the above story shows a steel mill operation by Big River Steel. Reporter Patricia Martinez contributed to this story.
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