Mega-Project Impact

HARLINGEN — The new Cardone Industries Inc. distribution facility planned for the city’s industrial park will bring more than 500 jobs and, over 10 years, shower hundreds of millions of dollars in wages on local workers.

Investment in the new facility by Cardone will total $50 million, which includes not just the construction of a facility with as much cubic footage as the Astrodome, but equipping and furnishing the mega-project, too.

Yet like the sunken underside of an iceberg, much of the economic impact of such a significant addition to the city’s commercial sphere lies under the surface.

Here is what lies beneath.

Jobs and employment

The new Cardone facility is expected to lower the city’s and possibly even the county’s jobless rate with the addition of 550 new jobs when it opens, and 750 new jobs when fully ramped-up.

The Harlingen-Brownsville jobless rate for October stands at 5.5 percent, and it’s about the same in the City of Harlingen. Statewide, Texas’s jobless rate is 3.9 percent.

To forecast just where these new workers will come from, we can look at the makeup of the workforce at Cardone’s current facility in Harlingen, which has been operating for 11 years.

The Cardone workforce is overwhelmingly from Harlingen and Cameron County, with 38 percent of Cardone’s workers living within Harlingen zip codes, and another 20-something percent coming from San Benito.

The rest of the workers are from elsewhere in Cameron County, or from Willacy and Hidalgo counties.

“Cameron County should expect, because of construction, because of spinoffs of what’s going on here, for our unemployment rate to continue to go down,” said Raudel Garza, chief executive of the Harlingen Economic Development Corp., which sealed the deal to bring a second Cardone facility to the city.

“We’ve been behind McAllen and Edinburg for a long time, but this kind of announcement, and some other things that are going on, will start closing that gap,” he added.

The multiplier effect

The addition of direct jobs expected to start at $8.50 to $9 per hour at the new Cardone (pronounced car-DOAN) facility is the most immediately visible benefit. But behind those jobs will be an army of local residents who will benefit financially from siting the distribution center here.

The new facility will need cardboard and plastic wrap to box up its remanufactured items, many from its brake operation in nearby Matamoros. Then there will be fuel and maintenance for the 32 tractors and 50 trailers which will be operating out of the new center.

Landscapers will be needed, along with plumbers and food service companies.

“They’re buying fuel locally, they’re buying tires, and they’re repairing those vehicles locally,” Garza said. “That has a ripple effect. They outsource a lot of their maintenance, their air-conditioning, and all of that ripple effect is an economic multiplier.”

Another source of good-paying jobs not to be discounted will employ local construction workers, engineers and maybe even architects to build the facility.

“At 920,000 square feet, that’s about 20 acres or so under-roof, and all the dirt work they’re going to have to do for the 60-acre tract is going to require a lot of people, and a lot of equipment,” Garza said. ““So they’re going to reach out to as many local subcontractors as they can.”

Jolt to the economy

The newly hired Cardone workers at the distribution center will, as a group, take home anywhere from $10 million to $14 million in wages each year.

“If half of your disposal income is being spent locally and it wasn’t there before, that’s a big chunk,” Garza said. “So we do expect for there to be additional retail sales in the community.”

Garza said the HEDC contracted with an Austin company for an economic analysis of the impact of the new Cardone facility.

Their economists found that direct and indirect jobs would total almost 1,200 over 10 years, and the salaries of those workers would add $328 million to the local economy. Taxable sales from the spending of the workers and their families would total $128 million over that period.

So why here?

Cardone executives cite location as the primary reason to build a new facility in Harlingen.

As their product lines of remanufactured automotive parts and assemblies, and some new manufactured parts, continues to grow, they say Harlingen makes logistical sense because of their current plants in Harlingen and Brownsville and their brake operation in Matamoros.

“Having this new distribution center in close proximity to our South manufacturing facilities will help us get those products in our customers’ hands quicker,” Cardone CEO Stan Gowisnock said in announcing the facility.

“Because we are centrally located in the Valley, because we have easy access to I-69, we have easy access to international bridges up and down the Valley, if there’s product coming from the east or the west, or the north and the south, Harlingen’s in the middle,” Garza said.

He said Cardone placed its 295-worker facility in Brownsville because there wasn’t room for it in Harlingen. Cardone shares a massive building with CK Technologies.

“And that’s fine. It all benefits Cameron County,” Garza said. “The facilities in Matamoros have grown because of the brake caliper production moving from Philadelphia, and so it made sense for them … to have a distribution center on the U.S. side.”

Garza also noted Mexico’s contributions to improving infrastructure as being part of the economic development of the region, specifically the Mazatlan highway.

Some of Cardone’s parts come from China, and they will be brought in through the Port of Brownsville.

“And some of the product goes to Canada, so they will be utilizing, hopefully, a foreign trade zone so they can gain from those benefits and be more competitive,” he added.

Size does matter

The massive facility planned for Harlingen will be 920,000 square feet, which dwarfs the average size for commercial buildings in the city which is around 50,000 square feet or even less.

The new Cardone facility will now be the second-largest manufacturing space in Cameron County, behind only the building now shared by Cardone and CK Technologies in Brownsville.

These new mega-facilities are also an anomaly for the rest of the Valley, including Hidalgo County.

“In Hidalgo, most of those buildings are in the 100,000 to 200,000 square foot range,” Garza said. “There are a few others now with Black and Decker that have gone above the 200,000 into the 300,000 square foot range, but there are not many that are over a half-million that I know of.”

Marketing Harlingen

Garza, who has headed the Harlingen EDC for five years, says the strategy has been to ensure current companies in the city are the development agency’s top priorities.

“By ‘our guys,’ I mean United Launch Alliance, Dish Network, United Health Care, the hospitals … and Fox Valley Molding and Cardone,” he said.

But he concedes when it comes to marketing the City of Harlingen, a facility like the new Cardone distribution center is something to brag on.

“We have been wanting to close on this deal for a long time, so that we can actually try to use it as part of our marketing,” he said. “And we are using it as part of our marketing — ‘We just landed a big fish, and look, they decided to be here, and you should be here, too.’

“That’s part of the pitch,” he concluded.