McALLEN — City and county leaders in the Rio Grande Valley have for years frequently stressed the importance of attracting high-skill, high-paying jobs to the region.
Their efforts to attract new industry have been rooted in the desire to raise the Valley out of the poverty that it has struggled with for decades. The region, more than 90% Hispanic, remains one of the most impoverished areas in Texas, with 23.3% of families living below the poverty line.
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This week those efforts paid off as officials celebrated that Valeo, an automotive supplier headquartered in France, has chosen McAllen for their new advanced manufacturing facility which is set to open in 2027. The company selected the city for their newest plant, a $225 million, 215,000 square-foot site that will focus on advanced technology. It is the largest single industrial investment in Hidalgo County history, according to city officials.
The region has seen strong investment in their schools and hospitals through nursing and residency programs. It is also home to SpaceX’s Texas launch site. which was thought to bring high-level job opportunities, though it’s unknown how many of them went to locals. It also remains unclear whether those factors have led to widespread changes in the types of opportunities in the Valley. With Valeo, regional leaders see a path forward to achieving those changes, hoping that the new facility will improve the area’s employment outlook.
The region is no stranger to manufacturing facilities. Maquiladoras, as they’re referred to in the area, are common just across the border in the Mexican town of Reynosa. They produce automotive parts there that are then distributed out of McAllen.
Valeo’s facility is a new type of enterprise,one that will produce advanced and innovative automotive technology.
“What we have in Reynosa, in that automotive cluster, it’s like the tier two — they’re building the seat belts, they’re building the plastic bumpers,” said Elizabeth Suarez, president and CEO of the McAllen Economic Development Corporation. “This is different, this is the brain of the vehicle. It’s really different and so that’s what’s exciting because it keeps us advancing with what technology is doing.”
With the facility’s arrival, economic leaders in the region hope that the area will prove itself as a capable partner in this type of advanced manufacturing and open the door to investment from other companies that could provide more high-skill, high-paying job opportunities for Valley residents.
What the new facility will be making
As a tier one supplier, Valeo supplies products directly to automakers. They produce vehicle technology and software from powertrain and lighting systems to wiper systems. Their brain division handles central computing capabilities for sensors, cameras and hardware for autonomous driving.
At the new McAllen facility, Valeo will be making a liquid-cooled, central computing device for the automotive industry. The central device is meant to replace smaller computing systems, each with their own function, that cars use today.
“You can get rid of dozens of those and have one large brain or large, liquid-cooled computing center that controls all of these features all in one place,” said Jeffrey Shay, president of Valeo North America.
Valeo has facilities all over the world, including in the nearby Mexican city of Rio Bravo, where it produces small computing boxes.
But for a high-value product like a central computing unit, Shay said they decided on a U.S. site to manufacture the products in the same country that they’ll be delivered to, protecting the site’s resiliency and minimizing possible disruptions in the supply chain.
In McAllen, specifically, Shay said they found a welcoming community that had the workforce they were looking for and schools that were interested in how their students could fit the company’s needs.
“This is very high-tech business for us,” Shay said. “The talent pool needed to be at the right level, and these universities were absolutely ready to step up to that.”
The facility is expected to create about 500 jobs which will include a variety of positions in quality, engineering, logistics, finance and human resources. Valeo will also be hiring skilled technicians for assembly on the production lines.
The projected 500 jobs represent what the company needs to produce the business that’s already booked for the plant over the next several years. Like all industrial producers, Valeo said, it has invested in artificial intelligence to improve efficiency. They will use AI at their McAllen site in a way that they hope will allow them to take on more business with the same staffing levels.
The McAllen site will serve multiple customers: their first will be General Motors. Production is expected to begin in late 2027.
The promise of new jobs
The type of jobs that Valeo will create can be hard to find in the Valley, which is why the company’s incoming presence is exciting officials at the University of Texas Rio Grande Valley.
Many of their students, upon graduation, are looking for high wage jobs that come with an opportunity for growth so many end up taking jobs outside of the Valley with companies that have name recognition.
As an industry partner with UTRGV, Valeo can serve as a host for special projects, internships, and on-site training. The school can then start replicating some of the company’s workforce needs into their curriculum.
“We can learn so much from them,” said Ron Garza, senior associate vice president for workforce and economic development at UTRGV. “Not only does it really create that robust pipeline, which we all want, we want our students graduating to have just a seamless transition into employment.”
Hopes for the Valley’s future
Local leaders are placing a lot of hope on Valeo’s future in the Valley. If the region proves to be an ideal location for this type of advanced manufacturing, it could prompt other companies to locate their next sites in the Valley too.
Suarez said the project will serve as a testimonial of what is possible there and what the community can sustain.
“It speaks volumes to who we are as a community and the talent of our community,” Suarez said. “That’s what we’re really selling, is that workforce.”
There is reason to hope that more companies could follow Valeo’s lead, according to Ray Perryman of the Perryman Group, a Texas-based economic research firm.
“The presence of a significant manufacturer can enhance the chances of attracting additional activity over time,” Perryman said. “As the Valley becomes known as a place with the skilled workers, supplier networks, and infrastructure needed for success, the chances of other firms considering the area increases.”
It could lead to other ongoing benefits, Perryman said, such as ripple effects from spending by the company in the area. He also pointed out that there are potential opportunities for other local companies, ranging from landscapers, security firms and suppliers.
“As wages and salaries earned up and down the supply chain are spent, consumer effects occur,” Perryman said. “The bottom line is that for an advanced manufacturing facility, the ultimate effect on the local economy is likely to be multiples of the direct spending by the firm.”
Garza also expects that more companies will follow Valeo’s lead, creating an ecosystem where more students pursue majors to fit into that industry and companies are attracted to the potential workforce.
“I think it’s going to be transformational,” Garza said.
Reporting in the Rio Grande Valley is supported in part by the Methodist Healthcare Ministries of South Texas, Inc.
Disclosure: General Motors, Methodist Healthcare Ministries of South Texas, Inc. and the University of Texas – Rio Grande Valley have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.