When CARDONE Industries announced plans in December to build a 920,000-square-foot distribution center in Harlingen, it was touted as the largest economic development project in the city’s history. The $50-million facility represents a major strategic move for CARDONE, complementing existing operations in Matamoros, Brownsville and Harlingen.
For Harlingen, the deal represents a giant step forward for economic growth in a city that over the last five years has experienced new business expansion in just about every sector. And the CARDONE development may just give Harlingen a higher profile in attracting other large job-creating projects.
“Harlingen is the hidden gem that’s starting to be rubbed off a little bit,” Harlingen Economic Development Corporation CEO Raudel Garza said. “That carbon stone is looking more and more like a diamond.”
The story behind the CARDONE announcement evolved over a period of years, starting in 2004 when the privately-held company established a foothold in the border region by opening an automotive parts remanufacturing center in Matamoros, which today employs about 3,000 people. Along the way the company entered the Harlingen market with the purchase of the old Fruit of the Loom plant in the city’s industrial park, where used parts are received and processed before going to Mexico for remanufacturing. The Pennsylvania-based company later leased half of the old Titan Tire plant in Brownsville to warehouse parts coming out of Mexico.
CARDONE’s core business takes worn automotive parts and remanufactures them. Parts are completely disassembled and every component inspected. A point of pride for the company is its use of reverse engineering to pinpoint original equipment design weaknesses and incorporate fixes to produce even more reliable products.
“We totally disassemble the whole thing,” said George Zauflik, CARDONE senior vice president for compliance and government relations. “It’s a key differentiator for us. All rubber parts and worn parts are replaced 100 percent. And we are able to make improvements to it.”
As the company’s operations grew, the logistics of distribution became more complicated and CARDONE began looking at options for a massive distribution center to move products faster and more efficiently to customers.
“We saw the need for a local distribution center,” Zauflik said. “We needed an additional warehouse to support the product coming out of Matamoros. We launched an 18-month search. We looked at locations in the Valley. We looked in Ohio, Georgia and Kansas. But it came down to the relationship we started with the folks in Harlingen.”
Zauflik gave praise to Garza, Harlingen Mayor Chris Boswell, Cameron County Judge Eddie Trevino and other local and state officials for building the relationships and community support that helped solidify the deal. “When we came down for the groundbreaking and saw how many people turned out, it was like wow, we really made the right decision,” he said.
Garza said he and other Harlingen officials were optimistic about chances of landing this big fish from the beginning, but they still had to make a strong case. “I always thought we had the best opportunity because we had the existing facility plus we had a lot of land in the proximity of that facility. So we put together an incentive package that we thought was the winning package and then pushed it forward.”
As it turned out, CARDONE officials had similar sentiments. “They had the land, they had incentive packages. That got our attention,” Zauflik said. “We always had luck with the workers in Harlingen. We were successful hiring engineers. We got positive input from our employees about the cost of living and quality of life.”
But before a deal could be signed, a host of details had to be negotiated and resolved to everyone’s satisfaction, and that included coming up with enough land to hold the mammoth structure. “We were lucky enough to negotiate the purchase of some other property and combine that with what the industrial foundation had and we basically created a 65-acre tract,” Garza said.
Part of cobbling different parcels into one large tract involved an existing business on FM 509, Bales Mold Services. The Economic Development Corporation bought the land and is working with the company to relocate operations. “They have been very cooperative,” Garza said. “They said they were not going to slow down industrial development in the community, that they knew we would treat them right.”
It took some $900,000 in land acquisition to come up with the 65 acres that in turn was sold to CARDONE. “And CARDONE is doing some things for the community that will more than make up for that investment,” Garza said, such as contributing to “truck ready” road improvements in the vicinity that will benefit other industrial operations as well as CARDONE.
Another big factor was Cameron County’s approval of the freeport tax exemption, which was authorized in a constitutional amendment approved by Texas voters in 1989. It exempts companies from paying property taxes on inventory that is in Texas for a short time before being taken out of state. The CARDONE distribution center fits into that category.
“When the county said yes to the freeport tax exemption, that was huge,” Garza said. “It could be a $1.5 million revenue stream and they said they were going to get rid of that for economic development. The kind of companies that are going to be coming because of that are the CARDONE type of companies.”
The company also has a long track record of investing in the quality of life in communities where they do business. As part of the Harlingen agreement, CARDONE will donate up to $800,000 for quality-of-life projects over the second and third year of operations, Garza said.
“CARDONE is usually very generous with the communities they are in,” he said. “They have helped out in Matamoros quite a bit. Their corporate culture is faith-based. It’s just what they do. They don’t brag about it.”
CARDONE’s timeline is for construction to be completed by the end of this year, with some operations beginning as early as the summer when half of the building will be ready to occupy. Over the first 10 years, projections are that the project will create almost 1,200 permanent direct and indirect jobs with almost $328 million in salaries. The facility’s assets added to local tax rolls is expected to top $237 million. Local vendors and suppliers will benefit. New homes will be constructed to house new residents coming in to work at the plant.
“I don’t think Harlingen has a good grasp on what that’s going to mean for them,” Garza said. “What we have seen in Harlingen over the last few years is that slow churn of companies that are coming in and hiring people and then there is this spinoff and this indirect benefit from what they are doing.”
Garza commended Harlingen officials for creating an environment that opens doors for economic development. “CARDONE has a future here in South Texas and Mexico. But they won’t be the only ones. If we tell their story then others are going to pay attention and start asking, why there? Why Harlingen and why now?”
While Harlingen currently has between 400 and 500 acres available for industrial growth now, that could change in the not-to-distant future. “There’s another 1,500 to 2,000 acres available out there,” Garza said. “It’s mostly farmland now but the likelihood of it developing into more industrial land is high. As the population grows and there becomes more demand for competitive labor markets, South Texas is going to be one of those places people are going to look at.”