San Antonio is the largest majority-Hispanic city in the US (some 64% of the population). It is also one of the fastest-growing cities in the country.
It is the US’s seventh most populous city and the 12th in North America with 1.4 million residents in 2020.
San Antonio has a diversified economy with a gross domestic product of approximately $121bn in 2018.
Having become famous for its call centres in the 21st century, the city’s economy has more traditional strengths in military, healthcare, government departments, oil and gas, technology and tourism.
Founded as a Spanish mission and colonial outpost in 1718, in 1731 the city became the first chartered civil settlement in what is now present-day Texas.
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The area was then part of the Spanish empire, and from 1821 to 1836 it was part of the Mexican Republic. It is the oldest municipality in Texas, having celebrated its 300th anniversary on 1 May 2018.
San Antonio FDI snapshot
According to Texas Governor Gregory Abbott’s report on FDI Alliance, between 2009 and 2013, 475 foreign companies announced more than 600 separate business openings or expansions in Texas.
“When all of these projects are fully operational, they are forecast to generate 59,000 jobs and $43bn in combined capital investment,” the governor said at the time.
Local investment promotion agency City of San Antonio says that between 2003 and 2022, the city attracted investment from 76 foreign companies.
Leading countries providing foreign investment in San Antonio include Japan (14 companies), Canada (13 companies), the UK (eight companies), Mexico (eight companies), Germany (six companies), Ireland (six companies) and Spain (five companies).
The largest foreign investments in San Antonio during this time were attributed to Toyota Motor (Japan, $380.7m), Maruchan (Japan, $330m), Elastic Hosts (UK, $273.8m), Magtel (Spain, $202.6m) and OCI Solar Power (South Korea, $200m).
According to that report, more than half of Texas’s foreign direct investment (FDI) projects during this time frame originated from western Europe, where major economies such as the UK and Germany drove investment.
Investment Monitor’s FDI Projects Database shows that San Antonio’s FDI levels dropped significantly in the period from 2019 to October 2022, however, from eight projects in 2019 to only one recorded in the first ten months of 2022.
The UK seems to be the main contributor to the city’s FDI scene – albeit by a small margin – with a total of four projects in the period. This is closely followed by Germany, Canada and Japan with three projects each.
The regional manufacturing industry employs more than 51,000 people. There are more than 1,000 manufacturing and distribution employers in San Antonio making and developing goods, complementary products and technologies.
San Antonio manufacturers produce fighter jets, McGriddles for the fast-food chain McDonald's, solar panels, robotics, electric vehicles and more.
Emerging sectors in San Antonio
According to regional economic development agency greater:SATX, one in six San Antonians works in the bioscience and healthcare industries (adding up to around 187,000 individuals).
"The region is home to more than 1,381 bioscience business entities, and has added 50,000 bioscience jobs in the past decade," the agency told Investment Monitor. "Twelve universities and colleges offer 93 undergraduate and postgraduate bioscience programmes, which serve as key sources for San Antonio’s rich R&D and bioscience private sector."
San Antonio is also home to world-renowned research organisations and centres including Southwest Research Institute, Texas Biomedical Research, UT Health San Antonio and the University of Texas at San Antonio.
"The city's leading position in information technology and cybersecurity fuels growth across other foundational industries," says a spokesperson from greater:SATX. "San Antonio has access to Department of Defense cyber headquarters, tier-1 university research, and a high volume of certified, security-cleared talent second only to Washington, DC, which means faster speed to market and higher margins for cybersecurity operations."
The cyber sector is another space that is contributing to the expansion of San Antonio's economy into new territories.
"San Antonio is home to the Sixteenth Air Force [the US Air Force's cyber operations] and has one of only four NSA Cryptological Centres in the country," says the agency. "There are about 100 operational cybersecurity companies in San Antonio in addition to the most National Security Agency and Department of Homeland Security centres of academic excellence-designated universities in the nation.
"Tech Port Center + Arena in San Antonio is the most technologically advanced entertainment venue in the world. Opened in May 2022, this $70m, 130,000ft2 facility hosts a 2,500-seat state-of-the-art tech arena, the San Antonio Museum of Science and Technology, classrooms and meeting spaces, an R&D lab and a 24-hour electronic gaming arena."
Mexican ties and foreign trade zones
In the US, foreign trade zones are the domestic equivalents of international free trade zones, and are intended to encourage healthy competition with foreign businesses.
As a city committed to maximising its presence in the global economy, San Antonio is a compelling location for businesses interested in increasing their export power. With its engagement in globally oriented economic programmes and its optimal geographic location, the city provides a wide array of business opportunities, a quality enhanced by its foreign trade zone designation. This designation gives the city the following advantages:
- Storage: Foreign and domestic merchandise may be stored within the zone for an unlimited period of time, thereby avoiding all duties and excise taxes.
- Approved operations for admitted merchandise: Goods may be opened, examined, sampled, displayed, assembled, mixed, cleaned, labelled or repackaged within a zone.
- Manufacturing: products manufactured within the zone, including foreign merchandise, can face reduced duties if the tariff rate on the finished product (the product leaving the zone) is lower than the tariff applied to the initial components (the product entering the zone).
- Disposal: Waste materials and damaged or valueless merchandise can be destroyed within the zone without encountering duties.
San Antonio has historic and deep connections with Mexico's business community. The city has made a strong commitment to strengthening business and cultural ties through its Casa San Antonio (San Antonio House) trade promotion office.
Casa San Antonio assists businesses with the following services in San Antonio, Mexico City, Guadalajara and Monterrey:
- Identifying relevant contacts.
- Coordinating in-market business travel agendas.
- Providing translation and interpretation services.
- Providing general guidance to those considering doing business in San Antonio or in Mexico.
San Antonio's low household median income
San Antonio has a relatively low household median income when compared with peer cities in the US. It also has a lower rate of educational attainment of associate’s degrees or higher when compared to the same cities.
The City of San Antonio’s Economic Development Strategic Framework identifies several opportunities to ensure targeted growth impacts all San Antonians equitably. These include the strategic development of resources in regional centres and key corridors in San Antonio, as well as increasing transport opportunities needed to connect residents to economic opportunities.
There is also an ongoing initiative to deploy San Antonians in employment opportunities tied to current regional and industrial needs, while simultaneously upskilling and credentialling residents to support the emerging jobs in the region.
"Much like the rest of the US, San Antonio is working to bridge the skills gap and provide even greater job opportunities for its residents in alignment with training and education options," says greater:SATX. "San Antonio is working together to create opportunities for economic mobility for residents while also building a ready workforce for employers. San Antonio’s 'people-first' spirit is evident in how the community readily collaborates for the greater industry good."
The agency says that a few programmes are under way to address the skills gap and create economic mobility in San Antonio.
SA Worx, for example, is the workforce team within greater:SATX that connects industry and education to create a stronger talent pipeline.
In 2022, it began a partnership with the US Chamber of Commerce Foundation to adopt and implement the Talent Pipeline Management, or TPM, framework.
Another programme is Ready to Work, San Antonio’s unprecedented education and job placement scheme. In 2020, San Antonio voters overwhelmingly approved the $200m programme, which is funded by a small sales tax. "Local employers have pledged support for the programme and provide guidance relating to in-demand, well-paid occupations and relevant training," says greater:SATX.
San Antonio offers a fast-growing economy that is expanding beyond its traditional sectors. Local authorities are proactively rolling out programmes to fill in the city's industrial gaps. All of this appears to be good news for foreign investors looking at this Texan city as a potential destination.