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Texas Manufacturing Still Expanding Amid Pandemic

While economic recovery from the COVID-19 pandemic has slowed slightly in Texas manufacturing — or as The Dallas Morning News recently put it, hit a speed bump, — expansion is still taking place, and several 2021 developments offer hope that expansion rates will again quicken.

Although the state production index — a key barometer of manufacturing activity devised by the Federal Reserve Bank of Dallas — continue to reflect expansion in January 2021, the rate is well below what it was in December 2020, and also below the average rate in the eight months since the pandemic rebound began last summer.

But manufacturing employees in Texas are looking ahead. As a respondent to the Dallas Federal Reserve Bank’s January 2021 Texas Manufacturing Outlook Survey put it, “We are anticipating better business opportunities in the coming six to 12 months. This typically happens when the past year has been restrictive on industry spending and growth. Also, with the new outlook and hopes with a new government, we believe that the outlook could be very favorable for spending.” As the total output from manufacturing increases, the forecast for manufacturing employment does as well.

This positive outlook is reflected in a number of recent Texas manufacturing developments. For example, Samsung Electronics Co. — the world’s largest memory chip and smartphone maker — is considering spending more than $10 billion building its most advanced logic chipmaking plant in Austin, Texas — a major investment the company hopes will win more American clients and create more jobs in the state. According to Bloomberg, plans are preliminary and subject to change, but for now the aim is to kick off construction this year, install major equipment beginning in 2022, and begin operations as early as 2023.

SpotSee, a Dallas-based supply chain monitoring and solutions provider, recently doubled in size after acquiring TMC Hallcrest and LCR Hallcrest to expand into the temperature monitoring space used for vaccines, pharmaceuticals and industrial applications. With the acquisition of the Hallcrest companies, SpotSee added 200 employees, bringing the company’s total workforce to 400. The acquisitions also doubled the number of customers SpotSee will serve globally, according to CEO Tony Fonk. It’s been a big year for us,” he said. “We’ve wanted to expand that part of the portfolio, and the combined Hallcrest companies make us one of the world’s leaders in temperature monitoring.”

In addition to the promising outlook for manufacturing, the outlook looks promising for Texas’ economy as a whole. Union Pacific railroad shipped 3% more volume in the final three months of 2020 compared with a year earlier — its first gain since the pandemic. As consumers have been spending less on entertainment and dining out during the pandemic, they have been spending more on goods such as motor vehicles, furniture, and electronics — benefiting manufacturers in the process.

To see firsthand where Texas manufacturing is heading, visit HOUSTEX 2021.