Texas continues to grow its economic power despite the low oil prices that are affecting its largest industry and export. Recently, a Japanese HVAC company made the move to build a mega factory for its AC production outside Houston. This factory, a sprawling 4.2 million-square-foot complex, is set to be one of the largest buildings in the area. Its roof alone spans 100 acres.
In comparison, the average Walmart Store is 100,000 square feet.
The company behind this giant of a facility is Daikin, and it has invested around $500 million on what can be considered its most advanced factory yet.
But why would Daikin build this mega factory in rural Waller County, Texas?
It’s because Texas has one of the best HVAC markets in the country, something that Takeshi Ebisu, head of Daikin’s U.S. Operations, firmly believes.
“It’s so hot here. So much A/C. It’s a deep and broad market, and still growing fast.”
Growth is why Daikin, in 2012, bought Houston-based Goodman Global for $3.7 billion.
The regional population has grown by 10% over the last five years, bringing the total amount to 6 million people, double the national rate. And with the large, growing population comes more need for AC units. Those AC units also create local jobs for HVAC technicians because taking care of them is important.
An improperly installed HVAC unit can increase energy costs by up to 30%. Not only that, but a buildup of debris inside ventilation ducts or the unit itself can lead to a 42% loss in efficiency.
That isn’t something business or homeowners want to deal with. And if Texas real estate markets are going to continue to grow as realtors predict, then there are going to be a lot of AC units needing repair and maintenance in the years to come.
Now, Daikin believes it can make money by building its AC units in Texas, too.
Patrick Duffy, President of the Colliers Real Estate Brokerage in the local area, says that the so-called “Oil Bust” hasn’t completely stopped economic growth in Texas, just slowed it slightly.
“Houston has kept right on growing through the oil bust. We were doing 110 miles per hour, then when we slowed down to 60 it felt like we had slammed on the brakes.”
Daikin isn’t the only major employer that’s been lured to Houston recently. According to the labor market research firm Emsi, Houston ranks fourth in the country for talent acquisition.
Daikin isn’t done building out in the county, and they next plan to construct two single-family homes that have two separate styles of HVAC systems. One will have a compressor-based AC and gas-fired system, common to Houston, and the other will have an inverter-based system.
“It’s more expensive up front, but uses 50% less energy and pays for itself in just a few years,” says Ebisu, “it’s hard to convince people.”
So Daikin plans to keep very organized records of the total benefits of their systems compared to the more common system to entice future buyers.
However, it’s not all business deals and plans for the employees at Daikin.
The new residents of the county are eyeing their surroundings and wondering what comes next. They’re already worried about the trajectory of the neighborhood, especially across the way from them, which looks like an ideal spot for a mini-mart.
“I don’t like the For Sale sign,” says Ebisu. “We like looking at the cows.”