05/21/2017
Giant HVAC plant rises from the Waller prairie
Japanese firm’s facility employs thousands, will add billions to area
By Dylan Baddour
The $417 million Daikin Texas Technology Park is expected to put about 5,000 people to work in the Houston area through direct employment and related businesses.
Workers assemble air-conditioning units in the new facility. Daikin began its move here in 2012 when it bought Houston-based Goodman Global Inc., making it the largest air-conditioner manufacturer in the world.
Takeshi Ebisu took in the quiet stretch of Waller County prairie, some 40 miles northwest of Houston and half a world from his native Japan. The most memorable thing he saw was a cow walking near a pond.
Three years later, the pasture has been transformed into a vast and modern manufacturing space, where Ebisu oversees a stafl of thousands of engineers and welders, fabricators and warehousers as CEO of Goodman Manufacturing and the place where just about every Goodman, Daikin and Amana air conditioner or heating unit sold in the U.S. and Canada is made.
Ebisu’s gleaming domain rises up as a surprise to drivers speeding along U.S. 290 toward Brenham. It covers some 94 acres under a single roof, the equivalent of 37 conventional city blocks, making the plant No. 2 behind a Boeing jetliner-assembly plant on the nation’s list of largest industrial buildings.
But its enormity also can be measured in less physical terms, as a multibillion-dollar generator of well-paying jobs to produce and supply the units in the world’s biggest market for them. Bob Harvey, president of the Greater Houston Partnership, calls the Daikin Texas Technology Park, named for its Japanese corporate parent, “one of the few projects that actually shows up as far as moving the needle” on the region’s gross domestic output.
“It’s not often that we have an individual project of that scale,” he says.
Indeed, the $417 million facility is expected to put about 5,000 people to work in the Houston area through both direct employment and the expected arrival of related businesses. Already, a Chinese company that supplies electric motors to Daikin companies is preparing to build its U.S. headquarters and an assembly plant less than a mile away.
‘A huge deal’
Though it has been in operation since October, the new Daikin plant will mark its oficial grand opening on Wednesday with tours, a Clint Black concert and remarks by Gov. Greg Abbott and former Japanese prime minister Yasuo Fukuda.
“It is a huge deal,” said John Isom, director of the Waller Economic Development Corp.
In all, the campus is expected to generate about $4 billion in annual economic impact for Houston, which is one reason Business Facilities magazine named it the deal of the year nationally for 2015.
The governor’s ofice of economic development called the project one of the largest job expansions in Texas in recent memory but couldn’t produce an exact figure because the ofice was not involved in attracting the investment.
Foreign investment
Daikin, a 93-year-old, $24 billion company ranked No. 478 on Forbes’ list of the world’s largest publicly traded companies, manufactures heating and cooling units in more than 80 countries and sells them in about 150.
The company’s move into Houston began in 2012, when it bought Houston-based Goodman Global Inc. for $3.7 billion, making it the largest air conditioner manufacturer in the world, according to Reuters. At the time, Harvey feared a foreign purchase of a well-established local company meant jobs would be shipped overseas.
He was pleased to find the opposite.
“Sometimes foreign investment is seen as hostile, but this is an example of how it creates growth and opportunity,” Harvey said.
Daikin planned to move other parts of its international operation to Houston, but the company felt the two local Goodman plants and one engineering center were too small to house the operation it had in mind.
Ebisu, a seasoned company executive, was tapped to move to Houston, take the helm at Goodman and oversee the development of a new North American operation.
In an interview at the new Daikin building, beneath a ventilation unit programmed to follow individuals around the room with a light stream of conditioned air, Ebisu named the Goodman acquisition as Daikin’s top reason for settling in Houston. He said other factors, like Texas’ portfolio of universities, made the decision easier.
“We feel the engineering ability in the Houston area is superb,” Ebisu said. “We can acquire quality-talent workers here.”
Workers from three Goodman facilities in Houston and one in Tennessee will be relocated to the new Daikin plant, and those facilities will close.
The new plant broke ground in March 2015, opened its distribution center in February 2016 and turned out its first unit in October. Now, 10 assembly lines are churning inside the cavernous space, with 11 more under construction.
From raw materials
From atop a catwalk above the manufacturing floor, at least one of the four tall walls seems always out of site, obscured by the distance inside a building that spans nearly half a mile on its longest edge.
New units come off each assembly line every few minutes. They start as raw materials — coils of copper or packs of sheet metal loaded in through the plant’s west bays, then put one by one onto a moving conveyor belt. Machine presses bend parts into shape while workers fit them together and braze them with a blowtorch.
Workers down the line install fans and motors, side panels and electrical hardware, while others operate mechanical arms that perform heavy operations before the units pass through a series of tests. A worker puts on one last sticker, and the units get boxed and stacked and hauled ofl to a heaping pile in the warehouse, awaiting a space in the back of a big rig.
“It’s going straight from raw materials to finished products to our customers in one flow,” said Michelle Jack, vice president of general aflairs at Daikin and project manager for the Daikin Texas Technology Park.
On the factory floor, managers pedal across the vast distances on large tricycles, while robotic trolleys ferry cargo around marked loops and carts and forklifts move products down highways drawn on the concrete floor.
Outside the factory walls, hundreds of trucks pull in and out daily, dropping ofl raw materials or picking up HVAC units along 240 docks, then driving them cross country to Daikin’s 1,200 distribution locations.
“If you buy Daikin in the U.S. or Canada, it’s probably made here,” said Rex Anderson, communications director for Goodman.
Suppliers coming
The hub of commerce on such lightly developed land is sure to attract more nearby investment. One Daikin supplier is already setting up shop. And, said Waller Mayor Danny Mar-burger, “There will be more coming.”
“That whole area is going to continue to build up with suppliers and other companies,” he said.
Boad-Ocean Motor Co., a China-based manufacturer of electric motors and a supplier to Daikin, already is constructing a 480,000-square-foot manufacturing and distribution facility on U.S. 290, less than a mile from the Daikin plant.
That building will be the company’s base of U.S. operations and will allow it to provide “localized service to Daikin,” said Jason Huang, Boad-Ocean vice president of manufacturing, who relocated from China to Houston last May to oversee the Waller County project.
The company plans to inhabit a third of the space it has under construction and lease out the rest to other suppliers as they move in.
“It shouldn’t be that dificult” to find tenants, Huang said. “A lot of suppliers will need to find space nearby for warehousing or manufacturing.”
Some city oficials said one supplier of packaging material and one supplier of insulation were also on the hunt for a land deal in the area. Others predicted it would boost demand for thousands of homes set to hit the market soon in a handful of new subdivisions built in response to the Grand Parkway.
Introducing new tech
The Daikin plant also could bring a hub of technological innovation.
In addition to manufacturing, warehousing and ofice space, the facility includes 200,000 square feet of laboratory space for research and development. Rows of fortified chambers can subject heating or cooling units to bouts of heat, cold, rain, pressure or salt spray under the watchful eye of engineers.
Daikin could develop its products at scores of other facilities across the world, but Ebisu said the company wants to develop products specific to this market.
“The American people know best the American people’s needs and demands,” he said. “Whatever is sold and consumed in that region should be designed and manufactured in the region.”
Ebisu aims to introduce new technology to the U.S. market, specifically “variant refrigerant volume,” or VRV, a system invented by Daikin in the 1980s that allows for targeted room-by-room heating and cooling. It is also substantially more eficient in terms of power consumption, thanks to electrical inverters that allow for variable speeds at various parts of the unit instead of simple on and ofl.
Ebisu said the technology already is widely adopted in Japan.
“The U.S. is probably the worst in terms of eficiency of the HVAC unit,” he added, citing weak government regulatory standards here that make it hard for the higher-tech units to compete financially. “We’d like to bring those technologies to this marketplace.”
