By Justin Sayers – Staff Writer, Austin Business Journal
Aug 5, 2022
An Elgin business that's like an auto parts store for the semiconductor sector — both repairing and manufacturing hundreds of parts used in the fabrication process — has expansion plans to meet the industry's booming demand.
Yerico Manufacturing Inc. hopes to move into a new 20,000-square-foot space at the Elgin Business Park, located off Roy Rivers Road and owned by the Elgin Economic Development Corp., in 2024. And even more expansion is likely on that site, executives said.
CEO Ihn-Hong Min founded Yerico in 2002. The company currently operates in a 25,000-square-foot-space at 619 Mogonye Lane. It also has a branch in South Korea.
Yerico supplies and repairs parts and conducts preventative maintenance for major semiconductor manufacturers and suppliers, including Applied Materials Inc., Samsung Electronics Co. Ltd, Micron Technology Inc., NXP Semiconductors NV and Infineon Technologies AG.
John Cervantes, senior sales director, said Yerico has seen an almost fivefold increase in demand for repairs. Annual revenue is $15 million and the company has 55 employees, with room to grow to 75 with the new space.
"We are in the need to expand our business and our capacity to supply the semiconductor industry with parts, service spare parts and consumables, and repair parts," he said.
The company's growth comes at a time when the semiconductor industry is booming in Austin, trickling down from corporate giants to affect dozens of businesses across the supply chain. Yerico customer Samsung is building a $17 billion plant in Taylor and considering investing nearly $200 billion more for 11 additional fabrication plants in Taylor and Austin. Samsung said it has not made a final decision on whether to expand.
Over the past couple of years, Yerico has been working with the city of Elgin and its EDC to secure land for the project. The company has purchased two five-acre parcels and signed agreements with the EDC to receive one parcel for free and another parcel for a reduced price around $200,000. The deal is contingent on the company meeting certain construction, investment and job totals.
"They've been in Elgin for awhile. They were looking to expand. ... They do semiconductors, which are in great demand, particularly with Samsung," said Owen Rock, the city's EDC director. "To have them grow in the city that they have already been in, it's great for us and great for them and helps the company and the city as a whole."
Yerico has both short-term and long-term plans for the 10 acres, according to Cervantes and public filings with the Texas Department of Licensing of Regulation. The company could eventually add about 50,000 more square feet in the business park.
The first parcel includes a 20,000-square-foot manufacturing and office space, which Cervantes said would be used to expand Yerico's core business and should be ready in 2024. A second parcel is listed as having 30,000 square feet of warehouse space, but Cervantes said those plans are "fluctuating." The company also has additional space at its current site that was originally slated to be used for expansion, but it pivoted once the EDC offered space in the business park.
Cervantes, who joined the company about six years ago, said that the production of semiconductors is a lot like your vehicle. There are consumable parts, like windshield wipers and tires, that are used and thrown away afterward. There are parts that need repairs, like alternators. And then there is preventive maintenance, like an oil change or tire rotation.
At its shop, Yerido handles all three, offering a more timely and cheaper alternatives to just purchasing replacement parts. Cervantes estimated that they can repair some pieces of equipment for $15,000 to $20,000, when it might cost $85,000 to buy a new one. He estimated Yerico can fix at least 95% of products that are sent for repairs.
With the expansion, he said the company will be better able to compete with the likes of Applied Materials, which he compared to Amazon.com Inc. for his industry. In that comparison, Yerico would be the local bookstore.
"All of a sudden, it allows us to compete a little bit more with some of the bigger companies," he said.
Yerico's experience shows how the semiconductor sector is affecting even small towns. Elgin, located about 26 miles east of downtown Austin, had an estimated population of 10,549 in 2021, up from 9,784 in 2020, according to the U.S. Census Bureau.
The community is expected to keep growing because of its available land and proximity to both U.S. Route 290 and State Highway 130, as well as the Samsung factory in Taylor and the $1.1 billion Tesla Inc. factory in eastern Travis County.
Other businesses set to occupy Elgin's 80-acre business park off U.S. 290 include Carr Lane Manufacturing Co., an aerospace parts manufacturer that is relocating from North Austin. It plans to have at least 65 employees in a 50,000-square-foot building. Southside Market is also building a 5,000-square-foot office building and 20,000-square foot distribution center there.
Cervantes said he thinks the city and region will continue to attract companies because of an abundance of available land and proximity and logistical transportation advantages. He also said that companies like his will continue to feel the effects of larger companies, all the way down to raw materials providers, security guards, cleaning crews and shipping giants.
"You're talking thousands of parts that ripple down and people and small businesses," he said.
The biggest challenge facing Yerico is staffing. The company has met with Bastrop Independent School District about starting a program for students to go into technical fields. He said there is not enough workers to fill the jobs being created in these kinds of roles, from Yerico to Tesla.
"A four-year guy with a psychology degree is not going to be the guy you want working in your fab," he said. "There's got to be a revival coming to where the trades are becoming almost more important and the job market in the trades is going to surpass the college degree. ... You're going to need people to fix these electric cars, and you're going to need people to fix things, and the cost of fixing things has gone up because there is not enough people."