McALLEN -- Local leaders are staying mum about which auto manufacturer may come to the Rio Grande Valley, but signs point to Hyundai Motor Co.

McAllen Mayor Richard Cortez announced at a hastily called news conference Wednesday that the city was in talks with an automaker, but gave few other details, worried about upsetting a manufacturer that has asked for silence in the project.

The South Korean company was in talks with area officials two years ago, but those discussions fell through. City leaders said media reports hurt the talks by prematurely identifying the company, but representatives of Hyundai and its subsidiary, Kia Motors Corp., said a site in West Point, Ga., was just more attractive.

People familiar with the talks say Hyundai is again investigating the Valley.

Company representatives scouted the campuses of the University of Texas-Pan American and South Texas College last year. The two higher education institutions would play an important role in training factory workers.

The Texas-Mexico border would be a good fit for Hyundai, analysts say. And the Asian automaker's interest wouldn't be a surprise since Kia looked hard at the Valley in 2005 and 2006 before ultimately choosing to locate its plant in Georgia.

A Hyundai spokesman did not return an e-mail Thursday seeking comment on a potential plant here.

"Hyundai is very ambitious," said Catherine Madden, the North American automotive industry analyst with Global Insight Inc., a Boston-based economic research firm "They would like to expand their sales and a new plant or line of vehicles would be a good way to do that."

The Hyundai companies already have manufacturing plants in Alabama, Georgia and California. In the last three years Hyundai has also expanded into the American SUV and minivan market with four new models.

Any automaker that invests in the McAllen region would likely do much of its manufacturing in Mexico to save on labor, then ship the components to the United States for final assembly, Madden said. The McAllen area would offer a young, abundant and relatively inexpensive workforce.

Final production in the United States would mean the company would not have to pay import tariffs on the vehicles. There is also an advantage to having a "Made in the U.S.A." label in the largest consumer market in the world.

Even with the nation's struggling economy and subpar domestic auto sales, now would be a good time for an auto manufacturer from South Korea to locate in the United States, said David Cole, chairman of the Center for Automotive Research in Michigan.

The weak purchasing power of the U.S. dollar means buying land and building here is relatively inexpensive, Cole said. In addition, strong currencies in Europe and Asia mean the companies don't make as much money off goods sold in the United States that are built overseas.

"It's a very compelling environment for investing in manufacturing in the United States," Cole said.

Economic officials have been trying to land an automaker in the Upper Valley for 16 years.

During that time, the McAllen Economic Development Corp. and other local groups have been trying to put in place the infrastructure needed to support an automaker.

Top-tier auto part suppliers, a beefed-up higher education system and an improved transportation system would be crucial to luring a major manufacturer, said Keith Patridge, president and chief executive officer of the development corporation.

Economic officials flew to Europe last year to try to lure more auto suppliers to the region. Reynosa alone already includes operations by suppliers such as TRW Automotive Holdings Corp., Delphi Corp., and Standard Motor Products Inc.

Whichever automaker is looking at the area, landing a plant would have a significant impact on the region's economy, Cole said.

"The economic value of an operation like this is really something else," he said.
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Kyle Arnold covers business, the economy and general assignments for The Monitor. You can reach him at (956) 683-4410.