Houston's economy

On Monday 5/22/2017, the Greater Houston Partnership hosted an event called ‘The State of Houston’s Global Economy’ so it’s members could get the latest global economic outlook. The event featured a morning panel discussion among three executives who lead global institutions in Houston, Renu Khator, Chancellor and President, University of Houston, Jean-Francois Poupeau, Executive Vice President, Corporate Development, Schlumberger and Manolo Sánchez, Chairman, BBVA Compass. The mediator of this panel was Bob Harvey, President and CEO of the Greater Houston Partnership.

Khator started the panel discussion on Houston’s global economy by describing Houston as a global knowledge center, since Houston has the features of a global knowledge hub: high concentration of talent, a big industrial cluster, presence of cross-cutting technology industries, a lot of research institutes, an innovative ecosystem and the global connectivity. According to the Brookings institution research group, Houston can call itself one of the 19 knowledge hubs in the world with all these features. This top 19 is really a competition between major global metropoles, so Houston has to take a look further now to stay competitive.

According to Khator is the density of talent a good measurement of the successfulness of a city. Houston has a high density of talent and need to keep it this way. Last week 8690 students graduated from the University of Houston. 60% of them are staying in Houston, 80% in Texas. The city of Houston has to give the talents a reason to stay, because Houston needs a powerhouse for research, innovation etc. The universities are fueling the local economy.

The University of Houston plays an imported role in this fueling process by being the 2nd most diverse University in Houston and by recruiting 5 members of the National Academy. 1 out of 4 Houstonians are born outside of the USA. Nowadays there is a lot to do on immigration. Khator sees an impact of these undercurrents. There’s a lot of misinformation and anxiety, causing a drop in international students. There is more effort on communication needed.

According to Poupeau the key to Houston’s success is the stability to welcome all nationalities. Houston has no problem at all in recruiting top engineers. More and more of the global leaders of Schlumberger are coming from Houston.

Sánchez pointed out that Texas is growing every year with 5%, which makes it an emerging market. This is all thanks to the business- and idea friendliness of city of Houston, but also Texas. The miss right now in Houston is the amount of start-ups. The innovation system needs to be more present. At this time, Houston is 3rd in the state of Texas when it comes to start-up, this is too low, Houston is never the 3rd in anything in Texas. It’s hard to pinpoint what is causing the lack of start-ups. Last week the GHP announced the start of an Innovation Strategy Office together with the City of Houston, part of an effort to improve Houston’s start-up culture. We will report more about those ideas and innovations soon.

During the luncheon, the Partnership’s SVP of Research, Patrick Jankowski, shared his findings on Houston’s global trade and investment ecosystem. The question he asked is if Houston is a global city? According to the department of commerce there’s a five-point checklist to determine if Houston is a global city.

The first checkpoint is trade. Houston is on the 3rd place when it comes to export (after NYC and LA) with $93,7 billion in export. The Port of Houston is the port of entry and exit for raw, intermediate and finished goods. Exports exceeds the import of goods and materials. So, Houston is absolutely present in the USA when it comes to trade.

The second checkpoint is Foreign Investment, measured by the amount of foreign subsidiaries (Shell), Greenfield projects (Akzo Nobel), Mergers & Acquisitions and Foreign owned properties. On all these aspects, Houston scores really high.

Another way to measure how global a city is, is to determine how well connected the city is. Houston intercontinental airport has 19 foreign flag carriers, services at 70 overseas markets and 11.6 million international passengers per year. This makes Houston the no. 6 airport in the USA when it comes to overseas services. In addition to the airport, Houston has 4 big ports: Houston, Galveston, Texas City and Freeport. 5000 companies are involved in global commerce; 33% of the revenue of companies based in Houston are earned overseas. 23,7% of the Houstonians are born overseas, with their children you can count on 2.2. million people who have ties overseas.

The last checkpoint is ‘dominance’. Is there a dominant industry present in the city? Dominance means that when you’re not in that city as a company, you’re out of the business. This is the case for the Oil & Gas industry. Houston has a dominance in the Energy market. With this last checkpoint, Houston crossed off all the points on the checklist. We can confirm what we’ve known for years: Houston is indeed a global city and a great place to do business!

 

Posted by Mariella Priem May 25, 2017

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