Tuesday, October 10, 2006

Houston scores on the Fortune Global 500

Fortune magazine recently released their 2006 Global 500 corporate rankings with a very cool graphic that is unfortunately not online. It's an abstract map of the world, with circles for each country proportional in size to the Global 500 revenues of companies based in that country. Then, within the circles, were the names of the cities in that country with Global 500 HQs, with larger font names for those cities with more Global 500 HQ revenues. Of course, the U.S. is the largest circle by far, followed by good sized circles for Britain, France, Germany, and Japan.

You can see the city rankings here, with Houston in a very respectable 10th place globally, with almost $327 billion in Global 500 revenues. The top four you can probably guess, each with Global 500 revenues over a trillion dollars: Tokyo, Paris, London, and New York (the classic Big 4 world class cities). Houston is third in the U.S., but you'll never guess who's #2 (8th globally). It's Irving, TX, home of mega-corp Exxon. As a matter of fact, poor Dallas (#203) is in a smaller font on the map than Houston, Irving, Plano, Ft. Worth, San Antonio, and Round Rock. Dallas has a single Global 500 to Houston's six, although obviously the DFW metro does much better.

You'll also have a hard time guessing #4 U.S. (#11 global): Bentonville, AR, home of Wal-Mart. Surprisingly, Chicago, whose metro barely beats us for #2 on the domestic Fortune 500 HQs, is way, way down at #43 on the global list. There is also an alternate ranking by number of HQs rather than revenue, where we move up to a 4-way tie for 9th place globally, tied with Atlanta for 2nd place in the U.S. with six.

Obviously, because of the energy industry, Houston stacks up extremely well. What's impressive is that our rankings are so high even without counting many Global 500 companies with major operations here, but not their HQ: Exxon, BP, Shell, Chevron, HP, etc.

So my next thought after reviewing this list/map is what major Global 500 business cities are we not yet connected to by nonstop flights? You can check out Continental's route maps here. We have the Big 4 covered (Tokyo, Paris, London, NYC), although we're stuck with remote London Gatwick instead of close-in Heathrow because of arcane regulations. The top ones we're missing are Beijing, Munich, and Seoul (The Hague is drivable from Amsterdam). China routes are pretty tightly controlled, so I doubt we'll see that one until the U.S. negotiates open skies with China. Lufthansa does run a hub out of Munich in addition to Frankfurt, so that's a possibility. And Continental SkyTeam partner Korean Air hubs out of Seoul, so we're likely to see that one in the not-to-distant future. Finishing out the top 15 cities, Zurich, Madrid, and Brussels seem like longshots. I think Continental is pretty content running those connections through Newark. But overall, we're in pretty good shape - both a top global business city and pretty well connected to other top global business cities, including almost all the ones in North America.

That's long enough for today. Thursday night I'll post on another Fortune ranking win for Houston.

8 Comments:

At 9:33 AM, October 11, 2006, Anonymous Anonymous said...

Tory:

Los Angeles DID make the list--it's 78th.

 
At 10:31 AM, October 11, 2006, Blogger Tory Gattis said...

Oops. My mistake. Thanks for the heads up. I did a search on the page, but I must have accidentally done it on the shorter alternate list. It's fixed now.

 
At 3:24 PM, October 11, 2006, Blogger Tory Gattis said...

I received this question in email, which I thought I'd answer here:

"I was wondering if you had any idea why Exxon keeps their corporate HQ in the Dallas area? They have huge offices here and most big energy is based in Houston."

I don't *know* the answer, but I have several theories. I think when Exxon chose their HQ, Dallas was considered a more upscale city than Houston at the time: more controlled, better quality of life. I think Houston has come a long way since then and Dallas has had some setbacks. Also, at the time, I think AA/DFW was a much larger hub than CO/IAH, with better connections to the world. DFW still moves more people, but CO has grown strongly at IAH, and now goes to many more destinations (187 vs. 166, esp. international) with about the same number of daily flights (about 800).

But there's another reason that we might not be able to overcome. Boeing stated that one of the reasons they moved HQ from Seattle to Chicago is that they wanted the conglomerate HQ to be separate from any division HQ, so they could be more objective (Boeing commercial airplanes is still based in Seattle). I heard an anecdote that major Boeing commercial airplane customers would fly to Seattle and expect to meet the Boeing CEO rather than the head of the commercial airplanes division (they also have major military and space divisions). The HQ in Chicago is very small - a few hundred employees at most. Exxon is the same way in Irving: a very thin corporate HQ, with division HQs all over the world. They may simply not want the corporate HQ to be so close to the divisions based in Houston - could lead to personal relationships and favoritism when it comes to budget time. They also might have trouble getting execs to take jobs at divisions outside of Houston, because they want to maintain that visibility to HQ. Not a problem if HQ is in Dallas with no other major divisions. Dallas gets the prestige of the HQ, but we get the vast bulk of the employees, spending, and payroll.

If anybody knows other reasons, I'd love to hear 'em. Same for Chevron.

 
At 10:36 AM, October 12, 2006, Anonymous Anonymous said...

The reason stated in your last paragraph is exactly the reason that Exxon gave when they moved the HQ to Dallas. I remember it clearly because I thought it was pretty offensive. (They actually didn't state it as nicely as you just did, Tory. They said it more like... "because we dont' want to be near any of the operations."

 
At 10:38 AM, October 12, 2006, Anonymous Anonymous said...

Chevron is a little different in that it is headquartered where it has always been. Anybody think there's a chance a relocation is in the works with the new massive office space lease downtown?

 
At 2:21 PM, October 12, 2006, Blogger Tory Gattis said...

I've heard that they're always being pursued, but that the current CEO and his wife have deep ties in San Francisco. But the big real estate moves is a good point. Maybe more of the jobs will move down here, and, hopefully, eventually the HQ.

 
At 9:54 PM, October 12, 2006, Anonymous Anonymous said...

does anyone know approximately the year exxon moved hq to dallas?

 
At 6:56 AM, October 13, 2006, Blogger Tory Gattis said...

Looks like 1990 was the HQ move from NYC to Irving/Dallas:

http://www.washingtonpost.com/wp-dyn/content/
article/2005/08/04/AR2005080400994_pf.html

Came across this interesting blurb from Texas Monthly in 2000 when Exxon bought Mobil:

http://www.texasmonthly.com/
preview/2000-06-01/bizfeature

Jobs
Winner: Houston
Loser: Dallas

EVEN THOUGH EXXON MOVED ITS CORPOrate offices from New York to the Dallas suburbs ten years ago, Big D has really been a Mobil town. Before the merger, the company had a high-profile presence around the city—its red neon Pegasus icon atop the Magnolia Building at Commerce and Akard streets is a landmark—and employed about 2,300 people in Dallas, the second-largest concentration of workers outside its home base of Fairfax, Virginia.

All that's changing, though. Dallas may be able to brag that it has the headquarters of the world's largest oil company in its back yard, but Houston has gotten the real glory in the form of thousands of jobs. When the merger was first announced, Exxon and Mobil forecast that 9,000 jobs would be cut company-wide; in December the number was jacked up to 16,000. The company is still in the process of figuring out who's being cut and transferred and which cities will be affected, but it has been reported that about 2,000 Dallas-area jobs will be shifted to Houston, where Exxon had already employed 12,800. By contrast, only about 400 people work at ExxonMobil's corporate offices in Irving.

But Dallas is losing more than Mobil jobs; it's also continuing to lose its luster as an energy business center and an E&P (exploration and production) town where oil company logos once decorated the tops of skyscrapers and where a popular prime-time soap opera documenting the wheelings and dealings of ruthless oilman J. R. Ewing was set (somehow, a TV show called Houston, with Ewing Oil ensconced in a Post Oak highrise, doesn't have quite the same cachet). On the other hand, Houston, which had its economy battered by the oil industry in the 1980's bust, is getting its luster back. Bill Gilmer, an economist in the Houston branch of the Federal Reserve Bank of Dallas, says that oil directly and indirectly supports more than half of the city's 2 million jobs. So-called "upstream" jobs at company headquarters and production units, where key decisions are made, account for 56,000 jobs in Houston—nearly four times more than Dallas, Gilmer estimates. "Houston has recreated its role as the energy capital not only of Texas but of the world," says Bernard Weinstein, the director of the University of North Texas' Center for Economic Development and Research. "It's clear that Dallas has been the loser."

 

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