Houston tops Fortune's fastest-growing companies list
Continuing from our last post on Houston's high rankings on the Fortune Global 500, we also recently scored well on another Fortune ranking of the fastest-growing companies. More evidence of the energy boom and its impact on local companies and Houston.I was going to write up my own analysis, but the Greater Houston Partnership press release sums it up pretty nicely:
Of the 100 companies ranked,
“The
The 12 Houston-area companies on the list, in order of ranking, include: Vaalco Energy (1); Edge Petroleum (8); Frontier Oil (11); Southwestern Energy (35); Swift Energy (40); Grant Prideco (48); Helix Energy Solutions Group (50); EOG Resources (53); ConocoPhillips (75); National Oilwell Varco (93); Quanex (94) and Oil States International (95).
Rankings were based on earnings-per-share growth; revenue growth; and total return.
Editor’s note: A complete listing of company rankings can be viewed in the September 18, 2006, edition of Fortune magazine.
posted by Tory Gattis @ 8:45 PM
9 Comments:
All Energy companies... how diverse.
Hope we dont go the way of Detroit.
I have to say, given the globalization trends, I think the only industry cluster I'd want to have in my city more than energy would be finance, but NYC pretty much has a lock on that one.
"Hope we dont go the way of Detroit."
Detroit is not in the shape it is in due to a decline in the auto industry. Far from it. Detroit's problems stem from the decline of US auto companies. Big difference.
Does anyone have any reasons why places like Detroit and much of the midwest have done so badly? I understand the decline of heavy manufacturing, but why did some cities have such a huge problem making the transition while others didn't? I also don't mean Detroit within the city limits, so need to bring up white flight and other demographics. Did anyone on this blog live in these places during their decline?
Brian-
There is nothing to draw people to these Midwest cities and states except jobs. They simply don’t have the weather, natural beauty, or “sex appeal” of other cities. Also, many of these cities started as manufacturing areas because they were close to the Great Lakes, which was a major waterway before railroads made it easier to ship overland directly to the major seaports. The railroads have improved efficiency and reduced costs, so now that the historic industries in those areas are disappearing, there is not the impetuous to base new, unrelated manufacturing in the area
Brian,
Irwin makes some good points, although I think there is some nice natural beauty up there (think upper Michigan, Wisconsin, Minnesota). The history is definitely agricultural water transportation (via the Erie canal) to the east coast, then railroads, then manufacturing. Manufacturing moving overseas is one obvious factor in the decline. Strong unionization is another - most companies now prefer the South to avoid that and be in a "right-to-work state".
But I think the biggest reason is a quirk of technological timing. Everybody admits the winters are brutal up there, but before widespread air conditioning from the 1950s on, the South was not much of an option - the summers were just too hard. You had to endure the northern winters so you could have a reasonable summer without A/C. This applies to both residential and large factories. Once A/C came along - and eventually got very affordable to both install and operate - most of the population has decided they'll take a hot summer over a cold, dreary, snow-bound winter. Thus the rapid rise of the Sunbelt.
In theory, what they should be doing to compensate and compete with the South and elsewhere is try to be even more business and tax friendly to lure jobs, but I think state/local govt inertia and control by Big Labor prevent that from happening. See the parable of the boiled frog: when it's a slow decline, they just let it happen instead of fighting back.
I think two things could turn them around: 1) get as biz-friendly as Texas, and 2) special federal legal immigration allowances if those immigrants locate in those states. There are millions of people around the world that would be perfectly happy to live in Michigan et.al., and they would bring a lot of entrepreneurial energy.
I agree with Tory on his points.
However, as for Irwin's point about the Midwest's lacking natural beauty, I strongly disagree. Check out photos of Cincinnati, Chicago, or St. Louis on flickr. Even places like Pittsburgh and Cleveland have natural beauty - their industrial pasts aside - Pittsburgh is right on 3 rivers, and Cleveland is right on the lake. The Midwest can be hilly, has lakes and rivers, and is very green. Kansas may be another matter... but I think the Midwest can look very similar to the Texas Hill Country - at least the parts I am used to!
I think the reasons people moved to the southwest and Texas are:
1) Air conditioning
2) Friendly business climate
3) Oil (in the case of Texas)
4) Immigration - a lot of which is illegal - the southwest naturally gets a larger share of this, at least up to this point
As for "going the way of Detroit", let's be clear that Detroit hasn't gone anywhere and isn't going anywhere anytime soon. It's a major world city and will be for the rest of our lifetimes.
To answer the questions of "why has the Midwest done so badly", I really don't think it has. I think the South and West have grown exceptionally because of some advantages, and new technology like A/C. That has coupled with the inner-city decay of some Midwestern cities and the decline or outsourcing of some of their stronger industries. But Chicago and Detroit are far from ghost towns. In fact they are arguably (in Chicago's case, most certainly) more important, larger urban centers than anyplace in the Southwest save maybe LA.
Places like St. Louis and Cleveland, as well as other cities in the midwest, have even begun revitalizing their inner cities with new sports venues, downtown condos, lofts, museums, performing arts centers, new light-rail service, etc. - just takes a lot of effort, urban planning, and community involvement to make that sort of thing happen and turn things around The Southwest hasn't had to deal with this because it is so young. The most similar period for Texas was the early 1980s bust.
But in conclusion I guess I agree with anon : Houston still seems very reliant on its energy industry. If we are all using wind / solar in 30 years, I have seen very little indication to see why Houston would be any more relevant to the energy industry at that point, than Detroit is now to the auto industry.
> Houston still seems very reliant on its energy industry. If we are all using wind / solar in 30 years, I have seen very little indication to see why Houston would be any more relevant to the energy industry at that point, than Detroit is now to the auto industry.
You have to hope they will adapt to new technology to keep up their multi-billion dollar stock valuations. They will certainly have the ability to buy and grow any newcomers, just as Google recently did with YouTube. As long as energy requires big infrastructure (and that includes wind), I think they will survive. If we get some kind of miracle solar tech that works at the household level and can peel hydrogen off of water for cars and energy storage, then they're in trouble. But even that's a multi-decade adjustment to go global and replace car fleets.
I would agree with Tory that the general trend of manufacturing moving overseas has hurt the Midwest, but this has hurt manufacturing across the country. The reason the Midwest is in worse shape is because of the weather, the ease of relocating manufacturing in other areas, and the lack of a “hip” scene to attract people. And yes, there may be some areas of natural beauty, but the area has no unique areas of beauty that would attract residents. Almost no one would move to Michigan or Ohio for the natural surroundings or because of outdoor activities. Compare this to places like Denver, Salt Lake City, Portland, Seattle, or Burlington.
Also, I would agree that the strength of the unions and high government regulations when compared to the South hurts the Midwest. But, overtime, regulations and union power will increase in the South as manufacturing becomes a larger portion of the economy.
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