Saturday, June 21, 2008

Newsweek: Houston, we have no problems

OK, that title might be a bit of an exaggeration. But the wave of plaudits just keeps coming as the media world discovers Houston, from Kiplinger to Business Week to MSNBC and now this from Newsweek (thanks to Jessie for the heads up - and to give credit where credit is due, I think the good coverage started with Joel Kotkin's various articles extolling Houston many years ago).

The whole thing is great, and I highly recommend reading it, but if I must pick excerpts...
THE MONEY CULTURE - Daniel Gross, Newsweek
Houston, We Have No Problems

Houston has become a sort of Silicon Valley for the global energy industry. Urban cowboy? Think suburban geek.

To find a hot spot where soaring oil and commodity prices, and the booming economies of the developing world, are keeping cash registers ringing and construction crews fully employed, you don't have to trek to Dubai or Moscow. You need travel only as far as Houston. In May, the unemployment rate in the nation's sixth largest metropolitan area was a measly 3.8 percent. In the past year, Houston-based companies, which include 26 Fortune 500 firms, added 71,000 jobs to their payrolls. The local United Way closed out its fiscal year with a record $76.1 million in donations. At the Galleria, a high-end shopping oasis, Bridgette Bottone, manager of the De Beers store, notes, "We're still selling the big guys": three-carat-plus diamonds that retail for more than $50,000. Pessimists are as rare as Birkenstock sandals, or OBAMA '08 stickers in ExxonMobil's parking garage.
"We're only 50 percent dependent on energy." (The city's biggest employer: the Texas Medical Center, the nonprofit megaplex that runs two medical schools and 14 hospitals.) At Houston's port, the second busiest in America, cranes are loading ships with industrial equipment. Exports rose 25 percent in 2007, to $72 billion.

Exports are rising because Houston has become a sort of Silicon Valley for the global energy industry. "There's hardly any oil and gas production in a 40-mile radius of Houston," says Mayor Bill White, a former energy executive, as he held court in the city's charming art deco city hall. (Think of a much smaller Rockefeller Center, but without the tourists.) "It's the knowledge that has concentrated here that is driving things." In 1981, the oil and gas industry was a domestic, blue-collar one. Today it's an international, white-collar one. Oil companies, wind-energy start-ups, consulting geologists and software developers compose what John Hofmeister, who is retiring in July as president of Shell Oil Co., calls "this mass aggregation of people who know what they're doing in the energy world." Urban cowboy? Think suburban geek. Houston has 70,000 engineers and architects (a concentration 60 percent higher than is typical for the United States) (city branding option?). The oil boom and weak dollar are boosting demand for their services, and engineering and construction firms like KBR and Fluor are applying their expertise to power plants and sewage facilities around the world.
The residential market, which avoided a bubbly run-up—thanks to endless supplies of land and a lack of zoning laws—has remained buoyant. Development is rampant, from $200,000 single-family homes in suburban planned communities to $1.4 million town houses (for real?!) that have replaced student apartment buildings near Rice University.
Such projections of endless growth are characteristic of bubbles that are about to pop. But they're also characteristic of an area that finds itself uniquely situated to capitalize on the longstanding megatrends that are transforming the global economy. For now, Houston does not have a problem.
And, as I've said before, rather than just basking in the good times, we should be using them to invest like mad in infrastructure and amenities that will help us when they end.

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At 10:23 AM, June 22, 2008, Blogger CarmineSantucci said...

Great article! With Opportunity Houston leading the way, led by Drayton McClane, can Houston continue to attract new industries and corporations to the area? I say yes, evidenced by the Danish company opening a wind power company here. Profits from these energy companies should be directed into bringing top alternative energy talent and venture capital into alternative energy. Houston can become an incubator for these type of companies.

At 6:13 PM, June 24, 2008, Anonymous Anonymous said...

I'm very proud of Houston for being a great collision of cultures and a hub for the creative arts... that's what makes it great. I'm not so proud for it also being the hub of a LOT of corrupt corporations, greedy land developers unconcerned with preserving green space or history and the fact that it's one of the most polluted cities in the country. The American Lung Association's “State of the Air: 2008" gave Houston a failing grade for high ozone levels... not good.

And of course Houston isn't suffering the job losses or financial hardships that most other cities are facing. It's because oil companies and the war profiteers call Houston home.

Good things are happening in Houston but most of the items cited in your entry make me sad for the general population of our great city. Yes - Houston has problems... LOTS of problems (does anyone remember Enron?).

I think it's premature to give ourselves pats on the back with all of the serious challenges we face.


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