Monday, July 21, 2008

On a roll in rankings and the national media

I've heard of the, well, "herd mentality" in the national media, but it seems to be definitely the case with Houston lately. We've been getting all sorts of attention, and it seems to be snowballing. First, some recent rankings.

Forbes just ranked Houston the third-best city for young professionals (city profile), behind SF and Boston (Hat tip to HAIF). That puts some pretty high profile cities behind us: #4 NYC, #6 Chicago, #9 Austin, and #18 Dallas (poor Tampa came in last). They base it on high-powered business opportunities for 25-35 year-olds, and they look at success in attracting graduates from top universities. It helped us a lot that they include Rice in the universities they track along with Stanford, Princeton, Harvard, Duke and Northwestern. This year they stopped penalizing cities and states that attract their own grads, so we shot up from #16 to #3 with all those Rice grads, along with high salaries, a low cost of living, and plenty of singles. There's been a lot of fretting over the years that Houston can't attract grads from top schools, but this data seems to put that to rest.
"Anyone who follows the news knows that materials and energy companies have had a good year, and there's a high concentration of the nation's best geospace engineering firms, oil and gas operations companies, and oceanic exploration companies in Houston. Despite its size, the city ranked eighth for the number of graduates it was able to attract from the class of 1998."
Houston is also now Inc.'s #4 best big city for business, behind Raleigh-Durham, Austin, and Salt Lake City, and moving up 13 places from last year (rankings, story). We're the highest ranked of the mega-cities with over a million jobs. Hat tip to Joel.

The Texas Ascendancy Continues

While California is struggling, says Los Angeles-based architect David Hidalgo, Texas is thriving. Hidalgo just completed a large Latino-themed shopping center in Ft. Worth and sees more of his business coming from the Lone Star State. "That's where the opportunities are," he says. "Its costs, regulation, and infrastructure drive you to Texas."

Our rankings certainly bear out Hidalgo's assertion. In many ways Texas has become the new Florida, dominating the top of the list. Among the largest metro areas, a remarkable five of the top 12 best places to do business are from the Lone Star State, ranging from Austin (No. 2) and Houston (No. 4) to Ft. Worth (No. 9) and Dallas (No. 12). Among the small cities, Midland, now ranks No. 1, up 10 places from last year. Odessa and Longview, both big gainers, round out the Texas stronghold on the top portion of the list.

Texas' boom reflects solid growth in a variety of industries, from energy and agriculture to manufacturing and trade. "The big difference for Texas is we did not rely on the real estate bubble," suggests Bill Gilmer, a Houston-based economist for the Federal Reserve. "Our gains are based on jobs elsewhere and that has insulated us pretty well."

And our final ranking: Houston ranked #1 for manufacturing jobs. Hat tip to Brian.
"Texas is home to 24,273 manufacturers employing 1,225,585 workers, ranking second in the nation for number of manufacturing jobs and plants, just behind California. The state accounts for 62 percent of the Southwest's manufacturing jobs and 55 percent of the region's manufacturers.
Houston alone currently accounts for 222,072 industrial jobs -- comparable to the number of manufacturing jobs for the entire state of Oregon. Houston saw employment drop by 1.6 percent over the year, but still ranks first in the nation for number of manufacturing jobs, according to the report."
The rankings aren't the only national press we're getting.
"Houston's newfound energy prosperity comes on top of other economic advantages the nation's fourth-largest city has long possessed. Tax rates are low, as is the cost of living, and the city's political climate is aggressively pro-business—officials steadfastly resist imposing zoning laws, for example, because they could crimp development."
"To the extent that Houston is the energy capital of the world, [it] is not because we have a lot of hardhats, but because we have a lot of technology," said Barton A. Smith, director of the Institute for Regional Forecasting.
Thanks to Jessie and Nick for most of those links.

Finally, in case you missed it, the Chronicle's own Lisa Falkenberg says taking our boom times for granted is a dangerous attitude:

The fact is Houston's bubble can be popped. Each time we've managed to convince ourselves that the next big thing — tech, real estate, oil — was an invincible industry, we've been proved wrong.

"You know, there's probably a good reason for Houston to be looking over its shoulder just a little right now," says Bill Gilmer, senior economist and vice president at the Federal Reserve Bank of Dallas.

As tempting as it is to bask in the fairytale stories of Maserati sales, we should face the crude truth. One of the surest ways to bust a boom is to actually buy into it.

Or, as the local bumper stickers used to say,
"Please Lord, give us one more oil boom. I promise not to blow it next time."
Time to hold up our end of the bargain...

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At 8:01 AM, July 22, 2008, Anonymous Anonymous said...

Loved all the links and don't put much stock into Ms. Falkenberg, she's shown time and again that she has no idea what she is talking about. They should move her column to the comics section, because she is always so off.

At 2:24 PM, July 22, 2008, Anonymous Anonymous said...


I'll take your remarks to mean that you did not live in Houston in the mid-80s. Not only is Falkenberg absolutely correct, anyone that believes that good times never end...especially in the oil frankly, an idiot.

Some of us know what it is like to interview with 40 oil companies in one summer to get one job offer, an offer that was revoked by a hiring freeze only one week later. We know what it is like to sheepishly tell our friends that that brand new BS degree from Texas A&M prepared us for that job delivering reupholstered furniture. We have seen the subdivisions full of half-built homes.

While it is nice to see Houston receive the accolades, most of us realize that 1986 was not that long ago...MOST of us.

At 10:28 AM, July 23, 2008, Anonymous Anonymous said...

So what do we to do hedge against the bust?

At 10:43 AM, July 23, 2008, Blogger Tory Gattis said...

A few things. Make investments that will serve the city well even if oil busts: bayou parks, infrastructure (transportation, water/sewer, drainage, etc.), education system (higher and lower), etc.

Also work extra hard to diversify our energy base: make sure the alternative companies get based here, even if that requires some incentives. Work with the big energy companies: how can they partner locally to diversify our energy base beyond just oil and gas? (biofuels, solar, wind, nuclear, etc.) Maybe they want to create alternative energy units, but also need local university and community college programs to provide skilled workers.

Right now they're swimming in money, and don't have many attractive spending/investing options, so they return it to shareholders. What kind of public-private partnerships would encourage them to invest it here instead?

I'd love to hear other ideas in the comments.


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