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Tech, Innovation, Energy and More: Top 10 Houston.org Stories in '19

Published Jan 04, 2020 by A.J. Mistretta

From a growing population and major tech announcements to what the future holds for the region's core industries, 2019 brought a lot of big headlines to Houston. Here are the top 10 most popular stories on Houston.org in the last year. 

1. Houston Population Expected to Exceed 7.1 Million by 2020

In May, we reported that metro Houston added nearly 92,000 residents in 2018, boosting the region’s total population to just under 7.0 million. Based on the growth rate over the last decade, Houston’s population was expected to exceed 7.1 million by the end of 2019. New Census data on population growth will be released later this spring. read more

2. Houston Still Most Diverse City in the Nation, Report Finds 

A report released in April by the personal finance site WalletHub showed that Houston remains the most diverse city in the nation. WalletHub looked at diversity among the nation’s largest 501 municipalities across five categories: socioeconomic, cultural, economic, household, and religious. The report examines additional factors such as industry diversity, income, age, religious affiliation, education, language, worker class, and marital status. read more

3. Houston in 1969: A Look at the City Then and Now 

With Houston celebrating the 50th anniversary of the Apollo 11 moon landing over the summer, we took the opportunity to compare the Houston of 2019 to the city it was in 1969. With changes in population and core industries as well as major improvements in transportation and trade infrastructure, Houston has evolved into a world class city over the last five decades. read more

4. Why Tech Companies are Choosing Houston 

2019 brought a series of announcements in the tech and innovation space, from new offices of companies like Bill.com to a cluster of new accelerators and incubators that opened their doors. The Houston Business Journal reported in March that a growing cohort of tech companies were being lured to Texas and specifically Houston by factors such as cost of living, quality of life and the ability to attract talent. read more

Rendering of The Ion in Midtown

5. Former Sears to Become Innovation Hub Dubbed The Ion 

Early in 2019, Rice University revealed plans for The Ion, a 270,000-square-foot innovation hub inside a former Sears department store in Midtown. Construction on the project began in July with completion expected sometime in late 2020.  The Ion will bring together entrepreneurs, corporations and academic institutions to collaborate under one roof. In announcing the project, Rice said the goal of The Ion was to support businesses at all stages of the innovation lifecycle and provide resources for Houstonians seeking to participate in the innovation economy. read more

6. Houston No. 1 Among Millennials New Study Finds

A study released in March ranked Houston as the top city in the nation for millennials. The report from Colorado-based strategy firm The Langston Co. looked at how cities rank across dozens of different dimensions, including culture, climate, transportation, and salary potential. Houston came out on top for offering the best overall value, followed by Atlanta, Dallas, Minneapolis, and Austin, in that order. The study surveyed nearly 3,000 millennials across 22 major U.S. cities. read more

A rendering of the TMC3 design

7. Design Revealed for Much-Anticipated TMC3 Campus 

The Texas Medical Center and its partner institutions revealed a new design for the 37-acre TMC3 campus in May. The massive collaborative healthcare and research campus is expected to break ground in early 2020 just south of the existing TMC footprint. When completed in 2022, TMC3 will bring together Baylor College of Medicine, Texas A&M University Health Science Center, The University of Texas Health Science Center at Houston (UTHealth), The University of Texas MD Anderson Cancer Center and TMC itself within the translational research campus. read more

8. Six Takeaways from Dow Chemical’s Jim Fitterling 

A candid conversation with the CEO of Dow Chemical was the keynote of the Partnership’s inaugural State of Houston’s Petrochemical Industry event in February. Dow’s Jim Fitterling talked about a range of topics, from the impact of China’s growth and industry-diversification in the Middle East to talent attraction and the rise of robotics in the petrochem sector. read more

9. 2018 Record Year for Wind Energy; Texas Leads U.S. 

Houston ramped up discussions in 2019 around the region’s role in energy transition and the effect that transition will have on our core industries. The city hosted the nation’s largest conference on wind energy in May and as well as other industry events throughout the year that touched on renewables. In April, the American Wind Energy Association released a report with the Partnership showing Texas produced nearly a quarter of all U.S. wind energy in 2018, more than any other state. What’s more, wind production nationwide grew 8% in 2018 over the previous year and the industry supports more than 114,000 U.S. jobs. read more

10. Fintech Co. Bill.com Announces Expansion into Houston 

In February, the Palo-Alto, CA-based business software company Bill.com announced it would open a second office in Houston. The fintech company moved into a 25,000-square-foot space in Westchase in September. Bill.com worked with the Partnership in the months leading up to the announcement as the company considered Houston for its new office. The expansion was one in a series of openings and announcements throughout the year that served the bolster Houston’s identity as a growing digital tech hub. read more

See the Partnership's sector-by-sector Employment Forecast for the year ahead and get more perspective on 2019 in the Partnership's Economic Highlights report. 
 

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Houston Economy to Face Major Job Losses, Recession from Coronavirus and Oil Plunge

4/1/20
Houston is likely to see significant job losses and a prolonged drain on its economy from the COVID-19 coronavirus.   That was one of the major takeaways from a virtual presentation by Patrick Jankowski, Partnership Senior Vice President of Research, on March 31. Jankowski discussed his latest analysis of COVID-19, collapsing oil prices, the imminent U.S. recession, and their impact on Houston’s economy.  Jankowski stressed that because of the unprecedented and ongoing nature of the situation, predicting the economic impact is difficult at this time. “With the situation changing daily, we can’t really get a good read on what’s actually going on yet,” he said.  Jankowski referenced the next Bureau of Labor Statistics’ jobs report, which will be based on the number of employees on payroll during the second week of March and won’t include the waves of layoffs that happened during the third and fourth weeks of March. It won’t be until the April report is released in early May when we will see the real impact on the job market. Pandemic will determine recession’s length and severity  “We are coming off a period of 113 consecutive months of job growth, the longest expansion in US history and a phenomenal jobs report,” Jankowski said. “Last week we saw 3.3 million claims for unemployment benefits, and I believe that number will only rise as more people are laid off, the system becomes less overloaded and people figure out how to apply for benefits.”  Given the single week of job losses based on the initial claims for unemployment insurance in Texas and Houston’s share of Texas’ jobs, Jankowski estimates mid-March losses in the region will be around 37,945 jobs.  Jankowski noted that measures to combat the coronavirus are also combating the economy. He referenced the U.S. GDP forecasts from major financial institutions that estimate a decline in GDP for the first quarter of the year that continues through the rest of the year.   “From my perspective - yes, we are in a recession and the situation will worsen in Q2,” Jankowski said. “We hope to have some growth in Q3, but we will end of the year worse off than at the beginning.”  Add that to the drop in oil prices and the Texas Railroad Commission being asked to regulate crude oil production for this first time since the 1970s, Jankowski believes the crude collapse will only add to Houston’s misery.  Small businesses and other industries hurt the worst  Jankowski mentioned the Partnership’s survey of its small business members and found that 29% were unable to deliver goods or services, 59% are operating below half capacity and the most concerning, that 41% can survive only 1 to 4 weeks.  He also highlighted industry sectors that are most at risk during this initial period and the 777,000 jobs tied to those sectors. The sectors include those impacted by social distancing (like retail), those whose services can’t be delivered remotely (such as plumbers and other home services), those that aren’t considered essential (such as the arts), and most small businesses (that tend to operate on thin margins).   “If this virus continues after May, every job is at risk, every sector is at risk,” Jankowski stressed.  “And even if you are working from home and able to provide services to some degree, you may be affected. We will see additional layoffs to what we’ve already experienced.”  Houston predicted to lose at least 150,000 jobs  There are two ways to predict how Houston will fare – looking at models based on assumption or based on history.   The Institute for Regional Forecasting shows 18 different scenarios of how the virus and oil prices will play out, with the most likely scenario from their prediction showing Houston down by 44,000 jobs. On the other hand, The Perryman Group’s model is forecasting 256,000 jobs lost.   “These are two very different forecasts and you’re really seeing that uncertainty play out in these models,” Jankowski said.   By referencing the history of recessions Houston has experienced, Jankowski estimates Houston’s jobs loss will hover between 150,000 jobs and 350,000 jobs.   “Given how Houston fairs when oil is faring badly and then when the US economy not doing well, we are likely to look like between 2008-09 recession and oil bust we had in the 1980s,” Jankowski said.   With a job loss of 13.2% from 1982, that amounts to about 417,450 jobs today. Using the Great Recession benchmark of 4.5%, that loss is closer to 142,325 jobs.  Collapsing oil prices on par with 1982 energy bust  With the tensions between Saudi Arabia and Russia spilling onto the world stage and affecting the price of crude, Houston has already felt the effects.   On March 30 of this year, the price of oil closed at $21.07 a barrel. During that same month in 1982, the price was $10.25 but adjusted for inflation, it closed at $24.37 a barrel.   “We can expect crude to slowly climb back into the low $30s by mid-summer without a Russia-Saudi deal,” Jankowski said. “We’ll see any jobs we regained from the 2014 fracking bust disappear and a leaner, smaller industry in the next two years with more consolidations and bankruptcies taking place.”  Houston in one word – resilient  One of the biggest determining factors in an economic rebound will be the level of fear people still have around the virus, Jankowski said. Even on the downward slope people will practice at least a degree of social distancing. He reiterated the damaging shock to consumer confidence the virus has caused.   “The economy really won’t be able to recover until people feel comfortable spending again. However, if there’s one word I would use to describe Houston, it would be resilient,” Jankowski said. “We've been through five downturns since the 1980s and yet the economy is larger now and more diverse than ever before.” 
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Economic Development

Countering COVID-19 Disruptions with Supply Chain Resiliency

3/28/20
The COVID-19 pandemic continues to disrupt many aspects of Houston's business community, including jobs and how businesses engage their customers. The crisis is also creating problems for the global supply chain. But experts say there are actions companies can take now to strengthen that chain and make it even more resilient in the long term.  Margaret Kidd is Program Director for Supply Chain & Logistics Technology at the University of Houston's College of Technology. She offered insight for businesses below.  What does a resilient supply chain look like?   A resilient supply chain is one that: conducts a risk management review at regular intervals has a business continuity/contingency plan has tested that plan at regular intervals A true resilient supply chain has factored in the cost of JIT (just-in-time) versus flexibility and has high visibility. Examples of flexibility include geographic location of first and second tier suppliers, as well as location of manufacturing facilities and distribution centers, along with modes of transportation for delivery.   While vetting of suppliers for quality, performance, and timely readiness are important, establishing purchasing procedures that provide proper incentives to vendors are also relevant to resiliency. Often, these are made with strict terms and conditions in the purchase order or manufacturing/service agreements. Ultimately, seeking partnerships with suppliers is the key to success. In the global disruption of the supply chain and various declarations of force majeure, relationships for the long term can help mitigate risk when literally the entire global community faces similar challenges.  What are the immediate actions business leaders must take now with regards to supply chain management to stay in operation?     If we consider Houston industrial companies, all should have been following the news from China as of early-January, Europe as of mid-February and the U.S. as of late-February/early-March. These companies should have already implemented a business continuity/continuation plan as a result of following the data points and established a central command unit. In many cases in the current environment, it is both availability of personnel and mode of transportation or routing that must be reconsidered, along with using second-tier/or other suppliers. If alternative geographic locations for manufacturing exist, those should have been activated before March. When there is no internal expertise on the logistics side, a best practice is to consider a 3PL/4PL provider.   Business leaders must have a firm grasp of delivery deadlines so that supplies reach the front line and get to market. To achieve these goals, companies need to thoroughly evaluate the suitable modes of transportation. On some trade lanes, reliable liner service will be impacted with "blank sailings" or insufficient containers given imbalance. On other trade lanes, given delays in capacity of air cargo, it actually might make more sense to utilize a quick liner service. The granularity of schedule, price, and reliability are key factors to analyze in supply chain management.   What are the greatest challenges in the short-term? Long-term?    One of the greatest challenges in the near term relate to sole source suppliers and disrupted maritime transport coming from Asia. In the long term, organizations engaged in manufacturing must diversify their facilities geographically and have multiple suppliers in various regions. Additionally, buffer stock during periods of known natural disasters such as hurricane season and Q4 retail/holiday season should be considered.   Reliable partners in logistics vendors are established on a long term basis with volume commitments. It is truly a challenge for global container carriers to serve all markets everywhere. Relationships with niche regional players are critical for timely delivery.  What’s the timeline for decisions they must make within the next 1-2 weeks? A month? 6 months? A year?    Regrettably, managing supply chain disruptions can impact both market share and stock price for many publicly traded companies. A high performing supply chain will use disruption as a competitive advantage. If organization leaders can alter the product or shape demand, then production can continue. A stellar supply chain leader will analyze risk through multiple lenses and most saliently through global connectivity. Disaster recovery will probably be occurring by mid-May/early-June for Houston (if we use China as our illustration). The advantage our region has for probably a quicker recovery relates to our decades-old urban planning dilemma - lack of population density and public transport, along with sprawl. We do not have the same compounding risk factors of China, Italy or, New York City. For organizations that did not have a fine-tuned business continuity plan, the next six months will be the time to get one in place and test and optimize their supply chain through JIT and flexibility.  Which resources should they leverage most to make those sound decisions?     The resources that should be leveraged are the subject matter experts within the organization. This translates into companies leveraging the human capital in both risk management and business continuity capacity, as well as bringing in consultants/3PL/4PL service advisors. In Houston, industrial companies regularly employ companies such as Agility, Bollore, Ceva, Crane Worldwide, DHL, Kuehne & Nagel, and UTC Overseas, respectively. The Partnership highlighted 12 key indicators on COVID-19's impact on Houston.  Visit the Partnership's COVID-19 Resource page for updates, guidance for employers and more information. And sign up for daily email alerts from the Partnership as the situation develops. 
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