What Houston needs now to grow its economy
As a managing partner at KPMG’s downtown Houston office, Tandra Jackson has a unique vantage point on the region’s economy and its biggest industries.
She leads market development for the Big Four consulting firm in Houston, San Antonio, Austin and cities in Louisiana. She recently shared her insights with Texas Inc. regarding the actions Houston must take if it wants to continue attracting business and talent in the future.
Q. Why should companies want a presence in Houston?
A. With our heavy focus on energy, one might think we are just an oil and gas town, but we have technology and innovation, including deep engineering capabilities. Our focus on technology and innovation combined with quality of life and the fact that we’re a global city, with access to a lot of global talent, puts us in a great spot to attract any business. And we’ve done a phenomenal job of attracting companies.
Houston is a great place from a quality of life perspective, and it’s also economically friendly and highly diverse. Our demographic attracts people and cultures from across the world. We have a tremendous growth story. We’re the fourth-largest city in the country. Our port of Houston is the second-largest port in the country in terms of tonnage. If you look at net earnings (income after taxes and housing), we’ve outpaced the national average over the past two decades or so.
Q. How does Houston stack up with other cities in terms of economic development?
A. It depends on how you measure economic development; there are various indicators of economic development, including job growth. KPMG conducted a pro bono study for the Center for Houston’s Future on this topic. For decades, our city has enjoyed advantaged economic growth as measured by per capita net earnings. We outpaced peer cities such as Chicago, Atlanta, and Dallas.
While net job growth continues to be favorable in spite of our oil and gas downturn, Houston’s growth trajectory has been disrupted. We view economic vitality not just as job growth, but high-multiplier job growth, which has slowed significantly. Jobs that we’re creating today do not generate as positive of an impact on the economy as jobs that we created five years ago. They’re not spurring the same amount of capital and investment in the city.
Q. What is Houston doing about that?
A. We’re working on being a great place in the future by improving our infrastructure, investing in technology and innovation, and attracting talent to help make sure Houston is a strong contender for companies considering coming here.
While there's been a lot of growth and development in Houston in recent years, we need to move quickly to improve our infrastructure. As part of the 100 Resilient Cities Network, which Houston joined last year, we’re developing a long-term vision for dealing with problems such as flooding and congestion. (100 Resilient Cities is a nonprofit organization that provides a platform for member cities to develop and and execute plans for building and maintaining infrastructure, attracting talent, and dealing with issues such climate change.)
Our efforts to drive technology and innovation, and therefore business growth, are interesting, too. For example, Houston Exponential is a kind of ecosystem for start-up and technology activity. Last year, we got our first venture fund that's meant to support tech start-up activity and provide funding to help attract talent. It's one part of our tech and innovation ecosystem. The TMCx (Texas Medical Center accelerator) program is another part of our tech and innovation ecosystem, specifically in the health care arena. TMCx provides resources and guidance for entrepreneurs in the medical tech space and connects them to investors. There are many different pieces to Houston's efforts to support innovation and attract tech talent to the area.
“Houston is a great place from a quality of life perspective, and it’s also economically friendly and highly diverse.” Tandra Jackson
Q. Not attracting Amazon to Houston is one of Houston’s biggest sore spots. What did that mean for our community and what are we doing about it?
A. Not being selected for Amazon HQ2 was definitely a disappointment. Not being shortlisted was a shock and even more disappointing for our city. It highlights some of the fundamentals we need to address more aggressively, including infrastructure and access to tech talent. We’re making progress with efforts such as the 100 Resilient Cities and our innovation ecosystem — e.g., Houston Exponential, TMCx and The Cannon (“a co-working space for Houston's entrepreneurs, small businesses, freelancers, and creatives”). While these efforts are great, honestly, they are slow moving. We need bolder moves to super-charge our efforts.
Q. How does Houston compete with Austin for technology when Austin has a better infrastructure for technology?
A. We need a stronger call to action on a couple of fronts. No 1., we need top business leaders in our city to unite and engage in solving our education problems. Our K-12 education within the city needs work and support from our business community. We have programs, like Early Matters, in place to help with our foundational education system. But we need to put more effort into establishing a comprehensive education plan, especially for intercity Houston. We really need to pull our resources together, today, so we have the right foundation for educating our future talent.
This is key for continuing on the trajectory we’ve enjoyed over the last two decades and drive the high-multiplier job growth which spurs other capital investments and creates other high value jobs.
No. 2., we need a greater sense of urgency to support our tech start-up ecosystem and to better attract and retain talent and companies. We need to focus on infrastructure and diversifying the economy. Our Houston leaders need to push our infrastructure agenda and accelerate our advances in innovation and technology. Investment in tech and innovation is key.
Finally, we need better branding. We need to do a better job of telling our story. We have a lot of tech talent in Houston supporting some of the world’s most innovative solutions. However, outside of Houston, people don’t know it. They continue to think of Houston as a “town,” not a lively and diverse city with tech savvy professionals that can match that of any city in the country. The more we share this story outside of the boundaries of Houston, the better off we’ll be in the future.
Q. How’s the Houston economy doing now?
A. It’s doing well. The oil and gas industry has been in a downturn in the last three years with oil prices being so volatile. Back in the 1980s, the impact of a downturn in the energy industry was devastating. Huge financial institutions were tied to the energy industry and the city was not nearly as diversified as it is now. Today, the impact of a downturn in the oil and gas industry is much less. Jobs lost in the energy industry over the last three or four years were more than made up for by gains in other industries. Houston is much better at weathering a downturn in the energy cycle. Certainly, Harvey helped some of that – with all the activity happening in construction.
Q. What kinds of alternative energy opportunities are there in Houston?
A. We’re seeing growth in the renewable energy sector within Houston, albeit slower than some anticipated. There’s more examples of wind, solar, and renewable transmission companies than several years ago, including investments by the major oil and gas companies in the industry. I’d expect (and hope) to see growth and investment accelerate in these areas over the next few years.
Q. What do you tell people trying to establish Houston as a place of business?
A. The main organization that you want to work through is the Greater Houston Partnership. They work to target organizations to come to Houston and they do a very good job of helping businesses get on board and connected. It’s like our Chamber of Commerce, though we don’t call it that.
Q. Any final words?
A. Houston is a great place to live, but we don’t always brand ourselves as well as we could. We should continue to strengthen the branding and awareness of Houston in terms of quality of life and business. Leaders of the business community should focus on telling our story more effectively than they have traditionally.
“Houston is a great place from a quality of life perspective, and it’s also economically friendly and highly diverse.” Tandra Jackson