Private companies
While Houston’s top public companies hail predominantly from the energy industry, a look at the top private companies paints a fuller picture of the city’s economic activity.
Houston’s top private companies include retail, distribution, construction and hospitality. Two of Houston’s largest private companies, the retail electricity provider Calpine and Toyota distributor Gulf States Toyota, broke $9 billion in revenue in 2018.
“It’s interesting, if you look at this list — there aren’t many that are directly tied to industry,” said Patrick Jankowski, an economist with the business group Greater Houston Partnership. “These are related to consumers and, to some
extent, construction.”
Out of the 50 companies that appeared on the Chronicle 100’s top private company list in both 2017 and 2018, 40 saw revenues increase by an average of 20 percent, with Amerisource Business Capital, a direct lender to small and lowermiddle market businesses, growing its revenue by 57 percent.
Jankowski said distribution companies fare well in Houston because of the city’s confluence of transportation options: two airports, highways and train stations all within easy distance of a major port.
“The cheapest way to transport anything is by water,” he said. “So that’s one reason we’re so much in the logistics business, is because of the port.” Transportation companies may soon become even busier as pipelines under construction begin transporting crude.
Twenty-four of this year’s top 56 companies were related to the construction industry, which Jankowski said had a banner year due to a strong industrial sector and demand for repair work from Hurricane Harvey, among other factors.
“The economy is better now, so our business is better,” said Kelly Hall, chief executive at Harvey Builders, where revenue increased 15 percent between 2017 and 2018. At Harvey Builders, construction has included a YMCA building that had been devastated by Hurricane Harvey and medical laboratory buildings meeting demand from Houston’s burgeoning health care industry, which the Greater Houston Partnership predicts will add 9,000 jobs between December 2018 and December 2019. The construction industry itself may add an additional 8,900 jobs.
Houston’s job gains, in turn, are driving demand for more homes.
“We’ve seen a pickup in volume, which is exciting,” said Gary Tesch, president of McGuyer Homebuilders, which owns Coventry, Plantation and Wilshire Homes. Tesch said the company is on track to build 10 percent more units this year than last and has seen an increase in demand for homes with in-law suites designed to house multiple generations.
Other constructionadjacent companies, such as the construction equipment dealer Mustang Cat, highway builder William Brothers Construction and general contractor W. S. Bellows Construction, have also grown rapidly over the last year.
But at the same time as job growth as fueled demand for construction, the industry has had to contend with the rising cost of land, materials and labor. Tesch said that to be successful, businesses need to focus on quality and affordability. McGuyer Homebuilders takes pride in the fact that 98 percent of its customers say they would recommend the brand to friends and family, and it has focused on reducing costs by making efficient use of materials.
This year, Jankowski predicts the construction industry will continue to grow, although not at the pace of 2018.
“Last year was one of the best few years on the record,” he said.