Global trade gains heft

When energy sector stalled out, exports came to the rescue

International investments and trade, primarily exports, buoyed the Houston economy during recent downturns in the energy sector, a new report from the Greater Houston Partnership shows.

“Trade is becoming as important as oil and gas in Houston,” partnership senior vice president of research Patrick Jankowski said of the findings released on Friday.

The 2018 Global Houston report outlines the ways in which Houston has increasingly tied itself to the global economy, while also addressing impending threats to the future of trade agreements such as NAFTA.

“Ours is the most diverse city in the nation, a place where one in four residents is foreign born and dozens of languages are spoken,” partnership president and CEO Bob Harvey said. “But there are risks that come with being such a high-profile international hub, and this report gives us some insight into what to look out for in Houston’s near future.”

The report noted among its key findings that the rate of growth in exports from Houston is nearly three times the growth rate of the region’s GDP.

Houston’s exports last year were valued at $109 billion, up 19 percent from the year prior. Met-

ric tons of exports out of the Houston/Galveston Customs District also grew by 19 percent.

Jankowski noted that Houston shifted from an import-oriented economy five years ago when imports of crude started to decline and the broader global economy grew.

Crude imports are now less than half of what they were 10 years ago, while crude exports have grown significantly in the two years since Congress lifted a 40-year ban on them.

Other leading exports include chemicals, plastics, and industrial and electrical equipment.

As the local export economy continues to grow, jobs grow with it.

One in nine Houston jobs are now tied to exports, and more than 5,000 Houston companies are engaged in global trade.

Should Houston lose just 10 percent of its exports, Jankowski said, 33,000 jobs would either go away or experience salary cuts.

“The partnership is not forecasting an impending U.S. or global downturn,” the report reads, “but since Houston’s fortunes are closely tied to events overseas, it’s prudent to consider global events that could derail Houston’s growth.”

Specifically, the report identified the possibility of the U.S. pulling out of the North American Free Trade Agreement, or NAFTA, and the possibility of Chinese import tariffs as two high risks for the Houston economy.

Last year, Mexican trade with Houston was valued at $20 billion, and trade with China was valued at $18.8 billion.

“Houston’s economy is still struggling to recover from the oil price crash,” the report said. “At the very least, a global trade war would prolong Houston’s recovery.”

As federal and foreign governments continue to deliberate over global trade deals, Houston officials have played a role in fostering international relations.

Houston participated in 155 trade missions last year, Jankowski said. That included city officials traveling overseas, receiving visiting delegates and holding trade briefings.

A growing number of international firms have put down roots in Houston, which has branded itself a gateway between U.S. and Latin American markets.

Some 300 foreign-owned firms have opened or expanded operations in the Houston region since 2010, Jankowski said, and more than 43,000 people moved here from overseas last year.

Shifting immigration policies and rhetoric were are also cited as concerns. Forty percent of the growth in the local workforce over the last 10 years has been through migration, Jankowski said, and anything that could dissuade workers from coming to Houston, or convince workers here to leave, would have longterm effects.

“The whole negative dialogue of immigration is sending a signal that we may not be as welcoming anymore,” Jankowski said.

Whether it’s immigration as it pertains to the local workforce, or agreements that affect the cost of imports and exports, he said Houston’s ties to the global economy cannot be underestimated — especially with some experts forecasting crude oil demand could peak within 10 to 30 years.

“Everybody should be as versed in international trade as they are in oil and gas,” Jankowski said.