What Hous­ton needs now to grow its econ­omy

Houston Chronicle - - TEXAS INC - By Ilene Bassler

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

Steve Gon­za­les / Staff pho­tog­ra­pher

El­iz­a­beth Con­ley / Staff pho­tog­ra­pher Hous­ton is home to Big Oil and is ready to branch out to high tech­nol­ogy.

Steve Gon­za­les / Staff pho­tog­ra­pher

KPMG man­ag­ing part­ner Tan­dra Jack­son says “there are many dif­fer­ent pieces to Hous­ton’s ef­forts to sup­port in­no­va­tion and at­tract tech tal­ent to the area.”

Melissa Phillip / Staff pho­tog­ra­pher

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