The Fast Track
To No. 1
A rapidly expanding economy propels Houston
to the top spot among the nation’s largest cities.
he fastest-growing economy in North America is producing more corporate real estate projects than any other city in the U.S.
Greater Houston, which in 2011 secured 195 corporate facility expansion projects, is increasing the size of its metropolitan economy at a rate that leads every other metro area on the continent, according to a new study from the Brookings Institution.
As a result, it’s no surprise that Houston won Site Selection Magazine’s ranking as the No. 1 Large Metro in the U.S. for 2011. America’s fourth-largest city easily beat out second-place Chicago, which garnered 167 facility deals last year.
Houston’s top ranking confirms what many company executives already knew: The largest city in Texas is a great location for business.
“In terms of the overall business climate, this is definitely a strong market,” says Deborah Miner, chief financial officer for FlexSteel Pipeline Technologies Inc., which is nearing completion on a US$94.8-million manufacturing plant in the Houston suburb of Baytown. The 250,000-sq.-ft. (23,225-sq.-m.) facility on a 30-acre (12-hectare) site will create 130 jobs.
“Everyone at the Greater Houston Partnership and the state of Texas was very helpful,” Miner says. “We received tax abatements on the property and the equipment, as well as assistance in job training.”
Although the company is based in Houston, Miner says FlexSteel scoured the Gulf Coast and the Midwest for the best location for the new factory. “Our existing manufacturing facility is in Panama City, Fla.,” she says. “We looked at locations in Louisiana, Texas and areas in the Midwest — areas that have good rail access and good barge transportation access.”
FlexSteel identified other potential sites within a 100-mile (161-km.) radius of Houston, notes Miner, but eventually selected Baytown for a number of reasons.
“Our most important site criteria were logistics considerations,” she says. “We weighed the distance from the raw material suppliers versus the distance to the customers. We needed rail access and port access, so being close to the Port of Houston and other Gulf Coast ports was a key factor.”
Being able to find and hire qualified labor, and qualifying for state and local incentives, were pivotal factors as well, the CFO adds. “Energy consumption is also a major consideration,” she notes, referring to the cost of electricity and other energy costs associated with operating the new plant.
Access to Latin American markets was a big factor, notes Miner. “We are exporting our product to Latin America, and that fact tended to tilt our search more toward a Southern location,” she adds. “We did look at some locations along the Mississippi River in the Midwest, but a Gulf Coast location with great port access became the driver.”
Most of FlexSteel’s suppliers tend to cluster along the Gulf Coast because they also supply the many refineries in the region, says Miner. “We want people to know that this is expansion number one,” she says. “We will expand by adding other facilities once this plant is up and running. We will conduct more site selection processes as we move forward and build additional facilities.”
George Frioux, vice president of business development for Merit Medical, says that logistics and a pro-business climate helped sway his own company toward selecting a Greater Houston location for a new medical device manufacturing plant.
The facility in the south Houston suburb of Pearland is a 117,000-sq.-ft. (10,869-sq.-m.) concrete tilt-up building that will be a production facility for the making of catheters. The $19.5-million capital investment creates 160 jobs.
“The scope of our site search was south of Houston to allow our employees at our existing plant in Angleton to commute to the new site,” says Frioux. “We looked at eight to 10 sites before choosing Pearland. The city has been extremely generous with their time and very helpful in connecting us with other businesses in the area. They have a very good network in Pearland and a very good economic development team.”
Frioux especially likes the work force in the region. “We had a hurricane there three years ago, and a number of our employees left their homes to come over to our plant in Angleton and help us rebuild our plant within 30 days,” he says. “They are highly qualified employees. We hire a lot of engineers. It is a tremendous work force.”
Although Merit Medical is headquartered in the Salt Lake City suburb of South Jordan, Utah, Frioux says the company has found an exceptional labor pool in Greater Houston.
“This new facility will have a clean room and it will increase our manufacturing efficiencies in making extrusion products,” he says. “It gives us a better constructed building in an upscale business park with excellent transportation access right on the I-288 Corridor. Trucks will be able to get in and out of our new site quickly.”
With 2,500 employees worldwide, Merit will do close to $400 million in global sales this year, says Frioux. Established in 1987, the company operates plants in China, France, Virginia and the Netherlands.
“We have been in the Houston area since an acquisition about 12 years ago,” he adds. “The city, the county and everyone in the region have made us feel very welcome here.”
Jeff Moseley, president and CEO of the Greater Houston Partnership, says that spirit of South Texas hospitality is one thing that sets his area apart.
“We continue to be a very business-friendly community,” Moseley says. “We are very competitive in affordability. That has to do with the fact that we don’t have planning and zoning. We have a very low regulatory climate and a fabulous work force. Going to work and getting the job done are very important here.”
In fact, more people are going to work in Houston today than ever before. With a work force of 3 million people, Houston has gained more jobs than any other U.S. city since the recession. From 2006 to 2011, Houston added 109,700 private-sector jobs.
Houston is the first major metro area in the country to fully regain all of the jobs that it had lost during the recession. The Global MetroMonitor rankings released by Brookings in January showed that Houston’s economic growth ranked 19th in the world — the best rating on the continent. The ranking includes such factors as population, employment and per-capita income.
There are no signs that this growth rate will slow down anytime soon. “Over the next 30 years, Texas will grow from 25 million people to 50 million people,” says Moseley. “We will become the most populous state in the nation. Houston will gain the equivalent of the population of Los Angeles during that time. We will gain more than 3 million people. About 80 percent of the population growth in Texas will occur in the triangle of Houston to Dallas-Fort Worth to San Antonio.”
Currently, the city of Houston has a population of 2.1 million, the fourth largest in the country, while the metro area has a population of 6 million.
Moseley notes that “everything we do today is just putting the foundation in place for this vast global community. There is no ethnic majority in Greater Houston right now. We really do look a lot like the future of America already.”
To illustrate his point, Moseley notes that “in one of our districts, the election ballot is printed in four languages — English, Spanish, Vietnamese and Mandarin.”
Project activity abounds throughout the metro area. Chicago Bridge and Iron Works is planning a $25-million upgrade at its existing plant in Pasadena. The project moves 35 highly skilled jobs from New Jersey to Houston.
Neutex Lighting is relocating its LED lighting headquarters to Houston, bringing $2.5 million in capital investment and creating 50 jobs. Schlumberger Ltd., the world’s largest oilfields services company, is expanding by $9.6 million and adding 175 jobs.
“We are projecting 85,000 new jobs in our region this year,” Moseley says. “When you look at the performance of our metro economy, it puts us up with some of the top performers in the world like Beijing, Shanghai and Rio.”
Home of the Texas Medical Center and M.D. Anderson, Houston ranks as a world leader in the biomedical field.
“More than 95,000 trained medical professionals go to work every day in downtown Houston,” Moseley adds. “You couldn’t build that today if you tried. The R&D and intellectual property that come out of that cluster put Houston at the forefront of the cure for cancer.”
With the widened Panama Canal set to open in the next 36 months, Moseley says that the Port of Houston is poised to grow exponentially in cargo volume. “The next step for us is to add the rail intermodal infrastructure,” he says. “We really are the gateway to the Americas, and our ties to Latin America will only get bigger.”