Houston’s export business is “absolutely booming” and will be getting another boom — this time through innovation — as the chemical and liquid natural gas (LNG) plants expand and Mexico’s energy industry opens itself up to foreign investment.
Mayor Annise Parker, speaking at the HSBC Made for Trade Houston — Exporting American Innovation conference, said Houston was here because of trade, because it was a place where the railroads met the sea.
Who else helps make trade happen in Houston? Check out the day in photos here to see other notable Houston business leaders, policymakers, and stakeholders from the area at HSBC Made For Trade Houston.
“The closest, safest place for those railroads to come in, really for the ships to come into Galveston, and after we built the ship channel, to come into Houston,” she said. “Today, we have not just the rail and the sea connection, but we have air connections as well.”
Expansion of the chemical plants and LNG terminal upgrades adds another dimension to Houston’s claim of being an international city.
Parker noted that while Forbes called Houston “the next great global city,” she feels it is already there, pointing out that Houston is officially the most diverse city in the country, according to the U.S. Census. Additionally, she referenced the fact that Houston has 90 foreign consulates for whom “their job is to grow trade and commerce for their countries.”
Houston has maintained its international edge for more than a generation, Parker said, and it will continue because of how the city’s residents think.
“Houston is a town that dreams bigger than its own border and plans for the world that is around the corner”
“Houston is a town that dreams bigger than its own border and plans for the world that is around the corner,” she said. “Houston is an energy town, a medical town and a space town. We understand the connection and that we are all in it together and we learn from each other.”
That same sentiment is being heard from the business community as well. Many of our clients want to continue to borrow and invest to take advantage of opportunities abroad and overseas customers say they also want to be a part of Houston’s growth story, said Lori Vetters, senior vice president and regional commercial executive for HSBC USA.
Panelist Patrick Jankowski, vice president of research at the Greater Houston Partnership, and author of the HSBC sponsored report: Houston’s Next Boom: Exporting Innovation, explained that growth in exports will come from LNG; plastics and chemicals; and oilfield services.
He added that Houston is not immune to what goes on in the global economy, and is probably more impacted by what goes on in the global economy than the domestic economy.
Jankowski also noted later that the widening of the Panama Canal, expected for next year, won’t have as big an impact on Houston as previously thought.
“It is important and it will help Houston, but it won’t drive exports,” he said. “Out of the 1 million TEUs (20-foot equivalent units) that pass through Houston, only 180,000 are destined for Asia. That’s less than 20 percent You would have to see a doubling in the amount of cargo for it to have a significant amount.”
He went on to say that Houston is also competing against a number of ports on the West Coast like Los Angeles, Long Beach and San Francisco. Those ports aren’t “going to roll over and play dead” just because the canal is expanded, but will fight for the cargo, he added.
Houston is already proving it can compete. In November 2013, the Brookings Institution reported the Houston metropolitan area was No. 1 in trade within North America.
The city’s position can only get stronger now that Mexico is opening up its energy sector to foreign investment. Jankowski said the industry there will need more skilled labor in order to move forward.
That presents opportunity for Houston businesses to make international expansion part of the business plan.
A panel of business leaders, including Hemant Goradia, CEO of Vinmar International; John Magee, president and CEO of Crane Worldwide Logistics; Robert Robbins, president and CEO of the Texas Medical Center; and Cindy Taylor, president and CEO of Oil States International Inc., spoke about that as well as how innovation will keep Houston in the game, at the HSBC event.
Here are some excerpts from the discussion:
Taylor: Everyday when we are in a deep water environment, we are going increasingly global. Deeper waters, harsher environments, higher pressure, higher temperature…As we have progressed, it has been the emphasis on drilling and completion activity, but two, the technology necessary to reach the reserves. Increasingly there is a lot more to go. They are talking about basically subsea factories on the sea floor…all to do with ultimate production in deepwater… Many are more exposed land activity. Horizontal drilling, fracturing. Now with the game changer that is shale play development, the Freeport LNG, which was designed to be import gas, is going to convert into an export facility.
Magee: If you look at supply chain, it has been around forever. When you have that, and the players have grown to a size, it is hard for them to change. Technology was at the forefront of what we wanted to do. I have offices in far away places, like Mozambique. In my prior company, to try and get the technology opened up to get an office in Mozambique, it would have been next to impossible even in today’s world. Using the latest technology, I was up in three days. It has been a huge competitive advantage.
Robbins: There is an incredible opportunity, leveraging all the great assets we have in this city, to be a competitive force with the Londons, the Shanghais, the Singapores, the Bostons and the San Franciscos in being not only the energy capital of the world, but also the life sciences capital of the world. In order to do that, we have to be able to figure out a way to grow and mature the ecosystem to be able to translate those discoveries into commercializable products.
Goradia: Innovate or parish. We keep that in mind….A few years ago, no one was considering investing anything in the U.S. in petrochemicals. Nothing. Everyone was looking at the Middle East or China, but today there are projects announced that total over $70 billion dollars. And Houston is the place. Companies are building plants in Louisiana, but are building commercial offices in Houston.
