Houston / Global
Economy-wise, Houston is bigger than Austria and South Africa, thanks largely to its oil and gas industry. But alongside the energy behemoths, small entrepreneurial businesses are finding a welcoming niche.
In the shadow of a 30-storey-tall Saturn V rocket on display at the Johnson Space Center in Houston, Nasa chief technologist Douglas Terrier tells monocle about the complex’s future now that the space shuttle programme has ended. “[The centre] used to have a Cold War posture in the extreme,” says Terrier. “Now we see ourselves as an integral part of the local economic community.”
Like its space centre, Houston is evolving. The Texas metropolis of more than five and a half million people has a gdp of $450bn (€327bn), trumping countries such as Austria and South Africa, and is known as the oil and gas capital of the US because of the thousands of energy-related firms operating here.
Yet it is a city in the midst of an evolution. “At the height of the oil boom, 82 per cent of all the primary sector jobs in Houston were tied into the oil business,” says Rice University sociologist Stephen Klineberg. Fluctuating oil prices have compelled Houston to become a different kind of economic creature. It is no longer defined by a black-gold monopoly. “Today it’s around 45 per cent – it’s still very important but this was a one industry town.”
Renewable energy firms have gained a toehold, there is a buzz around the start-up scene and the green shoots of a forward-thinking retail community are popping up. “Five years ago there was nothing except fuddy-duddy, provincial, mom-and-pop stores,” says Amanda Valentine, the California-born proprietor of PH Design, a quirky paper-goods shop. “People come in here and are relieved that we encourage individualism; that there’s a space for them.”
Alongside this shift urban planners are tackling Houston’s sprawl and its unlovely downtown. City Hall is setting the tone: Houston has one of the largest fleets of government-run electric cars and receives around half of its own municipal power from wind turbines.
“We try to lead by example,” says Houston sustainability director Laura Spanjian who, somewhat surprisingly, says that she has forged good relations with several fossil-fuels firms. She praises Shell and nrg, the operator of numerous coal plants, for sponsoring a programme to make offices greener.
“It’s a city with the right skillset,” says Stephan Blasilli, a manager at edp Renewables, which runs 30 wind farms around the US and is headquartered in a Renaissance-style skyscraper built downtown in 1927. Michael Skelly, founder and president of Clean Line Energy, which develops transmission lines for renewable power, agrees that his industry is a good fit in Houston. “If you want to build a new grid or big power plants, solar plants or wind farms, a city like Houston is ideally positioned,” he says.
A beneficial side-effect of Houston’s global importance in the energy industry is its diplomatic heft: there are about 100 consulates in the city. “Oil and gas is the driver of it,” says British consul general Andrew Millar, a cheerful Scot who works in premises dotted with pictures of Queen Elizabeth. “It’s a global industry and because of that we have to be in Houston.”
Houston’s industrial vigour has created an international population: the city has 92 consulates and there are direct flights to other oil centres such as Moscow and Lagos. Plus, its metro area comes closer than any other in the country to having a population that comprises an equal number of whites, Asians, African-Americans and Latinos. Downtown it’s not hard to find Indian and Mexican food and Central European kolache pastries in close proximity. “I can’t pinpoint an age, race or income demographic that stops by the store,” says Trang Nguyen of craft and clothing shop Myth & Symbol. “From a marketing perspective that may be a nightmare but I love that I can’t.”
While oil companies still play a key role in the city’s economy, entrepreneurs have room to make a go of it alongside or in partnership with them. “The energy industry is open to research being done outside its companies,” says Walter Ulrich, head of the Houston Technology Center, an organisation that supports entrepreneurs. “There’s definitely a move from ‘Golly, we’ve go to do it [in house]’ to getting good ideas from wherever they are.”
This shift might be driven by the rise of a new guard in the industry, says entrepreneur Kirk Coburn. “Millennials are starting to become more influential in big energy and this is having an impact on collaboration.” A good example is Rebellion Photonics, a company building video cameras that detect gas leaks – a welcome advance on existing technology. “You get billion-dollar refineries using 1950s gas detectors,” says co-founder Allison Lami Sawyer. The firm’s young owners met at graduate school and persevered with their idea despite naysayers who said they couldn’t make an impact in the monolithic energy industry. Their device has already been installed at a large refinery and they have secured two major oil firms as customers. “We got a lot of flak for not moving to one of the coasts,” says Sawyer. “But we don’t need to be near our investors, we need to be near our customers.”
While Houston is an appealing city for business, its brand of urbanism leaves something to be desired. “Houston has been labelled the most unsustainable major city in America,” says Rice University’s Klineberg. “[It is a] totally car-dependent city spread out across a geographical space the size of Massachusetts.” Indeed, one of the city’s biggest challenges is its downtown. Here, at the core of its endless suburbs, skyscrapers cluster above a network of tunnels packed with places to eat. Thronged at lunchtime, these subterranean walkways are alluring when the weather is uncomfortably humid – as it often is – but it means roads are bereft of pedestrians and businesses. “It’s a dilemma. How do you get people back up to the street?” says Bob Eury, head of a downtown management organisation, from a skyscraper conference room. “We’ve been working hard over the past 30 years to make sure downtown doesn’t just become an office park.”
To encourage greater density, the city is offering tax rebates to developers who build residential property downtown; so far almost 2,500 units have been proposed. For now, many shops and restaurants prefer to be in other areas, such as the handsome Montrose neighbourhood. “Downtown is scary territory,” says Nguyen. “It’s dead at night.”
Irrespective of geography, Nguyen says she’s noticed a shift in the mindset of Houston shoppers. “We’re seeing a movement of people supporting local – especially in Rice Village, there’s a community here.” Other standout businesses include Oudvark, offering lamps that incorporate raw chunks of stone and wood, and Space Montrose, with American handmade ceramics, jewellery and other goods. Its co-owner, Leila Peraza, says that “Houston felt soulless. Now, with so many wonderful independent restaurants and stores it’s a real revolution in our city. There are young people who are taking big risks and making things happen.”
Houston’s task is to coax its hydrocarbon-minded inhabitants out of their cars and into the community. Similarly, it must continue to help innovators make the most of the city’s commercial and technological endowments. One institution that seems set to take a greater role in entrepreneurial life is the Johnson Space Center, Nasa’s lead centre for the International Space Station. Terrier says that it suffered several thousand job losses after the space-shuttle programme ended in 2011 and more than $2bn (€1.5bn) has been sliced from its budget. In response, it is being recast as a regional, university-style player.
Terrier suggests that the “low-hanging fruit” for the initiative are the oil and gas sectors. “We’re about harsh environments in space and that transfers directly to [extraction on the] sea floor,” he says. For instance Nasa and Houston firm Astro Technology jointly developed a fibre-optic monitoring system that attaches to sub-sea pipelines and detects changes in tension in response to oceanic or meteorological conditions. It is amid surprises such as this one – a siloed space centre opening up to entrepreneurship, oil companies embracing green initiatives and small businesses making inroads with multinationals – that the future of the US’s energy capital can be found.