Even prior to COVID-19, Houston’s oil and energy industry was already seeing shifts, and as a huge economic base for the region, Greater Houston Partnership was already in market with an economic development strategy around Energy 2.0. On this episode of the Economic Development podcast, Susan Davenport, Senior VP & Chief Economic Development Officer at the Greater Houston Partnership, shares how her region is accelerating innovation around renewables and clean tech in addition to their role in continued job creation and business attraction around other key sectors.

As a region, we’ve been expanding our target sector with energy 2.0 and exploring the full complement of where we know future growth is moving in renewables, clean technology, and all of the different facets that go along with that. We just announced having the first expansion of Greentown Labs, the largest climate tech and clean tech incubator in North America and perhaps around the world.

Episode Highlights:

• 02:10 – Houston was already experiencing shifts in certain industries prior to COVID, namely oil and gas
• 03:38 – Greater Houston Partnership already had a strategic plan in place prior to the pandemic that became even more critical following the impact from the pandemic.
• 07:44 – As the energy capital of the world, Houston continues to evolve the growth of the industry, job creation, and talent attraction.
• 09:08 – Looking on to energy 2.0, the region attracted the largest clean tech incubator in the country.
• 10:14 – Susan shares how Houston is leading the energy transition.
• 11:46 – The organization has pivoted to prioritize certain industries, namely energy 2.0, life sciences, and logistics and distribution.
• 15:30 – Losing the Amazon HQ2 bid was a turning point in how the region started to reevaluate how all of its assets were packaged and presented to the world.

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Episode Transcript:

Susan Davenport  00:00

We have a very, well thought through, well documented strategic plan that was actually approved by our organization interestingly at the end of March. So it has been underway in its development, and it was very relevant to the sectors that we’re undertaking. What are the tenants of economic development? Job creation, retention and expansion, and we think can provide those pieces of quality of life and quality of place. And we’re undertaking the plan that we set out around outreach and discussions about the opportunities here in Greater Houston.

Fabiola Fleuranvil  00:59

This is Fabiola Fleuranvil of Blueprint Creative Group. We provide strategic communications counsel during times of opportunity, change, and crisis. And obviously, as a country, as we’re making our way through crisis and the way it has impacted economic development is the purpose of this podcast. So today’s guest is Susan Davenport, who is the Senior Vice President of Economic Development at the Greater Houston Partnership.

Susan Davenport  01:24

Hi, I’m doing well. Nice to speak with you.

Fabiola Fleuranvil  01:26

It’s a pleasure to hear from you as well, because your region has had so much growth over these last few years. Houston has been heralded for growth in almost every sector, population growth, and a lot of investments and developments in your infrastructure. So certainly, your region is doing a lot of great things. But when we see a crisis and a pandemic affect all communities, I’m sure that there has been a lot of impact to your industries as well.

So from a macro level, particularly in the Houston region, and then also with some of your targeted industries, what does economic development look like these days now that we’re moving into response and resiliency?

Susan Davenport  02:10

Well, it’s a great question. And you’re correct. We have seen a tremendous growth over the past few years in multiple areas – population and multiple different factors. But I do think the pandemic has met a very unique moment in time. Obviously, we were already, even pre-COVID, beginning to see some slowdown in one of our major sectors – oil and gas obviously. So we saw that approaching and had seen some early job losses even in January and February, perhaps a little bit prior to that as well.

Then when it met this COVID crisis, we kind of had a double hit so to speak on some of the regional economic factors that really are some of the tenants of our regional economy. It was an interesting time, and we have seen some tremendous job shedding. I think, probably at the end of May, early June, we looked at numbers, and we had probably lost about 330,000 jobs over about a two month period of time. When we looked at numbers last month after the reopening, we saw the largest month over month increase that I think was recorded and we saw the increase in creation, supposedly of 74,000 jobs.

Susan Davenport  03:38

We’ve had a net loss of about 250,000 jobs, and as you can imagine, that was due to the reopening. People coming back online in various hospitality and retail were mostly where many of those jobs that we saw come back online. We are still looking at that loss, net loss, currently maybe about 250,000. And that may not be the end. So we take this very, very seriously.

One of the things I thought when I saw your question about the outlook for economic development, and my immediate thought was incredibly important to what we’re doing and our strategic response. How we as a city, in a region, Greater Houston, of a nine county MSA region, how do we respond to that is incredibly important. We have a very well thought through, well documented strategic plan that was actually approved by our organization, interestingly, at the end of March. So it has been underway in its development probably from the fall of 2019 and culminated in its completion around the end of February. It was actually approved in its entirety on one of our first board meetings or business committee meetings. So I could say it was very relevant to the sectors that we’re undertaking that will create the tenants of economic development – job creation, retention, and expansion.

Susan Davenport  05:24

We think can provide those pieces of quality of life and quality of place. So the strategy when new data was validated and renewed, and the sectors identified, what we did do after COVID, I think came on board and the two layers of this crisis that we’re seeing again, which is unique to us. The downturn of one of our largest sectors, and then the COVID crisis put together, what we did I think was take a look at the target that we have identified, and perhaps reprioritized a little bit, maybe had kind of an inherent focus on some more urgently than others. But I can tell you that they’re all very relevant.

We’re undertaking the plan that we set out around outreach and discussions about the opportunities here in Greater Houston, and I’m happy to go into that further, if you like. There’s some great examples that I think really could showcase how each community, city, region, really needs to look at, what are their assets, and at the time of a crisis, how do they maybe shift, but then what are the opportunities underneath those that can then come forward and really begin setting the stage for your future.

Fabiola Fleuranvil  06:58

So let’s unpack some of what you said. So obviously, we knew about the oil industry and it being affected even prior to COVID. So that’s one layer. So the strategic plan, I can imagine, had a lot to do with recovering or perhaps supplementing some of the impact and the loss from that industry.

So now that you have both layers added into the strategic plan, are there certain industries that are rising to the top right now where there’s a lot of growth opportunities that are that appear to be viable and fruitful for the region? Whether or not they were a big focus prior to COVID, but are rising to the occasion just because of the innovation that’s coming out of the industries or just market opportunities in general?

Susan Davenport  07:44

That’s a great question. You captured it. What is so interesting about Houston and where we were, as we were moving into this new strategic plan, our targets and the industry sectors that we’re working on  really have that innovation included in all of them. As you know, Houston has such a great group of industries. Every facet of the traditional energy industry with about 4,600 to 4,800 energy firms. We are in every sense the energy capital of the world from the base of industries that are here, and who makes that up.

We also have the largest medical centers in the world where we have one of the biggest industrial bases and one of the most active ports. So when you put all that in the mix, and those are your assets, then you look at the innovation that comes within each of those. Our goal around the strategy was moving to the next iteration of those industries, which would again, help with that workforce creation and continuing to iterate and upskill workforce. As we educate all of the students that come out of the region, we recruit, people move in, and having those opportunities, and a perfect example I think is the energy industry.

Susan Davenport  09:08

It’s been set what we’re most often known for, but we look to our target sector with energy 2.0. It was adding to the base of the traditional sector that we’ve been so fortunate to have and still have, and Houston will always be part of that. But looking at, do we have the full complement of where we know future growth is moving in renewables, clean technology, and all of the different facets that go along with that? That was our sector or our target that we were hoping that we are growing.

I can say we just announced having the first expansion of Greentown Labs, the largest climate tech and clean tech incubator in North America and perhaps around the world. Their first expansion is now going to be in Houston, and that was a huge statement of what we have been quietly setting the stage for over a year.

Susan Davenport  10:14

Even in January before COVID, at our annual meeting, our chairman talked about the energy transition and how Houston would lead that, and that was a surprising message to many. But the fact of it is we have the entire industry sector here, and so we do need to lead that. And that talent, again thinking about a crisis and thinking about job loss, that talent that is so well educated around energy, that could provide that base of talent to move into the energy 2.0 area and help kind of bridge that distance. We have this almost ready workforce around understanding the tenants of energy and markets and how they function, and that’s a huge asset for our recruitment opportunities.

As you know, we’re a very global city, and so our base of recruitment is global. This is a massive international city, and obviously, we are the most diverse city in the country. So when you put all of that together, we take what is happening at the moment as those immediate job losses. But those are the things that we’re now able to message to those companies and entities that are wanting to move in this ready workforce. And as you know, talent is the currency of economic development as we like to say.

Susan Davenport  11:46

So that’s just one example. I think another is looking at supply chains and looking at medical infrastructure. Again, the largest medical center in the world is in Houston, and they collectively make up about 55 to 60 entities over 100-220,000 people. So you’ve got this massive base of medical infrastructure and frankly, a market, right? When you look at bringing on new innovation around life sciences, we have those hospitals and entities to call on, to test, to detect for products, etc, and having the real estate opportunities and the infrastructure. And then obviously the transportation and logistics and distribution sector.

You put all those things together, and there’s an enormous opportunity, and we’re incredibly cost competitive on the cost of doing business, the cost of living from some of the major hubs. So in every crisis you have to look at what were you trying to do. I think we were a bit fortunate in that our strategy was so relevant at the moment. We pivoted obviously to prioritize certain sectors, but we’ve had the beauty of being able to move forward with implementation and to showcase what’s been lost that can be added to someone else’s advantage.

Fabiola Fleuranvil  13:29

All of this, as you mentioned, is reason why Houston is such a growth market the way it is from the sheer size of your industries, the impact that your industries are making not just regionally and across Texas, but also nationally, and also the diversity in your industries. I mean, you mentioned everything from clean tech to bio sciences, your health sector, which we know is going to experience significant boom right now with the search for a vaccine for the virus and future viruses. So there’s a lot of opportunity and growth within your region.

What do you think was where the groundswell really started to swell up the way it did for Houston to result in a significant shift in how things used to be and with what we’re seeing now?

Susan Davenport  14:20

That’s a great question. It actually happened probably about I would estimate, probably about two years ago, in all honesty, and a lot of it had to do with looking at sectors and looking at at how they were progressing. I think as economic developers, and as entities that facilitate economic development initiatives and activities, you always have to have your eye on the future. So it’s important to understand the iteration these industries that we’re so fortunate to have are seeing for the future. I think the seeds were planted, and then I think there were changes around market focus and around the way innovation ideas needed to germinate.

There was a big push to develop the innovation corridor that we’ve been putting in place, which is in the heart of Houston,  downtown at the Medical Center in Rice University, the University of Houston and some of those entities.

Susan Davenport  15:30

All of that had been underway. Those ideas had been discussed for a couple of years, and honestly, you’ll see this where our leadership has said it publicly. When the Amazon headquarters opportunity had come around and Houston had submitted information, and didn’t make the top 20, I think they became very focused the fact that we’re not even being considered. What was interesting about the assessment after that was that we did have all of the elements, but we did not have them organized correctly. And I think that’s where Houston began to turn the corners.

We have all of these energy R&D centers, private centers, through all of our major companies in the area. We have our universities and hundreds of thousands of students that we’re educating annually through our 40 institutions of higher education that make up this regions yet they said that we didn’t have all of these things organized correctly. We have NASA, we have all of these assets. We’re just such a broad region. So we became very focused on that four mile innovation corridor work and the density that it could provide.

Susan Davenport  17:01

We began to develop what’s now under construction that Rice University has put for a 16 acre innovation district in the middle, and with multiple other connection points, the medical centers, JJ Labs and their own TMCX Labs and all of the things that they’re doing to promote innovation. We’re really recognizing the beauty of Houston and connecting that through all of our different points throughout the nine county region. All of our innovation assets were actualized together, but people could drop in for that into that corridor, that four corridor area, and experience that innovation. So all of that went underway, and again, we had taken some of that early data, and then we had done a more tactical and strategic plans, beginning in the fall of 2019 that complemented some earlier research done there, and came out with a plan to hit the ground in March. We were already seeing COVID and already seeing the energy downturn.

Susan Davenport  18:18

So we were uniquely ready to kind of go after this and already honestly have been on since when we announced Greentown. In June, we announced Google’s first Houston office on Wednesday, and then a new Amazon state of the art facility center with over 1000 employees. I call that the economic development three ways. We had some work that really began to be announced and come to fruition about three months ago. We are watching the job loss very, very carefully, and trying to shore up in any way that we can, and really trying to find those new opportunities for people who have lost existing jobs. We are hard at work every day, and I think some of the trends that COVID has pushed to the forefront could potentially be additional opportunities for Houston.

Fabiola Fleuranvil  19:29

So with all that said, and the growth that you’re clearly experiencing, is there still an industry or two that you think is still under exploited in Houston that could certainly lend itself to the current growth?

Susan Davenport  19:44

So, I think, were there any sectors that maybe weren’t as developed, but has the potential for further growth?

So one of the things I think that is that there were six targets that we were really looking at. I’ve been around manufacturing and eventually the life sciences, and energy 2.0. We were also looking at digital technology and companies that were developing the technologies to recruit to the region as we try to, again, incorporate equally innovation around all of our existing sectors. So while we know that sector spans all sectors, we really looked at it to keep up the presence of little companies here. One of the interesting pieces I’ll say that I think Houston is known for is NASA Johnson Space Center and obviously putting man on the moon over 50 years ago. That really seeded a lot of innovation in many ways.

Susan Davenport  21:04

The commercial applications of that, I think we have a huge grip around commercial aerospace and aviation that complements on with that. And so while it seems that we would have all of that. The new focus is on partnerships with NASA commercialization activities from their technology base and then the collaborative effort on putting together new products in aerospace. All of those things are in great development right now. We’re fortunate because we have the base of activity to build from, but we we want to see that next generation that’s part of Houston’s offerings as well. So that’s been a real growth area as we started to put that forward.

Fabiola Fleuranvil  22:05

Well, it’s been a pleasure talking to you and learning more about what’s going on in Houston. Thank you for sharing and contributing your thoughts.

Susan Davenport  22:14

We appreciate you highlighting economic development and all of the things that we are as regions and cities, communities around the country. That’s such an important area for all of us now, so we appreciate it.

Fabiola Fleuranvil  22:29

Yeah, certainly. Coming out of this pandemic and with the future of the industries and the country looks like is largely dependent on how economies and industries and companies in the community collaborate together. So it’s certainly an important topic.

Susan Davenport  22:47

Definitely. Very well said. Thank you.

Fabiola Fleuranvil  22:49

Thank you. Thanks again for tuning in to the Economic Development podcast presented by Blueprint Creative Group. There is more episodes featuring Economic Development leaders throughout the country. And we thank all of the participants for sharing their perspectives. Check out all of the episodes in this series at blueprintcreativegroup.com/economicdevelopment.