University of Houston’s Bill Gilmer: Why Houston Wasn’t Right for Amazon
Bill Gilmer: “We’re not a match.”
HOUSTON – (By Michelle Leigh Smith, Realty News Report) – While Houston is widely regarded as a major hub for the plastics and energy industries, University of Houston economist Bill Gilmer says the city is not the best fit to host Amazon’s second headquarters.
“We’re not a match in terms of our labor force,” Gilmer told the Greater Heights Area Chamber of Commerce during a recent speech.
“Houston is an engineering city, not primarily a tech city,” he explained. “We’re also located at the geographic edge of the country. Over 80 percent of goods moving through our port are petroleum products. Dallas is more centrally positioned for a headquarters, and it also has strong rail connections.”
Seattle-based Amazon released a shortlist of 20 cities being considered for its $5 billion HQ2 project, which is planned to house about 50,000 employees and roughly 8 million square feet of office space.
Both Dallas and Austin made Amazon’s top 20 list; Houston did not. “We were the only major city cut from Amazon’s list,” Gilmer noted.
Some local business leaders have grown hopeful that rising oil prices—recently above $60 per barrel—could spur faster employment gains in the region.
But Gilmer urged a more cautious outlook. His consensus forecast anticipates moderate growth, projecting roughly 30,000 new jobs in 2018.
“Recent data shows the economy is improving, but at a slow pace,” said Gilmer, a professor of economics at UH’s Bauer College of Business. “Last year, we expanded at about two-thirds the rate we’d expect in a normal year.”
He repeatedly reminded the audience that the oil and gas sector has shed about 77,000 jobs over the past two-and-a-half years, although drilling activity has picked up lately.
“U.S. oil production reached an all-time high last month,” Gilmer said. That increased production tends to put downward pressure on prices. He displayed a slide depicting what he called the current cycle of ‘mutual destruction by production.’”
KHOU reporter Melissa Correa moderated the question-and-answer session after his talk, steering discussion toward recovery and resilience following Hurricane Harvey and noting the severe damage KHOU’s own Allen Parkway studios suffered during the storm.
“I can certainly relate to the losses from Harvey,” Gilmer said. “I grew up in Amarillo; we endured a tornado that left only one teacup and a single kitchen cabinet intact in our home. Our car remained in the driveway, so I know what it’s like to lose almost everything.”
He added that final tallies are still being compiled, but Harvey caused extensive property damage across Texas. Thousands of homes experienced significant damage and roughly 300,000 vehicles were declared totaled.
The recovery effort has, in turn, driven notable local spending.
“In the first four months after Harvey, retail spending totaled about $1.1 billion on autos, carpeting, furniture, wallboard and other construction materials,” Gilmer said.
