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UH’s Bill Gilmer: Houston Not a Good Match for Amazon, Anyway

Bill Gilmer: “We’re not a match.”

HOUSTON – (By Michelle Leigh Smith, Realty News Report) – Houston reigns as the “center of the universe for plastics” but the city is not the logical choice for Amazon’s second headquarters, says University of Houston economist Bill Gilmer.

“We’re not a match in terms of our labor force,” Gilmer told the Greater Heights Area Chamber of Commerce in a speech last week.

“We are an engineering city – not a tech city,” Gilmer says. “We’re also at the edge of the country. More than 80 percent of what moves through the port is petroleum products. Dallas is ideally positioned for a HQ, and they have rail as well.”

Seattle-based Amazon recently announced the 20 cities that are on the short list to be chosen as the location for Amazon’s $5 billion second headquarters. Amazon’s HQ2 will have 50,000 employees and 8 million SF of office space.

Dallas and Austin made Amazon’s top 20 list. Houston did not. “We were the only major city axed by Amazon,” Gilmer noted.

Some people in the Houston business community are pumped up about the possibility of job growth accelerating because oil has risen to more than $60 per barrel.

However, Gilmer is a bit more subdued when it comes to optimism. His consensus forecast centered on moderate growth, and he projected a gain of around 30,000 jobs in 2018.

“Recent data shows the economy is improving slowly,” said Gilmer, Professor of Economics at UH’s Bauer School of Business. “This last year, we grew about two-thirds as fast as we would in a normal year.”

Several times, Gilmer reminded the Heights audience that the oil and gas industry has lost 77,000 jobs in the past two and a half years. But drilling has improved recently.

“Last month, U.S. oil production set an all-time high record,” Gilmer said. Rising oil production puts downward pressure on oil prices. Gilmer showed a slide that depicted what he calls the current cycle of “Mutual Destruction by Production.”

KHOU’s Melissa Correa led the Q&A following his presentation, focusing on Harvey-related resilience and noting that KHOU’s headquarters on Allen Parkway was devastated by Hurricane Harvey.

“I can certainly relate to the losses of Harvey,” Gilmer said. “I grew up in Amarillo and we lived through a tornado that left one teacup and one kitchen cabinet in our home,” he says. “We were left with the car in the driveway, so I understand what it is to lose everything.”

He says not all the numbers are in yet for Houston, but Harvey dealt a major blow in property damage across the state. Thousands of homes suffered major damage, along with 300,000 vehicles that were totaled.

The recovery has generated significant spending in the Houston area.

“In the first four months following Harvey, there has been $1.1 billion in retail spending on autos, carpeting, furniture, wallboard and other construction material,” Gilmer said.

Jan. 28, 2018 Realty News Report Copyright 2018

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