Texas recognized as second best state for business, while Houston expected to see key economic growth

Feathers for our cap

Texas was named the second best state for business by Forbes, and Oxford Economics predicted Houston's economic growth to be more significant over the next few years than most other major metros. Getty Images

Houston and the rest of Texas received two early Christmas presents signaling that their economies continue to percolate.

In a report released December 23, economic forecasting and analysis firm Oxford Economics predicted Houston and Dallas-Fort Worth will enjoy a greater share of economic growth through 2023 than any other mega-metro area in the U.S. except San Francisco.

Meanwhile, Forbes magazine declared on December 19 that Texas is the second best state for business, behind only North Carolina. Texas previously sat in the No. 3 spot on the Forbes list, preceded by North Carolina and Utah.

Through 2023, Oxford Economics forecasts average compound GDP growth of 2.4 percent in Houston and Dallas-Fort Worth. Among the country's 10 biggest metro areas, only the projection for San Francisco is higher (2.7 percent).

For Houston, the 2.4 percent figure would be an improvement over recent economic performance. From 2014 to 2018, the region's GDP growth rate was 1 percent, while it was 1.5 percent for 2015-19. In the 2020-21 timeframe, the growth rate for Houston is expected to be 1.9 percent.

In a recent forecast, the Greater Houston Partnership envisions the Houston area adding 42,300 jobs in 2020, mostly outside the energy sector. Among the region's top-performing sectors in 2020 will be healthcare, government, food services, and construction, the partnership says. Meanwhile, the energy, retail, and information sectors are expected to shrink.

In November, Robert Gilmer of the University of Houston's Institute for Regional Forecasting explained that by the end of 2022, job losses in the oil industry should have a limited effect on the region's economy. Still, he anticipates Houston's job growth through 2024 will be "moderate and just below trend."

In forecasting strong economic growth for Houston and DFW, Oxford Economics says the "industrial structures" of the two regions "are not exceptional, but low costs and low regulation mean that the industries that they do have grow faster than elsewhere."

"San Francisco's very high costs are creating affordability problems and rising inequalities that may eventually undermine its model," Oxford Economics adds. "Competitive advantages never last forever. The Sunbelt cities [including Houston and DFW] may yet give it a run for its money."

Houston's and DFW's competitive advantages mesh with those of the entire state. Texas' high points include lower taxes, lower labor expenses, lower cost of living, and low levels of regulation, Oxford Economics says.

As noted by Forbes, Moody's Analytics predicts Texas businesses will add close to 1 million new jobs by 2023, which would be the third highest average annual job growth rate among the states. Meanwhile, the share of Texans who launched businesses last year was the fourth highest in the country, according to Kauffman Foundation data cited by Forbes. And just three states — California, New York and Washington — saw more venture capital flow into them in 2018 and 2019 than Texas did, according to PwC.

Texas earned these rankings on the Forbes list:

  • No. 1 state for growth prospects
  • No. 1 state for business costs
  • No. 4 state for economic climate
  • No. 10 state for labor supply
  • No. 15 state for quality of life
  • No. 21 state for regulatory environment
In his 2019 State of the State address, Gov. Greg Abbott praised Texas as "the most powerful state in America," thanks in part to healthy job growth, low unemployment, and rising wages. "Texas is the premier economic destination in the United States," he said.
Texas is listed as the third-most vulnerable state when it comes to robots replacing the workforce in manufacturing. Houston houses a third of the manufacturing jobs in the state. Thossaphol Somsri/Getty Images

Houston jobs could be hit hard by the rise of robots, one study finds

Automation nation

If a new forecast comes true, Houston's manufacturing sector could take an especially hard hit from the upturn in the use of robots.

In a new report, Oxford Economics, a forecasting and analysis firm based in the United Kingdom, ranks Texas as the third most vulnerable state when it comes to human workers in manufacturing being replaced by robotic labor. The report gives no estimate of how many manufacturing jobs Texas might lose to robots, but around the world, robots could boot 20 million jobs by 2030.

About one-third of Texas' manufacturers operate in the Houston metro area, meaning the robot revolution carries significant weight for the regional economy.

In 2017, manufacturing accounted for $82.6 billion, or nearly 17 percent, of the Houston area's economic output, the U.S. Bureau of Economic Analysis says. Manufacturing employment in the region averaged 219,160 jobs in 2017, with total wages of nearly $4.8 billion.

Among the top manufacturing segments in the region are fabricated metals (22 percent of all manufacturing jobs), machinery (19 percent) and chemicals (17.5 percent), according to the Greater Houston Partnership. Between 2012 and 2017, manufacturing employment in the Houston area slipped by 9.8 percent, going from 243,011 workers to 219,160 workers.

However, a recent report from the Economic Innovation Group shows Harris County netted more manufacturing jobs (11,592) from December 2016 to December 2018 than any other county in the U.S.

According to the National Association of Manufacturers, the manufacturing sector in Texas created more than $226 billion in economic output in 2017. Last year, about 880,900 people held manufacturing jobs in Texas; that's more than 7 percent of the statewide workforce.

In declaring that Texas sits among the states most susceptible to job losses due to robotics, Oxford Economics took into account factors such as:

  • Dependence on manufacturing jobs.
  • Current use of robots in manufacturing.
  • Productivity of the manufacturing workforce.

Based on those criteria, Texas received a robot vulnerability score of 0.50. The top two states, Oregon and Louisiana, each got a score of 0.58, with the higher number meaning greater vulnerability.

The report cites three reasons for the ascent of robots in manufacturing:

  • Robots are becoming cheaper than humans.
  • Robots are becoming more sophisticated.
  • Demand for manufactured goods is rising.

"The rise of the robots will boost productivity and economic growth. It will lead, too, to the creation of new jobs in yet-to-exist industries, in a process of 'creative destruction,'" according to the Oxford Economics report. "But existing business models across many sectors will be seriously disrupted. And tens of millions of existing jobs will be lost, with human workers displaced by robots at an increasing rate as robots become steadily more sophisticated."

Tony Bennett, president and CEO of the Texas Association of Manufacturers, says the Oxford Economics report isn't all gloom and doom.

"Robotics and mechanization in our advanced manufacturing industries will continue to displace some general-labor jobs. However, this change is also ushering in a new set of higher-skilled jobs that are being created to engineer, build, and service these sophisticated machines," Bennett says. "The state of Texas must continue striving to increase educational opportunities in engineering, math, science, and career and technical programs to meet the complex manufacturing processes of the future."

Houston Community College's Advanced Manufacturing Center for Excellence is among the organizations in the Houston area that are preparing workers for jobs in robotics and other high-demand, tech-driven aspects of manufacturing.

"Innovation is Houston's bedrock," Houston Mayor Sylvester Turner said in 2017. "The city would have never thrived without the innovations it took to build the Ship Channel and the innovating that goes on every day in the energy industry, at the Texas Medical Center, at the Johnson Space Center and in the manufacturing sector. Now, Houston is poised to take its place at the forefront of the American future in technology."

Earlier this year, another study found a similarly daunting result. Almost half of Houston's workplace tasks are susceptible to automation, according to a new report from the Brookings Institution's Metropolitan Policy Program. Of 100 metros analyzed, Houston ranks 31st among the country's 100 biggest metros, with 46.3 percent of work tasks susceptible to automation.

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Houston Methodist awarded $4M grant to recruit head of Neal Cancer Center

new hire

Armed with a $4 million state grant, the Houston Methodist Academic Institute has recruited a renowned expert in ovarian and endometrial cancer research to lead the Dr. Mary and Ron Neal Cancer Center.

The grant, provided by the Cancer Prevention and Research Institute of Texas, enabled the institute to lure Dr. Daniela Matei away from Northwestern University’s Feinberg School of Medicine in Chicago. There, she is the Diana Princess of Wales Professor in Cancer Research and chief of the Division of Reproductive Science in Medicine.

Matei will succeed Dr. Jenny Chang, who was hired last year to run the Houston Methodist Academic Institute.

At the Neal Cancer Center, located in the Texas Medical Center complex, oncologists work on innovations in cancer research, treatment, and technology. The center opened in 2021 after the Neals donated $25 million to expand Houston Methodist’s cancer research capabilities. It handles about 7,000 new cases each year involving more than two dozen types of cancer.

U.S. News & World Report puts Houston Methodist Hospital at No. 19 among the country’s best hospitals for cancer care, two spots below Chicago’s Northwestern Memorial Hospital. The University of Texas MD Anderson Cancer Center in Houston sits at No. 1 on the list.

Matei’s research related to ovarian and endometrial cancer holds the potential to benefit tens of thousands of American women. The American Cancer Society estimates:

  • 21,010 women in the U.S. will be diagnosed with ovarian cancer, and 12,450 women will die from it.
  • 68,270 women in the U.S. will be diagnosed with endometrial cancer, and 14,450 women will die from it.

Matei is leaving Northwestern in the wake of widespread cuts in federal funding for medical research. The National Institutes of Health (NIH) has canceled or frozen tens of millions of dollars in grants for Northwestern, the Wall Street Journal reports, and the university has been plugging the gaps with its own money.

“The university is totally keeping us on life support,” Matei told the newspaper last year. “The big question is for how long they can do this.”

According to the Wall Street Journal, Matei’s $5 million NIH grant supporting 69 cancer trials has been caught up in the federal funding chaos, so Northwestern stepped in to cover trial expenses such as nurses’ salaries and diagnostic procedures.

Trial participants include some patients with rare, incurable tumors who are undergoing experimental treatments aligned with the genetics of their condition, the newspaper says.

“It’s certainly a life-and-death situation for cancer patients on these trials,” Matei said in 2025.

Matei is among the beneficiaries of more than $15 million in grants approved February 18 by CPRIT’s board. The grants went toward recruiting five cancer researchers to institutions in Texas.

One of those grants, totaling $1.5 million, went to the University of Houston to recruit Akash Gupta, a research scientist at MIT’s Koch Institute for Integrative Cancer Research. The remaining grants went to recruit scientists to The University of Texas at Dallas and The University of Texas Southwestern Medical Center.

Rice University lands $14M state grant to open Center for Space Technologies

on a mission

Rice University’s Space Institute soon will be home to the newly created Center for Space Technologies.

On Feb. 17, the Texas Space Commission approved a nearly $14.2 million grant for the Rice project. The Center for Space Technologies will target:

  • Research and development
  • Technology transfer and innovation
  • Statewide partnerships
  • Workforce development training
  • Space-focused education programs

The goal of the new center “is to fulfill an articulated need for research, workforce development, and industry collaboration,” said Kemah communications and marketing executive Gwen Griffin, chair of the commission.

State Rep. Greg Bonnen, a Friendswood Republican, authored the bill that set up the Texas Space Commission.

Since being authorized in 2023, the commission has funded 24 projects, with Rice and Houston-area companies accounting for nearly $75 million in grants to back space-related initiatives.

The grant to Rice brings the TSC's total investment to $150 million, fully committing the entire state appropriation from the Texas Legislature in 2023.

Other local companies that have received grants over the years include Aegis Aerospace, Axiom Space, Intuitive Machines, Starlab Space and Venus Aerospace.

The commission also awarded $7 million to Blue Origin earlier this month. See a list of the 24 awards here.

Waymo self-driving robotaxis have officially launched in Houston

Waymo has arrived

Waymo will begin dispatching its robotaxis in four more cities in Texas and Florida, expanding the territory covered by its fleet of self-driving cars to 10 major U.S. metropolitan markets.

The move into Dallas, Houston, San Antonio and Orlando, Florida, announced Tuesday, February 24, widens Waymo's early lead in autonomous driving while rival services from Tesla and the Amazon-owned Zoox are still testing their vehicles in only a few U.S. cities.

In contrast, Waymo's robotaxis already provide more than 400,000 weekly trips in the six metropolitan areas where they have been transporting passengers: Phoenix, the San Francisco Bay Area, Los Angeles, Miami, Atlanta, and Austin, Texas.

Waymo operates its ride-hailing service through its own app in all the U.S. cities except Atlanta and Austin, where its robotaxis can only be summoned through Uber's ride-hailing service.

The expansion into four more markets marks a significant step toward Waymo's goal to surpass 1 million weekly paid trips by the end of 2026. Without identifying where its robotaxis will be available next, Waymo is targeting a list of eight other cities that include Las Vegas, Washington, Detroit and Boston while signaling its first overseas availability is likely to be London.

To help pay for more robotaxis, Waymo recently raised $16 billion as part of the financial infusion that puts the value of the company at $126 billion. The valuation fueled speculation that Waymo may eventually be spun off from its corporate parent Alphabet, where it began as a secret project within Google in 2009.

Although Waymo is opening up in four more cities, its robotaxis initially will only be made available to a limited number of people with its ride-hailing app in Dallas, Houston, San Antonio and Orlando before the service will be available to all comers in those markets.

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