Houston Falters, Yet Oil Is Not to Blame ; Its Economy Souring and Enron Failing, the City Is Nonetheless Poised to Rebound
Kris Axtman writer of The Christian Science Monitor, The Christian Science Monitor
The headlines in recent months have been as stinging as this bayou city's mosquito population. Compaq to cut 8,000 jobs in merger with Hewlett-Packard. Continental lays off 12,000 employees after terrorist attacks. Enron declares bankruptcy, leaves 4,000 people out of work.
It's enough to make most Houstonians - even given their legendary bravado - shudder, as reminiscent as it is of the "Great Downturn" of the mid-1980s. At the time, Houston - fully 86 percent dependent on oil - fell into the worst recession since the Great Depression.
After that debacle, the city diversified its economy. The only trouble is, it now acts much like the rest of the country - which means when the US goes into recession, as it is now, so does Houston.
"One of the hallmarks of this recession is that it is fairly uniform across the country, even in parts of the Southwest like Houston," says Steve Cochrane, senior economist at Economy.com in West Chester, Pa.
He says Houston used to "always come out smelling like a rose" during national recessions, because it was able to ride them out on the high price of oil.
That was one of the main reasons Trupti Sheetal and Ganesh Hariharan came to Houston from India in the first place.
Both on H1 visas, they knew (or thought they knew) that energy was a safe industry during a recession, an industry that could weather a downturn while they worked on getting their green cards.
They were two of the fortunate few to get hired on at Enron right out of college. They now have 30 days to find another job or return home.
"We came for the stability," says Ms. Sheetal, hustling into an informational meeting for ex-Enron employees. "We thought Enron was one of the more stable companies out there."
While Enron and Compaq are cutting 12,000 employees out of a total workforce of 2 million here in Houston, their demise is being felt far beyond the newly unemployed.
"Both Compaq and Enron represented icons for the new diversified Houston," says Barton Smith, an economist at the University of Houston. "One of the impacts will be the psychological impact of losing these two icons."
Indeed, Enron symbolized the changing energy industry that has moved away from oil and gas production into refining, marketing, and distribution. But it was also emblematic of the Houston entrepreneurial spirit.
"The Enron story is the story of Houston bravado," says Stephen Klineberg, a sociology professor at Rice University here. …