Driven To Success

Houston-area manufacturers praise logistics, worker skills.

If you need to go anywhere in Texas -- even to the middle of nowhere -- you can get there, seemingly in a short time, on the state's abundant freeways, two-lane highways, and back roads. Thus, despite Houston's engineering talent, its machining expertise, its giant petrochemical complexes, its spaghetti bowl of pipelines, or the abundance of technically skilled workers, it is the highway system -- along with Houston's international airport and ship channel -- that large and small companies cite when describing the metro area as a world-class manufacturing center. "We do a lot of air freight," says John Giles, president, Merlin Process Equipment Inc., a small, global manufacturer of industrial mixers used in processing plastics. "When Houston constructed the northwest part of the outer-loop beltway, it helped getting around, it helped getting deliveries, and it helped getting to the airport." That beltway construction -- part of the $15 billion that the region has spent the last 15 years on highway improvements -- also has expanded the area from which Merlin can recruit workers. In fact, six of its 33 employees now live more than 50 miles away. "It allows them to work at our company and still live in a rural area if they choose," says Giles. Similarly, because the movement of large amounts of inbound materials and outbound shipments is a critical element of the just-in-time manufacturing process at Compaq Computer Corp., the region's logistics network is a big plus, says Charlie Loarridge, Compaq's vice president, supply-chain strategy. "We were originally in Houston by accident," says Loarridge of the home-grown, now-global manufacturer. "But if you did a study on which places have good logistics, Houston would be way up on the list of places to be," he says, and not just for the movement of raw materials and goods. "We do an immense amount of traveling . . . to the Far East . . . and to Europe, and you can get anyplace you want to go from Houston without a hassle," claims Loarridge. Even rush-hour slowdowns seem shorter and less annoying in Houston, thanks to the inner loop, the outer loop, the Beltway, and the still-to-be-completed Grand Parkway that ring the city and whisk the region's workforce of 2.4 million people and truck shipments throughout the area. Add to that the Port of Houston -- which ranks first in the nation in foreign tonnage and second in total tonnage -- and you have an enormous asset for manufacturing, which accounts for $34.8 billion or 19% of the gross area product of the eight-county Houston metropolitan area. But while an asset for manufacturing, the volume of traffic has created an ozone-pollution problem. The region has exceeded federal ozone limits for 40 days to 80 days per year for the last 20 years. Still, Houston has increased manufacturing jobs by 8.2% during the last five years. "The fact that our design base is here is not without significance," says Compaq's Loarridge. "There are very good technical people with engineering skills because of the universities, who bring with them a very good work ethic." Loarridge, who has worked in a number of locations around the globe, praises Houston for availability of materials and of people to manage and run processes and distribute product efficiently. A corps of electronics-manufacturing suppliers, for example, has relocated to the region to support Compaq's operations. Some 41% of the region's manufacturing jobs are in the fabricated-metals and industrial-machinery businesses, and that concentration indicates Houston's domination of several industries. For example, the metro area accounts for 45% of all oil-field-machinery-manufacturing jobs in the U.S., 48% of the nation's ethylene capacity, 49% of the nation's base-petrochemicals-manufacturing capacity, and 63% of its polypropylene capacity. Not surprisingly, Technology Industry Forecaster newsletter ranks Houston the No. 1 city for biotech, chemical, pharmaceutical, and advanced-materials jobs. In Houston, there is a "great concentration of skilled machinists, welders, mechanics, and engineers," because of the concentration of refinery and petrochemical plants, confirms Don Clews, president of Siemens AG's Chicopee, Mass.-based TurboCare unit. Its Houston operations this year moved to a location south of the city in order to expand its aftermarket turbomachinery-parts-making business. "Workers have the aptitude and skill sets needed" to precision manufacture industrial-size bearings, couplings, and seals, he adds. Strong Support System The support system "is much stronger -- and helpful -- here," whether it's to solve a business problem, find skilled workers, or train workers, adds T. Michael Andrews, vice president, Stewart & Stevenson Services Inc., a $1.2 billion Houston-based manufacturer of oil-well fracturing equipment, electric-power-generation equipment, rail-car movers, airline ground-support equipment, and army vehicles. More than 2,500 of its 4,200 workers worldwide-many of them mechanics or people with technical expertise -- are in the Houston region. "We've found those skills much harder to find elsewhere in the U.S.," says Andrews. What's more, "If we have to solve a problem with a business process," he says, "we have never had someone say they couldn't help. It is more likely they will ask when can we come over and show you how to do something." Similarly, Andrews says that he can go to Houston-area educational institutions and get support for changing curricula to develop students with the skills -- be they welding, technical reading, or advanced-manufacturing com-petencies -- geared toward company operations. "I don't think you can effect that type of change in other cities." Another example of helpfulness: As part of a state job-training program, TurboCare had an instructor come to its plant -- over a two-year period -- to train 75 of its manufacturing workers in shop math, blueprint reading, and precision-tool and instrument measurements. It's that kind of support that Houston executives say has been invaluable in helping them grow. Just ask the executives at Novo Industries LP, now part of Canadian-based Royal Group Technologies Ltd. It started 15 years ago with three employees and now, with 1,100 employees, is the largest manufacturer of vertical blinds for windows and patio doors in the U.S. "You couldn't find a better place for manufacturing," says Todd Markey, Novo's vice president of operations, who grew up in Colorado. "Some 70% to 75% ofour raw materials -- things such as steel, aluminum, and chemicals -- are purchased within 50 miles. That is a huge strategic advantage when you have to compete against Asia. We can get what we need in two hours, if needed. It keeps us efficient and keeps our inventories and costs down." Novo's growth also has been boosted by its diverse workforce, another strength of the Houston region, says Markey. People from more than a dozen cultures work side by side in Novo's spotlessly clean manufacturing buildings. "Our people have the same work ethic" as the people who emigrated to the U.S. Northeast a century ago, says Markey. Novo's employees, too, have "picked up their lives and moved to a new country." A graphic illustration of Markey's assertion can be seen on a large sign at Novo's entrance road. There, in five languages, are recruiting advertisements for workers it will need for a plant expansion this fall that will increase square footage at the nine-year-old site by 50% and add 300 to 500 workers during the next three years. "Our employees -- plus everyone else in this area who is allied to our success -- enable us to compete very aggressively against southeast Asia," says Markey. "If we were [elsewhere], there is no way we could compete in this business."

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