OKC economic "portfolio"

[Teo9969]

I made *this* post in the Boeing thread, and thought it would be an interesting topic to expand on in discussion.

The basic question is what is going to be the foundation for OKC moving forward economically. It seems that currently, the only major industry that OKC bolsters is Energy. Both of our Fortune 500 companies are Energy companies. It seems like a major step for OKC to build a more solid foundation is to weave another major industry into the economic fabric of the city. I expect Natural Gas to do well for us for several more decades, and hopefully it blows up big enough to thrust OKC into a major boom. Unfortunately any major boom is going to be at risk of a major bust if the market was on a bubble to begin with (Fortunately, I think that Natural Gas is undervalued, unlike Oil in the 80s). It helps to soften a blow to a community when a bust happens or even a downturn in a specific market if that community has a strong portfolio in other markets that are performing well.

With all the Boeing jobs that are currently moving here, coupled with current aerospace infrastructure already in place (FAA, for example), it seems that is a market that has a chance to be woven into the economic fabric. It certainly will never overtake energy, but it's a good start to "diversification".

What other markets would you all like to see have a bigger presence in OKC moving forward? What types of markets would thrive in OKC, what types of markets are pipe-dreams?

Here's a list of markets that I can think of off the top of my head (Some of these are more broad, and some more specific):

Banking/Finance
Retail
Restaurant
Energy
Raw Materials (Steel, Concrete, Soil, Fabric, Wood etc.)
Technology
Communication
Insurance
Medical/Pharmaceutical
Automobile
Aerospace
Charity
Music
Movies
Performing Arts

Clearly most of these will not be a foundational part of our fabric for a host of reasons, but the main question is which of these, or others that you can think of, are the best plays for this city?

[G.Walker]

Of course the Energy, Aerospace, and Medical sectors are the biggest movers in OKC right now. I would like to see OKC diversify to more Banking/Finance.

[Just the facts]

I think one of the problems is that of perception. Sure there are lots of aviation jobs around OKC, but unless you drive by Tinker or the airport you never see them. Take the 1000+ Boeing employees who will be sitting in a cubicle to do their work for example. In a non-descript 6 story building out on Air Depot they don't have a visual presence. Put those same employees in a downtown officer tower with Boeing stamped on the roof and LED light outlining the building and people will take notice.

Here are some rendering of a proposed Boeing office tower in Charleston, SC. These buildings create a presence in the community.

[Skyline]

Not urban enough.

[Just the facts]

Not urban enough.

LOL - it is nice to see that people pickup on that instantly now. It wasn't very long ago someone would see a tall building and say 'urban'. Now they are looking at how the building intereacts with the land around it before assigning a classification. That is progress.

[Urbanized]

Though most Oklahomans can't conceive of it, tourism is the third largest industry in the state. It has a $6 billion annual impact, employs nearly 75,000 people statewide (around 25K of whom are in OKC). It is the best kind of economic development, as it brings money from other markets and deposits that cash in our economy without requiring much in the way of infrastructure or public incentive.

OKC Biz
OKC CVB website

It's OK for us to get excited about a few hundred jobs here and there in whatever random industry -- especially when they are high-paying related to our current average income and help redefine the curve - but with an estimated ROI of $32.54 to $53.46 for every one dollar spent on tourism advertising in Oklahoma, it's hard to believe that we shouldn't put more money and effort into this sector.

[soonerguru]

I made *this* post in the Boeing thread, and thought it would be an interesting topic to expand on in discussion.

The basic question is what is going to be the foundation for OKC moving forward economically. It seems that currently, the only major industry that OKC bolsters is Energy. Both of our Fortune 500 companies are Energy companies. It seems like a major step for OKC to build a more solid foundation is to weave another major industry into the economic fabric of the city. I expect Natural Gas to do well for us for several more decades, and hopefully it blows up big enough to thrust OKC into a major boom. Unfortunately any major boom is going to be at risk of a major bust if the market was on a bubble to begin with (Fortunately, I think that Natural Gas is undervalued, unlike Oil in the 80s). It helps to soften a blow to a community when a bust happens or even a downturn in a specific market if that community has a strong portfolio in other markets that are performing well.

With all the Boeing jobs that are currently moving here, coupled with current aerospace infrastructure already in place (FAA, for example), it seems that is a market that has a chance to be woven into the economic fabric. It certainly will never overtake energy, but it's a good start to "diversification".

What other markets would you all like to see have a bigger presence in OKC moving forward? What types of markets would thrive in OKC, what types of markets are pipe-dreams?

Here's a list of markets that I can think of off the top of my head (Some of these are more broad, and some more specific):

Banking/Finance
Retail
Restaurant
Energy
Raw Materials (Steel, Concrete, Soil, Fabric, Wood etc.)
Technology
Communication
Insurance
Medical/Pharmaceutical
Automobile
Aerospace
Charity
Music
Movies
Performing Arts

Clearly most of these will not be a foundational part of our fabric for a host of reasons, but the main question is which of these, or others that you can think of, are the best plays for this city?

I believe there are already more jobs in OKC in aviation and defense industries than there are in oil / petroleum. I realize that may have changed with recent announcements.

[Reggie Jet]

I certainly agree about Tourism. I think our chances of truly moving forward in that regard will depend on how successful we become in working with the tribes to market our Native American heritage. (We need that cultural center completed, for sure!)

As far as advancing in the areas of health, I think our medical center will have to become more of a regional draw, not just a state draw.

Biotech (which I'm assuming will mostly be under the health category) will also grow, hopefully.

I would love to see us become a center for alternative energy. Sure would help cushion the next oil/gas bust.

And while I'm speculatin'... Nanotech, anyone?

[Just the facts]

Not to doubt you Urbanized but I have seen the way the Chamber and other City entities calculate these numbers. It is doubious at best. If the $32.45 return was even close to accurate don't you have to scratch your head and wonder why the state doesn't spend the whole $8 billion state budget on tourism advertising? By their logic a person making $100K that only spends $10 on crackers could make $200K if he started spending $20 on crackers.

[soonerguru]

I politely take issue with Urbanized's comment regarding the lack of needing infrastructure for tourism. I think I know what he's saying, but the facts are we have spent over $1 billion on improving our city, which has enhanced our tourism. That is not all roads and bridges (though we're working on those, too), but basketball arenae, canals, parks, and street cars enhance the tourism experience and make OKC a more desirable destination. So, yes, we DO need to spend money on infrastructure to grow our tourism base, and we have and it has already paid dividends.

[Urbanized]

Not to doubt you Urbanized but I have seen the way the Chamber and other City entities calculate these numbers. It is doubious at best. If the $32.45 return was even close to accurate don't you have to scratch your head and wonder why the state doesn't spend the whole $8 billion state budget on tourism advertising? By their logic a person making $100K that only spends $10 on crackers could make $200K if he started spending $20 on crackers.

I won't quibble that there is surely some puffery going on when an industry is required to justify its existence at the public feeding trough. But even if those numbers are really just 25% of the stated (which they almost certainly are not) they are still impressive. In this case it is - as you say - a headscratcher that we don't spend more in advertising and leveraging more of this spectacular ROI.

The reason we don't is twofold:

1. Advertising itself is a popular place for businesses - much less the public sector - to cut in times of austerity. It is actually counterintuitive; advertising is most important when times are tough. But ask any advertising account executive and they will tell you that the marketing budget is the first place most company budgets are cut when people want to save money.
2. Locals (regardless of the locale) typically find it hard to believe that others find their place of residence interesting enough to shell out dollars to visit. Therefore, it is much easier for a politician to make points with his or her constituency on CUTTING the budget for "fluff" like tourism marketing than ADDING TO the budget. This is true not just in markets like OKC, but also in places like Florida, California, and other "tourist meccas."

Nutshell: most people don't know or care how much money tourism brings to the economy, so unless there is a strong advocate publicly demanding that we pay more attention to this industry, we substantially ignore it. Which means as a city and as a state, we are leaving money on the table, consumer tourism dollars that instead go to other markets.

[Urbanized]

I politely take issue with Urbanized's comment regarding the lack of needing infrastructure for tourism. I think I know what he's saying, but the facts are we have spent over $1 billion on improving our city, which has enhanced our tourism. That is not all roads and bridges (though we're working on those, too), but basketball arenae, canals, parks, and street cars enhance the tourism experience and make OKC a more desirable destination. So, yes, we DO need to spend money on infrastructure to grow our tourism base, and we have and it has already paid dividends.

I understand and agree with what you are saying to some extent. There is no question we have spent and hopefully will continue to spend money improving those places, and that our roads, arenas, public parks and such are certainly utilized by visitors. However in most of the instances mentioned, we were actually spending to improve OUR OWN quality of life. You could add places like the outlet mall on I-40 to the list; there was public infrastructure and other participation that brought the mall here. There are tons of visitors AND locals alike shopping out there; just check the car tags.

But improving OUR local quality of life experience was the whole point of MAPS, for instance. Purely by accident (well OK, maybe not accident, but as a consequence of), we also created a place that other people like to visit (forehead slap).

[Just the facts]

Someone is going to have to define 'tourism' for me? Is going to the movies tourism? If I am driving through OKC and stay the night in OKC hotel is that tourism? If I go to a Thunder game is that tourism? Where does tourism end and simply living in OKC begin?

[Snowman]

Someone is going to have to define 'tourism' for me? Is going to the movies tourism? ... If I go to a Thunder game is that tourism? Where does tourism end and simply living in OKC begin?

If you live in the metro then rarely would anything you do in the metro count as tourism. If you are frequently in the area it is generally not tourism either. There are gray areas though.

... If I am driving through OKC and stay the night in OKC hotel is that tourism? ...

Short term lodging could be tourism, especially the longer it gets away from your home, though if it is a trip you do more than a couple times per year then starts leaning to no.

[Questor]

City governments don't attract jobs, at best they make the environment more attractive and help give industries a nudge in the right direction. Industries follow people, be it customers or a skilled labor force. So really what the city needs to do is recognize what we already have here and think about what types of policies might help diversify that (by getting word out to the larger industry about what industry is already here, by talking to existing industry and seeing what's on their minds, etc.).

Here's what I mean: case in point -- aerospace -- there are lots of successful mil-aero companies here because they are all clustering around their customer... mostly Defense related, but we've also had success to a lesser degree with Commercial (not saying things like Mike Monroney aren't great, just saying that defense is a much larger base here). So why not try to go after more commercial work? Industry follows people... we have lots of people who understand the aerospace industry here who would be great workers, we also have some commercial customers here, so attract more industry that diversifies that. In other words I think sometimes the tendency is to go for the obvious thing and not see all the other un-served opportunity. From a tax base standpoint it would be good for the city because with aero when military is up often times commercial is down and vice versa.

The same goes for energy. Clearly Oklahoma has a long legacy with oil, and then gas not too long after that. We have lots of people here who understand the energy industry... and lots of energy consumers, customers, and distribution... so to me that means it is time to go after things that could thrive of off that which we don't currently have much of here... green/renewable energy companies and other segments. Again good for the tax base because it adds jobs, but also like with the first example I have noticed that often times when the more traditional energy sector work is down the non-traditional stuff is up, and vice versa. Good for diversification.

[Fantastic]

Locals (regardless of the locale) typically find it hard to believe that others find their place of residence interesting enough to shell out dollars to visit.

Eureka!!!

[Popsy]

City governments don't attract jobs, at best they make the environment more attractive and help give industries a nudge in the right direction. Industries follow people, be it customers or a skilled labor force. So really what the city needs to do is recognize what we already have here and think about what types of policies might help diversify that (by getting word out to the larger industry about what industry is already here, by talking to existing industry and seeing what's on their minds, etc.).

Here's what I mean: case in point -- aerospace -- there are lots of successful mil-aero companies here because they are all clustering around their customer... mostly Defense related, but we've also had success to a lesser degree with Commercial (not saying things like Mike Monroney aren't great, just saying that defense is a much larger base here). So why not try to go after more commercial work? Industry follows people... we have lots of people who understand the aerospace industry here who would be great workers, we also have some commercial customers here, so attract more industry that diversifies that. In other words I think sometimes the tendency is to go for the obvious thing and not see all the other un-served opportunity. From a tax base standpoint it would be good for the city because with aero when military is up often times commercial is down and vice versa.

The same goes for energy. Clearly Oklahoma has a long legacy with oil, and then gas not too long after that. We have lots of people here who understand the energy industry... and lots of energy consumers, customers, and distribution... so to me that means it is time to go after things that could thrive of off that which we don't currently have much of here... green/renewable energy companies and other segments. Again good for the tax base because it adds jobs, but also like with the first example I have noticed that often times when the more traditional energy sector work is down the non-traditional stuff is up, and vice versa. Good for diversification.

Green/renewable energy companies would be a poor choice to recruit in that without massive government subsidies it would not be utilized today as the expense to produce it are many times more than the cost to produce traditional energy sources. With the federal government well past the point of being bankrupt the continued subsidies of green energy are doubtful.

[semisimple]

And while I'm speculatin'... Nanotech, anyone?

Not gonna happen - SWeNT is an unusual success story in nanomaterials manufacturing made even more unusual given that was an OU spin-off. It's not likely that "nanotech" will ever likely to develop into its own industry, but will rather augment existing ones (aerospace, automotive, oil & gas, etc.) while existing large chemical companies will take over the basic synthesis/manufacturing role of companies like SWeNT.

[soonerguru]

Green/renewable energy companies would be a poor choice to recruit in that without massive government subsidies it would not be utilized today as the expense to produce it are many times more than the cost to produce traditional energy sources. With the federal government well past the point of being bankrupt the continued subsidies of green energy are doubtful.

I see your point, and it's a good one, but R&D for green energy will be ongoing regardless of government debt. Either OKC positions itself to join this sector or it locates elsewhere. No reason we shouldn't get in the game, as green energy will become more affordable / cost effective as research and technology improves.

I remember when everyone said that no one would buy recycled paper because it was "too expensive." Within five years that argument was moot.

[Popsy]

I see your point, and it's a good one, but R&D for green energy will be ongoing regardless of government debt. Either OKC positions itself to join this sector or it locates elsewhere. No reason we shouldn't get in the game, as green energy will become more affordable / cost effective as research and technology improves.

I remember when everyone said that no one would buy recycled paper because it was "too expensive." Within five years that argument was moot.

Guru, I would not argue your point, but I would question the possibilities of research continuing without the subsidies.

[Questor]

Green/renewable energy companies would be a poor choice to recruit in that without massive government subsidies it would not be utilized today as the expense to produce it are many times more than the cost to produce traditional energy sources. With the federal government well past the point of being bankrupt the continued subsidies of green energy are doubtful.

My point was that the city government needs to look at what we have here economically and then figure out how they attract not just other businesses from that same economic domain but also from adjacent markets. I'm not specifically saying go after "x," I'm saying they need to figure out anything and everything that is and then go after it all, focusing on what customers we have here and what our existing employment base is.

[ou48A]

There are millions and millions of barrels of crude oil already flowing though the oil hub in Cushing Oklahoma and the amount of crude will likely increase. This gives our state a very unique advantage.

It’s hard to understand why Oklahoma hasn’t done a much better job of finding ways to add value to this raw product. Doing so would create mostly high wage jobs; increase our tax revenue base and create an environment where other spin off business could be created.
Our state could also do a better job of helping businesses that add value to natural gas.

[ou48A]

Is it because we don't have the refining capabilities that exist in Houston?

I agree, but we could still do more with what we have to work with. If nothing else we should consider what it would take to expand the capabilities of the refinery’s we have in Oklahoma.

[ou48A]

I'd be for that. Just didn't know if we are under investing, where we would be.

I just know that with all the crude oil & NG that flows through our state that we should be doing more to add value to it.
Exactly what and how,,,,,, that’s going take someone smarter than me to figure out.

[Jchaser405]

I would love to see OK lead the nation in natural gas investment and technologies. I would be amazing to be the first city to phase into NG vehichles over time and begin exporting the tech.