Houston shrugs off Enron drama

City image-makers in full-spin mode

By PATTI BOND
The Atlanta Journal-Constitution
Published on: 02/07/06

Houston — The biggest fraud trial in business history, tied to one of the biggest bankruptcies ever, is playing out right in the middle of the downtown business district here, but it's all a mere footnote, as civic leaders see it.

Four years after the fact, the Enron scandal is being shrugged off as rather passé in this Texas town still fueled by old-economy energy businesses that preceded and survived the start-up energy trader.

"It just wasn't the devastating blow, economically, that it was made out to be," said Charles Savino, executive vice president of the Greater Houston Partnership, an economic development group.

Savino and other area business leaders contend that Houston got a bad rap in the aftermath of the late-2001 collapse of Enron, once the seventh-largest U.S. company. In the resulting media frenzy, Enron's impact on Houston was overblown in the headlines, they say.

"Houston went through a flat period from 2001 to 2003, but it was mostly the result of [the 2001 terrorist attacks], not Enron," Savino said.

But the specter of Enron is back — emanating from the federal courthouse down the street. The government's massive trial of Enron founder Kenneth Lay and former Chief Executive Jeffrey Skilling began last week, and that has put Houston's image-makers into overdrive. Dozens of reporters from news outlets across the globe have swarmed downtown, and this time around, Houston is on the offense.

"We want to make sure that all the professionals coming in to cover the trial have good, accurate information about the city," said Jeff Moseley, president of the Greater Houston Partnership. "They're naturally going to have questions about the community Enron grew up in, and we want to give them the answers."

Indeed, answers are everywhere. For the first day of jury selection, workers for the partnership had stocked the media overflow room at the federal courthouse with stacks of Houston-friendly info, including maps, economic data and a recently prepared document titled, "Enron in Perspective," offering a tit-for-tat rundown on "Enron Then" and "Houston Today."

Plan hatched 5 months ago

Civic leaders launched their game plan for the trial five months ago, at one point floating the idea of coaching hotel workers on what to say if nosy journalists started sniffing around. That proposal fell by the wayside, though. Instead, they persuaded downtown hotels to set up media-friendly areas, such as press rooms, and hand out city economic info packets.

Metro Houston, with a population of more than 5 million, is clearly big enough to handle losing Enron, which employed more than 6,000 people locally.

Savino says that Enron's once-well-paid employees have largely stayed close to home to start their own businesses or find other work.

"We're not like the city that lost a manufacturing plant. Enron had a huge talent base, and that created a venture capital community here," he said. "We've seen that happen historically in other downturns. People tend to stay close to Houston."

Boom-and-bust in general is second nature to Houston, a town built around oilmen.

Recent history: In 1982, plunging crude prices sent the city into a five-year downward spiral following the giddy "Urban Cowboy" oil boom days of the 1970s and early 1980s.

By the 1990s, Houston was back in business, thanks in part to a new focus on endeavors outside oil: the Johnson Space Center and the Texas Medical Center.

Still, energy is the bread and butter of the economy in Houston, which is home to about a third of the country's energy exploration jobs, according to the partnership.

Although the loss of Enron dealt a blow to the city's blossoming energy trading sector, there has been a bounceback, thanks to high demand and skyrocketing prices. And that's pushing expansions of local offices.

The city's overall economy has grown for 35 months straight, according to a monthly report by the National Association of Purchasing Management-Houston.

Like Atlanta, Houston also is seeing a surge of redevelopment intown.

Just blocks from Enron's old headquarters building, for example, the city's Midtown neighborhood is a construction zone of newly opened or soon-to-open lofts, restaurants and shops.

Still, Enron's gleaming glass towers (one of which now is occupied by Chevron Corp.) are iconic reminders of what some remember as darker days.

"I stood at the window, watching the Enron people walk out with their cardboard boxes," said Savino, whose office is directly across from the former headquarters.

As today's headlines go, so far, so good for the country's fourth-largest city.

April Young, media relations coordinator for the Greater Houston Partnership, fielded an average of 10 Enron-related calls a day leading into the trial. Looking at the resulting flurry of stories for the kickoff of the trial, Young said she's pleased.

"I think Houston has done well in coverage so far," she said. "The media, both local and national, is really focusing on the trial and not the city, which is nice."

HOUSTON AT A GLANCE

•Metro area population: 5.18 million.

•Economy: Nearly 50 percent of Houston's economic base is energy-related. It is home to nine of the country's 25 largest publicly traded oil and gas exploration and production companies.

In all, more than 3,600 energy companies, including 600 exploration/production firms and more than 170 pipeline transportation firms, operate there. Houston also calls itself as the world's largest medical center, with 43 health-care operations such as the University of Texas M.D. Anderson Cancer Center, the Baylor College of Medicine and Texas Children's Hospital.

•Biggest employers: Memorial Hermann Healthcare System (16,300 employees), Continental Airlines (16,000), University of Texas M.D. Anderson Cancer Center (16,000), Halliburton (14,000).

•Job growth: The Texas Workforce Commission forecasts that employment in the greater Houston/Gulf Coast area will grow by nearly 482,000 jobs, or 19 percent, by 2012.

Source: Greater Houston Partnership, Greater Houston Convention and Visitors Bureau