Texas hopes `fourth economy' will cushion future oil shocks
International events have conspired this summer to boost oil prices back to levels that allow Texas and other energy regions to breathe easier. But with oil at $21 a barrel, no one in Texas is getting complacent - which is why bulldozers will begin cutting roads into a parched swath of ranchland just west of San Antonio next month. Like some 200 other areas of the United States, San Antonio is opening a research park aimed at incubating new businesses out of high-tech, biotech, and medical discoveries cooked up in the vicinity.
``It's abundantly clear,'' says Raymond Smilor, a business professor at the University of Texas at Austin, ``that oil and gas will never have the emphasis they did in the 1970s.''
Dr. Smilor sees Texas as entering its ``fourth economy.'' The first was cotton and agriculture. The second was cattle. The third, oil and gas. And now, it's high-tech and biotech. Parts of each of these previous economies continue to exist, but diversification is enhanced with each new overlay.
As Smilor and all but the most die-hard oil wildcatters see it, Texas has a reprieve right now in the overall decline of the oil industry. But it must act quickly to diversify an economy that labors under 9.6 percent unemployment, has a surfeit of unoccupied buildings (Austin, for instance, has a 34 percent office vacancy rate, highest in the nation), financially strapped banks and thrifts, idle oil rigs, and a growing number of bankruptcies (John Connally, former governor and one-time US Treasury secretary, is the most notable recent one).
``Texas is like Pennsylvania was in 1970,'' says Richard Morris of the Texas Research and Technology Foundation in San Antonio. ``Coal and steel slipped away from Pennsylvania back then, and there were many people who believed it would come back. But it didn't.''
Texas, meanwhile, was enjoying the ride as the Organization of Petroleum Exporting Countries jacked up energy prices. By 1980, the year oil reached its $36-a-barrel apogee, some 1,500 people a week were moving to Houston.
``Now things have reversed,'' Dr. Morris says. ``Realistic people know that the firmer oil price will only be temporary.''
This is why the Texas Research Park outside San Antonio is so important - for practical and symbolic reasons. It is aimed at tapping the academic and applied scientific talent of south Texas and creating new businesses for the state. Oil money is driving it in the form of a 1,500-acre site donated by the Concord Oil Company.
Along with Austin-based Microelectronics and Computer Technology Corporation, and Sematech - a semiconductor industry research consortium that Austin is vying for - the research park could be an anchor of the fourth Texas economy.
The biggest emphasis of the research park will be on the ``life sciences,'' meaning biotech and medical research. This is because of the big medical infrastructure that already exists in San Antonio with three major military bases, which emphasize medical treatment of service personnel, and several other medical centers. There is also the fast-growing University of Texas at San Antonio branch, with its newly accredited engineering department, and Southwest Research Institute, which specializes in applied research.
Among research areas where San Antonio already has a reputation: aerospace medicine and related ergonometric areas such as information display and response time for human beings; food processing, including work on disease-free foods; microencapsulation of foods, water, and fuel; recombinant DNA; and the chemical engineering and geology related to the petroleum industry. The primate colony at the Foundation for Biomedical Research is important in the medical work being done on acquired immune deficiency syndrome.
There are some 200 research parks in the US. About 75 of those are considered viable by those who track them. Only 10 are real successes. Leading examples are Research Triangle Park in North Carolina, which dates from the 1940s, and Stanford Research Park in California, which opened for tenants in 1951.
What makes the Texas Research Park different? It starts with $40 million in facilities and research equipment, endowed research chairs, university support, and a debt-free status. It can therefore be selective about tenants. The first ones will begin taking up residence in the campuslike park in the spring of 1989.
The local labor force looks attractive, too. San Antonio wages are somewhat lower than the national average, and the unemployment rate is about 9 percent. But labor specialists say the city actually has a large, skilled labor base.
``It's a misconception outside the state that San Antonio is largely blue collar,'' says Mario Hernandez of the San Antonio Economic Development Foundation; 53 percent of the labor force is actually white collar and fairly well educated, he says. Skilled Army and Air Force careerists often retire in San Antonio, usually at a fairly young age, and become part of the local talent pool.
Morris estimates that the research park will create 30,000 jobs over the next 30 years and spin off 100,000 other jobs outside the park. Even if it is not that successful, it is a significant move for this state away from oil dependence.
``If we are clever and see the writing on the wall,'' Morris says, ``oil will get us through hard times. But diversification is necessary for the long run.''