The Woodlands-area small business, major industries look at 2021 recovery prospects

After a year fraught with unprecedented challenges amid the COVID-19 pandemic, some small-business owners in The Woodlands area said they are greeting 2021 with cautious optimism, while local economic experts said industries such as oil and gas may be looking at more widespread changes as they adapt to a new business landscape.

Several circumstances, such as a growing health care employment sector and a robust commercial market, may have helped to protect The Woodlands from greater losses, area experts said. However, The Woodlands was not immune to some downturn due to an upheaval in the energy industry and a chain reaction of losses across hospitality and retail industries as in-person activities dropped throughout the year.

“People are optimistic that by midyear enough population will be inoculated that we’ll return to some normalcy for transportation, ... business meetings that will help the hotels, retail coming back. ... So that gives us again something to be excited about,” said Gil Staley, the CEO of The Woodlands Area Economic Development Partnership.

Other experts watching economic trends agreed the key to determining how fast and to what extent recovery is possible hinges on COVID-19 vaccine distribution.

Patrick Jankowski, the senior vice president of research for the Greater Houston Partnership, said his 2021 forecast for the creation of 35,000 to 50,000 jobs in the Houston area depends on a successful vaccination rollout and a midyear tipping point of COVID-19 case counts beginning to diminish.

Patrick Jankowski, the senior vice president of research for the Greater Houston Partnership, said his 2021 forecast for the creation of 35,000 to 50,000 jobs in the Houston area depends on a successful vaccination rollout and a midyear tipping point of COVID-19 case counts beginning to diminish.

“The real key is going to be how quickly we can get the vaccine rolled out and how many people are willing to take it,” Jankowski said.

Oil and gas

Until 2020, the energy industry was the largest nonretail major employer in The Woodlands area. It dropped from commanding 27% in 2019 to 22.4% of the area’s nonretail jobs among major employers as of early 2020, according to The Woodlands Area EDP.

“We’re not going to rebound like we have in the past,” Jankowski said of the oil and gas industries, citing industrywide permanent restructuring.

In 2020, Occidental Petroleum Corp., which had just completed a $60 billion acquisition of Anadarko Petroleum Corp. in The Woodlands, downsized the company’s presence and sold the 30- and 31-story Anadarko towers on Lake Robbins Drive.

Occidental will continue to occupy one of those buildings for 13 years under an agreement with The Howard Hughes Corp., which purchased the towers, but the arrangement was one of several challenges for those working in the energy industry in 2020.

Oil futures hit a historic low of -$37.63 per barrel April 20, according to the Nasdaq stock exchange—a result of the expiration of the futures contracts, Community Impact Newspaper reported. As 2021 began, it was still below January 2020 highs of more than $60 per barrel.

Jankowski said the industry could lose 2,000 jobs in the Houston region in a good scenario in 2021 or 5,000 in a bad one. He said layoffs typically occur in the first quarter of the year, but prospects could improve with the economy.

According to the Texas Workforce Commission’s listing of companies that have filed Worker Adjustment and Retraining Notifications for required notification of mass layoffs, ExxonMobil indicated Dec. 2 that 677 employees in Harris County and a total of 45 employees at Hughes Landing in Montgomery County would be affected in a WARN filing for Feb. 2.

ExxonMobil released a statement Oct. 29 regarding pending layoffs.

“As part of an extensive global review announced earlier this year, the company plans to reduce staffing levels in the United States, primarily at its management offices in Houston, Texas,” the news release said. “The company anticipates approximately 1,900 employees will be affected through voluntary and involuntary programs.”

David Bat, the president of The Woodlands-based Kimberlite, an international oil field research and consulting group, said the effect of the COVID-19 pandemic on the industry was unprecedented.

“The effects of the ... coronavirus has probably been the most dramatic disruption event in the history of the oil and gas industry,” Bat said.

Bat said oil field services have seen the most dramatic change with reductions of 20% to 50% in the workforce. In places such as The Woodlands, that could mean individuals in their 50s or 60s taking an early retirement, he said. For companies, the chief strategies have been to reorganize to bring revenues and expenditures in line and to invest more in remote operations and digital technology.

Bat said despite lower oil prices, he expects to see near-normal oil consumption this year.

“I think 2021 is really shaping up to be a very strong year economically for the oil and gas industry,” Bat said. “In 2021, we’ll probably be back to our consumption of about 97 million barrels a day. ... So our demand for energy in 2021 will be strikingly close to where it was before the pandemic.”

Other regional employment

When the COVID-19 shutdown happened in March, initial unemployment rates skyrocketed across Texas, including Montgomery County, where new unemployment claims peaked at more than 22,000 for March 18-April 18. However, the Greater Houston area began to see signs of economic recovery at the end of 2020, Jankowski said.

Unemployment filings in Montgomery County, which were at 229 in the first week of March, peaked at almost 6,000 in the first week of April and ended the year at 435 for the week ending Dec. 26, according to the U.S. Bureau of Labor Statistics.

“We’ve recouped half of the jobs we’ve lost,” Jankowski said Dec. 18. “We’ve gotten back all the easy jobs. ... The second half is going to be more difficult to get.”

As part of that challenge, on Jan. 5, restaurant capacity was reduced to 50% due to COVID-19 hospitalizations in the trauma service area including Harris and Montgomery counties.

Despite the challenges, businesses continue to choose The Woodlands as a location, Jankowski said.

“The Woodlands may be unique in that it might be able to handle additional development because a lot of population is still migrating there,” he said.

Staley also said he is optimistic for several reasons, including the strong commercial market.

“Our [commercial] occupancy levels are higher than almost anywhere in the Houston region,” he said, citing the 15% office vacancy rate in late 2020, which was still below regional averages closer to 20%.

One company that opened a facility in The Woodlands in 2020 was Wildcat PPE, which manufactures personal protective equipment.

“Wildcat PPE needs people,” Staley said. “They are running three shifts, 24-hour operation, over 2,000 jobs, unskilled labor. So it’s a great opportunity for those who need a helping hand right now.”

Staley said by September and October, the EDP was receiving almost normal levels of interest from businesses looking to locate in the area.

“We’re really optimistic that we’ve landed a company from San Francisco Bay area in biotechnology that will bring much-needed jobs,” Staley said.

Biotechnology jobs are of particular interest because of their high pay and requirements for high levels of education. According to the U.S. Census Bureau five-year Annual Community Survey estimate for 2019, 64% of The Woodlands working-age population has a bachelor’s degree.

“That’s hugely important to a biotech company that requires an educated workforce,” Staley said.

Staley said the company that might locate in The Woodlands could translate to hundreds of jobs in a few years. However, as of press time, he was not able to confirm the name of the company.

Meanwhile, another technology company, Hewlitt Packard Enterprise, announced Dec. 1 it was relocating its headquarters to Springwoods Village, just south of The Woodlands.

U.S. Rep. Kevin Brady, R-The Woodlands, said in a Dec. 1 statement that the move will help the entire region, including sectors that have been suffering in The Woodlands.

“When the new [HPE] headquarters opens in Spring in 2022, it will bring thousands of jobs to the region in addition to supporting our tourism, hospitality and restaurant industries,” Brady said.

Small businesses

Outside of major industries and employers, many locally owned businesses had to retool their approaches in 2020. Meanwhile, new businesses faced the challenge of attracting customers when most people were staying home.

Debra Myers, the owner of The Woodlands-based Enfusia, which makes bath and body products, said its transition to making hand sanitizer and mask-refresher spray was critical. Hand sanitizer is regulated by the federal Food and Drug Administration, but a waiver allowed companies such as Myers’ to make the product during the pandemic.

While the company is still making hand sanitizer, its largest new category of sales was the mask spray, she said.

“It’s just one of those really COVID[-19] success stories, and it’s just something that was really born out of necessity. ... We survived the summer doldrums of ‘there was no business,’ ... and we really thrived,” Myers said.

Angela and Ryan Donnell, co-owners of JDog Junk Removal & Hauling in The Woodlands, started their business Aug. 1. Although launching during a pandemic was risky, they said it was positioned as an essential business offering a service people needed at that time.

“We weren’t ever scared about getting shut down, but we were definitely concerned about our level of business wasn’t going to be as high as we had planned,” Ryan Donnell said.

Angela Donnell said they used marketing methods that did not rely on face-to-face contact, such as placing door hangers on trash cans and joining the local chamber of commerce.

A local business that relies on in-person customers, The Game Preserve on Sawdust Road, has faced steeper challenges, however, co-owner and Chief Operating Officer Rusty Key said. The arcade room provides video game and pinball machines, and while hand sanitizer is available throughout the venue and cleaning efforts have been stepped up, he said business is down.

“[It’s a] very, very low [amount of] people coming out. ... We’re losing money every month,” Key said.

The location has launched a fundraising campaign on its website to try to recoup losses so it can renew its lease in March.

Meanwhile, J.D. and Beth Webb, the co-owners of Signarama The Woodlands South, said launching their business in August not only changed the way they approached marketing, but also the products they offered.

“The sign industry is an essential business when it comes to things like this because we’re able to produce PPE equipment and provide face shields and provide room dividers and the plexiglass shields at the register and things like that,” Beth Webb said. “It wasn’t just signs saying ‘we’re still open’ that helped us stay afloat.”

Beth Webb said she believes the community spirit in The Woodlands area has helped to foster a spirit of recovery.

“People have a lot of pride here,” she said. “I’m glad we chose this area. I wouldn’t put us anywhere else in the world but here.”

Hannah Zedaker contributed to this report.

By Ben Thompson
Ben joined Community Impact Newspaper in 2019 as a reporter for The Woodlands area and began working as Austin's City Hall reporter in April 2021.
By Vanessa Holt
A resident of the Houston area since 2011, Vanessa began working in community journalism in her home state of New Jersey in 1996. She joined Community Impact Newspaper in 2016 as a reporter for the Spring/Klein edition and became editor of that paper in March 2017 and editor of The Woodlands edition in January 2019.