After a year marked by lengthy business shutdowns and higher unemployment numbers as a result of the COVID-19 pandemic, the economic vigor of The Woodlands area has taken an unprecedented hit, experts said in an April report on local employment.

The region’s previous leading industry, energy, dropped to third place among major nonretail employers surveyed as of early 2021, but health care continued to see growth, and a manufacturing company entered the area’s 10 largest employers for the first time, according to data released April 14 at The Woodlands Area Chamber of Commerce’s annual Economic Outlook Conference.

However, overall job growth was essentially flat among major nonretail employers—defined as those providing at least 100 jobs—said Gil Staley, CEO of The Woodlands Area Economic Development Partnership. A total of 38,660 employees were counted among 84 companies in the report, compared to 38,559 at 80 companies last year. Conroe ISD continues to employ the most people in the region with 4,487 employees as of the 2021 report.

“I was ready to come to you today and say this perhaps is the worst job downturn we’ve seen in our 46 years of existence,” Staley said. “But ... our newest major employer, No. 3, is 2,415 jobs. Wildcat PPE ... a company that came to our community at the height of the pandemic.”

However, the addition of those jobs was complicated by a furlough that took place in April when a federal contract Wildcat had to produce personal protective equipment such as hospital gowns was delayed due to the start of a new administration under President Joe Biden. Staley said the jobs are expected to return, but without them, the job loss would be the greatest in the area’s recorded history. Bill Gilmer, director of the University of Houston’s Institute for Regional Forecasting, said indicators for the Greater Houston area in March began to show promising signs despite little additional recovery since last July, when the region gained back 30% of the jobs it lost during the spring 2020 shutdowns.

“It looks like the vaccine is probably working, and we’re seeing the early stages of a turnaround as long as those estimates hold up,” he said.

Health care, manufacturing growth

The addition of Wildcat PPE to The Woodlands area marked the introduction of a manufacturing company to the region’s largest employers despite the uncertainty surrounding its workers’ returns, Staley said.

Matthew McFarlane, attorney for Wildcat’s parent organization, Python Holdings, echoed Staley’s remarks at the forum, claiming the furlough affecting floor staff is temporary. As of mid-April, he said the goal was to get people working again within a month, and the infrastructure was in place to support that return to work.

McFarlane said the furlough came about because one of the company’s major contracts was with an agency that provided hospital gowns to the U.S. Department of Health and Human Services for the military. He said a contract was awarded in September for $1.6 billion, but with the change in administration in 2021, there had been delays in sending out new delivery orders.

Although the uncertainty of the contracts puts the past year’s manufacturing job gains into question, Staley said growth in the health care sector has been consistent.Health care companies now make up five of the top 10 major nonretail employers in The Woodlands area with 10,806 jobs, according to the 2021 report. The industry overtook energy as the area’s No. 1 employer in 2020 and has grown from 26% to 28% of the region’s employees among major nonretail employers since then, Staley said.

That growth is poised to continue with expansions underway at Houston Methodist The Woodlands Hospital and Memorial Hermann The Woodlands Hospital to add patient care areas, operating rooms and other facilities.

Debbie Sukin, CEO of Houston Methodist The Woodlands Hospital and regional senior vice president of Houston Methodist, said the hospital has grown from 700 employees to more than 1,600 since 2017, and that growth will continue in 2022.

“Our extensive growth and current facilities expansion ... allows us to continue contributing to economic growth in The Woodlands and surrounding areas,” she said in an email. “We are excited to share that we will be hiring more than 300 new employees to help staff this phase of the expansion project.”Gilmer said health care is growing not just in The Woodlands but across the state and the country. However, he said the jobs are essentially local because of the services they provide.

“A lot of times when they talk about inherently local jobs, they talk about the laundry and dry cleaners, and the saying is, ‘We’re not going to get rich by taking in each other’s laundry.’ We’re not going to get rich by taking each other’s blood pressure,” Gilmer said.

Energy losses

Two years ago, energy jobs made up 27% of The Woodlands area’s major employers, but that had dropped to 11.2% as of the 2021 report.

Gilmer said in an April 1 report that changes in the oil sector will mean a smaller and more focused industry in the future.

“Oil will have less impact on Houston for years to come,” he wrote.

ExxonMobil moved from third to sixth place among employers in The Woodlands area in 2021 with 1,527 jobs.

ExxonMobil was also poised to fail to meet the terms of a 10-year tax abatement agreement with Montgomery County on two buildings at Hughes Landing in The Woodlands because of a reduced number of employees at the start of this year, according to county officials.

The abatement, approved in 2013, requires the company to have an average of 470 employees at the buildings. The penalty for failing to comply was nearly $4 million, according to Montgomery County Tax Assessor-Collector Tammy McRae.

In March, Montgomery County officials said the company would have 30 days to comply with the agreement. However, McRae followed up the March statements with an announcement April 27 that the company had moved employees from its Springwoods Village facility in Spring, in Harris County, to resolve the default.

Another energy company, Anadarko Petroleum Corp., in 2019 had the second-highest employment in the region for major nonretail employers with 3,666 employees. However, that company was bought by Occidental Petroleum Corp. later that year. As of the 2021 report, Occidental had 876 employees in The Woodlands area.

Robert Kaplan, president and CEO of the Federal Reserve Bank of Dallas, said at the April 14 meeting he believes fossil fuels will continue to see demand even as they make up a smaller portion of the energy sector.

“There will be demand for decades,” Kaplan said. “We possibly have not yet seen peak oil demand. ... It will be an important industry for many years to come.”

Future challenges

As of April 1, the Greater Houston area still had 146,000 people out of work and looking for employment, Gilmer said in a report he prepared for the Institute for Regional Forecasting. In The Woodlands area, data from the U.S. Bureau of Labor Statistics indicated unemployment was still at 7.8% in Montgomery County in February—about the same it was the previous summer.

Before COVID-19 shutdowns in March 2020, the unemployment rate in Montgomery County was less than 4% in early 2020.

Despite the lack of job growth in industries across the board in The Woodlands area since 2020, the region is preparing for an influx of people moving from other parts of the country such as California, said Fred Caldwell, president and CEO of Caldwell Companies That growth includes additional development Caldwell said is planned in south Montgomery County. The Howard Hughes Corp. is also continuing residential build-out in parts of The Woodlands such as Creekside Park and East Shore.

Gilmer said regional job recovery could come in early 2022 as the Houston area projects to replace another 160,000 jobs of the 340,000 that were lost when the virus first struck due to shutdowns and other measures. He said about 60,000 jobs could return early next year in sectors such as oil as the population becomes fully vaccinated and the recession backs down.

“Get everybody vaccinated as fast as possible,” he said. “It will be a COVID-driven recovery. I’m optimistic about this coming back together.”