Thank you Susan for co-hosting this teleconference with HREDA. I had planned to be in Houston with you, but the coronavirus continues to present challenges.
However, we all know that when Houston confronts such obstacles, it always prevails.
It last happened in August 2017, when Hurricane Harvey dumped 40 inches of rain on your city. It was the wettest storm ever to hit the United States, and it tied with Katrina as being the costliest on record. But just as your citizens, your industries, your workers, and your economic development organizations responded so successfully to that crisis so, too, will you emerge from this current one ─ stronger than ever.
A special thanks to the economic development professionals at HREDA who work so hard and have been so successful at attracting investment and retaining our country's most important and essential industries. I visited Corpus Christi in late 2018 with Governor Abbott to christen the first cargo loading of LNG at Cheniere's massive greenfield plant. It was a true reflection of your region's commitment to industry that no virus will ever abate.
I am also pleased to see how the Greater Houston Partnership has embraced its role in assisting companies reopen the economy. Your "Work Safe 2.0 Principles" are an indication of why you have been such a force in the community since the Houston Chamber of Commerce was founded back in 1840.
And to your member companies who are supplying the essential intermediate goods for PPE ─ or have shifted some of your production to making these life-saving products ─ thank you. You and your employees are providing the vital protection needed by our courageous health care professionals, and our front-line workers. The nation depends on your output now more than ever.
Since fostering economic growth is job number-one for all of us, our country achieved an important milestone on July first ─ the day the U.S.-Mexico Canada Agreement entered into force. Yesterday afternoon, I was with President Trump as he welcomed President Obrador of Mexico to the White House for an official ceremony to celebrate the entry-into-force of the USMCA.
I discussed with his Economic Minister numerous issues associated with implementing the agreement, including:
- The investment climate for U.S. businesses;
- Mexico's actions that favor state-operated energy providers;
- And Mexico's aggressive tax-collection actions that may be costly to American companies.
Since USMCA went into effect a week ago, the U.S. Government has been extremely busy implementing this ground-breaking trade deal. We have:
- Published rules for dispute settlements;
- Issued new tariff schedules and duty rates;
- Released guidelines to administer the high-wage component of the labor-content requirements;
- And put in place labor enforcement provisions that are written into the agreement.
USMCA is all systems go. It fortifies the world’s largest trading block, and it provides companies in Houston with a level playing field on our own continent for the first time since 1994. For Texas, with the longest Mexican border of any U.S. state at 1,254 miles, the agreement should generate even more economic growth once the pandemic subsides.
And it will be especially beneficial to Houston given:
- Your number-one rank as the largest exporter of any U.S. metro area, with goods exports amounting to $121 billion in 2018.
- Your number-one rank among all U.S. metropolitan regions for manufacturing GDP;
- Your 230,000 skilled manufacturing workers;
- Your access to export markets through intermodal ports, rail, trucking routes, and two international airports;
- And your sustained devotion to economic development, a high quality of life, great neighborhoods, and affordable housing.
Exports of goods from Texas totaled a whopping $329 billion last year. One-third of those exports ─ or $109 billion ─ headed to Mexico; and $28.5 billion were shipped to Canada. Mexico and Canada were the two largest export markets for goods manufactured in Texas, representing 42 percent of the state's exports.
Texas is an industrial juggernaut, ranking first among the 50 states for exports.
USMCA’s new rules of origin will help rebuild U.S. production that was outsourced to Asia, and it will go a long way to re-establishing domestic supply chains in many industrial sectors. USCMA increases North American content of vehicles to 75 percent, and it requires that up to 45 percent of the value of passenger cars be made by workers earning an average base-wage of at least $16 an hour. It also raises the di minimis levels, allowing companies to bring products into the country without any tariff or value added tax.
With the economic lockdowns required by the coronavirus pandemic, the last three-and-a-half months have not been easy for anyone. The collapse in oil prices has added to the stress. Thankfully, the price of oil is ascending, and most manufacturers have been proactive ─ and creative ─ in re-engineering production lines to protect their employees. As a result, there have been far fewer layoffs in manufacturing than in many service sectors. And this bodes well for Houston as we emerge from this crisis.
Your commitment to foreign direct investment also will help tremendously. From May 2015 to this past April, there were 742 greenfield FDI projects announced in Texas, with a total listed capital expenditure of $58 billion. FDI supported 623,000 jobs in Texas, according to the latest data from the Bureau of Economic Analysis.
In 2019 alone, there were 48 announced greenfield FDI projects in Houston. This reflects the fact that you are truly a global city, hosting consulates from 90 countries.
Since the lockdowns in March, American families have been yearning for good economic news. Thankfully, we have stopped the hemorrhage of jobs. Employment figures have been extremely encouraging, with 6.5 million people returning to work in June, the biggest monthly gain ever. There were also 5.4 million job openings last month, an auspicious sign of continued employment gains in the months ahead. The recovery is being aided by a savings rate of 23.2 percent, which also bodes well for the future.
In May, Americans saved $4.1 trillion at an annualized rate, up from $1.4 trillion in February. It means that our financial institutions are sound, and there is stored up potential for large increases in consumer spending. We saw evidence of that in May’s figures when retail sales jumped by a record 17.7 percent, far higher than the 8 percent economists had projected in a survey by Dow Jones. If we can avoid further lockdowns, local businesses will continue to benefit from this pent-up consumer spending.
Finally, before I take your questions, I want to mention that it is essential for everyone in the Houston metropolitan region to fill out their Census surveys. To date, Houston's response rate is only 52.4 percent. This is far below the national average of 62 percent.
So much depends on having an accurate count, including the allocation of billions of dollars in federal funds over the next decade, and your representation in Congress. The disbursal of future housing, healthcare, and educational funds are all determined by the 2020 Census.
I encourage all of you to engage with your workers, your community organizations, and your local governments to stress the importance of going online and filling out the form.
And, please support Mayor Sylvester Turner’s Car Parade through the Fifth Ward on July 18th to raise awareness and increase response to the 2020 Census.
Now, I am eager to hear your ideas on how we can work together to accelerate our economic recovery and generate thousands of great jobs for the workers of Houston and the Gulf Coast region of Texas.
Thank you for taking the time to join today's call, and I look forward to our discussion.