Bid to Spur Oil-Based Economy : Houston Is Laying Claim as Nation’s Space Capital

The nation’s oil capital, learning to live with cheaper oil, has decided it now wants to be America’s space capital in fact, not just in name.

As the home of the Johnson Space Center, the National Aeronautics and Space Administration’s base for manned flights, Houston has always claimed the title “Space City U.S.A.”

But until the oil price slump, space played a small role in Houston’s economic scheme.

Although Chamber of Commerce types loved to mention the Johnson Space Center when listing the city’s attributes, they did little over the years to encourage the development of a space-related economic sector.

The attitude, according to University of Houston economics professor Bob Hodgin, was: “Why worry about diversifying when your main industry is going bananas?”

That changed dramatically when oil prices fell through the floor and unemployment soared from 3% to 10%.

Suddenly, the 13,000 jobs and $925 million generated by Johnson Space Center took on greater importance. NASA became a rock upon which a new, more diversified economy could be built.

Local leaders began touting the city as an aerospace center--a kind of Silicon Valley of the space industry.

The hype, once begun, has not ended. Space is on the lips of all the city leaders like a soothing mantra.

Mayor Kathy Whitmire mentions it every chance she gets. So does the Chamber of Commerce and the Houston Economic Development Council. Some even claim that one day space industry will replace oil as the local economic king.

Others, looking at statistics showing that 65% of Houston’s 364,000 jobs are still energy-related, clear their throats and sound cautionary notes that space can be an anchor, but probably not the anchor, for the city’s economy.

There are reasons to believe that Houston can develop a substantial space industrial sector.

Already, according to Hodgin, there are 66 aerospace-related companies in the Houston area, which range from one- or two-man shops to corporate giants such as International Business Machines.

Included in that group are two firms that stand to benefit directly from the new national space policy announced recently by the Reagan Administration, providing for a greater private sector role in the commercialization of space.

The companies, Space Industries Inc. and Space Services Inc., have spent many years and millions of dollars preparing for this moment. Both are well-positioned to get lucrative government contracts in the years ahead.

In fact, SII’s project, known as the Industrial Space Facility, is generally considered the favorite to get a big piece of the $700 million that NASA has announced it will spend renting space on a commercial space station.

Help Credibility

Space Services is readying a rocket for launch in mid-1989 to put up small commercial payloads.

The company was buoyed by news that the new space policy includes government use of just such private facilities.

In both cases, the companies said the government projects will give them a credibility with the private sector that thus far has been hard to achieve.

“We see this as a transition period. After a few launches are successfully completed, the private sector will see we can do it and will begin to use our facilities,” said Space Services special projects manager Mark Daniels.

Houston space promoters see the same type of scenario for the city.

“If we can get a couple of successes here, this will become a Mecca for aerospace industry,” said David Norton, director of the Space Technology & Research (STAR) Center.

Seek Space Hardware

The STAR Center, which is part of the Houston Area Research Center founded by oilman George Mitchell, does federal aerospace research and works with Houston businesses to show them opportunities in space industry.

Norton and other space promoters would like the envisioned influx of space-related industry to include companies that produce space hardware.

At present, according to HEDC spokesman Brian Levinson, most of the city’s 66 aerospace companies are in the software business.