A TURN TOWARD TRADE

A TURN TOWARD TRADE

Working under contract with some of the nation's leading valve manufacturers, Mivco Inc. has a special place in Houston's economy.

For starters, it is one of only two Texas firms to have won an "E" Award

from the U.S. Department of Commerce last year. In addition, it does not function as a trading company, buying goods domestically and selling them overseas for a profit.Instead, it provides an innovative service for valve makers with an appetite for international business, particularly in Asia, Latin America and the Middle East. It represents them in those regions, helping them define their markets and learn if their products can compete in the export jungle of the 1990s.

Although it has declined to release sales figures, Mivco has been growing strongly since 1989, when it launched its international strategy.

More important for Houston, however, is the example set by Mivco and other companies that appear to have a bright future.

Despite the city's best efforts to diversify both its image and its economy, oil and natural gas still dominate, according to analysts. Where it has managed to diversify, however, Houston has often been on target.

The result is a city on the brink of an explosion in trade with at least 10 developing countries - trade that is set to outdistance Houston's well- established dealings with Western Europe and Japan.

That was the assessment of Jeffrey E. Garten, U.S. undersecretary of commerce for international trade, when he visited Houston last fall to present the "E" Awards to Mivco and another Houston firm, Microwave Networks Inc.

"The companies in Houston have the expertise in demand in developing countries," said Mr. Garten. "You only see that in a few other places: Los Angeles, Miami and Seattle."

The 10 most likely spots for stronger Houston connections identified by Mr. Garten are China, Indonesia, India, South Korea, South Africa, Poland, Turkey, Mexico, Brazil and Argentina.

His observations came as no surprise to economists like Bill Gilmer of the Federal Reserve Bank in Houston and Ray Perryman, a Waco-based consultant who monitors Texas with a close eye.

After suffering through stagnation for the past two years, Houston is considered set for a revival this year and next, sparked by growth in foreign trade, a more active real estate market, and the presence of Compaq Computer Corp.

"The Houston area will experience notable economic growth over the long term," Mr. Perryman said. "The Houston area will see significant expansion in business, and medical services and durable manufacturing will play a role in the expansion of the area's economy in the coming years.

"Job creation will also occur in business opportunities linked to expanded international ventures as the city gains prominence as a trade center," he continued. "The petroleum industry continues to have a noticeable impact on the area's economy, although economic diversification efforts of the past decade have been highly successful."

Yes, let's not forget oil and gas. Once upon a time, city leaders sought to downplay their economy's pillar. Mr. Gilmer emerged last year with what could have been seen as sour news when he released a report that found Houston still closely tied to energy.

He hasn't changed his tune. In another report, released Aug. 14, he reminded the world that natural gas is widely considered the fuel of the future and that "60 percent of the local economic base is still tied to energy."

"Over the past year, Houston's economy has slowly picked up steam, and local growth favorably compares with the rest of Texas for the first time since the end of the Persian Gulf War," he said.

He noted that the local economy came to a virtual standstill in 1992 with the collapse of natural-gas prices. It was also a time of widespread cuts and restructuring by Houston's large energy firms.

"Slow growth continued in 1993 as several policy proposals struck hard at Houston's most important economic institutions," said Mr. Gilmer.

He cited a proposed "Btu tax" that would have hurt refining and petrochemicals; plans for health-care reform that generated concerns about the city's famed Texas Medical Center; and a presidential review of the space- station project that hurt investment around Clear Lake, home to the area's aerospace industry.

"The resolution of these policy issues seemed to set the stage for renewed growth in 1994 and 1995," said Mr. Gilmer. "Nationwide growth and a highly profitable energy sector are now driving the Houston economy."

Saying that "natural-gas drilling remains the mainstay of U.S. exploration activity" and that technological advances have reinvigorated energy exploration in the Gulf of Mexico, he described Houston's vast oil-services sector as poised for expansion.