Houston: The international gateway to Cuba

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Houston is well positioned uro become the gateway for trade and investment with Cuba. Artwork by Jon Braeley.

The entourage that left from Bush Intercontinental Airport last September—an assemblage of 28 prominent citizens from Houston City Hall, the Port of Houston, the Houston Airport System, the Texas Medical Center, and companies such as Halliburton and Siemens—was not a trade mission headed to any of Houston’s top trading partners, countries like Mexico, China, Brazil or Germany.

Instead, Mayor Sylvester Turner’s first overseas trade mission was bound for Cuba.

“It made a big statement that the mayor’s first trip abroad was to Cuba,” says Felix Chevalier, a Houston attorney in that delegation. “Any new market, regardless of size, presents economic potential for U.S. businesses. In the case of Cuba, they are looking for more than $9 billion of foreign direct investments in industries like energy, healthcare, transportation, hospitality, and telecom. These are industries where Houston shines.”

Indeed, the potential for trade and investment between Houston and Cuba seems almost perfectly aligned. Two of Cuba’s most pressing needs are Houston’s strong suits: A wealth of expertise and equipment for energy development, and a muscular seaport and transportation hub for agriculture products.

“There are a number of synergies between Cuba and Houston when it comes to energy, medicine, education, the arts—even in sports,” says Mayor Turner. “When I was there I gave the mayor of Havana my Astros baseball cap. We had more conversation about that baseball cap than anything else.”

That sort of personal diplomacy, a hallmark of Mayor Turner’s sincere, eye-to-eye political style, is just what Houston wanted to bring to Havana, and the point of the mission: to begin a relationship with Cuba before the U.S. embargo against the island ends.

“It takes a while to build relationship. It’s a step by step process. People have to get to know you,” says Mayor Turner. “Houston is an international city and you can’t be an international city without playing on an international stage. And you can’t do that effectively without building meaningful relationships.” As for the embargo, says the mayor: “Time will bring about a change, and those who will prosper will be those who are prepared for that moment.”

For Houston, the relationship with Cuba is what in sports vernacular is called the long game. Maybe so, says Texas energy consultant Lee Hunt. But with enormous potential reserves under Cuba’s land and coastal waters, he says, “there is a lot of need in Cuba in their oil fields, for a lot of energy services… What they understand is loyalty. If you go help Cuba, even symbolically, at a time when help is not easy to get, the reward will be there when the opportunity arises.”

A container ship docks at the Port of Houston. Photo supplied by Port of Houston.

THE PORT CITY

Beyond the particular opportunities for individual firms and even whole industries in Houston, Cuba fits into the city’s grand strategy to position itself as the transportation and shipping hub between Latin America, the Caribbean, and the United States. With Cuba’s Port of Mariel ready to become a major deepwater transshipment point for the region, an alliance with the mighty Port of Houston only makes sense.

“Above all we view ourselves as a trading city,” says Andy Icken, head of economic development for the City of Houston and a close aide to the mayor. “We also have a natural affinity for anything in the Caribbean, Central, or South America. We like to think of ourselves as the gateway to the Americas. If we start with that as an overall theme, a place that has been left behind from our gateway is Cuba, for unique reasons.”

Cuba, he adds, “has significant needs that are apparent now, and much of the commodities and other things [needed] are what Houston is known for, or else come through our port.”

Today the Port of Houston is the second-busiest U.S. port in terms of tonnage, and the nation’s leading port in terms of foreign-bound tonnage. Originally located entirely within the city limits, the port’s facilities have since spread for miles down the channel that connects it to the Gulf of Mexico. On its banks are more than 150 companies, with everything from oil refineries to factories for energy equipment—another advantage the Port of Houston has over its competitors vis-à-vis Cuba.

“I think there are opportunities for [shipping] agricultural produce—grain, rice, beef, chicken—and of course petrochemicals, oil, and gas,” says Port of Houston Commissioner Dean Corgey, another member of the mayor’s mission. “But there is also what’s called project cargo, such as oil and gas equipment, power plants, water treatment facilities, sewage plants, things of that nature. There is a lot of manufacturing out there [along the channel] of those type of things, and it seems to me they are going to have to redo everything down there [in Cuba].”

Corgey says Houston should also be the leading candidate for U.S.-Cuba trade tonnage because of its diversity. While some ports are strong in particular categories—Miami for container cargo, for example, or New Orleans for petrochemicals and bulk agriculture products—Houston, partly as a result of its size, moves virtually every type of cargo. And that same size means it can support regular shipping schedules.

“If you are going to have good commercial service you need regular service you can depend on. It sounds simpler than it is,” says Corgey. “You have to make sure you can get down there to deliver that cargo, guaranteed. That is something Houston can do. And with that back and forth on a regular basis, it produces jobs down there as well as here… We can structure deals that are mutually beneficial for both countries.”

Click the photo to read how the Houston Airport System aims to help Cuba’s airport infrastructure.

THE INTERNATIONAL CITY

Beyond providing the foundation for its global trade relationships, the Port of Houston was a historical game changer for the city’s character. In many ways it defined Houston’s personality, and the swagger of its leadership.

“You’ve got to go back to the history of the city,” says Icken. “Houston, without any port facilities of its own, depended on Galveston until the hurricane of 1900. The hurricane of 1900 devastated Galveston, basically eliminating it. So the leaders of Houston decided that it was time for the city to have its own port.” While Teddy Roosevelt was busy with the Panama Canal, Houston cut its own 25-mile long complex of channels to Galveston Bay and the Gulf of Mexico. It opened in 1914, three months after the canal. Both were officially opened by President Woodrow Wilson.

The port not only allowed the city to prosper. It gave it a global outlook.

“In some sense, internationalism has always been a part of Houston,” says Matthew Shailer, the city’s director of trade and international relations. “We developed from the very beginning with an international port and goods being shipped through Houston. It was agriculture in the late 19th century—cotton, sugar, rice—and later oil and oil equipment. The international element has always been there.”

What has arrived later on was a truly international metropolis and population. “Houston was an international city early on because of oil and the ship channel. But it was Anglos here doing the commerce,” says Stephen Klineberg, a professor at Houston’s Rice University and founding director of the Kinder Institute for Urban Research.

For 36 years, Klineberg has researched Houston’s demographics. His conclusion: “Houston is now the most diverse city in America. All of America will look like Houston looks today in 25 years.”

While this is partly the result of geography, what really created Houston’s international community was a shift in the economy, says Klineberg. “No one planned it, no one expected it,” but in the wake of the 1982 collapse of the oil boom “all the growth was propelled by an influx [of immigrants] from around the world.”

With Houston augmenting energy production and shipping with sophisticated manufacturing, aerospace firms, and medical research, the jobs that needed filling were for engineers, scientists, and doctors. “These were filled by Asians and Africans with much higher levels of education than Anglos,” says Klineberg. Even the great stream of Latin immigration, much of it looking for blue-collar jobs requiring little education, brought with it an educated elite.

Bob Harvey, president and CEO of the Greater Houston Partnership, sites a Brookings Institution report that identifies 19 “knowledge capitals” around the world, recognized for innovative products and services, of which Houston is one. “You are a seeing a migration of talent to these knowledge centers,” he says. “Cities need to lose their provincial nature to be more global, to be more diverse, to have the personal connections between their city and cities around the world.”

It is that combination of intellectual capital and international reach that makes Houston such a potent potential trade and investment partner with Cuba. Houston also shares deep historical bonds with the island.

“The connection between the Gulf of Mexico and Cuba since colonial times are very important. Don’t forget that the Spanish conquest of Mexico was launched from Cuba, and that Texas used to be part of Mexico,” says Dr. Luis Duno-Gottberg, chair of the Department of Spanish, Portuguese and Latin American Studies at Rice University. “People think of us as apart from the Caribbean but the connections historically are tremendous. Before Cuba existed as Cuba, and Mexico as Mexico, this area was connected.”

Today that connection is being tangibly tightened. Among the few air routes to Cuba outside of Florida and New York approved by the U.S. Department of Transportation is a weekly United Airlines flight between Houston and Havana. That route has done so well that United has applied to expand to daily service.

“That route is performing exactly as we expected,” says Darrin Hall, United’s Houston-based director of corporate and government affairs. “We are pleased with both the United service out of Houston and Newark, and in Houston so much as that we are looking to expand United’s offering.”

Altogether, United offers 91 daily non-stop flights to 52 destinations in Latin America and the Caribbean. “Houston will be an important gateway for service to Havana, because it will directly connect 20 markets across the central U.S. with just one stop,” says Hall.

Click the photo to read why the Baylor School of Tropical Medicine wants to collaborate with Cuban health institutions.

VALUE-ADDED MEDICAL RESEARCH

Like the over-sized ambitions of the Port of Houston, the Texas Medical Center began with a big vision—118 acres purchased in 1945, initially for the construction of a 1,000-bed Naval hospital. Today it is home to 54 medical institutions that include 21 hospitals, eight research institutions, and four medical schools. TMC receives more than 3,000 patients a day and more than eight million a year, including 18,000 international patients.

TMC staff, including then CEO Dr. Robert Robbins, visited Cuba with Mayor Turner, and since then the center’s doctors and researchers have been exploring ways of collaborating with Cuba’s health system and biopharmaceutical institutions.

“The medical center has been here for 70 years and it is now the biggest medical center in the world,” says William McKeon, TMC’s new CEO and an advocate of exploring relations with Cuba. “We have a highly diverse, educated talent base. Our diversity is our strength, and opening doors to Cuba is another way to expand what is already a richly diverse community.”

The TMC expands by leasing acreage to new institutions for $1 a year; these new schools, hospitals, or research labs become members of the center and subsequently share in maintenance fees for things like road maintenance, lighting and security. “Whereas most cities would have fragmented hospitals across a major metropolis, here we have physicians in oncology, neurology, orthopedics, and so on, all of them on the same campus, like a university,” says McKeon. “The collision of their minds is what makes this an extraordinary center.”

With Cuba’s prowess in advanced drug development, and U.S. regulations now permitting Cuba to test and market its drugs in the U.S., McKeon envisions building a “bio bridge” between the two countries, similar to what TMC has done with Australia, where top innovative companies are invited to set up shop in the campus incubator.

“I think that is a great model for Cuba,” says McKeon. “It allows physicians [and researchers] with innovations to bring those innovations to market and get them supported. We provide all the services and don’t take any cut of their equity. We like it because it just adds to the diversity of the campus.”

Another potential area of collaboration lies with the Cuban health-care delivery system, says Arun Rajani, head of Baylor College of Medicine’s global initiatives program. Baylor has developed modular health care facilities—fully outfitted high-tech shipping containers—that can be deployed anywhere.

“Cuba has a well-developed physician work force,” says Rajani. “We at Baylor are experts in guiding and training, but we cannot provide human resources overseas. Cuba exports its doctors, so it might be a good opportunity for us to provide the facilities while local Cuban doctors provide the services.”

All across the TMC campus, various institutions could interact with Cuba’s biomedical industry, from Baylor’s School of Tropical Medicine  to MD Anderson, the largest U.S.cancer research institute (Cuba has highly developed cancer drugs).

Click the photo to read how current regulations offer opportunities to engage Cuba’s energy sector. Photo by Port of Houston.

THE ENERGY PLAY

Even considering the value of Houston’s port and medical facilities, few areas offer the kind of explosive growth possibilities as does collaboration in the energy sector. No one knows just how much oil lies beneath Cuba and its coastal waters, but billions of barrels are potentially at stake—as well as hundreds of millions of dollars in support services.

“The oil reserves in Cuba are unproven. They have had mixed results [testing]. But the technology upgrade that is needed is phenomenal,” says Jonathan Newton, a partner in the Houston office of Baker & McKenzie who traveled with the mayor to Cuba. “I think oil and gas companies are interested in production—the clichéd people who take it out of the ground. And there is a lot of money in that. But there is also lots and lots of money in the whole stream of it, the oil field equipment and service providers, and all those folks see that opportunity.”

While Newton thinks that it’s still a long way off, “In a best-case scenario you can see a pipeline going in between Cuba and the U.S. It’s only 90 miles after all.”

Yuliya Marcer, the Houston-based senior counsel for global projects at petroleum giant BP, notes that 4,800 energy-related companies have a presence in the city,   including nine of the top 25 publically traded energy companies—such as Chevron, ExxonMobil, and Shell. In addition, eight out of ten global oil companies have offices in Houston.

“Houston has been for decades—and even more so now—the energy capital of the United States,” she says. “For BP, Houston is now our largest presence in the work, more than the UK. We have the most employees here.”

Among other things, the presence of these firms has spawned a vast network of international lawyers in Houston, specialists who understand sanctions, trade restrictions, export control issues, anti-money laundering regulations, and the like. “Houston has a very deep bench of those kinds of lawyers, particularly in energy,” says Marcer, who currently chairs the international section of the Texas Bar.

Marcer says she is “cautiously optimistic” about doing business with Cuba. “Even with sanctions aside, however, we are still looking at two very different legal systems. So, we still must figure out how to work together to allow businesses to develop and achieve their goals. There are still a lot of questions to be answered.”

Regardless of the details, says consultant Lee Hunt, the affinities are compelling.

“Everything you need to efficiently run an oil field is manufactured and inventoried in Houston,” says Hunt, whose firm Hunt Petty LP advise major oil firms. “It’s not just the expertise. As a hub for the transport of oilfield products, we are unparalleled.” That includes the ability to respond rapidly to oil spills and other crises in the gulf, “because everything is staged and mobilized here for international distribution.”

Moving beyond oil to natural gas, Houston is equipped there as well. Houston-based MODEC International, Inc., for example, builds and operates floating production vessels and floating power vessels that employ natural gas.

“What MODEC is working on, and what we have spent a couple of million dollars on in research, is a floating barge powered on natural gas,” says Sam Webb, a project development manager for the company. “I think what Cuba needs is a natural gas power plant, instead of relying on diesel and heavy oil. We have the capability of bringing a floating power plant that can also desalinate water.”

Webb has visited Cuba twice, once with Texas Gov. Greg Abbott before the mayor’s visit, and earlier this year with a mission organized by attorney Felix Chevalier.

Chevalier, who many consider Houston’s unofficial ‘soul of Cuba,’ is the son of Cuba parents who left the island before his birth. Among the many Cuba-related projects he’s working on is a Houston leadership academy for young Cuban entrepreneurs, and trade missions to take clients beyond Havana to visit regional port cities, mining operations, industrial complexes, and agriculture centers. But it is in energy where Chevalier sees the most immediate impact, especially regarding influencing U.S. policy toward the island.

“Generally speaking, I’ve found business in Houston to be open to the idea of a trade relationship with Cuba,” he says “However, uncertainty surrounding the administration’s plans for Cuba have put a bit of a damper on the progress made over the last couple of years.” Consequently, Chevalier plans to launch an association that advocates for trade with Cuba on behalf of the energy industry. “Similar to what we see in agriculture, I think a sector-by-sector approach to highlighting the financial impact of trade with Cuba may be the most effective way to move the chains on Cuba policy,” he says.

Until that time, however, it may take the collective effort of leaders like Mayor Turner to move the process of engagement forward.

Click the photo to read an interview with Houston Mayor Sylvester Turner. Photo by Richard J. Carson.

ON A MISSION

If the leaders of Houston have anything to say about U.S. relations with Cuba, those connections will only grow stronger. That was a big aim for Mayor Turner’s trip to Cuba. As Icken puts it, “The mayor made a clear point that this is not just a one-time opportunity.” He also did it with a style that has been the hallmark of his political career, his enormous sincerity and the authenticity of his own journey.

“He is very present in all his meetings. He is there with you. He really wants to understand where you are coming from,” says Shailer, something that comes from the Mayor’s own personal struggle as the youngest of seven children in a family that was “far from affluent.” By sheer determination and effort he became valedictorian of his high school’s first integrated class and ultimately graduated Harvard Law School.

“Cuba could appreciate that,” says Shailer. “It is a very hardworking country that believes what you put into people is what you can get out of them, one reason they have such a strong education system.”

Indeed, Mayor Turner is a man who knows how to interact with people, and how to personalize any encounter.

“He made some friends in Cuba, that is for sure. And that’s what this was about,” says Dr. Laura Murillo, president and CEO of the Houston Hispanic Chamber of Commerce and another memer of the mayor’s delegation.

“Relationships are built over time, and on a person-to-person basis,” says the Partnership’s CEO Harvey, whose organization co-sponsored the trip. Like other Houston leaders, Havey sees only an upside for a Houston-Cuba connection.

“I think of Cuba just as a great opportunity. We think that the relationship between the U.S. and Cuba will improve, and we see a natural kinship there with Houston,” he says. That kinship includes Houston’s strong Latin heritage, its healthcare system, its emphasis on education, and above all, its energy expertise.

Indeed, personal diplomacy aside, the mayor was also in Cuba to ask a specific favor for that sector.

“One of the reasons we went to Cuba was because of the World Petroleum Conference in 2020, which we wanted for Houston,” says Mayor Turner. Cuba, it turns out, is one of the countries that had a vote at the conference executive committee meeting in Bahrain in December.

Houston beat Vancouver for the event, which is expected to draw 10,000 visitors and have an economic impact of $60 million to $80 million. Says the mayor: “I thank Cuba for their vote.”

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  1. Houston mayor discusses future opportunities for city in Cuba - Cuba Trade Magazine - August 14, 2017

    […] Once the relationship between Cuba and the United States is normalized, when the embargo is lifted, I think it’s beneficial for relationships to already have been established. Once the embargo is lifted Houston has to be well positioned to engage in international trade with Cuba.  […]

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    […] “Houston is the oilfield technology capital of the world,” says Texas energy consultant Lee Hunt. “Everything you need to efficiently run an oil field is manufactured and inventoried in Houston.” […]

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