Important now: When seeking out new industries to diversify the economy, target those that complement existing core industries and develop a talent pool with high level skills to produce a compatible workforce.

It would be easy for Midland, TX to get complacent about its economy since it sits atop miles of luxuriant natural resources vital to the needs of everyday living. Especially when tapping into those rich deposits sparked an unprecedented employment boom and a population explosion that produced up to a 51% boost in sales tax revenue in 2018. That year the city’s population reached 142,000, up nearly 30% since the start of the decade.

While Midland is deservedly basking in its good fortunes it is also being mindful of the vulnerability it faces with 38% of total wages tied to the energy industry. Made more cogent when Covid hit causing crude oil prices to plummet as low as negative $35 per barrel in May 2020 forcing sellers to unload an overabundance of inventory at massive losses.

The pain reverberated to city coffers sending sales tax revenues alone down by 30% (see related interview with John Trischitti, executive director of economic development for the Midland Development Corporation in the latest edition of CityRevive).

Hopefully Covid will be a one-off event and luckily oil price related downturns are not as severe for Midland as they once were decades ago. Moreover, crude oil prices have already recovered to the $60 per barrel level.

Still, the jolting impact of volatile oil prices has compelled the city to diversify into other more even-keeled industries.

Take for example the city’s full-fledged foray into the aerospace industry with a $9.5 million investment in the Midland International Air and Space Port Business Park, one of only a handful of commercial spaceports in the US (see capital investment table below). It’s an FAA-approved space launch site encompassing 50 acres of land that caters to companies involved in aerospace and aviation development.

“A group of Midland leaders had the vision for diversification by introducing a new industry cluster that would complement the city’s inherent strengths,” says Sara Harris, chief financial officer for Midland Development Corporation, the city’s economic development group.

Midland has created institutional strengths in energy and an organically produced labor force that complement the aerospace cluster yet simultaneously diversifies the economy, notes Harris.

“Midland has twice the national average of engineers per capita. That is a natural bridge in the workforce between natural resource extraction and aerospace,” she says.

The city-owned Space Port park offers shovel-ready sites available for lease, with facilities for companies to produce, test and launch satellites as well as test rocket engines. Companies can also access the Midland Altitude Chamber Complex (MACC), a high-altitude test facility within the park.

The MACC allows for the testing and qualification of space and pressure suits, payloads, subsystems and components, as well as flight crew training operations. The MACC is owned by the Midland Development Corporation and is operated by Kepler Aerospace. 

Current tenants at the park include AST & Science and Kepler Aerospace with negotiations underway with other potential tenants.

AST & Science is working on redesigning how satellites will be built and launched to improve on critical factors such as accelerated launch times and resiliency and reach at significantly reduced costs.

Kepler is developing more efficient and economically viable satellite delivery systems by upgrading and reengineering existing advanced aviation technologies.

Encouraging the Entrepreneurial Spirit

Midland is also taking a longer-term view for achieving diversification by being a catalyst in nurturing it through purposeful educational programs and partnerships.

It all starts with encouraging the entrepreneurial spirit. That in turn sparks creativity leading to innovative ideas which ignite new startups who mature into thriving businesses which form a new industry and ultimately culminates in a more diversified economy.

It is an evolution requiring sound foundations. At the ready is the University of Texas Permian Basin (UTPB) which has developed a set of new programs to support the mission.

For example, coming this fall is a new incubator and makerspace program open to anyone with realistic startup business ideas.

Located at the university’s Center of Energy & Economic Diversification (CEED) building, the program provides office space and support, managerial training as well as expertise on bringing ideas to fruition.

“Absolutely anybody with creative ideas can use the facilities,” says Dr. Steve Beach, Dean of the College of Business for UTPB. “We want to open this up to the community and our own students whether they come with technical or business backgrounds or from the arts.”

The incubator is seen as a resource hub to help entrepreneurs find the tools and expertise to lead them in the right direction or get them to the next step in their progression, including obtaining a patent for their product, notes Beach.

The makerspace provides open office spaces that give users the ability to mingle and share ideas. For a nominal fee, users can rent out office spaces and make use of equipment in the building as well as get connected with equipment available in different parts of the university.

“We are not looking to make a profit on the rental space; we are using it to bring people together,” notes Beach. Potential revenue is seen in other aspects of partnerships.

“The university may be engaged with something that turns into a big-time revenue generator for us where we collaborate with someone on a patent bringing our expertise to bear on the technology transfer and getting it to market.”

Conveniently co-located at the CEED building is UTPB’s Small Business Development Center office. This allows for entrepreneurs to obtain guidance and connections to experts in the university’s various schools, including technical, scientific, managerial or financing areas.

More Programs for New Change

UTPB is the first school to collaborate with the University of Texas at Austin on a community development social entrepreneurship program for students.

“Primarily what we will be doing is kindling that entrepreneurial mindset and thought process and the willingness for them to be risktakers in their career and in pursuing ideas,” says Beach.

“As ideas become a little more developed, they will transfer over to the incubator and makerspace where we have more high-level skills and tools available and the Advanced Manufacturing Center which might be relevant to them,” he explains.

Midland is also working with a major oil company to develop ideas that will help move the community into the new energy environment of the future. The partnership will encourage students to come up with ideas that will help their communities get ready for a future where the mix of energy usage might be different.

“This will be a program where we host competitions encouraging students to come up with new business ideas to help communities prepare, such as the infrastructure needed to be ready for the next 20-30 years,” says Beach.

“We are looking for ideas for sustainable businesses not necessarily in the energy sector that will set them up for success into the future.”

But Beach emphasizes the importance of continuing to service the energy sector for the here and now.

“The university is establishing stronger expertise in the energy industry. We have made big strides in solidifying that, so people know we’re producing graduates ready to go to work here in the Permian Basin as it is today and are able to contribute to their communities right off the bat.”

Also new next fall at the College of Business is a Bachelor’s of Business Administration degree program in healthcare management.

“We see a lot of opportunity in this sector that will serve the community well because more people with high level skills will be working in it. They may not be interested in working with patients on a daily basis but want to be able to play a meaningful role in healthcare,” says Beach.

Between the incubator and makerspace, entrepreneurial-driven programs and new degrees in promising sectors, the UTPB is building the footing for an ecosystem that will set Midland on the evolution toward economic diversification.

Beach notes that the Covid-forced social distancing has in some ways helped the ecosystem come together. “We are looking forward to this fall when it all comes together, and we have these reasons for people to be on our campuses. We want to engage with them, help them move things forward and make it a bright new day when we all come out of this time of crisis.”

For more information contact Sara Harris: sharris@midlandtxedc.com