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When Diana Kelley first heard that Compaq C

September 19, 1995

HOUSTON (AP) _ When Diana Kelley first heard that Compaq Computer Corp. wanted her to move to Houston from the San Francisco area, she had her doubts.

``I really imagined ranchers and cowboys,″ the 25-year-old product analyst said.

But the job at Compaq, which now employs about 9,400 in Houston, offered a better position, better hours and better pay than her old job in the Silicon Valley.

So last September she left Palo Alto for Texas.

Ms. Kelley is among scores who work outside the oil industry relocating to Houston. While energy companies continue to draw employees from other regions to this sprawling city, its economy no longer depends primarily on energy the way it did in the 1980s.

Houston so far this year has been the most popular city for corporate and government moves, according to a report by PHH Relocation, a Wilton, Conn.-based relocation specialty firm.

This influx, though, differs greatly from the arrival of migrants 15 years ago.

In the years leading up to the mid-1980s oil bust, Houston attracted a high percentage of upper-middle-class newcomers while most major U.S. cities became home to low- and moderate-income migrants.

``In the early ’80s, there were a tremendous number of people coming to Houston, but most of them were tied in one way or another to the oil production industry,″ said M. Ray Perryman, a Waco-based economist. ``That is no longer the case.″

Houston’s shift from primary energy to related businesses and industries that have nothing to do with oil and gas _ like Compaq _ is the biggest change over the last decade and a half.

``It’s been a very healthy and very productive shift,″ Perryman said.

In the late 1980s, petrochemicals drove somewhat of a comeback and for about a year, Houston again was a major growth center.

Since then, Houston’s economy has grown steadily, ``but nothing spectacular until just very recently. It’s now beginning to see a lot more relocations and a lot more expansion,″ he said.

An improving international economy, petrochemicals and the city’s diversification have contributed to the expansion, economists say.

The Texas Medical Center _ the world’s largest medical complex, and Johnson Space Center _ home of NASA’s Mission Control, have become major growth poles.

``You could actually tell that things had slowed down because the freeways weren’t as crowded,″ says Jared Hazleton, director of the Center for Business and Economic Analysis at Texas A&M University.

``They’re crowded again,″ Hazleton notes.

While the domestic rig count _ long a local yardstick for measuring the health of the oil industry _ is a mere shadow of its late 1970s explosive growth, international work for the oil service and machinery companies is filling the gap, says Bill Gilmer, an economist with the Federal Reserve Bank.

The economy overall, with substantial gains in service sectors and small manufacturing, is performing about the same as the rest of Texas, which it trailed for three years. And it is doing significantly better than the rest of the nation.

Employment is growing at about 3 percent a year. Nationally, the growth rate is about 2 percent.

``There’s been good, solid growth in the health care sector throughout the whole period _ that’s been one of the constants throughout the entire 15 years,″ Perryman said.

Both the medical center and NASA are undergoing restructuring as part of a national trend. Aerospace employment in Clear Lake, a suburban area where Johnson Space Center is based, has dropped from 20,000 to 15,900 over the last few years and is expected to continue to fall, according to the Greater Houston Partnership.

Health care employment continues to grow, however. In June 1994, there were 113,600 jobs in the industry in Houston. That figure increased modestly to 114,300 in June of this year.

Back when oil was booming, many of those outside of the energy business were getting pushed out of Houston because they couldn’t afford it.

Today, the nation’s fourth-largest city is a bargain.

``Houston is one of the lowest cost-of-living cities in the United States and one of the lowest cost-of-doing-business cities in the United States,″ said Barton Smith, an economist at the University of Houston.

And it’s no longer as speculative as it once was.

``The boom mentality of where anything works _ we got that shaken out of us,″ Smith said. ``It’s much more cautious. I think that’s good for Houston in the long run. We don’t want to see another overbuilding spree going off.″

Houston has made great progress working its way out of the real estate bust of the mid-80s.

Then, motorists rounding the curve of Interstate 45 that hugs downtown’s cluster of skyscrapers could peer through floor upon floor of empty office space. Although some vacancies remain, many of those offices are occupied now.

``There’s been some absorption of those `see-through’ buildings, as we used to call them,″ says Hazleton.

``It just took a long time. We had overbuilt and we’re perhaps at the end of that phase now.″

``I’ve been very, very pleasantly surprised,″ says Ms. Kelley, the recent California transplant. ``Department store prices are about half of what they were in Silicone Valley. People are much nicer here, (there is) less stress and more emphasis on personal life.″

End Adv for Sunday, Sept. 24, and thereafter

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