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Robust Progress

Encouraging news about the state’s economy

Louisiana has done a better job than most other states of capitalizing on its resources in recent years to stave off the effects of national economic recession. Two Louisiana State University economists documented the state’s progress and offered a look into the future in a recent “economic outlook” published by LSU’s E.J. Ourso College of Business.

In their report, Professor emeritus Loren Scott and Professor James Richardson predicted “very robust progress” for Louisiana as it adds nearly 68,000 jobs during the next two years. “If our forecasts are near the mark, sometime in 2015 Louisiana will have more than 2 million people employed for the first time in its history,” they wrote.

The economists noted, however, that progress “will be geographically uneven, with regions along and below I-10 performing much better than the central and northern areas of the state.”

Scott and Richardson said they are keeping close watch on certain assumptions, including:
• Expectations that oil prices will hover around $95 per barrel as more oil comes on the market from the shale-fracturing process. “This price will still make the Gulf of Mexico a very profitable field for exploration,” they predicted.
• Projections of continued low natural gas pricing at around $4 per million BTUs, “due to the ocean of this fuel that has” become available through shale fracturing.
• A continuation of the boom in Louisiana’s chemical industry stemming from low-cost natural gas.
The economists also are keeping a wary eye on three unknowns:
• how much money will be pumped into the Louisiana economy via payments by BP PLC in connection with its 2010 oil spill in the Gulf of Mexico;
• whether the new National Flood Insurance Program will be fully enacted once the current hold on implementation expires;
• what the impact of the federal budget cuts, and particularly Defense Department budget reductions, will be on Louisiana businesses and military facilities.
Keeping all these issues in mind, the following highlights from the report by Scott and Richardson offer a revealing look at the future of six Louisiana regions.

Greater New Orleans
As the past nine years have clearly shown, New Orleans is coming back strongly from its darkest hour. The city has recovered from the disastrous hurricane and flood of 2005 to the point where it is projected to add about 11,000 jobs in the near term, bringing employment to almost 90 percent of the pre-Hurricane Katrina level.

New Orleans managed this despite the loss of 3,500 jobs at Huntington Ingalls’ Avondale shipyard.

Massive amounts of spending to rebuild houses, flood-protection levees and other public works helped buoy the local economy through the recent national downturn, and an estimated $12.6 billion in construction spending will continue driving economic expansion, the LSU economists say.

Completion of a 400-bed hospital in 2015 to replace Big Charity hospital will generate about 1,000 jobs in a complex that will include several medical buildings. At the same downtown site, a nearly $1 billion 200-bed Veterans Affairs hospital is taking shape, slated to employ 2,220 people when it opens in 2016.

A stalwart in the New Orleans region is Textron Marine & Land Systems, a builder of military vehicles that employs nearly 1,000 and has continued to land big international contracts even as domestic defense spending declines.

Employment also is picking up at the Michoud Assembly Facility, with several NASA space projects under way, along with Lockheed Martin’s manufacturing of  tanks to hold liquefied natural gas. The USDA Finance Center located on this eastern New Orleans campus employs 1,300 people, and economic development officials are chasing nearly a dozen more potential new projects for the site.

One of the great non-manufacturing wins for the region was drawing GE Capital’s Technology Center to New Orleans last year, bringing the prospect of 300 new jobs by 2015.
“The region has also become a worldwide leader in coastal sustainability,” Richardson says, noting that the city is equipping itself to “export its knowledge” to flood-prone areas throughout the world.

Other parts of the region that lie closer to the Gulf of Mexico also have prospered. Houma and Port Fourchon are exploding with economic activity after suffering through the oil and gas pullback that followed the BP oil spill of 2010. Houma has added 4,700 jobs in the past two years, and the economists say it is on track to continue the growth.

Supported by such oilfield service companies as Gulf Island Fabrication and Edison Chouest Offshore, the area “will break through the 100,000 employment mark for the first time in its history” next year, they predict.

Baton Rouge/Plantation Country
The state capital region is known for its colorful political history and many stately mansions that reflect the economy of a bygone era. But today, the most prominent economic feature of Louisiana’s plantation country is an unprecedented industrial expansion.

“It is difficult to temper one’s optimism about the future for the Baton Rouge area,” Scott and Richardson wrote in their report.

Their statement is impressive given that this area lost more than 10,000 jobs during the economic recession of 2008-2010. The capital region’s recovery has been striking. By the end of 2013, new hiring had not only offset all the job losses but was putting the area on track to set new employment records.

The nine-parish metropolitan area is benefiting from some $20 billion in industrial projects that will nearly double the demand for construction workers in the region during the coming year alone, the economists say.

Big names in the petrochemical industry, ranging from BASF, Methanex and Georgia Pacific to Honeywell, Shintech and Dow Chemical, are building or expanding plants to take advantage of low-cost natural gas that can not only fuel their manufacturing operations but in some cases serve as feedstock for the chemical products they produce.

Other industrial projects under way include ExxonMobil’s new synthetic aviation oil blending center, which will make Port Allen the world’s largest producer of finished lubricants. Genesis Energy soon will complete an 18-mile pipeline from Port Hudson to the ExxonMobil Refinery; Trafigura is doing preliminary work for a $270 million coal export terminal near Geismar; and not far away Avalon Rare Metals plans a rare earth metals separation plant.

All of this activity is helping to boost business at the Port of Baton Rouge, which has made considerable investment into its own expansions.

Meanwhile, the area is experiencing a technology boomlet, with IBM bringing an 800-person technology center to the capital city, and Ameritas Technologies on its way to becoming a 300-employee operation.

In all, the economists estimate nearly 22,000 new jobs will come to plantation country, including East and West Feliciana, Pointe Coupee and St. Helena parishes, during the next two years.

Acadiana
Anchored by the cities of Lafayette and Lake Charles, the culturally rich region known as Cajun Country has economic assets that reach well beyond infectious music and boiled crawfish. Known for a high-quality local work force, the area has capitalized on its wealth of underground resources and proximity to the Gulf of Mexico.

Lake Charles is the fastest-growing metropolitan area in the state, LSU economists say. The economy of the area, encompassing Calcasieu and Cameron parishes and beyond, is largely focused on chemical production and refining, with almost two dozen chemical plants and two refineries employing nearly 7,000 people. The plants also are generating a large number of construction and other jobs related to expansion and maintenance.

The economists predict that Lake Charles will add almost 8,000 jobs during the next two years, driven by $40 billion worth of plant construction. Leading the way are new terminals to handle the exporting of liquefied natural gas, which has become feasible because the ready availability and low price of Louisiana’s gas are attracting buyers from afar.

“It’s very important for relatively inexpensive natural gas to continue to be available because it’s all built around that,” Richardson says.

Gambling is another economic lynchpin in southwestern Louisiana, and a large new Golden Nugget casino and 700-room hotel soon will expand on the success of two gaming establishments already operating in the area.

Meanwhile, several large aircraft repair and maintenance employers, including Northrop Grumman and CB&I Modular Solutions, anchor the growing activity at Chennault Industrial Airpark.

To the east, in Lafayette, economists say about 4,000 new jobs are on tap stemming from a surge in oil and gas exploration. With deep-water drilling ships predicted to increase by more than 60 percent, service firms will be hiring. And several exploration companies and related firms have major expansions under way in locations including Broussard, Youngsville and St. Martin Parish.

Important sources of non-energy jobs in Lafayette include ambulance provider Acadian Cos., which employs about 1,200 local people; jewelry setting manufacturer Stuller Settings, with about 1,200 employees; physician staffing company Schumacher Group; and the expanding Lafayette General Medical Center and Park Place Surgical Hospital.

Northwestern Louisiana
With an estimated 175,000 jobs, the parishes of Caddo, Bossier and DeSoto have the highest concentration of durable goods manufacturing in the state, and recently, several players in this sector have come on strong, including cellular tower maker CellXion, kitchen appliance maker Frymaster and Ternium, a steel components manufacturer.

The region is also home to the state’s largest and most successful gambling market, encompassing six riverboat casinos and a race track casino that employ more than 6,000 people.

Meanwhile, some 12,000 military and civilian workers earn their living at Barksdale Air Force Base in Bossier City.

Though the region is home to diverse business interests, a single industry delivered what the LSU economists term “a huge economic jolt” in the past decade when natural gas producers learned how to extract the gas from shale that lies beneath much of this region. When they began using a rock-fracturing process to force the gas from the shale, the industry took off in a big way.

The Haynesville Shale deposit drew billions of dollars of investment and made millionaires of local owners of gas-rich property. While extraction activity has tapered off, the mineral leases remain important to the area, and when demand for the gas rises – as commodities experts believe it eventually will – shale fracturing will pick up steam.

The Haynesville resource and activity at Barksdale, which gained more than 1,000 jobs related to the Defense Department’s Global Strike Command, helped offset job losses in other sectors, including a shutdown by General Motors and layoffs at two Georgia Pacific plants. But challenges remain, including a recent decline in military jobs related to federal budget cuts.

Still, Richardson believes northwestern Louisiana will return to growth. The Port of Caddo-Bossier soon will be home to a new $900 million manufacturing complex of Benteler Steel Tube, which expects to employ 675 local people. And custom-printed paper packaging company Ronpak invested in a new manufacturing center that will employ about 175 workers.

Meanwhile, the opening of a new Margaritaville Casino will help buoy the area.

“The region has enough job diversity to maintain steady growth,” Richardson says, predicting the addition of about 1,800 jobs through the end of 2015.

Northeastern Louisiana
With a history rooted in agriculture, and lacking the underground mineral resources that have enriched other parts of the state, northeastern Louisiana has found attracting industry and jobs a challenge, and LSU economists expect this will be the state’s “quietest” region during the next few years.

That said, the area has scored some economic “wins” in recent years, and employment has risen in its largest city, Monroe. A major driver of economic activity is the Fortune 500 telecommunications company CenturyLink, which has been expanding aggressively through acquisition.

Last year the company made a commitment to keep its headquarters in Monroe through 2020 and broke ground on a new Technology Center of Excellence, which expands its local footprint by 250,000 square feet. The project will help fulfill the company’s promise of 800 new jobs and push the company’s statewide annual payroll past $200 million.
CenturyLink currently employs some 2,000 people in the local area.

“The great hope is that as CenturyLink continues to grow it will attract many of its vendors – such as KPMG, Ericsson and Huawei – to the city,” the LSU economists wrote in their report.

More growth lies ahead as package carrier FedEx is building a new $30 million, 50,000-square foot distribution center in Monroe. And Gardner Denver Thomas, which relocated its Wisconsin pump and compressor operations to the area in 2010 with an eye towards a total workforce of 225, has been so successful that it now employs 300.

Elsewhere in the region, Foster Farms reopened the shuttered Pilgrim’s Pride poultry processing plant in Union Parish and has grown employment back up to 1,200 workers.
In nearby Sterlington, Angus Chemical invested about $100 million in its plant, which helped the firm remain productive enough to retain its 174 jobs.

And Graphic Packaging International, which employs about 450 local people in West Monroe, recently expanded its local consumer carton plant with a $9 million investment that adds about 50 more jobs.  

The LSU economists predict that northeastern Louisiana will continue to gain employment ground inches at a time over the next few years.

Central Louisiana
With rolling hills and the city of Alexandria at its heart, central Louisiana is home to several key industries, including durable goods manufacturing and forestry products. Both are vulnerable to economic recessions, as workers saw during the downturn of 2008-2010. Union Tank Car, Dresser Industries and Louisiana Hardwood Products all laid off workers, and International Paper closed its Pineville mill.

But after several years of job losses, LSU economists are projecting that employment in the region will edge up during the next two years.

Two biofuels companies – Sundrop Fuels and Cool Planet Energy – are making big investments in the area, and Pineville-based Crest Industries is expanding its headquarters in a move that will create 90 new jobs.

In addition, business outsourcing company Sutherland Global Services announced it would open an operations center in Alexandria that will employ some 600 people.

Alexandria will also get a new 150-person Immigration and Customs Transfer facility at England Airpark, which is investing about $10 million in site upgrades.

Meanwhile, several stalwart employers continue to anchor the region’s economy. Procter and Gamble employs more than 1,000 workers and contractors in Pineville, while Roy O. Martin Company, which operates three lumber and wood facilities in the region, employs 1,200 local people and is investing $20 million to expand its plywood plant in Chopin.

Pineville-headquartered utility company Cleco could add to its 1,300 employees in coming years.

Government employment is important in this area, as evidenced by the 400-employee Huey P. Long Medical Center (which is being taken over by two of the private hospitals in the region), and Pinecrest Support and Services Center for the mentally disabled, which employs 1,300 people. Central State Hospital for the mentally ill has about 300 workers, and nearby Fort Polk is the largest military installation in the state.

In addition, Camp Beauregard, a 12,000-acre site near Pineville that’s devoted to training for the Louisiana Army National Guard, accounts for more than 800 active guardsmen, civilians and state military personnel.

LSU’s economists say a potential hope for the local economy is the Tuscaloosa Marine Shale natural gas deposit. If demand for natural gas picks up, shale-fracturing producers might become more interested in central Louisiana.






 

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