10/12 Industry Report [Q1 2016]

FIRST QUARTER 2016

INDUSTRYREPORT

Stacked drilling rigs at the Port of Iberia.

Just staying

AFLOAT With oil prices at rock-bottom, companies that depend on drilling are in survival mode.

PLUS:

• The Panama Canal goes big • Updating your IP strategy • Alliance Safety Council hits the road

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BUILDING ON

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10/12 INDUSTRY REPORT • FIRST QUARTER 2016

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CONTENTS

Just staying

AFLOAT With oil prices at rock-bottom, companies that depend on drilling are in survival mode.

Publisher: Rolfe McCollister, Jr. EDITORIAL Editorial Director: Penny Font Editor: Jerry Martin Director-Online Operations: Brandi Simmons Director of Research: Sierra Crump Contributing Writers: Sam Barnes, Erin Z. Bass, Adrian Hirsch, David Jacobs, Meredith Whitten Contributing Photographers: Lee Celano, Terri Fensel, Cheryl Gerber, Don Kadair, Collin Richie ADVERTISING Special Projects Manager: Jennifer Finley Senior Account Executive: Stacy Kaklis Account Executives: Jennifer Gross, Angie LaPorte, Brandy McIntire Marketing Director: Jennifer Guillot Marketing/Special Events Coordinator: Christie Battaglia Advertising Coordinator: Lacie Thibodeaux Community Liaison: Jeanne McCollister McNeil PRODUCTION/DESIGN Production Manager: Melanie Samaha Art Director: Hoa Van Vu Senior Graphic Designer: Carolyn Valentine Blakley Graphic Designers: Tammi deGeneres, Melinda Gonzalez, Emily Witt

PAGE 28 ON THE COVER: Unused inland drilling rigs are stacked together at the Port of Iberia in New Iberia. Photo by Tim Mueller.

LAUNCH

10

In case you missed it Industry briefs

15 18

New products

21

The big picture Special rolling gates that weigh 8 million pounds apiece are a key part of the new, expanded Panama Canal.

Update The LNG industry in southwest Louisiana continues to move full steam ahead.

24

In their own words Industry leaders talk safety.

27

People Gregory M. Bowser, Executive Vice President & Director of Governmental Affairs, Louisiana Chemical Association

38

44

49 50

FEATURES Job ready Mobile Services and “nesting” from the Alliance Safety Council are helping companies save time and money during worker processing.

Almost like a miracle Industrial operations and their workers throughout south Louisiana are fortunate to have Baton Rouge General’s Regional Burn Center nearby.

54

58

60

Company spotlight Orion Instruments shines in the global market.

Big cargo Louisiana ports and the industries that depend on them are expecting to catch a wave when the expanded Panama Canal opens this year.

GO Group update Despite tensions, southwest Louisiana leaders move ahead with initiatives to reap the benefits of rapid growth.

A partner for manufacturers MEPOL offers various services, including workforce training and marketing Renewable, sustainable … and profitable An October conference at the LSU AgCenter examined the progress and outlook for the bioproducts industry in Louisiana.

64

Protect your assets!

What today’s manufacturers should know about patent law.

Part 1 of 2.

68

Crude calculations Will the end of the ban on exporting oil be good or bad for Louisiana?

70

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

CLOSING NOTES

AUDIENCE DEVELOPMENT Audience Development Coordinators: Kenna Maranto, Brittany Titone A PUBLICATION OF LOUISIANA BUSINESS INC. Chairman: Rolfe H. McCollister, Jr. President and CEO: Julio A. Melara Executive Assistant: Millie Coon

72

Insight Guest columns look at state budget wars, the energy outlook and the Capital Region transportation crunch.

SUBSCRIPTIONS/CUSTOMER SERVICE 9029 Jefferson Hwy., Suite 300 Baton Rouge, LA 70809 225-421-8140 • FAX 225-928-5019 1012industryreport.com email: circulation@businessreport.com

75

Business files Tracking executive moves and company news across the 10/12 corridor.

Volume 1 - Number 1

78

The boom at a glance Our maps of the megaprojects and medium-sized projects that are driving the industrial boom.

82

My toughest challenge Cordell Haymon

Send your ideas and company news to editor@1012industryreport.com.

6

Mixed outlook At a fall economic forum, experts noted construction could benefit from stagnant oil as jobless workers fill the labor void.

ADMINISTRATION Chief Financial Officer: Jonathan Percle Chief Innovation Officer: Curtis Heroman Business Manager: Adam Lagneaux Business Associate: Danielle Daly Office Coordinator: Debbie Lamonica Courier: Jim Wainwright Receptionist: Cathy Brown

© Copyright 2016 by Louisiana Business Incorporated. All rights reserved by LBI. 10/12 Industry Report is published quarterly by Louisiana Business Inc. Reproduction without permission is prohibited. Business address: 9029 Jefferson Hwy., Ste. 300, Baton Rouge, LA 70809. Telephone (225) 928-1700.

POSTMASTER: Send address changes to 1012 Industry Report, 9029 Jefferson Hwy., Ste. 300, Baton Rouge, LA 70809.

10/12 Industry Report cannot be responsible for the return of unsolicited material—manuscripts or photographs, with or without the inclusion of a stamped, self-addressed return envelope.

Information in this publication is gathered from sources considered to be reliable, but the accuracy and completeness of the information cannot be guaranteed. No information expressed here constitutes a solicitation for the purchase or sale of any securities.

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IN THIS ISSUE

No need to turn out the lights just yet

I

PENNY FONT EDITORIAL DIRECTOR

8

t’s nothing like the ’80s.

Such was the silver lining in a talk Louisiana economist Dr. Loren Scott delivered to the executives gathered at the Baton Rouge Business Report Power Breakfast in late January. In other words, don’t start cranking out those “Will the last person out of Louisiana please turn off the lights” bumper stickers from 1985 just yet.

While oil prices have driven the economies of seven of Louisiana’s nine metro areas either flat or into decline, Lake Charles and Baton Rouge are continuing to grow, thanks to the petrochemical and construction activity.

But the benefits of a bifurcated economy are of little solace to New Orleans, Shreveport/Bossier, Houma or Lafayette. Cumulatively, those communities have lost 11,500 jobs since November 2014. The pain is most acute in Lafayette, which has borne the brunt of more than 44% of those losses.

Nor does it offer much comfort to Quay McKnight, featured in this edition’s cover story, which captures the stories of how some of Louisiana’s oil and gas firms are struggling to survive. The chairman of M&M International in Broussard has kept his company profitable, but only through painful cost-cutting—including two rounds of layoffs since rig counts started falling at the end of 2014.

His workforce—once 100 people strong—now stands at about 70.

Now that oil prices have dipped below $30 a barrel, he’s uncertain what the future may hold for the company that sells well-control valves for oil and gas drilling.

“I don’t know what’s going to happen next week,” McKnight tells 10/12 Industry Report. “We depend heavily on drilling, and what those guys do is what we have to respond to. I’m not sure if prices continue to fall, what that looks like.”

On the positive side, our story has a tip sheet of robust strategies for surviving tough times from executives who have been here before, like

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

keeping one eye on the balance sheet and the other on the future, and keep recruiting the best and brightest.

Sound counterintuitive? “Eventually you’ll get to a point where you look at these down cycles as opportunities to grow as a leader,” says Gary Luquette, former head of Chevron North America Exploration and Production, now CEO of Frank’s International, “and really move the business to a more efficient, productive, formidable space, so when the recovery does come you’re really ready to ramp up and run very efficiently.”

GOING QUARTERLY In 2016, you’ll get even more content targeted to heavy industry. 10/12 Industry Report is going quarterly. This first issue of the year is jam-packed with information about the economy, the state budget’s impact on business and industry and federal regulations, as well as practical management tips. Check out: • There’s a new potential player in Louisiana’s ever-expanding liquefied natural gas export industry. G2 LNG plans to break ground on an $11 billion export facility on the Calcasieu River Ship Channel in Cameron Parish in the middle of next year, with a goal of coming online for LNG exports in 2020. If you don’t recognize the name G2 LNG, you’ll recognize the name of the chairman behind it: former Gov. Buddy Roemer. Get the scoop on page 21.

• There was a time when the future of the Manufacturing Partnership of Louisiana was in serious jeopardy. Its sponsor, the University of Louisiana-Lafayette, had dumped it, and it was leaderless. But the entity known as MEPOL is making a comeback, both with a new sponsor and a new director—and plans to expand beyond its Lafayette home. Read about the organization’s revival on page 58.

• Companies with big project launches know the frustration of ramping up manpower. Drug screening. Medical evaluations. Safety training. It all takes time—usually

two or three days. But a new Alliance Safety Council initiative known as “nesting” is slashing that to as short as a single day. See how it’s benefiting one of Baton Rouge’s largest firms on page 40. · Wondering whether the end of the ban on exporting oil will be good or bad for Louisiana? Ragan Dickens of the Louisiana Oil and Gas Association likens it to a rock thrown into the lake. “It’s that ripple effect.”

But Loren Scott says the primary beneficiaries will be those drilling for oil and harvesting oil in the Bakken play in North Dakota and the Eagle Ford in Texas. Get the full story on page 68. · Stephen Waguespack of the Louisiana Association of Business & Industry takes on the state budget shortfall, noting that over the last 10 years, government spending has increased by 44%, while the economy has grown by just 25%. This spending growth is dominated by a more than $1 billion increase in Medicaid and hundreds of millions of dollars in increased costs to pay for the state’s 13 public retirement systems. Get details on page 72. · Our comprehensive update on the industrial projects announced or proposed since 2009, with a projected capital investment of $250 million or more. As of now, the total potential capital investment is $144.5 billion; direct new jobs, 11,877. Read more on page 78.

• When one of SGS Petroleum Service Corp.’s biggest customers suddenly became its biggest rival, how did the company remain competitive? Senior Vice President Cordell Haymon shares what turned out to be a successful strategy in our new feature, “My Toughest Challenge,” on page 82.

As always, we want to hear your ideas and company news. Send them to editor@1012industryreport.com.

If you have other decision-makers in your company who should receive this publication this year, call (225) 421-8140.

1012industryreport.com

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10/12 INDUSTRY REPORT • FIRST QUARTER 2016

9

LAUNCH

ICYMI

Axiall, Lotte announce $3B in Louisiana chemical projects

L

otte Chemical Corp. executives announced in December the companies will make a combined $3 billion capital investment in two new chemical manufacturing plants in Lake Charles. Axiall and Lotte, through a joint venture called LACC LLC, will make a $1.9 billion capital investment in a new ethane cracker facility beside Axiall’s current Lake Charles manufacturing plants in Calcasieu Parish. Additionally, Lotte will make a $1.1 billion capital investment in a new monoethylene glycol manufacturing plant on the same site.

Combined, the projects will create 215 new direct jobs, with the ethane cracker producing 135 new direct

jobs with an average annual salary of $75,500, plus benefits, and the monoethylene glycol, or MEG, facility producing 80 new direct jobs with an average annual salary of $87,000, plus benefits. Louisiana Economic Development estimates the combined projects will result in 1,892 new indirect jobs, for a total of more than 2,100 new jobs in southwest Louisiana. With its project, Axiall will retain 1,600 existing workers in the Lake Charles area, and the company estimates 2,000 construction jobs will be created at peak building activity for the new plants.

The Axiall and Lotte announcement is the final investment decision for a project first disclosed as a potential investment in December

2013. Later, Axiall identified its investment partner for the project as Lotte, and the two companies announced a joint-venture arrangement in June 2015. Lotte will be the sole owner of the MEG plant, with construction on that site and the ethane cracker expected to begin in 2016. Upon completion of the MEG plant, Lotte plans to export more than 600 kilotons per year to customers abroad. The ethane cracker is expected to open in early 2019, with an annual capacity of 1 million tons.

Axiall plans to acquire 50% of that plant’s output for making vinyl chloride monomer and other products.

“The project is needed to enhance the long-term sustainability of existing Axiall facilities by ensuring

a cost-competitive, reliable source of ethylene feedstock that will enhance Axiall’s ethylene integration for its vinyl chain,” noted Jim Rock, Axiall vice president for operational excellence. “Manufacturing ethylene at an Axiall-affiliated facility will contribute to the economic sustainability of our existing Louisiana plants in Calcasieu Parish and Iberville Parish.”

CB&I and Samsung Engineering both announced they have been awarded the major contracts for engineering, procurement, fabrication and construction for the two new facilities.

—Staff reports

Oil Slump

THE SAFETY STATE The rate of work-related injuries and illnesses among Louisiana’s private-sector employers improved in 2014 to the best level in 13 years, the Louisiana Workforce Commission announced, citing a new federal Bureau of Labor Statistics survey. The survey showed Louisiana improved to two incidents per 100 full-time workers, down from 2.2 in 2013. The national average was 3.2. Louisiana ranked first among the 41 participating states, trailing only the District of Columbia for the rate of nonfatal, workplace-related injuries and illnesses. It was the state’s best showing since the federal Occupational Safety and Health Administration revised its record-keeping rules in 2002.

Louisiana End-of-Year Rig Counts (for more details about slumping rig counts, see the cover story, pages 28-37)

—Daily Report

SECOND CITY Baton Rouge is ranked as the No. 2 city in North America for economic development in the chemical and plastics industry in Conway Inc.’s 2015 edition of “The World’s Most Competitive Cities” report, trailing only metro Houston area and leading the Chicago, Cincinnati and Dallas metro areas. The report measures metro areas’ performance across 12 business sectors central to national and regional economies. At the report’s center is Conway Inc.’s proprietary Conway Projects Database, which tracks private-sector corporate facility investments worldwide. Conway Inc., which is the publisher of Site Selection magazine, partners with Moody’s Analytics, Oxford Economics and Tractus Asia to annually publish the index of recent economic development success and future potential in metro areas across the globe.

175 2010

150 2011

109 2012

111 2013

112 2014

59 2015

—Staff report 10

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

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Issue Date: Feb/Winter Ad proof #1

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Corporate Headquarters and Warehouses: 9436 Highway 75, Geismar, LA 70734 225.673.3370 • 1.888.269.4315 • www.braudco.com

10/12 FILE PHOTO

Doing it right for OVER 30 years!

SHELL TO EXPAND GEISMAR PLANT Shell Chemical plans to invest $717 million at its Geismar plant to develop a new linear alpha olefins manufacturing unit, the company announced in November. The manufacturing unit will produce alpha olefins, chemicals that are used to produce a variety of consumer and industrial products including plastics, synthetic lubricants, drilling fluids and household detergents. Shell says its linear alpha olefins unit will generate 425 kilotons per year, making its Geismar plant the largest alpha olefins production site in the world. Construction will begin during the first quarter of 2016, with the unit expected to begin operations in 2018. The project is expected to create 20 new direct jobs at the Geismar plant, which employs about 650 people total and has been in operation since 1967. The new jobs will pay an average salary of $104,000, plus benefits. Louisiana Economic Development estimates the project will also result in an additional 93 new direct jobs in the Capital Region, and the company expects construction will require 1,000 workers at peak building activity.

The alpha olefins unit will be the fourth at Shell’s Geismar plant, which is located on roughly 800 acres at River Road and La. 3251 on the east bank of the Mississippi River. The state is providing Shell an incentive package that includes workforce development assistance via LED’s FastStart program. The company is also expected to benefit from the state’s Enterprise Zone and Industrial Tax Exemption programs.

—LED

$ 55.08

BILLION

projected 2016 global expenditures on large-scale onshore LNG liquefaction and regasification terminals Source: Visiongain

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10/12 INDUSTRY REPORT • FIRST QUARTER 2016

11

ICYMI

METHANEX

“This isn’t a question of what’s happening today. It’s a question of what’s going to happen in the next 10 years. And we think the U.S. is an energy-rich region and will remain so for quite some time.”

The Methanex Geismar 2 plant is now in production.

UP AND RUNNING Methanex says it has begun producing methanol at the second plant it has relocated to Geismar from Chile. Production began at the end of December, roughly three months ahead of schedule, the Vancouver-based company said in a news release.

“We expect the plant to ramp up to full production rates over the coming weeks,” said Methanex President and CEO John Floren in the release. “With the start-up of Geismar 2, we have successfully grown our operating capacity by approximately 3 million tonnes over the last three years.” The combined cost to relocate both methanol plants to Geismar—the first of which began producing methanol in January 2015, roughly 2½ years after the company announced the relocation—was approximately $1.4 billion, Flores added. Methanex is the world’s largest supplier of methanol.

Siluria chemicals and fuels executive Joe Lee, on how low oil prices might impact the prospects for the commercial methane-ethylene plant the company is developing in Louisiana Source: ICIS

CORRECTION The story “Contracting on the coast” in the fall 2015 issue of 10/12 Industry Report incorrectly identified a key organization as the “National Fish and Wildlife Federation.” The organization’s title is the National Fish and Wildlife Foundation. 10/12 Industry Report regrets the error.

—Daily Report

800-626-4431 • DonahueFavret.com

12

10-12 February 2016.indd 1

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

1/12/2016 2:40:38 PM

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STEADY AS SHE GOES Plant managers from 41 industrial facilities in the Baton Rouge area surveyed by the Greater Baton Rouge Industry Alliance foresee steady capital expenditures and employment forecasts over the next six months. The survey, released at the end of January, shows the current GBRIA index is 58, which is a 1-point decrease from October’s index. The index ranges from negative 50 to 150, with any reading above 50 reflecting an expansion of the local economy and any reading below 50 as evidence of economic contraction. GBRIA surveys area plant managers and compiles an index score for the region, similar to the index reported by CEOs of The Business Roundtable. GRBIA Executive Director Connie Fabré says the index’s 15-point increase for plant production stems from recent public announcements of plant projects. “The index has decreased from a high of 94 in the 3rd quarter of 2012, before many capital investments were made; however, now that many of those investments are in place members continue to enjoy the strong business conditions,” Fabré says in a statement. Of the 41 respondents, 68% say they see no change in their plant’s production in the next six months, while 24% say they foresee an increase and only 7% predict a decrease. When asked about whether they expect the plant’s company employment to change in the next six months, 63% indicate they expect no change, while 32% predict an increase and 5% foresee a decrease.

—Daily Report

I N N OVAT I V E , T U R N - K E Y S O LU T I O N S F O R A C H A N G I N G WO R L D

17%

year-over-year increase in commercial building permits in St. Tammany Parish through the first three quarters of 2015 Source: St. Tammany Economic Development Foundation

THE RIPPLE EFFECT January media reports on a community meeting in Jefferson Davis Parish made clear how the industrial expansion in southwest Louisiana is impacting parishes outside Calcasieu and Cameron, where the surge in industrial construction is based. Leaders in Jeff Davis Parish met Jan. 21 in Jennings to educate the public about job opportunities as a result of the more than $100 million in megaprojects in southwest Louisiana, urging their residents to learn about the jobs, get additional training and help the region meet its coming workforce needs. “We need everybody in Jeff Davis Parish that is able and willing to work to get involved in our workforce,” R.B. Smith, vice president for workforce development at the Southwest Louisiana Economic Development Alliance, told the gathering, according to The American Press. “What’s happening in southwest Louisiana is really a blessing to all of us,” Jeff Davis Economic Development Director Marion Fox added. “It is attracting companies here and a lot of people are looking at us because of what’s happening in Calcasieu and Cameron parishes.” “While many are scooping up jobs right now, Fox said more are coming and the time to act and get trained is now,” TV station KPLC reported from Jennings. “We say next year, 2017, is just going to be the beginning construction of a lot of the plants,” Fox told the station.

“Yes, some of them are on board now but they’re just in construction. So, it’s going to be 2, 3, 4, 5 years before there are permanent jobs available.” About 100 people attended the meeting.

225-677-8890 • bengalindustries.com

—American Press, KPLC

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10/12 INDUSTRY REPORT • FIRST QUARTER 2016

13

ICYMI AP FILE PHOTO

“It is also telling that Mr. Souki sold a great deal of his stock, which made it somewhat easier for him to ‘swing for the fences,’ making it a win-win for Mr. Souki but not necessarily for the shareholders.”

$ 5.7

Carl Icahn

Activist investor Carl Icahn on Dec. 14, regarding the firing of Charif Souki as chief executive of Cheniere, which is on the verge of the first large-scale LNG exports from the U.S. at its Sabine Pass complex in Cameron Parish Source: Argus

BILLION

TIP OF THE HAT

annual local revenue generated by the Calcasieu Ship Channel, according to a new report released by the Port of Lake Charles in October Issue Date: Special Project Press Ad proof #1 Source: American

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• Additional revisions must be requested and may be subject to production fees.

ISC Constructors was named the 2015 Specialty Contractor of the Year by Engineering News-Record Texas & Louisiana. As the trade publication reports, the Baton Rouge-based electrical subcontractor saw a strong 2014, with regional revenues propelling upward by about $55 million over 2013 figures.

This jump was due in part to the refining and chemical industry expansions taking place throughout the Gulf Coast. ISC was able to capitalize on that industry growth, having been preparing for Gulf Coast expansion over the past few years with workforce development and training efforts, plus the recent opening of a new office in Lake Charles. Beyond the job site, ISC and its associates contributed to more than 80 charitable organizations over the year, in the form of monetary donations and the giving of time and personal caring in various capacities, including education, medical research, health and well-being.

In 2015, ISC earned three ABC Excellence in Construction Eagle Awards and one ABC Excellence in Construction Pyramid Award from ABC National.

—Staff report

Carefully check this ad for: CORRECT ADDRESS • CORRECT PHONE NUMBER • ANY TYPOS This ad design © Louisiana Business, Inc. 2015. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

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NEW PRODUCTS

O

rion Instruments, a global leader in high-performance level control instrumentation, is proud to announce the release of the JUPITER™ Model JM4 magnetostrictive level transmitter, its newest and most advanced level instrument to date. The JM4 is available as a direct insertion option, as well as an external mount on any Orion magnetic level indicator (MLI) or modular instrumentation bridle.

“With an improved design, unparalleled performance, and a collection of new and innovative features, the

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JM4 provides safer, simpler, and smarter measurement in total and interface level applications,” the company says in a news release.

The JM4 is engineered to be the smartest, most innovative magnetostrictive transmitter available. To this end, numerous enhancements have been introduced, including greater signal-to-noise ratio (SNR), a full graphic local user interface, HART 7.0 (Foundation fieldbus available), local waveform capture, and a more intuitive device type manager (DTM) allowing for remote config-

N

Orion rolls out next-generation magnetostrictive level transmitter.

uration, trending and diagnostics.

The JM4 is the first magnetostrictive transmitter in the industry to offer a field-removable and rotatable head, Orion reports.

The removable head allows for simpler transmitter maintenance and troubleshooting without disrupting the process. 310° of head rotation provides users with greater accessibility to operate the JM4’s on-board graphical interface.

To further enhance the removable head, the JUPITER Model JM4 also features Smart Probe technology. When any JM4 transmitter head is attached to a probe, a single push of a button imports factory configORIO

Level up

THE JUPITER™ MODEL JM4 INCLUDES NUMEROUS ENHANCEMENTS.

uration settings into the head, and in seconds, the transmitter is ready for operation.

JUPITER also offers a remote mount option. Available in 3-foot and 12-foot lengths, the transmitter head is attached to the probe via a flexible cable to allow for easier viewing under various spatial constraints.

Orion Instruments is a globally recognized leader in the design and manufacturing of magnetic-based level technologies. Based in Baton Rouge, Orion offers an extensive product line of custom level measurement solutions with the broadest range of options to solve the most difficult industry applications.

10/12 Industry Report has more on Orion Instruments in our Company Profile on page 49.

—Staff report

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

15

NEW PRODUCTS

Time saver

New inspection app aids in capture of variety of information.

E

nvoc, an award-winless than an hour, Envoc reports in ning full-service digital a press release. Spotter uses built-in agency, has announced tablet functionality, such as the camthe release of their latest era and microphone, to save time, product, Spotter. Spotter money and headaches, the company is a customizable mobile tablet notes. inspection app designed to streamWith Spotter, inspection, controls, line a business’s inspection processes, survey and safety professionals are providing significant improvements able to capture and use their valuable in preventive maintenance and inspection and audit information process controls. The first release ineasier than ever before. Envoc has cludes compatibility with both iPad also partnered with Xciel to provide and Android tablets, with support companies with intrinsically safe for other operating systems coming Class 1 Div 2 Android tablets and in future updates. iPad cases for high-risk worksites For many companies, inspectors that require it. spend between five and eight hours Spotter’s key features include: per inspection. By removing the • client-managed inspection temneed to carry and use clipboards, plates & questionnaires pens, paper, cameras and record• audio, video and photo integraing devices, andSpring then re-entering Issue Date: Ad proof #1 tion • Please respondinto by e-mail or fax with approval or minor•revisions. information a system ofyour record, offline capability for remote • AD WILL RUN AS IS unless approval or final revisions Spotter can cut that time down to locations are received by the close of business today.

• Additional revisions must be requested and may be subject to production fees.

• real-time inspection information analysis via the Dashboard Spotter has already been well-received by the media and clients alike, Envoc reports. It has been featured in Biz New Orleans’ Oil & Gas issue and Inspectioneering Journal. Clients have included CTS, an industrial service solutions company providing on-site inspections to the oil and gas industry; Quanex, a global manufacturer of energy-efficient window and door products, systems and solutions; and a Louisiana-based inland marine company for work

boat inspections.

And the feedback has been exceptional. “Spotter is REALLY impressive,” says Douglas Hauck of Quanex Building Products. “It’s obvious you guys have had a lot of feedback and implemented it, because there are features in here I didn’t even know I needed until I saw them. It’s set to become a key part of our quality assurance program.”

More information on the product is available on the website spotterinspectionapp.com.

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YOUR ADVOCATE in Solving State Government and Regulatory Issues As an attorney and registered lobbyist, Emory A. Belton, Jr. applies this extensive experience to issues concerning the energy industry. He has represented clients in complex electric and gas utility regulatory matters, power generation, transmission, renewable energy, oil and gas exploration and production, pipelines, landowners, royalty matters, hurricane recovery, oil field waste haulers, telecommunications, and governmental and political affairs.

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WWW.BOHBROS.COM 10/12 INDUSTRY REPORT • FIRST QUARTER 2016

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THE BIG PICTURE 16 GIANTS Crews move a steel rolling gate at the Panama Canal in Cocoli near Panama City, April 2015. Crews from the Panama Canal Authority supervised the installation of the last of 16 giant lock gates that are a key part of the waterway’s multibillion-dollar expansion.

HEAVY METAL The gates are made of steel, measure 187 by 105 by 33 feet, and weigh 8 million pounds apiece.

NEW LOCKS The construction of a larger, third set of locks using the new rolling gate mechanism will allow the passage of so-called post-Panamax vessels or container ships much too big to fit through the Panama Canal’s old locks. The expanded canal is expected to open later this spring.

Turn to page 50 to learn about the impact the expansion will have on south Louisiana.

ROLLING ALONG The rolling gates will move in and out of the gate recesses on two sets of wheels that roll along supports and crane rails located along the recesses and the bed of the lock. Operated by a winch and motor system, the gates are pulled forward or backwards out of or into recesses by means of thick wire ropes, allowing the lock chamber to be filled and emptied.

OCEAN PASSAGE Pre-expansion, about 14,000 vessels carrying 5% of the world’s ocean cargo—280 million tons—passed through the waterway each year.

Sources: Associated Press, MWH Global

SUPER GATE

AP PHOTO/ARNULFO FRANCO

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UPDATE

Next in line LNG exporting projects continue to steam ahead.

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CENTER FOR LIQUEFIED NATURAL GAS

A

Louisiana-based firm for which former Gov. Buddy Roemer is chairman has added its name to the series of potential players in south Louisiana’s burgeoning liquefied natural gas export industry. G2 LNG says it expects to break ground on a new $11 billion LNG export facility on the Calcasieu River Ship Channel in Cameron Parish in mid-2017. If all goes according to plan, the facility will come online for LNG exports in 2020, officials from G2 LNG say.

The proposed facility is expected to export about 14 million metric tonnes of LNG annually to countries around the world, the company says in a news release.

“The G2 LNG project has several unique advantages that have led to advanced discussions with potential customers in Asia, Europe, India and the Caribbean,” Roemer says in a prepared statement.

The company has received permission from the U.S. Department of Energy to export LNG to Free Trade Agreement countries and is awaiting a decision in 2017 from DOE on its application to export to non-FTA countries.

The project is expected to create 3,500 construction jobs and 250 permanent jobs averaging $85,000 annually, company officials say, adding they are also working with state and local officials to bring on local vendors for the project.

“G2 LNG is a Louisiana-owned company and is dedicated to continue hiring Louisiana people to build and operate this facility,” Roemer says. “Our people have a long history and knowledge of the energy industry in this state, and we will use that know-how to make this project a great success.”

Houston-based KBR was announced as the FEED engineering contractor on the project. Additionally, KBR will provide the technical documentation required by the Federal Energy Regulatory Commission during the pre-filing process.

Other recent developments in

Louisiana LNG include: • Cheniere Energy’s Sabine Pass plant in Cameron Parish is about to become the first facility in the contiguous “lower 48” of the U.S. to export LNG. The company announced in January it expects to export the first LNG commissioning cargo from its Sabine Pass liquefaction project in late February or March.

• Williams and Williams Partners LP announced that the Federal Energy Regulatory Commission has approved an application for Gulf Trace, a 1.2 million dekatherm per day expansion of the Transco pipeline system to serve the Sabine Pass project. The target in-service date is first quarter 2017.

• Houston-based Magnolia LNG has inked a $4.35 billion deal with an engineering joint venture between Houston-based KBR Inc. and South Korea-based SK Engineering & Construction for its LNG liquefaction facility near Lake Charles.

The engineering, procurement and construction contract includes up to four LNG production trains designed to produce 2 million tons per year or more per train. The contract also includes two 160,000-cubic-meter containment storage tanks, LNG marine and ship-load-

ing facilities, supporting infrastructure, and all required approvals and licenses.

• SCT&E LNG announced it has selected Air Products and Chemicals Inc. to provide its proprietary propane pre-cooled mixed refrigerant process (AP-C3MR™ process) and its main cryogenic heat exchangers (MCHE) technology, equipment, and related process license for the SCT&E LNG project located on Monkey Island in Cameron Parish. Greg Michaels, chairman and CEO of SCT&E LNG, said the company expected to begin design and related engineering in January 2016. “Our project schedule and commencement of the FERC process is directly matched to global LNG demand in 2022 and beyond,” he added.

• In December, Dongsung FineTec Co. Ltd. announced it will create 250 new direct jobs and make a $5 million capital investment in a cryogenic insulation manufacturing facility in Lake Charles. Based in South Korea, Dongsung FineTec provides specialized high-performance insulation to LNG plants and other industrial sites around the world. The company will lease an 11-acre site at the Port of Lake

Charles’ Industrial Park East for its manufacturing complex. The region’s dynamic natural gas liquefaction and export industry will provide a significant customer base for Donsung FineTec. • BG Group and Energy Transfer Partners have gained approval from the U.S. energy regulator for their LNG production and export plant in Lake Charles, the companies said.

The go-ahead is a key milestone for the project, one of 10 major LNG projects in the works for southwest Louisiana. The partners said they would take a final investment decision on the project, expected to export around 15 million metric tonnes of LNG a year, in 2016 and that the first LNG exports from the plant could follow four years after construction starts. The Lake Charles project will convert Energy Transfer’s existing LNG regasification facility into a liquefaction plant, one of the aspects that the developers say will make it one of the most competitive new LNG terminals in the United States. BG, which will be operating the terminal once completed, will be responsible for choosing contractors for the construction of the project.

—10/12 Staff Reports

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• AD WILL RUN AS IS unless approval or final revisions are received by the close of business today.

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Over 30 years of providing the highest quality and most reliable Onsite Field Machining, Mechanical & Fabrication services in the industry

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PHOTOS COURTESY LAGCOE

EVENTS

Meet me at

LAGCOE

THE LOUISIANA Gulf Coast Oil Exposition 2015 welcomed more than 16,400 visitors from 46 countries and 49 states to the Cajundome & Convention Center in Lafayette Oct. 27-29. Attendees viewed 448 exhibits, eight technical presentations, seven international presentations and five special events over the three-day period.

“We are very pleased with the number of attendees and exhibiting companies at LAGCOE 2015, given the state of the industry,” said Angela Cring, LAGCOE executive director. “It is evident that networking, innovation and preparing the next generation are critical components to our industry, especially in lean times.”

In continuous operation since 1955, LAGCOE is an oil and gas exposition where world-class companies display the latest equipment and services, and technical sessions address pertinent issues from across the globe. The biennial event will next be held Oct. 24-26, 2017.

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IN THEIR OWN WORDS

SAFETY: What works

What practice or technology has had the biggest impact on safety at your facility?

“FINDING INNOVATIVE ways to reduce exposure and risk to people working in our BASF Geismar facility is a key to our ‘Zero Incident Mindset.’ In years past, hydro-blasting involved a person manually maneuvering high-pressure water shooting out of a lance to clean equipment throughout the production units. The manual process of hydro-blasting exposes a person to a certain level of risk, which could result in an injury due to water cutting, heat stress or overexertion due to handling this device.

Through collaboration with our industrial partner, our site transitioned to automated hydroblasting technology. The automation removed the lance from a person’s hands, and it is instead remotely controlled through a robotic device. As a result of using this automated technology, there have been zero injuries associated with hydro-blasting.”

“EXXONMOBIL BELIEVES that safety is a value, not a priority. While priorities may change, values do not. At our Baton Rouge sites, each of us accepts personal responsibility for our own safety and that of our coworkers, and that accountability translates into a culture where everyone actively intervenes to ensure the safety of others. Our pursuit for safety starts with our Operations Integrity Management System. OIMS is the cornerstone of our commitment to managing risk and achieving excellence in operational performance.

OIMS is implemented across our worldwide operations and reinforces our belief that all incidents are preventable.”

BOB JOHNSTON Site Manager ExxonMobil Chemical Co., Baton Rouge

TOM YURA Senior Vice President and General Manager BASF Corp., Geismar

“WHEN OSHA implemented the Process Safety Management regulation, we reduced inventory of two chemicals, which removed the site from falling under the regulation. However, we made the decision to embrace and follow the PSM regulation because it was the right business decision. Without question, following the requirements of PSM has had the biggest, most far-reaching impact on safety and operational performance at this facility.

That work provided a solid foundation that led to OSHA VPP Star status in 2005.”

DAVID RENTROP, Operations Director W.R. Grace & Co., Lake Charles

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“SAFETY PROCEDURES, training and awareness of hazards are basic elements of a sound safety process. We have found the key to maintaining and improving these elements is participation of our employees in refining the process. Tools such as safe work/behavioral observations, job task analyses, and unsafe condition recognition can be integrated into operational activities such that employees are not only working safe but ensuring that others are as well. The better the employee participation, the better the overall safety process. Tools that are integrated into daily activities such that employee participation remains strong have the biggest impact on safe work performance.”

TIM HALL Plant Manager Louisiana Pigment Co., Westlake

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• Please respond by e-mail or fax with your approval or minor revisions.

• AD WILL RUN AS IS unless approval or final revisions are received by the close of business today.

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“AT THE BATON ROUGE Polyolefins Plant, safety is everyone’s responsibility, and achievements like the 2015 LCA Best in Louisiana Serious About Fostering Excellence (SAFE) Award showcase our workforce’s ownership of safety. We take great pride in the safety culture and safety performance at our site, which is driven by individual and collective commitment to operational excellence. That ownership and commitment, along with ExxonMobil’s Operations Integrity Management System, drive action every day, at every level of our organization, to safeguard the people who work in our plant, as well as the environment and the community in which we operate. One of the ways we do that is by sharing learning from actual incidents and near-misses across ExxonMobil and in our industry, and then actively translating that learning into improved work practices at our site.”

we are energy

ANGELA ZERINGUE Plant Manager ExxonMobil Polyolefins Plant, Baton Rouge

“AS AN INDUSTRY, we are safer because of innovative safety technologies and practices that have emerged over the past several years. Dow has led the way in working with our contract and industry partners in developing and implementing automated technologies to remove workers physically from industrial cleaning jobs. Dow has best-inclass training, procedures and standards.

As a result, Dow has far fewer injuries than most other industries. But, at the end of the day, what distinguishes Dow Louisiana Operations is our ‘One Team’ approach. Every contract employee, every Dow employee, every day working together as ‘One Team’ with safety as our only priority.”

w w w . h s i . e n e r g y 1-800-349-7560 technical bolting

hydrostatic testing •diamond wire cutting

• pipeline services

field machining

EDUARDO DO VAL Site Director Dow Louisiana Operations, Plaquemine

LAPLACE 1012industryreport.com

• LAKE CHARLES • HOUSTON 10/12 INDUSTRY REPORT • FIRST QUARTER 2016

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BUSINESS

Major chemistry The Dow/DuPont merger at a glance.

WHEN DOW CHEMICAL CO. and DuPont Co. announced on Dec. 9 that they would merge to create a chemical, plastics and agricultural industry giant worth more than $120 billion, it was the largest deal in the history of the chemical industry. The combined company would have about 20 plants on the Gulf Coast, including Dow’s Louisiana Operations in Plaquemine, but it is not yet known how the merger will impact any of them.

While the merger is set for late 2016, it includes a plant to then split the business into three units by late 2017.

DUPONT

DOW CHEMICAL

NYSE – DD

NYSE – DOW

FOUNDED 1802

2/3 SPECIALTY CHEMICALS

FOUNDED 1897

1/3 COMMODITY CHEMICALS

1/3 SPECIALTY CHEMICALS

2/3 COMMODITY CHEMICALS

(CUTTING 5,400 JOBS)

Sold neoprene business to Denka [2015]

Spun off chlorine business to Olin [2015] NEW, COMBINED COMPANY

DOWDUPONT • • • • • •

116,000 employees Headquarters in both Midland, Mich., & Wilmington, Del. Andrew Liveris, Executive Chairman Ed Breen, CEO $90B revenues 20 Gulf Coast plants

MAY SELL OFF SOME FACILITIES

WILL SEPARATE INTO THREE PUBLICLY TRADED COMPANIES (R&D WILL BE COMBINED). ADDITIONAL JOB CUTS ARE EXPECTED.

AGRICULTURAL CHEMICALS Mostly Dow’s Seeds & Crop Protection Includes DuPont’s Ag Products

$19 BILLION REVENUES

SPECIALTY PRODUCTS

MATERIAL SCIENCES & PLASTICS

DuPont’s Nutrition, Health, Biosciences Safety & Protection Dow’s Electronics

DuPont’s Performance Materials Dow’s Performance Plastics (Except Dow Electronics) • May use Dow name

$13 BILLION REVENUES

COMMODITY PRODUCTS $51 BILLION REVENUES Sources: Homesite Co., Wall Street Journal

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PEOPLE

Executive profile: Gregory M. Bowser

What are the responsibilities of the executive vice president of the Louisiana Chemical Association?

As executive vice president, I’m responsible, along with the president, for the day-to-day operation of the Louisiana Chemical Association and the Louisiana Chemical Industry Alliance. I also assume overall responsivity, accountability and decision making in the absence of the president. The executive VP works closely with the president and the boards of directors of both organizations to develop and implement strategies that will ensure the continued growth and well-being of both organizations. I also work with the president with respect to preparation of annual budgets and staffing.

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[Note: Bowser will be transitioning to the role of president this summer when Dan Borné retires.]

What is your secret to leadership and advancing in your field?

Listening and being open to ideas that may be different than mine.

What is your favorite part about what you do?

There are several parts that I like, but one part that stands out to me is working as part of a team. Working with others as part of a team, trying to achieve the same goals, to me is something very special. So, working with others toward a common goal and watching the personal growth that comes from achieving things as a team.

COLLIN RICHIE

Where did your career start, and how did you get to where you are today?

I started by working for a United States congressman in Washington, D.C. I served as press secretary and manager of special projects.

Working in Congress gave me the opportunity to learn about how the legislative process works in Washington. It also gave me great exposure NAME to a number of difGregory M. Bowser ferent people and POSITION organizations from Executive Vice President & all over the world.

Director of Governmental After a couple of Affairs, Louisiana Chemical years of working Association in D.C., I returned to Louisiana as AGE the assistant chief 55 of staff for Gov. HOMETOWN Buddy Roemer in Baldwin, Louisiana 1988 and worked EDUCATION there for two years.

Louisiana State University Working for the (1983) governor gave me great exposure to the workings of the legislative process at the state level. It was the experience I gained while working in Congress and at the Louisiana State Capitol that gave me the knowledge that helped to prepare me for my current career.

What are your day-to-day responsibilities like?

My day-to-day responsibilities are communications with member companies and prospective members and with key political figures, and working in coalition with other organizations on issues important to the growth of the chemical industry.

What do you see for the future of your industry?

The future of our industry is as bright as it has ever been.

What are your next goals both professionally and personally?

Professionally: Provide people with a better understanding of the chemical industry. Personally: Always look to get better.

What is a great piece of advice you have personally received?

Believe in yourself.

What is your favorite way to spend your time?

Playing golf with my two sons.

What is an item on your “bucket list”?

Play golf at the Augusta National.

What do you do to unwind?

A glass of wine and soft music, preferably jazz.

What is your go-to spot in Baton Rouge?

Home.

Interiew by Erin Z. Bass

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

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COVER STORY OUT OF WORK: With the number of active rigs in Louisiana at a record low, liftboats sit in storage at the Port of Iberia in New Iberia.

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Just staying

AFLOAT With oil prices at rock-bottom, companies that depend on drilling are in survival mode.

BY DAVID JACOBS

TIM MUELLER

Q

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uay McKnight’s father survived the oil bust of the 1980s. He came away with an important lesson that he hammered into his son: Do not get into debt.

“We choose to grow organically,” says McKnight, chairman of M&M International in Broussard, which sells well-control valves for oil and gas drilling. “And in times like this, it’s a godsend.”

Even in the midst of the worst oil industry slump in 30 years, the company remains reasonably profitable, he says, but only through painful cost-cutting. They’ve had two rounds of layoffs since rig counts started falling at the end of 2014, reducing their workforce from 100 to about 70.

McKnight says he thought his company was lean enough to hold steady for a while. But after watching oil prices dip below $30 a barrel in mid-January, he’s not so sure.

“I don’t know what’s going to happen next week,” he says. “We depend heavily on drilling, and what those guys do is what we have to respond to. I’m not sure, if prices continue to fall, what that looks like.”

Less than two years ago, oil prices touched $100 a barrel. Since then, the price has fallen to its lowest point in more than a decade, even lower than during the worst days of the global recession.

Healthy oil and gas-related companies are staying alive by slashing payroll and expenses, but there’s only so much they can cut while still remaining viable.

McKnight considers himself a pretty

positive guy, and he believes the future will be bright. The oil industry is cyclical, and it always makes a comeback.

Lower prices lead to less production, but the demand for oil doesn’t go away. So eventually the market tends to rebalance.

This time probably will be no different.

But for now there’s not much optimism in the oil business. The strong likely will survive, but the rest may fall away, and it might get worse before it gets any better.

UNDER ATTACK This downturn reminds Louisiana Oil and Gas Association President Don Briggs of the mid-1980s, and not just for the obvious reasons.

President Ronald Reagan’s administration secretly urged Saudi Arabia to ramp up oil production, cratering the market for the Soviet Union’s only reliable source of hard currency. While the tactic may have helped win the Cold War, Louisiana’s oil industry was devastated.

Once again, the domestic oil business is caught in geopolitical crossfire, and again the Saudis are at least partly to blame.

“Cartels do one of two things,” Briggs says. “One, they can stabilize prices and make things competitive. Or they take out their competition.”

OPEC, of which Saudi Arabia is the most important member, has chosen the latter, Briggs says.

“This is a direct frontal attack on our industry,” he adds.

Of course American companies, particularly the shale drillers, also are flooding the market. In 2008, the U.S. was produc-

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

29

COVER STORY

TERRI FENSEL

ing five million barrels of crude per day, Briggs says. By 2015, that total had almost doubled.

Briggs says the world’s daily supply is 96 million barrels a day, which exceeds demand by two million barrels, while more than a billion barrels of oil are sitting in pipelines, ships and storage tanks.

As it emerges from international sanctions, Iran is preparing to add even more supply to the market.

And economic growth in the developing world no longer can be depended upon to boost demand.

“We are drowning in oil,” Briggs says. “There have been a lot of bankruptcies, and there are going to be more. Everybody’s gotten as lean as they can get.”

He says the number of active rigs in Louisiana is at a “record low,” even compared to the nadir of the 1980s.

Only one rig is running in the state’s inland waters, Briggs says, while only eight are running on land in south Louisiana and only a couple dozen in the deepwater of the Gulf of Mexico. That leaves way too many service companies trying to feed off of too few rigs.

According to the most recent Louisiana Workforce Commission report, 42,500 people were working in mining and logging, the category that includes oil and gas, last December. That’s a 21% decrease from two years prior, and it’s safe to assume the numbers are still falling.

Moncla Companies, a Lafayette rig and oil services company, told KATC it had gone from 633 employees in 2014 to 305 in December 2015. Oil-and-gas equipment supplier National Oilwell Varco on Jan. 7 closed a Houma facility that employed 80 people, according to the most recent mass layoff announcement by the LWC. When Jason El Koubi became CEO of One Acadiana, the greater Lafayette business chamber, in 2013, people were excited about the economic climate. Oil and gas was doing well, radiating positive ripple effects throughout the region.

Today, there’s far more anxiety and uncertainty, he says. While

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SLASHING COSTS: Quay McKnight says his Broussard valve company remains reasonably profitable, but only through painful costcutting and layoffs.

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STRATEGIES FOR TOUGH TIMES • Be careful how you cut. Keep one eye on the balance sheet and the other on the future. Your best talent and most important assets are important to the long term health of the company.

• Keep in touch. If the people you let go plan to keep working, you’ll want to be able to find them when things pick up.

• Keep the lines open. Don’t promise your people that “everything will be fine,” because it might not be. But keep them in the loop; uncertainty breeds fear and negativity.

• Don’t stop recruiting. While Frank’s has reduced its overall head count, it also has added “a couple of dozen of new people” that were cut loose “because of short-term actions of others in the industry.”

• Don’t forget the kids. The industry can’t afford to lose a generation of talent.

Keep in touch with your feeder colleges and universities. Provide internships, speak to classes, and keep making donations if you can.

• Weed out waste. When flush with cash, companies often acquire stuff “just in case” they need it. Instead, work with your customers to anticipate future needs so you can have a “just in time” approach to inventory. Use the slowdown as an opportunity to reexamine your workflow and ensure it’s as efficient as possible.

• Focus on your strengths. If you try to chase everything, you could end up getting nothing. Even worse, you could end up working for a client that can’t pay you. It’s better not to work at all than to work and not get paid.

• Don’t lose hope. Down cycles are a normal part of the business, just like up cycles.

“Tactics change. Strategy shouldn’t,” Luquette says. “Don’t lose sight of what it is you want to become down the road, otherwise you will find yourself as a dinosaur, ill-equipped to face the challenges of the marketplace on the back side.”

STOCK FILE PHOTO

THIS IS THE FIFTH industry downturn for Abbeville native Gary Luquette, who has been in the oil and gas business, mostly as an operator, for 37 years. The former head of Chevron North America Exploration and Production is now CEO of Frank’s International, a service company, and he says a slump feels a lot different from the service side of the fence.

“It’s certainly easier to serve humble pie than it is to eat it,” he jokes.

Luquette says he’s come to realize that when things slow down, it’s easier to step back and see the big picture.

“Eventually you get to a point where you look at these down cycles as opportunities to grow as a leader,” he says, “and really move the business to a more efficient, productive, formidable space, so when the recovery does come you’re really ready to ramp up and run very efficiently.”

So what do Luquette and other sources interviewed for this story think industry leaders should keep in mind at a time like this?

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COVER STORY many companies are paring back their expenses, El Koubi hasn’t seen a wave of closures.

“They’re preserving their capital and their core plays, and waiting for an opportunity to invest when the market conditions are better,” he says.

Fortunately, Louisiana’s economy is more diversified than it used to be. The 1980s oil bust led to double-digit unemployment in the state; today it’s about 6.3%. In the Lafayette area, a little more than 10% of the jobs are in oil and gas, compared to almost 20% before the 1980s slump, El Koubi says.

Gregg Gothreaux, CEO of the Lafayette Economic Development Authority, says he’s only heard about “a couple” of oil and gas companies going out of business so far. He hasn’t yet seen many mergers and acquisitions, though he’s been told to expect more in the near future.

TERRI FENSEL

Issue Date: Feb-Winter Adtheir proof #2 EL KOUBI: “They’re preserving

and plays, waiting or minor revisions.

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into the oil and gas industry, LEDA suddenly finds itself with an energy labor surplus.

“Our mission now is to find jobs for people that were working in the energy sector,” he says.

He hopes many laid off locals will continue living in Lafayette but find jobs they can commute to in the Lake Charles-area construction boom. While cheap natural gas isn’t good for the oil and gas industry, it’s great for chemical producers along south Louisiana’s 10/12 corridor.

And some oil patch veterans will find temporary jobs or work in unrelated fields to stay afloat. A recent job fair for the Ambassador Town Center retail center drew about 2,800 people, Gothreaux says.

After 15 years of recruiting people

WAITING FOR THE TURNAROUND Charles Goodson is CEO of Lafayette-based PetroQuest Energy, which evolved from a company he co-founded in 1985. Not exactly an ideal time to start an oil and gas exploration and production company.

“I went through pretty much all of my savings in the first year,” he recalls. “The more of these cycles you go through, the more you realize they’re longer than you anticipate.”

PetroQuest stock was worth $8 a share in 2014. Lately, it’s trading for less than 40 cents, putting the company’s common stock at risk of being delisted by the New York Stock Exchange. PetroQuest officials have sold their largest asset in Oklahoma’s Woodford Shale for $280 million. They’ve also made a complex exchange offer to their bondholders in hopes of extending the maturity date of many of those bonds from 2017 to 2021.

“We have a reason to survive,” Goodson says. “We have some great assets in the Gulf Coast, the Gulf of Mexico and east Texas. It’s a function of waiting for the commodity prices to come back up.”

Production and service companies can be “frenemies,” as oil and gas attorney Bob Duplantis puts it, even during good times. There’s a tendency to become less friendly when the money isn’t flowing.

“The longer these prices stay down, and the more stress on the

LOUISIANA RIG COUNT 1987

2014

2015

2016

North La

12

31

28

26

South La Land

23

19

12

8

Inland Water

36

10

5

2

State Offshore

(included)

0

0

0

Federal OCS

63

56

35

23

TOTAL

136

116

80

59

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© 2015 Regions. All loans and leases subject to credit approval. I Regions and the Regions logo are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank.

Source: DNR

1012industryreport.com

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

33

• AD WILL RUN AS IS unless approval or final revisions are received by the close of business today.

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SAFETY FIRST

OPPORTUNITY

“Our team is trained to ask the right questions to ensure our jobs are safe.

It’s our top priority. Westgate is an excellent company to build a career with that is focused on safety and growth. There is more opportunity in front of us as a company and an industry.”

TION OF S A A D O FE V N N A N T I U d IO N O an

ou

YEA

E

R S A V E R A G E estg a r su p er v isors have worked for W

SHARING OUR EXPERIENCE “I enjoy helping our team grow by teaching what I’ve learned over the past 27 years. The variety of experience, working on different work sites, has given each of us a unique perspective to share. For those who want to work hard and build a career, Westgate offers lots of opportunities to grow. For our clients, our experience matters.

– MITCHELL SANDERS, 27 year Westgate team member with 21 years in the industry

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

TIM

Y

17

34

– SCOTT PARKER, 17 year Westgate team member with 23 years in the industry

T

F

– WALTER GREEN, 23 year Westgate team member with 21 years in the industry

“There is plenty of opportunity at Westgate and in our industry to build a career. With the right attitude and work ethic, our team members support each other like a family. We are growing this company together. By committing our time and talents, we have the opportunity to make a really good living for our families.”

te

GROWTH Westgatellc.com (225) 749-2635 1355 Beaulieu Lane Port Allen, LA. 70767

“Every day is different at Westgate. Our work environment is always changing, giving me the opportunity to learn and grow each day. By learning from my experienced coworkers and our clients, I have been able to build a career. And because we keep safety first, we are ready to take on the opportunities to expand our service and reach at all levels of our industry.”

– ROBERT DEL ANEY, 21 year Westgate team member with 22 years in the industry

1012industryreport.com

COVER STORY

cash flows, the more pressure there is to get into a very adversarial sort of relationship,” says Gary Luquette, CEO of Frank’s International.

Luquette hopes companies, rather than just slashing costs and hunkering down, use their downtime to prepare for the marketplace of the future. [See “Strategies for tough times,” page 31.]

Goodson says PetroQuest gets along well with its service companies.

But when commodity prices reach a certain point, such as when natural gas falls below $2.75, it’s impossible to negotiate a rate where it makes sense to keep going.

“They can only go so low,” Goodson says. “At a certain point, they say we’d rather idle our equipment, lay off our employees, keep some hands, and wait for this price to rebound.

And that’s kind of what’s going on right now.”

Goodson says now is a good time 1012industryreport.com

to do some “housecleaning.” Companies are whittling down to their best people, their best assets and their best partners.

Danos, privately held and headquartered in Gray, has worked for oil and gas operators for almost 70 years. Executive Vice President Paul Danos says the company’s overall

workforce including contractors is down from about 2,000 to 1,750 or so. But the company kept all of its core staff and had its busiest year ever in 2015.

There was still work to be had, Danos says, but the margins were much tighter, and customers could be picky about which companies

LOUISIANA OIL & GAS PRODUCTION (EXCLUDES OCS)

Oil Production (monthly average in million barrels of oil)

Gas Production (monthly average in billion cubic feet)

Oil/Gas Permitting (total permits) Source: Louisiana DNR

2013

2014

2015*

6.8 mmbo

6.4 mmbo

5.7 mmbo

193.3 bcf

160.7 bcf

148.3 bcf

1,541

1,400

945 *through Sept.

CHERYL GERBER

DANOS: “We’re hopeful that we can continue to do what we did last year, which is keep our heads above water, maintain our position, and stay in the game in a strong way for when it all turns around.”

they hired. Now, there’s not enough work for even the best performers.

“This year, even the good suppliers are going to suffer, and some of the good people are going to lose their jobs,” Danos says.

Danos says his company has a broad customer base and not much debt, and should be able to “scrap by with a little bit more than our fair share by really executing well.”

“We’re hopeful that we can continue to do what we did last year,” he says, “which is keep our heads above water, maintain our position, and stay in the game in a strong way for when it all turns around.”

Luquette says industry can still partner with university leadership even when the demand for graduates goes down by giving of time, advocating for technical jobs in the energy business, and explaining the cyclical nature of the industry. But Fathi Boukadi, head of the petro-

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

35

COVER STORY

THE NEXT 12 MONTHS: WHAT TO EXPECT fittest works in this industry, just like it works in nature.”

David Dismukes, executive director of the LSU Center for Energy Studies, blames the price drop largely on the economic slowdown in the developing world, particularly in China. The odds of a sudden demand surge are slim.

Right now, forward market traders assume the price won’t reach $50 a barrel until 2019 or 2020, Dismukes says. He expects the price this year to be flat at best and perhaps reach new lows, noting the uncertainty about how much Iran, newly freed from international sanctions, will add to the glut.

As many as a third of American oil-andgas producers could end up in bankruptcy by mid-2017, according to Wolfe Research.

There hasn’t yet been a flurry of mergers and acquisitions, but that’s expected to change this year, and hedge funds likely

will be looking for bargains.

Oil prices might rebound by the end of the year, says Eric Smith, associate director of the Tulane Energy Institute. But they won’t reach $100 a barrel, and maybe not even $50.

If prices don’t recover, “you won’t see any drilling in Louisiana,” he says.

“We’ll finish the projects we’ve already started in the Gulf,” Smith adds. “We won’t start any new ones.”

The majors that don’t drill with borrowed money will have a chance to take over leases from the highly leveraged independents. And when drilling stops, revenue disappears for the south Louisiana companies that serve the drillers.

“The deepwater players, they’ll scrape by,” Smith says. “If you’ve got shallow water crew boats and platform rigs that are only good for 400 feet of water, you’re kind of up the creek.”

STOCK FILE PHOTO

ECONOMIST LOREN SCOTT says Louisiana should expect far fewer layoffs during the current slump than in the oil bust of the 1980s. The oil sector isn’t nearly as big here as it used to be, so it’s impossible to experience the same amount of pain.

But that doesn’t mean it’ll be pretty.

Wall Street thinks the price will keep dropping. But just as the Saudis are suppressing the price by oversupplying the market, Scott says, they can just as easily cut back. If that happens, we could see $50 or $55 oil by the end of the year, which would make many shale and deepwater plays more attractive, he says.

If the price stays low, companies with little debt and deep cash reserves will have a chance to buy equipment, leases, reserves and companies on the cheap. “[The strongest companies] are going to come out on the other side of this very, very well,” Scott says. “Survival of the

36

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

1012industryreport.com

IDLED: Trinity Marine Products is in the midst of closing its Madisonville barge fabrication operation, where 324 workers had been laid off or resigned by the end of December.

CHERYL GERBER

leum engineering department at UL-Lafayette, says he can barely hire teaching assistants because donations have dried up, and companies have stopped recruiting.

Boukadi says companies are laying off a lot of people who are near retirement age and aren’t coming back, meaning they could be caught shorthanded when the market rebounds. He urges companies to still consider hiring college graduates, at a low salary or even part-time if necessary.

Boukadi says the price of oil could rebound as early as this summer, perhaps even reaching $60 by 2017. Some may see that as a wildly optimistic prediction, but who knows?

At this time last year, plenty of so-called experts thought prices would have rebounded to $70 or $80 by now, Briggs says. Maybe they’re wrong again.

“Right now, everyone’s saying we’re going to go to $20 oil,” Briggs says with a chuckle. “So maybe we’re going to be at $70 or $80 oil this time next year.”

CREATING CHEMISTRY. CREATING CAREERS. WWW.BASF.US/LA

1012industryreport.com

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

37

WORKFORCE

Job ready Mobile Services and “nesting” from the Alliance Safety Council are helping companies save time and money during worker processing.

BY SAM BARNES

COLLIN RICHIE

A

few short months ago, it would have taken a new hire at Baton Rouge’s EXCEL Group nearly three days to be processed and prepped for work, sometimes resulting in costly delays and impacting the critical path. This was of particular concern on larger projects where manpower had to ramp up quickly.

Administrators in EXCEL’s corporate office knew something had to give. “We had some huge projects in the 800- to 1,200-worker range, and when you’re ramping up to meet your manpower schedule, having a 2.5- to 3-day process for drug screening, medical evaluations and safety training is problematic,” says Richard Beemer, EXCEL’s director of craft services. “Last year, in Q1 and Q2, and going into Q3, we were hiring about 160 people per week.

That adds up quickly.”

Beemer is all smiles these days, as the worker processing time has been slashed to a single day, sometimes less, in part due to the “nesting” of a full-time lab manager from Baton Rouge’s Alliance Safety Council at EXCEL’s new Staffing and Training Center (STC) in Prairieville. About 90% of the industrial contractor’s safety training is now performed at the STC. While instructor-led training is still executed at the Alliance Safety Council offices on Siegen Lane, all computer-based training is done at the STC. The Alliance Safety Council has been offering Mobile Services for years, but began nesting its proctors at select contractors’ offices to help expedite employee processing on a

larger scale. Kathy Trahan, Safety Council president and CEO, says nesting—a more permanent, fulltime variation of Mobile Services— is being utilized only by those contractors with sufficient volume to justify the use of a full-time proctor.

The nesting process enables a contractor to centralize its new employee processing, while serving the dual purpose of lightening the load at the Safety Council offices.

“It takes a little bit of the pressure off of our main sites, and allows contractors to more quickly get people

38 10/12 INDUSTRY REPORT • FIRST QUARTER 2016

job ready,” Trahan says.

In addition to EXCEL, there are full-time, nested proctors currently working for Turner Industries, CB&I and Cajun Constructors LLC. At each site, a proctor oversees the Safety Council’s computer-based safety refresher program (Basic Orientation Plus Refresher), assists students and ensures that they are efficiently processed.

SAVING TIME Beemer, EXCEL’s former corporate safety director who now over-

FAST LANE: Forklift driver Trelyn Pitts works on a computer-based training course at EXCEL’s Staffing and Training Center in Prairieville.

sees STC operations, says integrating the Safety Council’s IT system with EXCEL’s was surprisingly easy.

“The Safety Council staff came over and we did the complete integration for the Web portal from our IT department to their IT department in about three and a half days,” he added. “It was virtually flawless.”

EXCEL’s nested lab manager, Jameelah Yazeed, oversees all com1012industryreport.com

MOBILE SERVICES Not generally limited by contractor size, the Alliance Safety Council’s Mobile Services option is more widely used since it can be “suitcased” and delivered anywhere in the country on a as-needed basis.

1012industryreport.com

“If an owner says I’m going to have a lot of contractors on site, and they’re working an outage or expansion somewhere else in the country, we can go there and assist them,” Trahan says. “It’s more cost effective for us to send an instructor and a clerk. We can take the whole turnkey operation up there to save them time and travel.”

And it’s not only contractors requesting the service. In 2008, Marathon Petroleum contacted the Alliance Safety Council while

ramping up for its massive $3.9 billion plant expansion in Garyville, asking the Safety Council to help staff its safety trailers with proctors while the company supplied all of the hard cost items such as computers and projectors. Additionally, the Safety Council opened its Gonzales facility “around the clock” to assist with training the large number of contractors needed for the project.

Roger Gautreau, Marathon Petroleum’s safety supervisor in Garyville at the time, says the Mobile Services

significantly improved the efficiency of contractor processing at the peak of construction. “We went from a few hundred people to almost 10,000, coming from all parts of the country,” Gautreau says. “The service made a lot of sense to us.”

Marathon Petroleum’s orientation trailer was located in the same parking lot as its security office, so new contractors could complete their processing and receive their security badges in the same location.

Anywhere from 50 to 100 people a day were processed at the facility from 2008 through January 2010.

The primary advantage of the Mobile Services model is its ability to adapt to virtually any environment or location. “They just give us a place to deliver it,” Trahan says.

“It could be a training room or a trailer with computers. They provide the hard assets and we provide the turnkey training solutions, including cameras; anything that it takes for us to deliver a trained and badged individual.”

In the Baton Rouge area, ExxonMobil and Dow utilize Mobile Services training several times a month. Isadore Brown, who oversees training at ExxonMobil in addition to his duties as a classroom instructor at the Siegen Lane facility, says the demand for Mobile Services has grown significantly since he began working for the Safety Council 10

COLLIN RICHIE

puter-based training. “Being able to resolve a problem or glitch with an on-site lab manager versus having to get on the phone with the Safety Council, and operating through voice mail or email, saves us gobs of time,” Beemer says.

Before the STC office opened in October, EXCEL’s new hires would typically travel two miles to Prime Occupational Medicine in Gonzales for their drug screening and physical, then to the Safety Council for safety training. As a result, it would take nearly three days per employee to fill manpower orders.

Now, everything is done in house at the STC, which has processed between 350-400 new employees since October. “From what it costs per person, we have seen a drastic savings by having everything—processing, medical and safety—in house,” Beemer says. “We get them on the job at least a day and a half quicker and the revenue savings for the company, not to mention the employee, are hard to ignore.”

Beemer says EXCEL has plans to expand training at its Airline Highway office by the end of 2016, adding more computers for safety training and craft training through NCCER (National Center for Construction Education and Research).

The company could also add similar capabilities at its Texas locations in Freeport and Deer Park, where about 700 laborers currently work.

The Safety Council’s Trahan says determining the financial viability of a nesting operation is dependent upon a number of factors, stressing that it’s difficult to rationalize a nesting operation for a contractor with less volume than those already using the service. “Until you find yourself with a Mobile Services team out there every single day of the week, you can’t justify putting someone over there full time,” she says.

COLLIN RICHIE

MOBILE TEACHER: Isadore Brown oversees Safety Council training at ExxonMobil in addition to his duties as a classroom instructor at the council’s Siegen Lane facility.

STAFF IN HOUSE: Safety Council instructor Jameelah Yazeed with EXCEL training center operators Richard Beemer, front, and Byron Ragan, back.

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

39

years ago. “As the economy improves, there has been more of a need for that,” he adds. “At ExxonMobil, they might schedule as many as 100 people for a single class.”

In recent years, Brown has traveled as a Mobile Services proctor to various job locations across the South. “Typically, when I go to a site, it’s just me and another person,” he says. “The other person is administrative and assists with registering people, preparing IDs, etc.” In addition to training workers in Basic Orientation Plus, or BOP, Brown also administers site-specific courses.

A passing grade ranges from 70% to 80% depending upon the test and the company.

“Everything we do is scalable, and we have a very standardized process for all of our facilities,” Trahan adds.

“We spend a lot of time making sure that we cross train, so that whether a student is at one location or another, they get the same experience. Even the technology is the same, so an instructor can go from place to place and log in and start up a class and access the training, do their scoring, etc. … everything is the same.”

STANDARDIZATION IS THE GOAL Looking ahead, the Alliance Safety Council plans to increase its focus on Mobile Services, as well as enhancing its computer-based and lecture-led portfolio of courses, particularly through continued improvements to the BOP course and the addition of new “signature lecture-led courses.”

Standardization is the overriding objective, and as a result the Safety Council’s footprint stretches across the country. In 2015, the Safety Council launched a new BOP course that, after being sanctioned by the Association of Reciprocal Safety Councils, will be offered by regional Safety Councils across the country.

“It has been completely revamped with a more effective, interactive format, and rolls out Feb. 1,” Trahan says. “We competed with other providers of content development and were awarded based on our proposal.” The course includes a refresher and Spanish versions.

As one of the founding members of ARSC, the council’s training plays a role in lowering safety incident rates, severity rates and costs to in40

DON KADAIR

WORKFORCE

“We provide the turnkey training solutions, including cameras; anything that it takes for us to deliver a trained and badged individual.”

—KATHY TRAHAN

dustry across the country. Through the ARSC network, members may train employees in their home city before sending them to work in another part of the country.

While the Safety Council has a seven-person content development team physically located at the Siegen Lane facility, it also utilizes freelance script writers and voice talent scattered across the country to develop its computer-based programs. The group handles every aspect of content development, and is trained in learning styles, graphics, script writing, programming and animation.

The content development team has developed a host of lecture-led signature courses that range from 32 to 40 hours in length. One such course aims to establish a safety culture within jobsite leadership. “That’s

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

where the rubber meets the road for safety; making sure supervision is on board,” Trahan says.

Additionally, a Safety Council-developed Certified Occupational Safety Specialist course is now being offered by LSU’s Continuing Education Department. The course is being utilized across 14 states, with more than 7,000 students participating to date. Due to the success of the course, the council was also asked to create a Certified Safety Manager class.

BEYOND SAFETY The Alliance Safety Council has followed a pattern of steady and prescribed growth over the last 10 years, investing in both building and technological assets, along with boosting its staff from 14 to 76.

In 2012, the Safety Council moved into a new 32,500-squarefoot training facility off Siegen Lane (10099 N. Reiger Road) to create additional training and administrative space, and in 2014 it opened a new 11,000-square-foot satellite office in Gonzales. Another 6,000-square-foot facility opened in Addis in 2008. Ultimately, the goal of the satellite offices is to bring the training closer to its members.

“There are about 30 or so [industrial] facilities down there, and it saves them a considerable amount of time,” Trahan says.

Still, it’s the Safety Council’s investments in technology that make it stand out.

“Our focus has primarily been around record keeping, easy access, or access on different devices; we’ve been making continuous improvements to allow our members to not only see the training that they take here, but also merge any of their training into one system so they can do comparisons on their workers,” Trahan says.

The council helps its members save time and eliminate errors by having content imported directly into their database systems, enabling records to be accessed in one location. The Safety Council has also migrated its servers to a virtual data center to ensure members’ data is available 24/7, regardless of weather or other emergencies.

Members can, in turn, perform gap analysis and determine which workers are ready for which site, and what training they might need to move from one job level to another.

“It takes the information off of a spreadsheet into a database system where they can run reports, putting the information at their fingertips to help them make good decisions in a timely manner,” Trahan says.

The Alliance Safety Council trains more than 180,000 employees a year through its facilities and on-line courses. About 60% of the courses are considered computer-based training, with the remainder lecture-led.

Previously called the Safety Council of the Louisiana Capital Area, the name change was a direct result of the partnerships formed with local contractor industries and members.

1012industryreport.com

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T:11.5”

This ad design © Louisiana Business, Inc. 2016. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

T:10.5”

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ACCIDENT RESPONSE

Almost like a miracle

BY ADRIAN E. HIRSCH

Industrial operations and their workers throughout south Louisiana are fortunate to have Baton Rouge General’s Regional Burn Center nearby.

O

n April 2, 2015, at the beginning of the evening shift, supervisor Brandon Nickens and his crew were performing routine equipment checks before starting up a Geismar refinery.

Without warning, the seal blew on a pump. A mixture of hydrogen, diesel and reacted animal fat spewed out with 1,800 pounds of pressure and enough friction to ignite. In a matter of seconds, the six men were engulfed in flames.

“Your instinct takes over,” Nickens says. “I ran while I was still burning.

My shirt was on fire. There was a wet slab outside, I stopped and rolled on my side, [but] I couldn’t get the flames out. One of my operators saw me and came to my aid. By then, I guess the liquid burned itself out.”

As soon as the fire was detected, a plant operator activated Geismar Area Mutual Aid, a collaborative of first responders from area plants.

GAMA ambulances transported the men to St. Elizabeth Hospital in Gonzales. There, they were triaged.

The badly burned workers were stabilized, administered pain control and prepared for transfer.

“If [we] wouldn’t have had on FRC [flame retardant clothing] and PPE [personal protective equipment including safety glasses, hard hat and gloves], that is standard practice, [we] never would have gotten out,” Nickens says.

“We escaped it. Nobody lost their lives. Two of us were burned pretty severe. The rest escaped without any kind of injury. The flames were over 60 feet tall. They did a lot of heavy damage to our plant.”

In 1970, Baton Rouge General established the Regional Burn Center (RBC). A dedicated team of

physicians, nurses, therapists and other medical professionals treat adults and children injured by flame, scalding, electrical, chemical, steam and other burns.

The team provides a full spectrum of specialized services, from intensive inpatient care to outpatient rehabilitation, skin grafts, laser treatments and long-term monitoring to address scarring, pain, contracture and other burn-related issues that occur as patients age and tissues heal.

According to the American Burn Association an estimated 486,000

TIM MUELLER

SHORT: “We are a unique blend. We are a community hospital who is running a phenomenal burn program.”

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Upon being alerted about the accident, Nickens’ family had driven from their Ponchatoula home to Gonzales and followed the ambulance to Baton Rouge.

By 10:30 p.m.—only four hours after the blast—Nickens, his injured colleague and their families had all arrived at the Regional Burn Center.

“I was not aware that we had that unit so close. I’m so thankful we have it here. It almost seems like a miracle that [these professionals] are there,” says Nickens.

“If it had been any other way, it would have been more traumatic and a lot more painful for me, and it would have been so much harder on my family. [Now,] I can’t even comprehend not having that unit here in Baton Rouge. It was a personal miracle to me.”

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she says, “When you are dealing with gas, oil and hydrocarbons, it is usually a large injury. There is usually trauma [to underlying organs] related to it.”

Many people anticipate they might land in the hospital for elective procedure, broken bone or other injury or illness at some point in their lives. However, “No one ever plans or prepares to have to be a burn patient,” Short maintains.

“There’s such an element of surprise to the injury that I really see people at their lowest,” she says. “The thing that I like is you get to see them beyond, in that recovery phase.

You see the progress they make, and you get to be that cheerleader.”

All patients and burns heal differently. But, the severity and percentage of the body burned, the patient’s age, pre-existing medical conditions and overall health conspire to determine the prognosis for recovery.

And, the percentage of burn is also a relatively reliable indicator of how many days a patient will spend in the hospital. For example, a patient with a 30% burn can expect to spend a month in the hospital.

NICKENS: “I can’t even comprehend not having that unit here in Baton Rouge. It was a personal miracle to me.”

CHERYL GERBER

burns are treated in the United States annually. Nearly 70% of burn victims are male and 30% female.

Due to recent advances in earlier recovery and fluid resuscitation, early debridement and closure, and the use of antibiotics, the survival rate has now risen to 96.7%.

The majority of burn centers are anchored to the trauma programs of academic medical centers. While Baton Rouge General has an affiliation with both LSU and Tulane medical schools, “We are a unique blend,” explains RBC Medical Director Tracee C. Short, M.D. “We are a community hospital who is running a phenomenal burn program. But, we are hanging with the best of them—and, in some areas, surpassing them. We’re doing good stuff; but, we don’t fit the classic mold.”

In fact, the RBC is one of only 63 ABA-accredited centers nationwide—and the only verified facility of its kind in a 300-mile radius.

RBC has forged relationships with referring facilities and physicians and provided education and telemedicine capabilities. That means professionals in outlying and rural areas can now transmit the images of burns and get an immediate consult with an RBC specialist on the transfer or treatment options.

In the last three years, the RBC has treated 90% of burn patients injured in the metro area and patients from more than 150 ZIP codes across the Gulf Coast.

UNDERSTANDING INDUSTRIAL BURNS Of the 700 adult patients who arrive at the RBC each year, approximately 100 have been injured in industrial accidents.

“Having a burn unit like the Baton Rouge General Medical Center in our region is a resource we can be thankful for when seconds count in treating a burn,” says Connie Fabré, executive director of the Greater Baton Rouge Industry Alliance.

As Short notes, the definition of an industrial burn extends beyond the plants lining the Mississippi River. “[Industrial burn patients] come from anywhere—shrimp boats, river traffic in the Gulf, oil rigs or right here in petrochemical alley.”

Recently, she recalls a patient who was originally from the Ukraine and was injured during a fire on a freighter. After leaving their shipmate in the care of the RBC, the ship continued to its destination.

Despite the differences in the way workers get injured, Short has noticed some common characteristics among industrial burns.

“It is rarely an isolated one-person event and, unfortunately, there’s sometimes some fatalities involved,” she says. “[The RBC] can get multiple people with various severity all arriving at one time. The last [incident] we had, we received four patients. The one before that, we got a call for one person; but, there was one fatality at the scene.”

As far as the patients’ injuries,

Nickens remained hospitalized for three days. “They were trying their best to let us be home for Easter,” he recalls.

“Dr. Short is the most wonderful doctor I have ever had the pleasure to meet. I can’t say enough good things about her and the [staff] in that burn unit. You felt like you were their main center of attention. Everyone was so professional and so caring.”

In addition to the medical staff, Nickens and his family credit another team member—volunteer Mike Gautreaux—for inspiring Nickens’ recovery.

“He comes to visit with patients and their families and to share his experience as a 15-year survivor of a 50% burn,” says Nickens. “It took a long time, [but] you can hardly tell that he has been burned. “[He’s proof] of what the medical team can do and the fact that you do go on with your life.”

A NEW NORMAL Short says the indicators for leaving the hospital include the patient’s ability to control pain with oral medication; to have a family member or a home health professional provide wound care in their

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DON KADAIR

ACCIDENT RESPONSE

GROWING TO MEET THE NEED: The burn center moved to the General’s Bluebonnet campus in 2015 and is now working on expansion plans.

home; to maintain the motivation and marshal transportation, family support and other resources to continue outpatient rehabilitation and therapy.

After discharge, the RBC staff monitors patients in a weekly clinic for a month then every three months progressing to once a year.

While many patients can functionally return to their previous jobs or activities, some find that psychologically resuming their previous lives is no longer desirable.

“Burn [treatment] used to just focus on getting patients out of the hospital,” Short explains. “[But] the majority of patients treated do not have 50% burns, they are 3% to 6%.

So, it was realized that [approach] is very shortsighted, because it doesn’t look at actually returning patients back to a normalcy of life. So, we explain to patients that life is never going to be normal again. But, you will have a new normal.”

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Since the incident nine months ago, the 58-year-old Nickens has returned as an outpatient for multiple follow-up visits to clean and dress the wound and for physical therapy, three skin grafts and two laser treatments.

While he has regained full use of his arm, he still wears a compression sleeve, works with a specialist to achieve pain control and expects to have at least two more laser procedures.

“Dr. Short says a burn will teach you patience,” he says. “I was ignorant about how long a burn takes to heal.

It seemed like it was going real slow.

I’m still improving. I can see it every month. Hopefully, it won’t be nothing except a scar there left without any pain.”

A MAJOR EXPANSION While there seems to be no shortage of patients, funding for this high acuity care that requires special staff, equipment, supplies and precautions

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can be scarce.

The average cost of care for burn inpatients is $41,000, compared to an average of $6,400 for all other admissions. More than half of burn center patients are uninsured or underinsured.

So, it’s no surprise that the number of burn units in the U.S. topped 200 in the 1970s and has now declined to 125.

Since moving from the General’s Mid City campus to its Bluebonnet campus in late 2015, the RBC has been planning a major expansion.

Because burn patients are particularly delicate, the unit is designed around the concept of moving the patient as little as possible, which means locating specialized equipment and services in close proximity.

Improvements include a 14-bed, state-of-the-art center with a decontamination infrastructure, a helipad, trauma elevator, dedicated emergency room, inpatient/outpatient areas,

invasive and minimally invasive surgical suites, tub rooms, and ancillary and rehabilitation space, as well as family and visitor overnight amenities.

“This tremendous need [for burn care] is growing in Louisiana,” says Baton Rouge General President and CEO Mark Slyter.

Noting that there are more than 250,000 industrial workers in the region, Slyter also stresses the necessity of matching emergency services capabilities with the growth in the industrial sector.

The RBC itself is a major contributor to the region’s economy. Its annual economic impact to the state, including spending by the hospital, its employees and visitors, is estimated to be $15.3 million.

SPECIAL EXPERTISE Furthermore, “We have the most experience on doing it in an efficient and effective manner. It would 1012industryreport.com

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RARE RESOURCE: The General’s Regional Burn Center is one of only 63 ABA-accredited centers nationwide—and the only verified facility of its kind in a 300-mile radius.

DON KADAIR

actually be worse for the state and our organization … to shift these patients to other states.”

Slyter cites not only the logistics issues involved in interstate medical transportation but an increase in cost to the patients, employer plans and insurers.

But those disadvantages pale in comparison to an intangible but important factor: “One of the most important pieces of [burn] recovery is that family network,” he explains.

“Many of these patients are dealing with not only their acute medical issues, but mental issues related to disfiguration and other things.

You really do need a strong support network close by to help with the healing process. So to displace them from Louisiana would create a very big gap and a problem for us.”

Short says that’s especially true for patients burned in industrial accidents. “When you look at plant accidents, they are usually larger percentage burns, which means a longer stay in the hospital,” she says. “[That can] disrupt family life for a long time. [Having a burn center in

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47

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SLYTER: “This is really an absolute for a state like Louisiana.”

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DON KADAIR

ACCIDENT RESPONSE Baton Rouge] usually allows for the family disruption to be minimal.

Spouses can still go to work. Children can still go to school. If we weren’t here, these patients would probably go to Shreveport or Alabama. That would be difficult.”

The expansion also ties into the medical center’s vision to become a tertiary referral center and a destination for advanced care. “The burn unit connects well with our emergency department, helipad, hazmat and decontamination infrastructure,” Slyter says. “All of those types of things just meld well with the burn center moving forward.”

That level of specialization comes with a price tag of $37 million. Construction should take 12 to 18 months, once the funding is in place.

To that end, Baton Rouge General has included a $20 million request in its capital outlay. The medical center hopes to raise the remainder through private and public sources. “We really do need public and private support to make this happen,” he says. “This is some-

thing we’re not going to be able to continue in the proper way moving forward, if we don’t get that public and private funding.”

Already, the Baton Rouge General’s plans seem to be sparking the interest of stakeholders throughout the state, including lawmakers.

“Many of our legislative leaders—at the state and federal level—[are] very supportive,” Slyter reports. “They’re just trying to help us find where the funding will come from, because they all recognize this is really an absolute for a state like Louisiana.”

“We have industry from Baton Rouge to below New Orleans,” says Nickens. “More than likely, if [workers are injured by burns], they’re going to end up at Baton Rouge General. It’s no more than an hour away from people along that river.

“I wish everybody in that industry realized what they have so close at hand. If they did, they’d be so grateful to know that the professionals and the latest technology are located in Baton Rouge.”

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ORION

COMPANY SPOTLIGHT

Orion’s state-of-the-art headquarters in Baton Rouge.

I

n 2001, Magnetrol International, a leader in the instrumentation industry, launched Orion Instruments in Baton Rouge. The company specializes in custom engineering and manufacturing instrumentation focused on magnetic-level indication (MLI), primarily for the purpose of measuring and controlling liquid levels. Like its constellation namesake, Orion took direct aim at the global market and armed itself with

HEAD OF THE CLASS Control Magazine, a widely read and highly respected publication that promotes excellence in process automation, announced in January that Orion Instruments has received its eighth consecutive award for No. 1 Magnetic Level Indicator and its fifth consecutive award for No. 1 Magnetostrictive Level Transmitter. Based on an annual survey conducted by Control Magazine where their readers are asked to identify the best solution providers in different categories, Orion Instruments has remained the clear choice for the readers in the level measurement classification.

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high-quality products and a unique focus on customer service.

From chemical plants and refineries to nuclear power and wastewater applications, Orion’s MLIs inhabit a diverse range of industrial facilities.

Orion products are built to withstand some of the world’s toughest conditions, from Arctic cold and searing deserts to steaming jungles and harsh marine environments. In the past 14 years, Orion Instruments has grown from a small startup to a leading global brand operating from a new 50,000-square-foot, state-ofthe-art facility. Over 65% of its sales are overseas, and the company boasts products in use in 32 countries.

“From the beginning, we knew that companies in the global market were looking for a high-quality American product that enhanced facility operations,” said Orion General Manager-Director Don Sanders.

“To reach our targets, we decided to travel to where they were, and understand their culture and business model. Then, we brought them here to meet our team in Louisiana and

show them how our company does business. Our efforts and attention to detail, along with superior products, helped us win over customers.”

At the same time, management realized the importance of recruiting a globally diverse group of employees to help provide customer service based on different needs for each culture and region.

Today, Orion possesses a sales and service team with members who speak seven languages, including Arabic, Hindi, Malaysian, Mandarin, Portuguese, Spanish and Vietnamese.

“It’s not just about having the capacity to convert literature and interpret contracts, although that’s very important, too,” said Craig Carroll, the company’s global sales and marketing manager. “The ability to relate to global customers, understand cultural nuances and communicate effectively is really what’s

ORION

Orion Instruments shines in the global market critical to our success. That’s why we recruit globally and from across the United States, as well as from Louisiana State University’s engineering school here in Baton Rouge, which routinely turns out strong candidates.”

To fuel its growth domestically and internationally, the company has utilized a variety of incentives offered by Louisiana Economic Development, such as the Industrial Tax Exemption and Enterprise Zone programs, and the Research and Development Tax Credit.

“From the beginning, not just after we became successful, LED has been there to offer assistance,” Sanders said.

“With their help and incentives, we’ve been able to expedite our growth, hire additional employees and build a new facility.

Their partnership has been key to our success.”

—Story courtesy Louisiana Economic Development

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AP PHOTO/ARNULFO FRANCO

PORTS

Big cargo

SAILING CLEAR: Cargo ships sail near the area where a new set of locks were installed, during a November 2015 press tour of the Panama Canal expansion project, in Cocoli, near Panama City.

BY MEREDITH WHITTEN

Louisiana ports and the industries that depend on them are expecting to catch a wave when the expanded Panama Canal opens this year.

L

ater this spring, an expanded Panama Canal is expected to open for business, doubling the 102-year-old waterway’s capacity and sending ripple effects around the world, including the Gulf Coast. The canal currently accommodates an estimated 5% of the world’s total cargo volume, according to the U.S. Department of Transportation, with trade between Asia and Western economies dominating demand for the canal’s capacity.

Although it takes eight to 10 hours for a ship to traverse the canal, the alternative is an 8,000-mile journey around Cape Horn.

As global trade has skyrocketed, the canal’s ability to increase its capacity was hampered by a limit on the size of vessels and the amount of traffic it can accommodate. At

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its narrowest point, the canal spans about 110 feet, which is inadequate for the increasingly large container ships used to transport goods. The expansion project was needed to increase capacity to meet growing demand as well as to modernize the 50-mile-long canal.

Construction on the $5.25 billion project began in 2007 and includes widening and deepening the waterway, building new locks—one each on the Atlantic and Pacific sides—and excavating new channels to the new locks. As a result of the expansion, larger post-Panamax ships holding 15,000 standard shipping containers (known as 20-foot equivalent units, or TEUs) will be able to access the canal, compared to ships holding a maximum of about 5,000 TEUs today. Panama Canal volume will grow from 12.3 million

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TEUs to 25.4 million TEUs by 2028. The expansion will also reduce bottlenecks and lower average transit times.

The expanded canal is currently projected to open in May—about a year and a half behind the original schedule.

The project is one of the largest global trade infrastructure changes in more than a century. By providing shippers easier access to North America, the canal’s expansion will have ramifications for global trade, including an impact on shipping routes, port development and cargo distribution. It will likely reduce the cost of trans-ocean shipping, particularly for those trade routes between Asia and ports on the U.S. East and Gulf coasts, and could affect global supply chains and demand for industrial real estate space. Port

and inland infrastructure upgrades from Canada to the Caribbean are already underway in anticipation of the larger cargo ships. This includes Louisiana’s ports.

EAST TO WEST Much of the attention about the Panama Canal’s expansion has focused on competition between West Coast and East Coast ports in the United States, with a Boston Consulting Group study estimating that container traffic from East Asia to the United States could shift from West Coast ports to East Coast ports by up to 10%. Yet the canal’s expansion will have an impact on Louisiana and Gulf Coast ports and trade, as well. While the extent of that impact is unknown, industry professionals agree that the expansion will be beneficial for local, state 1012industryreport.com

and regional economic development.

“Just being where the cargo is heading, we’re going to see a gain,” says Paul Aucoin, executive director at the Port of South Louisiana.

“Even if we don’t change a thing, we’ll see a 15% increase in cargo because of the larger vessels.”

Robert Landry, chief commercial officer for the Port of New Orleans, says that East Coast ports likely will benefit because the large number of distribution centers and the large population base located in the eastern United States will mean ships can more directly service consumers, as most of the container trade coming through U.S. ports is consumer goods from China, Thailand, Vietnam and other parts of East Asia.

That doesn’t mean that Gulf Coast ports won’t benefit, however.

“It won’t be as prevalent as what will happen on the East Coast, but we will see a boom,” Landry says.

Louisiana is home to 33 ports.

These include shallow-draft inland ports, which serve cargo, or shallow-draft coastal ports, which serve offshore industries, such as oil and gas and commercial fishing.

Louisiana also has six deep-draft ports, which generally transfer large volumes of cargo. Additionally, other ports are in development. The ports differ in types of cargo and in the regions they serve.

A 2012 study conducted by James Richardson, alumni professor of economics at LSU, found that the state’s ports account for $4 billion in personal earnings, $290 million in state taxes and $227 million in local taxes, as well as 73,000 direct jobs and almost 400,000 jobs overall. The Lower Mississippi River handles more than 500 million tons of domestic and foreign cargo annually and accounts for 20% of U.S. waterborne commerce, including 60% of its grain and 20% of its coal and petroleum products.

MORE CARGO COMING As a result of an expanded Panama Canal, Gulf Coast ports will experience an increase in the size of the ships and the volume of cargo those ships hold. The state could also experience additional service from Asia, as well as an increase in feeder services from transshipment hubs in the Caribbean.

“What we’ll see as a result of the deepening of the Panama Canal is larger ships being handled at lower Mississippi ports,” says Joe Accardo, executive director at the Ports Association of Louisiana. “Ships with deeper drafts will be able to get into Gulf Coast ports that have that draft capability more efficiently.”

These larger ships carry more cargo, which translates to higher volumes of goods being processed through Louisiana’s ports. Forecasts indicate Gulf Coast volume will grow from 1.5 million TEUs to 3 million TEUs by 2028, with

12% of cargo traffic flows occurring between the Panama Canal and the Gulf Coast.

“We expect to see container volume rise 8% to 10% in the first year, then 3% to 5% average growth rate per year, and that reflects that we could benefit from the canal’s expansion,” Landry says, though he adds that forecast “was done a few years ago, when the economic outlook was rosier.”

Larger volumes of cargo passing through Gulf Coast ports leads to an increase in goods transported through the state using other modes, such as rail, road and inland waterways, which results in economic benefit far beyond the ports themselves.

“A study showed that the Panama Canal expansion will lead to additional containers being sent through the Port of New Orleans container facility further into the Midwest— up to Indiana and Minnesota,”

AP PHOTO/ARNULFO FRANCO

UNLOCKED: Two cargo ships navigate the Miraflores locks on the Panama Canal in Panama City. Post-Panamax ships will nearly triple the cargo capacity of ships currently able to pass through the canal.

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PORTS Accardo says. Yet, he adds, “the study looked at what is possible—that doesn’t mean it will happen.”

GOING DEEP Indeed, the extent to which the state can capitalize on the Panama Canal expansion depends on a number of things. Some, like the strength of the global economy, are beyond the state’s control. Similarly, shippers’ routing decisions—based on fuel prices, delivery times, intermodal transport connectivity, distribution centers and other details—will determine which ports benefit most. “It’s the cargo shippers who will decide where they want to go and those decisions are based on cost and capacity,” Aucoin says.

Yet the state can improve its chances of benefiting from the increased volume resulting from the expanded canal in part, Aucoin says, “by making ourselves available and letting them know we can handle their cargo needs.”

One way to improve the attractiveness of the state’s ports is by deepening the Mississippi River, Accardo says. When the Panama Canal expansion is complete, the canal will be able to handle ships that have drafts 50 feet below the water’s surface. The Mississippi, meanwhile, is 45 feet deep. That five-foot difference means the river cannot accommodate the deeper-draft ships that will soon be sailing through the Panama Canal, which could cause Louisiana ports to lose out on potential economic benefit. A 2013 study by economist Tim Ryan, commissioned by the Big River Coalition and the Louisiana Department of Transportation and Development, concluded that deepening the Mississippi River five feet, to 50 feet, would add $11.5 billion to the U.S. economy. For example, according to the U.S. National Ocean Service, an extra inch of draft would allow a ship to transport an additional 358,000 pounds of wheat, 36 John

Deere tractors or 9,600 laptops.

The Water Resources Development Act of 1986 authorized the U.S. Army Corps of Engineers to deepen the Lower Mississippi River channel to 55 feet, but this never happened, in part because the legislation required the state of Louisiana to pay for any maintenance beyond 45 feet. However, the latest iteration of the act changed that, instead putting responsibility for the cost of maintenance of up to 50-foot drafts on the federal government, not the state. Yet, the act provided no funding.

“If we’re going to take advantage of the deepening of the Panama Canal, we have to work diligently with our congressional delegation, the governor and the State Legislature to find the money to deepen the river channel to 50 feet,” Accardo says.

GETTING READY Investing in port and inland

waterway infrastructure is also critical, Landry says. East Coast ports from New York to Miami are pumping billions of dollars into improvements. Ports in Savannah and Charleston, for example, are deepening their river channels, while the Port Authority of New York and New Jersey’s planned upgrades include increasing bridge height to accommodate the larger ships.

Louisiana ports have planned upgrades, as well. For example, the Port of New Orleans is expanding port capacity from 800,000 TEUs per year to 1.5 million TEUs annually.

Landry says the port also has plans to transform its existing freight railyard into an intermodal rail facility and a 4-acre cargo marshalling yard, increasing the port’s container yard capacity to 840,000 TEUs. The Port of South Louisiana is investing $6 million in infrastructure over the next five years. This includes building a new bridgeway from dock to land, adding two new

PORT OF N.O.

CONTAINERS, CONTAINERS EVERYWHERE: The Port of New Orleans is expanding port capacity from 800,000 TEUs per year to 1.5 million TEUs annually.

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RIPPLE EFFECT: Barges, rail and trucking all stand to see their share of the increased cargo being distributed northward from Louisiana ports.

PORT OF SOUTH LOUISIANA

mobile cranes capable of lifting more tonnage to the center of a post-Panamax vessel, and potentially constructing a new container port that could handle 15,000 TEU to 18,000 TEU ships. And, while “we always have upgrades going on,” Aucoin says, the impending increase in cargo and traffic from the Panama Canal’s expansion factors into these plans.

Landside capability also needs to be upgraded. This could include providing more land to accommodate the increased cargo or becoming more efficient in how cargo is processed—or a combination of both— says Landry. Intermodal capabilities and connections—such as roads and rails—that connect with the ports also must be upgraded to handle increased volumes. This includes enhanced capacity for barges, a highly efficient way to transport cargo such as petrochemicals and grain. Increasing use of rail and barge transport also takes some traffic off the state’s roads, which can improve air quality and reduce congestion, Landry says.

The increase in port activity will spill over to other industries, such as

warehousing and real estate. “With an increase in cargo, if it plays out like they say, we’ll see an increase in demand for trucking, driving and warehousing jobs,” Aucoin says.

Yet the forecasted growth of Louisiana ports is not based solely on the Panama Canal expansion.

“The increase in container volume [at the Port of New Orleans] reflects benefits from the expansion of the Panama Canal, but also the growth of the South American economy,

namely Brazil, Argentina and west coast countries of Chile, Ecuador and Peru,” says Landry. “We’re seeing a lot of activity in those areas.”

Maintaining a competitive, modernized port system capable of handling the increasing size of vessels and volume of cargo from the expanded Panama Canal and from expanding trade is critical for the growth of Louisiana’s existing industries—such as the petrochemical industry—as well as for the

state’s overall economy. “We’re a huge economic generator for the state,” Landry says. “We have customers in all parts of the state that use our ports. And, when you have an asset like the Mississippi River and a well-developed inland waterway system, companies want to be here.”

Aucoin simply adds: “It’s going to be good for all of the Gulf Coast.”

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53

PLANNING

PROACTIVE MINDSET: GO Group Executive Director Karen Clapp near a construction project in downtown Lake Charles.

GO Group update Despite tensions, southwest Louisiana leaders move ahead with initiatives to reap the benefits of rapid growth.

BY DAVID JACOBS

54

A

s southwest Louisiana’s population grew over the years, communities reacted to that growth as it happened. Comprehensive planning was pretty much a foreign concept.

But with possible industrial projects worth nearly $100 billion anticipated for the region, including some $40 billion already under construction, officials realized it might be a good idea to prepare for the impact ahead of time.

“This community’s been very accustomed to being reactive,” says Karen Clapp, who is organizing the planning effort. “Being proactive is new, but we’re really starting to have to think on our feet.”

Clapp is the executive director of the Southwest Louisiana Task Force for Growth and Opportunity, nicknamed the GO Group. She was hired last February, but the planning

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process by southwest Louisiana officials began in early 2013 following Sasol’s announcement of a massive potential industrial project. Local leaders wanted to coordinate the efforts of various agencies that seldom work together.

In 2014, Sasol paid for a study about how the industrial expansion would affect housing, utilities, education, workforce development, transportation, public safety, public health, the environment, small businesses and community relations in Calcasieu, Cameron, Beauregard, Jefferson Davis and Allen parishes.

The study projected population growth of 22,000 for the region by 2019.

That study informs the GO Group’s research. Most of the impact is predicted for Calcasieu, so that’s where the GO Group primarily is focused, but their work will inform preparations throughout the region.

LEE CELANO

“Don’t let growth define your community,” Clapp says, summarizing the group’s mission. “Challenge your community to define what growth will look like for them, and how they can make it work for their benefit.”

The group’s steering committee includes cities and police juries, school boards, economic development groups, the Port of Lake Charles, McNeese State University and SOWELA Technical Community College. Clapp is a full-time director, paid by the City of Lake Charles and the Calcasieu Parish Police Jury, but everyone else involved in the various task forces and subcommittees is a volunteer.

“The GO Group is probably something that every community needs,” says R.B. Smith, vice president of workforce development with the Southwest Louisiana Economic Development Alliance. “It engages 1012industryreport.com

ADDRESSING DRAINAGE In mid-January, the group held three community meetings to talk about drainage. Area residents say new development in recent years has caused flooding in areas that never flooded before.

Calcasieu has 14 entities responsible for drainage, says Mary Kaye Eason, who chairs the GO Group’s Public Service Improvements task force.

“They all take their responsibility very seriously,” she says. “But when they solve a problem in one drainage district, often they’ve sent the water to another district.”

Residents are frustrated that there isn’t an imminent solution for the flooding they’re already experiencing, but retrofitting existing neighborhoods is expensive and time consuming. Right now, the goal is to keep the problem from getting much worse.

“We have to stop the problem at the development stage, so that we can eventually catch up,” Eason says.

One way to do that is by implementing “low-impact development” standards, incorporating more green space and technologies such as permeable pavement to better absorb rainwater. While Eason feared that low-impact techniques would be too expensive, she says it actually can be cheaper to build that way. And so far, she says she hasn’t heard from any developers who oppose the idea.

Eason says three drainage studies have been done in Calcasieu over the past 20 or so years, but very little changed. Now, she thinks there is a sense of urgency and momentum to do something about it.

HOUSING SQUEEZE As for housing, Clapp says developers will have no problem meeting the demand for permanent homes.

But she says most people don’t fully comprehend the need for temporary worker housing, which many fear will devalue their properties and bring undesirable elements to their communities.

According to an Associated Press report, the projected demand for housing in Calcasieu Parish in 2016 is 17,000 units. Right now, only 10,000 units are expected to be available. Demand is expected to rise in 2017.

In the absence of temporary homes for construction workers, longtime residents are being squeezed out of their apartments as rents are increased to take advantage of greater demand. Consequently, more people are seeking housing assistance, including people at higher income levels than had sought such assistance in the past, Clapp says.

Four or five worker villages have been permitted, says Calcasieu Parish Police Jury administrator Bryan Beam, but more are needed. Of the various issues related to the industrial expansion, temporary housing is politically the most controversial.

Beam says residents worry about traffic and security, and want the villages as close to the plants the workers are building as possible.

“We’re trying to make them more palatable,” he says. “It’s never going to be perfect. But the important point is that it’s temporary. No one is going to want that next to them for

GUIDING PRINCIPLES

The four task forces of the GO Group have set the following goals:

GROWTH PANNING • identify areas most suitable for growth based upon infrastructure, schools, flood plains, etc.

• implement unified development codes and standards across all jurisdictions • ensure that future plans and standards address various modes of transportation, including air, mass transit, pedestrian and cyclists

PUBLIC SERVICE IMPROVEMENTS • make Lake Charles Regional and Chennault International airports more efficient • improve drainage services and systems • improve the reliability and service capacity of water providers • improve wastewater practices • maintain and/or improve community fire ratings

EDUCATION AND WORKFORCE DEVELOPMENT • support development of a master plan for Calcasieu Parish Schools and other area systems • determine whether local school curricula should be realigned with industry needs • support the statewide effort to change negative perceptions regarding technical and industrial careers

SPECIAL COMMUNITYRELATED INITIATIVES • identify and meet social services, community development and cultural development needs • ensure that GO Group communication and civic engagement efforts properly support “community-driven change” initiatives

Details and updates are available at gogroupswla.com.

the next 20 years.”

But if the village is gone when the construction project is over, that seems a fair trade for the benefits of growth, Beam adds.

Development standards are another thorny issue. No one wants to be told what they can or can’t do with their property.

Often, a neighborhood is built inexpensively in a rural area, with

the assumption that it will be annexed into a municipality later on.

Connecting to the municipal water and sewer systems and bringing the development up to the city’s standards can be costly for taxpayers. It’s generally much cheaper and more efficient to develop where the infrastructure already exists.

One of the GO Group task forces is identifying areas most suitable for LEE CELANO

people in the government of their communities.”

Volunteers are learning how various local agencies and organizations function and discussing ways to improve those systems. Much of that work so far has been happening behind the scenes, though they’re also seeking input and feedback from the general public.

IT’S ONLY TEMPORARY: Modular housing units at the Moss Lake Village worker village, under construction near Southland Airfield in Sulphur.

1012industryreport.com

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

55

PLANNING LEE CELANO

“Knowing and doing are two different things.”

—BRYAN BEAM

growth, taking into consideration issues like utilities, schools and potential for flooding.

“You don’t want to tell people, ‘Here’s where you’ve got to build,’” Beam says. “But if it costs us less to put you here, we’d rather have you here. If you plan on building something further out [from existing development], make sure you account for some basic services that we don’t want to have to put on the backs of the people that come after us.”

HARD DECISIONS AHEAD As a financial incentive to develop to higher standards, authorities might consider allowing more and smaller lots, which also could be controversial in some areas.

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10/12 INDUSTRY REPORT • FIRST QUARTER 2016

“You have some urban and suburban uses pushing up against what has historically been rural,” Beam says. “That naturally brings a little tension. We’ve got to try to tamp that down as much as we can, respect both uses, but recognize that we’re going to have to grow.”

The industrial “boom,” as some have called it, won’t last forever, so local officials want to take full advantage of the opportunity. GO Group members don’t only want to preserve the things they already love about southwest Louisiana while the expansion is happening. They want to be left with a more prosperous, better organized and more sustainable community when it’s over.

Organizers say they’re pleased with the progress so far. But hard decisions must be made, and while they know the way things are done today has to change, most of the real work lies ahead.

“We have to make sure we’re diligent to carry out some of these things that have been brought forth,” Beam says. “Knowing and doing are two different things.”

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MANUFACTURING

HELPING HAND: MEPOL helped Byron Stephens’ Lafayette manufacturing company with research and development.

A partner for manufacturers MEPOL offers various services, including workforce training, marketing and advice on improving process efficiency.

BY DAVID JACOBS

F

or a while there, the Manufacturing Extension Partnership of Louisiana was in pretty bad shape.

It had been dumped by its sponsor, UL-Lafayette, and its director had left.

But now it has a new sponsor, South Louisiana Community College, and a new director, Frank Buck.

And it is on the verge of expanding from its Lafayette home and spreading out across the state.

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“It’s an exciting time right now, that’s for sure,” Buck says.

As the name suggests, MEPOL exists to help Louisiana manufacturers, particularly those with fewer than 500 employees. That covers a lot of ground; of Louisiana’s more than 3,300 manufacturers, about 70% employ anywhere from one to 19 people, Buck says. The state’s larger manufacturers tend to be the primary consumers of these small manufacturers’ products, although

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

many of the small companies do sell nationally and internationally.

“These are people that probably invented something in their garage,” Buck says. “They have to wear an HR hat. They have to wear a marketing hat. They have to wear an engineering hat. And nobody’s good at everything.”

You might think of MEPOL as a one-stop shop for manufacturing help. The partnership offers various services, including workforce training, marketing and advice on improving process efficiency. There’s also an advanced materials and polymer lab, a source of prototyping, testing and technology transfer for entrepreneurs looking to convert raw plastic stock into finished goods.

And if they can’t help you inhouse, they’ll try to find someone who can. They have a long list of vetted third-party providers, from accountants to website designers, and

they have contacts at other economic development organizations. Do you sometimes wonder what state and federal programs and incentives you might qualify for? MEPOL can help you find out.

MORE LOCATIONS COMING “The most complex business you can get into is manufacturing,” Buck says. “Every operation has its own challenge. … A lot of times we’ve been doing things one way for years, and we don’t think that someone can help us do it better.”

Buck joined MEPOL about 16 months ago after a 30-plus-year career in manufacturing with small and medium-sized companies. Much of his career was spent in packaging and automation, though he has also worked for automotive and machine tool businesses.

He spent about three-and-a-half years working for Newpark Re1012industryreport.com

MEPOL’s goal is to help manufacturers throughout the state. But with ULL and SLCC, it has been difficult to reach companies beyond the greater Lafayette region.

So the partnership is realigning itself with the broader Louisiana Community and Technical College System, in hopes of placing agents at all 13 LCTCS colleges within the next four years. Buck expects MEPOL will establish five locations “within the next quarter.”

“Our mission is to take care of all of Louisiana,” he says.

HELP TO THE NEXT LEVEL Another new MEPOL initiative is the Louisiana Manufacturers Institute, a small but growing trade organization that represents the concerns of small to medium-sized manufacturers. Members participate in CEO forums where they can discuss shared issues, such as workforce development or succession planning, and potentially can pool resources to take advantage of benefits otherwise offered only to larger organizations.

“CEO roundtables are not a new

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thing, by any means,” Buck says. “The nice thing about a manufacturers’ roundtable is that these people can relate to manufacturers’ issues.”

Byron Stephens is president and founder of Broussard-based Step-Ko Products, which provides corrosion protection products to the oil and gas industry. He started the company in 2000 and employs 15 people.

Stephens first reached out to MEPOL in 2011 or 2012. He says working with the partnership was convenient and required minimal paperwork.

Partnership staff connected his company with research and development help, making it easier for Step-Ko to take products “to the next level.”

“We’re a small company,” he says.

“There’s only a handful of us that do the technical aspects of it.”

MEPOL also put Step-Ko in touch with a consultant who helped it obtain ISO 9000 certification, which basically proves that the company can meet a particular set of quality and regulatory standards.

EXCITING TIMES: Under new director Frank Buck, the Manufacturing Extension Partnership of Louisiana is making a comeback.

TERRI FENSEL

sources in Carencro. Most recently before MEPOL, he did business development for Kee Safety Group in South America.

From 2009-2012, MEPOL helped create or retain 2,835 jobs and helped companies increase sales by more than $320 million, according to the organization. But it was in a weakened state for a while until SLCC picked it up, Buck says.

“When we started reaching out, people that knew about us thought we were gone,” he says.

Manufacturing Extension Partnership centers are in all 50 states and in Puerto Rico. The program is overseen by the U.S. Department of Commerce’s National Institute of Standards and Technology.

Funding support comes from the federal government, the host sponsor and fees charged to businesses that use the services. The current federal grant is worth about $590,000 this year, and while a new grant has not been issued Buck expects the total to be increased to about $1.4 million, which will help MEPOL expand its mission.

“If you want to grow and play with the big boys [in our industry], it’s beneficial for you to have [the certification],” Stephens says. “It’s opened doors to bigger projects.”

Step-Ko did about $4 million in revenue in 2014, he says. It was down to about $2.5 million last year, as the entire oil and gas industry struggled with low commodity prices.

Right now, the company is working on refining existing products and possibly launching a new one, in preparation for when the industry starts to rebound. As it does so, Stephens plans to call on MEPOL’s help again.

For more information about MEPOL, visit mepol.org.

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10/12 INDUSTRY REPORT • FIRST QUARTER 2016

59

BIOPRODUCTS

Renewable, sustainable … and profitable An October conference at the LSU AgCenter examined the progress and outlook for the bioproducts industry in Louisiana.

LSU AGCENTER AND STAFF REPORTS

60

to drought-stricken agricultural regions.

“The way CoolTerra works is that it acts as a virtual sponge to retain water and nutrients at the roots,” Bukowski said. “With reductions in water or fertilizer, CoolTerra maintains or improves total production levels. It also sequesters carbon from the atmosphere.”

ENERGY FROM SUGARCANE Richard Buhr, chief marketing officer and vice president of business development for NFR BioEnergy, which has since changed its name to American BioCarbon, said its biorefinery being built in White Castle is slated to begin production in July using sugarcane waste to create pellets for coal-fired plants.

“The sugarcane pellets are similar to coal, but the sugarcane pellets do not contain the harmful gases that coal does,” Buhr said. “Our product presents an alternative to switching over to natural gas or to plants having to install new, very expensive equipment, because our material co-fires readily with no retrofitting of current infrastructure.”

American BioCarbon is partnering with the Cora Texas Manufacturing sugar mill in White Castle and building a plant that it says can convert 600,000 metric tons of sugar cane waste annually into 200,000 tons of biofuel pellets. It’s the first of what state officials say could be 10 or more such facilities throughout south Louisiana, requiring a total of $312 million in capital investment and employing 450 people by 2019.

Melanie Verzwyvelt, of the Louisiana Public Service Commission, told about the commission’s renewable energy pilot program, which was

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

PORT OF GBR

W

ith several success stories to tell, Louisiana is poised to become a major player in the bioproducts industry, speakers said during a bioenergy conference held by the LSU AgCenter.

The conference was held in conjunction with National Bioenergy Day in October.

One successful bioproduct venture in the state is Myriant in Lake Providence, which uses sugars to develop bio-succinic acid. It opened its flagship facility in Lake Providence in December 2010.

Mark Shmorhun, vice president of engineering and general manager for the Lake Providence facility, said a lot of “great” things are happening right now.

“It’s been a slow process, but we’re seeing success with our product,” Shmorhun said. “Not all chemicals are created equal, and the succinic acid we’re creating is biobased; therefore, it is environmentally friendly.”

Succinic acid is used to make a broad range of products people use every day, as well as in pharmaceutical compounds.

Cool Planet Energy Systems in Alexandria is another Louisiana bioproduct success story. Mike Bukowski, vice president of operations for the Alexandria site, said his company’s focus is to “change the world for good.”

Cool Planet is a renewable energy and agricultural technology company that converts biomass into both hydrocarbon fuels and chemicals.

One of its products, CoolTerra, is a water- and fertilizer-saving soil amendment that sequesters carbon, as well as offers other benefits

established in 2010 to determine if a renewable portfolio standard was suitable for Louisiana.

“Louisiana has several companies that are seeing savings by participat-

ing in alternative energy programs,” Verzwyvelt said.

Wood energy is one alternative energy feedstock that can help both the economy and the environment, 1012industryreport.com

WAITING TO SHIP: Storage domes built by Drax Biomass at the Port of Greater Baton Rouge hold more than 40,000 tons of wood pellets each.

“Trees that are used to produce energy have to be cut down,” Jostrom said. “This keeps loggers in business, which, in turn, keeps other members of rural communities working.”

Wood is an excellent renewable source of energy. Louisiana has an abundant supply of wood to use for biomass, said Michael Hudson, fiber supply manager for International Paper in Bogalusa.

said Mike Jostrom, director of renewable resources for Plum Creek Timber Company. He said using wood is good for energy as well as rural communities.

1012industryreport.com

GREENHOUSE SAVINGS Drax Biomass is a Louisiana company that manufactures wood pellets to use for renewable low-carbon power generation. Richard Peberdy, vice president of sustainability for Drax, said his company is seeing great environmental benefits from the use of wood pellets.

“We’re reducing the use of coal, and we’re increasing the use of biomass,” he said. “By doing this, we’re making significant greenhouse savings.”

Drax Biomass has facilities at the Port of Greater Baton Rouge, Amite and Bastrop. The wood pellets are loaded onto ships at the port and shipped to Europe, where they are used for power generation. Two large storage domes constructed at the port hold more than 40,000 tons of pellets each.

Dan Len, regional biomass coordinator for the United States Department of Agriculture Forest Service southern region, said wood used to make energy is a wise choice.

“Historically, wood-to-energy was the use of mill residues to produce heat and some electricity,” Len said.

“Combining heat and power is economically favorable, and it makes sense. Louisiana has the feedstock needed to make wood pellets, and there is a market for this type of energy. We just have to use it.”

Les Groom, with the USDA Forest Service southern region, said his team is using woody biomass to make synthetic gas. If successful, this will place a demand on wood fiber not seen since the pulp and paper boom in the 1980s and 1990s, he said.

“Determining the most efficacious and sustainable manner of using re-

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10/12 INDUSTRY REPORT • FIRST QUARTER 2016

61

BIOPRODUCTS WASTE INTO FUEL: American BioCarbon’s biorefinery in White Castle, now under construction, could be the first of 10 such facilities across south Louisiana.

CHERYL GERBER

newable woody resources is critical,” he said.

Richard Sharp, of Cleco Power, said his company owns the Brame Energy Center, a series of plants on 6,000 acres that use man-made Rodemacher Lake as a cooling source for the plant’s generating units. The lake covers about half of the site.

“We have three units at the Brame site,” Sharp said. “Madison Unit 3 is the largest generating unit. It was completed in 2010 and is among the cleanest solid-fuel units of its kind in the nation.”

MORE TO COME Louisiana is set to attract more ability is important for bioenergy bioproducts companies, said Russell programs to succeed.

Richardson, business director of “A promise was made that biothe Baton Rouge Area Chamber of mass energy would be the dominant Commerce. “Louisiana offers one source of power and heat in select of the most competitive business geographies and socioeconomic climates.” settings,” Reith said. “Bioenergy An ideal environment for bioinitiatives will prevail or persist only energy also includes sustainability. if targeted toward these predisposed Charles Reith, a professor of natural geographies and if intrinsically comand environmental sciences and sus-Ad proof mitted Issue Date: 10/12 Industry #3to sustainability.”

• Please respond by e-mailat or fax your approval or minor Based revisions.on the current status of the tainability director thewith American • Ad will run as is unless approval or final revisions University ofthe Nigeria, said sustainbioenergy industry in Louisiana, are received by close of business today.

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it is possible the state’s agricultural producers could benefit by becoming a part of this growing trend, said John Russin, AgCenter vice chancellor and principal investigator for the Sustainable Bioproducts Initiative.

“In the future, the bioenergy industry may give producers another outlet from which to make money in addition to selling their crops for food,” Russin said. “We encourage producers to learn all they can about this industry and how they can

benefit from growing crops to use as feedstock.”

“There is a lot of focus right now on bioenergy globally, particularly in the wood sector. We want to ensure Louisiana producers are aware of what is happening in this industry,” said Rich Vlosky, conference coordinator and director of the LSU AgCenter Forest Products Development Center.

The LSU AgCenter has researchers and agents dedicated to helping Louisiana residents understand the bioenergy industry, said Bill Richardson, LSU vice president for agriculture and dean of the College of Agriculture.

“The LSU AgCenter’s mission is to provide the people of Louisiana with research-based educational information,” Richardson said.

“AgCenter researchers are involved in several projects related to biofuels and bioproducts.”

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10/12 INDUSTRY REPORT TO PUBLISH QUARTERLY IN 2016!

10/12 Industry Report will continue to report on the latest developments in the corridor as the industrial growth continues in 2016 and beyond. We will take a close look at the people and the projects making all the news in industry and construction.

Watch for our spring issue coming this May. To reserve your space call us today.

225.928.1700

Next Issue: May 2016 A publication of

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10/12 INDUSTRY REPORT • FIRST QUARTER 2016

63

PATENT LAW

Protect your assets!

Part 1 of 2.

What today’s manufacturers should know about patent law.

D

oes your company have an adequate intellectual property strategy? Are its policies up to date with rapidly changing patent laws?

Does it include the role of employees in creating or using intellectual property? Does the company have a

64

process for determining whether to seek patent protection on inventions by employees?

These are just a few of the questions worth asking for any manufacturer whose activity involves innovation, research and development, new products or processes, or the use of products, processes or technologies

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

created by other entities. We asked the intellectual property experts at four Louisiana law offices to give us a primer on today’s IP environment for manufacturers. In this series, you’ll find information on some threats you may not have considered and some best practices you may want to implement. Look for Part 2

of the series in our second quarter issue.

Note: The information provided in this article is for informational purposes only. Before you make any decision that may have legal implications, you should consult with a qualified legal professional for specific legal advice tailored to your situation.

1012industryreport.com

What should manufacturers consider when implementing or updating their intellectual property strategies in 2016?

JOHN RUNNELS

Taylor, Porter, Brooks & Phillips

RUNNELS: Intellectual property can be one of a company’s most valuable assets. A patent gives its owner the right to exclude others from making, using, selling, offering to sell or importing the patented invention.

Not all discoveries are patentable.

Even where an invention is otherwise patentable, patent rights can be lost with the passage of time.

In the first instance, a manufacturer should make sure that its employment contracts and policies expressly require employees to assign all inventions to the employer, or at least to assign all inventions related to the manufacturer’s line of business.

Those who go through the patenting process for the first time are often surprised to learn that an employer does not necessarily own inventions made by its employees. Patent policies are sometimes put into place

only after the first horse is already out of the barn. The recommended practice is for employment contracts to expressly require assignment of employees’ inventions.

A manufacturer should also have procedures to encourage the prompt disclosure of new inventions to a single office. That office should promptly evaluate all new disclosures and, where warranted, should confer with a patent attorney or patent agent. Sometimes a quick Google search is all that is needed to determine that a promising idea is not new after all. Google can save you time and money before you confer with an attorney. If nothing relevant turns up on Google, and if an invention might be commercially valuable, then it is time to confer with a patent professional.

Until a patent application has

been filed, information about any new invention should be kept confidential. In general, no sales or other commercial uses should be made involving a new invention before a patent application has been filed.

In narrow circumstances, there can sometimes be exceptions. A patent attorney or patent agent should be consulted to discuss whether an exception might apply in a particular case.

If the decision is made not to file a patent application, then the company should consider whether instead to maintain a new discovery as a trade secret. Trade secret information should only be disclosed to those having a need to know and only where there is a written agreement in place requiring the recipient to keep the information confidential.

What is new or most important in today’s patent law that manufacturers should be aware of?

RUNNELS: Patent law is a complex and rapidly changing field. Two topics will be discussed here, but these topics just scratch the surface.

Foreign patents can sometimes be important. Foreign patents can also be expensive. A United States patent only has effect in the United States. Where there are international markets for a particular product, a company will need to weigh the costs and benefits of seeking patent coverage in other countries. Some jurisdictions are especially strict about timeliness of patent filings.

Premature public disclosures can jeopardize potential patent rights.

Especially in cases where foreign patents might be considered, take precautions that nothing is publicly announced concerning new discoveries before a patent application has been filed, or until a decision is made not to file a patent application.

Under the America Invents Act (AIA), premature disclosures also have the potential to create problems even in the United States. The AIA 1012industryreport.com

is often known primarily for its “first-to-file” provisions. Where two people claim the same invention, it was formerly the case in the United States that the “first to invent” would be awarded priority, at least in principle. Priority instead is now awarded to the “first to file.” Although “first to file” represents the most widely known change in the law, it is not the most significant aspect. Only a very small fraction of patent applications actually end up in priority disputes; certainly, for those few patent applications, “first to file” versus “first to invent” can make a huge difference. However, for the vast majority of patent applications, the more significant aspects of the AIA are those that changed the scope of what is considered “prior art,” i.e., the body of knowledge against which the patentability of a new invention is judged. In general, the scope of “prior art” has been broadened, although in some circumstances it has been narrowed.

Broadly speaking, “prior art”

encompasses information that was publicly available before a patent application was filed. In some circumstances, a disclosure made by the inventor less than one year before the filing date will not count as “prior art.” However, even public disclosures made by the inventor are considered “prior art” if made more than 12 months before a patent application is filed. Further, the United States Patent and Trademark Office has taken the position that, even for public disclosures within 12 months of the filing date, where someone else learns of an invention through the inventor’s own disclosure and where that person then makes a new public disclosure with even slight modifications, then that new disclosure can be considered “prior art” that could ultimately bar the original inventor’s patent application.

Whether the courts will agree with the USPTO remains to be seen. In the interim, the prudent course is to confer with your patent professional earlier rather than later, and to defer

all public disclosures related to an invention until a patent application is filed or until the decision is made not to file.

Practicing law since 1985, Taylor Porter Partner John Runnels is engaged primarily in the practice of patent law, including chemical patent prosecution, biotech patent prosecution, patent licensing, university technology transfer and related matters. Runnels is admitted to the bar in Louisiana, New York and the United States Patent and Trademark Office. He is a member of the American Intellectual Property Law Association, American Bar Association Section of Intellectual Property, Louisiana State Bar Association, Baton Rouge Bar Association and Association of University Technology Managers.Runnels has a B.S. in chemistry from Louisiana State University and an M.S. in chemistry from California Institute of Technology.

Continued >>

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

65

PATENT LAW

What is new or most important in today’s patent law that manufacturers should be aware of?

RUSSEL PRIMEAUX Kean Miller LLP

PRIMEAUX: There are two recent developments in patent law of which manufacturers should be aware. The first is the overall rise in patent infringement assertions by so-called patent trolls, also known as Non-Practicing Entities (NPEs).

An NPE is an entity that owns patents but does not manufacture any products or provide any services covered by the patents. While we may initially think of NPEs as nefarious evil-doers, some NPEs may not fit that stereotype. For example, universities often develop patented technology, but they do not manufacture products. Companies should not ignore letters from NPEs; the

consequences of doing so can be costly. Companies who receive letters from NPEs should consult with a patent attorney and evaluate how to respond.

The second development is the change to U.S. Patent Law implemented by the America Invents Act (AIA). These changes took place in 2012 and 2013. The main change is that the U.S. has shifted from a “first to invent” system to a “first to file” system. Under this new regime, it is important that companies file for patent protection as soon as possible. Otherwise, a third party may file first and preclude the company from obtaining patent protection. Also,

companies should still be aware of the statutory time deadlines that remain in place, even after implementation of the AIA. Under these statutory time deadlines, an inventor will be barred from obtaining a patent if they file more than one year after certain triggering events. These triggering events include the sale, offer for sale, public use or publication of the invention. Finally, many foreign countries do not recognize the one-year grace period. Therefore, to preserve the option of seeking foreign patents, a company should file a patent application before any of the triggering events take place.

What advice do you have for manufacturers for implementing or updating their intellectual property strategies in 2016?

PRIMEAUX: I think the best thing companies can do for their intellectual property strategy is to conduct an IP audit. For the IP audit, we act as if we were conducting due diligence prior to the purchase of the company. It is analogous to putting your house for sale—you try to imagine that you are a potential buyer coming to see the house. Here are some of the things that may be included in an IP diligence inquiry: 1. Are there any new or anticipated acquisitions of IP or technology, including new filings, new issuances or registrations, new branding or rebranding initiatives, or acquisitions of IP from third parties?

2. Are there any challenges to the company’s trademarks or any failure to register a trademark (due to third party blocking marks or otherwise)?

3. Are there any challenges to the company’s ability to operate due to blocking patents owned by third parties?

4. Is there any loss of rights (recent or anticipated), including loss of rights by way of expiration, abandonment, lapse, cancellation, being held invalid or unenforceable, etc., that has had or may have an impact on the company’s business?

5. Are there any disputes concerning licenses or other IP/technology 66

related agreements?

6. Are there any expirations or terminations (or any anticipated expiration or termination) of material or significant licenses or other IP/ technology-related agreements that have had (or may have) a material or significant impact on the company’s business?

7. Are there any existing or anticipated IP related lawsuits, proceedings (including proceedings before the U.S. Patent & Trademark Office or other IP registries), arbitrations, threats, demands (including cease and desist demands and unsolicited offers of license), or claims?

8. Are there any unresolved security or cybersecurity breaches or loss of sensitive data, trade secrets or other confidential information?

9. Does the company have key employees execute nondisclosure or noncompete agreements?

10. Does the company have key employees execute agreements in which the employee agrees to assign any IP created by the employee to the company?

11. Does the company have nondisclosure agreements or agreements in which IP was disclosed to or received from third parties?

12. What are the company’s trademarks and are they registered?

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13. What are the company’s patents? Are there pending patent applications? Do the patents and pending patent applications match with the company’s key products or services or are there gaps in coverage?

14. Are patented products and services properly marked?

15. Does the company rely on copyright protection? If so, are there copyright registrations? Does the company place a proper copyright notice on materials protected by copyright?

16. Does the company possess and claim any items of information as trade secrets? What is the company’s proprietary program for maintaining trade secret protection?

17. Does the company have a clearance process to determine if products or services will infringe third party IP rights? Are there documents describing a formal clearance process?

18. Does the company have a process for determining whether to seek patent or copyright protection on inventions or works of authorship by employees? Are there documents describing that process?

19. Determine if the company has a listing of software in which the company has rights, whether as

owner, licensee or otherwise.

20. Does the company have a policy making it clear to employees that they are not allowed to download third party software onto the company’s computers without proper license rights?

21. Determine if there are communications to or from third parties relating to the validity or infringement of the company’s patents, trade secrets, trademarks, service marks, copyrights and other IP rights.

22. Determine if there are studies or reports relating to the validity or value of the company’s patents, trade secrets, trademarks, service marks, copyrights and other IP rights, and the licensing thereof.

23. Determine if there are agreements pursuant to which any patent, trademark, service mark or copyright has been sold or transferred by or to the company. Are those agreements recorded with the proper government offices?

24. Does the company have a list of all domain names?

25. Does the company have a calendar or docket system to ensure that all IP items are timely maintained and kept in force?

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Are there patent issues particular to Louisiana or to core Louisiana industries such as chemicals, shipbuilding and energy?

PRIMEAUX: A recurring patent theme with traditional Louisiana industry is the concern about IP representations and warranties in Design & Build contracts. In a typical Design & Build scenario, Contractor A will design and build a plant for Company B, and the design will often include technology licensed from third parties. In the Design & Build contract, Company B should ensure that it will have full rights to use the technology embodied in the plant design provided by Contractor A. Company B does not want to face an infringement suit at the outset and be unable to operate the plant, especially after making such a significant investment. Conversely, Contractor A should conduct the necessary IP clearance work, or obtain the necessary licenses, to ensure that it can meet its obligations under the Design & Build contract.

Supplying the pulse of Louisiana since 1922

Also, Louisiana, as a Civil Code state, does not have Article 2 of the Uniform Commercial Code (UCC).

Consequently, Louisiana does not have a specific statutory provision stating that goods are sold with a warranty of non-infringement.

Companies buying from Louisiana manufacturers may want to ensure that their purchase agreements contain a warranty that the goods being sold do not infringe the IP rights of third parties.

Russel Primeaux, a registered patent attorney, leads the intellectual property (IP) team at Kean Miller. His practice includes patents, trademarks, copyrights and trade secrets. Primeaux represents clients in obtaining IP protection, in IP transactions and in IP infringement litigation.

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ENERGY

Crude calculations

Will the end of the ban on exporting oil be good or bad for Louisiana?

BY DAVID JACOBS

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industry, and men and women from Louisiana work in many of those shale plays that are responsible for so much production.

“The way it affects Louisiana is that rock thrown into the lake,” Dickens says. “It’s that ripple effect.”

Economist Loren Scott says Louisiana refineries primarily are built to process heavy crude. The West Texas Intermediate crude produced at shale plays in Texas and North Dakota is light and sweet.

That misalignment leads to a bottleneck, which means WTI oil sells for less here than it does overseas. So the shale producers want to sell their product where it will draw the higher price.

“The major beneficiaries of lifting the export ban would be the people who are drilling for oil and harvesting oil in the Bakken play in North Dakota and the Eagle Ford in Texas,” Scott says. “I wouldn’t think it would have a whole bunch of impact on us [in Louisiana].”

BROKEN PREMISES Upton says several studies have predicted massive economic impacts from lifting the oil ban. According to some proponents, lifting the ban could create almost 1 million new jobs or boost GDP by as much as $1.8 trillion.

Upton says such studies are premised on the idea that removing the export ban would lead to higher prices for domestic producers, which causes an increase in production that leads to the economic benefits.

But he argues that much of the price differential between WTI and the Brent crude produced in Europe, the Middle East and Africa can be

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ISTOCK PHOTO

I

n October of 1973, the Arab members of the Organization of the Petroleum Exporting Countries declared an oil embargo against the United States in retaliation for U.S. support of Israel during the Yom Kippur war. The resulting oil price spike led to the Energy Policy and Conservation Act of 1975, which banned most oil and natural gas exports.

The hope was that keeping most American crude oil at home would prevent price shocks and keep the nation from becoming dependent on foreign oil.

After years of debate, this December Congress passed and the president approved a measure to repeal the export ban. Domestic oil producers, battered by recent price drops, would love to sell their light, sweet crude at the higher prices that it commands outside of North America.

While the export ban may have served U.S. national security interests in 1975, it actually was counterproductive to those interests today, the oil industry argues. Others say lifting the ban is premature when the nation still imports millions of barrels of foreign oil every day, and could lead to higher gas prices for consumers.

Gregory Upton, an economist and assistant professor with the LSU Center for Energy Studies, says many of the arguments on both sides of the issue have been overstated. At the center’s annual Energy Summit in October, he argued that the move carries serious risks for Louisiana’s refining industry, but might also offer rewards that few people are talking about.

Louisiana isn’t really a big crude producer compared to Texas and North Dakota, says Ragan Dickens of the Louisiana Oil and Gas Association. But our pipeline and highway infrastructure support the

attributed to shipping constraints within the U.S., not the export ban.

If that’s right, that could mean that lifting the ban would have little to no impact on domestic prices.

“So Louisiana and other Gulf Coast producers are unlikely to have been impacted by the crude export ban, as the price differential between Brent and these Gulf Coast crudes is just simply not large enough to move these things overseas,” he says.

But Upton says the change still

could have a dramatic impact on Louisiana’s economy. U.S. refineries, many of which are based in Louisiana, are thought to benefit from the export ban because it suppresses the price of domestic crude below the global price. If domestic producers could sell their crude worldwide, the thinking goes, U.S. refiners could lose the cost advantage they currently enjoy over their foreign competitors.

“For Louisiana, the removal of the 1012industryreport.com

export ban will remove a long-running federal protectionist policy for an industry that has served as an important component of our economy,” Upton says. “But in return, we’ll have the opportunity for the state to be at the center of an emerging global trading hub.”

The domestic shale boom has caused crude imports through the Louisiana Offshore Oil Port to decline. But if crude exports are allowed, LOOP becomes a two-way import and export terminal, possibly allowing Louisiana to become the epicenter of the international crude market, Upton suggests. Gasoline prices likely won’t be affected much by the change, he says.

SECURITY AND FAIRNESS “Repealing or weakening the crude oil export ban could harm our national security,” a group of senators said in a letter to President Barack Obama last summer, noting that the United States still imports about 5 million barrels of oil a day.

The argument is that it’s premature to lift the ban now, especially when

the impact of lifting sanctions on Iran has yet to be determined.

But industry representatives argue that the ban actually harms America’s security interests. LOGA President Don Briggs says it “places Saudi Arabia in the driver’s seat to control the world crude market,” while restricting the United States’ “ability to be the oil-producing competitor that we should be globally.”

Ultimately, Upton didn’t take a position on whether the ban should be lifted or not. But during his Energy Summit presentation, he noted that major oil companies could export refined products with no limitations, yet crude producers couldn’t do the same. As one CEO put it, that’s like stopping farmers from exporting wheat but allowing Pillsbury to export all the processed flour it wants.

The U.S. also has approved some exports of liquefied natural gas, though it has yet to be determined how large that industry will be.

Perhaps it’s time, Upton suggests, to treat all hydrocarbons the same and let the market sort it out.

ENERGY SUMMIT NOTES The LSU Center for Energy Studies held its annual Energy Summit on Oct. 21, where CES economist Gregory Upton presented a fresh perspective on the debate over lifting the crude oil ban.

Among the other news from the summit: • Frank Macchiarola, executive vice president for government affairs with America’s Natural Gas Alliance, said gas producers can meet new demand as the EPA tries to nudge the nation away from coal. But more pipelines are needed, he said, particularly in the northeast. Despite the low price of oil, he said, liquefied natural gas exports still have a future, as Eastern European countries in particular look for alternatives to buying Russian gas.

• Jennifer Vosburg, senior vice president with NRG Energy and president with Louisiana Generating, said the technology associated with microgrids, which can be used to distribute electricity when the main grid goes down, is improving.

However, only about 124 are in operation nationwide. Such grids could serve industrial corridors and large residential neighborhoods. A hospital-based system could also power nearby schools, gas stations, supermarkets and public water facilities, helping the entire community recover from a disaster.

• Mike McGough, chief commercial officer with NuScale Power, said his company is making progress developing modular nuclear reactors that are safer, cheaper and more scalable than traditional nuclear power plants. He said a NuScale plant can be built for less than $3 billion, compared to about $8 billion for a traditional plant, and has the ability to shut itself down and cool itself off without power or human actions. The design might be certified by 2020, and other companies would be able to copy that design.

• R. Neal Elliott, associate director of research for the American Council for an Energy-Efficient Economy, said advances in sensors, communications and computation are enabling new advances in utility planning and management. Better data collection, and high-performance computing and analytic capability being applied to that data, can lead to lower costs and less spending on new infrastructure.

—D.J. 1012industryreport.com

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CONSTRUCTION

Mixed outlook

BY SAM BARNES

At a fall economic forum, experts noted construction could benefit from stagnant oil as jobless workers fill the labor void.

A

s uncertainty permeates the oil and gas markets, perhaps through 2016, some industry leaders hope that layoffs in that sector will conversely ease the skilled labor shortage dogging Louisiana’s construction industry.

Many of these out-of-work laborers are expected to transition to construction, prompting Louisiana Associated Builders and Contractors and others to ramp up training efforts. “It’s a huge opportunity; we just have to shift and step up our training,” said Andy Dupuy, CEO of Brown & Root Industrial Services

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in Baton Rouge. Dupuy was one of several industry executives who spoke in November at the South Louisiana Construction Economic Forum, hosted by the Louisiana Construction Financial Management Association and ABC. Guest speaker at the forum, economist Anirban Basu of Baltimore’s

Sage Policy Group Inc., also sees the oil and gas downturn as an opportunity. “A lot of workers on oil and natural gas projects have been dislocated,” Basu said. “These [workers] will eventually transition into other areas that are adding jobs, primarily construction.”

This would come in the nick of 1012industryreport.com

time, as contractors ramp up efforts to find more skilled laborers to support a profusion of industrial projects in south Louisiana. The Baton Rouge area announced more than $60 billion in new industrial projects in 2015, while the New Orleans area announced $13.6 billion in new projects.

“There’s a lot of work coming Louisiana’s way,” Basu said. “Some of those projects will get the green light and some will not, but by this time next year I’m certain we’ll be talking about significant construction job growth.” Baton Rouge construction 1012industryreport.com

THE DROP IN PRODUCTIVITY As contractors struggle to find skilled laborers to fill a burgeoning number of jobs, they must also contend with an aging workforce and lower labor productivity. “In the next 10 years, 30% of the workforce will be over 60,” Dupuy said. “I think we’re training just as fast as we can.

The problem is in attracting the younger generation to the industry.”

The forum participants applauded Louisiana ABC’s efforts to train more students—the group is training an estimated three to four times more students a year—but they said the bigger problem is in attracting younger workers to the industry.

“We’re teaching kids that they have to go to college, but with one or two years in welding school they can make over $100,000 a year,” said Conrad Bourg, president of James Industrial Construction in Baton Rouge. “How many school teachers make that? That’s the mindset that we have to change as an industry.”

Still, the infusion of younger workers brings with it a disturbing

decline in productivity, which Bourg suspects is related to a changing work ethic. “During the last 10 years, we have begun to realize that we have to start altering our method for calculating labor productivity,” he added. “Does it take any longer to make a weld? No, it just takes longer to get things done.”

Consequently, lower production per man-hour raises job cost and creates uncertainty. “A contractor has a hard time fixing a price if they can’t put a finger on their productivity,” Bourg noted.

Dupuy said Brown & Root has begun to use a “hybrid contract” with its clients, which sets a target price for labor and thereby accounts for the risk in estimating labor cost. In such an arrangement, Brown & Root is penalized when labor cost exceeds the projected amount and earns a bonus if it falls below.

a heavy dependence on oil—North Dakota, Wyoming, Oklahoma, New Mexico and Alaska—are at risk for a recession relapse, Moody’s Analytics continues to view Louisiana as a growth state, in part because of the influx of construction.

The biggest drag on U.S. construction has been in the residential market. While multifamily construction is growing, single-family home construction is sluggish, primarily because first-time home buyers are missing from the closing table. “We’re talking about 20- and 30-somethings that are dealing with student debt,” Basu said. “Additionally, it’s also harder to get a mortgage than it used to be.”

CONSTRUCTION DRIVES NATIONAL ECONOMY Basu said the U.S. economy is currently in the “mid-cycle stage” of recovery, driven primarily by nonresidential construction, residential construction, consumer spending, and auto sales and production.

In 2015, the U.S. Economist Anirban Basu of Sage Policy Group addresses added 2.8 million the South Louisiana Construction Economic Forum held at L’Auberge Casino & Hotel in Baton Rouge. non-farm jobs, “and we would have added even more jobs if we had been able There are also cultural differences. to find enough people to fill the “Millennials [born 1980-95] are job openings,” Basu said. “People just different from the way we were,” in construction know this better Basu added. “These young people than anybody. It’s not enough to do not seem to be inspired by asset create a job opening. You have to accumulation. Just look at driver’s have the people with the right set license data—16- and 17-year-olds of knowledge, skills and ability, and are not getting drivers’ licenses at a willingness to accept the offer of anywhere near the same rates that compensation offered.” we did.”

In another promising statistic, the Additionally, many millennials construction unemployment rate equate home ownership with wealth is lower than it has been in several destruction rather than wealth accuyears, with 233,000 construction mulation, due to experiences during jobs added nationwide in 2015, the most recent recession. Still, Basu accounting for 3.8% job growth. predicts that home ownership will Fortunately, while other states with improve over the next decade.

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SAM BARNES

jobs grew more steadily than New Orleans in 2015, since it had more projects entering the construction phase.

Of course, a sustained drop in oil prices is not all good news for construction. The combination of lower oil prices and a strong U.S. dollar in 2015 has created an unhealthy economic environment for the chemical industry, said Dan Borné, president of the Louisiana Chemical Association. This, in turn, will impact contractors working in that sector.

“When oil is low and the value of the dollar is strong, it impacts Louisiana’s exports and therefore affects everybody in this room,” Borné added. “A sustained, long deflation in the price of oil makes the raw material for our competitors in Europe more economical.”

Basu is more concerned about the strong U.S. dollar than oil. “Frankly, low oil prices just don’t make me that nervous,” he says. “Nationally, more contractors and developers are helped than hurt [by lower oil prices]. However, I think we will be wrestling with a strong U.S. dollar all next year. This affects Louisiana deeply since it is one of the more export-oriented states in the country.”

INSIGHT

There is no silver bullet

STEPHEN WAGUESPACK

T

hroughout life, we often find ourselves on a quest for that one silver bullet to solve our problems.

The problem with that simple approach is that most of life’s challenges are complex and multi-faceted, demanding a similarly complex solution. They are not usually structured in a way susceptible to an easy answer, though that rarely stops us from pursuing one.

Wish you had more money?

Rather than paying your dues and focusing on hard work, why not buy a Powerball ticket? Want to stop the cycle of poverty in our state?

Instead of focusing on the difficult task of improving the educational system, offering effective job training or combating the culture of government dependency, government is prone to simply propose a new wage or hiring mandate on the private sector.

We rarely roll up our sleeves and take the thoughtful, substantive approach to patch together a solution for life’s most vexing problems; instead, we just search for that one silver bullet that seems easy to design and implement.

The debate over how best to solve the state’s budget crisis seems to be falling into this same trap.

Louisiana’s chronic state budget deficit is a significant challenge that, without question, must be

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addressed. Its cause can be traced to a number of factors, including a broken budget process, excessive spending, runaway entitlement costs and a tax code that fails to meet the needs of the public and private sectors. The reasons for these deficits are complex, and our only hope to solve the issues once and for all is to develop a multi-faceted and comprehensive approach. However, rather than doggedly pursuing that type of effort, the search for that elusive silver bullet seems to be preoccupying all of our time.

The reality is this: There is no one silver bullet, not even new revenues, that will magically solve this problem.

Barring a major surprise and regardless of whether it is the best approach, it appears clear that tax increases are on the table this legislative session. The only remaining questions appear to be how high, in what way, and in addition to what other fiscal reforms.

Some have argued that raising taxes by $2 billion is the only silver bullet we need. However, we know Louisiana’s economy is fragile and that the $700 million generated in new taxes last year did little to stabilize the government budget.

Low oil prices hurt state collections and put thousands of Louisiana jobs in jeopardy. The tax increases passed last year that incentivized companies and individuals to scale back investment and quickly cash in their credits before the deadline depressed state collections even further.

Over the last 10 years, spending has increased by 44%, while the economy has grown by 25%. This spending growth is dominated by a more than $1 billion increase in Medicaid and hundreds of millions of dollars in increased costs to pay for the state’s 13 public retirement systems. We subsidize local government by nearly $5 billion annually and have roughly 400 dedications

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

in the budget locking away spending flexibility for lawmakers. We have more four-year universities than Florida, despite being 20% the population, and we have five higher education governing boards compared to North Carolina’s two.

Over the years, we have shot the new taxes silver bullet time and time again and the endless cycle of state budget uncertainty remains the same. We must try a more comprehensive approach.

• Cut spending on state boards, commissions and agencies.

• Identify overlapping bureaucracies and demand efficiencies, while partnering with the private sector to deliver governmental services more economically.

• Eliminate as many statutory dedications as feasible in one bill to give legislators more flexibility to invest current dollars on priorities.

• Pass reforms to Medicaid to better control the costs of that program.

• Improve the legacy pension systems to reflect today’s reality and stop ignoring the true costs to taxpayers now and for future generations.

• Reduce subsidies to local government and create a culture of self-determination in that sector.

• Scale back those ineffective exemptions and credits that do not

help grow the economy.

• Demand more efficiency and effectiveness from our educational system, kindergarten through college, so that our students get the relevant training they deserve while taxpayers get the best bang for their buck.

• Pass “smart on crime” legislation to end the cycle of incarceration that has been an expensive and ineffective stain on Louisiana for generations, fueling the high poverty and crime rates we have battled for so long.

Resolving the state’s deficits once and for all will require a comprehensive approach that will be time-consuming, multi-faceted and likely controversial. The silver bullet is a myth and the search for it must end. Relying solely on new revenue to solve our budget challenges is a time-honored tradition in Louisiana.

We know this singular approach hasn’t worked in the past and we can safely assume it will not do so going forward either.

A comprehensive approach must be taken to finally end this cycle.

Some form of new revenue may be a part of this arsenal, but it is going to take a whole lot more ammunition than that to finally finish the job.

Stephen Waguespack is president of the Louisiana Association of Business and Industry.

“The reasons for [state budget] deficits are complex, and our only hope to solve the issues once and for all is to develop a multi-faceted and comprehensive approach.”

-STEPHEN WAGUESPACK

1012industryreport.com

Issue Date: Feb Ad proof #4

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INSIGHT

Carefully check this ad for: CORRECT ADDRESS • CORRECT PHONE NUMBER • ANY TYPOS

Reading the signs for the energy complex

DAVID E. DISMUKES

T

he beginning of 2016 has not brought about what oil and natural gas producers hoped would be a turnaround in energy prices. In fact, the beginning of this year is already showing signs that the pricing outlook for many producers can, and may very well, get worse before it gets any better.

Continued bad economic news from Asia, coupled with Middle Eastern geopolitical power struggles and energy demand malaise in the developed world will very likely keep crude oil and natural gas prices low over 2016.

While U.S. rig counts are currently down by over 65% from their 2008 peak, crude oil production is only down by a mere 4% relative to its April 2015 peak. Domestic natural gas production is flat despite pricing pressures that have been ongoing for years, not months. The continued productivity of U.S. unconventional drilling, therefore, amazes market observers, but also undermines any near-term energy commodity price recovery. Producers have clearly become victims of their own amazing success. Equally worrisome for the sector are the barrels upon barrels of crude oil, liquids and refined product that are starting to fill every storage tank, cavern and other type of storage facility to the rim. There is simply too much commodity for the market, not only in the U.S., but more importantly, for the world.

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While low prices are good for consumers, many are using less energy today than they were before the 2008-2009 recession. Gasoline demand, while moderately increasing over much of 2015, is down by almost a million barrels per day relative to its pre-2008 averages for this time of the year; electricity demand is down by as much as 1.8% relative to 2008. Natural gas demand is up considerably from 2008 levels, but the rate of demand growth is starting to slow, with consumption levels now only about 6% higher than the prior three-year average.

While the industrial renaissance, and the opportunities for billions in annual capital investments in south Louisiana continues, overall domestic industrial output is starting to lag despite record low commodity input prices (including natural gas).

Domestic industrial production indices have fallen in nine of the past 12 months, production has decreased consistently over the past four months, and it is down by about 1.2% relative to its post-recession peak last December, in part due to a strong U.S. dollar (making U.S. exports more expensive), and weak Asian demand.

The key to prosperity in 2016, for the entire energy complex, rests on one important factor: economic growth. Without economic growth, energy supplies will continue to stockpile, and prices will remain low, reflecting excess market supply conditions. At best, markets will move sideways through 2016, although temporary shocks, testing new pricing lows, are very possible, particularly in the first quarter of the year.

David E. Dismukes is a professor and the executive director of the Center for Energy Studies at Louisiana State University. He holds a joint academic appointment in the department of environmental sciences, where he regularly teaches a course on energy and the environment.

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INSIGHT

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GBRIA members on the move

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T

he Greater Baton Rouge Industry Alliance is a trade organization whose members are comprised of 60 industrial facilities located in eight parishes around Baton Rouge. The association’s mission is to drive solutions to common issues with an emphasis on safety performance and workforce development. One of the most pressing “common issues” today is the Baton Rouge region’s traffic congestion and aging infrastructure.

GBRIA’s members employ over 18,000 direct and regular contract workers annually in the region. An additional construction workforce completing turnarounds/outages and capital construction of about 30,000 were employed as well. Industrial facilities make up about 8% of the area’s workforce, and with a multiplier effect of approximately 5% (being conservative), one can estimate that industry is responsible for about 40% of all the jobs in the Baton Rouge region.

With such a widespread impact, the effects of people working industry can be felt everywhere, from rush hour traffic to the tax collector’s office. GBRIA being an organization that solves workforce issues, the topic of traffic congestion keeps coming up.

Workers are complaining and voting with their feet. They are refusing to take jobs due to traffic congestion, deciding to bide their time elsewhere.

The problem has grown so large that plant managers have made solving the traffic issues in the region their top priority.

GBRIA organized a working

group that has been meeting since 2014. Results of the group are focused on short-term solutions that can make a difference. The following are the major improvements achieved to date. With the help of DOTD, a new ferry was put in service between St. Gabriel and Plaquemine. The Ascension Parish president and the Ascension Parish Legislative Delegation were able to advance a project to improve La. 30 and one to add a connector between La. 30 and La. 44.

The Capital Region Planning Commission launched GeauxRide.com, a ride-share and employee benefits program, and GBRIA continues to promote the program to its members and area contract employers.

To solve the area’s long-term needs, GBRIA helped found Capital Region Industry for Sustainable Infrastructure Solutions (CRISIS) in partnership with the Baton Rouge Area Chamber and the Center for Planning Excellence in 2015. CRISIS’ mission is to provide a leadership voice to address the Baton Rouge area’s transportation crisis, identifying solutions and advocating for their prioritization and funding. The area’s business and industry leaders recognize that to get a new bridge or other large-scale new infrastructure in place in 10 or 15 years, we must begin now as a community and we must all speak with one voice for our region.

The consequences of waiting are already impacting the region. Major corporations have voiced their concern that they are losing new projects to Texas or other locations because decision-makers in corporate offices do not see the region bringing forth solutions that would enable bringing more workers to the region.

GBRIA members are “on the move” in more ways than just traffic.

Improving the area’s skilled workforce, keeping employees and their communities safe and improving how industry communicates with all of its stakeholders remain key goals of the association.

Connie P. Fabré is the executive director of the Greater Baton Rouge Industry Alliance, Inc. 1012industryreport.com

BUSINESS FILE | EXECUTIVE MOVES

DANOS

DISTEFANO

DANOS Danos announced three senior position hires in December. John Danos (no relation) serves as construction division general manager, working to develop a best practices foundation for the way Danos executes projects in conjunction with the company’s project management group. Prior to joining Danos, he held leadership positions at J. Ray McDermott, International Offshore Services, International Construction Group and Harvey Gulf International Marine. As fabrication operations manager of the Amelia facility, Marc Distefano is responsible for overall leadership of the facility and maintaining a culture of continuous improvement. Prior to joining Danos, Distefano held leadership positions at Alison Marine Contractors, Conrad Industries, Alliance Consulting Group, the U.S. Army, Shell and Enron. Jack Roszelle joins Danos as corporate quality director, overseeing quality control and quality assurance for the company.

Prior to joining Danos, he served as vice president of quality for Dynamic Energy Services International and area quality manager for the Americas region with McDermott Inc. BATON ROUGE AREA CHAMBER The Baton Rouge Area Chamber announced that Lauren Hatcher was promoted to a new chief of staff role for the regional economic development organization. BRAC created the position in a restructuring following the departure of Executive Vice President and Chief Operating Officer Erin Monroe Wesley, who was appointed to a cabinet position with Gov. John Bel Edwards’ administration. As chief of staff, Hatcher will coordinate BRAC’s annual 1012industryreport.com

ROSZELLE

HATCHER

business planning process, engaging the organization’s board, investors, stakeholders and staff. Additionally, she leads internal meetings and acts as staff liaison to BRAC’s board, executive committee, and Super Region and governance committees.

Internally, Hatcher oversees organizational processes, as well as performance metrics reporting, contractual services, and facilities and equipment. Previously, Hatcher served as director of marketing operations, managing BRAC’s advertising and communications.

The Baton Rouge Area Chamber also announced that Ann Forte Trappey will serve as chair of the board for the organization in 2016.

A registered professional civil and environmental engineer, Trappey is chief executive officer and president of Forte and Tablada Inc., a consulting engineering and land surveying firm specializing in civil, structural, environmental and electrical engineering. Trappey succeeds Van R. Mayhall Jr., a senior partner at Breazeale, Sachse and Wilson, who served as BRAC’s board chairman in 2015.

FRANK’S INTERNATIONAL Frank’s International announced that Donald Keith Mosing has resigned from his position as executive chairman of the company’s supervisory board of directors effective Dec. 31. Mosing will remain on the supervisory board as a director, but will no longer perform day-to-day activities as an employee of the company. In January 2015, Mosing had turned over the president and CEO role to Gary P. Luquette, and assumed the transitional role of executive chairman. Current supervisory board director Michael

TRAPPEY

BERGERON

C. Kearney has been appointed to serve as chairman of the board.

Kearney has served on the Frank’s International board as chairman of the Audit Committee since November 2013 and lead supervisory director since May 2014. He is also currently a director for Core Laboratories and Fairmount Santrol.

Kearney served as president and CEO of DeepFlex Inc. from September 2009 until June 2013, and previously as its executive vice president and CFO. He also previously served as the executive vice president and CFO of Tesco Corp. as well as vice president of administration and CFO of Hydril Co. PORT OF NEW ORLEANS The board of commissioners of the Port of New Orleans has elected William T. Bergeron chairman.

Bergeron represents St. Bernard Parish and joined the board in November 2012 when he was appointed by Gov. Bobby Jindal. He succeeds Scott H. Cooper, whose term as chairman expired. Cooper will continue to serve as a commissioner. In addition, Michael W. Kearney was elected vice chairman and Robert R. Barkerding Jr. secretary-treasurer. Bergeron is managing director of Bergeron Resources, a diversified management, investment and consulting firm involved in oil and gas properties throughout Louisiana and Texas. Bergeron Resources also participates in real estate projects and maritime and transportation services in Louisiana and Mississippi.

PETROQUEST PetroQuest announced the departure of Todd Zehnder, chief operating officer, noting that

BAKKEN

Zehnder’s resignation is on the best of terms as he plans to continue his career outside of the oil and gas industry. Lafayette-based PetroQuest Energy Inc. is an independent energy company engaged in the exploration, development, acquisition and production of oil and natural gas reserves in Texas, Oklahoma, Louisiana and the shallow waters of the Gulf of Mexico.

The Louisiana Association of Business and Industry (LABI) has announced its officers and board members for 2016. John Finan, president and CEO of the Franciscan Missionaries of Our Lady Health System, will serve as the chair of LABI for 2016. He replaces Jay Lapeyre, president and CEO of Laitram LLC, who becomes the immediate past chair. Art Favre, president of Performance Contractors, will serve as the board’s vice chair. Additional LABI 2016 officers include Tim Stine (Secretary), CFO of Stine Lumber Company, and Sonia Perez (Treasurer), president of AT&T Louisiana.

ENTERGY Entergy Corp. announced that A. Christopher “Chris” Bakken III has been named executive vice president and chief nuclear officer for Entergy, effective April 6. Bakken replaces Jeff Forbes, who announced his retirement last year. As a member of the Office of the Chief Executive, Bakken will report to Leo Denault, chairman and CEO. You can submit items for Executive Moves by emailing a press release and a high-resolution headshot to editor@1012industryreport.com.

Executive Moves is limited to senior management and board positions only.

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

75

NUCOR RESTARTS Nucor announced Jan. 6 that its direct reduced iron (DRI) plant in St. James Parish would resume operations by the end of January.

The plant temporarily suspended production at the end of last year for planned maintenance and the company decided not to resume production at that time based on market conditions. Nucor’s raw materials strategy is built on flexibility, with the company constantly evaluating the market for the lowest cost raw material inputs at the quality levels its customers need. Changes in the raw materials market led to the decision to restart plant operations, Nucor said.

PPG PLANT UPS CAPACITY PPG Industries announced in January that it is increasing precipitated silica production capacity at its Lake Charles manufacturing plant by more than 10,000 tons per year in response to growing demand.

“PPG remains committed to the precipitated silica market, and this investment will enable us to meet growing demand for our products among key strategic customers and target segments in the Americas,” said Anup Jain, PPG vice president, specialty coatings and materials.

Jain said PPG would achieve the 10,000-tons-per-year capacity increase through debottlenecking projects that are already underway and expected to come online in the second half of 2016. The debottlenecking projects at Lake Charles build on a 22,000-tons-per-year capacity increase that came online in mid-2014 and phased debottlenecking projects that came online in 2012.

G2X BREAKS GROUND G2X Energy, a developer of advanced natural gas-to-methanol projects, hosted a ground breaking ceremony to celebrate the beginning of Phase 1 construction on its previously announced world-scale methanol production facility located in Lake Charles. “We are extremely pleased to be moving forward in such a significant way on this project. All state and federal permits for construction have been obtained, staffing of key management is underway and our site preparation has 76

COURTESY G2X

BUSINESS FILE | COMPANY NEWS

Company and local officials break ground for the Lake Fuels Methanol Plant in Lake Charles.

begun,” stated Tim Vail, president and CEO of G2X Energy. “We are estimating the construction of this facility will add 2,500 direct and indirect jobs to the Lake Charles area and will take approximately three years to complete.” Once complete, this facility, known as Big Lake Fuels Methanol Plant, will produce 1.4 million metric tons of commercial grade methanol per year and will have the necessary facilities to convert methanol to automotive gasoline in the future.

FORMOSA PROJECT ONE OF TOP 3 The Formosa Petrochemical Corp. project in St. James Parish has been touted as one of the nation’s top three deals in Business Facilities magazine’s 2015 Economic Development Deal of the Year competition.

Formosa, a Taiwan-based company that has operated in Louisiana for more than three decades, announced in September 2015 that it was assessing the feasibility of developing a $9.4 billion industrial complex, which would include ethane crackers and downstream chemical manufacturing plants. Pending a final investment decision by mid-2016, Formosa would develop the project in two phases on the west bank of the Mississippi River, near the Gramercy bridge.

GBRIA MOVES OFFICES The Greater Baton Rouge Industry Alliance offices moved to a new location at the end of 2015. The new headquarters is more conveniently located and has more space for meetings.

The new address is 8555 United

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

Plaza Blvd. (IV), Ste. 202, Baton Rouge, LA 70809.

LQT EXPANDS INTERNATIONAL PRESENCE LQT Industries, a full-service provider of accommodation facilities, design-build construction services, and support services to the oil and gas industry, has been awarded multiple contracts to provide fire and safety services for a drilling company located in Asia. LQT’s Fire and Safety Division’s initial release of work includes refurbishment, upgrades, and installation of all fire and gas detection systems, foam suppression systems, and safety equipment throughout a drilling rig. “LQT continues to expand its international presence with projects currently ongoing in the Middle East and Malaysia,” said Lonny Gaspard, LQT’s Fire and Safety Division manager.

“This is a positive start to the new year for our group.” LQT is based in Broussard, Louisiana.

ABC CRAFT WINNERS NAMED The Associated Builders and Contractors Pelican Chapter held its annual craft competition in December at its Baton Rouge Training Center. The all-day affair hosted 29 student competitors in five separate craft categories. Categories included were: industrial electrical, instrumentation, millwright, pipefitting and welding. Competitors ranged in background from high school students to field workers and were selected by their respective ABC Training instructor and sponsored by different ABC member companies. The following winners of each

category will move on to represent the Pelican Chapter in the ABC National Craft Championships in March. Electrical: Chris Malbrue, EXCEL (1st place). Instrumentation: Ryan Diez, Triad Electric & Controls (1st place); Derek Ray, ISC (2nd place). Millwright: George Cisneros, Turner Industries (1st place). Pipefitting: Randall Searcy, Performance Contractors (1st place). Welding: Tanner Bergeron, Performance Contractors (1st place); Jeremiah Kidwell, EXCEL (2nd place); Jake Williams, EXCEL (3rd place).

KNIGHT CONFORMS TO NEW API SPEC Since 2006, Knight Manufacturing, now based in Broussard, Louisiana, has held the accreditation for Specifications API 7-1 and 5CT “threading.” In September 2015, Knight Manufacturing, Broussard, gained accreditation for Specification API 7-1 to supply and monogram Kelly Valves and drillstem subs. This accreditation means Knight Manufacturing has added another range of high-precision tools and equipment to an already existing line available to the oil and gas market. Other equipment available from Knight includes drilling jars and energizers, shock tools, fishing jars, bumper subs and anchors.

CB&I WINS MAINTENANCE CONTRACT CB&I announced it has been awarded a contract by Cheniere Energy for general maintenance services including preventive maintenance, repair and testing services for 1012industryreport.com

LAGRANGE HONORED BY NITL Port of New Orleans President and CEO Gary LaGrange received the 2015 McCullough Award at the National Industrial Transportation League’s 108th annual meeting, which was held in New Orleans in November.

The award is presented annually by the League’s board of directors and Logistics Management magazine to the ‘Logistics Executive of the Year” and is named after John T. McCullough, a former chief editor of Distribution magazine.

LQT GETS DRILLING RIG WORK LQT Industries has been awarded projects for fire and safety services on multiple drilling rigs in the Middle East and Malaysia. LQT’s Fire and Safety Division will be providing field services including upgrades and inspection on nine drilling rigs for a major oil and gas drilling contractor in the Middle East and Malaysia. These upgrades will encompass both fire and gas detection system upgrades as well as

expansion of the existing alarms and annunciation of the living quarters and drilling operations area.

PORT OF NEW ORLEANS

the regas and liquefaction facilities at Cheniere’s Sabine Pass LNG terminal in Cameron Parish. “CB&I is pleased to be selected as a maintenance provider for the Sabine Pass LNG facilities,” said Chip Ray, president of CB&I’s Capital Services operating group. “This award is a result of CB&I’s focus on superior safety performance and efficient project execution, and we look forward to building a long-term partnership with Cheniere Energy.”

Gary LaGrange, right, president & CEO of the Port of New Orleans, accepts the 2015 McCullough Award from Bruce Carlton, president & CEO of the National Industrial Transportation League.

DYNAMIC ANNOUNCES CONTRACT Dynamic Industries Inc., a leading fabrication and service provider to the global oil, gas and energy industries, announced that its specialty construction division, Dynamic Construction Services, has been awarded a contract to provide shop blasting and coatings of large bore pipe of varying diameters to a client engaged in a critical capital expansion project. Matt Oubre, DCS president, said, “DCS appreciates the confidence our client has shown in selecting DCS to support them in this fast track project. Our expanded integrated offering has been created to increase the value our clients have come to expect from DCS.” In September, Dynamic Construction Services opened up a multi-service branch in Lake Charles to provide insulation, coatings, scaffolding and manpower services to the Gulf Coast petrochemical market.

PERFORMANCE NAMED ‘MILITARY FRIENDLY’ Performance Contractors announced that it has earned the 2016 Military Friendly® Employer designation by Victory Media, publisher of G.I. Jobs and Military Spouse magazines. Performance ranked seventh in the Diversified Services Industry—providing top jobs for veterans including construction management, construction worker, IT specialist, operations and facilities manager, skilled laborer, and trades. Performance Contractors was showcased along with other 2016 Military Friendly® Employers in the December issue of G.I. Jobs and the January issue of Military Spouse, as well as on MilitaryFriendly.com.

Send news to editor@1012industryreport.com. News that will be considered includes new promotions, hires and transfers at the executive level; product announcements; office openings and moves; project and contract announcements; and awards. Personnel news should be accompanied by a 300 dpi, color photo of the executives involved.

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10/12 INDUSTRY REPORT • FIRST QUARTER 2016

77

CLAIBORNE

THE BOOM AT A GLANCE BOSSIER

Map of megaprojects

CADDO

16 CF Industries Nitrogen, LLC $2.1B | 93 jobs

33 Shell Chemical $717M | 20 jobs

2 Sasol Ltd. $19.1B-$22.1B | 1,253 jobs

17 Live Oak LNG (Parallax Energy) $2B | 100 jobs

34 Valero Refining – New Orleans, LLC $700M | 24 jobs

3 G2 LNG $11B | 250 jobs

18 Yuhuang Chemical, Inc. $1.85B | 400 jobs

35 Louisiana LNG Energy, LLC $646.6M | 44 jobs

4 Sempra Energy/ Cameron LNG $10B | 190 jobs

19 EuroChem $1.5B | 200 jobs

36 Pin Oak Terminals $600M | 70 jobs

20 Shintech $1.4B | 100 jobs

37 Methanex Corp., Methanex 1 $570M | 35 jobs

5 Formosa (St. James Parish) $9.4B | 1,200 jobs 6 Lake Charles LNG (aka Trunkline LNG; BG Group and Energy Transfer Partners) $9B | 250 jobs 7 Southern California Telephone & Energy (Monkey Island LNG) $9B | 200 jobs 8 Delfin LNG $7B | 400 jobs 9 Venture Global LNG $4.25B | 100 jobs 10 Magnolia LNG $3.7B | 50 jobs 11 Nucor Steel Up to $3.4B | 1,250 jobs

21 South Louisiana Methanol $1.3B | 63 jobs 22 G2X Energy $1.3B | 243 jobs 23 BioNitrogen Louisiana Holdings, LLC $1.25B | 250 jobs 24 AM Agrigen Industries $1.2B | 150 jobs 25 Castleton Commodities International $1.2B | 50 jobs 26 Dow Chemical $1.06B | 71 jobs 27 Cornerstone Chemical Co./ Dyno Nobel $1.025B | 65 jobs

VERNON

BEAUREGARD

41 BASF (Geismar) $500M | 100 jobs 42 Sundrop Fuels $450M | 150 jobs 43 Westlake Chemical (Geismar) $425M | 70 jobs

CALCASIEU

55 2 6 12 13 50 10 22 31 17

44 Shintech Louisiana, LLC $420M | 88 jobs

46 Williams Olefins $400M | 5 jobs

30 Benteler AG $975M | 675 jobs

47 NuStar Energy $365M | 32 jobs

14 Revolution Aluminum (formerly American Specialty Alloys) $2.4B | 1,450 jobs

31 Lake Charles Cogeneration, LLC $820M | 210 jobs

48 Syngas Energy $360M | 86 jobs

15 Marathon Petroleum $2.35B | 65 jobs

32 Petroplex $800M | Not available

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

SABINE

40 Shintech Louisiana, LLC $500M | 5 jobs

29 Entergy Little Gypsy $1B | 15-20 jobs

78

NATCHITOCHES

39 Honeywell International $500M | 80 jobs

45 Hazelwood Energy Hub $400M | 123 jobs

13 Lake Charles Clean Energy (Leucadia Corp.) $2.5B | 215 jobs

RED RIVER

DESOTO

38 Methanex Corp., Methanex 2 $570M | 120 jobs

28 Monsanto $1B | 95 jobs

12 Axiall/Lotte Chemical $3B | 250 jobs

30 BIENVILLE

Louisiana industrial projects announced or proposed since 2009 with projected capital investment of $250 million or more.

Second line shows projected capital investment and direct new jobs. List is representative, not complete; project statuses change frequently. (LNG = liquefied natural gas export project) 1 Sabine Pass LNG (Cheniere Energy) $20B | 400 jobs

WEBSTER

49 ExxonMobil Corp.

(Chemical) $336M | 30 jobs

4 CAMERON

3 1

9

7

8

RED = PROJECT KILLED BLUE = NEW PROJECT ADDED SINCE LAST EDITION

1012industryreport.com

J

UNION

NE

MOREHOUSE

WEST CARROLL EAST CARROLL

LINCOLN

OUACHITA

RICHLAND MADISON

55 PPG Industries, Inc. $264M | 27 jobs

51 American Biocarbon $312M | 450 jobs

JACKSON

56 Gavilon Trading $250M | 100

52 Avalon Rare Metals Processing, LLC $300M | 225 jobs

FRANKLIN

CALDWELL

54 Investimus Foris $265M | 85 jobs

50 Westlake Chemical (Lake Charles) $330M | 25 jobs

TENSAS

53 German Pellets Louisiana, LLC/Louisiana Pellets, Inc. $290M | 80 jobs

WINN

53

57 Cambridge Energy FLNG No announced size

Siluria Size and location unknown

CATAHOULA LASALLE

TOTAL POTENTIAL CAPITAL INVESTMENT:

$144.5B

GRANT

54

TOTAL POTENTIAL DIRECT NEW JOBS:

CONCORDIA

14

11,877

RAPIDES

42 AVOYELLES

23

WEST FELICIANA

WASHINGTON

EAST FELICIANA

ST. HELENA

EVANGELINE ALLEN

POINTE COUPEE

TANGIPAHOA

ST. LANDRY

45

WEST BATON ROUGE

40 ACADIA

26 19

IBERVILLE

51

46 41 52 43

33 ST. JOHN 37 38 21 THE BAPTIST29 18 56 24 36 16 39 34 11 32 28 ST. JAMES 5 15

IBERIA ASSUMPTION VERMILION

ION NS

ST. MARTIN

LAFAYETTE

44

ST. TAMMANY LIVINGSTON

CE AS

JEFFERSON DAVIS

20

49

EAST BATON ROUGE

48 47

ORLEANS

27 ST. CHARLES

JEFFERSON

25 ST. BERNARD

ST. MARTIN

35 ST. MARY LAFOURCHE IBERIA

Sources: LED, American Press, 10/12 research

1012industryreport.com

PLAQUEMINES

TERREBONNE

57 10/12 INDUSTRY REPORT • FIRST QUARTER 2016

79

CLAIBORNE

4

THE BOOM AT A GLANCE BOSSIER

Map of mediumsized projects

$200MM | 100 jobs Location: St. John the Baptist Parish Status: announced June 2015

2. Indorama Ventures

$175 MM | 125 jobs Location: Calcasieu Parish Status: commercial startup projected before end of 2017

3. NOLA Oil Terminal

$162MM | 54 jobs Location: Plaquemines Parish Status: under construction

4. Regency Energy Services

$144MM | 6 jobs Location: Webster Parish Status: under construction

5. Bunge North America

$140MM | N/A Location: St.Charles Parish Status:

6. Matheson Gas

$130MM | 40 jobs Location: Calcasieu Parish Status: under construction

7. Advanced Refining Technologies

$135MM | 325 jobs Location: Calcasieu Parish Status: completion of expansion projected for 2018

80

8. Florida Fuel Connection, LLC

$75MM | 50 jobs Location: East Feliciana Parish Status: expected to be completed Q1 2017

9. Southwest Louisiana Bioenergy

$ 69.3MM | 41 jobs Location: Allen Parish Status: under construction

10. Momentive Specialty Chemicals, Inc.

$66MM | 68 jobs Location: St. Charles Parish and Ascension Parish Status: Expected to begin construction in 2016

11. Hunting Energy Services

$62MM | 123 jobs Location: Terrebonne Parish Status: announced March 2015

12. Stepan Company

$60MM | 33 jobs Location: Ascension Parish Status: hiring to begin as early as 2017

13. Virdia

$60MM | 81 jobs Location: Lafourche Parish Status: completion projected for end of 2016

14. Epic Piping

$45.3MM | 566 jobs Location: Livingston Parish Status: under construction

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

21

CADDO

BIENVILLE

Louisiana industrial projects announced or proposed in Louisiana since Jan.1, 2014, with projected capital investment of $25 million-$250 million. Second line shows projected capital investment and direct new jobs. List is representative, not complete; project statuses change frequently.

1. First Bauxite

WEBSTER

20

RED RIVER

DESOTO

15. Boise Cascade

$43MM | 400 jobs Location: Sabine Parish Status: completion projected for 2017

NATCHITOCHES SABINE

15

16. Graphic Packaging International

$41.5 MM | 1,340 jobs Location: Ouachita Parish Status: under construction

17. Balchem and Taminco

VERNON

$40MM | 110 jobs Location: Iberville Parish Status: expected to begin construction in 2015

18. Bayou Cos.

$39MM | 15-20 jobs Location: Iberia Parish Status: opening targeted for March 2016

BEAUREGARD

19. TCI Plastics

$36.5MM | 280 jobs Direct jobs: 280 Location: Orleans Parish Status: under construction

20. Computer Science Corp.

$34MM | 800 jobs Location: Bossier Parish Status: completion projected Q2 2015

7

2

CALCASIEU

6

21. SB International

$32.5MM | 134 jobs Location: Bossier Parish Status: under construction, completion projected for 2017

CAMERON

1012industryreport.com

J

UNION

NE

MOREHOUSE

WEST CARROLL EAST CARROLL

LINCOLN

OUACHITA

RICHLAND

16

MADISON

JACKSON

FRANKLIN

CALDWELL

TENSAS WINN

CATAHOULA LASALLE GRANT

CONCORDIA

RAPIDES

AVOYELLES WEST FELICIANA

8

WASHINGTON

EAST FELICIANA

ST. HELENA

EVANGELINE ALLEN

POINTE COUPEE

9

TANGIPAHOA

ST. LANDRY WEST BATON ROUGE

14 ST. TAMMANY LIVINGSTON

17

ACADIA ST. MARTIN

IBERVILLE

12 10

ION NS

LAFAYETTE

CE AS

JEFFERSON DAVIS

EAST BATON ROUGE

ST. JOHN THE BAPTIST

1 ST. JAMES

10

IBERIA ASSUMPTION

18 VERMILION

ORLEANS

5

ST. CHARLES

19 JEFFERSON ST. BERNARD

ST. MARTIN ST. MARY

13 11

IBERIA

Sources: LED, 10/12 research

1012industryreport.com

LAFOURCHE

PLAQUEMINES

3

TERREBONNE

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

81

MY TOUGHEST CHALLENGE

Cordell Haymon

BY JEN BAYHI-GENNARO

POSITION: Senior Vice President COMPANY: SGS Petroleum Service Corp.

WHAT THEY DO: Baton Rouge-based SGS Petroleum Service Corp. is in the business of providing Coast Guard-licensed tankermen to load and unload barges, and also operates dock facilities and does in-plant product handling.

CAREER: For over 20 years Haymon was principal owner and CEO of

Petroleum Services Corp. In 2004 the company was acquired by SGS, a global firm based in Geneva. Haymon continues to serve as SVP of SGS Petroleum Service Corp. He has long been active in the Baton Rouge community, serving on the boards of the Baton Rouge Area Foundation, Teach For America South Louisiana and the Center for Planning Excellence.

THE RESOLUTION Haymon met with the competitor and tried to understand the reasons for their decision. “They explained that they appreciated and valued our company and our service and would like to continue utilizing us as needed, but they saw this direction as an opportunity for growth for their own company,” he said.

Since they were unable to dissuade the competitor, SGS had to decide whether they would continue working for them, or stop and view them strictly as a formidable rival.

Despite the considerable ambiguity 82

involved, the decision was made to continue working for them while still competing vigorously to keep them from getting work from other companies. This dance went on for years, until quite recently, and Haymon and the team at SGS all the while worked hard to maintain a friendly relationship with the competitor’s management and provide them great service, while defending their share of the market.

THE TAKEAWAY Despite its best efforts, the competitor’s decades-long attempt to successfully break into the tankermen and dock operating business never gained real traction. “Eventually, in the last couple of years, they came to us and asked if we would be willing to take over a group of their tankermen and also the operation of several dock facilities where they had been able to get contracts. They asked that we consider employing their workers who were assigned to these jobs. These transitions have now taken place, and this major customer is no longer our competitor,” Haymon said. He feels that sustaining this tricky relationship over many years and seeing it to such a successful conclusion is a tribute to the excellent performance of his employees, but also credits the integrity and maturity of the leadership of the customer in sustaining this unusual working relationship.

10/12 INDUSTRY REPORT • FIRST QUARTER 2016

DON KADAIR

THE CHALLENGE What do you do when your biggest customer decides to become your biggest competitor? That’s exactly what happened to SGS Petroleum Service Corp. “It’s a hazardous industry,” Haymon explains. “We work in all kinds of weather, loading and unloading hazardous, flammable, environmentally sensitive material.” A little more than 20 years ago, their biggest customer, the largest tank barge company in the U.S., decided to go into the tankerman service business, including building their own cadre of tankermen and bidding against SGS for dock and in-plant contracts. To initiate this effort, the competitor hired a former employee of SGS as the leader and quickly recruited about a dozen of SGS’ tankermen to come to work for them.

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