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FALL 2015

BUSINESS REPORT’S

PLUS • The new Brown & Root • Spending the BP money • Reducing project failures

INDUSTRYREPORT

Who

will be the

ANGELLE DARDENNE

BEST GOVERNOR for industry? WE ASKED THE QUESTIONS.

EDWARDS

VITTER

YOU DECIDE.


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10/12 INDUSTRY REPORT • FALL 2015

3


CONTENTS

PAGE 36

Who

Publisher: Rolfe McCollister, Jr.

will be the

ANGELLE DARDENNE

BEST GOVERNOR for industry? WE ASKED THE QUESTIONS.

EDWARDS

VITTER

YOU DECIDE.

EDITORIAL Special Projects Editor: Jerry Martin Director-Online Operations: Brandi Simmons Director of Research: Sierra Crump Contributing Writers: Erin Z. Bass, Adrian Hirsch, David Jacobs, Maggie Heyn Richardson, Meredith Whitten Contributing Photographers: Lee Celano, Terri Fensel, Cheryl Gerber, Don Kadair ADVERTISING Special Projects Manager: Stacy Kaklis Account Executive: Angie LaPorte Marketing Director: Jennifer Guillot Marketing/Special Events Coordinator: Christie Battaglia Advertising Coordinator: Brittany Nieto 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 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

8

32

In case you missed it Industry briefs

12

34

Company profile Setpoint’s surge

18

Insight

48 51

Metrics

56

30

A new home on the bayou Danos moves into a beautiful new headquarters near Houma.

Good chemistry New federal designation for Louisiana Chemical Corridor could mean vital funding and a more coordinated industry.

58

Workforce spotlight South Louisiana Community College begins classes for oil and gas workers this fall.

A new Brown & Root is born New industrial services company borrows key executives, entrepreneurial spirit from The Shaw Group.

A new study shows the economic punch of the Louisiana chemical industry.

28

70

Contracting on the coast Money from the BP oil spill settlement and other funding streams will create billions of dollars in publicly bid coastal restoration projects over the next 15 years.

Logistics Two new rail terminals in the Capital Region will change the logistics equation for petroleum products and other industries.

Renaissance on the river St. James Parish has a boom of its own going on.

People Dale Logan, Executive Director, Southwest Louisiana Construction Users Council

27

Project by project

Louisiana Workforce Education Initiative A public-private campaign aims to recruit, inspire and educate the future craft and plant workers of Louisiana.

Where the megaprojects are

Guest columns from energy expert David Dismukes, Alliance Safety Council CEO Kathy Trahan and LABI’s Stephen Waguespack.

25

65

A timeline illustrates the years of permitting and construction needed to complete Cheniere’s LNG project at Sabine Pass.

The big picture Louisiana expertise goes into the nation’s first offshore windfarm.

15

Anatomy of a megaproject

72

The contract tug of war The industrial construction contract is all about managing risk.

77

What causes project failures? New research points to a range of causes—and remedies.

80

The soft soil challenge Experience and technology help geotechnical engineers build massive industrial structures on Louisiana’s unique soft soil.

84

Ports Both agribusiness and energy are key to recent growth at the Port of Greater Baton Rouge.

90

Certified sites Our map of the largest LED Certified Sites in south Louisiana

AUDIENCE DEVELOPMENT Audience Development Manager: Jessica Weimer O’Connor Audience Development Coordinator: Jeanette Benedetto Audience Relations Assistant: Brittany Titone A PUBLICATION OF LOUISIANA BUSINESS INC. Chairman and CEO: Rolfe H. McCollister, Jr. President and COO: Julio A. Melara Executive Assistant: Millie Coon 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 Volume 34 - Number 2 © Copyright 2015 by Louisiana Business Incorporated. All rights reserved by LBI. The Greater Baton Rouge Business Report (USPS 721-890 ISSN 07474652) is published biweekly by Louisiana Business Inc. Reproduction without permission is prohibited. Business address: 9029 Jefferson Hwy., Ste. 300, Baton Rouge, LA 70809. Telephone (225) 928-1700. Periodicals postage is paid at Baton Rouge, La. Subscription rate is $65.00 (in-state) and $75.00 (out-of-state) for 26 issues, with 6 additional issues published annually in April(2), June, November(2) and December. POSTMASTER: Send address changes to The Greater Baton Rouge Business Report, 9029 Jefferson Hwy. Ste. 300, Baton Rouge, LA 70809. The Greater Baton Rouge Business 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.

Send your ideas and company news to editor@1012industryreport.com. 4

10/12 INDUSTRY REPORT • FALL 2015

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FROM THE PUBLISHER

Choosing a governor

I

ROLFE MCCOLLISTER JR.

ndustry has always been an economic driver and creator of well-paying jobs in Louisiana. Our latest map of current and proposed projects [pages 34-35] shows nearly $125 billion in potential capital investment with more than 10,000 potential jobs. The latest report by economist Loren Scott puts the impact of just the chemical industry in a single year at $69.1 billion in sales for Louisiana businesses. Just ask Lake Charles how important industry is to the future. So, as you face the decision of voting for a new governor—the state’s next CEO—you might be asking, “Who would be the best for industry?” We questioned the gubernatorial candidates on key policy issues that impact industry. They shared their views on solving the state’s budget problems, the state’s higher ed structure, infrastructure priorities, supporting the energy sector and tort reform. Their answers begin on page 38. But we had more questions and limited space. We also asked them about the roles of LDEQ and the EPA, international commerce, development-ready industrial sites, tax exemptions, and the future of economic development. We have included those answers online along with the questions you’ll find here in print. (You can find the candidates’ answers to all 10 questions online at 1012industryreport.com.) This is an important decision for voters, and it’s a historic time in Louisiana for industrial growth. The next year—with a potential special session and a regular session—will set the course for the future, and who is at the helm matters. But I have learned it is about more than just “words” or “ideas”—every politician has plenty of those. Look beyond the words at the character and integrity of the candidates. Their values. Their history. What has been their commitment to their political philosophy, principles ... and the people of Louisiana? Actions speak louder than words. This is an important decision for Louisiana and industry. Choose wisely—and be sure to vote. INSIDE THIS ISSUE There is a lot happening on the 10/12 corridor

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10/12 INDUSTRY REPORT • FALL 2015

of south Louisiana—from Calcasieu Parish to St. James Parish and beyond: • This area was recently designated the Louisiana Chemical Corridor, which could mean millions in federal funding. See page 56. • The BP settlement is a game changer, adding billions to the funding for restoration efforts on our coast. See what’s next beginning on page 58. • The Louisiana Workforce Education Initiative aims to make industrial and construction jobs “sexy” and attract more students and adults to pursue those careers. Learn more about the campaign beginning on page 65. • There is much going on along the Calcasieu Ship Channel in southwest Louisiana and at the Port of Greater Baton Rouge. Turn to pages 26 and 84 to find out the latest developments. • On industrial projects, there is often a tug of war between “cost-plus” and “lump-sum.” Who prefers what—and what are the pros and cons? Learn more on pages 72-75. • And guest columns inside provide insights from energy expert David Dismukes, Alliance Safety Council CEO Kathy Trahan and LABI’s Stephen Waguespack. ANNOUNCEMENT FOR 2016 We are pleased to announce that 10/12 Industry Report will become a quarterly publication in 2016. As you can see in this edition, there is much going on in the industrial and construction sectors in south Louisiana—with more to come—and we want to focus on covering your industry. This magazine is published by the national award-winning Baton Rouge Business Report, and our team is committed to excellence and writing about issues and companies impacting industry and construction in south Louisiana—instead of national news. 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 in 2016, call (225) 421-8140. And for information on advertising in our Winter/February edition, email our president, Julio Melara, at julio@1012industryreport.com.

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technical bolting

hydrostatic testing

ďŹ eld machining

diamond wire cutting

pipeline services


IN CASE YOU MISSED IT

On the rise

D

emand for industrial construction workers in the Baton Rouge area is expected to jump late this year, as well as in mid- and late 2016 due to scheduled plant turnarounds, according to the Greater Baton Rouge Industry Alliance’s latest bi-annual employment outlook. Aside from the turnarounds, during which an entire processing unit of a plant is taken offline to upgrade or replace it, demand will remain “steady” over the next 18 months, according to GBRIA. The top three industrial jobs in demand will be pipefitters, welders, and instrument

and electrical technicians. But boilermakers, equipment operators, insulators, mechanics, millwrights and scaffold builders will also be in demand, according to the forecast. GBRIA notes that more than $129 billion worth of capital improvements have been announced at plants across the state. In the Baton Rouge area, about $35 billion worth of projects are planned, requiring an estimated 5,000 direct hires, and creating 11,000 permanent indirect jobs and 25,000 temporary construction jobs. The association generates its bi-annual employment outlook by surveying its members, which in-

KBR HITS KEY SAFETY MARK AT LOUISIANA SITE KBR Inc. announced it surpassed 3 million work hours without a Days Away from Work Incident at the Dyno Nobel ammonia plant construction site in Waggaman, Louisiana. “Although this is not the first such achievement for KBR, the logistical and schedule challenges associated with this particular project make it a significant milestone demonstrating our commitment to Zero Harm to people, property and the environment,” the company noted in a release. “KBR fosters an interdependent safety culture in which all employees are expected to make safety conscious decisions that are governed by personal values,” said Nick Anagnostou, KBR vice president of health, safety, security and the environment. “Everyone truly realizes that an injury incident is not a statistic but rather a person who has been negatively affected.” At the Dyno Nobel site, KBR’s commitment to Zero Harm is reinforced with daily and weekly site meetings, toolbox safety meetings and award recognition for employees, which all stress the importance of a safe work culture. KBR has been involved in the licensing, design, engineering and/or construction of more than 230 ammonia facilities. —Staff report

clude 60 petrochemical, energy, paper, pharmaceutical, storage terminal and other industrial facilities. Construction continues to be one of Louisiana’s strongest sectors, with unemployment figures from the Associated Builders and Contractors showing the state’s rate fell by 1.2 percentage points from May to June, settling at 5.6%. That’s the lowest level of construction unemployment recorded yet this year in Louisiana, according to the nonseasonally adjusted figures. And the 5.6% rate is also the lowest for construction in Louisiana during the month of June since June 2006, when it was at 4%.

THE TOP FIVE In 2014, the top five states for construction as a percentage of state GDP were:

1. North Dakota 2. Louisiana 3. Hawaii and

Montana (tie)

5. Utah

Source: ABC

—Steve Sanoski

12% Growth in nondurable manufacturing in Louisiana from 2013 to 2014 Source: The Pew Center

FINNISH MANUFACTURER CHOOSES NOLA

KBR

In July, Gov. Bobby Jindal and Cajo Technologies executive Ismo Rantala announced the Finland-based company will establish a New Orleans manufacturing site focused on laser-based machinery that creates permanent markings and color patterns on almost any material. The company will create 40 new direct jobs with an average annual salary of $55,000, plus benefits. Founded in 2010, Cajo Technologies employs a patented method for applying extremely precise markings and permanent color patterns, with practical applications in manufacturing industries. The company’s process relies on the use of traditional laser beams with no additives or pigments. In addition to fully automated machines, the company will make manual and semi-manual standalone machines. Cajo Technologies will locate its U.S. headquarters at Landing Zone New Orleans, a co-working space and business incubator. The company will house both sales and production in 2,000 square feet leased at the incubator. Cajo’s manufacturing operations will include the production of its patented laser color-marking machinery. The company began moving into the Landing Zone in June and was preparing to start commercial operations in September. The State of Louisiana offered a competitive incentive package that includes the services of LED FastStart—the nation’s No. 1-ranked state workforce development program. The company is also expected to utilize the state’s Quality Jobs Program. —Staff report

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Industrial natural gas consumption and Henry Hub spot prices (2000-2016) billion cubic feet per day

dollars per million British thermal units

25 20 15

history

6 4

average Henry Hub spot price

5 1999

2001

10 8

industrial natural gas consumption

10

0 1997

projections

2003

2005

2 2007

2009

2011

2013

2015

0

INDUSTRIAL DEMAND FOR NATURAL GAS STILL GROWING New plants coming online are set to drive industrial natural gas growth forward by more than 3% in the next two years, the U.S. Energy Information Administration said in an analysis released at the end of July. Industrial facilities, which include methanol and fertilizer plants, consumed an average of 21.0 billion cubic feet per day of natural gas in 2014, up 24% from 2009. By the end of 2015, that figure is expect to rise by another 3.4% to an annual average of 21.7 billion cubic feet per day. In 2016, the EIA predicted another 3.9% gain to 22.5 billion cubic feet per day—a powerful bump in demand for the commodity. Industrial and other users of the fuel have stepped up plans to switch to natural gas as the fuel has become relatively cheaper. Much of the additional demand is expected to come from new industrial facilities coming online along the Gulf Coast. —FuelFix.com

ISC CELEBRATES 25 YEARS

Ready to move your business forward?

Baton Rouge-based ISC Constructors LLC commemorated its 25th anniversary in June by hosting a companywide celebration, which provided associates and their families the opportunity to embrace and recognize their dedication to the organization. ISC has a number of associates who have been employed with the company since its inception. These associates were honored and given a memento to express ISC’s appreciation for their leadership and commitment to the company for a quarter of a century. ISC Chairman Eddie Rispone said the event was “a celebration with the families of those that have made ISC a premier company that serves its customers and families that depend on it.” The celebration resulted in a day of camaraderie between new and old friends, reinforcing the bond of ISC’s associates. Since first opening its doors 25 years ago, ISC’s services have expanded from construction and maintenance to now include engineering solutions. Through offices in Baton Rouge, Beaumont, Houston and Lake Charles, ISC has grown to employ over 2,500 people primarily in the southern region of the United States and services the chemical processing, petrochemical, refining, power, and pulp & paper industries, making it one of the largest specialty contractors in the country.

To take your business to the next level, you need a banking partner who not only understands the challenges of your industry, but also the unique needs of your business and your local market. That’s why the Regions Bankers right here in South Louisiana can deliver the resources of a large bank with the local market understanding and responsiveness of a community bank. So whether it’s a smart leasing solution, cutting edge Treasury Management capability or traditional loans and deposits, your local Regions Banker will be right here to deliver the customized service and solutions that give you a competitive advantage.

—Courtesy ISC

Call us at 225.388.2701 for advice, guidance and education on ways to move your business forward.

regions.com

ISC

© 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.

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IN CASE YOU MISSED IT ASCENSION OFFICIALS CLEAR WAY FOR MEGASITE

Issue Date: Fall Ad proof #1 ASCENSION ECONOMIC DEVELOPMENT

The Ascension Parish Council in August took a big step toward its goal of seeing industrial development on approximately 17,000 acres along the Mississippi River by adopting the West Bank Industrial Overlay ordinance. “This is a major milestone in turning this dream into a reality,” says Mike Eades, president and CEO of the Ascension Economic Development Corp., in a prepared statement. “By providing the mechanism to rezone portions of this property for industrial use, the parish has placed the area in serious contention for new, major industrial facilities needing access to the Mississippi River.” Ascension officials say the property, which includes 10 miles of Mississippi River frontage and 4.5 miles of railway, is the largest single tract of developable land with river access in the United States. Eades stresses there is still much work to do to realize the full potential of the property, adding industrial development on it could create thousands of jobs. “It is our intention to develop this site into a well-planned, ‘shared services’ business and industrial complex, incorporating design concepts that reflect best practices in the areas of sustainability, energy efficiency and intermodal logistics.”

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

—Daily Report

REPORT SHOWS 58TH CONSECUTIVE MONTH OF PRIVATE EMPLOYMENT GROWTH Louisiana’s unemployment rate decreased in July to 6.2%, its lowest level since June 2014, according to seasonally adjusted data released in mid-August by the federal Bureau of Labor Statistics. The state’s civilian labor force, which includes the number of people employed plus those looking for work, increased by 38,438 people from July 2014. The number of those employed in the labor force increased by 40,954 over the year. Nonfarm employment, or private employment plus government employment, grew by 7,200 jobs over the year, according to a seasonally adjusted BLS survey of 7,000 Louisiana employers. It fell by 4,500 jobs over the month with 2,500 fewer government jobs. July also marked the 58th consecutive month of over-the-year increases in private employment with 13,000 more jobs than in July 2014. “Although these numbers show growth, they are less than what we’ve come to expect every month,” said Curt Eysink, executive director of the Louisiana Workforce Commission. “They probably are what we should have expected with the low price of oil and with July normally being a slow summer month.” Manufacturing jobs have increased by 3,300 over the year. Leisure and hospitality added 3,100 jobs over the year and 900 jobs over the month. In July, professional and business services added 2,900 jobs over the year and 700 jobs over the month. Construction lost 2,000 jobs over the year but added 500 jobs in July over June. —LWC

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

STANDARD

CONSTRUCTORS, INC. PETROCHEMICAL • HEAVY CIVIL • INDUSTRIAL • COMMERCIAL

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Baton Rouge, LA (225.686.2120) • standardconstructors.com Corporate Office/Houston, TX (713.941.1232) • Freeport, TX (979.415.0881) • Port Arthur/Beaumont, TX (409.727.5464) 10

10/12 INDUSTRY REPORT • FALL 2015

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Issue Date: Fall Ad proof #1

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

Tax Consulting

ISTOCK.COM

Celebrating 25 Celebrating 25 Years Years

LAKE CHARLES PLANT READY FOR BIG EXPANSION W.R. Grace & Co. announced that Advanced Refining Technologies, the company’s joint venture with Chevron Products Co., will make a capital investment of $135 million to build a residue hydroprocessing catalyst production plant and additional alumina capacity at the existing Grace manufacturing facility near Lake Charles. Grace will retain 295 direct jobs at the site, while ART will create 30 new direct jobs with a new annual payroll of $2.4 million, plus benefits. Louisiana Economic Development estimates another 88 new indirect jobs would result from the project, for a total of more than 110 new jobs. In addition, 190 construction jobs will be created at peak building activity by the project, which will expand what is one of the largest refining catalyst plants in the world. Construction was expected to begin later this year. Grace’s 120-acre manufacturing site is across the Calcasieu River from Lake Charles and southwest of the city. There, the facility produces alumina, sodium silicate, fluid-cracking catalysts, hydroprocessing catalysts and zeolites, a class of hydrated minerals. Grace has invested $100 million in facility upgrades at Lake Charles over the past six years prior to this expansion. Operating in southwest Louisiana since 1953, the Lake Charles facility represents a significant portion of Grace’s global catalyst production capacity and supplies major refiners worldwide. —Staff report

150,000 Job cuts as of the end of May in the global energy industry since oil prices crashed. Source: Swift Worldwide Resources

Before you pay a state or local sales tax audit check with our experienced staff for possible audit reductions and refunds

We specialize in:

• Sales Tax Audit Review/Defense • Refunds & Credits • Compliance • Tax Incentive Programs • Property Tax Reporting • Training

SEND US YOUR NEWS! 10/12 Industry Report is now accepting industry-related company news for publication in future issues of the magazine. News that will be considered includes promotions, hires and transfers at the executive level; product announcements; office openings and moves; and project announcements, including projects being planned and contracts your firm has won. Personnel news should be accompanied by a 300 dpi, color photo of the executive involved. Send news to editor@1012industryreport.com. 1012industryreport.com

1575 Church St, Zachary, LA 70791 (225) 658-6065 • didierconsultants.com 10/12 INDUSTRY REPORT • FALL 2015

11


THE BIG PICTURE

Made in

LOUISIANA

THE STEEL Construction on the nation’s first offshore wind project began in mid-July, as steel went into the water off the coast of Rhode Island. But the steel foundations for the Block Island Wind Farm were made in Louisiana: They were designed by Keystone Engineering in Metairie and, as shown here, fabricated by Gulf Island Fabrication in Houma.

HIGH ABOVE At 589 feet above sea level, the turbines that rest on these foundations will be among the tallest in the world. The project, scheduled to be online in 2016, is expected to power about 17,000 homes.

THE DESIGN Each steel latticework foundation was assembled in two main sections: the jacket, which measures 110 feet tall and will be secured to the ocean floor with piles, and the deck, which stands 60 feet tall and will sit on top of the jacket. A wind turbine will be bolted onto a cylinder in the center of the deck.

THE PROJECT Block Island Wind Farm will be a 30 MW, five-turbine project in state waters three miles off the coast of Rhode Island. Developed by Deepwater Wind, the wind farm is expected to save local residents up to 40% on energy bills, add $42 million in net benefits to Rhode Island’s economy, and lower carbon pollution by 40,000 tons per year.

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THE ENGINEERS “Keystone has played an instrumental role as the foundation designer for several offshore wind projects due to our extensive experience with offshore oil and gas structures,” says Keystone Safety Director Josh Thibodeaux. “A lot of that expertise is particularly valuable for offshore wind farms.”

THE FABRICATORS Gulf Island is a Houston-based company that has worked on some of the largest oil platforms in the world. THE LOGISTICS The foundations’ journey by barge from Houma to Block Island took about 15 days and covered 1,800 miles.

A NEW INDUSTRY Thibodeaux says several other wind projects have received funding from the Department of Energy for design and fabrication, and Keystone hopes to do the designs for as many of them as possible. “We’re hoping that those wind farms that are designed down here follow the same route that Block Island did, and get Gulf Island or other fabricators with similar experience in oil and gas down in this area to do the fabrication for those as well.”

DEEPWATER WIND

—Adapted from WWL.com.

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• AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. 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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C T R I C A E L L

• I

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M E N T A T R U

N T E N A I A N

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S T R U C O N T

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w w w.westgatellc.com 14

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COMPANY PROFILE

Setpoint’s surge Baton Rouge-based company finds keys to growth in services, training and strategic acquisitions. BY MAGGIE HEYN RICHARDSON

1012industryreport.com

COLLIN RICHIE

O

riginally begun as a local valve company in 1959, the recently rebranded Setpoint Integrated Solutions is now one of the Capital Region’s fastest growing companies. Projected revenue for 2015 is $250 million, up from $182 million in 2013. The company, a subsidiary of Pon Holdings B.V. of the Netherlands since 2008, operates from a new 113,000-square-foot headquarters on Highland Road in Baton Rouge. The facility includes industrial equipment sales, services and an innovative training center where customers and their employees learn more about product capabilities. Setpoint I.S. began as Desselle-Maggard Corp., a local provider of flow control valves to manufacturing facilities throughout the Gulf South. In 2004, DMC expanded its mission to include sales of not just valves, but of all other control system equipment, including valve actuation and automation, instrumentation, pressure relief equipment, separators and team control instrumentation. The company also added a fleet of service programs, including repair, testing and asset management schedules. By 2008, DMC’s majority owner Joey Jobe made a critical decision. With substantial expansion possible in the form of new acquisitions, Jobe sought the backing of a partner with deep pockets. He brought the company to Pon Holdings. Pon owns 450 companies in 32 countries. Its holdings are largely in the transportation or manufacturing sector, and include companies that distribute Volkswagen, Audi, Porsche, Caterpillar and other big brands. Pon also holds several large bicycle manufacturers. Pon acquired DMC that year, providing the capital to buy another Baton Rouge area company, Carter Chambers. That merger helped further expand DMC’s footprint and customer base. For the next six

THE RIGHT PLAN: Now chairman of Setpoint I.S., Joey Jobe guided DMC’s growth before its rebranding.

years, the company functioned under the name DMC-Carter Chambers until it rebranded and became Setpoint Integrated Solutions in 2014. Jobe, who guided DMC’s historic growth, now serves as Setpoint’s chairman, while Houston-based Jack Guidry, an 18-year Pon executive, is the company’s CEO. Guidry, a Baton Rouge native and LSU alumnus, also oversees three of Pon’s other holdings. He says expansion likely isn’t over for the industrial supplier. “Setpoint is well positioned for more growth,” Guidry says. SERVICE MAKES THE DIFFERENCE Setpoint I.S. now has 700 employees in 19 locations on the Gulf Coast as well as in western Pennsylvania, New York and other parts of the northeast. About 430

employees are in Louisiana. The company works with clients in several different sectors, including petrochemical, oil and gas, refining, pulp and paper, food and beverage, and others. In the last year, Setpoint I.S has made additional acquisitions, including Automated Valve and Control in La Porte, Texas, a provider of custom actuation design and development, and Louisiana Valve Source in Youngsville, outside Lafayette. Louisiana Valve Source is a leading provider of valve repair and remanufactured valve equipment. The acquisitions open up entirely new disciplines for the company. Guidry says Setpoint’s ability to offer turnkey services to manufacturers gives it an edge. The company features 24-hour service, mobile repair units and equipment rental. “We have a good balance in terms

of service and products,” he says. “We’re one of one the largest service companies in the Gulf South and probably the U.S. and we’ve done this very well. We’re offering a lifespan of products to our customers as well as onsite field service. It makes us a cut above.” This summer, the company announced the opening of a new Consolidated Green Tag Center at its corporate headquarters in Baton Rouge where safety relief valves are to be assembled and repaired. GTCs are certified repair facilities that provide industrial clients a high level of valve repair. It represents a $600,000 investment by Setpoint and is its seventh such GTC. In addition, Setpoint I.S. announced in June that it had been awarded a contract to supply all control, safety relief and automat10/12 INDUSTRY REPORT • FALL 2015

15


COMPANY PROFILE

FUTURE GROWTH Guidry says future growth for the company will likely come in the area of process automation, or integrated control systems that can better increase plant efficiency. Such control

“We’re offering a lifespan of products to our customers as well as onsite field service.” —JACK GUIDRY

company will continue to position its staff to be experts on the large menu of products, and how customers get the best performance out of them. “In the past in this field, the manufacturer of the product was more important, and the [sales] rep was more of a pass through,” says Guidry. “Now, we can take the place of the manufacturers.” Setpoint’s new Highland Road headquarters, which opened in April, includes a mock process unit called the Integrated Technology Center. Marketing Director Dustin Anderson says the ITC was created to allow customers and their employees to experience hands-on training on pieces of equipment within a typical process unit. “The ITC combines our focus on both process automation and train-

SETPOINT I.S.

ed isolation valves for Cameron LNG, a liquefied natural gas terminal that first opened in 2009. Cameron LNG, one of the first LNG terminals in the country, began a massive, $10 billion expansion project at its Hackberry site in 2014. The liquefaction project will be comprised of three-train natural gas liquefaction facilities with an export capability of 12 million tonnes per annum of LNG, or approximately 1.7 billion cubic feet per day. All three trains are expected to commence operations during 2018, with the first full year of operations in 2019. Setpoint I.S. would not release additional details about the project because of a confidentiality agreement with its partners, CB&I and Chiyoda.

systems would exist alongside Setpoint’s fleet of individual products. “This kind of approach allows a customer to read how to make a plant as efficient as possible,” Guidry says. We’ve had success with it, and it’s still fairly new in the big picture. We see it as the future.” Another area of growth is in customer training. Guidry says the

ing,” Anderson says. Guidry says the ITC will be a key feature to manufacturers now under pressure to increase equipment efficiency at the same time that waves of seasoned workers are retiring. As new process safety engineers are onboarded, Setpoint can offer supplemental training to ensure new employees are clear on how to run a piece of equipment, and how it functions within the larger framework. The training facility also has a computer control terminal that shows in real time how equipment is running and what components are faltering or due for maintenance. Guidry says Setpoint’s next horizon could be more expansion in the U.S. and entrance into the Asian market. “We’re a proven commodity in the U.S.,” he notes. •

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10/12 INDUSTRY REPORT • FALL 2015

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10/12 INDUSTRY REPORT • FALL 2015

17


INSIGHT

Understanding Louisiana’s natural gas export opportunities

DAVID DISMUKES

I

t is difficult to believe that almost eight years ago, increased natural gas demand and declining U.S. natural gas production was positioning the country into being an importer of up to 14% of its natural gas supplies. Quietly, during the same time period, a revolution was brewing in the oil and gas patch. Within a matter of a few short years, “unconventional” processes for extracting natural gas would extend to a large number of other U.S. basins, reversing a decades-old trend of annual natural gas reserve and production declines, positioning the U.S. to become a major exporter of its newfound hydrocarbon bounty. To date, over 50 LNG export proposals, amounting to over 50 billion cubic feet per day (Bcf/d) of export capacity have been announced or are under development, a large part of which is anticipated to be in Louisiana (see table). All told, these LNG export projects represent anywhere between $20 billion and $50 billion in economic development opportunities for the state, positioning it into becoming a global leader in the trade of natural gas. Not all of this capacity, however, will get developed. World energy markets are in a state of transition. LNG export facilities will continue to face a number of risks, particularly in the short run. However, the long-run outlook for these facilities looks very favorable and supportive of continued development.

18

10/12 INDUSTRY REPORT • FALL 2015

EXPORT FACILITY DEVELOPMENT RISKS New LNG export facilities face a variety of risks, including: (1) weak global energy commodity prices; (2) contracting risks; (3) project development risks; and (4) regulatory and policy risks. Global energy commodity prices: Current LNG projects can be negatively impacted by both low natural gas and crude oil prices. World energy commodity prices are currently being challenged by the simple fact that, in the near-term, there are too many MMBtus of energy chasing too few MMBtus of energy demand. Contracting risks: LNG export facilities are very expensive, with investment costs in the $8 billion to $12 billion range. These projects are not developed on a speculative basis and need long-term, or series of longer-term, agreements to reduce their financial risk for project investors. Project development risks: LNG developers will have to compete with other industrial construction projects for what could prove to be a limited pool of engineering support, equipment, skilled labor and other inputs. Those projects best able to manage their development costs and schedules are the ones most likely to be successful. Regulatory and policy risks: Government actions also represent an important risk influencing LNG

export development. Most LNG facilities go through various DOE and FERC permitting processes that can extend project development time horizons, increasing project costs and development risks. EXPORT FACILITY DEVELOPMENT OUTLOOK The outlook for LNG has become clouded over the past year by the significant decrease in global energy commodity prices, creating some near-term financial challenges for many announced projects. Changes in Asian economic growth is particularly challenging. While an Asian economic slow-down is not unexpected, evidence is starting to increasingly show that Asian demand is likely much weaker than originally anticipated. This will continue to create a drag on global energy demand, and commodity prices, over the near term. The longer-run outlook for exported U.S. natural gas supplies, however, looks considerably more positive. While China and many other developing nations are experiencing a number of short-run growing pains, most are anticipated to see economic rebounds. These economies will need additional energy supplies from a diversity of sources, which bodes well for U.S. LNG export projects. Further, most all of these developing economies will be forced to address air emissions challenges, including

carbon, as their economies continue to grow. This also bodes well for U.S. natural gas exports and the facilities currently under development in Louisiana. CONCLUSIONS All told, Louisiana is sitting on a considerable, game-changing opportunity to serve as an international hub for natural gas trade. There are some concerns that the “law of one price” will drive currently low-cost U.S. domestic natural gas prices up to global levels, potentially threatening over $100 billion in new industrial development activity in the U.S. While this concern has some merit, at this point it appears to be a relatively unlikely outcome. Any increase in domestic prices would likely be met by such a resounding response by U.S. drillers that any significant increase would be transitory, at best, and result in another explosion of natural gas reserve and production development that would bring prices back into line with industrial expectations. 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.

FTA Application

Status

Non-FTA Application

U.S.

Louisiana

Louisiana as share of total U.S.

U.S.

Louisiana

Louisiana as share of total U.S.

47 49.4

20 19.4

42.6% 39.2%

13 14.0

6 7.3

46.2% 51.9%

6 3.7

-

0.0% 0.0%

32 33.1

13 12.2

40.6% 36.8%

53 53.1

20 19.4

37.7% 36.5%

45 47.1

19 19.4

42.2% 41.3%

Approved Projects Facilities (number) Capacity (Bcf/d)

Pending Projects Facilities (number) Capacity (Bcf/d)

All Projects Facilities (number) Capacity (Bcf/d)

FTA = Exporting to free trade agreement countries 1012industryreport.com


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19


INSIGHT

Let’s talk turnkey

I

t’s no secret we are facing an unprecedented need for a workforce with manufacturing and construction skills. For over 20 years, I’ve seen many of the same issues affect our region. While there have been countless discussions and attempts to address the issues, challenges persist. There were pockets of excellence integrated over time, but we need to move mountains. It’s time we start thinking laterally. Like most parents, I harped on the importance of four-year degrees. But that’s not necessarily the best or only choice for today’s dynamic economy. As such, the training model needs to morph at the same speed as demand. There must be an overarching technology platform that ties together every aspect of the workforce continuum and delivers it to your device of choice. Each phase must be analyzed and integrated. This includes image and outreach, recruitment and retention, foundational skill enhancement,

KATHY TRAHAN

engaging instructors and identifying training material, skill development through diversified delivery, skill assessment and hiring. How can we complete each process more efficiently and effectively? How can we save time during stages? We need standardization throughout, as well as feedback, to continually improve the output—a quality, work-ready candidate. We have the best industry associations and workforce development entities in our own backyard. We possess superior models for helping aspiring companies get off to a great start, and workers are willing and ready. We need to help them overcome the challenges of each part of the process. Completing training is only the beginning. For example, placement rates in Baton Rouge Community College’s process technology (PTEC) program were dismal in 2002. Instructional content was set by industry. Instructors were great. Students were completing the coursework.

So what was the issue? Interviewing past students revealed they weren’t prepared to navigate the 70-plus hiring processes of industrial facilities. After taking different types of tests at every facility, their confidence diminished and they sought other types of jobs. We brought them back in and set up practice labs for test-taking strategies, which included psychological-based testing, mechanical aptitude, chemical comprehension and troubleshooting simulation models. Placement soared. Issue resolved. At Alliance Safety Council, we continued this strategy as we streamlined our processes. Every step in our check-in process was analyzed. As a result, check-in times per student went from three minutes to 30 seconds. Our technology solutions and content team are among the best in the country, and we support other nonprofit and for-profit entities in the U.S. by sharing best practices, building course and training content,

STATE

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LABOR

&

E M P LOY M E N T

AGREEMENTS

MERGERS

&

ACQUISITIONS

DISPUTE

RESOLUTION

COMPLIANCE

1012industryreport.com


Issue Date: Fall Ad proof #7

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

and licensing and supporting our proprietary platform to partners in the petrochemical, pulp and paper, power, and nuclear sectors. We provide setup and help-desk support so our partners can offer the same level of standardized training and technology solutions to their local industries. We tie in our systems to members’ systems when it can save time and assist with comparative gap analyses on worker skills to identify qualified candidates in seconds. As a region, our focus needs to be on relevant training for available jobs in viable industries, taking locale into account. We should take advantage of resources available to us. Locally, utilize Louisiana Workforce Commission’s website (laworks.net), which allows you to search for open jobs and pinpoint training nearby. There are also accelerated learning and cooperative models that move trainees into the workforce more quickly. Acquiring a two-year degree in 12 months is one of many examples. How we assess adult learners, including veterans, is another critical piece of the puzzle. We mustn’t assume individuals with incomplete degrees or a number of college credits require three semesters of developmental courses. We found all they really needed was a good review to do well on placement testing. We need to take advantage of this window of opportunity to make a real difference in the workforce by utilizing relevant technology. Currently, there is a shift from asset heavy to asset light models. Asset light models use technology to create access to an abundant source of underutilized assets. In our industry, a network of safety councils, Associated Builders & Contractors and Associated General Contractors of America already existed for new hires and incumbent workers. Alliance Safety Council expanded the network of training sites by adding Authorized Training Providers to deliver training in technical and community college labs, as well as the existing training centers, thereby growing the network further. This allows contractors to train closer to home or on the way to jobsites. Another example of an asset light model lies within the general busi1012industryreport.com

ness sector. Companies like Uber are now filling delivery needs, and uShip offers an online marketplace for shipping services. Rachel Botsman, global thought leader on the collaborative economy and TED Talks presenter, believes we are trading and sharing as we have done for centuries, but we’re reinventing these activities into dynamic and appealing forms. “We’ve actually wired our world to share, whether that’s our neighborhood, our school, our office or our Facebook network,” she said. Industry associations should look to their members to discover how best to prepare for industry’s needs. Our governmental, educational and training entities can’t work in their individual silos and fail to integrate their processes. This costs us time we don’t have and qualified workers we need. Decisions we make will impact our industry tremendously in the coming months and years. Instead of waiting for additional housing to be built, consider Airbnb. Promote and use GoGet and Zipcar for transportation services rather than wait for roads to be built. Share tools like ParkNow, which allows users to find existing parking online or via a real-time app while providing residents and businesses with additional income. Mobile Job Force (mobilejobforce.com) can be used to manage large volumes of applicants. With technology, the possibilities are endless. We just need to check our respective agendas at the door long enough to create a continuum that serves our workers, our region and our industry. If it can be done, it can be done right here. We’ve never had more incentive, more interest or more at stake. There is no place like Louisiana, and that’s a good thing! During her 23 years in industry, Kathy Trahan, CAE, has been a part of developing industrial programs with a consortium of industry and educators across the Gulf region while working at the PPG (now Axiall) plant in Lake Charles, McNeese State University and BRCC. For the past 10 years, as president and CEO, she’s worked to ensure Alliance Safety Council’s 1,400-plus members enjoy time-saving processes and best available safety training and technology solutions.

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• AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. 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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INSIGHT

The top three

STEPHEN WAGUESPACK

T

he next election cycle represents a pivotal point in Louisiana politics. Voters will have the chance to elect leaders to address the state’s ever-increasing size of government and excessive dependence on taxing business, as well as its traditional near-the-bottom ranking in education and overly litigious climate. Here are the top three issues for industry over the coming year: ADDRESS THE STATE BUDGET The state budget has grown on average almost a billion dollars a year over the past 10 years, but deficits are an annual item of discussion. Incentives for economic development are commonly cited as the primary reason for this, though the largest tax decreases passed in the last decade are rate reductions and reincorporation of itemized deductions for individuals. In addition, the state cost share for government pensions has skyrocketed in the past decade, with state retirement costs increasing by 80% and teacher costs increasing by 124%. Lock boxes, dedicated funds and other tripwires continue to tie up the budget and render most of the state’s dollars unusable for key priorities. It will require some smart, strategic and tough decisions to bring the state’s unsustainable growth rate back to reality and produce a budget that is efficient, effective and funds appropriately without sacrificing growth in the private sector.

1012industryreport.com

ADVANCE WORKFORCE DEVELOPMENT Despite the fact Louisiana has passed several laws over the past decade that are viewed nationally as some of the most impressive education reforms in the country, our students rank No. 48 in reading and No. 50 in math nationally, and as a country the United States is No. 17 and No. 26 in those critical subjects and starting to fall behind some of our national competitors. Considering the global economy now demands more of our students than ever before, we simply must up our game to continue American dominance. It is critical the new administration and Legislature regard recent education reforms as the beginning to improving educational outcomes and achieving greater heights in classrooms across the state. IMPROVE THE LEGAL CLIMATE While Louisiana has earned a reputation for a poor legal climate over time, and currently ranks No. 7 nationwide on the Tort Activity Index, No. 49 for its lawsuit climate and No. 7 on the Judicial Hellholes list, nothing prohibits us from taking control of the system, passing sensible laws to improve it and changing our reputation for the better. LOOKING FORWARD The windshield is much more important to the future of this state than the rearview mirror, and we, the Louisiana business community, must help to chart the path ahead. At LABI, we do not believe the state can weave in and out of competitiveness, in and out of the path to progress. Right now state leaders have a chance to make smart decisions that will put Louisiana on a path similar to successful economies like Texas and North Carolina. In 2015, the Legislature came up short, and it will be up to a new administration and new Legislature to make 2015 a temporary setback. Stephen Waguespack is president of the Louisiana Association of Business and Industry.

10/12 INDUSTRY REPORT • FALL 2015

23


• AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. 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

automation/process control • instrumentation • electrical • process separations • valving Baton Rouge, LA • Lafayette, LA • New Orleans, LA • Lake Charles, LA • Birmingham, AL • Mobile, AL • Atlanta, GA Orlando, FL • Jacksonville, FL • Tampa, FL • Fort Lauderdale, FL • Austin, TX • Corpus Christi, TX • Dallas, TX • Freeport, TX Houston, TX • San Antonio, TX • Beaumont, TX • Fort Worth, TX • Midland, TX • Oklahoma City, OK • Memphis, TN

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www.awc-inc.com 24

10/12 INDUSTRY REPORT • FALL 2015

1012industryreport.com


PEOPLE

Executive profile: Dale Logan Where did your career start, and how did you get to where you are today? On June 29, 1981, I was hired on with ConocoPhillips as an area maintenance engineer here in Lake Charles. I retired in March 2011 as maintenance manager with Conoco after 30 years. Upon retirement, I took some time off and then was offered this position as executive director with SLCUC and accepted in July of 2013.

NAME

Dale Logan POSITION

Executive Director, Southwest Louisiana Construction Users Council AGE

56 HOMETOWN

Iowa, Louisiana

What are the responsibilities of the executive director at SLCUC? The executive director’s primary responsibilities are to administer and promote the council’s activities within the confines of its missions and goals.

EDUCATION

Memphis University (B.S., mechanical engineering, 1981)

What is your favorite part about what you do? Helping folks in our society receive training that allows them to successfully kick off a career and pursue opportunities that improve their lives, along with the lives of their families and the ones they support. What are your day-to-day responsibilities like? They include preparation and distribution of meeting notices, financial accounts of the council, providing oversight for ABC’s Southwest Budget, ensuring that policies and procedures of the council are properly implemented and followed, collecting and distributing manpower data on construction, maintenance and turnarounds, serving as a liaison with other councils, associations and organizations, and supporting contractor safety and recognition programs in southwest Louisiana. What are some of the biggest challenges that come with 1012industryreport.com

LEE CELANO

What is your secret to leadership and advancing in your field? Be firm, fair and consistent.

working in your industry, especially right now? Making sure that we have the appropriate number of trained craftspeople to meet the demand. I think that the model in the training industry is going to have to change somewhat for us to meet the demand we have coming at us. We typically have done just-in-time training, and we’re going to have to get ahead of the curve because the peak is so large. What do you see for the future of your industry? Unprecedented growth. All of the major megaprojects coming to southwest Louisiana—we’ve never experienced anything like this. In fact, I’m not sure it’s been experienced in the nation.

What are your next goals both professionally and personally? To continue to support the council in my current capacity and do what I can to prepare the workforce in southwest Louisiana for the growth that is coming our way. Personally, to enjoy quality time with family and friends. What is a great piece of advice you have personally received? A plant manager I worked for told me, “It’s all about the people, every day.” I’m an engineer by training, and as I progressed in my career into management, I still had this mindset I was an engineer, but this individual constantly reminded me my job was all about the people.

What is your favorite way to spend your time? Family, friends and fishing. What is an item on your bucket list? Fly an airplane. What do you do to unwind? I have a place up on Toledo Bend reservoir, so I spend quite a bit of time at my camp, and that’s primarily where I do most of my freshwater bass fishing. What is your go-to spot in Lake Charles? Luna’s. It’s got great food and great atmosphere and, from time to time, great music.

—Erin Z. Bass

10/12 INDUSTRY REPORT • FALL 2015

25


UPDATE

LAKE CHA RLE S

BO R

AN D

T

M ER

New port planned

HA R

A IN LD IST

T RIC

Industrial investment and offshore activity are driving port growth in southwest Louisiana. BY ERIN Z. BASS

P

lans for a new port are servicing those deepwater oil rigs,” underway in Cameron Broussard says. Parish, with construcA Cameron port could serve as tion expected by 2017. a second location for service comWest Cameron Port panies in the Fourchon area and Authority Director Stephen Brousoffer potential savings when finds sard says Port Cameron LLC has the are closer to Cameron. “Along with option on some property on Wakegrowth of LNG, they’ll be needing field Road with plans to build a the gas, and most of the west end of facility similar to what exists at Port Louisiana finds are gas finds over oil Fourchon in southeast Louisiana for finds,” Broussard adds. “In the next offshore oil and gas service. As of last 10 years, there will be a lot more year, some 270 vessels were said to activity for gas in our area.” move through Port Fourchon’s chanMeanwhile, a report released earlinel each day, and that port currently er this year predicts that traffic in the services 90% of deepwater structures Port of Lake Charles Calcasieu Ship in the Gulf. Channel will double by 2023. It cur“The findings in the deepwater of rently handles 1,022 vessels annually. the GulfDate: are now moving Issue Fall Ad2westward proof #3 It’s no surprise with $50 billion in • Please respond by e-mail or fax with yourwe approval or minor revisions. toward Mexico and Texas, and capital investment underway in the • AD WILL RUN AS IS unless approval or final revisions think we could be a vital location for area—and the potential for $30 bilare received by the close of business today. • Additional revisions must be requested and may be subject to production fees.

lion more— but the best news to come from the report is that existing infrastructure and operations have the capacity to handle it. “That made us very comfortable that the channel would be able to accommodate that amount of growth,” says port Executive Director Bill Rase. “We really don’t need any additional infrastructure as far as the channel.” What will be needed is more pilots, tugboats, agents and line handlers. Rase says a 17th pilot has already been added to the rotation, with plans to add one or two more. He expects most LNG producers to handle dedicated tugs in relation

to their own activity, and agents and line handlers will be added as need arises. “Investment will take place over a five- to six-year period, so it’s not something needed today,” Rase says. “We’re planning on keeping an eye on capital investment, but with the $50 billion going on now, we think we’re in the right area code to handle that.” Port of Lake Charles is currently the 13th largest port in the country based on tonnage handled, and it’s anticipated that increased traffic and investment will eventually propel the site to one of the top 10 in the nation. •

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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METRICS

IMPACT! Louisiana’s chemical industry by the numbers

3

$68.6 BILLION

27,611

TOTAL VALUE OF CHEMICAL SHIPMENTS IN 2012

WHERE CHEMICALS RANK AMONG LOUISIANA EXPORTS (behind petroleum and agricultural products)

257,154

$69.1

JOBS SUPPORTED BY THE CHEMICAL INDUSTRY IN 2012

NUMBER OF JOBS IN THE CHEMICAL INDUSTRY IN 2014

$14

BILLION

BILLION

SALES CREATED AT LOCAL FIRMS IN 2012, UP 31% FROM 2010

HOUSEHOLD EARNINGS GENERATED IN 2012

$989.7 MILLION

$821.7 MILLION

TAXES AND FEES GENERATED FOR THE STATE TREASURY IN 2012

TAXES AND FEES GENERATED FOR LOCAL GOVERNMENTS IN 2012

SASOL

Source: “The economic impact of the chemical industry on the Louisiana economy,” March 2015, by Loren C. Scott & Associates Inc.

1012industryreport.com

10/12 INDUSTRY REPORT • FALL 2015

27


WORKFORCE SPOTLIGHT

Training a new generation South Louisiana Community College’s new oil and gas courses will begin preparing workers for a changing industry this fall. BY ERIN Z. BASS

G

rowing up in south Louisiana, young men and women often see their fathers, uncles and grandfathers going to work in the oil and gas industry each day and bringing home a substantial paycheck as a result. That industry is still as viable as ever in the current climate, but faced with aging employees, rapidly changing technology and outdated expectations, the workforce isn’t always there to meet the need. A team of industry partners— including the Lafayette Economic Development Authority, South Louisiana Community College and representatives from area oil and oilfield services companies—are working to change that dynamic. In March of 2014, LEDA brought

28

10/12 INDUSTRY REPORT • FALL 2015

everyone to the table to explore the idea of developing courses for oil and gas workers through SLCC. Leaders and training directors from companies like Frank’s International, Superior Energy and Quality Companies were invited to lend a voice from the industry side and share how workers could be better prepared for the jobs that are available. “We met to look at creating a career path for those students who were not college-bound but definitely had an interest in the oil and gas industry,” says Spencer Colbert, corporate training director with Superior Energy. “We’re looking at an aging workforce, so we need a new breed to take a genuine interest if they’re so inclined, and we need to prepare them for the jobs in the industry.”

Quality Companies Vice President Jody Broussard says there’s often a misalignment of expectations when workers come in to apply for a job. Technical production knowledge and hands-on training is usually lacking, requiring companies to conduct their own training programs for workers before sending them out in the field. “Companies expect these technical graduates to come out and hit the ground running,” Broussard says. “Given the climate we’re working in now with depressed oil and gas prices, it’s more important than ever that they are ready because there’s not a lot of room for error.” Quality Companies does partner with UL Lafayette on an internship program and also has a mentorship program in place, while Frank’s

1012industryreport.com


TERRI FENSEL

SUPERIOR’S COLBERT: “We need a new breed to take a genuine interest if they’re so inclined, and we need to prepare them for the jobs in the industry.”

offers a full-service training center in Lafayette, but industry leaders say these types of programs aren’t enough to prepare workers in a reasonable amount of time. SLCC’s program, which is waiting on approval from the Southern Association of Colleges and Schools, would run for one year or three semesters and require 45 credit hours. The first semester would offer an overview of the industry and cover oil and gas regulations, safety, and drilling processes, resulting in a Helper I certification. During the second semester, students would learn about pneumatics and hydraulics, offshore drilling and basic production, resulting in a Helper II designation. The third semester would include courses on production and safety, well control, blowout prevention and natural gas processing. Jacke West, process improvement manager at Frank’s, believes an understanding of new technology is key to working in oil and gas today. “Our industry is going from a labor industry to a more technical understanding of hydraulics and pneu-

matics,” he says. “Technology is more important now than ever before.” West adds that SLCC teaching students the fundamentals of oil and gas will cut down on the training time Frank’s usually provides, generally lasting up to 90 days. “We’d be looking at a person that comes to our door with a much better understanding of what the oil industry is,” he says. To further round out the program and ensure that hands-on training, a $20,000 donation from The Grainger Foundation will go toward equipment and training modules. The SLCC Foundation Board also has an ad-hoc Oil and Gas Committee to seek out additional funding opportunities. Until SLCC gets word on the SACS approval, students interested in the courses can take them on a non-credit basis this fall at the New Iberia campus. About 20 students are expected to go through the program at a given time, and those who start now would be granted credit once the program is officially approved.

It's no secret our people differentiate us. P&N’s professionals are highly involved in state and local organizations and stay on the cutting edge of developments within Louisiana. With 9 offices and more than 650 professionals across South Louisiana, P&N is a leader in delivering diverse and innovative services to industrial

P&N Industrial Practice Group

companies. P&N’s Industrial Practice Group is deeply committed to helping businesses navigate Louisiana’s industrial expansion and plan for sustainable growth. That’s why we believe everyone counts, every day – for our clients, our firm and Louisiana’s economic growth.

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+

C O N S U LT I N G

+

TAX S E RV I C E S

+

T E C H N O LO G Y

I

800.259.2922

I

P N C PA . co m

10/12 INDUSTRY REPORT • FALL 2015

29


DESIGN

New home on the bayou PHOTOS COURTESY DANOS

D

anos, a 68-year-old family-owned oil field service company, celebrated the opening of its state-of-theart headquarters at the end of July. Located on the corner of La. 24 and U.S. 90 in Gray, just outside Houma in Terrebonne Parish, the multimillion facility was designed by Gensler and constructed by MAPP Construction of Baton Rouge. The 64,000-square-foot headquarters features a 9- by-15-foot magnetic map wall, a 32-foot history wall, a workout area with locker room facilities, the Bayou Market (an employee lunch room), a mother’s room, work space for more than 250 employees, seven conference rooms, and a handcrafted conference room table made from a cypress tree harvested from the site. In October 2014 the company also opened a new, 120,000-squarefoot fabrication facility in Amelia, expanding its workforce by 150.

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10/12 INDUSTRY REPORT • FALL 2015

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31


PROJECTS

Anatomy of a megaproject PHOTOS COURTESY CHENIERE ENERGY

NOV. 14, 2011

SEPT. 16, 2010

Bechtel announced as contractor for Trains 1 & 2.

Public open house held in Johnson Bayou to explain the environmental review process to stakeholders.

FIRST HALF OF 2011 FERC conducted its formal review process.

AUG. 17, 2010 Sabine Pass filed open house information and affected landowner list with FERC.

JAN. 13, 2012 National Oceanic and Atmospheric Administration approved the expansion in a letter to FERC, stating it “would not impact areas designated as essential fish habitat or supportive of marine fishery resources.”

MAY 2010

JULY 26, 2010

SEPT. 7, 2010

JAN. 31, 2011

JULY 19, 2011

Sabine Pass initiated a public outreach program for phase one of the expansion (Trains 1-4), holding more than 100 meetings and discussions with numerous agencies, individuals, groups and organizations regarding potential effects on the environment, community and public safety issues.

NEPA (National Environmental Policy Act) Pre-Filing Request submitted to the Federal Energy Regulatory Commission as the first step in siting, construction, expansion and operation of an LNG terminal in accordance with the Energy Policy Act of 2005; state representatives send joint letter to FERC in support of the project.

Department of Energy grants authorization to export LNG to countries with which the U.S. has a free-trade agreement.

Sabine Pass LNG and Sabine Pass Liquefaction LLC submit application to FERC under Section 3 of the Natural Gas Act to initiate the formal review process.

Jindal and Cheniere Energy Chairman and CEO Charif Souki publicly announce the project.

NOV. 19, 2010 U.S. Fish and Wildlife Service stated in a letter to FERC that the proposed project is not likely to adversely affect federal trust resources protected by the Endangered Species Act.

Wink Engineering, LLC

Engineering & Design Survey & Scanning

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10/12 INDUSTRY REPORT • FALL 2015

NEW ORLEANS

COVINGTON

TULSA

www.winkengr.com 1012industryreport.com


AUG. 9, 2012

IN JULY 2011, Gov. Bobby Jindal and Cheniere Energy Chairman and CEO Charif Souki publicly announced plans for one of the first natural gas liquefaction facilities in North America dedicated to exporting LNG. An expansion of Cheniere’s Sabine Pass facilities in Cameron Parish, the addition of six liquefaction trains to its existing import terminal represented an approximately $20 billion investment that would end up being one of the largest capital investments in Louisiana history. What does it take to move an industrial project of such magnitude from concept to completion? Hundreds of days, documents and meetings. Here is the timeline of Sabine Pass Liquefaction at a glance.

Cheniere issues a full notice to proceed with construction on Trains 1 & 2, and construction begins later in August.

SUMMER 2014 Construction continues

JULY 2012 Funding of about $6 billion, including about $2 billion in equity and $3.626 billion in loans, is secured to start construction on Trains 1 and 2.

APRIL 16, 2012

AUG. 7, 2012

FERC approves application and issues authorization to commence construction on the first four LNG trains.

Department of Energy grants authorization to export LNG to nations with which the U.S. does not have a free-trade agreement.

FEB. 27, 2013

JUNE 30, 2015

NEPA Pre-Filing Request submitted for Trains 5 & 6.

APRIL 30 – MAY 2, 2013 Open houses held in Johnson Bayou, Mamou and Kinder for Trains 5 & 6.

Cheniere issues a full notice to proceed with construction on Train 5.

MAY 22, 2013 Cheniere issues a full notice to proceed with construction on Trains 3 & 4 and construction begins.

LATE 2015 First LNG production expected from Train 1.

2018 Trains 5 & 6 expected to be in service.

MARCH 8, 2013 Pre-Filing Request for Trains 5 & 6 approved.

1012industryreport.com

SEPT. 30, 2013 NGA Section 3 Application filed for Trains 5 & 6.

10/12 INDUSTRY REPORT • FALL 2015

33


CLAIBORNE

THE BOOM AT A GLANCE BOSSIER

Project by project

CADDO

2 Sasol Ltd. $19.1B-$22.1B | 1,253 jobs 3 Sempra Energy/Cameron LNG $10B | 190 jobs

17 Yuhuang Chemical, Inc. $1.85B | 400 jobs 18 EuroChem $1.5B | 200 jobs 19 Shintech $1.4B | 100 jobs 20 South Louisiana Methanol $1.3B | 63 jobs

4 Formosa $9.4B | 1,200 jobs

21 G2X Energy $1.3B | 243 jobs

5 Lake Charles LNG (aka Trunkline LNG; BG Group and Energy Transfer Partners) $9B | 250 jobs

22 BioNitrogen Louisiana Holdings, LLC $1.25B | 250 jobs

6 Southern California Telephone & Energy (Monkey Island LNG) $9B | 200 jobs

23 AM Agrigen Industries $1.2B | 150 jobs 24 Castleton Commodities International $1.2B | 50 jobs

7 Delfin LNG $7B | 400 jobs

25 Dow Chemical $1.06B | 71 jobs

8 Venture Global LNG $4.25B | 100 jobs

26 Cornerstone Chemical Co./Dyno Nobel $1.025B | 65 jobs

9 Magnolia LNG $3.7B | 50 jobs 10 Nucor Steel Up to $3.4B | 1,250 jobs 11 Axiall/Lotte Chemical $3B | 250 jobs 12 Lake Charles Clean Energy (Leucadia Corp.) $2.5B | 215 jobs 13 American Specialty Alloys $2.4B | 1,450 jobs 14 Marathon Petroleum $2.35B | 65 jobs 15 CF Industries Nitrogen, LLC $2.1B | 93 jobs 16 Live Oak LNG $2B | 100 jobs

27 Monsanto $1B | 95 jobs 28 Benteler AG $975M | 675 jobs 29 Lake Charles Cogeneration, LLC $820M | 210 jobs 30 Petroplex $800M | 60 jobs 31 Valero Refining – New Orleans, LLC $700M | 24 jobs 32 Louisiana LNG Energy, LLC $646.6M | 44 jobs 33 Methanex Corp., Methanex 1 $570M | 35 jobs

28 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. All numbers are maximum estimates reported. (LNG = liquefied natural gas export project) 1 Cheniere Energy (Sabine Pass LNG) $20B | 400 jobs

WEBSTER

RED RIVER

DESOTO

34 Methanex Corp., Methanex 2 $570M | 120 jobs NATCHITOCHES

35 Honeywell International $500M | 80 jobs

SABINE

36 Shintech Louisiana, LLC $500M | 5 jobs 37 Sundrop Fuels $450M | 150 jobs 38 Westlake Chemical (Geismar) $425M | 70 jobs

VERNON

39 Shintech Louisiana, LLC $420M | 88 jobs 40 Williams Olefins $400M | 5 jobs 41 ExxonMobil Corp. (Chemical) $336M | 30 jobs

BEAUREGARD

42 Westlake Chemical (Lake Charles) $330M | 25 jobs 43 NFR BioEnergy $312M | 450 jobs 44 Avalon Rare Metals Processing, LLC $300M | 225 jobs

CALCASIEU

47 2 5 11 12 42 9 22 29 16

45 German Pellets Louisiana, LLC/Louisiana Pellets, Inc. $290M | 80 jobs 46 Investimus Foris $265M | 85 jobs

3

47 PPG Industries, Inc. $264M | 27 jobs 48 Gavilon Trading $250M | 100 jobs 49 Cambridge Energy FLNG No announced size

CAMERON

1

8

6

7

RED = PROJECT KILLED BLUE = NEW PROJECT ADDED

34

10/12 INDUSTRY REPORT • FALL 2015

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J


UNION

NE

MOREHOUSE

WEST CARROLL EAST CARROLL

LINCOLN

OUACHITA

RICHLAND MADISON

JACKSON

FRANKLIN

CALDWELL

TENSAS WINN

45

TOTAL POTENTIAL CAPITAL INVESTMENT:

CATAHOULA LASALLE

> $133.9B

GRANT

46

TOTAL POTENTIAL DIRECT NEW JOBS:

11,283

CONCORDIA

13

RAPIDES

37 AVOYELLES

21

WEST FELICIANA

WASHINGTON

EAST FELICIANA

ST. HELENA

EVANGELINE ALLEN

POINTE COUPEE

TANGIPAHOA

ST. LANDRY WEST BATON ROUGE

36 ACADIA

25

40

18

IBERVILLE

43

44 38 33 34 15

35

ION NS

LAFAYETTE

ST. MARTIN

39

ST. TAMMANY LIVINGSTON

CE AS

JEFFERSON DAVIS

19

41

EAST BATON ROUGE

17

20

ST. JOHN THE BAPTIST

10

14 30

ST. JAMES

4

48 23 27

31

ORLEANS

26

IBERIA ASSUMPTION VERMILION

ST. CHARLES

JEFFERSON

24 ST. BERNARD

ST. MARTIN

32 ST. MARY LAFOURCHE IBERIA

PLAQUEMINES

TERREBONNE

49

Sources: LED, American Press, 10/12 Industry Report research 1012industryreport.com

10/12 INDUSTRY REPORT • FALL 2015

35


COVER STORY

Who

will be the

ANGELLE DARDENNE

BEST GOVERNOR for industry? EDWARDS

VITTER

36

10/12 INDUSTRY REPORT • FALL 2015

Gubernatorial candidates share their views on the budget, infrastructure, exemptions and more.

1012industryreport.com


T

he voting booth looms large both this year and next for those in Louisiana industry and its many supporting and related enterprises, from chemical manufacturing [see page 27] to offshore services to equipment rental. Many are waiting to make hiring decisions, pull the trigger on capital investments or settle on long-term strategic plans until they know what policies—and what leaders—they can count on in Baton Rouge and in Washington when the dust settles in November 2016. In addition to the already-heated 2016 race for the White House, this fall in Louisiana will see important contests decided for governor, for dozens of legislative seats and for eight spots on the Board of Elementary and Secondary Education. The industry and policy experts we consulted brought up a wide range of issues they are looking for clarity on as these votes approach: state budget problems, the role and structure of higher education, the role and posture of the EPA, the use of incentives to attract new industry to Louisiana, the value of ports and infrastructure, job creation, the judiciary environment, the tax burden on industry, and much more. Based on the questions and ideas these experts suggested, we developed 10 questions for the four major gubernatorial candidates in Louisiana that we think will help industry executives make the first important decision of this dual election cycle: Who should occupy the Governor’s Mansion in January 2016? The four candidates are Republicans Scott Angelle, Jay Dardenne and David Vitter, and Democrat John Bel Edwards. On the following pages, you will read their answers to five of these critical questions. By visiting 1012industryreport.com you can also see their responses to five more questions that pertain to the industry environment and economic development. All 10 questions and the responses appear online.

1012industryreport.com

The five questions answered online are: • What are the proper roles of the EPA and the Louisiana Department of Environmental Quality in their regulatory relationships with industry? Would you support additional state general fund monies for LDEQ? How would your administration respond if the EPA continued to move forward with plans for lower ozone standards? • A major state focus over the last few years has been cultivating international commerce opportunities, including foreign direct investment (e.g., Benteler, CGI, Sasol), increased trade and port infrastructure investments. Would international commerce be a priority for you and, if so, what would you do to support or pursue it? Do you believe it is valuable for the governor to travel abroad to cultivate economic development? • LED has said that the most common reason we lose a manufacturing project today is that we now have more companies interested in investing here than we have sites available quickly enough to meet their needs. What would you do to build a bigger inventory of development-ready sites in order for us to attract more economic development projects? • Louisiana has roughly $7 billion in state tax exemptions, split roughly 50/50 between individuals/ families and businesses. Only about 3%-5% of that total is associated with economic development incentives. Do you think we should substantially reduce the number of tax exemptions in Louisiana? If so, where would you focus the cuts, and would you also reduce rates to keep the changes revenue neutral or instead use tax exemption cuts to increase revenues for state priorities? • Louisiana has an impressive record in economic development “wins” spread across a variety of industries over the past six years, but if we don’t continue our efforts, we could see that momentum falter. What will you do to build on our state’s recent progress in economic development and job creation?

Candidates answer

10

questions.

5

here

5

online 1012industryreport.com

Photos by Marie Constantin

10/12 INDUSTRY REPORT • FALL 2015

37


COVER STORY

Scott Angelle R

geauxangelle.com

Every candidate for governor has said they will call a special session after taking office to deal with the state budget. What do you think is the primary reason for the governmental deficits we see today: too much spending or not enough revenue? If too much spending, what specific agencies or programs do you think should be reduced? If not enough revenue, what specific area of the economy do you recommend contribute more revenue? Businesses, individuals, or both? I believe that Louisiana is in need of serious fiscal reform in order to eliminate our recurring deficit, and that wasteful spending must be assessed. I believe that each and every tax exemption and tax credit should be evaluated to see whether or not it is benefiting the state. In 1989, Gov. Roemer saw the need for a revenue estimating conference, known as the REC. It is now time for an ERC, an exemption review conference, to review all tax credits and exemptions for their economic impact and to provide the Legislature with the information needed to make sure taxpayers are getting what they’re paying for. If the exemption is growing the economy, creating jobs and strengthening our families, we should con38 10/12 INDUSTRY REPORT • FALL 2015

tinue to support it. We need to avoid throwing the baby out with the bathwater. If the exemption is failing to accomplish those goals, we need to bring it back to the Legislature for reconsideration. These exemptions are a precious resource for our state. We cannot give away our taxpayers’ dollars if they are not producing a good return on our investment. To give away these dollars without ensuring, year after year, that they are producing results for the taxpayers is fiscally irresponsible. If we cut this spending, I do not believe we will have to cut spending to specific agencies. What is the proper relationship between the five bodies (Board of Regents, LSU Board, Southern Board, LCTCS Board and the University of Louisiana Board) that

govern postsecondary education in Louisiana? How would you recommend optimizing this relationship to assure proper funding for programs that meet the needs of Louisiana’s 21st-century workforce? These bodies must be given the ability to operate in a manner that makes sense for the specific universities they oversee. I do not believe these boards should be consolidated, as each board knows what is best for its university system. I do believe that we must streamline communications between the boards to ensure the highest quality education for all Louisiana students. Our transportation infrastructure needs continue to grow more desperate, with a backlog in basic road and bridge maintenance and many

appeals for new projects to defuse chronic and escalating traffic problems. Which projects would you make the top priority, and how would you fund solutions for our infrastructure needs? Do you support an increase in the gas tax to help fund this work? I am determined to tackle our transportation problems head on by ensuring that we make expanding our roads and restoring our bridges a priority and by building toll roads and maintaining existing roads to ensure that motorists have a choice. We must also focus on restoring voters’ trust in funding transportation projects, by putting “trust” back in the Transportation Trust Fund and by unshackling local governments. I strongly believe that building roads and bridges to alleviate congestion and ensure safety are our next great hurdles to econom1012industryreport.com


ic development and job creation. Choking businesses with poor roads and bridges will only result in fewer jobs for hardworking families and make life more difficult for the mom and dad picking their child up from school each day or commuting to work in the morning. The fact is, traffic congestion and dangerous bridges affect us all equally. It’s time that we put the trust back in the Transportation Trust Fund and keep our promise to the voters by making sure that every dollar we get for transportation projects goes directly toward just that and not paying for other areas of government. My career in public service started at the bottom as a police juror, where we were responsible for getting potholes filled and widening local roads. I’m the only candidate in this race with that kind of local hands-on experience. You have my commitment to bring that same tenacity to the governor’s office where we’ll think big and act boldly to lead the conversation on this important issue.

I believe that when we invest in roads and ports we do more than move people and cargo from point A to point B; we create jobs. I am also prepared to lead the conversation on decentralizing DOTD and implementing a regional approach with opportunities tied to a vote of the people to develop 21st century infrastructure.

their families goodbye and set out to do the work of fueling America. We can continue to support the energy industry by ensuring our state’s regulations don’t lead to strangulation. We must understand that these businesses can deploy their capital and choose to create jobs anywhere in the world; it’s our job to bring them to Louisiana through a balanced regulatory environment

I strongly believe that building roads and bridges to ALLEVIATE CONGESTION and ENSURE SAFETY are our next great hurdles to economic development and job creation. With oil prices lagging and unlikely to rebound to $100 anytime soon, what can state government do to support our energy industry and its thousands of jobs? State government has a duty and a responsibility to support the hardworking men and women who wake up early every morning, put on their hard hats and steel toe boots, kiss

and a fair tax code. In 2004, when I became Secretary of the Department of Natural Resources, I noticed the drilling rig count was up in Texas, up in Oklahoma, up in America, but down in Louisiana. This confirmed to me that people were increasing investment in the exploration business across America, but not in Louisiana. Only through hard work,

www.riskwise.biz

improving policies and changing the culture of the way we operated DNR, did we experience a 100%plus increase in the Louisiana-based drilling rig count from 2003 to 2010. That didn’t happen by good luck, it happened by good management. Business and industry have been calling for tort reform in Louisiana for decades to improve the business climate and make the state more appealing to outside investment. Do you think the Louisiana legal climate is in need of reform? If so, in what way? I do not support lowering the jury threshold because it will clog up Louisiana’s court system and create situations where our district attorneys and criminal justice system cannot handle criminal cases quickly. While the right to access courts is guaranteed by our constitution, I will support efforts to reduce frivolous claims that only serve to choke the system and delay justice. •

www.webwise.bz

When you are serious about long-run cost control and revenue enhancement Industrial and Commercial Contractor Focused Chris Conti (225) 413-7542

1012industryreport.com

10/12 INDUSTRY REPORT • FALL 2015

39


COVER STORY

Jay Dardenne R

jaydardenne.com

Every candidate for governor has said they will call a special session after taking office to deal with the state budget. What do you think is the primary reason for the governmental deficits we see today: too much spending or not enough revenue? If too much spending, what specific agencies or programs do you think should be reduced? If not enough revenue, what specific area of the economy do you recommend contribute more revenue? Businesses, individuals, or both? Our revenue estimates have been too high, resulting in mid-year budget cuts. We need to be more frugal on the front-end, and budget based on priorities. We need to look more carefully at tax credits, exemptions, exceptions and deductions. We must make certain we are funding effective programs and not rewarding inefficient ones by simply cutting across the board. 40

10/12 INDUSTRY REPORT • FALL 2015

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What is the proper relationship between the five bodies (Board of Regents, LSU Board, Southern Board, LCTCS Board and the University of Louisiana Board) that govern postsecondary education in Louisiana? How would you recommend optimizing this relationship to assure proper funding for programs that meet the needs of Louisiana’s 21st-century workforce? As a state senator, I offered legislation that strengthened the role of the Board of Regents. They now need stronger oversight to coordinate the work of the other four management boards. We need to continue incentive policies such as the WISE Fund, which has resulted in better achievement and has directed course offerings toward jobs that actually exist in the real world. We must avoid duplication and utilize existing buildings and infrastructure instead of always building new campuses. The Workforce Investment Council (WIC) has done an outstanding job of developing lines of commu-

15

nication between the educational institutions and the private sector. Our transportation infrastructure needs continue to grow more desperate, with a backlog in basic road and bridge maintenance and many appeals for new projects to defuse chronic and escalat-

highway projects. I will do so. Major long-term priorities are: the completion of the last stretch of I-49 North; the large remaining portion of I-49 South in Acadiana; the I-10 bridge in Baton Rouge; and the I-10 access to the anticipated new airport in New Orleans. I do not presently support an increase of the gas tax because this is dependent on several

We must make certain we are FUNDING EFFECTIVE PROGRAMS and NOT REWARDING INEFFICIENT ONES by simply cutting across the board. ing traffic problems. Which projects would you make the top priority, and how would you fund solutions for our infrastructure needs? Do you support an increase in the gas tax to help fund this work? The huge backlog of road and bridge projects is the result of diverting money from the Transportation Trust Fund, and the failure to direct more capital outlay dollars to state

other factors, like what Congress does with transportation funding; how successful we are in re-directing state dollars to transportation; and the possibility of giving local governments the ability to tax gasoline. With oil prices lagging and unlikely to rebound to $100 anytime soon, what can state government do to support our energy industry and its

YEARS

thousands of jobs? One of the most important things to remember is that government does not create jobs—it merely creates the environment that spurs the growth of various industries, and the policies that develop the necessary workforce to meet employer needs. The state already offers incentives to attract more businesses to Louisiana. And while the energy industry is challenged by the lag in oil prices, we must support the industry by continuing to focus on long-term development of an educated scienceand technology-focused workforce. Business and industry have been calling for tort reform in Louisiana for decades to improve the business climate and make the state more appealing to outside investment. Do you think the Louisiana legal climate is in need of reform? If so, in what way? For years as a state senator, I introduced legislation to lower the jury trial threshold to $25,000. I will support doing so as governor. •

150 years

OF CREATING CHEMISTRY. WWW.BASF.US/LA

1012industryreport.com

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41


COVER STORY

Every candidate for governor has said they will call a special session after taking office to deal with the state budget. What do you think is the primary reason for the governmental deficits we see today: too much spending or not enough revenue? If too much spending, what specific agencies or programs do you think should be reduced? If not enough revenue, what specific area of the economy do you recommend contribute more revenue? Businesses, individuals, or both?

John Bel Edwards D

johnbelforlouisiana.com

As governor I would address structural budget problems, which are causing projected annual billion-dollar shortfalls for many years to come, by ending tax giveaways that aren’t producing for our economy, by growing our economy in a way that produces net new revenue, by accepting the federal taxes that we are paying back into Louisiana instead of allowing them to go to other states, and by never outsourcing Louisiana tax and fiscal policy to Grover Norquist or other out-ofstate interests. Outsourcing tax and fiscal policy to out-of-state interests like Grover 42

10/12 INDUSTRY REPORT • FALL 2015

Norquist has led Louisiana to continue tax giveaways (credits, rebates, exemptions and exclusions) that are not producing good return on investment for Louisiana taxpayers. In a special session I will build consensus on which portions of the $700 billion in giveaways should be capped, repealed or sunset. I believe the guidance in the recent study by Dr. Jim Richardson at LSU should drive the discussion about which “incentives” we should cap, repeal

or sunset. Just like I have forged bipartisan coalitions in the Legislature during the last eight years as a member of the House of Representatives, I would bring all the affected stakeholders to the table to produce a compromise that allows us to fund the priorities of government. I would also do as 14 Republican governors have done, and accept $16 billion of our taxes—taxes we pay no matter what—back into Louisiana over the next 10 years to expand

Medicaid for working people who currently make too much to qualify for Medicaid, but either make too little to purchase health insurance or their employers don’t offer it. This is not a partisan issue. It makes good fiscal sense, and it’s also the right thing to do. It will keep our hospitals operating, our ERs open, and replace federal dollars for uncompensated care that are set to expire. It will also displace funds from health care funding that we can use in other 1012industryreport.com


parts of our budget, including higher education, so that we can end the trend of cuts and tuition increases. What is the proper relationship between the five bodies (Board of Regents, LSU Board, Southern Board, LCTCS Board and the University of Louisiana Board) that govern postsecondary education in Louisiana? How would you recommend optimizing this relationship to assure proper funding for programs that meet the needs of Louisiana’s 21st-century workforce? Creating collaboration between these boards is a matter of leadership. I have a record of leadership, and the résumé to back it up. More information on my plans for higher ed and career and technical education is available here: http://www. johnbelforlouisiana.com/sites/johnbeledwards/files/PutLouisianaFirstPlanHigherEducation.pdf Our transportation infrastructure needs continue to grow

more desperate, with a backlog in basic road and bridge maintenance and many appeals for new projects to defuse chronic and escalating traffic problems. Which projects would you make the top priority, and how would you fund solutions for our infrastructure needs? Do you support an increase in the gas tax to help fund this work?

cannot ask the people of Louisiana to pay more to invest in roads and bridges until we can demonstrate that we will use the money they dedicate to a specific purpose in the manner they intend. I am committed to doing that as governor. As governor, I would commit 25% of the Capital Outlay program toward transportation and infrastructure projects. That would increase spending on these projects by $75 million

I would commit 25% of the Capital Outlay program toward TRANSPORTATION and INFRASTRUCTURE PROJECTS. That would increase spending on these projects by $75 million a year. In order to address the nearly $12 billion backlog in transportation and infrastructure projects we must first restore trust to the Transportation Trust Fund. Nearly $60 million from the TTF is being used for purposes other than is intended. We

a year, and would draw down more in federal match so we can meet our obligations to invest in ports and roads. With oil prices lagging and unlikely to rebound to $100

anytime soon, what can state government do to support our energy industry and its thousands of jobs? Louisiana has 90% of the offshore service industry. Our current inventory rebate policy supports that industry because we do not tax warehouse on vessels. I would support continuing this policy, which creates a mechanism for funding local government, while also supporting the offshore service industry, which is a backbone of the Louisiana economy and a driver of well-paying jobs for Louisianians. Business and industry have been calling for tort reform in Louisiana for decades to improve the business climate and make the state more appealing to outside investment. Do you think the Louisiana legal climate is in need of reform? If so, in what way? Reform connotes improvement. If there is an area where we can improve the civil justice system, I will support it. •

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10/12 INDUSTRY REPORT • FALL 2015

43


COVER STORY

David Vitter R

davidvitter.com

Every candidate for governor has said they will call a special session after taking office to deal with the state budget. What do you think is the primary reason for the governmental deficits we see today: too much spending or not enough revenue? If too much spending, what specific agencies or programs do you think should be reduced? If not enough revenue, what specific area of the economy do you recommend contribute more revenue? Businesses, individuals, or both? In January of this year, I publicly announced that, as governor, I would immediately call a Special Legislative Session focused exclusively on stabilizing the budget through fundamental spending and tax reform. I’m glad that my opponents have now followed suit, although Jay Dardenne has said that he would only focus in that session on stopgap measures for the current fiscal year, not fundamental or long-term reform. I’ve laid out clear, detailed solutions—how I’ll lead that session to end Louisiana’s budget chaos once and for all—in my detailed plan, “Together, Louisiana Strong: Our Blueprint For Building A Brighter Future.” That’s at davidvitter.com. We have important work to do on both the spending and tax sides of the equation. On the spending side, we must remove protections and dedications from most spending categories to fully get at waste, fraud and spending we simply can’t afford. That’s essential to end the death by a thousand cuts that higher education faces annually because it is one of the few undedicated areas of spending. Spending for things like a California 44

10/12 INDUSTRY REPORT • FALL 2015

consultant to “assist students to learn valuable social skills … on their recess,” or a consultant to “coordinate … Golden Glove Boxing tournaments” is outrageous. On the tax side, we must apply a sober cost-benefit analysis to all state tax credits, exemptions and deductions. We’ll keep those that boost the economy and repeal others. Wasteful tax credits like those for wealthy folks to buy solar panels are just government spending by another name. What is the proper relationship between the five bodies (Board of Regents, LSU Board, Southern Board, LCTCS Board and the University of Louisiana Board) that govern postsecondary education in Louisiana? How would you recommend optimizing this relationship to assure proper funding for programs that meet the needs of Louisiana’s 21st-century workforce? In our plan “Together, Louisiana Strong,” there is a detailed chapter

on “Stabilizing and Building Excellence in Higher Education” which addresses this question specifically. As it states, I will convene a Commission on Streamlining and Building Excellence in Higher Education composed of representatives of the Board of Regents, the four public higher education systems, and civic and community leaders to develop and propose specific reforms in three areas: • Giving greater authority to the Board of Regents in setting and achieving overall goals and priorities for Louisiana higher education. • Properly allocating resources to four-year, two-year, skills training, and other programs based on clear goals and objective metrics. • Reducing unnecessary duplication and inefficiencies in academic programs and the procurement of services. For instance, there are four public nursing programs in Shreveport-Bossier alone; while we need all of those in-demand nursing slots, we don’t need four different bureaucracies and sets of overhead involved.

Our transportation infrastructure needs continue to grow more desperate, with a backlog in basic road and bridge maintenance and many appeals for new projects to defuse chronic and escalating traffic problems. Which projects would you make the top priority, and how would you fund solutions for our infrastructure needs? Do you support an increase in the gas tax to help fund this work? Last year, only 11% of Louisiana’s Transportation Trust Fund was spent on new highway construction and repair. Eleven percent! The rest went to other spending including rich pension plans, unrelated programs and the state police. That’s outrageous. You can’t ask the taxpayers to put more money into the bucket when there is a massive hole at the bottom of it. I was the first candidate to announce that, as governor, I would immediately call a Special Legislative Session focused on fundamental spending and tax reform. And one 1012industryreport.com


of the four major areas that I will With oil prices lagging and focus on in this special session will unlikely to rebound to $100 be strengthening the state Transanytime soon, what can state portation Trust Fund and providing government do to support more protection for infrastructure our energy industry and its spending—like ensuring that trust thousands of jobs? fund revenue sources such as the Our energy sector represents vehicle sales tax actually go into the enormous Louisiana riches—not trust fund rather than get hijacked just in natural resources, but in peofor other, unrelated purposes. ple, innovation and know-how. Sometime after that initial special Growing up, I saw this first-hand session, I also will lead in developing through the eyes of my dad, who and proposing a high-priority highwas chief of Gulf Production for way building program to build vital Chevron. I see it today, fighting the projects on an expedited basis with Obama administration’s anti-oil and specific proposed revenue attached gas policies. As our governor, I’ll see to it. us through to an even more vibrant In all of these efforts, we need to energy future with his clear vision take the politics out of transportaand determined leadership. tion project funding by developing a I’ll review all state tax policy that data-driven approach that does the impacts energy with the goal of greatest amount of good for motoreliminating outdated or ineffective ists, not politicians and bureaucrats. incentives and shifting to provisions That starts with focusing on areas that will maximize energy producthat have the greatest need like tion, jobs and economic activity. This Baton Rouge, certainly including will include reinstating the inactive the area of the Baton Rouge bridge well exemption, and exploring the and the Date: need toSpring close or Ad move the #2 revenue-neutral repeal of some comIssue proof • Please respond by e-mail exit. or fax with your approval or minor revisions. Washington Street plex energy exemptions in exchange • AD WILL RUN AS IS unless approval or final revisions for lower severance tax rates, making are received by the close of business today. • Additional revisions must be requested and may be subject to production fees.

us more competitive with other producing states like Texas. We must also review the state’s regulatory process at DNR, making it far more customer-friendly. We can expedite permits for energy production by eliminating red tape and developing a “one-stop shopping” model for the regulatory system. I will also designate a portion of Incumbent Worker Training Program funds to be set aside and used for employees within certain distressed sectors at any given time and retooling LED’s Quality Jobs program to be a safety net for those hit by a significant economic downturn. Finally, I’m the only candidate for governor who will address our legal climate, which is a clear obstacle to developing good jobs in the energy sector, as I outline below. All of this is detailed in a specific chapter of our plan entitled “Leading With Energy,” at davidvitter.com. Do you think the Louisiana legal climate is in need of reform? If so, in what way?

Our state needs significant tort reform. And I am clearly the only candidate for governor who has said that litigation reform will be a real priority. According to the U.S. Chamber’s Institute for Legal Reform, Louisiana comes in at 49th among all 50 states in terms of the lawsuit climate. One area I’ll focus on in particular is legacy lawsuits. These lawsuits are strongly and negatively correlated with Louisiana drilling activity. Over the past eight years the economic impacts of the cumulative legacy-induced litigation alone can be said to have led to the reduction of close to $10.5 billion in Louisiana economic output and over 30,000 lost employment opportunities. I’ll fight for key reforms like guaranteeing the full right to trial by jury, stopping judge-shopping and preventing lawyers from raising unlimited campaign funds for judges they practice before. I’ll also oppose unfair lawsuits against energy producers for activity in the often distant past where they followed all applicable rules and regulations. •

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PARISH PROFILE

Renaissance on the river

With a series of major industrial projects announced and more on the way, once rural St. James Parish has its own boom going. BY MEREDITH WHITTEN

S

ituated midway between the state’s two largest cities, St. James Parish has had a perfect vantage point to observe Baton Rouge and New Orleans as they deal with the benefits and challenges of industrial investment. Yet St. James is not an idle bystander in south Louisiana’s economic development PORT OF SOUTH LOUISIANA success. In the past five years, Louisiana’s with an additional 374 indirect jobs. second-smallest parish (in total Construction is projected to begin area) has become one of the busiest in 2016. The SLM project lies across areas in the state for new industrial the Mississippi River from Nucor’s investment. $750 million direct reduced iron Buoyed by favorable transport plant, the first phase of a potential links, its location on a deepwater five-phase $3.4 billion complex estiport, available land and indusmated to employ 1,250 people. The try-ready sites along the Mississippi plant began operating in December River, St. James Parish has been 2013. a significant player in the state’s St. James Parish, along with St. industrial construction boom, with Charles and St. John the Baptist $9 billion of industrial investment parishes, is serviced by the Port of under development or in the planSouth Louisiana, the largest tonnage ning stage. port in the Western Hemisphere. “St. James Parish is uniquely qualIn 2014, the port handled a reified for this type of growth,” says cord-breaking 291 million tons of Parish President Timmy Roussel. cargo. “With the waterway, rail and the “The port and St. James work well interstate system, these companies together in our mutual goal to bring have an ease of transportation and a investment, jobs and tax revenue to variety of opportunities to get their the area,” says Paul Aucoin, execuproducts to and from their plant.” tive director of the Port of South The largest project is China-based Louisiana. Indeed, the port and the Yuhuang Chemical’s $1.85 billion three River Parishes work togethmethanol manufacturing complex. er as the River Region Economic The three-phase project will directly Development Initiative to attract employ 400 people and create an industry for the economic benefit of estimated 2,300 indirect jobs across the region. southeast Louisiana. Of the three parishes, St. James Another significant project is retained its rural nature longest, South Louisiana Methanol (SLM), which has worked to the parish’s which announced in 2013 that it advantage during its recent growth, would invest $1.3 billion in a new Aucoin says. methanol production facility on the “St. James has benefited from banks of the Mississippi River. The being patient,” he says. “The parish project will result in 63 direct jobs, has been able to benefit from the

48 10/12 INDUSTRY REPORT • FALL 2015

We have to work with the appropriate agencies to address all those holdups and delays,” Roussel says. Despite the inconveniences of growth, Roussel says that St. James residents largely support the parish’s economic development efforts. “Most of our residents work in industry, either in the parish or elsewhere in the region,” he says, adding that the majority American Styrenics in St. James Parish. of industry in the parish has a 27%-38% local experience of the growth of Baton hiring rate. Rouge and New Orleans.” Over the past 18 months, the One example is the parish’s parish experienced a drop in comcomprehensive plan, which guides bined sales tax collections, which future development in the parish. resulted in the parish postponing Roussel says St. James incorporated some projects and the school board lessons learned from growth and dipping into its general fund surplus. development in other parishes into Roussel says such variations are the land-use plan. expected when major construction “We were able to get our landprojects, such as Nucor’s plant, are use plan in position first so it could completed. guide our growth and help alleviate “The sales tax slide in 2014 and some of the growing pains,” he says. the beginning of 2015 scared us,” “We saw industry and residential Roussel says. “We’re hoping last subdivisions trying to locate next to month [ July] was the bottom. each other, so we pulled up all our There’s been a lack of expansions permits and used them as a guide in our parish, but we’re not letting to strategically place our industry that be the bell of doom. There’s a into conformity and nonconformity gigantic renaissance that we’re about areas.” to enter.” Indeed, both Roussel St. James has not escaped all the and Aucoin say that, in addition to challenges of such significant growth announced projects, they continually in industrial investment. Providing meet with prospects interested in infrastructure to keep pace with the parish, with several in early stageconomic growth and expansion has es still subject to confidentiality. been a key challenge. St. James also “With all these projects coming to is concerned about housing availfruition, we probably could double ability. the parish’s total assessed value of “With the potential [industrial] $540 million,” Roussel says. “That’s renaissance about to happen and significant.” Looking five years down with all the people coming in, can the road, he says, it’s realistic to preour roads support this? Will there dict the parish will see much more be places for them to stay? Railroad than $9 billion in capital expendicrossings are going to be used for tures. longer because of industry. There’s “These companies are serious going to be an inconvenience for our about us, and that’s exciting for St. residents and our local businesses. James Parish,” he says. • 1012industryreport.com


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NEWS

HOME BASE: Brown & Root’s global headquarters is located at Brown & Root Plaza in Baton Rouge’s CitiPlace development.

A new Brown & Root is born

New industrial services company borrows key executives, entrepreneurial spirit from The Shaw Group. BY DAVID JACOBS • PHOTOGRAPHY BY DON KADAIR

B

rown & Root, once one of the most famous companies in the industrial world, never really went away. But due to corporate mergers and acquisitions, the name had been dormant for more than 15 years. That changed in July, when Bernhard Capital Partners, the energy-focused private equity firm co-founded by former Shaw Group head Jim Bernhard, announced that it would partner with Houston’s KBR to re-establish the Brown & Root brand. With operations throughout the United States, Mexico and Canada, Brown & Root Industrial Services will have more than 6,000 employees, officials say, and will provide a range of industrial services for refineries and petro1012industryreport.com

chemical, chemical and manufacturing plants. “If you’ve been in this industry for any length of time, you know someone who has worked for Brown & Root,” says Fred McManus, the new Brown & Root’s president of maintenance. “That was something that Jim came up with: ‘Let’s resurrect that name that most of us know.’” McManus and CEO Andy Dupuy are former Shaw executives, and they say the rapidly growing portfolio Bernhard is amassing under BCP is reminiscent of their former employer. “The only difference is he’s got more money this time,” Dupuy says with a laugh. With access to more capital, Dupuy suggests, Bernhard’s new enterprises have a chance to grow even faster than Shaw did.

Other companies in BCP’s portfolio include Bernhard Mechanical, the mechanical construction company founded by Jim Bernhard’s grandfather nearly a century ago; EP Breaux Electrical; Arkansas engineering firm TME; Bernhard Energy, which promises to develop district energy systems and power plants; and EPIC Piping, a pipe fabrication company. A LONG HISTORY Brown & Root was formed in 1919 by Texas brothers George and Herman Brown and their brotherin-law Dan Root. Initially focused on roads and bridges, the company grew over several decades into an industry leader. Halliburton Energy Services bought Brown & Root in 1962.

During the late 1990s, Halliburton merged with Dresser Industries, parent company of Kellogg, and created Kellogg, Brown & Root, later known as KBR. Halliburton and KBR separated in 2007. Under the deal announced in July, the new company will be formed from KBR’s Industrial Services Americas Group and Baton Rougebased Wink Engineering, which Bernhard Capital Partners also acquired this summer. KBR and BCP will own equal shares of Brown & Root Industrial Services. In a separate deal announced simultaneously, EPIC Piping, another BCP portfolio company, plans to acquire KBR’s Canadian pipe fabrication facility, while KBR will become a minority limited partner in EPIC. KBR expects to receive 10/12 INDUSTRY REPORT • FALL 2015

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NEWS about $32 million in net cash when the transactions close before the end of the year. The Brown & Root name has at times been tied to controversy. The firm bankrolled much of Lyndon Johnson’s political career, and allegedly those ties helped the firm win lucrative contracts during the Vietnam War. Similar accusations were made during the second Iraq war, when critics focused on the relationship between parent company Halliburton and its former CEO, then-U.S. Vice President Dick Cheney. But politics aside, the Brown & Root name brings instant name recognition and credibility in the industrial marketplace, officials say. “The name is working really well for us as we go out to the industry and try to sell our wares,” Dupuy says.

new Brown & Root fits in well with the Capital Region’s strengths, says Baton Rouge Area Chamber CEO Adam Knapp. BOOST FOR BR “Seeing the rebirth of that brand, Thanks to its location in the heart Brown & Root, happening in of the south Baton Rouge is incredible, and it’s Issue Date:Louisiana Fall Adchemical proof #2 • Please respond by e-mail or fax with has your approval revisions. to the commitment of corridor, Baton Rouge long been or minor a testament • AD WILL RUN AS IS unless approval or final revisions a hub for industrial contractors. Th e Bernhard Capital Partners to really are received by the close of business today. • Additional revisions must be requested and may be subject to production fees.

“That was something that Jim came up with: ‘Let’s resurrect that name that most of us know.’” —FRED MCMANUS

become a major player,” Knapp says, adding that the company brings high-paying professional jobs to its headquarters in the city. Prior to the Brown & Root announcement, Baton Rouge had been getting some disappointing news on the headquarters front. Health care company Amedisys is moving many

of its top executives out of the city. Specialty chemical maker Albemarle may relocate its home base altogether, though company officials say they expect to maintain a significant presence in Baton Rouge regardless. “These are very high-level execs we’re getting [with Brown & Root],” says local economist Loren Scott. “We need things to offset what’s happening with Amedisys and what potentially may happen with Albemarle.” STIFF COMPETITION Dupuy and McManus say they haven’t had any trouble yet recruiting upper-level talent for the Baton

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720 edison street baton rouge, la 70806 225.421.6933 email: caleb@landscape180.com landscape180.com

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Issue Date: Fall Ad proof #5

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

Rouge headquarters. But when it comes to finding skilled labor, Brown & Root will face the same challenges as every other company in the industrial sector along the Gulf Coast. Dupuy says Brown & Root will maintain KBR’s emphasis on worker training. And the state recently has stepped up its efforts in that regard, McManus notes. “We’re going to be taking kids from every walk of life and trying to recruit them into our company,” Dupuy says. “There’s going to be quite a shortage of folks based on the amount of work that’s out there right now.” The good news is that as long as natural gas remains cheap—and it’s expected to for the foreseeable future—there probably won’t be a shortage of work. In competing for that work, Brown & Root will be going up against some of this region’s heaviest hitters, like Turner Industries, Performance Contractors and EXCEL. Brown & Root plans to expand on the services already being offered under the KBR banner in two

ways. The company expects to add more services to existing contracts. That could mean offering more equipment, or creating multi-site agreements with companies that have facilities across the country and worldwide. But expanding likely also will mean acquisitions of companies that can open new markets while creating synergies that enhance profitability and also reducing overhead and cost. “When we’re working in a certain plant, we want to be everything to that plant,” Dupuy says. “We want to be the one-stop shop. If they want somebody to build scaffolds, we’ll build scaffolds. If they want somebody to cut the grass, we’ll cut the grass. If they want somebody to run the cafeteria, guess what? We’re spooning food the next week.” With Shaw, Bernhard worked to instill an entrepreneurial, proactive approach to the business, and he recruited people with that mindset, Dupuy and McManus say. They expect to bring that same spirit as they build on the legacy of Brown & Root.

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ECONOMIC DEVELOPMENT

Good chemistry New federal designation for Louisiana Chemical Corridor could mean vital funding and a more coordinated industry. STAFF REPORT

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10/12 INDUSTRY REPORT • FALL 2015

WESTLAKE CHEMICAL

T

he “Louisiana Chemical Corridor” stretching across roughly 25 south Louisiana parishes, from Lake Charles to Baton Rouge and down to New Orleans, will be eligible for millions in federal funding to further its manufacturing resurgence following an announcement in July that the corridor is one of 12 U.S. regions included in the Obama administration’s new Investing in Manufacturing Communities Partnership. “An IMCP designation is an important signal to potential investors that these communities are a good place to spend their money, and this is smart government at work,” said U.S. Secretary of Commerce Penny Pritzker in a prepared announcement. “By breaking down silos and encouraging communities to take a more thoughtful, comprehensive approach to their strategic plans, we are ensuring that precious federal dollars are used on the most high-impact projects and in a way that maximizes return on investment.” LSU’s College of Engineering spearheaded the effort, with more than 80 regional partners, including industry associations, the Baton Rouge Area Chamber, the Louisiana Community & Technical College System, the Manufacturing Extension Partnership of Louisiana, the Louisiana Chemical Association, and companies like Turner Industries, Performance Contractors, Cajun Industries and Motiva. The Louisiana Chemical Corridor is now among just 24 regions in the U.S. to receive IMCP designation. The first 12 communities to receive the designation were announced in May of last year. No other regions in Louisiana have the designation. The IMCP-designated communities will receive coordinated support for their economic development strategies from 11 federal agencies with more than $1 billion

available in federal assistance. The agencies include the Small Business Association and the U.S. departments of agriculture, commerce, defense, housing and urban development, labor, and transportation. “The hard work is just starting,” says Jonathan Shi, an LSU professor in the construction management department of the LSU College of Engineering, who was part of a 12-member leadership team spearheading the proposal. “We’re not starting from scratch. We already have a lot of strength in our chemical corridor, and the intent of the program is to build on what is already there,” Shi explains. “So we are trying to pull the resources from federal agencies and local partners to identify those areas where we can make our

chemical industry even stronger and better.” A large part of the south Louisiana coalition’s strategy involves addressing the skilled workforce shortage that’s anticipated as billions of dollars worth of announced industrial projects come to fruition over the next five years. The strategy also includes building stronger relationships between and within industries to foster greater collaboration and efficiency, as well as developing new research partnerships and increasing infrastructure and site development. The Louisiana Chemical Corridor is the home of hundreds of chemical manufacturing facilities and refineries worth billions of dollars. The high international demand for petrochemical and

energy-related products has also created a network of key technology and supply chains deployed for building, operating and servicing these facilities. As the consortium’s proposal also noted, “One of the region’s greatest assets is the relationships built between and within industries that foster collaboration and innovation. Building a stronger network within the chemical manufacturing industry will support greater efficiency, promote the use of best practices and new technologies, and reduce waste. The supplier network plan takes an industrial ecology approach that studies inputs, outputs and waste products of industries and their relationships to the local economy and the environment.” • 1012industryreport.com


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COASTAL RESTORATION

SAND MOVERS: Saving Caminada Headland involved moving 3 million cubic yards of sand from the bottom of the Gulf of Mexico to the beach east of Port Fourchon.

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Contracting on the coast Money from the BP oil spill settlement and other funding streams will create billions of dollars in publicly bid coastal restoration projects over the next 15 years. BY DAVID JACOBS

RESTORE OR RETREAT, INC.

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illions of dollars in new money for coastal projects in Louisiana is on the way. But work to enhance and protect the state’s fragile coastal regions has been going on for years. Greg Grandy is a senior environmental manager for Coastal Engineering Consultants in Baton Rouge. His firm worked on the feasibility study for the state and the Army Corps of Engineers for the restoration of Caminada Headland, a 14-mile stretch of beach east of Port Fourchon. Over the past century, Caminada annually has lost an average of 35 feet of shoreline, according to the Louisiana Coastal Protection and Restoration Authority. The work began in March 2005, and the study was supposed to be ready by September of that year, Grandy says. As you might expect, that year’s infamous hurricane season blew away the original timeline. “A lot of the folks we were working with,” he says, “obviously, their priorities shifted.” But now the project is back on track. More than 3 million cubic yards of sand is being dredged from a shoal at the bottom of the Gulf of Mexico and taken by tugboat-powered barges to the project site, where it is pumped out onto the beach. Native plants will be installed to help hold the sand in place. Once restored, the beach should help buffer Port Fourchon and La. 1, a key hurricane evacuation route for Grand Isle and other communities, from storms, while providing habitat for nesting and migrating birds. This project is one tiny skirmish in

Louisiana’s permanent war with the sea, and companies like Grandy’s are on the front lines. “It’s an exciting time to be in the business, because there are opportunities today that weren’t available five, 10 or 15 years ago,” he says. “There are great problems to solve, and great challenges.” UNPRECEDENTED FUNDING Sediment deposited by the Mississippi River essentially created south Louisiana. But the levees that protect human life and property near the river also prevent the river from replenishing that sediment. To save the coast, humans must find ways to reverse that dynamic. Rising seas caused by a warming planet make the effort even more urgent. The Coastal Wetlands Planning, Protection and Restoration Act of 1990, better known as the Breaux Act or by its acronym CWPPRA (often pronounced quip-pruh), was the first federal funding source for coastal restoration, providing tens of millions of dollars annually on an 85%/15% federal/state match. The feds also award grants through the Coastal Impact Assistance Program, though CIAP is currently scheduled to sunset at the end of 2016, says Chip Kline, who chairs the Coastal Protection and Restoration Authority board and is the governor’s top official for coastal restoration. (Kline replaced Garret Graves, who is now a congressman.) But through the Gulf of Mexico Energy Security Act, or GOMESA, the state has begun receiving new money from offshore energy exploration. Assuming it survives the federal budgeting process, that 10/12 INDUSTRY REPORT • FALL 2015

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COASTAL RESTORATION revenue stream will increase in 2017. In the past, $60 million to $70 Now, as BP and Transocean begin million marsh creation projects were to pay for natural resource damage, typical, he says. In the future, we along with criminal and civil penalcould see construction of a single ties, associated with the 2010 Gulf long distance sediment pipeline that oil spill, an unprecedented infusion would cost more than 10 times that of new dollars are on the way. amount. This fall, officials will start Put all that money together and to make decisions about major sedyou’ve got something in the neighiment diversions, which can be conborhood of $1 billion a year, Kline troversial because of the perceived says during an interview in his impact on prime areas for harvesting fourth floor State Capitol office. The fish, shrimp and oysters. state’s coastal master plan envisions “We’re on pace [in fulfilling the $50 billion worth of projects over master plan], and I think over the 50 years, and Louisiana is projected next 15 years we are absolutely going to spend $500 million to $2 billion to be on pace, and perhaps even per year for the next 50 years on waahead of schedule,” Kline says. ter-related research and projects in marsh creation, protection systems, ALREADY UNDERWAY sediment diversion and restoration. On Aug. 19, CPRA Executive “I think you’re going to see a lot Director Kyle Graham gave the auof the same type of work that we’ve thority’s board an update on oil spill done, but on a much larger scale,” restoration planning. He mentioned Kline says. six projects worth a total of about That means moving away from $223 million that already are apsmaller-scale restoration projects proved and underway with oil spill to projects in the $300 million to money, including work at Caminada. $400 But most of the specific projects Issuemillion Date:range Fallwith Ad“more proofof#1 Please respond by e-mail oron fax saltwater with your approval or minor revisions. a• substantial impact” listed during his presentation remain • AD WILL RUN AS IS unless approval or final revisions intrusion and coastal land loss. in the “probable” category. are received by the close of business today.

WHAT DOES THE WORK LOOK LIKE? Here are some proposed projects that suggest the scope and nature of the work to be done. In November, CPRA board approved the following five projects for submission to the Gulf Coast Ecosystem Restoration Council for consideration under the Council-Selected Restoration Component of the RESTORE Act: • Golden Triangle Marsh Creation Project – a project to restore and protect wetland, fish, and wildlife habitat to help maintain landscape integrity and enhance community resilience. • Mississippi River Reintroduction into Maurepas Swamp Project – a project to restore and enhance the health and sustainability of the Maurepas Swamp through the reintroduction of seasonal Mississippi River inflow. • Biloxi Marsh Living Shoreline Project – a project needed to protect, enhance, and restore the Biloxi Marshes, which function as an important storm buffer for the City of New Orleans. • West Grand Terre Beach Nourishment and Stabilization Project – a project to restore and enhance dune and back barrier marsh habitat to provide storm surge and wave attenuation, thereby addressing the issues of gulf shoreline erosion, diminished storm surge protection, and subsidence of back barrier marshes. • Lower Mississippi River Management Program – a project to refine current river management practices to achieve habitat restoration and conservation, while maintaining the integrity of flood protection and navigation management projects and goals.

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

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This ad design © Louisiana Business, Inc. 2015. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

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“I think you’re going to see a lot of the SAME TYPE OF WORK that we’ve done, but on a MUCH LARGER SCALE.”

DON KADAIR

—Chip Kline

“I know this will change,” Graham says. “But I do think it’s also important that we start to lay the foundation so that folks are aware of where we are in our planning mode and how we see all of the various revenue streams starting to tie together as we ultimately build projects across the coast.” He noted that most of the oil spill money will be coming down over 15 years, and there will be three or four master plan updates during that time. As he explained, there will be three separate funding streams related to the spill. Louisiana’s share of the criminal penalties will be about $1.27 billion. The National Fish and Wildlife Foundation will administer those funds, which only can be used for barrier island and river diversion projects, and proposals will require approval by that federation’s board and the CPRA’s.

The state also is set to receive more than $5 billion to ameliorate natural resource damage. An initial payment of $368 million has been received, with 15 installments expected over the next 16 years. A draft plan meant to assess the damage and nail down exactly how much Louisiana will get is supposed to be ready in October, in advance of finalizing the consent decree in early 2016. Funds from the RESTORE Act, which dedicates 80% of Clean Water Act penalties to the affected Gulf states, are divvied up by a complicated formula for various types of projects. Louisiana’s share is expected to be at least $930 million. Some of the new money will go toward helping types of wildlife harmed by the spill, rather than for projects in the state’s coastal restoration master plan. The inverse

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also is true: Some projects funded by spill-related dollars won’t directly address damage from the spill, but will pay for master plan projects that complement efforts to repair the oil-damaged coast. The coast is an interrelated ecosystem, and project planning will reflect that. Since the oil spill money is coming in over 15 years, Graham suggests that the state may want to look into getting creative with its new funds to get more projects under construction quickly. Perhaps offshore oil revenue could be used as a kind of loan that would be paid back with RESTORE dollars. Maybe one of the funding streams can be securitized to get more money up front. All projects will be publicly bid, which means the state takes the lowest bidder who is qualified to handle the job. JOB SECTOR The water management sector potentially could create 10,000 to 20,000 new direct jobs, plus 10,000 to 25,000 new indirect jobs, through 2030, according to a set of analyses

1 621012Ad2015halfpage.indd 10/12 INDUSTRY REPORT • FALL 2015

DNR

COASTAL RESTORATION

ROCKS SOLID: A rock dike barrier, built at Little Lake in Lafourche Parish, works to protect coastal wetlands and slow erosion.

performed by McKinsey & Company for Louisiana Economic Development and the Louisiana Recovery Authority Support Foundation in 2010. “We foresee Louisiana as not only addressing its own water management issues but also developing scientific, engineering and construction expertise in the field that can be exported worldwide,” says LED Secretary Steven Grissom.

Despite the expected increase in coastal work, state officials are not expecting a workforce crunch. There will be significant crossover of workers from shipbuilding, maritime and other oil-and-gas-related jobs, explains Aaron Caffarel with the Louisiana Workforce Commission. So the slowdown in the oil patch adds to the potential labor pool. The Louisiana Community & Technical College System runs

training programs for the relevant jobs in the Houma/Thibodaux region. Caffarel says a workforce commission program, whereby contractors on coastal restoration projects submit lists of job openings and the LWC helps recruit and refer eligible candidates, hasn’t been used very much yet, though that could change as the amount of work increases. While the BP spill money will be a tremendous boost to the state’s efforts over the next 15 years, it’s important to remember that the current master plan is a 50-year blueprint. Eventually, Kline says, a permanent, sustainable funding stream must be found, because the need will never go away. As CPRA spokesman Chuck Perrodin explains, the master plan shows that Louisiana can halt land loss in about 30 years and start to gain net land, but it’s like owning a house: maintenance, roof replacement, painting, repairs, fighting termites; those things never end. And neither will our fight against the sea.

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WORKFORCE

Overcoming the stigma of technical education A public-private campaign aims to recruit, inspire and educate the future craft and plant workers of Louisiana. BY ERIN Z. BASS

W

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SPARKING AN IDEA: A student practices during a Baton Rouge Community College craft class at Baker High School.

to implement a media campaign to recruit, inspire, educate and prepare the next generation of Louisiana’s workforce. LWEI is supported by key industry, business and government leaders

DON KADAIR

e’ve all heard of “Don’t Mess With Texas,” the slogan first coined in 1986 to teach Texas residents the real cost of littering. Since then, celebrities like Willie Nelson and Matthew McConaughey have gotten on board to promote the message, and the phrase has become a cultural icon. The advertising exec credited with “Don’t Mess With Texas” is Roy Spence, and his daughter is Courtney Spence, founder of her own San Francisco agency C Spence. Together, the pair are teaming up to tackle just as serious an issue in Louisiana in hopes that their new campaign will be just as successful at changing perceptions. In early August, Courtney spent two weeks traveling to six cities in Louisiana to gauge the current landscape of the state’s education and workforce needs. Her tour represents the first step in creating the branding for a grassroots campaign as part of the Louisiana Workforce Education Initiative. LWEI is a nonprofit organization created to provide the public messaging and communications support necessary to begin changing outdated public perceptions about high-demand, high-paying industrial careers that don’t require a four-year college degree. It’s no secret that the demand for jobs like plant workers and welders is at an all-time high due to the industrial boom, but students and young adults aren’t always encouraged to pursue them as a career path. Armed with data from a poll conducted last summer that revealed outdated ideas about skilled jobs, community members of the LWEI board in partnership with C Spence and Baton Rouge firm SSA Consultants are now moving forward

and is working in coordination with the Louisiana Department of Education, the Louisiana Workforce Commission and Louisiana’s Workforce Investment Council.

QUALITY JOBS “The jobs are there, but we don’t have the trained workforce to fill them right now,” says LWEI board member and Urban Systems partner Mike Palamone. “All of the jobs with 10/12 INDUSTRY REPORT • FALL 2015

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WORKFORCE

“What we had to do is to really inform and explain to parents about all the job opportunities and that if you’re looking at your child and they like to work outdoors, don’t force them behind a desk.”

Issue Date: Fall Ad proof #3

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

CHERYL GERBER

—CINDY POSKEY

expansions along the river are going to be in those two-year programs, and they’re very well paid.” The numbers Palamone and others involved in the campaign are trying to communicate to students and parents are those like $60,000 a year, full benefits and an eight-hour workday. “Some kids really aren’t cut out for college, but they’re really good with their hands and they know how to do good work, and they can go get a two-year degree and be really productive,” Palamone adds. Parents and close family members have been identified as the main influencers when it comes to kids’ education and career paths. Cindy Poskey, vice-chancellor of workforce

development at Fletcher Technical Community College, says it’s a stigma that started back in the 1980s with the oil bust. “I really saw more of a deterrence there from parents allowing children to follow in their footsteps,” she says. “There wasn’t job security.” As the industry recovered, Poskey began to see students go straight from high school into the workforce, but unfortunately TOPS brought back the stigma in the late 1990s. “What we had to do is to really inform and explain to parents about all the job opportunities and that if you’re looking at your child and they like to work outdoors, don’t force them behind a desk,” she says.

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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“There’s still good careers they can business and industry. We are truly do outdoors.” in the workforce development busiThese days, Poskey and her team ness,” she says. in the South Central Louisiana Technical College System are seeing IMAGE PROBLEM success with programs like Jump State Department of Education Start and dual enrollment that allow Superintendent John White says the high school students to take courses efforts of LWEI will greatly benefit for college credit. Jump Start, which was developed Another example of the type of last year and is expected to reach training program targeted is the full implementation by 2018. “We one introduced at Fletcher Techhave an image problem regarding nical Community College over the technical workforce and technithe summer, aimed at meeting the cal education, especially insofar as shortage of process operators in they must ultimately compete with chemical plants. Originally piloted TOPS, LSU and all that comes with at SOWELA Technical Community the hallowed names of the four-year College in Lake Charles, the Process institutions,” White says. “Re-brandTechnology (PTEC) Fast Track ing the technical workforce in the program helps students with associminds of students, parents and ate degrees or higher attain a degree grandparents will have a lasting benin process technology in as little as efit for industry located in our state.” one semester. “We knew there were barriPoskey also works closely with ers—negative perceptions—that area plant managers, trainers and exist among kids and parents about human resources folks to ensure technical education,” adds Christel technical college students are Slaughter, whose firm SSA is under prepared for the10/12 jobs available. “I Ad proof contract Issue Date: Industry #3 to manage the operations • Please by e-mailall or fax your we approval or minor tell ourrespond instructors thewith time of revisions. LWEI. “We need a campaign to • Ad will run as is unless approval or final revisions have two customers: and change those attitudes about careers are received by the close ofstudents business today.

DON KADAIR

WORKFORCE

• Additional revisions must be requested and may be subject to production fees. Carefully check this ad for: CORRECT ADDRESS • CORRECT PHONE NUMBER • ANY TYPOS This ad design © Louisiana Business, Inc. 2014. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

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JUMP START: Ascension Parish resident Christian Williams is one of thousands of Louisiana high school students taking advantage of the new Jump Start program for technical training.

1012industryreport.com

that are available with technical education.” Data compiled for LWEI by Southern Media and Opinion Research last year helped flesh out the nature of the problem. Poll results showed nearly half the respondents felt there is social stigma attached to not having a four-year college degree. Meanwhile, more than two-thirds believed skilled jobs are physically demanding, while one-third believed they are dangerous—perceptions, says Slaughter, that are incorrect. “There are a lot of opportunities to educate people about the opportunities that are there,” she says. AT&T Louisiana President Sonia Perez is a member of the state Workforce Investment Council. She says that with the evolution of technology in today’s workplace, workers have to constantly be transforming and re-inventing their skill set. “In today’s vibrant economy, there are great opportunities for those who choose to obtain a certification while in high school, as well as those looking to re-tool for high-demand careers,” she says. “LWEI is part-

nering with Louisiana Community & Technical College System and other organizations to make training options and tools more affordable.” A STATE OF MIND During her Louisiana tour, Courtney Spence was struck by the number of people who are passionate about helping students find a path to a successful career. “There’s so many intelligent and kind people we have met, from policy makers to people working in schools to implement Jump Start,” she says. “It makes me excited about the opportunities we have when we can unify all these efforts under one message and one campaign.” Next up for LWEI is more qualitative research and sessions with focus groups before Spence moves on to the more creative aspects of messaging and media. A fundraising component targeted to business and industry is also in place, with approximately $4 million raised to date. (The campaign is expected to cost about $5 million-$6 million per year.)

Statewide, the plan is to spread the message across a mix of traditional, digital and grassroots channels starting next spring—and hopefully enter the national dialogue about education and workforce solutions. If LWEI follows the path of “Don’t Mess With Texas,” then Louisiana is in for a game change. “‘Don’t Mess with Texas’ really tapped into a state of mind,” says Spence. “It took an issue, which was litter on our highways, and tried to look at it from a different way. When you start to take those more specific issues and see how they really are part of something bigger, a greater purpose, you’re able to create a campaign and a new way of thinking.” In terms of workforce education, “What we’re talking about here, we’re talking about across the country,” adds Spence. “It’s now a topic of conversation with presidential candidates. If we can figure out how to crack the code in Louisiana, I think there’s a lot of ability to take that concept and design nationally.” •

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LOGISTICS

A bridge to Florida Florida Fuel Connection announces $75 million capital investment in Louisiana rail terminal project.

I

n July Gov. Bobby Jindal and CEO John H. Armbrust of Florida Fuel Connection LLC announced the company will make a $75 million capital investment in Louisiana and build a petroleum terminal and rail transportation facility in East Feliciana Parish, near the Mississippi River. The complex will provide a starting point for the shipment of gasoline and other fuels via rail to Florida, which lacks pipeline connections to regional oil refineries and primarily imports its fuel stocks by marine vessels. The project in East Feliciana Parish will create 50 new direct jobs at an average annual salary of $70,000, plus benefits. Louisiana Economic Development estimates the project also will result in 137 new indirect jobs, for a total of 187 jobs in the Capital Region and surrounding areas. In addition, the company expects the project to generate 200 construction jobs. “This is an exciting project for Louisiana, pairing energy and logistics to create more than 180 new jobs for the Capital Region,” Jindal said. “We welcome Florida Fuel Connection, which recognized the value of developing a strategic logistics facility in Louisiana to deliver high-demand petroleum products for suppliers in the Southeast. This project will help stabilize volatile fuel prices for Florida consumers. Best of all, it creates great jobs and an important economic boost for East Feliciana Parish. We are proud that Louisiana’s distinction as a great energy-producing state continues to help solve our nation’s long-term energy needs.” The company plans to transport gasoline, jet fuel and diesel from Colonial Pipeline’s system near Baton Rouge, and its new transportation facility will link the Colonial pipeline to existing rail lines to facilitate fuel delivery across the Gulf Coast to distribution points in Florida and Georgia.

70 10/12 INDUSTRY REPORT • FALL 2015

“FFC will have the ability to take petroleum product off the Colonial Pipeline in Baton Rouge, and for the first time, Florida and southeast Georgia consumers will benefit from a land bridge that transports petroleum from the major refining centers in the U.S. Gulf Coast that will reduce market volatility and the likelihood of supply shortages,” Armbrust said. “Importantly, maintaining a dependable supply of petroleum

by the first quarter of 2017 and at its peak will transport 240,000 barrels per day of petroleum product into Florida and southeast Georgia, including gasoline, diesel and aviation fuel. The East Feliciana Parish terminal represents a portion of an overall $300 million capital investment the FFC partners expect to make from end to end. LED began discussing a potential project with the company in January 2015. To secure the project, the state offered an incentive package that includes the Enterprise Zone program. Enterprise Zone benefits include a tax credit of $2,500 per qualifying new permanent full-time job created and either a tax credit on qualified capital expenditures or a rebate of state sales taxes paid on construction materials used exclusively on site during construction. “The directors of the Feliciana Regional Business & Industry Council have been working directly with state Rep. Kenny Havard and Mayor Robert Jackson of Slaughter on this outstanding project with Florida Fuel Connection,” FRBIC President Tom Moriarty said. “Over the past year we have seen this grow from what some would say is a pipe dream to reality. It is a tremendous opportunity for our region and our community. We are committed to making our region a viable player in the industrial and commercial markets. We are open for busiISTOCK.COM ness and look forward to moving products is especially critical for first on the next project.” responders and government agencies “BRAC welcomes Florida Fuel responding to major weather events Connection to the Baton Rouge or other natural disasters.” area,” said President and CEO The company will engage rail Adam Knapp of the Baton Rouge transport services that will constiArea Chamber. “The company’s tute a “land bridge” augmenting the selection of the Slaughter vicinity current marine delivery system for a for its off-load facility will facilitate portion of the estimated 10 billion efficient shipment of its products gallons of petroleum products and also paves the way for additional consumed annually in Florida. FFC industrial developments in East and anticipates being fully operational West Feliciana.” • 1012industryreport.com


LOGISTICS

The perfect site The new Port Allen Rail Terminal will provide a key logistics link in the Capital Region. BY DAVID JACOBS

A

t first, it was only going to be a single rail line. Real estate agent Ryan Greene was helping Texas-based developer USA Rail Terminals find a suitable location for a rail spur. USA Rail has a client in Clinton that wanted a better way to ship its commodity into Texas. But in the course of doing its research and talking to its contacts and to railroad customers in the region, Steve Roth, executive vice president of USA Rail, says his company discovered a “substantial need” for an entirely new rail terminal in the area. After a search of about 18 months, USA Rail bought a 155-acre parcel just west of La. 1 between La. 415

and La. 986 in Port Allen. As envisioned, the facility will tie into an existing Union Pacific rail line and have the capacity to store more than 1,200 rail cars next door to what organizers hope will be a thriving industrial park. The Port Allen Rail Terminal, an anticipated $80 million investment, will be unique in the greater Baton Rouge area, officials say, because of its ability to accept a “unit train.” Say you have a few rail cars that you need to get to Pennsylvania. Much like sending a package by mail at the standard rate, your shipment may have to go through several stops as other products are dropped off. In railroad shipping, this is known as “manifest freight.” But if you have 100 cars with the

same product and destination, the railroad will dedicate engines and a crew to take your unit train from point A to point B nonstop, sort of like next-day delivery of a mailed package. This approach simplifies the logistics for everyone involved. And to build a facility capable of dealing with unit trains, you need an enormous stretch of land. “You’re talking seven or eight thousand feet of rail just to land the train,” Roth says. “If you parked a 7,000-foot train out on this main line, you would be blocking every intersection all the way past the Port of Greater Baton Rouge.” And of course, you don’t just want lots of land. You want access to infrastructure, like existing rail lines, highways and river transportation.

“Finding a parcel like this that has the depth to receive modern-length unit trains is extremely difficult, which makes this site extremely rare,” Roth adds. Parcels alongside the site, which today are sugar cane fields, have been rezoned for industrial use and potentially could be home to several companies that would like to be next to a major rail terminal. In fact, the terminal’s first neighbor already has been announced. Thermaldyne, founded in Georgia, says it will spend $19 million to build its facility on 25 acres. The company remediates industrial waste that otherwise might end up in a landfill, resulting in byproducts such as clean oil and biodegradable solids that can be repurposed.

Company

A with a

Reach Voted #1 in Control Magazine Readers’ Choice Awards for 7 consecutive years With thousands of installations around the world in demanding and extreme environments, Orion Instruments proves daily what it means to be the best. Orion Instruments represents high-quality liquid level instrumentation manufactured right here in Louisiana by a dedicated and passionate team.

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For information about joining our team, visit www.orioninstruments.com

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CONTRACTING

The contract tug of war The industrial construction contract is all about managing risk. Here are the biggest options and variables most owners and contractors consider. BY MEREDITH WHITTEN

‘W

hen you talk about industrial construction contracts, it’s about who bears the risk of the unknown,” says David Nelson, a partner with Kean Miller. Yet, distilling the purpose of these contracts into one word is deceptive, as crafting an industrial construction contract is incredibly complex. Before dirt is ever moved on a project, an owner and a contractor must hash out all the minute details of the project—both those they can foresee and those they can’t. “Both parties want to identify everything they can think of that can possibly go wrong as well as prepare for those things they can’t predict,” Nelson says. “If they can successfully navigate through that maze of potential problems and work out how

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they’ll deal with that in the future, then they can avoid litigation, which is the whole point of a contract.” LUMP-SUM The two most common types of contracts for construction projects are the lump-sum and the costplus contract. As with any type of contract, each has advantages and drawbacks. An owner’s decision regarding which type of contract to use depends on many variables, as does a contractor’s decision to bid on a specific type of contract. “An owner wants as little risk as possible, but so do contractors,” says Russell White, development manager with CB&I, “so there’s this gentle tug of war.” A lump-sum, or fixed-price, contract calls for a specific amount of money to complete a specified job. In these contracts, “all the risk is on

the contractor,” White says. Contractors estimate their costs, including labor and materials, to bid on the project. To do this accurately, contractors need detailed and complete drawings and specifications. Although if a project runs smoothly a contractor stands to make a larger profit than with a cost-plus contract, contractors also stand to lose more by taking on more risk, particularly if there is uncertainty because project details are not well-defined, as a contractor’s costs could greatly exceed estimates. “A lump-sum contract gives the owner the greatest certainty as to the cost of the work,” says Trippe Hawthorne, a partner with Kean Miller LLP. “If done as a turnkey project, a lump-sum EPC (engineering, procurement and construction) contract gives the owner a single point of contact for all risk and re-

sponsibility for the project, whether schedule, cost increases, warranty or performance issues. So, for the typical owner that wants to get project funding in place with a relatively high degree of certainty and wants to minimize involvement in the management of the project and risk of problems associated with the project, the turnkey EPC contract is the best option.” Hawthorne, whose practice involves negotiating industrial construction contracts, adds that if the contractor on a turnkey EPC contract also is responsible for providing the technology for the process to be used in the completed unit, the risk of cost increases, schedule delays and problems with the work—whether design or construction—further shifts to the contractor. Contractors, too, are more comfortable with lump-sum EPC 1012industryreport.com


• AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. 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

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

Doing it right for 30 years! Braud Welding & Industrial Supply has been providing material to industries for over thirty years. Our emphasis is on service. We take pride in same day delivery. Customer service is always our number one priority. We deliver ontime, everytime. We also have a well stocked walk-in sales counter where you can purchase any quantity of an item.

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CONTRACTING contracts. “If I can control everything, I’m more comfortable doing fixed price,” White says. “If I’m only doing construction, I’m less comfortable with fixed price because I can’t control the engineering and procurement.” For example, if the engineering is done by an international engineering firm and, thus, the designs are in metric and to European standards, this would be a factor that contributes to a contractor not willing to do a lump-sum contract. Further, Hawthorne notes, if the project will be financed, many lenders require a lump-sum contract to ensure they have some certainty that in exchange for the money they are investing in the project, they will see a functioning, complete project. This certainty, however, comes at a premium price. FUZZY BOXES Risk factors that contractors look for include site location, site condition, worker availability and weather, among other things. For example, is the location remote and hard to get to? Is there an existing

workforce? Does the contractor have to deal with securing permits? Will construction occur in the summer? If so, worker productivity may drop, as research shows productivity falls when temperatures rise above 95 F. Thus, if a contractor has estimated 100% labor productivity, but the mercury soars, labor productivity declines and projects may be delayed. Meanwhile, owners also consider a contractor’s safety record and the quality of their work, as well as cost and time frame. Given the scope and pace of many industrial construction projects in south Louisiana, the lump-sum contract is often seen as too risky by contractors. “Because of the swell of work these days and the stress that puts on the engineering community in regards to how fast they have to work, contractors are bidding on a ‘fuzzy box,’” White says. “There’s not enough information in there to make contractors feel comfortable to bid on fixed-price contracts.” And, with the amount of industrial construction in south Louisiana

INDUSTRY

LEADER

these days, contractors can be more selective. “What we saw five or six years ago with an owner-favorable market was owners could dictate contracts more than they can now,” Hawthorne says. “With all of the work along the Gulf Coast now, the pendulum has shifted somewhat towards contractors.” Another concern with lump-sum contracts is cost-overruns. These contracts also lack flexibility, meaning change orders must be used to change any aspect of the contract, a significant drawback when dealing with large industrial construction projects that can change as the work progresses. “In my experience, the more complicated the contract, the less likely it will be a lump-sum contract,” Nelson says. COST-PLUS With the other common type of construction contract, the cost-plus contract, an owner reimburses a contractor for the cost of doing the work. Cost-plus, or reimbursable, contracts are more suitable to

ISC, a privately held company, is an industrial electrical, instrumentation, and controls company offering engineering, construction and maintenance services. Founded in 1989 in Baton Rouge, Louisiana, we have grown to employ over 2,500 people primarily in the southern region of the United States. Through our regional offices, we service the chemical processing, petrochemical, refining, power, and pulp & paper industries. ISC is a nationally recognized leader in developing the industry’s workforce.

www.iscgrp.com BATON ROUGE / BEAUMONT / HOUSTON / LAKE CHARLES

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Trusted for over 100 years with dependable resources and innovative solutions to get the job done.

projects where the project scope and parameters are not sufficiently advanced for the contractor to properly estimate and evaluate the project as a whole, but the project is time-sensitive. “If the project is so urgent that the owner cannot wait for that early engineering to be completed before moving forward with the project, the project will have to begin as a reimbursable contract,” Hawthorne says. While cost-plus contracts may offer more flexibility, a major disadvantage is not knowing how much a project ultimately will cost. “Most of the risk is on the owner because they cannot control spending,” White says. Cost-plus contracts, which typically specify weekly costs and payments, can also be more laborious with additional paperwork. “Right now, because of schedule pressures and because contractors are less willing to accept the risk associated with a lump-sum contract, reimbursable contracts are more common,” Hawthorne says. Given the advantages and drawbacks of lump-sum and cost-plus contracts, neither type is a good fit 1012industryreport.com

for some industrial construction projects. “What we see in south Louisiana is a lot of different moving parts,” Nelson says. “For many of these projects, it’s not easy to understand everything from the start.” Adds White: “Some fast-track engineering projects want you to go to field even before the piping is finished.” Thus, many industrial construction contracts used in south Louisiana projects are hybrid contracts. With hybrid contracts, “both parties feel like they have skin in the game,” White says. In a hybrid contract, the known factors—such as how long a piece of equipment will be used on the site—can be covered by a fixed price, while the unknown factors—particularly labor costs—are covered in a cost-plus model. Or, the construction work could be reimburseable up to a certain maximum, with a lump sum beyond that. One thing that owners and contractors do agree on is that every project is different. “There’s no such thing as a standard contract in this context,” Nelson says. •

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ISTOCK PHOTO ILLUSTRATION

CONTRACTING

What causes project failures? New research points to a range of causes—and remedies. BY DAVID JACOBS

A

t the annual Construction Users Roundtable national conference in Arizona earlier this year, Ed Merrow, president of Independent Project Analysis, spoke frankly about what he sees as a serious dilemma facing the industrial construction sector. “We are facing a profound crisis in engineering that is making it very difficult to do these complex, engineering-intensive projects successfully,” he said, according to a report in Engineering News-Record. The engineering error rate, including “Chemical Engineering 101-type errors,” has doubled since 2006, he said. Out of more than 3,700 industrial projects studied by IPA, more than a third of those worth less than $750 million suffered serious problems such as significant schedule delays, major cost overruns and post-construction operational problems. Almost two-thirds of larger projects were said to have similar issues. “We, as owners, are a big chunk of the problem,” John Pemberton,

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vice president of Intel’s technology and manufacturing group, said at the same conference. “We write the contracts, we set up how the game is going to get played, and we often set up adversarial relationships with many of the people who are trying to do good work on our behalf.” FEED AND SPEED Andras Marton, hydrocarbon processing and transportation manager with Independent Project Analysis, wasn’t as blunt as Merrow when interviewed by 10/12 Industry Report. But he agreed that many of the problems are caused by the owner’s front-end engineering work. “I think most of the industry sees this as a field productivity loss,” he says; that is, “our laborers are not doing work as efficiently as they used to.” “But in reality, all that can be tracked back to how we did the planning,” Marton adds. Of course, both owners and contractors often are eager to get started so they can create cash flow, please customers or serve corporate

goals. But with chemical plants and refineries, excessive capital spending generally is a much greater threat to profitability than falling behind schedule, he says. Since the planning phase usually only represents 4%-6% of total cost, smart companies aren’t afraid to spend an extra month or two in that phase. “If you want to go fast, spend time in the beginning to plan how you want to go fast,” Marton says. He says IPA’s research shows that trying to incentivize better or faster performance through contract structure generally doesn’t work. In fact, he says often the incentives don’t even match the owner’s goals. Marton says owners need to make sure their contractors have adequate resources and at least a good, experienced core of workers. “If the contractor’s going to hire [the entire staff ] off the street for your project, then you may have a problem,” he says. He says it’s important for contractors to know that they’re going to have the information they need to make timely progress. To that

DEFINING PROJECT FAILURE In the IPA study, a project failed if it met at least one of four criteria: Its costs grew by 25% or more; the schedule slipped at least 25% (one year, on average, for megaprojects); the project overspent compared to the industry average; or there were severe and continuing operational problems lasting more than two years after startup. —Engineering News-Record

end, the contract might say that if the owner’s operations manager isn’t available to make decisions at critical points, then errors or schedule slippage aren’t necessarily the contractor’s fault. Marton says it’s important for the owner “to always challenge the contractor.” “A good relationship helps, but it has to be challenged,” he says. COMMUNICATION 101 Of course, no project is perfect, says Jeff Boudreaux, a Kean Miller attorney who focuses on issues related to design and construction of 10/12 INDUSTRY REPORT • FALL 2015

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CONTRACTING

OVERSPENDING

Failed projects Successful projects (35%)

COST OVERRUNS PRODUCTION (operational efficiency)

EXECUTION SCHEDULE INDEX

EXECUTION SCHEDULE SLIP

(compared to industry average)

BIGGER JOBS, BIGGER FAILS: In IPA’s research, failed projects over $750 million performed poorly in

Issue Date: Fall Ad2 proof missed #4 schedules and severe operating problems after startup. multiple areas, including cost overruns, • Please respond by e-mail or fax with your approval Inc. or minor revisions. Source: Independent Project Analysis, • AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees.

commercial and industrial projects. But it’s still important to minimize the risk of mistakes and the damage that those mistakes might cause. Effective communication is paramount, both within the owning company and between the owner and any outside contractors, he says. And contractors need to be flexible. “Owners are going to change their minds,” Boudreaux says. “A good contractor should be able to roll with that.” One of the challenges in south Louisiana’s industrial sector, where fortunes rise and fall based on energy prices, is that “when somebody’s building, everybody’s building.” When productivity falls, he says, that’s often a direct result of a dearth of quality workers. While most businesses prefer to stay out of court, Boudreaux says some contractors actually build litigation settlements into their revenue expectations. If a project starts to go sideways and lawyers start getting involved, it’s best to insulate the people doing the work from the details

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

A Multi-Discipline Engineering Company FB&D HAS OFFICES IN: Baton Rouge, LA | New Orleans, LA Lake Charles, LA | West Monroe, LA Greenville, SC

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Engineers, Designers & Drafters Call (225)292-0050 or www.fbd.com

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of that dispute, he says. “The most important thing to have in a construction project, whether it’s industrial, commercial or residential, is momentum,” he says. “If you get kicked off the train, buy a second ticket and get back on the train as fast as you can.”

industrial projects are designed by engineers, and engineers often don’t communicate as well as architects, Schneider says. He says hiring the same firm to design and build the project might improve communication, or at least absolve the owner from being responsible for some of the miscomWHAT IFS munication. When you see a lot of change “The problem is basically that one orders on a project, it usually means company’s problem,” he says. “They the plans were wrong, says Don have to design it, and they have to Schneider, an LSU construction build it.” Unless the owner’s internal management instructor, former engiengineers build new projects on neer, and attorney whose practice a daily basis—and most don’t— areas include construction law. That they’re probably going to need to doesn’t necessarily mean the designrely heavily on the construction er screwed up; some problems can’t engineers anyway, he adds. be anticipated. However, he says using a design/ But it might also mean the owners build firm sacrifices certain “checks changed their minds. He says part of and balances.” So it’s important for the job of project designers is to talk the owner to have a strong conowners through the various “what struction manager to represent the ifs” and ferret out ahead of time the owner’s interests and wishes. issues that might otherwise lead the “If there’s communication, most owner to change course later. of the problems go away,” Schneider Issue Date: Spring Ad proof #1 says. “They all need to work togethWhen you’re building a house, • Please respond by e-mail or fax with your approval or minor revisions. the architect. • AD designer WILL RUN ASisISan unless approval orBut final revisions er.”

BEYOND PLANNING More than half of construction project owners experienced one or more underperforming projects in the previous year, despite confidence in project planning and controls, according to KPMG International’s 2015 Global Construction Project Owner’s Survey. “It’s not just the quality of the controls,” says Geno Armstrong, KPMG’s global chair for engineering and construction. “You also need to develop the skills of those managing the projects and using the various tools. Across the board, there is a critical need for more skilled talent.” Key points raised by KPMG’s survey of project owners include: • Only 31% of their projects came within 10% of budget over the past three years. • Only 25% of their projects were finished within 10% of the original deadlines. • 44% of owners acknowledged a struggle to attract qualified craft labor. • 45% of owners cited a lack of planners and project managers. • 69% of owners hire external resources equivalent to more than 5% of their total project workforce. • 82% of respondents said they expect to see greater collaboration with contractors in the next five years. • But only 32% of owners said they had a “high level of trust” in their contractors. “Project owners should continue to invest in relationships with contractors to raise mutual trust and discuss problems or shortcomings,” Armstrong says. “Improving collaboration, along with continued investment in project management tools and processes should help pave the way to greater project success.” —D.J.

are received by the close of business today. • Additional revisions must be requested and may be subject to production fees.

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

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.

Belton Law Firm, LLC Belton Consulting LLC 7266 Tom Drive, Suite 200 Baton Rouge, LA, 70806 (225) 615-0212 www.beltonconsultingllc.com | emory@beltonconsultingllc.com | emory@beltonlawfirm.com 1012industryreport.com

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ENGINEERING

The soft soil challenge Experience and technology help geotechnical engineers build industrial structures on Louisiana’s unique soft soil. BY ADRIAN HIRSCH

S

ince Hernando de Soto discovered the Mississippi River in 1541, the delta’s rich soil and potential for transportation and commerce has made the area between Baton Rouge and New Orleans coveted real estate. While the yellow fever epidemic is no longer ravaging the population, and air-conditioning has made surviving the summers easier, one problem that has persisted since the time of the early settlers and fur traders is the challenge of building on the region’s soft soil. Soil deposits have washed downstream from other tributaries to form the Mississippi River Delta. These malleable soils along with river mechanics have allowed the river to change its course many times over the past millions of years. The depositional processes that create these deltas result in recent soil deposits that have not had time to harden and provide a solid base for building. The same conditions that bedevil Louisianans who attempt to build hunting or fishing camps on or near any river or bayou in the Sportsman’s Paradise are magnified in industrial applications and large-scale developments. A LOUISIANA PROBLEM Other areas of the country have soft soil. “But the extent of soft soils is generally limited,” GeoEngineers Principal Engineer Blake E. Cotton explains. “Many times it can be 80

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simply dug up, hauled away and replaced with stronger and more suitable materials (such as rock), which are readily available. Because of the depth and extent of soft soils in Louisiana, we have to deal with them.” The instability of soft soil not only affects industrial sites near or on water, it extends throughout our region. Although the Sacramento Valley is somewhat similar, those conditions are unique to south Louisiana. “If you were in north Texas, “ says David P. Sauls, GeoEngineers chairman of the board, “a river might influence [soil] 100 yards wide and maybe 50 feet deep, then there’s typically bedrock. [Here in Louisiana], the soft soils can extend laterally for miles and to depths well in excess of 100 feet.” Fortunately, the challenges of dealing with soft soil have not discouraged local, national and international industrial companies from investing in expansions of existing plants or new facilities on lands near the Mississippi. Louisiana Economic Development Secretary Steven Grissom reports companies are more interested in workforce; business climate; operating costs; access to utilities, feedstocks and logistics; and infrastructure than the soil quality. Furthermore, he points out, “There are significant engineering challenges

in other parts of the country and world—such as designing structures to strict seismic standards or to handle heavy snow loads—that industries do not have to deal with in Louisiana.”
 Still, since site quality does influence construction cost, LED maintains an inventory of development ready sites throughout the state [see page 90 for a map of the largest ones]. In addition, “Louisiana boasts an impressive array of engineering and construction firms that can address and solve the environmental and foundation challenges that any project would bring to the table,” Grissom says. “We have the talent and resources to ensure that the most demanding projects can successfully launch in

Louisiana. Once we point out the major industrial complexes developed by such companies as BASF, Nucor, ExxonMobil, Dow, Marathon and Cheniere Energy, among others, any concerns are quickly allayed.” USING THE TECHNOLOGY Marwa Hassan agrees. “I don’t think it’s a hindrance in businesses locating to Louisiana,” says the graduate coordinator/CETF distinguished associate professor of LSU’s Department of Construction Management. “We have enough technology in design and engineering solutions that allow us to create very stable, long-durable structures over soft soils.” The basic problem with soft soils stems from their propensity to 1012industryreport.com


ST. JAMES PARISH

BUILDING BIG: The first phase of the Nucor steel complex takes shape amid cane fields, wetlands and small towns in St. James Parish. The DRI (direct reduced iron) plant was completed in 2013.

expand with exposure to water and consolidate in dry conditions, which causes buildings to settle. “Unless we know what we are dealing with and design and build appropriately,” Hassan says, “there will be problems over the service life of the structure.” The first step is a surface investigation to classify the types of soil. Once the composition of a core sample is determined, Hassan says simple solutions might include adding lime to the clay soil to increase its load capacity; or, driving steel, concrete or wooden piles (which look like huge telephone poles) beneath the foundation to stabilize the structure. Another proactive strategy to prevent the constant expansion and 1012industryreport.com

contraction is to pre-consolidate the soil before construction. One method involves placing a heavy layer of topsoil on the surface for six months. “That extra load allows the soil to settle down,” explains Hassan. “When you remove that layer and place the building on the site, it reduces your consolidation and settlement of the building.” In its 50-year history, GeoEngineers has employed traditional techniques on many projects; but its engineers have also found alternative designs that have proven to be cost-effective solutions to soft soil problems. For example, when consulting Cotton and Sauls about adding an industrial tank to a chemical plant in St. Charles Parish, a client 10/12 INDUSTRY REPORT • FALL 2015

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ENGINEERING

Issue Date: Fall Ad proof #1

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

Baton Rouge’s

Most Complete Piping Supplier

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William (Bill) Dow, President • wdow@windustrial.com

8961 Buzbee Drive • Baton Rouge, LA 70809 Phone 225-753-2940 • Fax 225-753-2932

Pipes • Valves • Fittings • Plumbing • Fire Protection

Serving Louisiana Industrial • Mechanical • Fire Protection • Plant • OEM • Government • Public

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DON KADAIR

KEEP YOUR FINGER ON THE OF YOUR BUSINESS

THE DESIGN MEETS THE SOIL: Engineers Blake Cotton and David Sauls visit their company’s lab where soil samples are analyzed.

expected the firm’s recommendation to include pile driving beneath the foundation. “We proposed a shallow system,” says Cotton. “We supported the tank on the ground surface with a concrete ring wall around the periphery of the tank and then let it settle under controlled conditions and with careful monitoring. The client got millions of dollars in savings, and the tank is still performing well.” A RANGE OF SOLUTIONS Geotechnical engineers are developing creative new approaches to this age-old problem as advances in technology allow for refined and improved designs. “More instrumentation, monitoring and data collection adds to our knowledge as to how things perform during construction,” says Sauls. “The beauty of that is we can make changes, counteract and fortify as we go along.” Even though compressible soils tend to shift when weight is added without additional stabilization, GeoEngineers’ pre-construction analysis of a Baton Rouge municipal building site again suggested another alternative to pile driving. “The 19th Judicial

District Court House is an 11-story building that has a basement and a concrete mat foundation below the ground surface with no underlying deeper element,” Sauls says, “because the weight of the soil we took out of the basement equaled the weight of the building. The soil sitting at the bottom didn’t know the load had changed, so it had no reason to move.” Undoubtedly, each site poses different construction challenges, ranging from bubbling sand boils to submerged cypress forests. “Louisiana soils are very unique,” says Cotton. “It takes years to understand how to design for these soils. It’s not something anyone can do.” The experience of local geotechnical engineers has proven that investing additional time and money in pre-construction research and planning yields tremendous returns. “Ultimately, we view our work in terms of the impact on construction schedule and cost,” says Sauls. “The extra effort might require more design analysis to consider the possible range of solutions. If you pay a little money up front, you can save a ton of money and time during construction.” • 1012industryreport.com


BUSINESS REPORT ANNOUNCES….

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. The new and unique publication, produced by the Award-winning Baton Rouge Business Report, will provide the vehicle to deliver your message to these hard-to-reach decision-makers... right on target!

Watch for our winter issue coming this February. To reserve your space call us today.

225.928.1700

Next Issue: February 2016 A publication of

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PORT OF GBR

PORTS

Gearing up Both agribusiness and energy are key to recent growth at the Port of Greater Baton Rouge. BY MAGGIE HEYN RICHARDSON

E

stablished by the state of Louisiana in 1952, the Port of Greater Baton Rouge is consistently ranked in the top 10 ports nationwide, serving bedrock sectors including agribusiness, manufacturing and energy. Its 85-mile jurisdiction spans the river from the Sunshine Bridge north to the East Baton Rouge Parish northern border, and includes East and West Baton Rouge, Ascension and Iberville parishes. Both a deepwater and shallow draft port, the complex offers easy

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access to the Gulf Intracoastal Waterway, as well as the 15,000-mile Mississippi River inland waterway system and the Gulf of Mexico. The complex also incudes rail, interstate and state highway access. “All of the lower Mississippi ports from Baton Rouge to the mouth of river have some unique advantages,” says Karen St. Cyr, director of public affairs. “For us, we have the petrochemical corridor and its tenants as well as commodity drivers in the grain, sugar and other agricultural industries. ” Significant recent investment in

SHIPPING OUT: The TBC Princess docks at the Port of Greater Baton Rouge to take the first shipment of wood pellets from Drax Biomass LLC.

the port complex is now helping to expand capacity further, adds St. Cyr. Cargo coming through the port more than doubled in one year, jumping from 4.2 million tons in 2013 to 9.2 million tons in 2014. GRAIN AND MORE GRAIN A key reason is that more grain than ever is passing through the port. Corn, soybean, milo, wheat and other crops grown in the heartland travel down the Mississippi River to the port, where they’re stored, handled and eventually shipped through the Gulf to destinations worldwide. In 2014, 4.1 million tons of grain was exported through the port, a substantial increase from just over 577,000 tons the year before. The expansion is due to $150 million in improvements at the Louis Dreyfus Commodities’ grain and oilseed elevator, completed in 2013. The facility is capable of storing and

transferring grain as well as cleaning, drying and blending it with grain arriving from Louisiana growers. The grain complex now has the capacity to handle more than 5 million metric tons annually. Moreover, the completion of the Drax Biomass storage domes in 2014 has made it possible for the port to become a key player in the movement of wood pellets, says St. Cyr. The material is used in low-carbon home heating in Europe. Drax Biomass recently completed wood pellet mills in Morehouse Parish and Gloster, Mississippi. The company selected the Port of Greater Baton Rouge as the site for its dock facility and wood pellet storage tanks. Two large domes, now identifiable features on the Mississippi riverfront, are designed to keep pellets dry. They hold more than 40,000 tons of pellets each. Energy also remains a funda1012industryreport.com


• AD WILL RUN AS IS unless approval or final revisions are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. Carefully check this ad for: CORRECT ADDRESS • CORRECT PHONE NUMBER • ANY TYPOS This ad design © Louisiana Business, Inc. 2014. All rights reserved. Phone 225-928-1700 • Fax 225-926-1329

emcotechnologies.com • 225.925.8900 8900 S. Choctaw, Baton Rouge, Louisiana

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MOTOROLA, MOTO, MOTOROLA SOLUTIONS and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license. All other trademarks are the property of their respective owners. © 2012 Motorola Solutions, Inc. All rights reserved.

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PORTS

PORT OF GBR

mental part of the port’s activities. A new major project underway is Houston-based Genesis Energy’s $150 million oil storage and import/ export terminal on the Intracoastal Waterway. “Genesis will be able to bring in ships, unload the vessels, store oil in tanks and then move it around the country,” says St. Cyr. The Genesis facility should open by the end of this year. The port estimates that the project will bring 33 million barrels of crude oil and other petroleum products through the terminal. It will generate about $2 million in annual revenue for the port.

HOT COMMODITY: In 2014, 4.1 million tons of grain was exported through the port, a substantial increase from just over 577,000 tons the year before.

INFRASTRUCTURE St. Cyr says port officials have been working to expand and improve the transportation infrastructure to make the port’s rail and truck transfer more efficient. “We’re working on an overall rail improvement plan that will move more trucks, trains and railcars in and out of the port faster,” says St. Cyr. A $2.5 million project is un-

derway at North Line Road near the Intracoastal to improve rail access to the Inland Rivers Marine Terminal. In addition, the port received a $1 million grant from the U.S. Economic Development Administration for IRMT rail upgrades. These should be completed in 2015. The Drax Biomass complex has also seen improvements in rail infrastructure with a new wood pellet rail car unloading facility. The $5.1 million project was paid for through the Louisiana Department of Transportation Port Construction and Development Priority Program, along with a 10% match provided by the port. St. Cyr says the port has applied for a $10 million federal TIGER 2015 grant from the U.S. Department of Transportation for additional improvements to the port’s rail terminal yard. The area has long been congested, and improvements will allow more rail cars and unit trains to enter the facility without delays. St. Cyr expects the grant awards to be announced in September.

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Bringing the innovation The McNeese EDA University Center is a resource for business and industry in southwest Louisiana.

M

cNeese State Woolman, chief innovation officer University has rein the Office of Economic Developceived a $102,590 ment at McNeese. grant from the Located in the McNeese SEED Economic Devel(Southwest Entrepreneurial and opment Administration of the U.S. Economic Development) Center, Department of Commerce to help Woolman said the EDA University lead innovation and economic develCenter is building an innovation opment in southwest Louisiana. network to “leverage our expertise, The grant from the EDA Univerresources and outreach activities sity Center Economic Development to continue to grow our public and program funds the third year of a private partnerships.” five-year grant awarded to McNeese “This in turn supports initiain 2013. McNeese was one of 19 tives that are focused on advancing universities awarded the grant in a regional commercialization efforts, national competition to advance and entrepreneurship and a high-skilled strengthen regional economies. regional workforce,” she added. “EDA’s investment is an opporWoolman said the goal of the tunity to grow and support the McNeese EDA University Center innovation infrastructure in southis to create an innovation economy. Issue Date: Special Project Ad proof #1 west Louisiana through training, “Recently, the EDA Center at Mc• Please respond by e-mail or fax with your approval or minor revisions. technical assistance, • AD WILL RUN AS IS unless applied approval orresearch final revisions Neese launched an application called are workforce received by theeducation,” close of business today. and said Janet Innovation Marketplace that helps • Additional revisions must be requested and may be subject to production fees.

businesses and industry identify university expertise and intellectual capital as a resource for business and industry.” To access the Innovation Marketplace, go to http://seed. mcneese.edu/facultysearch/. Woolman said the EDA grant has also provided the opportunity for the EDA Center to partner with the city of Lake Charles and Calcasieu Parish Police Jury to protect and improve the quality of life in southwest Louisiana. “Our faculty members are working with these governmental bodies to provide technical assistance on such issues pertaining to the Chenier Plain region and urban forestry management,” she said. Last fall, the EDA Center also partnered with the McNeese Innovation Center to host Innovation Week, which included a series of

activities for students, faculty, staff and the community—showcasing innovative projects or research by students and faculty as well as interactive sessions to demonstrate how innovation works. “McNeese is also exploring emerging technologies. It is one of the first universities in the nation to roll out a program featuring the use of Google Glass, the newest in lightweight wearable technology. Also, students can use the MakerBot Replicator to create a 3-D prototype for their projects,” she said. “McNeese has positioned itself to be a University of Innovation—one where new ideas and emerging technologies are embraced to cultivate business creativity and innovation and to stimulate economic development in southwest Louisiana,” said Woolman. •

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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Top LED Certified Sites A LOUISIANA ECONOMIC DEVELOPMENT Certified Site is a development-ready industrial site that has completed a rigorous review process by Louisiana Economic Development and URS, an independent, third-party engineering firm. Listed are sites of 100 acres or more.

6 RAPIDES

VERNON

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1 3000 Acres Sunshine 1635 La. 75, Sunshine Parish: Iberville • Acreage: 3,000 Contact: Brian Bordelon 225.910.0510

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2 Pointe Coupee Power Park 7807 River Road/La. 415, Jarreau Parish: Pointe Coupee • Acreage: 1,541.95 Contact: Les Cantrell, 225.638.3500 3 Pointe Sunshine La. 18, Donaldsonville Parish: Ascension • Acreage: 987 Contact: Lisa Laws, 225.675.1750 4 Kent Site 5564 Normandy Road, Batchelor Parish: Pointe Coupee • Acreage: 902 Contact: Les Cantrell, 225.638.3500 5 Dow Louisiana Operations West 59270 La. 1148, Plaquemine Parish: Iberville • Acreage: 882.87 Contact: Jim A. Cavanaugh, 225.339.1163 6 England Airpark Heavy Industrial Site W1 1611 Arnold Drive, Alexandria Parish: Rapides • Acreage: 700 Contact: David H. Broussard Jr., 318.427.6407 7 Avoyelles Parish Port La. 105 South, Simmesport Parish: Avoyelles • Acreage: 687 Contact: Tommy Maddie, 318.941.2487 8 NRG Industrial Park 4007 La. 981, New Roads Parish: Pointe Coupee • Acreage: 640 Contact: Les Cantrell, 225.638.3500 9 Grace Farms West 15910 Ramah Road, Ramah Parish: Iberville • Acreage: 515.45 Contact: Jim A. Cavanaugh, 225.339.1163 90

10/12 INDUSTRY REPORT • FALL 2015

10 Churchill Technology & Business Park 700 Churchill Parkway, Avondale Parish: Jefferson • Acreage: 485 Contact: Jerry Bologna, 504.875.3908 11 Grace Farms East 15820 Ramah Road, Ramah Parish: Iberville • Acreage: 457.26 Contact: Jim A. Cavanaugh: 225.339.1163 12 St. Tammany South Central 1 mile east of St. Tammany Regional Airport, Abita Springs Parish: St. Tammany • Acreage: 361 Contact: Lawrence Wm. Haik Sr., 985.960.7033 12 Chennault Southwest Site 4605 East Prien Lake Road, Lake Charles Parish: Calcasieu • Acreage: 343 Contact: Megan McLellan, 337.491.9961 14 Allstar Site La. 76, Port Allen Parish: West Baton Rouge • Acreage: 203.924 Contact: Jim A. Cavanaugh, 225.339.1163 15 LSU Innovation Park 8000 GSRI Ave., Baton Rouge Parish: East Baton Rouge • Acreage: 199.86 Contact: Rachel Pierson, 225.381.7146 16 Nord du Lac Just north of Interstate 12 and west of La. 21, Covington Parish: St. Tammany • Acreage: 170 Contact: Bruce Wainer, 504.834.5511

17 Vinton Port 2395 Camp Louise Road, Vinton Parish: Calcasieu • Acreage: 161 Contact: George Swift, 337.433.3632

23 Globalplex La. 637, Reserve Parish: St. John the Baptist • Acreage: 130 Contact: Linda Prudhomme, 985.652.9278

18 Chennault Air Park Site 5 3650 Sen. J. Bennett Johnston Ave., Lake Charles Parish: Calcasieu • Acreage: 160 Contact: Matt Redd, 337.310.7333

24 Baton Rouge Aviation Business Park 9430 Jackie Cochran Drive, Baton Rouge Parish: East Baton Rouge • Acreage: 125 Contact: Jim A. Cavanaugh, 225.339.1163

19 Waterloo Site 9604 La. 75, Geismar Parish: Ascension • Acreage: 155.88 Contact: Lisa Laws, 225.675.1750

25 River Chase I-12 and Brewster Road, Covington Parish: St. Tammany • Acreage: 124.8 Contact: Townsend Underhill, 985.246.3785

20 Bunkie Industrial Park 1209 La. 115 West, Bunkie Parish: Avoyelles • Acreage: 148.83 Contact: Mike Robertson, 318.346.7494

26 Williams Memorial Airport Business Park La. 182 and Airport Circle, Patterson Parish: St. Mary • Acreage: 100 Contact: Frank Fink, 337.828.4100

21 Sulphur OST/I Park East Burton, Sulphur Parish: Calcasieu • Acreage: 144 Contact: Jeff Peterson, 337.433.1055 ext. 120

27 Franklinton Industrial Park Taft St., Franklinton Parish: Washington • Acreage: 100 Contact: Ryan Seal, 985.735.7565

22 Industrial Park East- PLC Tract 175 1101 James Sudduth Pkwy., Lake Charles Parish: Calcasieu • Acreage: 130 Contact: Dan Loughney, 337.493.3513

28 Phillips 66 Industrial Site La. 1133 and Davison Road, Sulphur Parish: Calcasieu • Acreage: 100 Contact: Phil Precht, 337.491.4829 1012industryreport.com


are received by the close of business today. • Additional revisions must be requested and may be subject to production fees. 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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10/12 Industry Report [Fall 2015]  

10/12 Industry Report is an award-winning publication that provides news, data, analysis and insight on heavy industry and industrial constr...

10/12 Industry Report [Fall 2015]  

10/12 Industry Report is an award-winning publication that provides news, data, analysis and insight on heavy industry and industrial constr...