10/12 Industry Report [Spring 2015]

BUSINESS REPORT’S

SPRING 2015

INDUSTRYREPORT

Building the

New initiatives like college-industry partnerships are helping to fill the industrial boom’s workforce needs.

PIPELINE

INSIDE:

• The crisis in emissions credits • Growth in southwest Louisiana • Powering the boom

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CONTENTS

Publisher Rolfe McCollister, Jr. Executive Assistant Tara M. Jeanise EDITORIAL Special Projects Editor Jerry Martin Director-Online Operations Brandi Simmons Director of Research Sierra Crump Contributing Writers Erin Z. Bass, Kathy Finn, Lisa Hanchey, David Jacobs, Maggie Heyn Richardson, Meredith Whitten Contributing Photographers Lee Celano, Terri Fensel, Cheryl Gerber, Don Kadair ADVERTISING Special Projects Manager Stacy Kaklis Account Executives Andrea Doming, Angie LaPorte, Emma Rollo Advertising Coordinator Brittany Nieto Custom Publishing Manager Judith LaDousa PRODUCTION/DESIGN Production Manager Melanie Samaha Art Director Hoa Van Vu Senior Graphic Designer Carolyn Valentine Blakley Graphic Designer Tammi deGeneres

Entergy’s Ninemile 6 power plant in Westwego

8 In case you missed it Industry briefs 10 The big picture Heavy cargo at the Port of New Orleans 12 Company profile

Playing with the big boys

16 An outstanding outlook

A Q&A with Louisiana Economic Development Secretary Stephen Moret

18 Project by project

Where the megaprojects are

20 Metrics Louisiana nonfarm employment approaches 2 million.

22 Building the pipeline An update on efforts to meet the boom’s workforce needs 33 Up and down How the oil price plunge affects the boom 36 Gaining perspective Southwest Louisiana’s regional impact study 44 Game changer

Inside the country’s top workforce training program

50 Powering the boom Addressing Louisiana’s new energy needs 60 Trade barrier

Emission reduction credits are hard to come by in the Capital Region.

Send your ideas and feedback to editor@1012industryreport.com.

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10/12 INDUSTRY REPORT • SPRING 2015

69 Calling all

subcontractors The contracting process is rolling for the Sasol Ltd. megaproject.

73 Transportation blues Traffic hits industry in the Capital Region.

76 What’s next?

Where area leaders are focusing their attention for 2015 78 On a mission Bell Helicopter’s Lafayette Assembly Center 79 Resources Resources and organizations to know

ADMINISTRATION Chief Financial Officer Jonathan Percle Chief Innovation Officer Curtis Heroman Digital Product Development Lead Dylan Staley Business Associate Danielle Daly Business Manager Adam Lagneaux Office Coordinator Debbie Lamonica Courier Jim Wainwright Receptionist Cathy Brown 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 © Copyright 2015 by Louisiana Business Incorporated.

All rights reserved by LBI. The Greater Baton Rouge Business Report (USPS 721-890 ISSN 0747-4652) 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.

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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.

FROM THE PUBLISHER

Jobs, jobs and more jobs

ROLFE MCCOLLISTER JR.

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10/12 INDUSTRY REPORT • SPRING 2015

T

he good news is, while America’s economy and job growth continue to sputter, Louisiana’s 10/12 corridor from Lake Charles to the Northshore of Lake Pontchartrain has become the “jobs corridor.” This could be a reflection of our state’s No. 1 ranking for “business climate” by Business Facilities magazine in 2014. Or maybe it’s having the lowest tax burden in the U.S. for manufacturing operations.

Or the nation’s best state workforce training program (FastStart) for the last five years. Or being blessed with tremendous natural resources and geography on the Mississippi River and Gulf of Mexico. All of these matter and contribute. We also have a governor whose first priority from day one was JOBS, and the results speak for themselves. Louisiana is growing jobs—and more are coming in 2015 and 2016.

With these thousands of jobs comes a need for better workforce development, particularly for construction and industrial skills. Inside, we take a look at the efforts and the progress being made by LCTCS, Associated Builders and Contractors, and a new initiative for high school students called Jump Start. And we talk about workforce issues with industry executives Roland Toups and Art Favre and Louisiana Workforce Commission Executive Director Curt Eysink.

Also inside, we look at the impact on our industrial boom from the drop in oil prices, as well as the potential risk posed by the shortage of EPA emission credits in the Capital Region.

Reporter Kathy Finn interviews Louisiana

Secretary of Economic Development Stephen Moret to get an update on the “boom” and the outlook for Louisiana’s economy. (In May, Moret will become the new CEO of the LSU Foundation.)

We also examine the Southwest Louisiana Regional Impact Study, which made recommendations based on what areas will see the most growth, what housing solutions make the most sense and how local government has to change.

What are Lake Charles and the surrounding parishes doing to get ready for the future?

Louisiana is home to the nation’s best workforce training program: FastStart. We take a look at its success and the man who makes it tick, Jeff Lynn.

Finally, this edition of 10/12 Industry Report provides insights from industry and community leaders [pages 76-77] alongside resources you can use, like a map of the largest projects proposed in south Louisiana [pages 18-19] and a list of organizations to know [page 79].

We hope you will enjoy your VIP copy of 10/12 Industry Report and use it as a valuable tool for business decisions in 2015. Let us know what you think of this spring edition and share your ideas on what you would like to see included in our upcoming fall edition. Email us at editor@1012industryreport.com.

P.S. Enjoy reading your copy of 10/12 Industry Report, and if you need extra copies for clients or colleagues, contact the Business Report office at (225) 928-1700.

• 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.

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IN CASE YOU MISSED IT

Acadiana goes regional transforming into One Acadiana, an organization that aims to unite businesses and economic development organizations in Acadia, Evangeline, Iberia, Jefferson Davis, Lafayette, St. Landry, St. Martin, St. Mary and Vermilion parishes. Jason El Koubi, former president and CEO of GLCC, is One Acadiana’s new president. Home Bank CFO Joseph Zanco, GLCC’s former chairman, is One Acadiana’s chairman. GLCC’s

former members are automatically members of One Acadiana, and the rest of the 70-plus-member board are donors to the One Acadiana initiative, which met its $3 million fund raising goal in January, The Daily Advertiser reports. “One Acadiana will deliver a new, highly professional, nationally competitive economic development program for the region, which will help manage Acadiana’s current and long-term growth,

PORT OF NEW ORLEANS

WHILE ECONOMIC DEVELOPMENT efforts in southwest Louisiana, the Capital Region and other parts of the state have long been “regionalized” under multiparish organizations, such efforts in the Lafayette area continued to be largely structured by a collection of individual parish and city chambers of commerce. Not anymore. In February, the Greater Lafayette Chamber of Commerce announced that it was

retain and grow current business, and diversify the economic base by attracting new emerging growth industries and professional talent,” says a statement on the group’s website, oneacadiana.org. Local chambers in other Acadiana municipalities and parishes in the region will continue to provide leadership over business issues in their areas.

—Jerry Martin

EPIC WIN FOR LIVINGSTON PARISH In March Gov. Bobby Jindal and Epic Piping President Kent Shepherd announced the company will make a $45.3 million capital investment in Livingston, Louisiana, to establish an advanced pipe fabrication facility and corporate headquarters. The entire 200,000-square-foot facility—with future expansion to 300,000 square feet—will be air-conditioned workspace, with advanced robotic equipment to optimize pipe fabrication for a host of industries. The project will create 560 new direct jobs with an average annual salary of $56,600, plus benefits. Louisiana Economic Development estimates the project will result in an additional 732 new indirect jobs, for a total of more than 1,200 new jobs in the Capital Region and surrounding parishes. The company estimates the project will generate an additional 385 construction jobs. Epic Piping will build on a 70-acre site immediately southwest of the Interstate 12 interchange at La. 63. In conjunction with an affiliated 350-job manufacturing location under development in San Marcos, Texas, Epic Piping is creating what the company forecasts will become the fastest-growing industrial pipe fabrication organization in the world. Epic also will establish 60,000 square feet of auxiliary fabrication space in Baton Rouge.

—LED

JEFF DAVIS WINS NEW GALVANIZING PLANT Cargo worked at the Port of New Orleans’ public docks in 2014 totaled 8.37 million tons, the highest total since 2000 and up 28% compared to the prior 12-month period. Imported steel and container cargo led the growth, as imported iron and steel rose 101.6% in the 12-month period to 3.54 million tons. New shippers such as Chiquita, which returned to the port after a 40-year hiatus, and project cargo generated by the growing chemical industry, will bolster cargo figures in the future, says port president and CEO Gary LaGrange. Meanwhile, cargo worked at the Port of Greater Baton Rouge’s public docks in 2014 more than doubled over 2013, according to year-end statistics from the port. In 2014 the port handled more than 9.2 million tons of cargo, an increase of more than 100% over the 4.2 million tons that passed through in 2013. Officials with the port attribute the growth to a new grain elevator completed in late 2013 by Louis Dreyfus Commodities, a European grain exporter. Activity at the port’s petroleum fuel terminal was also up by about 44% over 2013, while cargo handled at its coke facility was up 36%.

With hopes of capitalizing on Louisiana’s burgeoning industrial boom, a Birmingham, Alabama-based firm will invest $9.75 million to build its first metal galvanizing plant in the state, company officials announced in February. Metalplate Galvanizing plans to construct the 50,000-square-foot facility in Jennings, a city of roughly 10,000 residents in Jefferson Davis Parish, creating an expected 104 new direct jobs. “This new plant will be the largest of Metalplate’s seven galvanizing plants located across the southern U.S.,” says company chairman Hartwell Davis in a prepared statement.

“Metalplate recognizes the very large and enduring growth potential of energy-related industry in Louisiana and in particular along its I-10 corridor.

We see a great need developing for hot-dip galvanizing at both new industrial operations and expansions of existing plant facilities.” Through hot-dip galvanizing to protect metal from corrosion, Metalplate Galvanizing serves customers in the steel, petrochemical and other industries. Its six other facilities are located in Atlanta, Houston and Jacksonville, Florida.

—Staff report

—Steve Sanoski

PORTS SEE HUGE CARGO GAINS

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10/12 INDUSTRY REPORT • SPRING 2015

TRAINING THE TRAINERS In hopes of helping the state address its skilled worker shortage, LSU is preparing to launch both a new graduate certificate and a master’s program in workforce development that have been developed in consultation with Louisiana Economic Development’s FastStart workforce development team, the Louisiana Workforce Commission and the state’s community and technical college system. “We’re not going to be the ones who necessarily train the welders and other skilled workers that are needed, but our mission is to develop the professionals who will train, develop and educate the skilled workforce,” says Ed Holton, director of LSU’s College of Human Sciences & Education. “But we shouldn’t be going down this road without partners, and that’s why we’ve worked with FastStart, LWC and the community college and technical college system. They’re on the front lines of workforce development issues.” Since last fall, LSU officials have been working with LED and others to shape the curriculum for the graduate certificate. Students will be able to earn it in as little as one year by completing a six-course curriculum.

The LSU Board of Supervisors OK’d creating the graduate certificate at its meeting last month, and Holton hopes the Board of Regents will give it final approval.

Courses for the graduate certificate will be available exclusively online.

—Steve Sanoski

PEOPLE: NEW WIC DIRECTOR The Louisiana Workforce Commission’s new Workforce Investment Council director, Jenee Slocum, brings both state and international experience to the agency. Slocum recently served as the director of special projects for Louisiana Economic Development, where she managed all aspects of speaking engagements, key meetings and social engagements for LED Secretary Stephen Moret, researched and wrote policy white papers and briefings for the governor, served as a liaison between LED and the higher education community, and advised and coordinated the activities of the Louisiana Innovation Council. Slocum was also an integral asset in developing the Workforce and Innovation for a Stronger Economy (WISE) Fund in the 2014 legislative session and the operating parameters for use and distribution of WISE dollars. In addition to her state government experience, Slocum worked on the Rio 2016 team that translated Rio de Janeiro’s successful bid for the 2016 Summer Olympic Games.

COURTESY JENEESLOCUM

—Staff report

REAL ESTATE SNAPSHOT: BATON ROUGE The industrial market in Baton Rouge continues to improve, demonstrating itself as one of the strongest segments of the real estate industry. A recent example is Texas-based Vermeer Equipment’s purchase of a 3.465-acre site at 12131 Airline Highway. The property, formerly occupied by Stone Oil, was improved with a 5,500-square-foot office/warehouse, but the majority of the value was in the land itself. Waguespack Oil Co. of Thibodaux sold the property to Vermeer Equipment for $1.08 million, or about $7.14 per square foot. Matthew Laborde of Beau Box Commercial Real Estate, who brokered the transaction, says Vermeer will construct a new 10,000-square-foot showroom and office for its equipment rental and service operation. Vermeer has 12 locations throughout Texas, but this location will be the company’s first in the Louisiana market.

—Tom Cook, Business Report real estate columnist

10/12 INDUSTRY REPORT • SPRING 2015

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THE BIG PICTURE

Doing the

HEAVY LIFTING THE LIFT Fracht USA/ Germany, a global freight forwarder, completed one of the heaviest project cargo lifts in Port of New Orleans history Jan. 12, successfully discharging a 718-ton, 164-foot-long absorption tower from a ship to barges positioned alongside deck cargo pontoons.

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10/12 INDUSTRY REPORT • SPRING 2015

THE LIFTERS The lift was completed at the port’s Louisiana Ave. wharf by SAL Heavy Lift, Fracht, Roll-Lift, McDonough Marine and the terminal’s stevedore, Coastal Cargo Co. LLC.

45 DAYS AT SEA The SAL Amoenitas arrived at the port carrying the tower after a 45-day trip from Shanghai, China.

PREPARING Coastal Cargo’s general manager of New Orleans operations, Don Zemo Jr., said he spent a week making the preparations to pull off the lift safely and successfully.

Coastal Cargo unloaded 400,000 cubic meters of cargo in heavy lifts like this one last year.

TIME ON TASK The lift took almost four hours to complete.

A YEAR TO PLAN Fracht officials said the entire move took more than a year of careful planning.

“When you look at this move, project forwarding isn’t just calling the vessel lines and calling the stevedore,” said Reiner Wiederkehr, Fracht’s chief operating officer.

“There are so many things involved with such a huge task.

WHAT IS IT? The absorption unit is an industrial-size tower (it measures 164 feet long; 24 feet wide; and 23 feet, 7 inches high) used to separate out components of rising gas.

PORT OF NEW ORLEANS

UP THE RIVER After the lift, McDonough Marine transported the absorption tower by barge 80 miles up the Mississippi River to Donaldsonville, where it was to be installed in the $2.1 billion expansion of the CF Industries Nitrogen Complex.

The expansion is one of the largest single capital investments in the history of Ascension Parish.

10/12 INDUSTRY REPORT • SPRING 2015

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COMPANY PROFILE

WHO DAT: LLOG officials believe their Who Dat development in the Gulf is the only privately owned floating production system in the world.

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10/12 INDUSTRY REPORT • SPRING 2015

LLOG

Playing with the big boys A private, homegrown, Louisiana oil exploration and production company is making waves in the deep water of the Gulf.

BY DAVID JACOBS

W

at what would come to be known as the Who Dat offshore oil field.

“I think there were a number of people that were surprised we went forward at that time, not knowing what all the regulations would be,” says Rick Fowler, the company’s vice president for deepwater projects.

“We felt there had to be a way for us to operate in the Gulf of Mexico, so we went forward with the project.”

And they were right.

Operating somewhat under the radar from its Covington headquarters, LLOG according to one ranking is the top privately owned liquids producer in the United States. As an independent company that competes toe-to-toe with the big boys, it follows its own judgment, not that of stockholders or Wall Street.

THE RIGHT PLAY LLOG was founded in 1977, primarily to develop prospects in south Louisiana. As the company grew, its focus expanded to include

LLOG

hen the Obama administration announced a moratorium on deepwater drilling in the Gulf of Mexico in 2010, politicians and industry spokespeople howled. The explosion on the Deepwater Horizon rig at the Macondo well was tragic, some said, but there was no reason to shut down an entire industry sector that otherwise was following the rules and operating safely.

Conspiracy theories that President Barack Obama would try to kill the industry with onerous new regulations proliferated in some circles. Even if the moratorium eventually was lifted, the naysayers said, companies might take their rigs, jobs and tax money to new locales and not come back for many years.

But at LLOG Exploration, it was no time to panic. The Louisiana company was on the cusp of launching its biggest project to date

HOME BASE: From its headquarters in Covington, LLOG runs an operation that has a 70% exploration success rate and has drilled more than 350 wells in the Gulf and the Texas/ Louisiana Gulf Coast since 2001.

the depths of the Gulf of Mexico.

In 2004, LLOG purchased seismic data covering a portion of the Gulf known to the offshore industry as the Mississippi Canyon.

It bid $6.77 million for a lease in the canyon the next year, a fairly high number for previously owned acreage. But the new data convinced LLOG—and several other companies whose bids had fallen short—that the area still had serious commercial potential.

Inspired by its own results and those of competitors drilling nearby, LLOG successfully bid almost $23.7 million for an adjacent lease and traded with another company for a third section. LLOG now had all the components of what it later dubbed the Who Dat field, named, as you may have guessed, during the New Orleans Saints’ 2009-2010 Super Bowl run.

The Who Dat development is a big part of LLOG’s shift from “who’s that?” to the “who’s who” list of the Gulf ’s independent players.

“It is certainly the largest thing that we’ve done in our history,” Fowler says.

Who Dat is LLOG’s biggest deepwater field in terms of the number of wells, he says, noting that eight wells there are producing and two more will be soon. For the first time in deepwater, the company developed a floating production system rather than tying back to infrastructure owned by another company.

The Who Dat FPS began producing in 2011.

“As far as we know, it is the only privately owned floating production system in the world,” Fowler says.

Not only was it the first FPS installed in the Gulf after the Macondo blowout, Fowler says, but LLOG

LLOG EXPLORATION AT A GLANCE • Founded: 1977 in Metairie • President and CEO: Scott Gutterman, who joined the company in 1993 and became CEO in 2007 • Headquartered in Covington, with offices in Scott and Houston • 170 employees • Ranked in 2014 as the top privately owned liquid producer in the United States • One of the top 20 exploration and production companies in the Gulf of Mexico, public or private • Has drilled more than 350 wells in the Gulf of Mexico and the Texas/ Louisiana Gulf Coast since 2001 • 2014 net production: 26,000 BOE (barrels of oil equivalent) per day Source: LLOG

was working through the contracting process even as the Macondo event was unfolding.

About $2 billion in total capital was required for the project, although the financial arrangement with EXMAR, which delivered the FPS, allowed LLOG to share the risk that it wouldn’t be approved by regulators in the stricter post-Macondo environment. But it was approved, and Who Dat is now producing.

“I think that was a big step for the company to put Macondo behind us and move forward,” Fowler says.

While LLOG of course had no direct involvement with Macondo, Fowler says he hopes the industry learns as much as possible from that rather serious incident and continues to improve safety and vigilance.

A CREDIT TO LEADERSHIP Chris John, president of the Louisiana Mid-Continent Oil and Gas Association, says LLOG’s success as 10/12 INDUSTRY REPORT • SPRING 2015

13

COMPANY PROFILE an independent operating in deeppublic company that has to answer water is a credit to the company’s to stockholders and outside analysts leadership and business plan. every quarter. As an example, Fowler “It’s been very difficult for the mentions the fact that LLOG has an independents since Macondo,” John inventory of subsea trees, which are says. used to monitor and control the proPermitting, planning, securing duction of an underwater well and insurance and meeting regulations cost several million dollars each. It have become more expensive and might be hard for a public company time-consuming, he says. Meanto justify having an expensive asset while, companies are venturing like that sitting around, but LLOG deeper and deeper into the Gulf, is free to hang on to them and put which also makes drilling more them to use quickly when needed. expensive and challenging.

Which is not to say there are “These are multibillion-dollar no drawbacks to being a smaller projects,” John says. company. When LLOG first met Fowler says the tougher regulawith South Korea’s Hyundai Heavy tions haven’t been a major burden Industries about a contract, Fowler for LLOG because the new rules is sure the larger company had never largely required things the company heard of his. But it helps that LLOG already was doing. The permitting is building a successful track record process takes longer, in part because in the Gulf. of the staffing limitations of federal “We’re not quite the stealth comregulators, though he says the govpany that we once were,” he says. ernment was able to expedite a perIndependent companies always mit for LLOG when a rig finished have played an important role in the its work and the company wanted to economic ecosystem of the Gulf of Issueit to Date: Spring Ad proof #2 Mexico, says Don Briggs, president move the next well.

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

AtWILL theRUN same • AD AS IStime, unlessindependence approval or final revisions of the Louisiana Oil & Gas Assoare received by the close of business today. allows for more fl exibility than a ciation, noting that independents • Additional revisions must be requested and may be subject to production fees.

FOWLER: “We’re not quite the stealth company that we once were.”

have access to the same science and technology and sometimes are more nimble than their larger competitors.

“It is always interesting when you

see a [Louisiana] homeboy out there playing in the deepwater where the big guys are,” Briggs says, “and being extremely successful doing so.”

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CHERYL GERBER

INDUSTRY ON THE MOVE

WHAT’S NEXT? WHAT WILL THE CHANGES IN ENERGY PRICES MEAN TO INDUSTRY IN SOUTH LOUISIANA?

Regions Bank and 10/12 Industry Report invite you to join us for a breakfast featuring a special presentation by:

DR. DAVID DISMUKES Executive Director LSU Center for Energy Studies

PRESENTED BY:

• Tuesday, May 5th • 8-9:30 a.m.

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10/12 INDUSTRY REPORT • SPRING 2015

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DON KADAIR

UNDERSTANDING THE BOOM

A

s the first quarter of 2015 wound to a close, 10/12 Industry Report spoke with LED Secretary Stephen Moret to get an overview of the state’s economy and the latest developments in the industrial boom. The following are his comments (edited for length).

An outstanding outlook A conversation with Stephen Moret, secretary of Louisiana Economic Development.

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10/12 INDUSTRY REPORT • SPRING 2015

Q. Louisiana is used to volatility in commodity prices, but the recent decline in crude oil prices has been pretty dramatic. How badly is this hurting the industrial growth we’ve heard so much about?

A. We’re continuing to experience a huge amount of manufacturing investment, and the outlook continues to be outstanding. While we would prefer for oil prices to be a bit higher in terms of our oil and gas industry, the vast majority of the manufacturing projects that we have announced are continuing to move forward as planned. And we have some really big things currently underway.

For example, in southwest Louisiana, Sasol has broken ground on their ethane cracker project, which is close to a $9 billion project.

Cheniere [Energy Inc.] is underway with their project, which has been expanded to about $18 billion. The

Sempra [Energy] LNG project is under construction—I believe the first phase is about $9 billion, and they’re now planning to expand it even further.

And we have other projects under construction around the state. Methanex is still wrapping up the second-phase investment of its methanol production facility. You’ve got the Bell Helicopter Jet Ranger X manufacturing facility in Lafayette [see page 78 for a profile of the project], and there are many others.

More projects are going to be breaking ground in the next 12 months. Yuhuang Chemical is a $1.8 billion project, and on top of that we have a great prospect pipeline. We have more than $40 billion worth of prospects—not things we have announced, but things we’re pursuing and projects [whose owners are] deciding where they’re going to locate.

I think we’re going to get a big chunk of that as well.

Q. Is the feasibility of any of the projects that are “in the pipeline” tied to the price spread between oil and natural gas, as the Sasol gasto-liquids plant was?

A. Some are [sensitive to the price spread] and some aren’t. But keep in mind, even at current oil price levels, essentially all of those projects are still very economically competitive.

Even with Sasol, the issue with the delay was actually not the economics of the project but that, because oil prices were down so much, they had a lot less cash flow, and it would put a strain on the company to go forward at the same pace with the gasto-liquids project. But they indicated that the project itself would still be economically attractive at the current oil price. They need a ratio of about 14 to 1 (in terms of the price of ) oil to natural gas, and I think it’s still comfortably in that range.

It’s really only the gas-to-liquids projects that have this real sensitivity to needing a significantly higher oil-to-natural-gas price ratio. For the chemical projects, 7 or 8 to 1 is great, and we’re really comfortably in that range.

The petrochemical sector has one of the highest multipliers of any industry.

It would not be uncommon to have a project where every direct job results in five or six, or even seven indirect jobs.

Q. We understand that the Yuhuang Chemical project represents the first major foreign direct investment into Louisiana from China. What is the significance of a Chinese manufacturer building a plant like this here?

A. It’s great to be able to attract significant investment out of China into Louisiana. We’re actively competing for a bunch of projects in China. A small team of us went over there a few months ago, to Beijing, Shanghai and Ningbo, and we have a number of big, China-based, global companies that are considering projects in Louisiana right now.

Yuhuang Chemical is the biggest one announced to date, but there are several others that we’re competing for.

I think that’s going to be a bit of a trend because the manufacturing cost advantage that China has had has really eroded quite a bit. They have had huge increases in labor and logistics costs; real estate costs are high; and electricity costs are going up rapidly. There are a bunch of issues that have caused the U.S. and China manufacturing sectors to start to come more into parity, particularly in downstream, natural gas-related projects. With the U.S. natural gas price being so low, it’s really made the U.S. much more competitive for those projects, and of course we’re trying to get more than our fair share of those. Once we realized that there was going to be meaningful interest coming out of China, we’ve really taken that country more seriously, and that’s why we’ve been spending time in Asia.

Q. The industrial expansion prom-

ises to generate a lot of short-term construction employment. Beyond that, what is the value to Louisiana of having so many of these new or expanded plants come to fruition?

A. I think the permanent employment impact is very significant.

Certainly, it’s many thousands of new permanent jobs, including direct [employment] at the plants, but also jobs with the contractors, at machine shops, maintenance firms and so on. Typically, these are pretty high-wage jobs, like $70,000-plus average salaries plus benefits. So it’s a tremendous amount of new high-paying jobs, and tax revenue at the local and state level.

You’ve heard of the multiplier effect, with direct jobs spinning off other jobs in suppliers, support services, professional services and so on.

Well, the petrochemical sector has one of the highest multipliers of any industry. It would not be uncommon to have a project where every direct job results in five or six, or even seven indirect jobs. For a car [manufacturing] plant, you might have two or three indirect jobs for each direct one, but for chemical plants it’s more than double that. They really do become major economic drivers and also generate a huge amount of new tax revenue.

Q. Do you expect to see more natural gas liquefaction projects built in Louisiana?

A. Cheniere is under construction, Sempra is under construction, and I think the British Gas/Energy Transfer Partners project is going to happen. Of the other ones that have been talked about, it’s hard

to say which of them will get built.

But the ones that are almost certain to be completed represent more than $40 billion. We’ll just have to see which of the others get fully financed and permitted.

Q. Other than the Sasol gas-toliquids plant, have any other of the announced industrial projects been suspended or called off?

A. I don’t recall any that were canceled. There have been a couple that have slowed down, and I think that Sasol basically said they’re not going to do all the work as fast as they intended.

Q. The oil price drop may not have a big impact on the chemical projects, but it does affect the oil and gas industry. How seriously are oil prices hurting the state’s economic growth?

A. Today Louisiana’s economy is still doing well even with the lower [oil] prices. Now, we have to monitor how it plays out over time, but overall I think we’re still going to grow.

One big takeaway from [the oil price drop] is that it shows the importance of continuing to work to diversify the economy. We definitely want to continue to be an energy state—it’s a huge part of who we are, we’re very competitive in that sector and it generates a lot of high-paying jobs. But at the same time we need to have a sense of urgency to cultivate other industries so that we become less susceptible to the swings of that sector. And we already have done that to a large extent.

The really exciting thing is, in addition to this big industrial stuff, we have a rapidly growing software development industry; we’re seeing the aerospace sector grow in a meaningful way; we’re seeing the water management sector come along. There are a lot of good things happening over and above the eye-popping manufacturing investment sector.

—Interview by Kathy Finn

10/12 INDUSTRY REPORT • SPRING 2015

17

CLAIBORNE

UNDERSTANDING THE BOOM BOSSIER

Project by project

CADDO

2 Sasol Ltd. $19.1B-$22.1B | 1,253 jobs 3 BG Group and Energy Transfer Partners (Trunkline LNG) $9B | 250 jobs 4 Southern California Telephone & Energy (Monkey Island LNG) $9B | 200 jobs

16 EuroChem $1.5B | 200 jobs 17 South Louisiana Methanol $1.3B | 63 jobs 18 G2X Energy $1.3B | 243 jobs 19 BioNitrogen Louisiana Holdings, LLC $1.25B | 250 jobs 20 AM Agrigen Industries $1.2B | 150 jobs

5 Sempra Energy/ Cameron LNG $6B* | 130 jobs*

21 Castleton Commodities International $1.2B | 50 jobs

6 Venture Global LNG $4.25B | 100 jobs

22 Dow Chemical $1.06B | 71 jobs

7 Nucor Steel Up to $3.4B | 1,250 jobs

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

8 Axiall/Lotte Chemical $3B | 250 jobs 9 Lake Charles Clean Energy (Leucadia Corp.) $2.5B | 215 jobs

24 Benteler AG $975M | 675 jobs 25 Lake Charles Cogeneration, LLC $820M | 210 jobs

10 American Specialty Alloys $2.4B | 1,450 jobs

26 Valero Refining – New Orleans, LLC $700M | 24 jobs

11 Marathon Petroleum $2.35B | 65 jobs

27 Louisiana LNG Energy, LLC $646.6M | 44 jobs

12 Magnolia LNG $2.2B | 50 jobs 13 CF Industries Nitrogen, LLC $2.1B | 93 jobs 14 Live Oak LNG $2B | 100 jobs 15 Yuhuang Chemical, Inc. $1.85B | 400 jobs 18

10/12 INDUSTRY REPORT • SPRING 2015

RED RIVER

DESOTO

31 Shintech Louisiana, LLC $500M | 5 jobs 32 Sundrop Fuels $450M | 150 jobs

NATCHITOCHES SABINE

33 Westlake Chemical (Geismar) $425M | 70 jobs 34 Shintech Louisiana, LLC $420M | 88 jobs 35 Williams Olefins $400M | 5 jobs

VERNON

36 ExxonMobil Corp.

(Chemical) $336M | 30 jobs 37 Westlake Chemical (Lake Charles) $330M | 25 jobs BEAUREGARD

38 NFR BioEnergy $312M | 450 jobs

A

39 Avalon Rare Metals Processing, LLC $300M | 225 jobs 40 Petroplex $300M | Not available 41 German Pellets Louisiana, LLC/ Louisiana Pellets, Inc. $290M | 80 jobs

37

42 2 8 9 19 25

42 PPG Industries, Inc. $264M | 27 jobs

28 Methanex Corp. $550M | 35 jobs

43 Gavilon Trading $250M | Not available

29 Methanex Corp. $550M | 120 jobs

44 Cambridge Energy FLNG No announced size

30 Honeywell International $500M | 80 jobs

24 BIENVILLE

Louisiana industrial projects announced or proposed since 2009 with projected capital investment of $250 million or more.

Second line shows projected capital investment and direct new jobs. List is representative, not complete; project statuses change frequently. (LNG = liquefied natural gas export project) 1 Cheniere Energy (Sabine Pass LNG) $20B | 400 jobs

WEBSTER

CALCASIEU

3 12 14 5 CAMERON

1

6

4

BLUE = PROJECT KILLED *Numbers do not reflect project’s newly announced expansion.

JEFF D

UNION

E

MOREHOUSE

WEST CARROLL EAST CARROLL

LINCOLN

OUACHITA

RICHLAND MADISON

JACKSON

FRANKLIN

CALDWELL

TENSAS WINN

41 CATAHOULA LASALLE GRANT

TOTAL POTENTIAL CAPITAL INVESTMENT: > $105B TOTAL POTENTIAL DIRECT NEW JOBS: 9,416

CONCORDIA

10

RAPIDES

32 AVOYELLES

18

WEST FELICIANA

WASHINGTON

EAST FELICIANA

ST. HELENA

EVANGELINE ALLEN

POINTE COUPEE

TANGIPAHOA

ST. LANDRY WEST BATON ROUGE

34

36

EAST BATON ROUGE LIVINGSTON

31 32 IBERVILLE

38

ION NS

ST. MARTIN

LAFAYETTE

35 39 33 28 29

CE AS

16

ACADIA

JEFFERSON DAVIS

ST. TAMMANY

13 15 30

17 7

ST. JOHN THE BAPTIST

43 13 40

20

ST. JAMES

23

IBERIA ASSUMPTION VERMILION

ORLEANS

26

ST. CHARLES

JEFFERSON

21 ST. BERNARD

ST. MARTIN

27 ST. MARY LAFOURCHE IBERIA

PLAQUEMINES

TERREBONNE

44

Sources: LED, American Press, 10/12 research

10/12 INDUSTRY REPORT • SPRING 2015

19

METRICS

Employment growth Louisiana total seasonally adjusted nonfarm employment, end-of-year, 2000-2014 2,050,000

DECEMBER 2014: 1,992,200 2,000,000

1,950,000

1,900,000

1,850,000

In 2015, Louisiana could surpass 2 million nonfarm jobs for the first time ever.

1,800,000

1,750,000

1,700,000 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

SOURCE: LWC, Louisiana Occupational Information System

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What a job boom looks like Lake Charles MSA construction employment 17,000

16,526 16,000

Between January 2012 and June 2014, construction employment in the Lake Charles Metropolitan Statistical Area rose 57.2%.

15,000

14,000

13,000

12,000

10,513 11,000

10,000

J

F

M

A

M

J

J

A

S

2012

O

N

D

J

F

M

A

M

J

J

A

S

O

N

D

J

2013

F

M

A

M

J

2014

SOURCE: LWC Labor Market Information

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WORKFORCE

Building the pipeline Louisiana’s workforce challenges remain serious, but innovative partnerships and other initiatives have gradually begun to produce more craft workers to staff the industrial boom. BY MEREDITH WHITTEN

J

ust five years ago manufacturing was considered a declining industry in Louisiana, with plant closures, job losses and attention focused on attracting other industries, such as digital media and renewable energy, and the workforce those industries need.

By 2013, the low price of natural gas coupled with efforts to improve the state’s business climate had prompted a U-turn in Louisiana’s manufacturing industry. Each day seemingly brought yet another announcement of plans for a new plant construction or expansion of existing facilities. By summer of 2014, the estimated dollar value of these new plants and announced expansions had reached $80 billion. Attention frantically focused on finding the projected additional 86,300 skilled craft workers needed by 2016 to turn these plans from abstract announcements to the reality of constructed plants, providing jobs and contributing to the state’s economy.

With the calendar running well into 2015, how are efforts to train and supply the needed skilled industrial craft workforce faring?

“Moving right along,” says Roland Toups, chairman/CEO of Turner Industries, an industrial contractor that employs some 9,000 workers in the Capital Region and was tabbed in February as a key contractor on Sasol’s $8.1 billion ethane cracker project in Lake Charles. “However, the demand curve is flatter because market conditions are rapidly changing. We are in a very dynamic environment with the oversupply and falling prices of oil, currency exchange issues and recent USW refinery strikes.”

A shortage exists in all skilled craft professions, though the shortage is particularly acute for welders, pipefitters, operators and electricians—“craft professions that require a lot of training and experience,” 22

10/12 INDUSTRY REPORT • SPRING 2015

Toups notes.

Robert Clouatre, director of education and training with the Associated Builders and Contractors Pelican Chapter, agrees, adding, “Welding is always at the top. Just about everything built in a chemical or petroleum facility has to be welded.”

Other skilled craft professions in demand include millwrights, boilermakers and carpenters, as well as process technology technicians, project managers and project estimators.

Geographically, workforce shortages are critical around Lake Charles and across southwest Louisiana.

“Those big projects are a little ahead of others, so they are starting to feel the pinch more than we are in the Baton Rouge area,” says Art Favre, president of Performance Contractors.

“But, workforce shortages remain acute along the I-10/I-12 corridor because that’s where most of the industrial construction is situated.”

CHANGING PERCEPTIONS To address the skilled craft workforce needs, government, education providers, professional organizations and nonprofits, and industry came together in what many describe as an unprecedented effort of cooperation and resource-pooling. Yet, despite the collaboration, overcoming the immense shortage of craft workers within the estimated time frame will be difficult. Indeed, Curt Eysink, executive director of the Louisiana Workforce Commission, says it’s “a challenge on an order of magnitude that Louisiana hasn’t ever faced because the ramp up is so quick. It’s ramping up faster than you can prepare people.”

Adds Clouatre: “I don’t think any of us are currently meeting the demand. We’re all partnering—all of us together are working to train and prepare the workforce. That’s what it’s going to take.”

The demand for skilled indus-

trial craft workers was made more daunting by an existing shortage, which had been exacerbated by years of focusing on other career paths, particularly those that require a four-year college degree.

“For decades Louisiana underdeveloped the infrastructure needed to produce enough credentialed, skilled workers,” Eysink says. “We told everyone to get a four-year degree.

We didn’t have the infrastructure for people between a high school diploma and a bachelor’s degree.”

This has had an impact on the state’s ability to prepare the needed workforce—you can’t stock the pipeline if the pipeline doesn’t exist or is in disrepair.

“Career education had basically fallen into disrepute in Louisiana,” says Dave Lefkowith, assistant superintendent with the Louisiana Department of Education. “It’s what students did if they were seen to not have real talent. So, professions like these skilled craft industries went unfilled. This hurts the state’s economy—it retards economic growth, plus it means we wouldn’t see the ripple effect in the economy.”

Favre, who is a member of the Workforce Investment Council, a panel of business leaders that advises the governor and the Louisiana Workforce Commission on the state’s workforce needs, says the lack of focus on training and educating skilled craft workers meant aging workers weren’t being replaced.

“The industry had recognized this as a fundamental issue for a long time. We’d been pushing since before the boom started because of the retirement age of workers,” Favre says. “There were almost disincentives to have people go into vocational education. The public perception, particularly that parents have, is that these are not good jobs. It can be very difficult to convince parents that you can make a good living and be more successful in an industrial craft, such

as welding. With the boom, we were finally able to get the attention of the state and the public education system, both K-12 and secondary education.”

According to Clouatre, “With a focus on academia, a lot of craft education dropped off. Tech classes

DON KADAIR

INDUSTRY GOES TO SCHOOL: As part of a college-industry partnership created through the WISE program, CB&I employee and journeyman welder Ed Mabile is on loan as an instructor at Baton Rouge Community College’s training center at Baker High School.

got pushed to the side.” But, he says, “We’re coming back to offering more career classes.”

GROWING CAPACITY While there is a long way to go, a number of training and education

initiatives and public-private collaborations have already been established or rejuvenated to build up the workforce pipeline. A few highlights: LCTCS The Louisiana Community and Technical College System has

made a number of changes to its industry-based certification programs as well as its two-year associate degree and diploma programs. In particular, LCTCS—the state’s largest training provider—has worked closely with industry to align its

programs with industry’s workforce needs, while at the same time offering flexible options to accommodate more students’ needs. Efforts to quickly expand the state’s workforce are front and center in LCTCS’s recently adopted strategic plan, as well as “Our Louisiana 2020: Building the Workforce of Tomorrow,” a six-year plan that lays out LCTCS’s goals for addressing the workforce development needs of the state amid unprecedented capital investment.

“LCTCS has committed to expanding enrollment,” Eysink says.

“They’re basing their performance on the wages of their graduates, which is a daring thing to do because they don’t control starting salaries.

It indicates that LCTCS is willing to do what it takes to make their graduates valuable, and this aligns with the needs of the state to grow capacity for the long term.”

LCTCS’s efforts to address the skilled labor shortage already have shown results. For example, LCTCS has seen a 125% increase in National Center for Construction Education and Research credentialing—or American Welding Society credentialing for welding courses—2013-14. Last year alone, LCTCS processed 3,900 NCCER level completions.

At the same time, industry has made major investments at LCTCS in the form of equipment, financial support, internship opportunities and professionals serving in advisory roles.

For example, CB&I entered into a workforce development partnership with LCTCS and two of its colleges, Baton Rouge Community College and SOWELA Technical Community College, to develop a welding curriculum that provides handson training. CB&I contributed a full-time welding instructor at both colleges, as well as a weld-operations manager who will serve as a liaison between the two colleges and CB&I. CB&I also is working with the schools to see that welding programs are more in line with industry culture, particularly regarding safety.

10/12 INDUSTRY REPORT • SPRING 2015

23

WORKFORCE

“CB&I has a significant presence in Louisiana, which includes a large professional workforce, major projects and key fabrication facilities,” said Philip K. Asherman, CB&I’s president and chief executive officer.

“So this partnership is important to our business. It will help us meet the demand for skilled and qualified workers to execute our existing and future projects in the state.”

This partnership is part of the Workforce and Innovation for a Stronger Economy, or WISE, Plan, which the state created last year to help align new investments in higher education with the workforce needs of the existing and emerging growth sectors in the state’s economy. The WISE Plan was specifically designed to forge a stronger partnership between colleges and industry leaders through a matching program to spur private investment in public universities and colleges.

Another LCTCS-industry collaboration can be found at Baton Rouge Community College, which partnered with ExxonMobil and its contractor base to provide fast-paced skilled labor training to 60 people from the 70805 ZIP code in north Baton Rouge, which historically has experienced the highest percentage of violent crime in the region. Participants receive training in level one and two NCCER or AWS crafts, particularly pipefitting, electrical and welding. In addition, they receive soft-skills and life-skills training.

ABC Students can take courses in welding, electrical, carpentry, heavy equipment, instrumentation, millwright, mobile crane operation and pipefitting at Associated Builders and Contractors training centers in Baton Rouge and Westlake.

All of ABC’s training programs are “very much in high demand,” Clouatre says. This is particularly the case for evening classes. “Our night training is pretty much maxed out,” he says.

“If we have overflow, we’ll push them to LCTCS. Our goal is getting that student trained. It doesn’t matter where they get that training, 24

10/12 INDUSTRY REPORT • SPRING 2015

ABC

GETTING TO WORK: Industry-sponsored training programs like those at the ABC Pelican Chapter training center in Baton Rouge are just one part of the formula for meeting the industrial boom’s workforce needs.

as long as it’s done well and helps students with a career.”

Clouatre’s statement reflects agreements between ABC and LCTCS to work together to maximize the space and capacity of both organizations’ training programs.

ABC also has enhanced its training efforts designed for high school students. In 2013, ABC’s training center became authorized by the State Department of Education as a Course Choice provider. Course Choice gives high school students access to in-person and online academic and career education courses often not available in traditional schools, such as welding, pipefitting and electrical training. In 2014, Course Choice was funded by the Board of Elementary and Secondary Education through the Supplemental Course Allocation, and ABC’s training centers in Baton Rouge and Westlake became recognized as a Supplemental Course Academy.

“High school students come in for

a couple of hours a day,” Clouatre says. “By the time they finish high school, they could be credentialed.

We could roll them into summer accelerated courses and get them into the workforce more quickly.”

The combined total of SCA enrollees attending training during the day and other high school students taking night courses at ABC is up to 230, while about 600 students graduate from ABC’s training programs each year, Clouatre says.

Jump Start One of the most heralded new training initiatives is Jump Start, developed through a partnership of the state Department of Education, the LWC, and business and industry. School districts, colleges and industry collaborate to offer career courses and workplace experience to high school students.

Regional teams made up of public-private partnerships develop innovative courses of study for Jump Start students. High school students

“LCTCS is basing their performance on the wages of their graduates, which is a daring thing to do because they don’t control starting salaries. It indicates that LCTCS is willing to do what it takes to make their graduates valuable.”

—CURT EYSINK, executive director, Louisiana Workforce Commission

complete a customized selection of courses and earn valuable industry credentials. Statewide graduation pathways include welder, carpenter, electrician, pipefitter and mobile crane operator, among others.

As the first school year since Jump Start launched comes to a close, officials say the program is far ahead of schedule and exceeding expectations.

“The program is one to two years ahead of its implementation schedule,” says Christel Slaughter, of SSA Consultants, which is working on the initiative. “All these school systems around the state are embracing it much faster than we anticipated, which shows how badly needed it is.”

“We’re only one year into a fouryear implementation process, but the process is moving more quickly than we had envisioned, especially in the area of construction crafts,” says Lefkowith. “Schools are embracing Jump Start. We’re seeing more teachers wanting to get NCCER certification so they can teach the courses.” Indeed, at the Jump Start Super Summer Institute in 2014 more than 250 Louisiana teachers earned certifications needed to teach qualifying courses.

SOME BREATHING ROOM Even with a renewed dedication to building the needed training and education infrastructure, producing qualified workers takes time. In

WORKFORCE

“Welding is always at the top.

Just about everything built in a chemical or petroleum facility has to be welded.”

—ROBERT CLOUATRE, director of education and training, ABC Pelican Chapter

particular, the need for experienced, higher-level staff is acute.

“It takes a few years to create a journeyman,” Eysink says. “That’s going to be a challenge.”

Yet announcements over the past year that several projects have been delayed provide some breathing room for workforce development efforts.

“We’ve been somewhat fortunate by the delays,” Eysink continues. “Those movements increase the window that the education establishment has to create people with credentials.”

Favre agrees. “None of the projects has hit the field exactly when they said they would. They’ve all been delayed to some degree. And, with gas prices dropping, some are being put on hold,” he says. “All of that combined has tended to stretch out the schedule and reduce the peak amount of people required at any one time. That reduces pressure on manpower and reduces pressure on the wage rate a little bit.”

Other factors influence Louisiana’s ability to train and attract the needed skilled craft workforce. For example, Favre says workforce shortages in other regions of the country add to the

pressure on Louisiana’s skilled craft workforce.

“Some of this heavy work is being done in the Midwest because of oil prices and the construction boom,” Favre says. “That puts more pressure on the Gulf Coast because the predominance of available skilled workforce has been along the Gulf Coast, and they’re being pulled elsewhere.”

Workforce development is also limited by instructor availability. The demand for skilled craft workers has meant that some people, such as retirees, who might have become instructors, are instead opting to return to work in the industry.

“It’s been a formidable situation to add instructors, mainly because the wage rates are so good,” says Will Seaman, director of skilled labor initiatives for LCTCS. “Experienced people are going back into the field, so they’re not willing to come teach.”

“It’s a good problem to have because it means people are employed,” he adds. “But, if you don’t have the qualified instructors to put in front of students, it can become a bottleneck.”

The shortage of qualified instructors

has led to innovative arrangements, such as CB&I donating employees to be instructors or assistant instructors.

Skilled craft workers also tend to be highly mobile, which can make it difficult to pin down whether the required workforce is available.

“No one is waiting around in Baton Rouge for projects to be announced,” Toups says. “The workforce we’re dealing with is transient—they go to where the work is. That’s a concept that people need to understand.

Workers come when a project is firmly announced—when the start date is set with a known rate of pay, work hours and conditions.”

A DROP IN THE BUCKET With fledgling training programs and ramped-up cooperation taking root, experts express concern that these efforts could be derailed just as they’re starting to produce needed trained and qualified industrial craft workers. A big concern relates to funding.

“With the budget problems within the state, all of these programs are in jeopardy of being cut back or cut out,”

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Favre says. “That would be devastating.”

Toups adds that the state must resist any efforts to drop the intense focus on skilled craft workforce training.

“The demand will be spread out more, but we may still need the same number of people,” he says.

“Louisiana’s big challenge is to not back off the accelerator. We were so far behind that we’re still playing catch-up. In the past, when the work slowed down, the training subsided.

A consistent, quality training effort must be sustained to build a cadre of “Industry’s emphasis is shifting qualified craftsmen.” to recruiting young people into It’s also not enough just to have these training programs,” Favre says. training and education programs— “That kind of recruiting requires a there’s also a need to ensure stulot of advertising and meeting face dents—and potential students—are to face. The effort put toward it will aware of them.

Th is includes Issue Date: Spring Ad proof #1 have to be a combined effort among tackling the stigma exists industry, • Please respond by e-mailthat or faxstill with your approval or minor revisions.education and economic • AD WILLsome RUN ASregarding IS unless approval or final revisions development.” among skilled craft are received by the close of business today. professions. saysfees. he’s confident the • Additional revisions must be requested and may be subjectEysink to production

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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.

momentum will be maintained. “I haven’t heard of a single job delayed because of workforce concerns,” he says. “As a state, we’re in a better position than we’ve been in for decades.

We’ve got more people working than we’ve had, and we’re just in the first year or two of this growth.”

Meanwhile, Favre says the state should be encouraged by its success

to date, but he emphasizes that there is still a long way to go.

“If you look at the big picture, all these training efforts have produced maybe a few thousand workers.

That’s a drop in the bucket of what we really need,” he says. “There are definitely a lot more young people in the pipeline, but we need to continue to add more.”

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WORKFORCE

Workforce solutions for the boom ABOUT

WEBSITE

CONTACT INFO

LCTCS

Schools in the Louisiana Community and Technical College System have standardized their curriculum to line up with the training being offered by ABC and craft workers unions. LCTCS colleges offer industry-based certification on a compressed schedule in a number of skilled craft professions, from welders to electricians to non-destructive testing technicians. They also have added evening and weekend-based certification training.

lctcs.edu/workforce/ skilled-craftprofessional-training/

(225) 922-2800

ABC – Pelican Chapter

Associated Builders and Contractors training centers in Baton Rouge and Lake Charles specialize in industrial construction training, with classes available in both daytime and evening.

abcpelican.org/en-us/ educationtraining.aspx

(225) 752-0088

Louisiana Department of Education

Jump Start is the state’s new program for school districts, colleges, and businesses to collaborate to provide high school students with career courses and work experience. Jump Start is an elective path for students pursuing a university-preparatory diploma, while it is a required path for students pursuing a Career Diploma (see below). Participating high school students will be provided more time during the school day and school year to earn industry certificates or college credentials in addition to a high school diploma.

louisianabelieves.com/ courses/jump-startcareer-education

(877) 453-2721

The Career Diploma Pathway delivers students who are literate, numerate and advanced problem solvers, with adult workplace skills and are drug-free. The Career Diploma Pathway requires two years of a strong academic base and two years of industry-defined course work, internships and training, including post-secondary coursework.

Apprenticeships

Registered apprenticeship programs that provide classroom and on-the-job training. The programs are joint labor-management apprenticeships and are in partnership with LCTCS.

laworks.net

Louisiana Workforce Education Initiative

LWEI is an industry-driven and privately funded nonprofit organization, created to provide the public messaging campaigns and communications support to change outdated public perceptions about technical training and twoyear degrees that will otherwise limit the success of Jump Start.

lweionline.com

(225) 769-2676

Four-year universities

Bachelor’s degrees in engineering and construction management fields, among others. Includes University of Louisiana System, Louisiana State University System, Southern University System.

Various

Various

WISE

The law creating the Workforce and Innovation for a Stronger Economy Fund was passed by the Legislature and signed by Gov. Jindal in 2014, providing an additional $40 million in funding for coursework at public colleges, including LCTCS schools, that targets specific workforce needs. A council will make recommendations to the Board of Regents on how to distribute the money. Continued funding of WISE had not been determined as of press time.

regents.louisiana.gov

LED FastStart

FastStart provides no-cost customized recruitment, screening and training to new and expanding companies. The program is available to manufacturers, corporate headquarters, warehouse and distribution, research and development, or other strategic facilities that will create a net of at least 15 new permanent jobs, or a service-related operation that commits to creating a net of at least 50 new permanent jobs.

opportunitylouisiana. com/page/led-faststart

(225) 342-0107

Industrial construction employers

Many industrial construction companies offer their own training, often to complement training received elsewhere, such as LCTCS or ABC.

Various

Various

Praxair Inc. – Skills Pipeline

One example of the initiatives individual companies have begun. In cooperation with LCTCS, Praxair’s Skills Pipeline program offers skilled welding scholarships through Baton Rouge Community College, Delgado Community College and SOWELA Technical Community College.

Contact college directly.

Various

ITI Technical College

ITI offers students the option of seven certificate programs and seven associate in occupational studies degree programs. Many of these programs are conducted during both day and evening and can be completed within 12 to 24 months.

iticollege.edu

(800) 635-8426

Louisiana Workforce Commission

LWC just won a $6.175 million federal grant to train workers in high-demand occupations and help employers in parishes across south Louisiana offset the cost of worker training. Industries include industrial construction, hospitality, health care, information technology, and shipbuilding and repair.

laworks.net

LWC Business Services Manager Greg DeClouet, (225) 342-6174 or gdeclouet@lwc.la.gov

The Incumbent Worker Training Program funds training partnerships between business and industry and training providers. The IWTP is designed to assist in the skill development of existing employees.

laworks.net/WorkforceDev/IWTP/IWTP_ Overview.asp#CustomizedTraining

1-866-725-IWTP (4987)

Employers can register now for this new, free, online employee recruitment and search tool developed by Louisiana Economic Development. They can post and manage job openings and utilize the site’s custom-made prospect-matching technology.

louisianajobconnection. com

Alliance Safety Council

Training courses are conducted at Alliance centers, on location, online and through authorized training providers.

The Alliance Safety Council and LSU’s College of Engineering consortium has been selected as one of only four new OSHA Training Institute (OTI) Education Centers across the country. The OTI Education Center will offer training courses on OSHA standards and occupational safety and health issues.

alliancesafetycouncil.org

(225) 766-0955 ext. 3269 or (877) 345-1253

LSU Continuing Education

LSU CE partners with OSHA and the Safety Council to offer safety training and management courses that make every employee mindful of safety. They can also train people as Certified Occupational Safety Specialists (COSS), giving them tools to ensure employers remain in compliance with regulations.

outreach.lsu.edu

(225) 578-2500

Safety Council of Southwest Louisiana

In addition to instructor-led training such as COSS, members have access to computer-based training courses and a training library of over 450 safety training videos online. Topics include OSHA compliance, Construction Safety, General Safety, DOT Compliance, Human Resources and many more. As of March 20, expanded its hours to 7 a.m.-4 p.m., M-F, to better meet increased demand.

safetycouncilswla.org

(337) 436-3354

Louisiana Job Connection

SAFETY TRAINING

Continued

10/12 INDUSTRY REPORT • SPRING 2015

29

WORKFORCE

Workforce solutions for the boom ABOUT

WEBSITE

CONTACT INFO

UNION BUILDING AND CONSTRUCTION TRADES TRAINING PROGRAMS Louisiana AFL-CIO

Offers Louisiana State Building and Construction Trades Apprenticeship Training programs for a number of professions, including construction and craft laborers. Provides classroom related and on-the-job training.

laaflcio.com/resources.php

Contact Central Labor Council in one of the 12 districts in Louisiana.

Alexandria Electrical JATC

Electrician

lajatc.org/alexandria-electrical-workers/

(318) 443-5811

Alexandria Pipe Trades JATC

Pipefitter (const.), plumber

(318) 442-9923

Baton Rouge Electrical JATC

Electrician

https://www.facebook.com/BRAreaElectricalJATC

(225) 752-4861

Baton Rouge Roofers JATC

Roofer

selabctc.org/roofers.htm

(225) 355-8502

Baton Rouge Sheetmetal Workers

Sheet metal worker

http://modiphy.dnsconnect.net/~smwia214/main/ index.php?location=baton_rouge#page=home

(225) 201-9695

Bogalusa Electrical JATC

Electrician

http://lajatc.org/bogalusa-electrical-workers/

(504) 733-9370

Bricklayers & Allied Craft Workers Local #6 LMA

Bricklayer (construction), marble setter, mosaic worker, plasterer, stone mason, terrazzo worker, tile setter, cement mason

selabctc.org/bricklayers.htm

(251) 433-1717

Finishing Trades Institute of District Council 80

Floor layer, glazier, dry-wall applicator, painter

iupatdc80.org/ftikenner.php

(504) 466-4114

Intl Union of Elevator Constructors

Elevator constructor mechanic

https://www.iuec.org/

(504) 889-1105

Ironworkers Local 623

Structural steel/ironworker

ironworkerslocal623.org/index.html

(504) 245-8032

Ironworkers Local 58

Structural steel/ironworker

ironworkers58.org/

(504) 245-8032

Lake Charles Electrical JATC

Electrician

http://ibewlu861.org/wp/

(337) 433-7277

Lake Charles Plumbers & Steamfitters

Plumber, HVAC, welderfitter

local198apprenticeship.org/union_hall.html

(337) 436-2444

Baton Rouge Carpenters Regional Council Training Center

Carpenter, millwright

centralsouthcarpenters.org/

(225) 927-6176

Louisiana Regional Pipetrades Training Center

Plumber, hvac, pipefitter

local198apprenticeship.org/union_hall.html

(225) 355-9938

Monroe Electrical JATC

Electrician

http://lajatc.org/monroe-electrical-workers/

(318) 387-4411

Monroe Plumbers & Steamfitters

Plumber, welderfitter, hvac

(318) 322-4520

New Orleans/Baton Rouge Insulators JATC

Insulation worker

insulators53.org/pages/index.asp

(504) 468-9598

New Orleans Cement Masons

Cement mason

selabctc.org/plasteres_cement%20masons.htm

(504) 523-3847

New Orleans Electrical JATC

Electrician

ibewlu130.com/join-ibew-130/apprenticeship-zone/

(504) 835-9899

New Orleans Carpenters Regional Training Center

Carpenter, millwright

neworleanscarpenters.org/home.html

(504) 945-3127

New Orleans Pipe Trades

Pipefitter (const.), plumber, hvac

ualocal60.org/

(504) 885-8033

New Orleans Sheetmetal JATC

Sheet metal worker

selabctc.org/sheet_metal.htm

(225) 201-9695

Operating Engineers JATC

Stationary engineer, operating engineer, construction equipment mechanic

http://iuoelocal406.org/

(985) 542-4322

Shreveport Electrical JATC

Electrician

ibew194.org/

(318) 746-6180

Shreveport Pipetrades

Plumber, pipefitter, HVAC

(318) 683-1664

Shreveport Sheetmetal Workers

Sheet metal worker

(225) 201-9695

South Central Laborers Training Center

Construction craft laborer

(225) 637-2311

Sources: Business Report research, LWC 30

10/12 INDUSTRY REPORT • SPRING 2015

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www.awc-inc.com 32

10/12 INDUSTRY REPORT • SPRING 2015

UNDERSTANDING THE BOOM

ISTOCK PHOTO

affect other industrial construction projects across south Louisiana.

David Dismukes, executive director of the Center for Energy Studies at Louisiana State University, says that gauging the future of those projects requires speculating not only on the direction of commodity prices, but also on how close the price of oil may come to the price of natural gas.

“It’s not the absolute price that matters for some of these projects, it’s the differential between gas and crude,” he says.

Among the projects that make up the $100 billion-plus basket of industrial development on tap across south Louisiana, the big gas-to-liquids plant

by Sasol was heavily dependent on oil remaining much more expensive than natural gas. That’s because the plant aimed to profit by using gas to create liquid fuels that could be substituted for oil-based fuels produced by conventional refiners. When the price gap between gas and oil narrowed so dramatically, the project no longer looked as viable, though the company has said it may revive the plan later.

Up and down How the oil price plunge affects the south Louisiana industrial expansion.

BY KATHY FINN

I

n a state well-accustomed to the fickle behavior of commodities, big swings in oil prices don’t necessarily create a stir. But when billions of dollars worth of planned industrial investment are potentially at stake, the story is a little different.

The decline in oil prices from more than $110 a barrel last June to below $50 a barrel in January sparked worry in some quarters that the drop might not only strike a blow to the petroleum industry, but could also en-

danger what many see as the biggest industrial expansion in Louisiana’s history.

A theoretical alarm sounded in January when South African energy company Sasol Ltd. put on hold its plan to invest as much as $14 billion into a new gas-to-liquids plant in Lake Charles. The plant was one of two large projects the company had on tap in the area.

Though oil prices have edged up in recent weeks, some concerns linger about how prolonged volatility might

CHEAP GAS MATTERS Cheap natural gas, on the other hand, is the driver behind the natural gas liquefaction plants being built in the Lake Charles area by Cheniere Energy, Sempra Energy and several other companies. While these projects would benefit from a bigger price difference between oil and gas, ongoing demand for natural gas in developing countries around the globe helps assure a relatively stable market for their product.

So far, the planned LNG plants in Louisiana not only remain on track, but a new project has joined them: Houston-based Parallax Energy announced it will build a $2 billion LNG plant in Lake Charles.

The other major category of industrial development in Louisiana encompasses projects that arose primarily from the availability of cheap gas and growth in global demand for a wide range of products.

Big petrochemical expansions and projects announced by Dow Chemical, Cornerstone Chemical Co., Williams Olefins and more than a dozen other companies—including an $8.1 billion ethane cracker already underway by Sasol—appear to 10/12 INDUSTRY REPORT • SPRING 2015

33

BRIAN BAIAMONTE

UNDERSTANDING THE BOOM

DISMUKES: “It’s not the absolute price that matters for some of these projects, it’s the differential between gas and crude.”

remain on solid footing. and the bulk of the announced proj“These projects are not harmed ects materializing,” he says. because natural gas prices are staying Chemical industry spokesman Dan low,” Dismukes says. Even if gas pricBorné agrees, adding that most of the es edge up, he notes, the stability of projects that do benefit from a spread Louisiana as a source of supply gives between natural gas and oil prices are the companies confidence in their still viable even at current price levels.

Issue Date: Spring Ad proof #2 The president of the Louisiana local expansions.

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

“I WILL stillRUN seeASbillions dollars • AD IS unless[of approval or final revisions Chemical Association says that oil at are received by the close of business today. worth] of activity being maintained $50 a barrel and natural gas at $3 per • Additional revisions must be requested and may be subject to production fees.

million British thermal units makes for a ratio of nearly 17 to 1 on an energy-equivalent basis. “That is still very competitive,” Borné says.

“A lot of capital is being bet on the availability of natural gas at a competitive price,” he adds.

As long as demand exists and the United States is able to provide gas more cheaply than other countries, most of the natural gas-based manufacturing expansion in Louisiana should remain viable, he says.

Borné also points out that the current lower oil prices carry some benefits, particularly to chemical manufacturers that use oil derivatives.

“Low oil prices in America put more money into the wallets of consumers,” enabling the purchase of more products made using chemicals manufactured in local plants, he says.

DEEPWATER SURVIVES Optimism aside, there’s no question that the plunge in oil prices is taking a toll in some quarters.

Oil industry service companies— businesses that serve and supply drillers and producers and provide trans-

portation—are always on the front lines in absorbing oil price shocks, and some companies have reacted.

Service giants Schlumberger NV, Baker Hughes Inc. and Halliburton Co. in January announced plans to cut some 17,000 jobs to bring their spending more in line with revenue.

The layoffs will likely hit hardest in areas with the highest concentrations of shale oil drilling, such as North Dakota.

But Louisiana is feeling the squeeze as well. Don Briggs, president of the Louisiana Oil and Gas Association, whose membership represents small and mid-size oil and gas-related businesses across the state, says some shale producers, service companies and other onshore drillers in central and north Louisiana have taken blows to their bottom line.

“The low prices are having a significant impact on the hundreds of very small producers,” Briggs says.

Landmen—individuals who find and lease properties for drilling— are among the hardest-hit thus far.

“Maybe 300 to 400 landmen have lost their jobs,” he 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

Industrial Construction • Maintenance • Turnarounds • Emergency Fabrication and Installation Local Fabrication Facility • ASME CODE R, U, and S, Stamps • Fabrication and Installation of all alloys and carbon steel piping • Fabrication of Structural Steel • Civil, Foundation and Concrete Paving

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10/12 INDUSTRY REPORT • SPRING 2015

Still, across south Louisiana in general, the picture is far from dire.

Jason El Koubi, president of One Acadiana (formerly the Greater Lafayette Chamber of Commerce), says that even though south-central Louisiana is heavily populated with oil-related businesses, data such as drilling permits and rig counts are not yet showing cause for alarm.

“Any job losses can cause anxiety,” he says. “But much of the service industry in Acadiana is focused on deepwater (offshore drilling and production), which is sustainable at a lower oil price.”

With job losses so far concentrated mainly in onshore plays and shallow water, the negative impact of lower oil prices on the south Louisiana economy “has been muted,” El Koubi says.

Companies focused on drilling and producing from deep waters of the Gulf of Mexico generally keep their eyes on long-term goals, given that it can take five to seven years or more to develop and begin extracting hydrocarbons from a deep-water field. Within that time, the spot price of oil on world markets will rise and

fall, perhaps substantially, but the companies are making calculated wagers that prices over the long-term will more than support their activity.

STAY THE COURSE Chris John, president of the Louisiana Mid-Continent Oil and Gas Association, says that while “anyone who says they know what prices are going to be next year is just guessing,” the large companies that form the bulk of his organization’s membership spend a lot of time making and revising long-term oil price forecasts.

“From what I see, they believe in staying the course ... and they think that prices will rebound,” he says.

John says myriad factors affect the price of oil, but neither the current glut nor softer demand in major consuming countries such as China are new situations, and now is not the time to panic.

The price drop “doesn’t change the fact that we use 20 million barrels of oil a day in this country,” he says.

“We’ve got to keep producing.”

The downturn in the price of oil has had some Louisiana residents

EL KOUBI: “Much of the service industry in Acadiana is focused on deepwater, which is sustainable at a lower oil price.”

recalling the economic horrors of the 1980s, when oil prices took a nosedive, bankers began calling in loans and the resulting real estate crash soured the entire regional economy.

But industry leaders say such pain is less likely this time around, in part because companies are leaner and operate more efficiently than they once did, lessening their risk of financial failure.

In addition, it may not be long before oil prices begin to creep upward and stabilize.

TERRI FENSEL

Dismukes says that, despite the current oversupply, crude oil is unlikely to languish around $50 a barrel for an extended period. Though he says “it’s very hard to call this market,” he guesses that oil will start a slow climb toward $70 a barrel and over the course of a few years finally settle in the range of $75 to $80.

As this publication went to press, West Texas Intermediate crude was trading at $50.14 (April 6), up from a one-year low of $42.60 in midMarch.

10/12 INDUSTRY REPORT • SPRING 2015

35

IMPACT LIFESTYLE MATTERS: The new regional impact study proposes the boom is not just a problem to be managed, but an opportunity for community improvement.

Lake Charles residents said they want to see more restaurants and cultural activities in places like downtown.

Gaining perspective A comprehensive regional impact study gives southwest Louisiana officials a blueprint for moving forward.

BY ERIN Z. BASS

I

t has been no secret that the Lake Charles area is preparing for explosive growth, but now community leaders have a guide to assist them in the form of the Southwest Louisiana Regional Impact Study. Released at the end of October, funded by Sasol and prepared by Baton Rouge firm CSRS, the study takes into account 19 industrial projects ($68 billion worth); 10 community systems, from education to transportation; and feedback from more than 200 stakeholders in the community.

(By the time the study was nearly finished, the southwest Louisiana industrial boom had surpassed $80 billion.)

CSRS President Michael Songy says his firm was hired to provide a socioeconomic model based on all of the announced expansions to try and forecast growth, as well as conduct comprehensive public outreach and an infrastructure assessment.

Coming in at around 350 pages, the

36

10/12 INDUSTRY REPORT • SPRING 2015

study is comprehensive to say the least. The 10 community systems assessed are: • workforce development • education • public safety and welfare • housing • small business development • transportation • utilities • health and medical • environmental • planning for growth Officials have spent the past several months analyzing the findings and are preparing to move forward with recommendations that call for consolidation of services and encouraging additional worker villages in strategic locations.

For the Southwest Louisiana Task Force for Growth and Opportunity (GO Group) that’s coordinating efforts through five parishes and 10 different task forces, the first step

has been hiring a director. Karen Lambert Clapp was announced for the position in early February after serving as director of marketing at West-Calcasieu Cameron Hospital in Sulphur for the past seven years.

“It’s an honor to be selected to serve in this role at such a pivotal point of unprecedented growth in our area,” she said in a press release. “I look forward to working with and for our community as we look to emerge from this growth and expansion a better Southwest Louisiana.”

Clapp will be facilitating the response to the study—and the boom itself—by leading the GO Group and coordinating efforts of public and community organizations.

STREAMLINING GOVERNMENT President & CEO of the Southwest Louisiana Economic Development Alliance George Swift says the study has provided a wealth of information for groups like his to make good decisions for the future.

He points out that some of these decisions, like building new schools, are obvious, but others are tougher to implement.

If there was one big takeaway to come from the study, it would be in the form of recommendations for increased efficiency and consolidation in government. “I think a lot of people thought the study would result in a wish list of schools and roads and a projected price tag to do them,” says Songy. Instead, CSRS found that government in Lake Charles has evolved into a lot of wards and districts with separate taxing and judicial structures. “A common theme is recommending that they take a look at combining some of these districts from an efficiency standpoint in terms of what they could do now,” he continues.

The recommendation didn’t come as a surprise to Lake Charles Mayor Randy Roach. “What many people outside of the five-parish region don’t think about is the fact that we

LEE CELANO

10/12 INDUSTRY REPORT • SPRING 2015

37

IMPACT

TERRI FENSEL

LEE CELANO

ROACH: “The GO Group becomes the entity through which we pull all these different cities, mayors, police jurors and school boards into the room to talk about the issues of the day.”

CHANGE COMING: The community of Moss Bluff is one of the areas expected to see rapid growth, changing traffic flow and requiring new schools.

38

10/12 INDUSTRY REPORT • SPRING 2015

don’t have a consolidated form of government,” he says. “We have a police jury system, so our challenges extend way beyond the city limits.”

Roach explains that preparing for this industrial growth is not unlike recovering after a storm. The GO Group was initially set up to mimic the Louisiana Recovery Authority’s response to Hurricane Rita, and officials believe its subcommittee structure is the best way to consider such a huge economic impact.

“The GO Group becomes the entity through which we pull all these different cities, mayors, police jurors and school boards into the room to talk about the issues of the day,” Roach says.

Swift also stresses the importance of urbanization to eliminate sprawl.

With 66% of new growth expected in unincorporated areas, there’s no doubt that outlying communities

will benefit, but at what cost? To alleviate the burden, Swift and the GO Group are looking at developing more housing within the city limits, where infrastructure like water, sewer and roads are already in place.

TOP CONCERNS According to the study, things like consolidation and public infrastructure weren’t necessarily expressed as priorities for stakeholders, though transportation did rank in the top five. Those interviewed were most concerned about education, quality of life, workforce development and housing.

In terms of education, temporary workers starting to arrive aren’t expected to produce a significant increase in the student population.

But once more permanent workers start coming into the parish with their families in tow, an increase of

• 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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BATON ROUGE

225-752-0088 www.abcpelican.org

LAKE CHARLES

337-882-0204 www.abcpelican.org

NEW ORLEANS

504-468-3188 www.abcbayou.com

10/12 INDUSTRY REPORT • SPRING 2015

39

IMPACT

AP PHOTO/GREGORY BULL

nearly 6,000 school-aged children is expected by 2019. Enrollment increases are expected in high-growth areas like Carlyss, Moss Bluff and South Lake Charles, where schools are already at capacity.

Downtown and North Lake Charles are also identified as key areas ripe for growth, and quality of life was second only to education in the top priorities of those interviewed. Residents expressed a desire for the area to have more

STUDY HIGHLIGHTS • Employment growth rate of 4.7% annually through 2019 • 22,000 new residents expected by 2019 • More than 14,000 temporary housing units, peaking in 2016 • Demand for 8,000 permanent housing units • 6,000 new students in grades K-12 • 86% new growth in Calcasieu Parish • 66% new growth in unincorporated areas • Freight output could double by 2021 • 45% increase in traffic delays

40

10/12 INDUSTRY REPORT • SPRING 2015

restaurants, shopping and cultural activities, while at the same time maintaining a sense of community.

WHAT TO DO ABOUT HOUSING According to the study, the demand for temporary housing in the region has already begun and is expected to peak in 2016-17 at more than 14,000 units. A separate study just for housing is in the final stages and expected to be released at the beginning of April, but GO Group housing committee chair David Conner was able to provide some insight into what that study will reveal.

He’s projecting a need for 8,500 to 8,800 permanent dwelling units, up to 12,000 at the peak. From 4,500 to 5,500 units are either under construction or in the permitting or land purchasing phase, and Conner believes this is enough to satisfy demand for now.

“A year ago, we were a little bit more nervous wondering if we were going to be able to keep up with demand, but I feel like at this stage the market has already started to react,” he says. “I think the market will be able to handle the magnitude

in terms of size and timelines.”

More time sensitive is the need for temporary housing, and Conner says existing stock is not even close to meeting potential demand. How to handle this problem has become a hot button topic in public meetings.

Four employee villages have been permitted so far and another is on the drawing board (including one just for women), but none are under construction yet and the public still isn’t sure about letting such a large contingent of workers live among them.

Although the study recommends encouraging more worker villages, the residents interviewed expressed concern about public safety, zoning, lack of positive impacts on local businesses and the possibility of impeding subdivision development.

“What we’ve been doing is answering the concerns and showing the need,” says Conner.

Roach admits the worker villages are controversial, but says that a situation where temporary workers are left to find their own housing could be worse. “There is a lot of residential development going on right now

TEMPORARY HOUSING: Part of the housing mix is sure to be worker villages like this one in Williston, North Dakota. Four have been permitted; the study recommends even more.

as people are moving into the area, but the general community is beginning to understand how a properly managed worker village can actually be a benefit to the community in these types of situations,” he says.

Conner says that paving the way for worker villages is a sign to industry that the area is ready. Workers in the thousands aren’t expected to arrive until the third or fourth quarter of 2015, but when they do Conner expects to see the villages start to pop up, along with RV parks and fully booked apartments and hotels.

“If we don’t do something quickly enough, then you’ll see it starting to affect our permanent housing market.”

BALANCING ACT CSRS offers a bulleted list of strategies in each area, but moving forward will be a balancing act for community leaders as they weigh public concerns against governmen-

SONGY: “A lot of our infrastructure assessments are planning for growth, but certainly not in the magnitude projected here.”

tal and infrastructure issues. For general planning, the firm recommends consolidation of as many services and communications as possible in the form of a parishwide master plan for public school facilities and drainage, implementation of a regional transportation authority, parishwide fire protection, and streamlining the development and permitting process.

“Several of the topics in there we’ve been talking about for a long time,” says Roach. “The issue of trying to be more efficient at a local level has always been something we’ve talked about. It’s good to have a consultant like CSRS come in and do the homework in order to get a third-party perspective on challenges we’re facing.”

While Songy and his firm certainly made plenty of suggestions on where Lake Charles and the GO Group need to go next, he says the

DON KADAIR

growth is so large that it’s hard to compare it to any other situation. “A lot of our infrastructure assessments are planning for growth, but certain-

ly not in the magnitude projected here. Eighty billion in investment versus a population of 300,000.

That’s pretty unprecedented.”

A copy of the regional impact study is available for download at gogroupswla.com.

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Game changer Founding Director Jeff Lynn has helped make LED FastStart the country’s most successful workforce training program.

BY MAGGIE HEYN RICHARDSON

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ver the last six years, Louisiana has attracted about $62 billion in new investment as companies from a range of sectors have committed to expand or locate in the Bayou State. Tax breaks and incentives have played a key part, but the silver bullet in Louisiana’s success in the site selection wars, admit many company leaders, is Louisiana Economic Development’s workforce training program, LED FastStart.

Launched in 2008, FastStart has been named the country’s top workforce training program by Business Facilities magazine for the last five years and has been lauded by Forbes and The Economist for its innovative approach. It’s also got a stockpile of positive testimonials from corporate CEOs, who routinely express surprise at the level of quality and the customized approach that FastStart delivers. Founding Executive Director Jeff Lynn says the program has separated itself from competitors by thinking like the private sector.

“We are state government, but we run like a business,” says Lynn.

“The folks we’ve hired to work at FastStart have come from business and industry. They understand what an expanding company or a startup needs in the way of hiring and training. They also understand the pressure a business is under. If a company we’re working with is

putting in 15-hour days, then we are, too.”

Operating from the City Plaza building in downtown Baton Rouge, FastStart has developed a reputation for creating custom, and often high-tech, recruitment and training products for companies that agree to bring more jobs to Louisiana. These products range from 3D animated training videos that give step-by-step instructions to new hires to targeted recruitment campaigns on social media that get the word out about new jobs in Louisiana’s expanding knowledge economy. FastStart’s

“We are state government, but we run like a business.”

—JEFF LYNN

tailor-made approach has helped the state attract global companies that might have gone elsewhere, says Lynn.

“Finding the right people to fill jobs, and getting them ready by day one is a huge priority for a new company,” says Lynn. “We can

remove that uncertainty. Taking it out of the equation has really made a difference.”

BUSINESS EXPERIENCE Lynn personally understands the training needs of business and industry. Between 1998 and 2008, he was head of training for Ciba Vision in Atlanta, the global optical products manufacturer, where he oversaw all aspects of employee training, from modules that prepared workers for the production line to those that reinforced the corporate culture.

Then, in 2008, the state of Georgia’s technical college system recruited Lynn away from industry to advance its workforce training program, Quick Start. Lynn’s understanding of the workforce needs of a major manufacturer helped him bring a fresh approach to the post.

He served as Quick Start’s director of regional project operations and developed customized training systems for manufacturers who were establishing new sites in Georgia.

Quick Start’s success helped the state land numerous new or expanding companies, including Cessna, AT&T, Geico, Toyo Tire and others.

In 2008, LED Secretary Stephen Moret recruited Lynn to Louisiana to help launch and develop a workforce training program that could compete with others around the country, and that would remove doubt about Louisiana’s workforce

pipeline. The idea behind FastStart, says Lynn, was to learn exactly what a new venture needed in the way of recruitment and training and to deliver it better than anyone else. It was especially important to create a top-notch program since Louisiana faces what Gov. Bobby Jindal has termed a “training gap”—a shortage of skilled adults.

FastStart changed the equation.

Within 15 months, the initiative was named the No. 1 workforce training program by Business Facilities magazine for the first time. It has maintained that status since. To date, FastStart has worked on 147 different projects in every region of the state. The services are offered at no cost to the company, and are part of the incentive package negotiated

by LED. “We’ve been able to do some really cool things,” says Lynn. “The bottom line is that we bring a lot of business and industry experience to the table.

Our goal is to overdeliver.”

Mild mannered and personable, Lynn gets excited about the products his team creates and frequently mentions that they surpass the private sector’s expectations of state government. That matters, since states need every advantage in the highly competitive game of site selection, he says.

“We have one shot to get it right,” Lynn says. “When we sit down with company officials, we have to nail it.”

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ECONOMIC DEVELOPMENT THE RIGHT STUFF: FastStart offers in-depth, world-class, custom employee recruitment and screening with hands-on assessments, as well as customized training for the complete operation of companies that make a qualified investment in Louisiana. The training is both comprehensive and highly customized.

NO TWO PROJECTS THE SAME Lynn and members of his team frequently travel to a company’s headquarters, study its manufacturing processes and learn what it would take to get new workers trained and ready by the time doors open. At times, they have designed possible recruitment and training programs on the fly during negotiations in order to demonstrate the wide range of products and services the team is able to deliver.

Once a company agrees to invest in Louisiana, the FastStart team begins its work, says Lynn. This includes engineering recruiting campaigns or producing training modules, including videos, manuals and apps that will help prepare workers. No two projects are the same, says Lynn.

FASTSTART

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About 95% of FastStart’s initial projects were aimed at the manufacturing sector, but Lynn says that has begun to change.

“The fastest growing sector we work now with is digital media,” says Lynn. “We’re very busy recruiting for IT companies and we’re surpassing their expectations in finding the right people for the job.”

Indeed, both IBM in Baton Rouge and Gameloft, the global video game design firm in New Orleans, are among the companies that have reported better-than-expected recruitment numbers, says Lynn.

“Everything we do is unique and based on a company’s needs. We don’t predetermine what we’ll be producing,” say Lynn. “We do an analysis and we really get to know their processes and work flow.”

The end result could be an orientation video that shows employees exactly what to do on the job. For example, when EA wanted to develop a better way of training its Baton Rouge-based video game testers, FastStart’s team created animated instructional videos that incorporat-

ed themes and images from popular EA games. The content moves fast, is easy to understand and gets game testers excited and invested in what they’re doing, says Lynn.

If the goal is to train an employee of a manufacturing facility, the FastStart team learns the equipment processes and creates a training program that often surpasses what a company previously had in place.

“We want to bring value-added products and services to the table,” says Lynn.

“I don’t think there is any program we received from LED FastStart that you would describe as ‘off-the-shelf,’” says Ray Peters, vice president for human resources and marketing at wood products manufacturer RoyOMartin. “Every time we went to them with a problem, we went through a problem-solving scenario with them, and they, working

FASTSTART

ECONOMIC DEVELOPMENT

LEARNING THE PROCESS: FastStart built a 3D model of a clarifier so trainees at CF Industries could “see” what happens inside the machine. A generic version has been adapted and animated for training for refineries, utilities and chemical plants.

CREATING CHEMISTRY. CREATING CAREERS.

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10/12 INDUSTRY REPORT • SPRING 2015

with us, said, ‘These are some of the solutions we can offer.’”

students annually for jobs with companies such as Sasol, which is expanding its footprint in Lake Charles by building an $8.1 billion ethane cracker plant in Westlake.

The regional training facility features industrial technology curricula taught in high-tech labs and classrooms.

Moreover, FastStart and the Louisiana Workforce Commission are working with the Department of Education’s Jump Start program to give high school juniors and seniors not bound for a four-year institution the chance to enroll in technical college courses that will help them obtain employment soon after high school. FastStart oversees the programs offered by Jump Start, ensuring they are coordinated with job opportunities.

“It’s important to help some kids get focused when they’re in high school. This helps them see what’s possible and gets them ahead,” says Lynn. “The alignment that we’re seeing in Louisiana between economic development, education and the workforce commission really surpasses what’s going on in other states.”

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WORKFORCE ALIGNMENT In addition to turnkey projects for new and expanding companies, FastStart has also become a key participant in Louisiana’s workforce readiness. Lynn and his team are working closely with two-year and four-year postsecondary schools to grow programs that dovetail with high-demand jobs, including advanced manufacturing and IT and computer science. Lynn and other FastStart officials have cooperated with both the Louisiana Workforce Commission and the Louisiana Community and Technical College System to ensure what’s being taught on LCTCS campuses is aligned with future jobs.

Lynn has helped establish key partnerships between community colleges and some of the state’s biggest new investments. For example, at Bossier Parish Community College, a state-funded Center for Advanced Manufacturing and Engineering is helping train workers for the recently opened Benteler steel tube manufacturing facility in northeast Louisiana. About 220 workers at a time can be trained on equipment at the new BPCC training center, which mimics the production floor of the Benteler site. The Center for Advanced Manufacturing and Engineering is also suited to prepare students for a variety of other jobs relevant to the Shreveport-Bossier regional job market.

In Lake Charles, a similar regional training facility opened at SOWELA Technical Community College that will prepare about 2,300

TO QUALIFY FOR FastStart’s services, a company must first commit to creating a net of at least 15 new, permanent manufacturing jobs, or a net of at least 50 new, permanent service-related jobs. LED FastStart is a discretionary incentive and each request is evaluated prior to project commencement to ensure all eligibility requirements are met. The type of industry and investment from the company are reviewed as well.

IT’S IN THE GAME: For EA in Baton Rouge, FastStart created animated instructional videos that incorporated themes and images from popular EA games.

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INFRASTRUCTURE

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Powering the boom The industrial boom means Entergy and Louisiana need more energy—lots of it.

BY DAVID JACOBS

O

n Jan. 26, Entergy Louisiana held a grand opening for Ninemile 6, a $655 million power plant in Westwego. Built ahead of schedule and under budget, it’s the first new plant built for the state’s largest utility in almost 30 years.

The company touts the 560-megawatt unit as the most modern, energy-efficient and environmentally friendly plant in its arsenal. Phillip May, CEO of Entergy Louisiana and Entergy Gulf States, says it will save customers about $50 million this year versus what they likely would have spent on electricity from less efficient sources. While owned by Entergy Louisiana, Entergy Gulf States and Entergy New Orleans will buy 25% and 20% of its output respectively.

It’s a shiny new addition to En

tergy’s aging fleet, and the company says it will help Louisiana meet the power needs of the burgeoning industrial expansion.

“Our rapidly growing economy is bringing thousands of new jobs and residents to our state, which is driving a large demand for energy,” May says.

But with some $100 billion or more worth of projects possibly on the way in south Louisiana [see pages 18-19], Ninemile 6 won’t be enough.

Entergy expects to spend billions to build new plants, buy existing ones, and establish new infrastructure to meet the demand in the Lake Charles area and along the Mississippi River industrial corridor.

Ratepayers will be on the hook for all this, which is why regulators say they will make sure the utilities don’t build too much or too soon. While some stakeholders worry that resi-

dential and commercial customers will end up subsidizing investments made to serve heavy industry, May says rates should remain “relatively flat.”

In fact, he argues that, far from being a burden, the industrial expansion is a chance to fund improvements that most everyone agrees would have to be made eventually anyway.

NEW TRANSMISSION “I’m excited about the quality of the companies that are coming here, and the opportunity it presents for this state,” May says.

In southwest Louisiana, those companies include South Africa’s Sasol, which is building an $8.1 billion ethane cracker (and possibly an $11 billion-$14 billion gas-toliquids plant, though that project is on hold and may never be built), and

San Diego’s Sempra Energy, which recently applied for federal approval to expand the scope of its Cameron LNG liquefied natural gas export facility now under construction.

Serving just those two projects could have required some $100 million in new transmission, May says. Instead, Entergy has proposed a $187 million transmission project that he says will power those projects and others that are in the pipeline. The Lake Charles region is a “load constrained area” for electricity, in part because it’s hard to build power lines across the Atchafalaya Basin.

In the “Amite South” region that includes the Baton Rouge-to-New Orleans corridor, Entergy is proposing $50 million to $60 million in new transmission. The logic behind the investments in both areas is the same.

10/12 INDUSTRY REPORT • SPRING 2015

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INFRASTRUCTURE “It allows us to inject more power and serve more load more reliably than if we did these things on a piecemeal basis,” May says. He says Entergy plans to spend almost $2 billion on transmission over the next three years over its entire fourstate footprint.

As for new generation, Entergy Gulf States plans to buy two of four units of the Union Power plant in Arkansas for $474 million, or about half the price of building a comparable new plant. But May says Louisiana “absolutely” needs more.

Entergy is reviewing proposals for a new unit in Amite South to provide between 650 and 1,000 megawatts, and expects to announce the results in May. Another request for proposals will be issued soon for new generation in the Lake Charles area.

Entergy has about 10,400 megawatts of capacity in Louisiana now, mostly produced at 30- to 40-yearold plants. Going forward, decisions will have to be made about whether to continue to invest in aging plants or build new ones.

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The good news, May says, is that modern plants are more efficient than the old ones, so ratepayers will be getting more bang for their bucks.

And the industrial expansion means that those costs will be spread over more payers, which saves money for everyone, he adds.

OTHER ALTERNATIVES Not everyone buys into Entergy’s line of thinking, however.

“Entergy’s business and residential customers should be concerned because they’re footing the bill for these new power plants,” says Casey DeMoss of the New Orleans-based Alliance for Affordable Energy.

Growth of commercial and residential energy needs has been fairly flat, she says, and the Louisiana Public Service Commission recently approved a new program to further encourage energy conservation. Industrial customers pay about 4 cents per kilowatt hour, while residential customers pay more like 6 to 8 cents per kilowatt hour, DeMoss says. The “industrial renaissance” is a good thing, she adds, but all customers are

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ENTERGY’S MAY: “I’m excited about the quality of the companies that are coming here, and the opportunity it presents for this state.”

being asked to pay for it.

DeMoss would like to see a “demand response” approach to help tackle new industrial needs. An industrial customer that needs 50 megawatts at its fingertips won’t need all of that power at all times.

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A demand response program could allow that excess power to be offered back to the grid.

“That is one thing that they could be doing that they’re not even considering right now,” she says.

Another piece of the puzzle could

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INFRASTRUCTURE be cogeneration, whereby industrial facilities generate their own power on site. While Public Service Commissioner Scott Angelle says Louisiana already has one of the largest cogeneration portfolios in the nation, Entergy’s recent move into MISO could encourage more of it, says Jennifer Vosburg, president of Louisiana Generating.

MISO is a “regional transmission organization,” a multistate independent watchdog and dispatcher that decides which assets power generators should be running when, without regard to who owns the plant that’s doing the generating. Such coordination hopefully means less capacity in the form of new transmission or power plants is needed to reliably serve everyone on the grid.

The move into MISO brings transparency to the energy marketplace, so a cogenerator can be more confident that it will be treated fairly if it has excess power to sell back to the grid. But Vosburg says regulatoIssue Date: Spring Ad proof #3 ry hurdles to cogeneration remain.

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ENTERGY

AHEAD OF THE CURVE 10/12 Industry Report was able to interview four of the five Louisiana Public Service commissioners, all of whom expressed absolute confidence in the state’s ability to meet its growing energy needs. They say the move into MISO and Entergy’s public “integrated resource planning” process to create a 20-year blueprint are helping the state stay ahead of the curve.

The PSC currently is reviewing Entergy’s application to combine its Entergy Louisiana and Entergy Gulf States companies. Entergy says Issue Date: Spring Ad proof #6 the move will result in a stronger • Please respond by e-mail or fax with your approval or minor revisions.

• AD WILL RUN AS IS unless approval or final revisions balance sheet, better ability to attract are received by the close of business today. and finance capital, and more flex• Additional revisions must be requested and may be subject to production fees.

ibility to make needed investments to support and serve the growing industrial sector. In turn, these benefits help keep costs down for all customers, Entergy says.

Commissioners say they will examine each proposal for new generation and transmission closely to evaluate the need and make sure costs are distributed fairly.

“That’s something that the Public Service Commission is going to have to grind through,” Angelle says, noting that most of the industrial growth is within Entergy’s footprint.

He says the PSC will work to do its part in making sure Louisiana takes full advantage of the industrial renaissance.

While the public ultimately pays for whatever the utilities build, it’s hard for the average person to follow the process, DeMoss notes. And commission observers often express frustration with how politicized commissioners’ discussions often are.

She says at least two commissioners—without naming names—“are not well-read on accepted models of alternative generation that are hap-

DON KADAIR

cogeneration facilities,” she says, “but yet they can’t send their own excess power that they’ve generated to their sister site down the road.”

PSC Chairman Clyde Holloway says commissioners want to promote cogeneration. He says he’s primarily interested in promoting cogeneration for a company’s own use, not in helping them sell it back to the grid.

ONLY A START: Ninemile 6 in Westwego, Entergy’s first new power plant in almost 30 years.

THE PSC’S ANGELLE: The Public Service Commission will “grind through” each proposal for new generation and transmission closely to evaluate the need and make sure costs are distributed fairly.

pening in other parts of the country.”

Speaking of politics, pending federal regulations on greenhouse gases are throwing considerable uncertainty over this whole conversation. Commissioner Eric Skrmetta says efforts to cut down on carbon emissions could as much as double the cost of building a power plant.

Skrmetta says PSC attorneys are preparing to challenge the EPA’s proposal. While he argues that the

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INFRASTRUCTURE U.S. Environmental Protection Agency is overstepping its authority, the U.S. Supreme Court (in 2007) and the U.S. Court of Appeals for the District of Columbia Circuit (in 2012) have said that the EPA has authority over greenhouse emissions like carbon under the Clean Air Act. However, it’s possible that a court battle brought by Louisiana and other states could delay implementation of new rules in hopes that the next administration will be less concerned about climate change.

But regardless of what happens at the federal level, Louisiana’s power needs are likely to keep growing.

“It’s an exciting time in the utility industry,” says Commissioner Lambert Boissiere III. “All of this [growth] is going to help us have a more diversified and abundant power source in Louisiana, for the industrial as well as residential and commercial customers.”

a question of how much to build, where, and when. Commissioners say they will keep a close eye on project announcements—including announcements of pullbacks and cancellations—to stay abreast of what the true needs will be.

David Conner, executive vice president with the Southwest Louisiana Economic Development Alliance, tallies $85 billion worth of proposed projects in his area.

“We have 10 projects that are billion-dollar projects,” he says. And it isn’t just the big projects that will need power; it’s the offshoot firms that will service them.

Major facilities require several years’ worth of planning, permitting and construction. Conner starts working with prospect companies before their decisions are announced, and he always brings the utilities to the table early in the planning process.

“We’re not building a Dollar WHEN AND WHERE General store; we’re building an $8 Issue Date: Spring Ad proof #1 billion ethane cracker,” he says. “That There is little doubt that Loui• Please respond by e-mail or fax with your approval or minor revisions. siana canRUN build capacity • AD WILL AS IS enough unless approval or finalto revisions long timeline helps to alleviate the are received by the needs. close of business today.more meet its power It’ s really crunch.”

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

DEMOSS: “Entergy’s business and residential customers should be concerned because they’re footing the bill for these new power plants.”

For southwest Louisiana and the state in general, the industrial expansion represents a once-in-a-generation, maybe even once-in-several-generations, opportunity, and there’s still plenty of work to do to get ready. No one wants something

CHERYL GERBER

as basic as finding enough power to mess this up. And if everyone gets this right, Louisiana could be in much better shape to meet its future needs once the industrial boom is over.

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

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INDUSTRY ISSUES

Trade barrier

A system of trading credits used to reduce industry’s impact on air quality has dried up, making it harder to build new plants in the Capital Region. With the EPA poised to push ozone standards lower, other regions could face the same effect.

BY DAVID JACOBS

bad was it?

“We were having two- or threeday episodes where you could actually see it,” says Mike McDaniel, who served as assistant secretary at the Louisiana Department of Environmental Quality from 1988-1992. “It would give you a scratchy throat, it was that bad.”

Controls placed on emissions from marine loading made a big difference in limiting release of the volatile organic compounds that contribute to ozone, McDaniel says. During the mid-2000s, when McDaniel led DEQ, “terrific spikes” of ozone were traced to VOC releases by heavy industry. Those were brought under control through plant fenceline monitoring and new technology.

Introduction of cleaner-burning automobiles and “constantly racheting down on industry” by regulators helped bring the Capital Region’s ozone problem under control.

“I’m quite proud of what the state has done,” McDaniel says, “particularly the Baton Rouge community. … We’ve seen progress in mitigating ozone in the face of some pretty good challenges.”

In late 2011, the Environmental Protection Agency announced that

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10/12 INDUSTRY REPORT • SPRING 2015

the five-parish Baton Rouge region had brought its average ozone level below the federal standard of 84 parts per billion for the first time since that threshold was established in 1997. More recently, the EPA unofficially acknowledged that the region had reached the tougher standard of 75 ppb established near the end of the George W. Bush administration.

But a system of trading credits, a key part of the regulatory regime that got us here, now threatens to limit industry investment at a time when the local petrochemical industry otherwise seems poised for growth. And as EPA prepares to lower the ozone standard once again, the rest of Louisiana could find itself dealing with the same issues that have been troubling Baton Rouge for decades.

GIVE US A LITTLE CREDIT While the ozone layer in the Earth’s atmosphere helps protect us from the sun’s harmful rays, ground-level ozone carries serious health risks, particularly for children, the elderly, people with respiratory ailments such as asthma, and people who work outside. Ozone is most likely to reach unhealthy levels on hot sunny days and is a major component of urban smog.

Ground-level ozone is formed when oxides of nitrogen (NOx) and VOCs react in the presence

BUSINESS REPORT FILE PHOTO

D

uring the late 1980s, the air pollution around Baton Rouge was, by modern standards, atrocious. How

of sunlight. Industrial facilities, vehicle exhaust, gasoline vapors and chemical solvents are among the manmade sources of ozone-causing compounds.

The emissions credit marketplace is an important mechanism for ozone control. Say ExxonMobil

shuts down a furnace that had been producing NOx. Once the emission reduction has been verified by DEQ, Exxon is issued a credit that can be sold to another company that is building a new facility and needs to offset its own emissions. A company that expects to emit 100 tons per

year of a pollutant in an area that doesn’t meet federal ozone standards might have to buy 110 tons worth of credits from another source in that same area, an offset aimed at lowering overall emissions over time.

The cost of such credits varies widely based on supply and demand.

McDaniel has seen them go for about $40,000 per ton of NOx in Louisiana and as much as $300,000 per ton in Houston.

But right now in greater Baton Rouge, the price question is moot because the supply of credits is basically nonexistent. VOC credits

are nowhere to be found, and NOx credits are being held tightly by companies that need them for their own projects. Credits are only good for 10 years, and recently many that might have been available have expired, explains Bryan Johnston, a scientist with DEQ.

CLEANER AIR: The ExxonMobil refinery and several petrochemical plants lie just to the north of downtown Baton Rouge.

After years of struggle, officials in the five-parish Baton Rouge region believe they have reached “attainment” of the EPA’s 2008 ozone level standard.

10/12 INDUSTRY REPORT • SPRING 2015

61

INDUSTRY ISSUES KNAPP: “We’re the canary in the coal mine here.”

Issue Date: Spring Ad proof #1

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10/12 INDUSTRY REPORT • SPRING 2015

The “impossibility” of finding credits has led the owners of four potential projects totaling more than $7 billion to basically rule out the Capital Region, says Baton Rouge Area Chamber President/CEO Adam Knapp, though it’s possible the credit market will improve before the companies have to make a final decision. A letter sent to the EPA by BRAC described the companies as “chemical manufacturers.”

“All indications suggest that they’re not looking at our region anymore,” Knapp says.

But perhaps the market’s rules can be changed to free up more credits, says McDaniel, now executive director of the Baton Rouge Clean Air Coalition.

Historically, credits only could be created by industrial facilities.

The coalition wants to let industrial companies earn credits by underwriting other strategies that reduce the region’s ozone emissions, such as transportation management projects and efforts promoting alternative fuels or energy efficiency.

Also, the markets for VOC and NOx credits traditionally have been separate. DEQ is working on a system that would make credits interchangeable. One VOC credit might be worth three NOx credits, or something along those lines, says Vivian Aucoin, a senior environmental scientist with the department.

While the limited availability of credits is a concern for industrial development in the short run, the coalition says in a new report to the EPA, it could be a “show-stopper” once even stricter ozone regulations are in place.

NO-MAN’S LAND It’s been obvious for some time that stricter ozone standards likely were on the way. The Clean Air Act requires EPA to periodically reassess its ozone threshold, and in 2008 the agency lowered the standard to 75 parts per billion, a level less stringent than the agency’s own scientific advisers had recommended.

In 2011 the EPA was poised to lower the standard again only to

ISTOCK PHOTO

pull back. Last year, a federal court ordered the agency to issue new standards, which have not been announced but are expected to be between 65 and 70 ppb.

Also last year, EPA officials said the Baton Rouge area appeared to have reached the 75 ppb standard, although the official designation has not yet been changed.

“We’re in this no-man’s land,” Knapp says. “We’ve actually achieved the cleaner air standard that they have asked us to achieve as a community, and yet we don’t get credit for it.” Which means new manufacturing facilities near Baton Rouge still need to offset their ozone emissions, while those in the rest of the state, which for the moment is considered in attainment, do not.

The latest measurements show Baton Rouge at about 72 ppb, DEQ says. Which might be cause for industry to celebrate if tougher standards were not on the horizon.

“We’re the canary in the coal mine here,” Knapp says. “We’re trying to say, ‘Look, if you don’t learn the

lesson about what you’re doing in Baton Rouge, EPA, you’re going to stifle American competitiveness.’”

An ozone standard of 65 ppb could cost Louisiana $3 billion in gross state product from 2017 to

2040 and $43 billion in compliance costs, according to a study commissioned by the National Association of Manufacturers, which favors maintaining the current standard.

The same study said the U.S. GDP

could be reduced by $1.7 trillion over the same period.

Dan Borné, head of the Louisiana Chemical Association, says it’s a shame the EPA would move the goalposts again after so much work

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INDUSTRY ISSUES was done to meet the old standards. dards rule,” and not just the current Expected designations for Louisiana metro areas “A new standard, wherever it credit crunch, caused the four major under EPA’s proposed ozone standard revisions. settles, will impede full deployment projects to be put on hold or go elseof some of the major capital projects where. He says the companies could MSA 75 ppb 70 ppb 65 ppb 60 ppb that have been announced along the not have been surprised by the prosriver and in the southwest Louisipect of tighter ozone restrictions, New Orleans-Metairie-Kenner A NA NA NA ana,” he says, adding that it’s difficult since it’s been clear the standard was to estimate the impact because “it coming down since at least 2011.

Baton Rouge A NA NA NA remains to be seen how much inWalke also notes that in 2001 the vestment might be reduced, deferred U.S. Supreme Court unanimously Shreveport-Bossier City A A NA NA or even canceled because of the ruled that the EPA has authority to new standard.” Borné predicts that regulate ground-level ozone. By law, Lafayette A A NA NA “ultimately the courts will consider the agency must set standards based the issue.” solely on public health considerHouma-Bayou Cane-Thibodaux A A NA NA Of course, industry spokespeople ations and may not consider costs, have been saying the EPA is going to the high court said.

Lake Charles A A NA NA wreck the nation’s economy as long as there’s been an EPA, yet the econCREATIVE SOLUTIONS Monroe A A A A omy has continued to grow even as Typically, emission reduction pollution has been slashed. In 2011, credits can only be traded within a Alexandria NM NM NM NM an EPA study concluded that the given nonattainment area. Trading benefits of Clean Air Act enforcewith other areas is only allowed A = Attainment, NA = Nonattainment, NM = Not monitored ment have outweighed the costs by when that area’s ozone problem is Source: Baton Rouge Clean Air Coalition more than 30 to one. equal to or more severe than yours.

Critics have attacked the NAM yet be identified based on current John Walke, clean air director But if the national standards are ozone study for ignoring the ecotechnology. The EPA says states with the Natural Resources Delowered, regions all over the state nomic benefits of improving public will be given time and flexibility to fense Council, takes issue with could be in the same ozone nonIssueand Date: Spring Ad proof #2 decide how they will meet the new Issuepublic Date: Spring byAd2 proof #4attainment boat. Since industrial health using fl awed methodolorecent statements BRAC • Please respond by e-mail or fax with your approval or minor revisions.

• Please respond by e-mail or fax with your approval or minor revisions. gy greatly the orpotential suggesting that “uncertainty • ADtoWILL RUN ASexaggerate IS unless approval final revisions standards, which are expected to be • AD WILL RUN AS IS unless approval created or final revisions plants in other areas haven’t had to are received by thecontrols close of business today. are received byproposed the close of business today. costs of ozone that can’t fi nalized by October. by the newly ozone stanworry about their ozone-causing • Additional revisions must be requested and may be subject to production fees.

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

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INDUSTRY ISSUES ENGINES OFF: Electrical hookups at Cash’s Truck Stop in Port Allen allow truckers to overnight with the engine off— the kind of project that might be used to create emissions credits for industry.

emissions lately, they may be able to take some relatively easy measures that can be converted to credits for use in Baton Rouge.

“There could be the ability to trade across the whole south of Louisiana, and possibly to Shreveport,” McDaniel says.

For the Capital Region, the low-hanging fruit mostly has been plucked, which means stakeholders here will have to be more creative.

As an example of the sort of project that locals hope one day will result in ozone emissions credits, McDaniel mentions a recently completed electrification project at Cash’s Truck Plaza in Port Allen, the first of its kind in Louisiana.

Long-haul truckers often sleep in their vehicles with the engine running, wasting fuel and creating Issue Date: Spring Ad proof #4 pollution.

Louisiana Clean Fuels, • Please respond by e-mail or fax with your approval or minor revisions. an liate U.S.approval Department • ADaffi WILL RUNof AS the IS unless or final revisions are receivedsbyClean the close of business today. of Energy’ Cities program, • Additional revisions must be requested and may be subject to production fees.

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INDUSTRY ISSUES obtained a grant through DEQ to provide electrified parking spaces that allow drivers to run their air conditioners, small appliances or Internet routers without having to idle.

Ann Shaneyfelt, who directs Louisiana Clean Fuels, says in 2014 the project prevented release of one metric ton of NOx and one-tenth as much VOC. The project also helps curb greenhouse gases, which is another EPA goal.

LCF is working with public and private sector fleets to convert vehicles to alternative fuels and with the Capital Region Planning Commission to encourage carpooling. And Shaneyfelt notes that everyone can help to control ozone by not idling in the drive-thru lane or when picking up the kids at school.

While heavy industry gets most of the blame for the region’s air quality issues, industry didn’t cause these problems alone, and can’t fix them alone either.

“It is everybody,” Shaneyfelt says.

“We can all have a cumulative effect that can help.”

CRACKING DOWN ON METHANE The Obama administration in January announced that it plans to impose sweeping regulations on methane emissions by the oil and gas sector. As one would expect from any story involving the words “Obama” and “regulations,” the industry did not welcome the news.

“Any more regulations on the industry is going to mean many hundreds of millions of dollars that the industry is not able to pour into the U.S. economy,” says Ragan Dickens, north Louisiana shale director for the Louisiana Oil & Gas Association. At a time when low oil prices are causing companies to slash budgets and lay off workers, any new regulations are especially unwelcome, he says.

Methane, found in natural gas, is the second most prevalent greenhouse gas emitted by human activities, according to the U.S. Environmental Protection Agency. Pound for pound, the EPA says, its effect on climate change is more than 20 times greater than carbon dioxide over a 100-year period. Hydraulic fracturing, or “fracking,” is the biggest industry-specific source of methane emissions, says Richard Metcalf, who directs environmental affairs for the Louisiana Mid-Continent Oil and Gas Association.

The American Petroleum Institute says the industry is unfairly being singled out for methane reductions, and says new regulations actually could hamper voluntary methane-curbing practices that industry representatives and the EPA agree are helpful.

“You have to comply with the letter of the regulation, whereas technology can pass that regulation by,” Metcalf says. Say the new rules require changing compressor seals every five years, for example. What incentive would a company have to develop better seals?

Metcalf cautions that it’s hard to know how expensive or burdensome complying with the new regulations will be, since the specifics have not been announced. But he expects Louisiana will be in pretty good shape, since measures long used here to curb volatile organic compound emissions (necessary to comply with ozone regulations) also capture methane.

It helps that EPA only intends to impose the regulations on new and modified sources of methane, he adds; in Louisiana’s case, those sources primarily would be in the Haynesville Shale. “[But] until you see the details, it’s hard to say what the impact’s going to be.”

—D.J.

DON KADAIR

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SUBCONTRACTING

SASOL

GETTING ACQUAINTED: Fluor Technip Integrated, Joint Venture, representatives interact with an attendee at the business opportunity forum.

Calling all subcontractors Business opportunity forum brings potential subcontractors together with major contractors on Sasol ethane plant.

BY ERIN Z. BASS

O

n Feb. 9, Sasol announced the appointment of six major Louisiana construction contractors to support construction of its ethane cracker and derivatives project, reflecting a commitment of more than $1 billion in contracts. As a result, numerous hiring, subcontract and procurement opportunities will be available directly with these contractors, including Baton Rouge

based Cajun Constructors, James Industrial Constructors, Turner Industries, ISC Constructors and MMR Constructors, plus Civil Construction Co. & Environmental Services of Westlake.

To help the region’s businesses take advantage of these subcontracting opportunities, the South African company held a business opportunity forum Feb. 19 at the Lake Charles Civic Center. “Our goal with the forum was to provide an avenue for

area businesses to meet with local Louisiana contractors and learn about anticipated timelines, application processes and business needs,” explains Kim Cusimano, Sasol’s senior public & government affairs specialist in North America.

Sasol’s construction manager, Fluor Technip Integrated (FTI), assisted in organizing the forum, and senior public affairs specialist for Fluor Kacie Forrest estimates that more than 700 people attended. The

event was set up like an open house, with contractors displaying booths and offering fact sheets to interested parties.

WIDE RANGE OF NEEDS Rusty DeBarge, director of construction management services at James Industrial, says his company made itself available to any subcontractor interested in doing business with Sasol. James will need between 40-60 vendors for services like site 10/12 INDUSTRY REPORT • SPRING 2015

69

SUBCONTRACTING

SASOL

TAKING THE OPPORTUNITY: Representatives of local subcontracting hopefuls line up to enter Sasol’s business opportunity forum in Lake Charles on Feb. 19.

and tree clearing, foundation, fill and underground piping work.

“We have begun the project already and have some subcontractors in place, but more will be needed,” says DeBarge. The company’s vendor qualification process includes a standard pre-qualification form that takes into account a company’s safety

record, volume of work, number of employees and minimum insurance requirements.

According to documents available on Sasol’s website, the company must be included as an additional insured on all policies, coverage must be certified and encompass workers’ compensation and employer’s, gen-

SPRING 2015

BUSIN ESS

RE PORT’S

IN DUSTRY RE

PORT

Building the

like New initiatives stry college-indu are partnerships the fill helping to m’s boo l stria indu needs. workforce

PIPELINE

eral, automobile and excess liability.

Other policies outline appropriate and inappropriate giving and receiving of gifts and entertainment so as not to tarnish Sasol’s reputation and define “conflict of interest,” which could apply to private business interests in entities that might do business with Sasol.

Forrest says subcontracting needs are unique to each contractor. A fact sheet handed out at the forum listed the six announced contractors, with responsibilities ranging from electrical and instrumentation to mechanical, structural steel and piping.

Grady Saucier, senior vice president of marketing at MMR, says the company left the forum with plenty of business cards and contacts for things like rental tools, equipment and materials. As part of the electrical and instrumentation team, MMR is currently getting its timeline together and won’t start its work for Sasol until the fourth quarter.

“We will be looking for materials, temporary facilities and equipment rentals,” says Saucier. “We’ll also have some services, maybe some dirt work or crane operations.”

2-YEAR VETTING PROCESS MMR will report to FTI, which is acting on behalf of Sasol to pur-

TARGET YOUR MESSAGE TO LOUISIANA’S MOST DYNAMIC AUDIENCE ALONG THE CORRIDOR!

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10/12 INDUSTRY REPORT • SPRING 2015

chase the majority of permanent our megaproject in southwest Louequipment, materials and services isiana.” to support the project. These items Sasol’s final investment in its ethrange from major equipment that ane cracker and derivatives complex will become part of the operating to be located next to the company’s complex to indirect materials and existing operations in Lake Charles services such as signage, piling, totals $8.1 billion and is expected to temporary fencing, portable toilets, create more than 5,000 construction construction equipment, office supjobs. The company had also planned pliers and trash removal services. an $11 billion-$14 billion gas-to-liqAbout being chosen as one of the uids facility in Calcasieu Parish but “big six” on the project, Saucier says announced in January that project a two-year vetting process paid off. would be delayed due to falling oil “There was a series of qualifications prices. and interviews and sit-downs and Saucier says the delay wasn’t presentations,” he explains. “They exactly bad news. For one thing, it didn’t look at our name in the Yellow means it won’t be such a challenge Pages and say we want to use these for companies like MMR to get guys.” labor and materials for the ethCusimano says using qualified, ane cracker plant, expected to be Louisiana suppliers and contractors operational in 2018. “The delay gave on the project where possible makes us some breathing room, and there’s good business sense. still plenty of work,” he adds.

“Louisiana is home to several Subcontractors who were not able veteran industrial construction and to attend the forum but are interestservice companies,” she adds. “Their ed in being considered are encourextensive petrochemical construcaged to contact these construction Issue Date: Springexperience Ad2 proof #1 contractors directly, or by visiting tion and maintenance • Please respond by e-mail or fax with your approval or minor revisions. and access skilled • AD WILL RUNto AS local, IS unless approvalworkers or final revisions sasolnorthamerica.com/vendors. are received by the close of business today. were key decision points in siting • Additional revisions must be requested and may be subject to production fees.

SHOPPING LIST Below are some examples of the procurement needs Sasol and FTI expect to have for the $8.1 billion ethane cracker project in Lake Charles.

Subcontracting needs of the major contractors that report to FTI may vary.

CONSTRUCTION INDIRECTS • Small tools • Gases—welding, purge, etc.

• Building systems— plumbing • Building systems— fire detection and protection

CIVIL • Backfill (materials) • Environmental (materials) • Landscaping • Fencing • Road and bridge construction • Concrete services • Paving • Civil work

LOGISTICS • Trucking

STRUCTURAL • Towers, antennas • Shop fabricated structural steel ARCHITECTURAL • Building materials • Facility equipment • HVAC equipment • Building systems— mechanical • Building systems— electrical

PIPING/VALVES/ FITTINGS • Carbon steel valves and accessories • Tubing and fittings • Piping components— gaskets, bolts, fasteners, etc.

• Pipeline engineering and construction ELECTRICAL EQUIPMENT AND BULKS • Conduit and accessories • Electrical wiring and accessories • Power cable • Pole lines

• Electrical and instrumentation services INSTRUMENTATION • Tagged instrumentation • Programmable logic controllers • Cable INDUSTRIAL PAINT AND INSULATION • Paint and coatings • Insulation • Fireproofing • Scaffolding CORPORATE INDIRECTS • Catering • Office equipment • Furniture and supplies • Signs

Source: Sasol

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INFRASTRUCTURE

BUSINESS REPORT FILE PHOTO

Transportation blues

STUCK IN TRAFFIC: Some plant owners in the Capital Region have been forced to pay higher wages to draw workers who face hellish commutes.

Though the boom is just getting started in the Capital Region, an increase in transportation woes is already causing headaches for industry.

BY DAVID JACOBS

T

he Capital Region’s industrial corridors have long had traffic issues. But Tom Yura, who oversees BASF’s Geismar plant, says the congestion has gotten noticeably worse over the past couple years.

What might once have been a halfhour commute has doubled for some of his plant’s workers. That leads to more aggressive driving, he says, and employees who show up to work frustrated by the traffic are unlikely

to be at their most productive.

As cheap natural gas drives industry expansion, industry and government leaders have spent a lot of time, effort and money training workers to meet the demand. But having skilled workers doesn’t do much good if they can’t get to the job.

“Industry in the past was like, ‘Well, the state needs to resolve it,’” Yura says. “We have to take a more active role.”

And that is beginning to happen.

Industry, business chambers, planners

and governments are coming together to talk about how they can work together to address the Capital Region’s transportation woes.

While a few short-term measures already are being implemented, everyone involved says significant structural changes are necessary to create transportation planning that is proactive and sustainable. But what that new system will look like, and how it will be paid for, right now is anyone’s guess.

FERRIES, VANS AND CARPOOLS Connie Fabré, who directs the Greater Baton Rouge Industry Alliance, says members complained to her about transportation issues in the fall of 2013.

“They were starting to see that long worker commutes were affecting their ability to attract a qualified workforce,” she says.

Those conversations led to formation of a “Baton Rouge traffic group,” which met with the Capital Area Transit System, the state’s Depart10/12 INDUSTRY REPORT • SPRING 2015

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INFRASTRUCTURE ment of Transportation and Development, the Capital Region Planning Commission, the Center for Planning INDUSTRY PINCH POINTS Excellence, the Baton Rouge Area A Baton Rouge Area Traffic and Infrastructure Working Group, including Chamber and others to brainstorm GBRIA, BRAC, CPEX, CATS, LED, about low-cost efforts that could be DOTD and CRPC, has identified the implemented relatively quickly. following industry “pinch points” in Fabré hopes an additional ferry the Capital Region, based on plant will be added in Plaquemine pretty surveys and anecdotal evidence: soon. Planners want to help workers • La. 1/Plaquemine to I-10 Bridge to arrange carpools, even among comdowntown Baton Rouge muters who don’t necessarily work at • La. 1/Plaquemine to Highway 190 the same company but perhaps live and the “old bridge” and work in close proximity.

• La. 30/west of Ashland Road to I-10 CRPC has purchased Green Ride, • La. 22/La. 70 Sunshine Bridge/ a ridesharing software program that Donaldsonville lets workers take surveys covering everything from music preference to Other short-term solutions the smoking. group has discussed include: • An additional ferry at Plaquemine CRPC is launching a pilot of the and increasing car and van pool program with various state agencies, priority in hopes of getting started in the next • Rideshare programs and incouple of months. centives, including Green Ride, “Without new infrastructure employer tax incentive, and Uber • Commuter education regarding projects to increase capacity, we need alternate routes, traffic information to find other ways to mitigate traffic resources, ridesharing and so on congestion,” says J.T. Sukits, CRPC’s •Issue CATS Date: going out of parish, Spring Adprivate proof #2 transportation alternatives coordiengagements, and coordinated • Please respond by e-mail or fax with your approval or minor revisions.

• AD WILLn’RUN IS unless approvalwith or final revisions nator. park rideASarrangements are received by the close of business today. contractors Yura says the plants have eased • Additional revisions must be requested and may be subject to production fees.

morning congestion by staggering starting times for shifts and allowing flexible schedules, but have had less success with the afternoon rush.

Fabré says employers also are talking about arranging van transports for workers, possibly collecting people on one side of the river, taking them onto a ferry, then either taking them on to the plant or letting them out to board other vans that would take them to their various plants.

“We have talked about a lot of great ideas, and people are very agreeable to saying that things are possible,” Fabré says. “But actually making them happen has been a bit slow.”

A lot of different agencies and employers are involved, making communication difficult, and everyone involved already has a full-time job. But sources involved in these conversations say there’s a growing realization that change can’t be put off any longer.

Ann Forte Trappey, president/ CEO of Forte and Tablada and a BRAC board member who is the board’s leader on regional transportation efforts, says a BRAC survey

shows transportation infrastructure is “by far the greatest concern.” The Capital Region is poised to pass the 400,000 jobs milestone, she says, with “tens of thousands of more jobs” on the way.

TIPPING POINT The traffic crunch is hitting plant owners where it hurts—the bottom line—as Fabré says plants are sometimes forced to pay higher wages to compensate for hellish commutes.

Trappey says it’s a quality-of-life issue that calls for a “data-driven and comprehensive solution.”

“We’re reaching a tipping point, and the time for action is now,” Trappey says.

Short-term measures are expected to help, but what about new roads, bridges and/or transit projects? And what about the region’s overall planning process, which often is driven by politics rather than needs?

CRPC is modeling a new West Side Expressway, three new Mississippi River bridge locations, and the Baton Rouge Urban Renewal and Mobility Plan, sometimes referred to

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

Providing Engineering, Surveying and Project Delivery services to governmental,

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10/12 INDUSTRY REPORT • SPRING 2015

Issue Date: Industry Report 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.

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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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as the “inner loop,” says Executive Director Jamie Setze. BUMP, if it comes to fruition, likely would be a toll road.

CRPC also is updating environmental documentation for an La. 415/La. 1 connector and is in the early stages of working on an La. 30 master plan, Setze says.

Meanwhile, a new coalition, likely including GBRIA, BRAC, CPEX and others, is coming together to tackle the long-term structural problems, such as how infrastructure decisions get made and how projects get funded. A group first met in February to share ideas and has begun crafting a mission statement. The acronym CRISIS (Capital Region Industry for Sustainable Infrastructure Solutions) has been suggested, although the name and full membership of the coalition have not been finalized.

Among many other questions, the group will look into whether the CRPC needs more money and staff to improve its effectiveness. A recent study by IBM for East Baton Rouge Parish found that “a siloed approach to data collection is compromising the region’s ability to effectively leverage transportation data.” The IBM report identified CRPC as a possible mediator that could “acquire appropriate data” and “create and standardize analysis procedures to quantify

traffic problems, evaluate alternatives and prioritize projects and funding allocations.”

The need for data-driven regional planning also was a theme of a conference hosted by CPEX last May about meeting the demands created by industrial expansion.

“The key to having an effective plan is having quality, transparent data that enables us to weigh the costs and benefits of different projects,” says Jessica Kemp, CPEX’s vice president for policy and advocacy. “That’s another piece that is not readily available at this point.”

Louisiana could be facing yearly deficits for some time, and the state already has a reported $12 billion road maintenance backlog. Yura says residents might need to be open to public/private partnerships, toll roads and higher gasoline taxes. He echoes the need to rely on data to drive the process, and says it will be important for stakeholders to support the process even if their favorite project turns out to not be the highest priority.

“I wish it would all be free, but it’s not,” Yura says. “Let’s get behind the most cost-effective way to handle this and get it done, and let’s not sit here and complain about it for the next 10 years.”

www.SunInteriors.com 504.833.8104

10/12 INDUSTRY REPORT • SPRING 2015

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INSIGHT

WHAT’S NEXT?

We asked leaders from a spectrum of industries, “What is the No. 1 issue you expect your organization or industry to face in 2015?”

BILL RASE Executive Director Port of Lake Charles

Two-thousand fifteen will bring the continued record expansion of economic development to southwest Louisiana, the Port of Lake Charles and the Calcasieu Ship Channel. As with most ports, infrastructure, including federal channel dredging needs, along with an educated and properly trained workforce, will be required in order to focus directly on the existing industries and those on the horizon.”

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10/12 INDUSTRY REPORT • SPRING 2015

MILES B. WILLIAMS, PE

JACQUI VINES

DANNY MONTELARO

President Sigma Consulting Group, Inc.

Senior Vice President and Region Manager Cox Communications Southeast

EVP, South Louisiana Area President Regions Bank

Though business has been very good for Sigma Consulting Group and our region in general, we have grown increasingly concerned about the future funding commitment by government for infrastructure projects.

We are worried that the current budget crunch will delay or stall important government-sponsored transportation and coastal restoration projects that Sigma plays an important role in.”

The cable industry continues to grow and evolve to best meet the needs of our customers despite increased competition, revised regulations for broadband and growing interest in over-the-top services.

Cox remains a nimble player with the ability to deliver life’s most important connections to the communities we serve over our powerful broadband infrastructure.”

It depends on where you look. In Washington, it’s regulations. To others, it’s cybersecurity. And that’s important. But to everyday customers, I think the top issue is how we can provide greater value. People want their bank to help grow their money, their business and their investments.

So we’re deepening our relationships with people to help them reach those goals.”

SEN. DANIEL R. DR. JOSEPH C. “DANNY” RALLO MARTINY Chairman Louisiana Senate Committee on Commerce, Consumer Protection and International Affairs

There does not appear to be a No. 1 issue coming before the Commerce Committee this year, at least as of now. Everything seems to be taking a backseat to the looming budget crisis. It appears that most industries and professions are directing their focus on tweaking or modifying their respective practice acts, i.e., dentists, engineers, etc., saving anything controversial until next year. Payday loans and litigation lending may also be revisited by the committee.”

Louisiana Commissioner of Higher Education

Our No. 1 issue for 2015 is to define the future landscape of public higher education for Louisiana.

We must identify priorities for our institutions against challenges emerging at both state and national levels. Only then can we begin to align our resources against those priorities in order to achieve long-term and sustainable solutions for the state.”

MONTY SULLIVAN President Louisiana’s Community and Technical Colleges

The No. 1 issue we face remains educating and training the workforce Louisiana requires to remain internationally competitive. In 2014, Louisiana’s community and technical colleges had their most productive year ever by serving 165,000 students and graduating more than 20,000 students. Yet we must do more. Our colleges remain focused on regional workforce demands and delivering quality programs that ensure the people of Louisiana are able to participate in one of the nation’s hottest economies.”

JOE WILEY Executive Vice President and General Counsel EXCEL Group

The biggest challenge overcome by EXCEL this year has been providing skilled craftsmen to meet the workforce requirements of our clients’ construction and fabrication projects, as well as maintenance contracts. Key resources will continue to be graduates of craft training programs offered by Associated Builders and Contractors in Baton Rouge and Lake Charles and ABC satellite training facilities at 15 area high schools.”

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BELL HELICOPTER

PROJECT PROFILE TAKING FLIGHT: The 505 Jet Ranger X will be built in Lafayette.

On a mission

Bell Helicopter’s new Lafayette Assembly Center will produce an aircraft that can fly faster, farther and longer.

BY ERIN Z. BASS

L

ouisiana’s established aerospace industry and exceptional workforce training programs have combined to land a production site for a new light, single-engine helicopter designed by a giant of the rotorcraft industry.

Fort Worth, Texas-based Bell Helicopter considered several possible manufacturing sites for its Model 505 Jet Ranger X before settling on Lafayette Parish. The helicopter is the latest development in a line of light rotorcraft dating back almost 50 years to the introduction of the Model 206 Jet Ranger. Bell built around 7,400 examples of the Model 206.

“Our experience has shown us that Lafayette Parish is a great place to do business,” says Bell General

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Manager Paul Watts. “In addition, our parent company, Textron, has had a longstanding, successful relationship with the state of Louisiana.”

Since buying the Acadian Composites helicopter panel repair business from Petroleum Helicopters Inc. in 2005, Bell’s footprint in Lafayette Parish has continued to grow. The company opened a $4.5 million composites facility in April 2014 and also operates Rotor Blades Inc. Both are in Broussard.

A strong incentives package provided by Louisiana Economic Development and the involvement of state and local officials contributed to Bell’s decision to base production of the helicopter in Lafayette.

The company’s new assembly center will operate in a leased hangar at Lafayette Regional Airport and is

expected to create 115 jobs.

The state is spending $26.3 million to build the hangar and has committed $4 million in lease support, $3.8 million for infrastructure and equipment and $205,000 to move Bell employees to Lafayette.

In turn, Watts says capital improvements at the airport and plans to invest in the local economy over the life of the contract demonstrate Bell’s commitment to the area.

Watts is director of the 505 Jet Ranger X program and has led the development team in creating the helicopter. Bell was able to successfully re-enter the short light single-engine market with the introduction of the 505 Jet Ranger X in 2014. The company says the 505 has received outstanding response from rotorcraft customers.

“Our team has worked closely with customers all over the globe from day one of this program to ensure that this aircraft meets customer needs,” explains Watts. “They have specifically asked for increased safety and performance at a cost-competitive price point.”

The five-passenger 505 Jet Ranger

X delivers with a flying speed of about 144 mph, a range of more than 410 miles and a useful load of 1,500 pounds.

“This aircraft offers customers the best combination of value, performance and features, and is able to fly faster, farther and longer than most aircraft in its class,” adds Watts.

Adaptable for multiple missions—including utility, training, private use and law enforcement—the 505 Jet Ranger X is the first helicopter in its class to feature the Garmin G1000H fully integrated glass cockpit to enhance pilot visibility, safety, efficiency and reliability.

Customers who want more customization can visit the “Build Yours” section of bell505.com and select an exterior color, interior fabric and extra features from air conditioning to electronic upgrades and a 1,500-pound cargo hook.

The company’s 84,000-squarefoot Lafayette Assembly Center was designed specifically for the 505 Jet Ranger X and will be capable of producing more than 200 of the aircraft a year. Groundbreaking was held in August 2014 and completion is expected this summer. Assembly operations should begin in the fourth quarter of 2015.

Watts, who formerly worked for Boeing Defense, says the full rate of production should be achieved by 2018.

DID YOU KNOW? Bell has produced some of the most recognizable helicopters in U.S. aviation history. Its Model 47 was approved for commercial use in 1946 and is perhaps best remembered for its use in the opening sequences of the 1970s TV series MASH. The Bell UH-1 Huey saw widespread use during the Vietnam War.

RESOURCES

Resources & organizations to know STATE GOVERNMENT

(Source: State department websites) Louisiana Directory Services to promote and protect health, safety and welfare.

(225) 219-5337 louisiana.gov Department of Environmental Quality Oversees permitting and provides services through comprehensive environmental protection plans and resources.

(225) 219-5337 deq.louisiana.gov Department of Revenue Controls generation of revenues from Louisiana taxpayers and businesses.

(855) 307-3893 revenue.louisiana.gov Secretary of State Collects, secures and communicates governmental information. Includes resources such as The Uniform Commercial Code, GeauxBiz, Direct Access, election information and state archives.

(225) 922-2880 sos.la.gov GeauxBiz A service of the Louisiana Secretary of State, GeauxBiz is a “licensing information center” for prospective small business owners; it provides current and potential business owners a single place to go for all the necessary information to operate within the state.

(225) 925-4704 geauxbiz.com Louisiana Workforce Commission Formerly the Louisiana Department of Labor, LWC provides services for business growth and employment opportunities.

(225) 342-3111 laworks.net Louisiana Economic Development Strengthens the state’s business environment by cultivating jobs and economic opportunity.

(225) 342-3000 opportunitylouisiana.com Department of Natural Resources Ensures and promotes sustainable and responsible use of the natural resources of the state.

(225) 342-4500 dnr.louisiana.gov Department of Transportation and Development Serves the transportation and water resource needs of Louisiana residents,

businesses and government partners 1-877-4LA-DOTD dotd.la.gov

4% sales/use tax rebate on capital expenses or a 1.5% investment tax credit for qualifying expenses.

Louisiana Public Service Commission Independent regulatory agency dedicated to serving the public interest by assuring safe, reliable and reasonably priced services for public utilities and motor carriers. Maintains a searchable database of all regulated utilities in the state.

(225) 342-4999 • (800) 256-2397 lpsc.louisiana.gov

Competitive Projects Payroll Incentive Program Provides an incentive rebate of up to 15% of a participating company’s new payroll for up to 10 years. Additionally, a participating company will be eligible for either a rebate of state sales and use taxes on capital expenditures or 1.5% project facility expense rebate.

Louisiana State Licensing Board for Contractors Agency staff receive and process applications for new contractor licenses, additional classifications, changes of license records, and annual license renewals.

(225) 765.2301 • (800) 256-1392 lslbc.louisiana.gov Louisiana Office of Financial Institutions Licenses and supervises entities under its jurisdiction in order to protect and serve the public interest and enhance confidence in the financial services industry. Maintains records of all active banks, lenders, brokers, CAPCOs and BIDCOs. (225) 925-4660 ofi.state.la.us

BUSINESS INCENTIVE PROGRAMS opportunitylouisiana.com (Source: LED) ALL SIZES FastLane Manages Louisiana’s business incentive programs that are approved by the Board of Commerce and Industry.

(225) 342-3000 fastlane.louisianaeconomicdevelopment. com Angel Investor Tax Credit Louisiana’s Angel Investor Tax Credit (AITC) encourages accredited investors to invest in early stage, small wealth-creating Louisiana businesses that seek startup and expansion capital.

Enterprise Zone A $2,500 tax credit for each certified net, new job created and either a 4% sales/ use tax rebate on capital expenses or 1.5% refund on capital investment.

Quality Jobs (QJ) Up to 6% rebate on annual payroll expenses for up to 10 years and either a

Research and Development Tax Credit A tax credit up to 40% to existing businesses with operating facilities in Louisiana to establish or continue research and development within the state.

Restoration Tax Abatement A five-year 100% property tax abatement for the rehabilitation of an existing structure.

Industrial Tax Exemption 100% property tax abatement for up to 10 years on a manufacturer’s new investment and annual capitalized additions.

SPECIAL PROGRAMS FOR SMALL BUSINESS Economic Gardening Initiative Provides customized core business strategies, market research, qualified sales leads and improved Internet and technology tailored to your growing needs.

Hudson Initiative Certification program offers greater access to purchasing and contracting opportunities at the state government level.

Small Business Loan and Guaranty Program Provides loan guarantees to banks and other small business lenders in association with the SSBCI ranging from $5,000 to $1.5 million.

Small and Emerging Business Development Program Provides for developmental assistance, including entrepreneurial training, marketing, computer skills, accounting, legal and industry-specific assistance.

Veteran Initiative Helps veteran-owned and service-connected disabled veteran-owned small businesses gain greater access to purchasing and contracting opportunities at the state level.

WORKFORCE RESOURCES LED FastStart® No-cost workforce training, recruiting and screening program.

(225) 342-0107 opportunitylouisiana.com Incumbent Worker Training Program (IWTP) IWTP is a partnership between the Louisiana Workforce Commision, business and industry, and training providers. It’s designed to assist in the skill development of existing employees and is divided into two sub programs: Small Business Employee Training (SBET) and customized training.

(225) 342-8980 laworks.net Small Business Employee Training (SBET) Assists in the skill development of existing employees through individual, standardized (off-the shelf) training.

(225) 342-8980 laworks.net Louisiana Job Connection A program powered by the Louisiana Department of Economic Development, Louisiana Job Connection is an employment database that matches job seekers and employers through available career opportunities. louisianajobconnection.com Economic Development Certification Program Designed for those economic development professionals, chamber of commerce staff, elected officials, and local civic leaders who are interested in best business practices in the field of economic development. business.lsu.edu

ORGANIZATIONS STATE AND REGIONAL ORGANIZATIONS Greater Baton Rouge Industry Alliance Industrial manufacturing trade association.

(225) 769-0596 gbria.org Louisiana Oil and Gas Association Association for members and associates of the Louisiana oil and gas industry.

(318) 841-6505 loga.la Louisiana Chemical Association Chemical manufacturers, vendor and 10/12 INDUSTRY REPORT • SPRING 2015

79

RESOURCES Gulf States Renewable Energy Industries Association Renewable energy trade association.

(225) 361-8921 gsreia.org

supplier association.

(225) 344-2609 lca.org

appraisers.

(504) 833-4949 lcai.org

Louisiana Chemical Industry Alliance Partnership between plants and suppliers that promotes the interests of the chemical industry and related businesses.

(225) 344-2609 lca.org

The American Institute of Chemical Engineers—Baton Rouge Chapter Local chemical engineers trade association.

(225) 578-1426 aiche-br.org

Louisiana Industrial Development Executives Association Economic and industrial development association.

(225) 448-5404 lidea.org

Southern Economic Development Council Southern region economic development organization.

(404) 523-3030 sedc.org

Ports Association of Louisiana Association for voluntary member ports and affiliated organizations.

(225) 344-9040 portsoflouisiana.org

Louisiana Gas Association Nonprofit organization composed of more than 125 gas distribution and transmission companies in Louisiana.

(225) 218-6885 lagas.org

Louisiana Association of Business and Industry LABI is Louisiana’s Chamber of Commerce and the state chapter of the National Association of Manufacturers.

Provides an interface between business and the Legislature. Numerous business resources can be found on the website.

(225) 928-5388 labi.org

Louisiana Construction and Industry Association Provides benefits, programs and services to all policyholders of LCI Workers’ Comp. lciassociation.com

Louisiana Mid-Continent Oil and Gas Association Trade association representing all sectors of#3 the oil and gas industry operating Issue Date: 10/12 Industry Ad proof Louisiana Chapter of or the in Louisiana • Please respond by e-mail faxAppraisal with your approval or minor revisions. and the Gulf of Mexico.

• Ad will run as is unless approval or final revisions Institute (225) 344-5502 are received by close of business Association forthe professional realtoday. estate lmoga.com • Additional revisions must be requested and may be subject to production fees.

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

South Central Industrial Association SCIA is an association for south central Louisiana industrial businesses and communities.

(985) 851-2201 sciaonline.net Bayou Industrial Group Southeast Louisiana and Bayou Region industrial organization (985) 580-3901 bayouindustrialgroup.com Lake Area Industry Alliance Lake Charles-based organization for local industries and the community, as well as leaders, politicians, educators and nonprofit organizations.

(337) 436-6800 laia.com REGIONAL PLANNING COMMISSIONS Regional planning districts work to assist municipal and parish governments, promote economic development, and assist new, small and expanding businesses.

Regional Planning Commission (504) 568-6611 norpc.org

Capital Region Planning Commission (225) 383-5203 crpc-la.org South Central Planning & Development Commission (985) 851-2900 scpdc.org Acadiana Regional Development District (337) 886-7782 ardd.org Imperial Calcasieu Planning & Development Commission (337) 433-1771 imcal.org NATIONAL CHAPTERS National Association of Manufacturers (202) 637-3000 nam.org Society of Industrial and Office Realtors Professional commercial and industrial real estate association.

(202) 449-8200 The American Petroleum Institute National trade association that represents all aspects of America’s oil and natural gas industry.

(202) 682-8000 api.org

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

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

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PAVING OUR FUTURE ONE MILE AT A TIME Asphalt Paving | Hot Mix & Cold Mix Sales Milling | Base Work | Drainage / Utilities Site Development / Earth Work

Geismar Plant Sales 225-673-4512

Central Plant Sales 225-456-5065

Office: 1107 East Hwy 30 Gonzales, La 70737 Phone: 225-644-1407 | Fax: 225-644-4122 | www.rjdaigle.com 10/12 INDUSTRY REPORT • SPRING 2015

81

RESOURCES Gas Technology Institute Research, technology and training organization for natural gas industry and energy markets.

(847) 768-0500 gastechnology.org Interstate Oil and Gas Compact Commission A multistate agency specializing in efficiently maximizing oil and natural gas resources.

(405) 525-3556 iogcc.publishpath.com Society of Petroleum Engineers Largest international organization serving managers, engineers, scientists and other professionals worldwide in the upstream segment of the oil and gas industry.

(972) 952-9393 spe.org

CHAMBERS

(Source: chamberofcommerce.com) BATON ROUGE LOCAL CHAMBERS Baton Rouge Area Chamber (225) 381-7131 brac.org Chamber of Commerce of East Baton Rouge (225) 921-1433 chamberebr.com

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10/12 INDUSTRY REPORT • SPRING 2015

City of Central Chamber of Commerce (225) 261-5818 cityofcentralchamber.com

Crowley Chamber of Commerce (337) 788-0177 crowleychamber.com

The Baton Rouge Hispanic Chamber of Commerce (225) 218-4817

East St. Tammany Chamber of Commerce (985) 643-5678 estchamber.com

Federation of Greater Baton Rouge Civic Associations (225) 926-1459 fgbrca.webs.com Zachary Chamber of Commerce (225) 654-6777 zacharychamber.com LOUISIANA REGIONAL Ascension Chamber of Commerce (225) 647-7487 ascensionchamber.com Assumption Area Chamber of Commerce (985) 369-2816 assumptionchamber.org Breaux Bridge Area Chamber of Commerce (337) 332-5406 chamber.breauxbridgelive.com Central Louisiana Chamber of Commerce (318) 442-6671 cenlachamber.org

Livingston Parish Chamber of Commerce (225) 665-8155 livingstonparishchamber.org New Orleans Chamber of Commerce (504) 799-4260 neworleanschamber.org

Greater Iberia Chamber of Commerce (337) 364-1836 iberiachamber.org

River Region Chamber of Commerce (985) 359-9777 riverregionchamber.org

Greater Lafayette Chamber of Commerce (337) 233-2705 lafchamber.org

St. Bernard Chamber of Commerce (504) 277-4001 stbernardchamber.org

Greater New Orleans Inc. (504) 527-6900 gnoinc.org Hammond Chamber of Commerce (985) 345-4457 hammondchamber.com Houma-Terrebonne Chamber of Commerce (985) 876-5600 houmachamber.com Iberville Chamber of Commerce (225) 687-3560 ibervillechamber.com Jefferson Chamber of Commerce (504) 835-3880 jeffersonchamber.org

St. Mary Parish Chamber of Commerce (985) 384-3830 stmarychamber.com St. Tammany West Chamber of Commerce (985) 892-3216 sttammanychamber.org SWLA Economic Development Alliance (337) 433-3632 allianceswla.org West Baton Rouge Chamber of Commerce (225) 383-3140 wbrchamber.org

are received by the close of business today.

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