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A SITE SELECTION INVESTMENT PROFILE
SOUTHWEST LOUISIANA
From Site Selection magazine, March 2011
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A Region of Resilience

CityDocks_OverheadShot
The Port of Lake Charles is the 11th largest port by annual cargo tonnage in the U.S.
Photo courtesy of the Port of Lake Charles

From twin Gulf setbacks to economic recovery, Lake Charles reveals its blueprint for a rapid turnaround.

by RON STARNER
"W

e took adversity and created opportunity."

With those words, George Swift sums up the response of his five-parish region of Southwest Louisiana to what most people would call an incredible streak of bad luck.

Five years after Hurricane Rita delivered a devastating blow to the Lake Charles area and surrounding communities, British Petroleum accidentally unleashed a gushing flow of crude oil into the Gulf of Mexico in deepwater off the coast of Louisiana.

While it would take most communities many years to recover from such setbacks, the Lake Charles area has already rebuilt its economy and placed the region firmly on the path to recovery, according to Swift, president and CEO of the Southwest Louisiana Economic Development Alliance.

"After Hurricane Rita in 2005, we were very fortunate that our elected officials came together," says Swift. "With the help of the state, we brought in some top planners. We had a mini construction boom. We realized after Rita that we could not continue business as usual. We had to jumpstart our economy and diversify our base of industry."

The strategy to diversify the regional economy paid big dividends in 2010, when the Lake Charles metropolitan area led all communities of 200,000 people and below in total number of corporate real estate projects.

"We had many new homes and buildings that were built to increased building standards," Swift says. "The city of Lake Charles had a bond issue on lakefront development. We are now projected to be one of the strongest housing markets per capita over the next two years. Our real estate market has held up very well. That has been a major factor in stabilizing our economy and keeping it outperforming the nation."

From alternative fuels projects to expansions at liquefied natural gas terminals, the energy sector has served as the primary driver of Lake Charles' economic engine. Not even a slowdown in permitting for new oil and gas drilling in the Gulf following the BP oil spill last April could put the clamps on the region's economy.

"Overall, this area's many infrastructure assets — our ports, our waterways, our petro-chemical industry refineries, etc. — have given our region a huge economic boost," notes Swift. "As companies have looked to expand, they have realized that Southwest Louisiana is a good place to do business. As a result, companies that are based here have made the decision to maximize their investment in their local work force."

These are companies like Shaw Modular Solutions, Sabine Pass LNG, Sasol Limited and Cheniere Energy.

Sabine Pass announced a $508-million capital investment in Cameron that creates 23 jobs. Cheniere announced a $120-million expansion in Cameron, and Sasol unveiled plans for a $175-million, 36-job project in Lake Charles.

From Nuclear Power to LNG

Shaw, meanwhile, continued work on its nuclear reactor module assembly facility in Lake Charles, growing by another $20 million in investment and adding 50 jobs.

Shaw finished building a world-class module fabrication and assembly facility on a 300-acre site at the Port of Lake Charles in 2010. The 400,000-sq.-ft. plant produces structural, piping and equipment modules for new nuclear power plants around the world.

Cheniere Energy, meanwhile, announced a series of projects last year that will add liquefaction capabilities at its Sabine Pass LNG Terminal. "We believe current market fundamentals have created an opportunity for the U.S. to offer natural gas to global markets at competitive prices," said Charif Souki, chairman and CEO of Cheniere. "We have begun pursuing contractual arrangements related to the project and have received favorable preliminary indications of market interest from both potential natural gas buyers interested in capacity and U.S. natural gas producers interested in committing supply to the project."

The Sabine Pass site can readily accommodate up to 4 LNG trains capable of processing about 2 billion cubic feet of natural gas per day. The capacity of each liquefaction train would be about 3.5 million tons a year.

The 853-acre Sabine Pass site is strategically located to provide export services because of its proximity to unconventional gas plays in Louisiana and Texas. It also ties in with Cheniere Energy's 94-mile-long Creole Trail Pipeline, which would be reconfigured to be bi-directional.

Much of the activity in the region is tied into the Port of Lake Charles, which in 2010 experienced "possibly the best year the port has ever had," according to Dan Loughney, director of marketing and trade development for the port. "In terms of cargo tonnage and activities in real estate and economic development, 2010 was a watershed year for us."

The 11th largest port district in the U.S. with a total volume of more than 58 million tons, the Port of Lake Charles in Calcasieu Parish handles 4.5 million tons of petroleum products each year, along with 30 percent of all tonnage that is exported as aid from the U.S. to Third World countries.

"From the marine side, we are seeing some movement of new cargoes and non-traditional cargoes over the port docks," says Loughney. "We are seeing a tremendous increase in aluminum coming in and out of South America. Also, with the recent discoveries of the shale oil fields in Eastern Texas and Northwestern Louisiana and the Dakotas, the port has been bringing in a lot of fract sand. It is a man-made ceramic product. It is coming in from China."

Due to an increase in activity, notes Loughney, the port's foreign trade zone is under application for expansion. "The FTZ covers the 200-acre City Docks facility — our deepwater port. Our application to the FTZ Board in Washington, D.C., covers all of the port properties plus 1,250 acres adjacent to the port's industrial park. This will include our Industrial Park East. We have now received Louisiana site certification. This is the fourth piece of property to be certified in the state."

Industrial Park East covers 365 acres and is adjacent to Chennault International Airport, which has 1,250 acres of prime industrial land.

Airport Bursting at the Seams

Randy Robb, executive director of Chennault, says that the airport is experiencing "very significant growth" with the advent of the $3.8-billion contract for KC-10 Contractor Logistics Service to Northrop Grumman.

"This will be the Repair Center of Excellence for Northrop Grumman," Robb says. "We are growing pretty fast and we are working with the state to get another hangar built for aircraft MRO work. We are working with the Federal Aviation Administration to widen our taxiway, and we are looking to build some new warehouses for Grumman."

Aeroframe is another MRO on site, "and we are having to turn away work at Aeroframe because we need another hangar," says Robb. "Basically, we need a 112,000-sq.-ft. hangar with four bays so that we can accommodate four A-320 airplanes."

After slow times in 2008 and 2009, "we are now experiencing exactly the opposite of a recession," adds Robb. "We are growing so fast that we can hardly keep up."

Another person who can say that is Dan Feibus, CEO of Zagis USA, which is expanding its cotton-spinning plant in the Lacassine Industrial Park in Jennings in Jeff Davis Parish.

"We are taking our plant and effectively doubling its productive capacity," Feibus says. "We will be adding warehouse space to consolidate shipping and receiving into one function. We will be putting in six new spinning frames, which cost roughly $1 million each with the support equipment. We are adding about 40 percent to our work force, which will total about 100 employees upon completion."

The Zagis plant covers about 140,000 sq. ft. and cost about $9 million to build.

"We can't say enough good things about Marion Fox and her economic development team at Jeff Davis Parish," says Feibus. "She is terrific. Gov. Bobby Jindal and Louisiana Economic Development Secretary Stephen Moret were also helpful in facilitating our expansion. This project was very much in doubt due to external factors, such as a dispute with our power provider, but the governor intervened and everything was worked out."

Feibus said he could have located the plant anywhere in the Southeast, but the logistics advantages of the Lake Charles area sold him on placing the project in Southwest Louisiana.

"We looked at sites literally all over the Southeast," he says. "We especially liked the site at Lacassine because it is close to the raw material we need and it has the unique benefit of port access and being right on Interstate 10."

In addition, he notes, "the work force is excellent. We are very fortunate. Our manufacturing process is a very clean and comfortable process. We have very low turnover here because the workers are so good."

Feibus also credited the persistence of Mike Heinen, head of the Jeff Davis Electric Coop, with paving the way for the deal to get done.

"Louisiana is pretty unique in utility service," says Heinen. "We have the 300-foot rule. New businesses that are located at least 300 feet from any existing utility line have a choice of who serves them with electrical power. We use that rule to help business and industry have competition among utilities. We can compete for business and we are very active in economic development. As a result, our pricing is always competitive."

BP Goes From Oil to Bio-Fuels

Fox, executive director of the Jeff Davis Parish Economic Development & Tourist Commission, says that the parish is adding a rice-loading facility at Lacassine. "It will load rice on trains that go directly to Mexico," she says. "The project is out to bid right now. The Police Jury of Jeff Davis Parish and the South Louisiana Rail Facility will build it. They will be able to load 40 rail cars in 10 hours from four bins, with a capacity of 25,000 bushels an hour."

BP, which made headlines for its Deepwater Horizon oil rig explosion and resulting catastrophic spill in the Gulf last year, is reinvesting resources back into the region in the form of a bio-fuels plant in Jeff Davis Parish. BP bought out Verenium and is moving forward with plans to make ethanol from cellulosic technology, says Fox.

In nearby Allen Parish, James Sandefur of Allen Industrial Park in Oakdale says the success of the new Roy O. Martin oriented strand board plant there is stirring interest from other companies.

"They have been running their plant 24-7 all through the economic downturn," Sandefur says. "It is the largest OSB plant in America. We have some property along U.S. Highway 165, the main north-south route through Oakdale, and it is available for commercial development. We own about 200 acres, and about 67 of them are industrial."

In Beauregard Parish, the success of large employers is driving revenue growth to record levels, according to DeRidder Mayor Ron Roberts.

"AmeriSafe, Boise and Meadwestvaco are all doing well," he says. "They have all weathered the recession, and 2009 was the largest revenue year in the history of DeRidder. Ten years ago, our city's debt was 40 percent of our annual budget. Today, it is only 4 percent. We have the largest cash reserves in the history of the city."

The completion of the four-lane highway from DeRidder to Lake Charles in 2007 gave his city a big economic boost, the mayor notes. "That shortened the drive time by about 15 minutes. Plus, activity at Fort Polk is only 15 miles away. There are 30,000 people who work there every day, including 12,000 military personnel. The remainder are civilians, and many of them choose to live in DeRidder."

Not to be outdone, Cameron Parish is poised to undergo the biggest renaissance of all in the region. With $200 million in state and federal funding for community facilities, infrastructure, transportation and economic development under way, Cameron has embarked on an ambitious recovery plan.

The hardest hit of the five Southwest Louisiana parishes during Rita, Cameron is banking on the Calcasieu Pass-Cameron Loop business park to supply about 60 percent of the West Cameron Port revenue stream.

"Cameron is in full-fledged redevelopment mode since the incursion of Rita," says Ernie Broussard, executive director of planning and development for the Cameron Parish Policy Jury. "Central to our economic development platform is our maritime initiative and its reliance on our ports to be the economic engine of our parish. The port is currently engaged in a $12 million to $15 million dredging project for its Cameron Loop and East Fork waterways."

Broussard says the Cameron ports received recent expansions from Martin Midstream, Halliburton and Moran Towing, but more may be on the way.

"We have been targeted by a series of prospective companies that are watching the market and industry opportunities," he says. "Although challenging times, we think this is going to be Cameron's finest hour."


This investment profile was prepared under the auspices of the Southwest Louisiana Economic Development Alliance. For more information, contact George Swift at 337-433-3632 or by email at gswift@allianceswla.org.


Story in Pictures

George Swift, President and CEO of the Southwest Louisiana Economic Development Alliance
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