omething good will come from this in Louisiana," says Bob Hess, consulting partner with Cushman & Wakefield Global Consulting and one of the lead site selection advisors to ThyssenKrupp's $3.9-
billion steel complex now going to southeast Alabama.
Louisianans may take little solace in this oft-
expressed sentiment, but they can take solace in the evidence behind it.
"Both Louisiana and Alabama were head and shoulders above everyone else," says Hess of the steelmaking site selection process, in which a site in St. James, La., was nosed out at the finish. State economic developers say half a dozen prospects already have expressed interest in that 4,000-
hectare) site since ThyssenKrupp took a pass. "They are well positioned for success in that state, and I'm very happy to see the strategic moves they're making," adds Hess, noting state plans for boosting its education infrastructure. The incentive package Louisiana offered was several hundred million dollars larger than Alabama's.
A continuing stream of very real projects helps Michael Olivier, director of Louisiana Economic Development, keep the faith when it comes to the state's economic prospects, including ThyssenKrupp spinoff impact.
"Our direct benefit will be the use of the Mississippi River," he says of how ThyssenKrupp's Alabama plant will still help Louisiana. "Another benefit will be to the steel users in our state, particularly General Motors in Shreveport, which will have access to a steel plant with lower costs because of transportation. Union Tank Car is keenly interested in getting certain types of steel. [The ThyssenKrupp plant's] proximity will be positive for Louisiana industry."
Among the other immediate benefits is the legislative set-
aside of $300 million that had been reserved for ThyssenKrupp for a general economic development fund for other projects. Other legislative possibilities were in the works as the Legislature's session wound down in late June.
Much of Louisiana continues to be open for Gulf Opportunity Zone (GO Zone) federal incentives, though many industrial end users have not necessarily put them to use. Asked about this, Olivier says, "They are what they are. What we've requested is that some of the timing be changed, inasmuch as the placed-
service provision for the accelerated depreciation. They've only allowed seven parishes to receive an extension to 2010, and we're requesting that more parishes be allowed to go to 2010. New Orleans will be very slow to come on board, so the parishes most catastrophically hit probably need an extension to 2012 at minimum. There are so many issues that have to me met, from 'Can I get insurance?' to 'Where can I build, and can I get construction workers?' "
Olivier says there are issues remaining with the federal government on several fronts, including the amount of money owed to homeowners by FEMA, which he says miscalculated the number of houses by 22,000. "We're going to need about $3 billion more," he says.
From 2004 to February 2007, Louisiana Economic Development was involved in 1,623 projects with a total capital investment of $25.2 billion that generated 36,601 new jobs. Seventy-
one percent of those projects were existing industry expansions.
Thanks to a tax break on equipment used to manufacture automobiles that was signed into law by Gov. Blanco in early June, General Motors
soon may add one more project, worth $73 million, to that list.
But there might be more. Olivier mentions the talk given by Dennis Cuneo, long the lead site selection advisor to Toyota in North America, at an economic development conference recently convened by Gov. Kathleen Blanco.
"He talked brass tacks with us about Louisiana's capability, trends in the automotive industry and framing where Louisiana can be in terms of attracting an additional automotive project in our state," Olivier says. "It was apparent he could see the merit of an
The Pointe Sunshine (above) and Orange Grove (below) sites being marketed by Entergy are within view of each other on a bend in the Mississippi River.
20 corridor site we have acquired."
That would be the Franklin Farms site in northeast Louisiana, first identified as Holly Ridge in these pages in January 2007 as a new "super site" for industrial development. Olivier says the state was advised to remove the word "ridge" from the name because of its association with uneven land. The site was then named after George Franklin, a landowner who passed away during the property acquisition process. Olivier says the state is doing additional environmental, geological and other preparations to get it to shovel-
"The family made us a magnanimous offer, frankly, and we were able to negotiate a deal for the state," says Olivier of the Franklin Farms site. "If we don't make a deal in 12 years, they get to buy it back for the same price we paid them for it."
It will be joined by three other sites – in Ascension and Tangipahoa parishes – certified by consultant Margaret Grissom on behalf of Entergy, and one other site that Ascension Parish is moving forward with on its own.
"We're encouraging areas to qualify them, preferably certify them and acquire control, preferably by option," says Olivier.
The Franklin Farms site was certified in May 2005, with the Tangipahoa and Ascension sites (called Zachary Taylor and Pointe Sunshine, respectively) achieving certification this summer.
Grissom says that the original parcel for Pointe Sunshine could get larger: She was planning to meet in mid-
June with a landowner who has an additional 400 acres (162 hectares) that could be attached to the existing 1,000-
hectare) site. In a litmus test for the power of certification, just across the river is the 1,023-
hectare) Orange Grove site that Ascension economic developers are marketing without the benefit of certification.
Both sites are within the jurisdiction of the Port of Greater Baton Rouge and therefore have access to bond financing. They're also within the jurisdiction of such major corporate players as BASF, Motiva and DuPont, bringing possibly valuable feedstock streams into play. Ascension Economic Development Corp. is buttressing the megasite play with a separate business park project now in the works.
Grissom says new U.S. Census data shows how population shifts since Katrina and Rita have accrued to the benefit of both Ascension and Tangipahoa parishes. The latter site is also helped by connection to two Louisiana Technical College campuses, as well as the fast-
growing campus of Southeastern Louisiana University in Hammond.
Higher learning and elementary education are receiving the microscope treatment from the Louisiana legislature this year, as the state, at Blanco's urging, seeks to make the sort of basic education infrastructure investment that has helped gird the growth of other southern states. But the funding is not just for research – it's also to help protect faculty in fighting a trend that Olivier and others in Louisiana economic development find troubling: the poaching of institution-
"A number of faculty members have been influenced to consider going to other universities in other states because we were crippled," says Olivier.
Lockheed Martin and NASA personnel at NASA's Michoud Assembly Facility in New Orleans load the space shuttle external tank designated ET-
118 onto its seagoing transport, the NASA ship Liberty Star, in June 2006. The manufacturing plant which houses the National Center for Advanced Manufacturing at Michoud encompasses 43 acres (17.4 hectares) under one roof. In March, NASA Marshall Space Flight Center Director David King and Louisiana Gov. Kathleen Blanco signed a Memorandum of Understanding establishing the framework for the state's investment in new facilities and tooling capabilities at Michoud.
Photos courtesy of LMSSC- MO, NASA and LED
Things may be worse in the healthcare sector, he says, mentioning ads from cities in Arizona offering sweetheart deals for healthcare professionals to move west.
"The attrition has occurred, as it would because so many of our facilities were damaged," says Olivier. Both schools and hospitals continue to re-
open apace. And after the death of superintendent Cecil Picard, the state department of education is now under new leadership in Superintendent Paul Pastorek, a practicing attorney with a long history of serving in the federal government and working with agencies such as GSA and NASA. Olivier says Pastorek is "making some wholesale changes relative to recruiting competitive and aggressive superintendents of education for every part of our state," including the "Recovery District" in New Orleans.
New Orleans, says Olivier, is home to one of the brightest talent magnets in the state, NASA's Michoud Assembly Facility, which in December shipped its 124th space shuttle external tank, manufactured and assembled by contractor Lockheed Martin Corp. A government-
operated component of NASA's Marshall Space Flight Center in Huntsville, Ala, Michoud employs 2,500 people. Lockheed is locked in to another NASA contract, the Orion crew vehicle program, which will manufacture large structures and composite parts at Michoud, and is competing with Boeing for NASA's Ares crew launch vehicle program, which will be carried out at Michoud no matter who wins. The facility is also the home of Rocketplane Kistler's work on NASA's Commercial Orbital Transportation Services project to develop and demonstrate crew and cargo delivery to the International Space Station. That firm will integrate and assemble its commercial vehicle at Michoud for launch in 2008.
hectare) site includes one of the world's largest manufacturing plants, with 43 of those acres (17.4 hectares) under one roof. It's supported by deepwater access, as well as the National Center for Advanced Manufacturing (NCAM) in New Orleans, founded in 1999, which aids the aerospace and other commercial markets in part through the development of new welding and fabrication techniques.
In March, Gov. Blanco and NASA officials signed a memorandum of understanding that establishes the framework for the state's investment in new facilities and tooling capabilities at Michoud, as well as further support for NCAM and NASA's Constellation program, which encompasses both Orion and Ares.
"The mission to Mars project is a 30-
year program, giving us long-
term, consistent and certain employment through quality jobs," says Olivier.
Power and Construction
Entergy isn't just certifying sites. It's busy creating its own megaprojects to supply power to them. They include a potential $4-
billion nuclear plant and a $1-
billion investment in circulating fluidized bed technology developed under the U.S. Department of Energy's Clean Coal Technology program that uses petroleum coke, a byproduct of the oil refining process, as its primary fuel. The latter project will take place at the company's Little Gypsy plant in Montz, La., a half-
hour west of New Orleans.
"At today's price of natural gas, this project will provide huge benefits for customers, with the potential to save customers as much as $4 billion over 30 years," said Renae Conley, president and CEO, Entergy Louisiana, LLC and Entergy Gulf States-
Louisiana, at the April announcement.
"If you can have a multitude of fuel opportunities available to you, you can for the long run have a constant, rather than spiking, trend in fuel costs," says Olivier of the state's electric power portfolio, which also includes a large deposit of lignite coal in the northern part of the state. "Right now, in Louisiana's case, we are at a point where we have more natural gas-
fired generation than other states do. However, we are going toward other sources of fuel."
A month after the Little Gypsy announcement, the Louisiana Public Service Commission voted 3-
2 to allow Entergy or any other utility building a nuclear plant to earn interest on the money it spends on constructing it. Such cost recovery measures are becoming de rigeur in states that hope to accommodate new nuclear power capacity.
The Little Gypsy project alone is expected to create up to 500 construction jobs. One year ago, the national Business Roundtable announced the rollout of a broad-
based effort to recruit and train up to 20,000 new construction workers in the Gulf Coast region by the end of 2009, calling it "The Gulf Coast Workforce Development Initiative." Asked for a progress report from Louisiana's vantage point, Olivier says, "Our work force levels have now just approached pre-
Katrina levels, and that's been driven by the demand of construction. The fact we have so much construction to be done on such a broad scale is evidenced by the fact we had a surplus of $800 million, and have a current surplus of $1.3 billion, and for next two to three years in the hundreds of millions. This is driven by the construction economy."
But he sees that group of workers evolving into something more, in part through training and retraining.
"The construction workers today will be floor workers on the manufacturing side in the future," he says. "Many construction projects are three-
year jobs, and a lot of these people attracted from other states will gravitate to those longer-
term jobs on the manufacturing floor. We have to be prepared to train those people as well as students coming from K-
12. The next decade is going to be all about work force."
Energy to Spare
It may be all about fuel too. That's why Marathon
billion refinery expansion in Garyville and others are so significant for a state whose function in the continent's energy picture is so crucial, from its offshore drilling and storage hubs like the Louisiana
Workers raise the roof on the third of three LNG storage tanks at Sempra LNG's Cameron LNG site.
Photo courtesy of Sempra Energy
Offshore Oil Port to Port Fourchon and an unmatched network of gas pipelines.
Marathon's cost on its project has risen by $1 billion since 2006 because of labor and materials costs, but unlike many of its fellow refinery expansions, it has not run into delays. In fact, in a reversal of hurricane-
related fortunes, the Houston-
based company has recruited construction and operating personnel from its hometown.
It's not just oil, however. Multiple LNG terminal projects – with price tags of up to $1.3 billion – are still on the boards and under construction on or near the shoreline, including Sempra
million project in Cameron, some two and a half hours east of Houston. McMoran
, based in New Orleans, is pursuing its Main Pass Energy Hub project, a reconfiguration of a former $1-
billion sulfur mine complex 37 miles (60 km.) from Venice, La., that was shut down in 2000. The $440-
million Main Pass project in January received license approval from the U.S. Maritime Administration.
The state's track record is a far cry from the plodding processes for such projects elsewhere in the U.S.
"We're welcoming them," says Olivier of the LNG projects. "The fast-
track permitting process is very much appreciated by the industry. There are two projects in place now, under construction, and at least seven others in some form of permitting. We expect about a half-
dozen in the ground."
based ethanol is also a dream becoming reality in Louisiana,
Celunol's demonstration facility is the first facility of its kind in the United States to enter the construction phase. Rated for an annual capacity of 1.4 million gallons- per- year of ethanol production, it will make use of locally- grown sugarcane bagasse and specially- bred energy cane.
in the form of Celunol's $10-
million cellulosic ethanol demonstration plant in Jennings, La., just above Lake Charles in the western part of the state. The project is a commercial-
scale plant that is the precursor to a $100-
million plant to come. The feedstock will be sugarcane residue, known by the French term baggasse, as well as wood chips, rice hulls and other byproducts of various processing industries in the region. Celunol, based in Cambridge, Mass., broke ground on the demonstration facility in February, at the same time it celebrated the completion of its pilot facility, which it said was "the first in the nation capable of producing fuel ethanol on a high-
yield basis from abundant, low-
cost cellulosic biomass."
"It has become clear that we need to look to new feedstocks and technologies to increase the sources of supply of ethanol to meet the nation's rising demand for clean automotive fuels," said Carlos Riva, Celunol's president and CEO. "We believe that a successful demonstration here in Jennings will mark the last major step before the full-
scale commercialization of this exciting new technology can begin."
Offshore and Onshore
The very offshore economy that has filled the coffers of many a Louisiana venture is about to overturn historic precedent and fill the coffers of Louisiana itself.
In December, in the same measure that extended GO Zone incentives to 2010, President George W. Bush signed legislation that will give Gulf Coast states a share of royalties from neighboring offshore oil and gas production. The measure makes available for exploration approximately 8.3 million acres (3.36 million hectares), and states will be able to receive 37.5 percent of royalties connected to new oil and gas leases on that acreage. According to the office of Sen. Mary Landrieu, D-
La., who has worked on the measure for the past decade, Louisiana's cash will amount to some $125 million from 2008 through 2016, bumping up to $562 million a year in 2017 and more after that.
The Minerals Management Service, which administers those payments, in April pledged its own support for coastal restoration, via $255 million through the Coastal Impact Assistance Program that was part of the Energy Policy Act of 2005.
"If Louisiana were able to keep our fair share of OCS revenues, we would be able to finance the greatest hurricane protection system in the world," said Landrieu in early 2006.
The Louisiana Coastal Protection and Restoration Financing Corporation
is slated to manage OCS revenue, which is to be used strictly for projects related to coastal protection, fisheries and hurricane protection. The state may sell some of the revenue stream in order to get up-
front money to finance immediate projects.
Olivier, for one, sees the birth of a new environmental services and clean technology industry a decade from now, serving the shoreline in the same way that rig and equipment firms for decades have served the offshore and onshore energy industry.
That old niche continues to see its own steady stream of projects. Most recently, in April, Lawdan Industries
, a Corval Group company headquartered in Minneapolis, completed the $2-
million conversion of a former Air Liquide facility in Baton Rouge into a 65,000-
hectare) pipe and steel fabrication plant.
"This renovation came together smoothly through a combination of partnerships with Lawdan, Louisiana Economic Development, the Baton Rouge Area Chamber and local union leaders," said Audie Tarpley, president of Verdi Construction, a fellow Corval Group company. "An incentive package for the company providing payroll rebates as well as rebates on sales taxes for materials used in the refurbishing helped pull the package together. We're of course, very proud to be a part of reinvigorating this industrial area."
The complex will serve the petrochemical and construction industries, and employ up to 100. On the Lawdan Web site, the company said it has over 150,000 hours of fabrication backlog, and expects "approximately $25 billion of industrial expansion in the Gulf Port Region over the next three to five years."
Site Selection Online – The magazine of Corporate Real Estate Strategy and Area Economic Development.
©2007 Conway Data, Inc. All rights reserved. SiteNet data is from many sources and not warranted to be accurate or current.