“America’s New Frontier For Business Opportunity”
They say that the view from the bottom is often the reason – the inspiration – for getting back up. For Louisiana, the view must have been coming from very low ground and looked overwhelmingly bleak, because the state has made a dramatic economic transformation over the recent years, after decades of experiencing a great outward migration of its population due to a notoriously poor business climate.
Now, Louisiana has become one of the most attractive states to do business across a wide spectrum of both traditional and burgeoning industries. This is in large part due to governmental reforms and economic development efforts that were executed in 2008, at a time when most states were pulling back on those efforts due to the beginning of the economic recession. In the past four years, the state has improved on all major business climate rankings, excelling on several lists among the top 10, and luring in dozens of economic development projects that are creating more than 63,000 jobs and over $28 billion in new capital investment.
Just last month, New Orleans was ranked no. 1 overall in economic recovery out of the largest 100 metro areas in the United States, according to theBrookings Institution. Specifically, the Louisiana city came out first in employment, first in Gross Domestic Product output, 87th in unemployment, and 26th in housing prices. Further confirming the strong economic recovery, New Orleans has witnessed above average employment growth in the Real Estate, Information, Oil and Gas, Leisure and Hospitality, and Education industries, thanks, in large part, to initiatives at the local and state levels.
For over two decades prior, however, Louisiana was perceived as having one of the poorest business climates in the country, and, subsequently, witnessed the lowest rankings across several business lists for it. As a result, Louisiana residents were fleeing away after high school and college in pursuit of better career opportunities elsewhere. In addition, business executives were not even considering Louisiana as an acceptable state to do business, as it had had a reputation for being one of the most corrupt states in the country.
In 2004, The Committee of 100, a statewide business organization, commissioned a national survey of business executives around the country to better understand how Louisiana was perceived and to determine what needed to be done in order to make the state more attractive for business investments. One of the open-ended questions asked business executives to list what they thought Louisiana could do to become more attractive for businesses that were looking to relocate or open new locations. Tied for the most common response was a request to clean up the image of corruption.
In 2007, after an unsuccessful push for a comprehensive governmental ethics reform by a local business coalition, Gov. Jindal made it one of his top priorities in his gubernatorial campaign. When he went into office in early 2008, Louisiana was listed among the ten worst states in the country, based on the state’s governmental ethics laws on Better Government Association’s Integrity Index and The Center for Public Integrity ranking.
Within the first weeks of his term, Gov. Jindal called the legislature into special session in order to pass legislation on governmental ethics reform. This drastically improved the perception of the state and became the start for what would be a prosperous journey for Louisiana’s economy. It also subsequently lifted the state’s rankings to no. 5, up from no. 46, on the BGA’s Integrity Index and no. 1 by the Center for Public Integrity, who gave Louisiana a 43 spot jump. Louisiana also ranked higher on lists that build their rankings in part on perception-based components, including Forbes’ Best States for Business.
Additionally, several business tax cuts initiated by Gov. Jindal helped improve the competitiveness of the state. He eliminated sales taxes on manufacturing machinery and equipment, natural gas and business utilities, and tangible personal property consumed in manufacturing processes. A state franchise tax on corporate debt and the capital gains tax on the sale of privately held businesses, which was once a contributor that drove successful entrepreneurs out of Louisiana, were also eliminated within Gov. Jindal’s first term in office.
Substantially reducing the state and local tax burdens on businesses that were driving the economy, these changes collectively made a significant impact on Louisiana’s business climate, allowing the state to now have a competitive tax structure. This year, in a 50 state analysis released by The Tax Foundation and KPMG, Louisiana was ranked the no. 2 state with the lowest state and local tax burdens on new firms and no. 10 for mature firms. These results are incorporated into major national business climate rankings.
Economic Development Efforts
Economic development efforts that reformed workforce development programs, created and strengthened economic incentive programs, and enhanced business development programs also contributed to Louisiana’s economic turnaround. In early 2008, when most states decided to pull back on this programing due to the turn of the economic recession, Louisiana took a more aggressive approach and decided to improve all economic development initiatives.
At the start of his term, Gov. Jindal appointed Stephen Moret as the Secretary of Louisiana Economic Development. With tax cuts and ethics reform already identified, Secretary Moret had the ambitious task of recruiting new business into Louisiana. Additionally, the Department of Labor was replaced with a more business-focused Louisiana Workforce Commission to respond to the state’s changes and the demands of the market.
In conjunction with the Louisiana Workforce Commission and several community and technical college campuses across the state, the LED created Louisiana FastStart that year to improve the workforce in Louisiana. The new programming, which is now comprised of 32 full-time professionals and about 105 specialized training contractors, designs comprehensive, customized workforce solutions to eligible companies that are either expanding or new to Louisiana. With little time to launch the new initiative, Secretary Moret recruited Jeff Lynn from Georgia’s Quick Start program to lead as the Executive Director of FastStart.
FastStart quickly became one of the strongest economic development tools to come out of Louisiana, turning what was once a poorly perceived workforce in Louisiana into one of the top influencers for new business development. For the past three years in a row, Business Facilities Magazine has ranked LED FastStart as the #1 workforce-training program in the country. FastStart has contributed in assisting projects that have brought in more than 63,000 direct and indirect jobs and over $28 billion in new capital investment.
Louisiana FastStart can attribute its success to their proactive efforts that help them stay ahead of other states, when it comes to recruiting new business investments. When word got out that French mobile game development studio, Gameloft, was looking to open its second North American studio, the LED reached out to the company and added New Orleans to the list of American cities that were being considered. Having not even been an option for Gameloft, New Orleans was now competing with Austin and San Francisco, cities that have long been dominating the gaming industry. In a seven week social media push, FastStart had collected over 1,400 applications from qualified candidates, who were either living in the region or ready to relocate to the New Orleans area, before even getting a commitment from Gameloft to relocate. With financial incentives such as the low cost of living and an aggressive tax credit program, Louisiana proved to also provide Gameloft with the workforce it needed to open its new studio with over 150 job openings in New Orleans.
Other major economic development wins include several projects across a wide spectrum of industries. General Electric, who will be creating over 600 direct and indirect jobs at their Technology Center in New Orleans, made the decision to open its new division in Louisiana after FastStart created unique enterprise software for the Fortune 500 company. Electronic Arts (EA) will soon be increasing their workforce from 400 to 600 in Baton Rouge after they received help to create internal software that makes their game testing more efficient. And, most recently, Sasol, whose gas-to-liquids complex in Calcasieu Parish will be providing the south western region of Louisiana with 7,000 new jobs and infusing up to $21 billion in capital investment into the state’s economy, was able to select a site for its multi-billion dollar complex six months ahead of schedule with a sophisticated, proprietary GIS-enabled site-selection tool that was created for them.
“If you really step back and look at it, its not just one or two things that have been a catalyst for this growth in Louisiana,” added Secretary Moret, “There are about 9 or 10 different factors that continue to contribute to making the state an economic powerhouse.”
New Orleans, specifically, has seen a large turnaround since its pre-Katrina landscape. From entrepreneurial growth, the progression of the digital media and biotechnology industries, and the development of the new multi-billion dollar medical corridor, New Orleans has witnessed an economic renaissance that is bringing new companies and investments into the region for the first time.
“What has happened is that there have been a significant amount of local economic development efforts that have progressed at the same rate as the state’s efforts,” said Secretary Moret, who admits that he worried about the future of New Orleans when first accepting his position in 2008. However, he adds that the remarkable turnaround has been tremendously exciting.
At the regional level is Greater New Orleans, Inc., an economic development force that works diligently in conjunction with the state to bring new investments to the 10 southeastern parishes in Louisiana. They, too, have been responsible for recruiting international companies such as General Electric and Gameloft into the state. Additionally, the organization has played a major role in preparing the region for the new medical corridor that is currently being built in New Orleans. The district, which will include a VA Hospital, University Medical Center, Cancer Research Center, and BioInnovation Center, is set to be fully complete in 2015 with over 20,000 job openings.
“Over the next three to four years, we will be working on building a critical mass of individuals in the region,” explained President and CEO of GNO, Inc., Michael Hecht, on the organization’s goals for the future. This growth of talent will be evidenced specifically within the developing medical and technology realms.
Further proof of the area’s wealth in business opportunity can be seen throughWorkNOLA.com, a website that was created by a New Orleans based networking group called 504ward. In 2012, 504ward joined forces with GNO, Inc. in order to improve the website and add on a new set of enhancements in conjunction with the region’s growing employment opportunities. Capitalizing on the region’s fast growing technology sector, the website caters to the regions demands by using a unique match-making system that collects a candidate’s skillset in order to best connect them with employers and positions they otherwise might not have considered before. The site also stays up to date with the hundreds of new positions available in the area, including those from the larger firms that are new to the region.
The site is free to use and makes job seekers in the area aware of all the strong industries developing throughout the region. Opportunities range across all sectors including healthcare, tech, education, hospitality, trade, and manufacturing, highlighting the entire region and its surrounding parishes. With the strong database of job seekers already in place, WorkNOLA.com also ensures companies that the Louisiana region is the right place to invest.
Adapting and Overcoming
One of the biggest issues that plagued Louisiana and the New Orleans region was its inability to adapt – effortlessly remaining indifferent to change and continuing to neglect its business, while losing several oil firms to Houston during the 1970’s and 80’s. With declining school systems and increasing corruption, the region was not able to compete with cities like Houston.
In the early 1980’s, a worldwide oil crash devastated the gulf coast, which was predominantly thriving on its petroleum industry at the time. Residents began to migrate out of the region in search for better opportunities. The state could not adapt to the economic changes facing the nation, and continued to suffer greatly as a result.
Now, with several industries flourishing simultaneously, financial incentives, workforce training programs, and an influx of both new and established businesses, Louisiana has been able to not only overcome a natural disaster, oil spill, and national economic recession, but has become one of the most competitive and prosperous states for business.
This success can be evidenced through a highly ranked business climate, low unemployment rate, and increase in the private sector that is securing more economic prosperity for Louisiana in 2013. In addition, according to theBrookings Institution, the Recovery School District in New Orleans has become the best school district in the nation for school choice and competition, further breaking down barriers that once hindered the area and its ability to retain residents and businesses.
As we go into 2013, the country faces a number of economic challenges, such as the repercussions of the fiscal cliff, the slow recovery of the economic recession, and the increasing number of Americans falling below the poverty line. However, there are still opportunities for individual and business prosperity, whether it’s in Louisiana or elsewhere in the country. What is important to note is that the future is not bleak, and the opportunities are available. The true question is, however, how are you going to adapt?