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The Birth of a Louisiana Super Region

By Mike Randle

New Orleans has the Super Dome. Louisiana's got a super economy. In fact, Louisiana has led all Southern states in our annual SB&D 100 ranking each of the last five years in the value of projects announced on a per capita basis. Even more, Louisiana has led all Southern states in total value of corporate and industrial investments straight up in two of the last five years.

Leading Louisiana to the top of the South, more so than any other region of the state, is the new super region formed recently between Acadiana and Southwest Louisiana. Louisiana was named Southern Business & Development's "State of the Year" in 2007, 2009, 2010 and 2011. And in 2008 and 2012, the state barely missed running the top state award to six straight years as it was recognized in those two years with a mere "honorable mention."

In short, Louisiana has dominated the South's economy, specifically in large capital investments, over the past six years. It wasn't always that way. How many "State of the Year" awards did Louisiana win prior to 2007, now that it has won four out of the last six? From 1993 to 2006, that would be zero.

Cheniere Energy is installing liquefaction services at its Sabine Pass LNG receiving terminal in Southwest Louisiana. Adding liquefaction capabilities will transform the terminal into a bi-directional facility capable of liquefying and exporting natural gas in addition to importing and re-gasifying foreign-sourced LNG. Cheniere won federal approval to add export services at the Sabine Pass terminal in April. Once the $10 billion export component is completed the facility will be the nation's only LNG export facility.  Two of those large capital investments — the two largest announced in the South in 2011 — happened in Southwest Louisiana. Sasol Limited and Cheniere Energy's oil and gas investments both topped $5 billion.

This is what we wrote about the two largest projects announced in the South in our 2012 SB&D 100 ranking that came out in the spring: "Here is something special from the investment side of the ledger: Never before has the South seen two $5 billion or more single project investments in any year. Not only that, those two projects were announced in the same place. Both Sasol Limited and Cheniere Energy invested in gas projects in Southwest Louisiana in 2011 that topped $5 billion each. That's an all-time record for any community. In fact, the total investment by those two deals would be an all-time record for many states in the South. For it to happen in one region of a state — Southwest Louisiana — in the same year is noteworthy."

Brains and brawn

So, what is the new 13-parish Greater Southwest Louisiana Super Region that is anchored in the Southwest by Lake Charles and in Acadiana by Lafayette?

In short, it's a successful combination of brains and brawn that can be found throughout the super region, which was formed to help businesses like yours gain access to one of the hottest economic development regions in the American South, the fourth-largest economy in the world. When you look at the two regions, Southwest Louisiana's economy is "brawn-based," with a strong manufacturing sector, and the Acadiana region is "brain-based" with growing technology and health care sectors.

And both regions have a strong and well-established energy sector, with businesses covering all aspects of the oil and gas industry — manufacturing, mining, modeling, measuring and managing. Acadiana and Southwest Louisiana, together, are the energy hub of America's Gulf Coast.

The human capital hatched through generations of workers in the energy industry in Louisiana's super region is unmatched anywhere in the world — all levels of the petrochemical business, including advanced technological achievements in exploration, design, manufacturing, management and services. Yep, when Middle East oil barons need advice, they often call Cajun Country.

Drilling for black gold is a way of life in south Louisiana. Workers take their expertise worldwide. Behind every oil sheik's robe, there's a Boudreaux, Broussard or Thibodeaux."Behind every oil sheik's robe, there's a Boudreaux, Broussard or Thibodeaux," said Marion Fox, Executive Director of the Jeff Davis Parish Economic & Tourism Commission. Marion's parish is located in the middle of the Southwest Louisiana-Acadiana super region.

Interestingly enough, Marion Fox and Jeff Davis Parish leaders are recruiting much of that oil and gas industry human capital to return home after serving those sheiks. "We are a rural parish, but we have a lot to offer to those in the oil and gas industry — wherever they may be — now and when it's time for them to retire. Unlike many places, our culture draws our people back home and part of our economic development strategy is to assist in that," Fox said.

To write that the petrochemical industry — oil, gas, chemicals and all of the variations and spin-off jobs from it — is a huge factor in Acadiana and Southwest Louisiana is like writing that Arkansas-based Wal-Mart is a huge factor in northwest Arkansas' economy or FedEx or Disney World are major factors in west Tennessee's or central Florida's economy. It's a no-brainer. But how large is the oil and gas industry in Acadiana and Southwest Louisiana, you might ask?

Well, various sources estimate that more than 300,000 workers — one in six statewide — hold jobs which are directly or indirectly tied to oil and gas industry in Louisiana. And, including federal reserves, Louisiana holds about 20 percent of total U.S. oil reserves and about 12 percent of natural gas reserves.

In addition, SB&D estimates that oil and gas operations in Louisiana last year had an economic impact of about $80 billion. We also estimate that about 40 percent of that $80 billion comes from the Southwest Louisiana and Acadiana regions.

"Oil and gas extraction are both large and 'old' industries in this section of Louisiana," said Dr. Loren C. Scott, referring to the Acadiana and Southwest Louisiana regions. Scott runs the three-decade-old Loren C. Scott & Associates consulting firm that has worked with ExxonMobil and other oil and gas companies. He is also Professor Emeritus of Economics at LSU. "Every kind of business you can imagine that is associated with the extraction industry — fabricators, service companies and users of the end product like the petrochemical industry — are located in this industry-friendly region.

What can oil-rich markets like the super region of Southwest Louisiana do for your non-oil related business?

Being the energy hub of the America's Gulf Coast is an easy label to slap on to this super region and leaders of the area are proud of that. And why not? The petrochemical industry has provided the financial base for Acadiana and Southwest Louisiana to diversify their economies and prosper even more. The result is an ecosystem that is a perfect location for non-energy-related companies, particularly those involved in manufacturing and high technology.

Companies like yours may want to check out what oil-rich regions like Acadiana and Southwest Louisiana can offer your non-energy-related company. Why? Unlike markets that are not oil-rich, this super region has the cash and other incentives to satisfy almost any reasonable request for any size project. And like other oil-rich markets in the South, such as those located near the oil and gas shale plays, now is the time for Acadiana and Southwest Louisiana to further diversify their economies. That is one of the reasons the two regions are joining together — to leverage regional assets to advance economic development efforts. And it's working.

Take the Lafayette metro for instance, the center of the Acadiana region. This place, filled with Cajun and Creole cultures, is an entrepreneurial-based economy that has few peers. That entrepreneurial spirit has helped Lafayette leap to the top of many studies and rankings such as:

  • In 2012, IHS Global projected that Lafayette will have the highest growth in employment (8.8 percent) and the second-highest gross metropolitan product growth (7.5 percent) of all 363 U.S. metro areas.
  • Lafayette was one of 25 counties in the nation named by CNN Money in August in a story titled, "Where the jobs are."
  • New Geography, based on data from the Bureau of Labor Statistics, named Lafayette No. 1 in a "Best cities for job growth" study among mid-sized markets in the U.S.
  • Forbes' annual list of best mid-sized cities for job growth saw Lafayette top the list with a growth rate of 5.2 percent from December 2010 to December 2011.
  • And finally, Gallup cited Lafayette as the second most optimistic city in the nation with 75 percent of respondents replying positively about the community.

All these accolades for Lafayette, La., have come in 2012, alone.

Over in Lake Charles, the anchor market for Southwest Louisiana, the accolades have piled up as well. The Chamber SWLA, the primary economic development agency, received a 5-Star Accreditation by the U.S. Chamber of Commerce. The recognition put the Chamber SWLA in the top 1 percent of chambers nationwide.

The Lake Charles metro area was recognized by Site Selection magazine as the 2010 Top Metro Area with a population of 200,000 or less. In 2011, Lake Charles was recognized by Southern Business & Development as the "Mid-Market of the Year." And as mentioned, in 2011, the Southwest Louisiana region landed the largest and second-largest projects announced in the American South in Sasol and Cheniere.

Together, Southwest Louisiana and Acadiana are a powerful force for industry

One of the reasons these two decorated regions are banding together in an effort to further economic development is because the differences in their economies complement one another.

Tweet from Todd Park, U.S. Chief Technology Officer: Silicon Bayou – aka Lafayette, Louisiana – is the best kept secret reservoir of innovation mojo in America. Pictured is technology at work at the Lafayette-based Louisiana Immersive Technologies Enterprise facility. Acadiana is rich in technology-related ventures, such as the Louisiana Immersive Technologies Enterprise (LITE), one of only a handful of facilities in the world that combines high-performance computing with advanced visualization. The facility houses a staff of professional artists and software engineers who specialize in product development.

A project created as a partnership between the Lafayette Economic Development Authority, the University of Louisiana at Lafayette and Louisiana Economic Development, LITE is the only facility of its kind in North America open to private industry, government and academia.

Software development, information technology, health care and other technology-related industries are a big deal in Lafayette. For example, Lafayette-based Schumacher Group, the nation's third largest emergency medicine staffing and management company, announced a major expansion of its headquarters last summer. The deal will create 600 jobs. The company uses advanced technology to integrate hospital services.

"Leaders in Lafayette have a fundamental appreciation of the vital role of technology in Lafayette's success," said Gregg Gothreaux, President and CEO of the Lafayette Economic Development Authority. "With innovative community initiatives like the Opportunity Machine, LITE, and dedicated, low-cost gigabit fiber connectivity; you have a community that has seen a surge in technology-intensive companies in the past decade and is poised to create a stronger, more diverse technology-driven economy in the years to come."

While the Acadiana region is an emerging brain-based market in Louisiana, the South and the nation, Southwest Louisiana is a global center of manufacturing muscle. In Southwest Louisiana you will find some of the largest industrial investments in the world. Some look like ordinary tank farms, but they are $6 billion tank farms, such as Cheniere's.

We got the opportunity to fly over many of the petrochemical facilities in Southwest Louisiana, including the site of the $10-billion-plus Sasol facility, as well as Cheniere Energy's liquid natural gas facility that is located in Cameron Parish, right on the Louisiana-Texas border.

The helicopter flight was an incredible experience — observing the South's oil, gas and chemical industry's evolution, sometimes from just 30 feet above, which is quickly beefing up this nation's exports at growth rates not seen in 50 years.

For example, it took the U.S. 10 years to double its exports. That's what occurred from 2000 to 2010. In the second quarter of this year, the U.S. exported more than half of what was exported in the entire year of 2011. Therefore, U.S. exports in 2012 will double exports from 2011 and Southwest Louisiana is a major contributor to those numbers. It should be noted that the American South accounts for over 40 percent of U.S. exports and what is being shipped out of Southwest Louisiana and the Gulf Coast accounts for the majority of the South's exports.

All of the logistical advantages and a place where your business can thrive politically

Brains and brawn is a good combination, and Acadiana and Southwest Louisiana have positioned themselves to use that to their advantage. But there are other reasons why these two regions are working together as a super region.

"We are doing this to help us both in a variety of ways," said George Swift, President and CEO of the Southwest Louisiana Economic Development Alliance. "By joining together, we can exert more influence in the political arenas in Baton Rouge and Washington. And we can sell to business the fact that these two regions represent a market of almost 900,000 people. It just makes sense for us to work together," Swift said.

The Port of Lake Charles is the 11th largest seaport in the U.S. Rice and other food products, forest products, aluminum, machinery and petroleum products are its principal cargoes.It does make sense. Acadiana is tech-savvy. Southwest Louisiana is muscled up and that includes the Port of Lake Charles, the 11th largest U.S. seaport.

The Port of Lake Charles, which was created by the Louisiana Legislature in 1924, encompasses 203 square miles in Calcasieu Parish and accommodates 5 million tons of cargo annually. The ship channel has a project depth of 40 feet and a bottom width of 400 feet.

All kinds of products are shipped out of the port, but its principal cargoes are rice and other food products, forest products, aluminum, machinery and petroleum products.

Rebecca Shirley, Director of Lafayette-based Acadiana Economic Development, knows the importance of the port for her region. "Lafayette and Acadiana don't have a deepwater port. We have shallow draft ports and diverse business parks, but we would never be able to recruit a Cheniere or Sasol like the Southwest region has successfully done. So, beyond the political clout that comes from Acadiana and Southwest Louisiana working together, it really comes down to we both need what each of us have," said Shirley.

Rural regions of Acadiana and Southwest Louisiana

The rural parishes of Allen, Beauregard, Cameron and Jeff Davis in Southwest Louisiana, and Acadia, Evangeline, Iberia, St. Landry, St. Martin, St. Mary and Vermilion in Acadiana have needs as well. They need the resources of the larger, anchor parishes, such as Calcasieu (Lake Charles) and Lafayette (Lafayette). And Lake Charles and Lafayette need the rural parishes.

In the rural parishes of the Greater Southwest Louisiana Super Region, natural resources such as fishing and oil and gas in the coastal parishes and agribusiness in the inland parishes are king. So, too, are the various aspects of the oil and gas business that employ pipefitters, welders and machinists.

"Many of our manufacturers in Lafayette and I'm sure in Lake Charles, prefer the workers who come from the rural parishes," Acadiana's Shirley said. "Many of them come from a farm background and therefore have a great work ethic. The labor force from the smaller parishes of this region is all about hard work."

George Swift agreed that the rural areas of the super region are critical players. "The Beauregard Airport property has a great future," Swift said. "We are working on certifying a site there. Some of the larger industrial sites are located in the rural parishes and we are marketing those areas."

A call out to those companies who are joining the reshoring rage

"Manufacturing rules!" That was the headline of Southern Business & Development's last edition. The numbers don't lie. Manufacturing is setting records in the South and that's been the case since 2007. The export data we previously presented are representative of that. Manufacturing and the resulting exports are growing so fast it is difficult to keep up with the numbers.

This new manufacturing phenomenon might be the biggest thing to happen to the South's economy in decades. For you who are considering reshoring or outsourcing manufacturing to the South, you cannot find a better workforce than in Acadiana and Southwest Louisiana. The manufacturing talent available in Acadiana and Southwest Louisiana is stable, growing and ready to work.

Conclusion

The building blocks put in place that have propelled Acadiana and Southwest Louisiana — the Greater Southwest Louisiana Super Region — to such lofty rankings are numerous and so well placed. With help from two outstanding universities — University of Louisiana at Lafayette and Lake Charles-based McNeese State University — the economic foundation that make up this super region create a diversity — super brains and super brawn — that is rarely seen anywhere in the South.

You will not find more professional organizations than Acadiana Economic Development and the SWLA Economic Development Alliance anywhere. . .and the fact that they are working together in an effort to diversify their economies is almost unprecedented. Welcome to Louisiana's super region.

For more information about the Southwest Louisiana-Acadiana super region, contact Rebecca Shirley at 337.769.7646 or by email at rebeccas@teamacadiana.org and George Swift at 337.433.3632 or by email at gswift@allianceswla.org.


  
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