Louisiana is one of only 12 states with more people employed today than in January 2008, according to economists Loren Scott and James Richardson. The state is also expected to surpass 2 million people employed in 2015 for the first time in its history. These figures and others were recently unveiled in “The Louisiana Economic Outlook: 2014 and 2015,” prepared by Scott and Richardson.
In past years, if there was $5 billion in capital expansions announced in the state of Louisiana, that was considered a really good year. The Greater Baton Rouge Industry Alliance recently calculated a remarkable $83.8 billion in capital projects either underway or announced in Louisiana.
“The excitement level in South Louisiana is like none I’ve ever seen in the 40 years I’ve tracked the Louisiana economy,” said Scott, a professor emeritus of the LSU E.J. Ourso College of Business.
These investments are highly concentrated geographically — generally for regions on and below I-10 — with $46.6 billion in announced industrial expansions in the Lake Charles Metropolitan Statistical Area (MSA) and $23.7 billion in industrial projects in the Baton Rouge MSA. The rural (non-MSA) area of Louisiana will also be a great source of new jobs over 2014-2015, growing by about 2 percent a year. The only rural parish on the Mississippi River between Baton Rouge and the mouth of the river is St. James Parish.
“A lot of available land with access to the river has created a huge, $8.3 billion industrial construction boom in this parish,” Scott said.
During the next two years, Louisiana will add 34,200 jobs in 2014 and 33,600 jobs in 2015. According to the report, each of Louisiana’s eight MSAs will have varying growth rates. The Lake Charles MSA is expected to add 7,800 new jobs during 2014-2015, giving it the highest percentage rate of growth of the eight areas and the highest projected growth in its history. Within the Baton Rouge MSA, between July 2013 and September 2014, the demand for contract workers will jump from 17,500 to 31,000, a 77-percent increase in just over a year.
“This means business will be especially strong for industrial contractors in the area,” Scott said.
However, the job growth in 2014-2015 is expected to create a worker shortage in Louisiana. Even though the report calls it a “happy” problem, it also notes it could be a major challenge.
“Finding these workers and housing them will be a great challenge over the next couple of years,” Scott said. “Companies are going to have to bring in people from out of state or possibly from out of the country to build these facilities. You’ll also see temporary camps like they have in North Dakota. For example, the Port of Lake Charles is planning to build a 4,000-person man camp on port property.”
Central to the projected growth in 2014-2015 will be the continuation of oil exploration. Scott and Richardson predict there will be a slight decline in oil prices from $106 a barrel in 2013 to $95 a barrel in 2015. In addition to this, the practice of “fracking” has made exploration more successful, which is projected to keep natural gas prices near $4 per MMBTU.
“Unless the Europeans begin to harvest their shale gas — an unlikely near-term prospect given the power of the Green Party in Europe — our manufacturers that consume huge amounts of natural gas will enjoy a significant competitive advantage over their European counterparts,” Scott said. “It is the ability to cut into the European market share of the world chemical market in particular that is driving the huge capital expansion in Louisiana (and Southeast Texas).”
Although the 32nd edition of the Louisiana Economic Outlook brings “generally very good” news, Scott said Louisiana must cast a wary eye toward three key issues in the state’s future: how much money will be pumped into our economy via BP payments; will the new National Flood Insurance Program be restrained or fully implemented; and what will be the impact of the sequester and other cuts to the Department of Defense budget on the state’s substantial military presence?
For more information on “The Louisiana Economic Outlook: 2014 and 2015,” visit www.business.lsu.edu/ded or call (225) 578-3785.