In recent years, the Gulf Coast has had the good fortune of being the recipient of many new and expanded industrial plant investments to the tune of well over $200 billion.
These investments are proving that capital investment is the lifeblood of a community in so many ways.
Capital dollars not only enter a community via new assets built, but also via local purchases, and local community connections between industry, schools, non-profits and other community stakeholders. The decision to invest occurs in corporate boardrooms through careful analysis of market conditions, a willingness to make a longterm commitment to funds, a belief that an asset will earn a reasonable rate of return, and a stable, welcoming community. Economic incentives from governmental agencies can lure projects to a specific location and are a key factor in management’s final decision. However, the capital dollars spent to build a new facility are just the beginning of the commitment, and people must be paid to design, build, operate and maintain the new facility.
Outside firms to provide utilities, engineering, construction, and supplies are needed as well. Think uniforms, ear plugs, gloves, glasses, hardhats, steel toed shoes, soap, paper towels, printers, computers, office furniture, pallets, meals, cutlery and “go boxes.” And that is just a fraction of the needs that are usually purchased with local suppliers. When projects are announced in the public domain, the focus is usually on the capital dollar spend, but all these other purchases add to the sales and/or sales tax collections not included in the capital spend number touted at the inception of a project.
People come with capital investments, too. Employees and construction professionals relocated to the area bring their families who need services such as housing, groceries, doctors, haircuts and schools to name a few. The connections that these new people bring can be tremendous for a community. Often, new capital projects are touted because they bring new jobs to an area, and although that is true overall, the number of direct new jobs has been criticized by some. The industrial community has been accused of losing jobs over time and has been painted as not keeping its commitment or upholding its end of the bargain when given economic incentives. The truth cannot be further from this. But why are some critical of what might seem to be a lack of or slower than expected job growth? The answer lies in technology.
The role technology has played in new industrial plant construction cannot be overstated and building new plants with the best modern technology is necessary to remain competitive in the global marketplace. It seems like everyone is embracing smart devices and robotics these days, and every school has a robotics club for students who enter robotics competitions. But where is all this headed? Right back to more efficient, more automated, and improved industrial facilities. And new iP- hones, toys and gadgets for our kitchen too, of course.
All this love of robotics and innovative technology is heralded on one hand, but when it causes new facilities to be built, refurbished and maintained with fewer and fewer people, then we have a problem. Although the number of jobs in the direct employ of an industrial company may either keep pace or decrease slightly over time, the number of jobs created via purchases of outside services and supplies increases with every capital investment. The Gulf Coast region has enjoyed steady employment growth over time, and it is a simple fact that the main reason for this is due to the industrial investments that have located there from oil and gas to petrochemicals.
The lifeblood of economic prosperity brought by the Gulf Coast industrial sector can only continue through consistent new capital investment. Markets change rapidly and plants must invest capital to update their chemistry and their facilities. When your new car has beautiful soft seats that hug your body or you grow a weed-free garden, these products are made in one of the facilities on the Gulf Coast. When your Angel Soft tissue helped you over the flu and when you donned your new fleece sweater when it snowed, that paper and polyethylene had to come from somewhere, so why not from manufacturers in the United States?
We can keep these plants here by lowering the hurdles to invest and encourage and support companies that employ our friends and relatives. Today, local decision makers can help continue the long history of the Gulf Coast being a global supplier of choice region or they can scale back the activity and let others do the manufacturing overseas. Capital investments, whether those are small annual additions, or debottlenecking projects, or new large investments, bring a continuous stream of new people who contribute to the community, new tax and income revenues, and simply put, help communities flourish.
For more information, visit www.gbria.org or call (225) 769-0596.
