BUSINESS REPORT: Louisiana Keeps Moving Up Way Down South
By Jenny Vickers
From the January/February 2012 issue
Louisiana once again produced a record year for business development in 2011, launching dozens of projects that are projected to create more than 20,500 new jobs, $18 billion in new capital investment and $55 million per year in new state tax revenue, along with hundreds of millions in new sales for small businesses across the state. In 2011, the state’s job-growth rate more than doubled that of the South and the U.S.—marking the fourth year in a row that the state’s employment performance has been one of the highest in the South and the U.S.
Louisiana’s success is attributed to a diverse and innovative platform of economic development programs that aim to strengthen traditional industries such as energy and manufacturing and develop emerging high-tech industries such as digital media and software development. The state’s best-in-the-nation workforce training program provides a strong pipeline of talent for these new and emerging high tech industries.
LOUISIANA Fast Facts
- Population (2010): 4,533,372
- Largest Cities (2010): New Orleans, 343,829; Baton Rouge, 229,493; Shreveport, 199,311; Lafayette, 120,623
- Targeted Industries: Agribusiness, Advanced Manufacturing, Digital Media & Software, Entertainment, Clean-Tech, Water Management
- Key Incentives: R&D Tax Credit, Mega-Projects Dev. Fund, Quality Jobs Program, Louisiana Faststart™, Digital Media & Software Incentive
- GDP (All Industry 2010): $218.9 billion*
*Bureau of Economic Analysis, U.S. Department of Commerce
Louisiana’s FastStart™ program is so effective that it has been named one of the best workforce training programs in the country. Since its inception in 2008, it has helped to attract a wide range of companies to the state, from Fortune 500 companies to smaller high tech companies funded by venture capital firms. The program helps companies recruit and train workers—free for the employers and subject to eligibility requirements—as long as they commit to creating a modest number of net new jobs.
“We created the FastStart program to revamp our workforce development system and offer a faster, higher-quality workforce solution so companies will invest here and create opportunities for our people,” said Louisiana Gov. Bobby Jindal.
The program offers in-depth employee recruitment and screening with hands-on assessments, as well as customized training for the complete operation. The training is both comprehensive and highly customized, covering specific processes and procedures as well as organizational management, and is supported with customized video and graphic material.
Louisiana’s Quality Jobs tax credit program, which provides qualifying companies with tax and payroll benefits for creating jobs that pay significantly above average and provide quality benefits, has been an important part of a strategy to provide companies as much as incentive as possible to grow and locate in Louisiana. It has provided millions of investment to date.
To keep up the momentum, in July 2011 Gov. Jindal signed a six-year extension of the program, which will continue to help foster growth and create good-paying jobs. The program provides qualifying companies that operate in one of the state’s targeted business sectors or that bring sales from out of state with payroll rebates of 5 percent or 6 percent for up to 10 years. In addition, Quality Jobs provides for a 4 percent sales tax rebate on capital expenditures or a 1.5 percent investment tax credit.
“Quality Jobs has long been one of Louisiana’s most successful business incentives,” said Gov. Jindal. “This six-year extension will continue to help foster an environment where companies want to invest so we can create good-paying jobs for our people to pursue their dreams right here at home.”
The FastStart and Quality Jobs programs are two of the reasons why biofuel manufacturer Sundrop Fuels, Inc. chose Louisiana as the location for its first production plant over several other states in the South and Southwest. In November 2011, Sundrop Fuels announced opening a $450 million biofuels refinery on about 1,200 acres of land near Alexandria, Louisiana.
The new plant will make “green gasoline” for consumer use and will result in 150 new direct jobs and an estimated 1,150 indirect jobs in the region. FastStart is helping the company jumpstart operations by providing the new facility with highly trained and capable workers.
The company is also receiving performance-based grants for building and financing costs ($14 million over 10 years and $4.5 million to reimburse relocation costs of R&D operations and key employees) and will utilize Louisiana’s Industrial Tax Exemption and R&D Tax Credit programs.
This investment is a win for Louisiana’s renewable energy industry. The plant will use forest waste from paper mills in the region and hydrogen from natural gas to produce up to 50 million gallons of gasoline, annually. By 2020, Sundrop Fuels expects to produce more than 1 billion gallons of renewable fuel annually through its process (including but not limited to its Louisiana facility), meeting nearly 10 percent of the federal government’s stated goal for renewable fuels refined from cellulosic material and other alternatives to crude oil.
“Sundrop Fuels’ first facility will provide America with millions of gallons of renewable gasoline and establish our transformative fuel production process, while supporting Louisiana’s natural gas and sustainable forestry industries,” said Wayne Simmons, Sundrop Fuels’ chief executive.
Sundrop Fuels joins numerous other recent clean energy projects utilizing Louisiana’s FastStart and Quality Jobs programs, including Cheniere Energy’s $6 billion natural gas facility in Cameron Parish (on the Louisiana-Texas border) that will create 148 new direct jobs and Sasol’s potential $10 billion gas-to-liquids complex in Calcasieu Parish (Southwest Louisiana) that could result in 850 jobs.
Emerging Digital Landscape
Louisiana is also home to best-in-the nation technology incentives, which are helping open up new avenues for the state to forge ahead in the world of digital media and software development. This emerging industry is expected to be one of the state’s top growth industries for the next two decades and beyond.
The Digital Interactive Media and Software program offers tax credits of 25 percent on certified development expenditures and up to 35 percent when applied to Louisiana-based payroll expenditures. Starting in 2012, the program was enhanced to offer a refundable, rather than a transferable credit. The enhancements mean that participating companies will receive a significantly larger benefit from the program even though the cost to the state for a given project won’t change.
The Technology Commercialization tax credit was also enhanced for 2012 through an extension of the program for another six years through 2017. The program offers tax credits of 40 percent on up to $250,000 a year in research tied to Louisiana higher education campuses. Those research companies may apply for a 6 percent payroll rebate on qualified jobs.
In the past year alone, the incentives helped the state secure game-changing projects, including Fortune 500 CenturyLink’s headquarters expansion in Monroe; Gameloft’s major game development studio in New Orleans; and the Electronic Arts expansion of its global quality assurance center in Baton Rouge on the LSU campus.
After growing to the third-largest telecom giant and from 6,000 to 50,000 company wide employees in just three years, CenturyLink’s undersized headquarters in Monroe, Louisiana not only needed a larger, long-term headquarters space, but also workforce solutions to meet the company’s demand for hundreds more qualified professionals.
The company could have negotiated a headquarters move to any major city in the U.S. and the company did consider other locations. Instead, CenturyLink decided to take advantage of the state’s competitive retention and expansion package, announcing in June 2011 it will remain in Louisiana at least through 2020, keeping the state’s largest Fortune 500 company headquartered in Monroe and creating up to 1,200 new jobs.
Along with a 35 percent tax credit through the Digital Media incentive program, the company will also receive a $14.9 million performance-based headquarters grant; a $3.3 million performance-based relocation grant; $1.2 million in curriculum funding to expand CenturyLink’s partnership with Louisiana Tech University; customized workforce training from FastStart; a tax equalization incentive; and a Quality Jobs rebate.
The digital incentives also wooed Paris-based Gameloft S.A., one of the world largest publishers of digital and social games, to announce in August 2011 it will establish a major new game development studio in New Orleans. Gameloft will create 146 new high-paying jobs over the next decade and apply the digital media and software development tax credit to its Louisiana-based payroll. FastStart which created a job recruitment website for Gameloft that attracted 700 skilled, qualified applicants, 60,000 page views and nearly 2 million impressions on the Web with the aid of an aggressive social media campaign.
Louisiana’s digital media incentives have helped Electronic Arts Inc. (EA), the biggest name in the game development world, locate and expand at its facilities on the Louisiana State University (LSU) in Baton Rouge.
In July 2011, the company broke ground at its new 94,000-square-foot North American Test Center at LSU’s Digital Media Center, where EA will move its global test center from its current location to the main LSU campus. This project will result in the creation of 400 jobs in the first year to more than 600 jobs within 3 to 4 years.
Business Gumbo Is Red Hot
Louisiana’s Business and Expansion Group continued to snare commitments in 2011 by major Fortune 500 companies to stay and/or grow in the Bayou State, including:
- CenturyLink announced its second major headquarters expansion in Monroe, LA, generating an additional 800 jobs with a capital investment of $30 million.
- Schumacher Group announced a headquarters expansion that will produce 600 new direct jobs in the next five years, growing its HQ team to nearly 3,000 by 2016. The company agreed to maintain its HQ in Louisiana through 2020.
- Cheniere Energy, based in Houston, announced an anticipated $6.5-billion investment in a natural gas liquification facility at its Sabine Pass terminal in Southwest Louisiana. The project, which will tap natural gas deposits in local shale.