By Jack Rogers
From the May/June 2019 Issue
When Gov. John Bel Edwards sat down with site selectors for DXC Technologies in early 2017, the company was deciding whether to put a new Digital Transformation Center in New Orleans or Nashville. At stake were 2,000 new jobs and a leadership position in the global IT and business enterprise sector.
In an exclusive interview with Business Facilities at the governor’s office in the state capitol in Baton Rouge, Gov. Edwards said that DXC’s biggest concern was access to skilled workers—and an assurance that Louisiana could keep producing them.
“They didn’t ask me about taxes, they didn’t ask me about the hurricane risk-reduction system after Katrina—they asked about higher education,” the governor recalled.
Edwards had spent his first year in office making full funding for education his top priority. He had inherited a $2-billion budget deficit from his predecessor and a state educational system that had been underfunded for nearly a decade.
When he first met with DXC, Edwards had already pushed through a state budget that fully funded education, including Louisiana’s scholarship program. The governor didn’t hesitate to put a bold offer on the table that committed Louisiana to provide $25 million in higher ed resources specifically earmarked for the DXC project.
“The biggest part of the upfront money we gave to DXC wasn’t to cover some of their cost of coming to New Orleans,” Edwards told BF. “It was money that we gave to our universities and technical colleges to develop the programs that DXC needed.”
Edwards sealed the deal for what became the biggest job-creating project in the state’s history (and the no. 2 project in the U.S. in 2017) by giving DXC access to universities and technical colleges throughout the state—and the ability to work in tandem with LED’s FastStart workforce development program (BF’s top-rated workforce training initiative for nine consecutive years)—to create the specific curricula needed to produce graduates with skillsets matching DXC’s requirements.
Gov. Edwards convinced the Legislature that the appropriation for the DXC project was “an investment in Louisiana’s technology infrastructure and in the people of Louisiana.”
“This is what became crystal clear to me—if we want to create opportunity and prosperity for our people in Louisiana we need to make sure they’re educated and trained, because that’s what is going to inspire the confidence of the decision-makers to invest in Louisiana and create job opportunities here,” said Edwards, who this year has made teacher pay raises a centerpiece of his state budget for the fiscal year that begins in July.
“Our economy is performing well enough so that even though we reduced taxes by more than $600 million for the current year, we have revenue coming in above the forecast. For the fiscal year starting in July, we’ll have $119 million more than we had last year, which will fully pay for the teacher pay raise,” Edwards said. “This is how you make possible strategic investments, but it wouldn’t be possible if the economy wasn’t performing so well due to the measures we took to inspire confidence in Louisiana.”
Confidence in the availability of a skilled workforce—and in the stability of the higher education resources that produce those skills—has been a key driver for economic development in the Pelican State, Edwards told us.
“It’s why we’re having across-the-board success in so many areas, whether it’s CenturyLink, which just decided to keep the largest corporate headquarters in Monroe through 2025, CGI coming to Lafayette with 800 jobs or IBM putting its tech center in Baton Rouge,” he said.
MUCH MORE THAN FOSSIL FUELS
The DXC project was one of the crown jewels of an influx of projects that have made Louisiana a high-tech leader and have fueled a surge in personal wages (LA had the second-highest percentage increase in wage growth in the U.S. during Q2 2018).
Gov. Edwards also credited surging growth in the state’s aerospace manufacturing, healthcare and construction sectors as key contributors to the upward march of wages in Louisiana. Substantial growth in the state’s petrochemical industry has resulted in more construction jobs in Louisiana than at any time in the state’s history, he said.
Edward’s decision to enlist Louisiana in the federal Medicaid expansion also has been a big job producer. “The Medicaid expansion is responsible for 19,000 new jobs across the state,” the governor said, adding that Louisiana’s healthcare sector employment is now at an all-time high.
The hallmark of economic development success in Louisiana in recent years has been the diversification of the state’s economy, which Edwards credited to Louisiana Economic Development [LED is the only state EDO to be recognized as an Accredited Economic Development Organization through the International Economic Development Council; it is one of only 61 EDOs in the world to earn the AEDO status, which is bestowed after a yearlong documentation and site review process by IEDC].
“It really pays dividends to have a professional economic development specialist in charge of economic development,” Edwards said, referring to LED Secretary Don Pierson. “[At LED] they understand what they’re doing and they’re very, very good at it.”
An early success in Louisiana’s effort to diversify its economy was the development over the past decade of a thriving digital media sector and increased film and TV production in the state. Since 2002, the state has attracted nearly $7.5 billion in direct production spending and $1.7 billion in new wages.
To counter the ebb and flow of film and TV production that depends on decisions made in Hollywood (and the evolving tastes of audiences), Gov. Edwards overhauled Louisiana’s innovative Entertainment Tax Credit program in 2017 with an eye towards creating more permanent employment in Louisiana’s entertainment industries. The new Entertainment Job Creation Program offers employers a payroll-based tax credit when they create permanent new jobs, among other enhancements to the program.
Edwards led the effort to make sure Hollywood was aware of Louisiana’s new and improved tax credit program by personally visiting some of the major studios in California. The governor’s initiative to turbocharge the entertainment sector in the Pelican State has paid off, bigtime: the 2017 program enhancements generated a 200 percent increase in independent film production in the state; from July 2017 to July 2018, 44 independent productions filmed in Louisiana, resulting in an estimated $208 million in direct spending.
SPREADING THE WEALTH ACROSS LOUISIANA
In some areas of the state, the diversification of the economy has involved multiple growth sectors. A good example of this can be found in the Shreveport-Bossier City area, which during Gov. Edwards tenure has become one of the nation’s leading cyber security hubs [see our Cyber security feature on p. 26]. Last month, the governor went to Shreveport to break ground for the latest addition to Shreveport’s surging biomedical corridor, a $14.2-million expansion for the Center for Molecular Imaging and Therapy. Set to open next year, the expanded facility will be the first of its kind in the state, with delivery of next-generation diagnostic, treatment and research techniques through advanced radiopharmaceuticals.
The governor cited an eye-opening statistic that underlines the success of Louisiana’s effort to diversify its industries: “Two decades ago, oil and gas revenue [accounted for] 40 percent of the state budget; today it’s less than five percent,” he told us.
“We want that sector to do well, but it’s subject to a worldwide price determined by supply and demand. We’re diversifying our economy so we can reach significant milestones for our GDP growth and personal income growth, despite the fact that tariffs are hitting our farmers right now and oil prices have been low and are just starting to rebound,” Edwards said.
That’s not to say that Louisiana has any intention of relinquishing its position as a national leader in natural gas production. To the contrary, the state is well on its way to become a global leader as an exporter of liquified natural gas. When all of the LNG (liquefied natural gas) facilities currently under construction are completed, Louisiana will have the capacity to export an estimated 7.7 billion cubic feet per day (bcfd) of LNG.
Louisiana’s LNG capacity includes Sempra Energy’s $10-billion Cameron Parish natural gas-export facility and Cheniere Energy’s Sabine Pass facility, currently the dominant LNG exporter in the U.S. (accounting for about 3.5 bcfd, or about two-thirds of current U.S. capacity). The total exports from Louisiana will more than double with the opening of Sempra’s plant plus two others currently under construction, including an additional plant at Cheniere’s facility and the new Venture Global Calcasieu Pass project.
[At press time, President Trump increased tariffs on China in an expanding trade war; China said it would retaliate, but did not indicate if it would cut back on LNG imports. The Chinese market for LNG is estimated at more than 9 bcfd. According to a Bloomberg report last July, of all states, Louisiana is most at risk to a protracted trade war as a leading producer of petrochemicals and an exporter of rice and soybeans.]
Gov. Edwards’ economic development strategy focuses on bringing new projects to all parts of the state; it includes the revival of facilities in traditional industries as well.
Gov. Edwards, Arcosa Marine President Thomas Faherty and St. Tammany Corp. recently announced that Arcosa will make a $7.5-million capital investment and create 149 new direct jobs to reopen idle barge manufacturing operations in Madisonville, LA. Arcosa Marine Products Inc., a division of Dallas-based Arcosa Inc., will install new equipment and complete facility upgrades to begin producing barges for customer delivery later this year.
The 149 new direct jobs will provide an average annual salary of $51,400, plus benefits. Arcosa will retain 26 existing jobs, for a total of 175 direct jobs at the La. Highway 21 manufacturing site on the Tchefuncte River. LED estimates the project will result in another 236 new indirect jobs, for a total of more than 380 new jobs in St. Tammany Parish in southeast Louisiana.
“We are excited to welcome back the manufacturing operations of a marine mainstay in the St. Tammany Parish economy,” Gov. Edwards said. “Manufacturing jobs generate great economic activity and a high number of supporting jobs throughout the area. We’re encouraged by the return of barge manufacturing in Madisonville and hope that this new investment by Arcosa will lead to greater growth in the future.”
GLOBAL LEADER IN COASTAL RESTORATION, WATER MANAGEMENT
Louisiana has been dealing with rising water for decades. Under Gov. Edwards’ leadership, the state has become a global leader in water management and coastal restoration, drawing inquiries about best practices from other coastal states—and from nations around the world preparing to cope with rising seas.
“We are not just starting to think about this [in Louisiana],” Edwards said. “Louisiana has faced a challenge like no other state in the United States for some time now: since the 1930s we’ve lost about 2,000 square miles of coast. So we have a tremendous sense of urgency here.”
Edwards bluntly said Louisiana is battling “a perfect trifecta” of water management issues. “It’s subsidence [gradual sinking], sea-level rise and coastal erosion,” he said. “We’re the canary in the coal mine.”
Louisiana is in the third iteration of a series of five-year water management plans that envision spending $50 billion over 50 years on coastal restoration and water management initiatives.
“The challenge is to understand exactly what is causing the problems along the coast and then to develop the strategies and specific projects that will address these problems,” Edwards told BF. “We’re absolutely committed to letting science make those decisions for us, because if you maximize the role of science, you minimize the role of politics. This inspires confidence in people that what you’re doing is the right approach, which is incredibly important.”
The words “Marshall Plan” come to mind when you survey the impressive resources Louisiana has brought to the front lines of the fight to save its coastline from the impact of climate change.
At the forefront of these coastal restoration and water management efforts are partnerships with other leading global players who have experience in protecting land that sits below sea level. In July 2017, Gov. Edwards and President/CEO Justin Ehrenwerth of The Water Institute of the Gulf announced that the Baton Rouge-based Water Institute had signed a memorandum of understanding (MOU) with Deltares of the Netherlands to pursue world-class solutions in coastal protection and restoration.
At the Institute’s Water Campus in Baton Rouge, the Louisiana and Dutch research institutes are collaborating on critical projects to protect and restore Louisiana’s coast. These projects include everything from software development and watershed modeling to infrastructure and nature-based solutions that preserve coastlines (like the mangroves Louisiana has planted as natural barriers on its coastline). Meanwhile, LED is busy attracting private-sector employers who apply the research to water management projects (in LA and worldwide). LED estimates that the Water Campus has the potential to create 4,000 new direct jobs and 45,000 new direct and indirect jobs statewide in the water management sector over the next generation.
“By combining forces with private research institutions like The Water Institute of the Gulf and Deltares, this MOU will help us establish a beachhead for mission success. As we work to save hundreds of square miles of Louisiana’s coast, we will attract thousands of jobs across the state and make the Water Campus a global leader in the water management sector,” Gov. Edwards said at the announcement of the MOU.
Edwards recently presided over the dedication of the $25-million Center for Coastal & Deltaic Solutions, the most visible waterfront anchor on the 35-acre Water Campus located between downtown Baton Rouge and the Louisiana State University main campus. The elevated 34,000-square-foot facility combines global water management research with major conference space, co-working space and unprecedented public viewing of the Mississippi River. Built at the site of Baton Rouge’s former municipal dock, the three-story structure extends over the river, providing a plaza surrounding the structure, allowing visitors to view the river beyond the levee. The centerpiece of the structure is The Water Institute of the Gulf, which is occupying offices on the second floor. On the third floor, a major meeting space—The Estuary Conference and Event Venue—plays host to academic conventions and research conferences.
The Center for Coastal & Deltaic Solutions joins two other facilities already completed nearby—the state Coastal Protection and Restoration Authority headquarters and the LSU Center for River Studies—on the Water Campus, which eventually will be home to an estimated 1.6 million square feet of commercial office, retail, restaurant, hospitality and residential space.
The LSU Center for River Studies conducts research on the world’s major rivers with a specific focus on the Mississippi, training the next generation of engineers, geologists and river experts.
The LSU Center is home to one of the world’s largest movable bed physical models: the Lower Mississippi River Physical Model. The river model is 10,000 square feet and based on the topography and bathymetry (a measurement of depth) of the Mississippi River Delta covering southeast Louisiana. Pumps are used to control the water and sediment injection. More than 18 acoustic sensors coincide with U.S. Army Corps of Engineers river gages on the Mississippi River and measure water levels in the model river. Twenty high-definition projectors illuminate the model and bring the river and coast to life. The model is able to replicate the flow, water levels and sediment (sand) transport of the river, simulating one year of the Mississippi River in one hour. Scientists, engineers and students can see, experience and conduct research at the same time using the model.
The LSU Center for River Studies is supported by a partnership with the Louisiana Coastal Protection and Restoration Authority (CPRA). The CPRA recently signed an MOU with Nicholls State University to create a new coastal studies center at Nicholls. The center, which will be similar to the LSU Center for River Studies, will concentrate on researching the Terrebonne and Atchafalaya Basins and creating models of the Atchafalaya River in order to guide integrated coastal protection projects in the region.
“In 2019, we’ll have $800 million in new projects and investments in coastal restoration and protection activities, the most we’ve had in any given year,” Edwards told us, citing revenue sharing with offshore oil producers operating in federal waters and money that continues to flow to Louisiana from the BP oil spill settlement as two key sources of funding.
EXPERTISE: EXPORTABLE COMMODITY
Gov. Edwards told us that Louisiana’s growing body of expertise in water management and coastal restoration is becoming an “exportable commodity” for LA.
“When I went to Israel last October [on a trade mission], we were asked to bring our foremost water management specialist to interact with the folks at Ben Gurion University of the Negev’s Zuckerberg Institute for Water Research,” Edwards said. “I was thinking, we have too much water and they have too little, what can we possibly help them with—but water management issues really have so much in common because what you need [to preserve] is water quality.” [Ben Gurion University of the Negev has a signed an MOU with Louisiana’s coastal restoration and water management experts to collaborate on developing solutions together].
Gov. Edwards said Louisiana’s partnership with the Netherlands was a key confidence-builder among coastal residents for the state’s coastal restoration efforts. The partnership with Deltares helps Louisiana lower the amount of controversy over its water management and coastal restoration decisions, he said.
“Quite frankly, when we undertake coastal restoration and protection projects, even though they’re the right thing to do for the state, there are some folks along the coast [who might be negatively impacted]. If you’re used to harvesting oysters through leases in a certain area and all of a sudden it’s going to be more fresh water than you like, that’s a problem for you and we have to manage that. That’s real,” Edwards explained. “But at the end of the day we have to restore our coast and we have to protect ourselves from future hurricanes, so we have to move forward. But it is really challenging.”
We asked Gov. Edwards if other coastal states are ready to have a national discussion about where to build—and where not to rebuild—as the oceans rise around us. [In 2016, Louisiana became one of the first places in the world to relocate an entire community—the Biloxi-Chitimacha-Choctaw, a Native American tribe living in Louisiana’s coastal wetlands—which had lost 98 percent of its land since the 1950s.].
“I don’t know if they’re ready, but I do know it is essential that we do that,” Edwards said. “When you have people that for generations have lived in a certain area, it is a very hard emotional situation to go and have that conversation with them. If you ever have to say—despite our very best efforts we just don’t think we can give you adequate protection to live here and we don’t know that restoration is going to work for this area—it’s very difficult.”