Economic Synergies across Southeast Louisiana Elaine Ortiz, MS Allison Plyer, MBA, ScD

Economic Synergies across Southeast Louisiana THE BIG PICTURE describes the Baton Rouge, New Orleans, and Houma-Thibodaux "super region" and its challenges relative to robust regions like Houston and Atlanta…as well as opportunities. ECONOMIC SYNERGIES examines interconnections across the 3 metros by highlighting commuter patterns, industrial specializations, and freight flows. THE OPPORTUNITY provides a baseline analysis of Southeast Louisiana's economy relative to each of the sectors targeted by the state for growth.

"In a complex and globalized economy, the competitive advantage of a region lies in achieving a critical mass of local interconnected firms and institutions, which leads to increases in productivity, innovation, new business formation, and global competitiveness." - Michael Porter The Baton Rouge, New Orleans, and Houma-Thibodaux regions combined have over 1,000,000 jobs and a population of nearly 2,400,000. This Southeast Louisiana “super region” is comparable in jobs and population to the Orlando metro, larger than the San Antonio metro, and eclipses the Raleigh-Durham super region. Source: GNOCDC analysis of data from U.S. Bureau of Labor Statistics CES 2012 and U.S. Census Bureau population estimates The Baton Rouge, New Orleans, and Houma-Thibodaux "super region” (aka Southeast Louisiana) THE BIG PICTURE

Source: GNOCDC analysis of data from U.S. Bureau of Labor Statistics CES. Southeast Louisiana has received high rankings for its economic performance during the Great Recession. Percent change in nonfarm jobs December 2007–December 2012 THE BIG PICTURE

Taking the longer view, we see that Houston outperformed Southeast Louisiana by developing a more diverse economic base after the oil bust. Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW). Historical job growth and loss, (thousands of nonfarm jobs) Houston metro and Southeast Louisiana THE BIG PICTURE

However, job projections for Southeast Louisiana continue to lag other Southern regional economies. Projected employment compound annual growth rates, Select metros and super regions Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW). THE BIG PICTURE

Sea level rise is rapidly increasing flood risk to essential economic infrastructure and population centers. Source: Carbonell, A. & Meffert, D.J. (2009). Climate change and the resilience of New Orleans: The adaptation of deltaic urban form. World Bank. Predicted Louisiana land loss with 1.0 to 3.3 feet relative sea level rise by 2100 THE BIG PICTURE

Economic diversification is nascent and sea level rise is rapid. The state’s Blue Ocean plan for diversification will simultaneously bolster existing industries while boosting growth in emerging industries. Southeast Louisiana is poised to receive RESTORE Act dollars which will rebuild wetlands and could accelerate plan for diversification. The Southeast Louisiana Super-Region Committee is a sign of the increasing sophistication of regional leadership in Baton Rouge and New Orleans.

Q: To what extent can New Orleans, Baton Rouge, and Houma-Thibodaux, working together, maximize their mutual economic sustainability? Do these metros share important economic synergies?

Commutes between Southeast Louisiana metros increased 11 percent from 2004 to 2010, indicating an increasingly shared workforce. Workers commuting between metros in Southeast Louisiana Trends in number of workers commuting each ways Source: GNOCDC analysis of Local Employment Dynamics, U.S. Census Bureau. ECONOMIC SYNERGIES

“Export” industries serve customers outside the region, supporting multiple local-serving jobs. Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES

BR metro is largely dependent on public employment, heavy construction, and petrochemical manufacturing. Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES Number of Jobs: 367,500Share of Southeast Louisiana jobs: 35 percent

Industry specializations in the Baton Rouge metro across 3+ decades Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES

Greater New Orleans is largely dependent on tourism, oil and gas, and shipping. Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES Number of Jobs: 588,200Share of Southeast Louisiana jobs: 56 percent

Industry specializations in greater New Orleans across 3+ decades Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES

Nine of Houma’s top ten drivers support the oil and gas industry. Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES Number of Jobs: 92,900Share of Southeast Louisiana jobs: 9 percent

Industry specializations in the Houma metro across 3+ decades Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES

Ten industry specializations are currently shared across the three Southeast Louisiana metros. Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES

Drilling down into sub-sectors of industry specializations, we see the three metros are highly complementary to each other in their economic roles. Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES

The three metros are highly complementary to each other in their economic roles. ECONOMIC SYNERGIES Oil and Gas: Houma specializes in oil and gas extraction, NO + BR specialize in refining and chemical manufacturing. Shipping: Houma specializes in water transportation to support oil and gas, NO specializes in int’l trade and warehousing. Construction: BR specializes in heavy construction to support chemical manufacturing, all metros specialize in marine facilities, dredging, channeling, dock construction, and levees. NO + BR specialize in architecture and engineering. Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW)

The three metros are highly complementary to each other in their economic roles. Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES Higher Ed: BR specializes in public colleges and universities, NO in private. Houma-Thibodaux has strong technical training tied to industry. Fabricated metal: Houma specializes in machine shops. BR specializes in boiler, tank, and shipping container manufacturing. Waste management: All three metros specialize in hazardous material response, tank cleaning, plugging wells, and decommissioning platforms.

The three metros are highly complementary to each other in their economic roles. Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) ECONOMIC SYNERGIES Ship building: Houma has strongest specialization in ship and boat building. NO also but declining. Food manufacturing: Houma specializes in seafood and sugar. NO specializes in coffee and spices + seafood. Insurance agencies: BR and NO specialize in insurance agencies and back-office insurance services.

Value of freight flows (in millions of dollars) between New Orleans and Baton Rouge by mode, 2007 Value of freight shipped between Baton Rouge and New Orleans is greater than to any other region. Source: GNOCDC analysis of data from U.S. Bureau of Transportation Statistics, Freight Analysis Framework. ECONOMIC SYNERGIES

Value of freight flows (in millions of dollars) between New Orleans and Baton Rouge by commodity, 2007 Freight flows data reveal that oil and gas and resulting products are primary shipments between the two metros. Source: GNOCDC analysis of data from U.S. Bureau of Transportation Statistics, Freight Analysis Framework. ECONOMIC SYNERGIES

All three metros are highly dependent on oil and gas (and resulting products) which drives major interconnections as well. Oil and gas, construction, shipping, ship building, waste management, food manufacturing, higher education, and insurance agency sub-specialties are highly complementary across metros. At the heart of Southeast Louisiana’s economy is sophisticated engineering and scientific consulting.

In 2010, LED developed a plan that aspires for Louisiana to achieve job growth rates similar to states such as Texas and Georgia. The “Blue Ocean Initiative” targets the best growth opportunities: Emerging industries of high growth in which Louisiana has a clear advantage Legacy industries of moderate/low growth where Louisiana has a clear advantage and acceleration is possible THE OPPORTUNITY

These 3 metros represent 55 percent of the state’s jobs and 53 percent of the state’s population. Source: GNOCDC analysis of 2011 U.S. Bureau of Labor Statistics QCEW and 2012 U.S. Census Bureau population estimates. THE OPPORTUNITY

State and regional economic development organizations are aligned in targeting six broad industry sectors. THE OPPORTUNITY Sources: Louisiana Economic Development, Greater New Orleans, Inc., New Orleans Business Alliance, Baton Rouge Area Chamber, and South Louisiana Economic Council.

What is Southeast Louisiana's current baseline in each target sector? Jobs, wages, and location quotients by target industry sector, 2011 Southeast Louisiana THE OPPORTUNITY Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics: CES, QCEW).

What is Southeast Louisiana's history in each target sector? Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW) THE OPPORTUNITY

A top specialization in all 3 metros. Port Fourchon and the Louisiana Offshore Oil Port are the center of oil and gas support services for Gulf of Mexico. 65+ chemical manufacturers in BR. 10 refineries in NO and BR account for over 10 percent of U.S. refining capacity. Poised to grow due to low natural gas prices and abundant supply. Rich in infrastructure that support energy and petrochemicals. Energy and petrochemical manufacturing: Why is it important? Photo Credits: Ports Assoc. of Louisiana; LED. Number of Jobs: 66,900Location Quotient: 2.9Average Pay: $88,186 THE OPPORTUNITY

Energy and petrochemical manufacturing: What are the challenges? Number of Jobs: 66,900Location Quotient: 2.9Average Pay: $88,186 Historical and projected land loss, Sources: Land Change Analysis (U.S. Army Corps of Engineers, New Orleans); and Land Change Analysis (U.S. Department of the Interior U.S. Geological Survey National Wetlands Research Center, Lafayette, LA). Modified from: U.S. Department of the Interior U.S. Geological Survey National Wetlands Research Center, Lafayette, LA. Map ID: USGS-NWRC Map Date: December 6, 2004; Pipelines and platforms (U.S. Department of the Interior); Refineries (Louisiana Mid-Continent Oil and Gas Association). Note: There are two additional refineries in the Baton Rouge metro not included on this map. THE OPPORTUNITY Barataria Bay Houma New Orleans

Advanced Manufacturing: Why is it important? Number of Jobs: 32,800Location Quotient: 0.6Average Pay: $63,990 Many sub-sectors are specializations in the 3 metros: ship building, machinery manufacturing, metal manufacturing, and plastics products manufacturing. Creates quality jobs, fuels exports, and drives innovation. Poised to grow due to low natural gas prices and abundant supply. (e.g. Lockheed Martin) THE OPPORTUNITY Photo Credits: LED.

Advanced Manufacturing: What are the challenges? Photo Credits: LED. Number of Jobs: 32,800Location Quotient: 0.6Average Pay: $63,990 Supplying the high-skilled workforce, including software programmers, engineers, process operators, and welders. The recent downsizing of higher education. THE OPPORTUNITY

Clean tech: Why is it important? Number of Jobs: 15,000Location Quotient: 0.6Average Pay: $68,911 Linked to current specializations in energy, waste management, water management, and sugar manufacturing. High-growth due to critical environmental and security trends around the globe. Provides an environmental and public health benefit. THE OPPORTUNITY Photo Credits: Blade Dynamics, Sundrop Fuels.

Clean tech: What are the challenges? Number of Jobs: 15,000Location Quotient: 0.6Average Pay: $68,911 State and local policies are needed to increase the market for “green” products and services in Southeast Louisiana. Developing adequate financing/ venture capital sources. THE OPPORTUNITY Photo Credits: Blade Dynamics, Sundrop Fuels.

Digital media: Why is it important? Number of Jobs: 11,000Location Quotient: 0.4Average Pay: $67,304 Linked to current specialization in motion pictures. High-growth, high-wage, and high- profile. Computers, software, and digital technology permeate every economic sector. Baton Rouge, New Orleans, and Lafayette to the west have developed key software/IT firms (IBM, Electronic Arts, GE, Schumacher Group) THE OPPORTUNITY Photo Credits: LED; LSU

Digital media: What are the challenges? Number of Jobs: 11,000Location Quotient: 0.4Average Pay: $67,304 Industry has grown in large part because of generous state tax incentives. Developing a critical mass of firms and local talent to sustain a successful digital media industry in the long run is essential. The recent downsizing of higher education. THE OPPORTUNITY Photo Credits: taxcredits.net

Biosciences: Why is it important? Number of Jobs: 11,000Location Quotient: 0.5Average Pay: $62,863 Rapidly growing segment of the world economy. Creates high-value, export-oriented products for a global market—and with substantial public benefit. Key assets in the region include the Pennington Biomedical Research Center, the BioInnovation Center, and LSU and Tulane Health Sciences Centers. THE OPPORTUNITY Photo Credits: LED.

Biosciences: What are the challenges? Number of Jobs: 11,000Location Quotient: 0.5Average Pay: $62,863 THE OPPORTUNITY National Institutes of Health funding (in millions), 2011 Southeast Louisiana and other select metros National Institutes of Health funding per capita, 2011 Southeast Louisiana and other select metros Source: GNOCDC analysis of data from the National Institutes of Health. Notes: Data for Raleigh is for the combined statistical area including the Raleigh metro and Durham-Chapel Hill metro.

Water management: Why is it important? Number of Jobs: 43,500Location Quotient: 1.7Average Pay: $72,798 THE OPPORTUNITY Source: GNOCDC analysis of USPS Delivery Statistics Product; Bureau of Ocean Energy Management; and Army Corps of Engineers. Change in households receiving mail, July 2005-January 2013 Coastal areas in Southeast Louisiana Barataria Bay

Water management: What are the challenges? Number of Jobs: 43,500Location Quotient: 1.7Average Pay: $72,798 Securing sustainable and adequate sources of funding for coastal restoration projects. Finding the political will to implement major river diversion projects that use the natural power of the Mississippi to rebuild land. THE OPPORTUNITY Photo credits: Times-Picayune; LED.

CONCLUSION: economic synergies Baton Rouge, New Orleans, and Houma-Thibodaux metros are highly synergistic in their economic roles. Houma provides the literal feedstock for petrochemical manufacturing in New Orleans and Baton Rouge. The three regions share important complementary specializations in: heavy construction and engineering shipping waste management higher education advanced manufacturing seafood processing

CONCLUSION: emerging sectors Southeast Louisiana must continue to foster new strengths in order to stay on the competitive edge. Harnessing economic synergies will be key for growing clean tech, digital media, and biosciences. Clean tech is linked to current specializations in energy, waste management, and sugar manufacturing. Digital media is linked to current specialization in motion picture. Many U.S. regions are competing for these industries. Southeast Louisiana faces challenges developing the financing, talent, and research capacities to grow these sectors for the long-term.

CONCLUSION: existing sectors Acceleration is possible in three legacy industries: energy, advanced manufacturing, and water management. Omnipresent in these industries are heavy construction, engineering and scientific consulting, and water transportation. Redeploying these assets to restore coastal marshes to protect oil and gas and logistics infrastructure is greatest challenge. Redeploying these assets in new and expanded ways is also greatest opportunity.

CONCLUSION: collaboration There may be opportunities to link smaller firms in the field with professional supports in New Orleans and Baton Rouge. Increased investment in transit corridors could expand the ability of new and growing companies to draw from a larger labor pool. Baton Rouge’s and New Orleans’ impulse to collaborate puts the region in an elite category of superregional economic development pioneers.