Economist Loren Scott's report held no surprises for the Lafayette metro - just reassurance the economy is on the right track. The Lafayette metro won't lead the state in job growth over the next two years - not by a long shot - but it will experience "very respectable" increases, Dr. Loren Scott told an audience of 400 gathered at The Hilton for ABiz's annual Entrée to Business breakfast Thursday. The economist's yearly forecast, which predicts economic performance throughout the state's eight metros, shows Lafayette fourth in job growth, with 2,100 jobs added in 2014, a 1.3 percent increase, and 2,000 more in 2015, a 1.3 percent increase.
Photo by Robin May
"Lafayette actually began setting record levels of employment in 2011," Scott said, emphasizing the diversity and resilience of the Lafayette area, which he notes was first in the state to start setting employment levels post-the Great Recession. And, he said, the Lafayette metro has had the best recovery of all eight MSAs during the 2010-2013 period, growing an impressive 6.9 percent, or 10,200 jobs. The annual growth rates, 2.2 percent in 2011, 3.2 percent in 2012, and an estimated 1.4 percent this year, are all above average but are the kind of increases expected for a region tied to a "surging exploration sector," Scott said.
Scott also explained to the audience that, as he predicted, the U.S. Bureau of Labor Statistics had to backtrack on its "unbelievable statistics" for 2012 job growth in the market when he and fellow economist James Richardson released their annual Louisiana Economic Outlook last year. "Initial data from the BLS suggested the Lafayette MSA's employment in 2012 was up by an annual 14,000 jobs, a whopping 9.6 percent growth rate," Scott said. When the BLS issued its revisions, the growth rate was still robust at 3.2 percent, he added, but it was about one-third the initial estimate.
Scott said resurgence in Gulf of Mexico activity will bolster exploration and energy service firms in the region, with three of the region's biggest employers - Acadian Companies, Stuller Settings and the Schumacher Group - adding marginally to their workforces in this region. And while he mentioned Lafayette's growing health care sector, red-hot residential real estate market and record-breaking retail sales, Scott didn't mince words about what's driving Lafayette's success:
It should come as no surprise that the exploration industry is the catalyst behind Lafayette's projected quality job growth over the next two years. Very profitable, and high, oil prices are a key driver here, but perhaps the most important specific contributor has been the resurgence in the nearby Gulf of Mexico post-BP Spill. Pre-spill there were 33 rigs operating in the deep waters of the GOM. Immediately post-spill this number dropped to only 11 as many drill ships left the GOM for Brazil, West Africa and the Mediterranean where no moratorium existed. By 2013, the pre-spill record had been met and surpassed - 36 drill ships were operating in the deep waters of the Gulf. By mid-2014, that number is expected to rise further to 50. ISI has projected this number will reach 60 in the 2015-17 time frame.
All of the state's metro areas should gain jobs in the next two years and the state as a whole is expected to add 34,200 jobs in 2014 and 33,600 in 2015 for an estimated annual growth rate of 1.7 percent - enough for Louisiana to hit 2 million jobs for the first time. And it's certainly no surprise which metros will be leading the pack, thanks largely to industrial projects under way or announced in Lake Charles and Baton Rouge.
Photo by Robin May
A crowd of 400 gathered Thursday to hear Dr. Loren Scott's Louisiana Economic Outlook: 2014 and 2015. ABiz's annual Entree to Business is sponsored by MidSouth Bank and Dwight Andrus Insurance.
Lafayette's projected job growth trails Lake Charles at No. 1, Baton Rouge at No. 2 and Houma at No. 3. Houma's growth is being fueled by activity at Port Fourchon, which is of course fueled by the resurgence in the Gulf, but there is a caveat in these numbers. If the National Flood Insurance Program is not modified, "all bets are off for Houma," said Scott, who gave the audience two staggering examples of what the new rates, designed to make the program actuarially sound, would mean for some property owners.
Commissioner of Insurance Jim Donelon reports changes in the NFIP will impact thousands of properties in Louisiana (there are 484,098 policies in effect in Louisiana), especially in St. Charles, Terrebonne, and lower Jefferson Parishes. The impact on the premium in some cases is eye-popping. The Greater New Orleans Chamber has estimated that the premium for a $171,900 home in St. Charles Parish will rise from $388 annually to $23,946 - over a 6,000% increase. GNO Inc. also estimates the annual premium on the Microtel Inn Suites in Belle Chase will jump from $1,522 to $103,197.
Scott's report has this to say about Lake Charles:
We are projecting that the Lake Charles MSA is about to enter the finest growth period in its history. It's projected 7,800 new jobs over 2014-15 (+8.1%) could easily be surpassed. GBRIMA has documented a monumental $46.6 billion in announced industrial expansions in this region (that number now balloons to $93 billion across the state) - including the largest single capital expansion in Louisiana's history, the $16 to $21 billion Sasol ethylene cracker/GTL complex. The Lake Area Industrial Alliance projects construction labor demand to jump from about 6,000 now to 14,000 in 2016. This number is so daunting that Global Logistics Solutions is building a $70 million man camp at the Port of Lake Charles to house 4,000 of the workers. Adding to the growth will be the opening of the new 1,500-job Golden Nugget Casino and a new name at Chennault Airpark - AAR - that will be adding 500 jobs.
And this about Baton Rouge:
The 9-parish Baton Rouge MSA is heading into an industrial expansion like none other in its history. The Greater Baton Rouge Industrial Manager's Alliance (GBRIMA) has tabulated a remarkable $23.7 billion in industrial projects that are either announced or underway. GBRIMA projects the demand for construction workers in the region will jump from 17,500 to 31,000 in the next year. IBM is bringing a new 800-person technology center to Baton Rouge, and another tech company - Ameritas - will be at 300 employees by forecast end. We are projecting 21,700 new jobs (+5.6%) for this MSA over the next two years, making it the second fastest growing MSA in the state.
Scott's breakfast presentation is sponsored each year by Dwight Andrus Insurance and MidSouth Bank, with support from Cane River Pecan Company, the Acadiana Economic Development Council and Vidox Motion Imagery. Read the full report here.