Business Cover

Big Deals of 2010

by Leslie Turk

Wednesday, December 29, 2010
The moratorium on offshore drilling dominated the news cycle for much of 2010, but the biggest news of the year is that the doomsday scenario never came to pass. By Leslie Turk**

Wednesday, December 29, 2010
The moratorium on offshore drilling dominated the news cycle for much of 2010, but the biggest news of the year is that the doomsday scenario never came to pass. By Leslie Turk**

Looking back on 2010, it's hard to find a day from late May until mid-October - the period when the Obama administration shut down the Gulf of Mexico oil and gas industry by refusing to issue new drilling permits after the BP disaster - that the future of the energy industry was not in headlines across Acadiana and the state. The uncertainty and apprehension caused by that knee-jerk policy had the potential to shut an entire economy down. But while the oil companies throughout Acadiana prepared themselves for the worst, they nevertheless charged ahead - with many operators deciding to refurbish rigs rather than uproot them and a number of service companies choosing to use the down time to take care of housekeeping they had been putting off.

We are far from out of the woods - as a wave of new regulations aimed at avoiding a repeat of the worst offshore oil spill in U.S. history is holding up the permitting process - but the numbers now reveal that there has been an insignificant loss of jobs in the oil sector of the Lafayette metro (which includes St. Martin Parish) since May. That doesn't mean we didn't suffer job losses; it just means that the sector was able to offset them with new jobs. The mining sector in the Lafayette metro has only lost 100 jobs from April (14,900) to November (14,800). Overall, it has gained 1,800 jobs from April (146,900 jobs) to November (148,700).  
For all of those reasons and more, the oil spill and resulting moratorium is the business story of the year.

There are several projects and companies worth mentioning that did not make the cut this year. Among construction projects in 2010, the new hospital complex for Lourdes, a $225 million investment on Ambassador Caffery Parkway near Verot School Road, was a major shot in the arm for the local economy but is not included on the 2010 list because it was a featured project in 2008 when it broke ground and again in 2007 when Lourdes purchased the property. Also on the 2008 list was the merger of one of Acadiana's largest privately held companies, the Ace Group, with Welsh, Carson, Anderson & Stowe, a New York-based private equity investment firm. The Ace Group included Ace Transportation and Dynasty Transportation, founded by Lafayette businessmen Bill Busbice and James Glasgow. Ace and Dynasty later merged with two other carriers, Texas Hot Shot Company and Venture Transport Logistics, to become United Vision Logistics. It's worth revisiting this big deal maker again because in 2010, Vision was awarded a $160,000 workforce training grant from the state to upgrade employees' skills sets, according to the Lafayette Economic Development Authority. The company maintains a base of more than 100 truck terminals and 2,500 owner-operators located throughout the southeast, Gulf Coast and other energy producing regions in the U.S.

Also nominated this year was Parc Lafayette development, Glenn Stewart's proposed lifestyle center on Kaliste Saloom Road across from River Ranch. The project has tremendous potential but is extremely ambitious in the current retail environment; if it gets off the ground in 2011, it will undoubtedly be one of the biggest stories of the year.

Each year we bring ABiz readers the variety of transactions, developments and issues that shaped the business community over the previous 12 months. What follows are the standouts of 2010:

Rallying Cry
While so much of what we heard and read in the second half of the year was that the drilling moratorium would cost us tens of thousands of jobs, those losses failed to materialize. Local experts say two factors have aided in the retention of oil and gas jobs - activity in the Haynesville Shale play in northwest Louisiana and the decision to refurbish rigs instead of immediately engaging them in overseas contracts. On a negative note, however, permits have yet to begin flowing. From the Obama administration's proposals to repeal tax breaks for the oil and gas industry and its attempts to step up regulation of hydraulic fracking to the de facto ban on offshore drilling, it could be some time before Gulf production returns to pre-BP disaster levels. But, thankfully, it ain't nearly as bad as those at July's "Rally for Economic Survival" feared it might be.

Mega Merger
In February, Schlumberger, the world's largest oil field services company, announced that it would merge with Houston-based Smith International in an all stock transaction valued at about $11 billion. What wasn't immediately evident to most local observers was that the merger would result in Schlumberger employing 1,400-plus workers here, ranking the company the sixth largest employer in Lafayette Parish. Companies in the Schlumberger family also include MI SWACO, Pathfinder Energy Services, Coil Tubing, Boyd's Rental Tools, Perf-o-log, Chem Tech, Wilson Supply Company and Samson Rope Technologies.

Bullet Dodging
In 2010, Lafayette Parish continued to dodge a bullet in both real estate and unemployment, which is hovering at 6 percent (though we could be in for a change in the latter if economist Loren Scott's 3,000-job loss prediction comes to pass in 2011; see related cover story). Our local real estate market has fared well, compared to much of the rest of the country, but the fantasyland sellers' market did come to an end, says Bill Bacqué of Van Eaton & Romero. From July-October, closed residential sales continued to underperform when compared with the same months in 2009, though the adjustments were negligible. November, however, was flat, and the number of Lafayette Parish homes sold from January-November 2010, compared to the same period of 2009, is currently down by only 1.86 percent. "The critical factor now, however, is that there are fewer buyers in the market today - a great position to be in if you're a buyer," Bacqué says. Quality inventory is strong, he maintains, and interest rates are at lows many of us have never seen. It's certainly good news that just as the year is coming to a close, November reveals that buyers are beginning to show interest in higher priced homes. "That's something that has been lacking in the marketplace during most of 2010," Bacqué says.

Battle Ground
When the Ambassador Caffery South extension is piled high with commercial development, it will be a boon to the coffers of Broussard, Lafayette and Youngsville, drawing in much-needed sales tax revenue. But right now, it's more boondoggle, generating animus among the three municipalities as they stake claim through annexation to the acreage skirting the new thoroughfare. While most commuters in Lafayette Parish saw the opening of Ambassador South as a welcome new shortcut from Highway 90 to the Johnston/Ambassador retail corridor, the mayors saw dollar signs. Roughly half the nearly six-mile stretch of road opened last March, all of it within the corporate limits of Broussard. But the when second half opened about a month later - virtually all of it running through unincorporated Lafayette Parish - the acrimony began. First there were the letters from City-Parish President Joey Durel urging residents and business owners in the vicinity to "get the facts" and join the city of Lafayette, warning that "when you build that $200,000 house or that $2 million house, you have much less chance that somebody's going to put a pipe yard next to you" because of Lafayette's relatively strict zoning laws. Soon Youngsville was in on the action, holding an emergency city council meeting on April 28 at which city leaders voted to annex a mile-long strip of Ambassador South. A land development company that owns a parcel within that strip and is loyal to Broussard sued to block the annexation. The case is currently languishing in state district court, preventing Youngsville from proceeding with any new development. (The city of Broussard joined the suit against Youngsville but was later ruled an ineligible litigant.) In the meantime, Broussard filed suit against Lafayette over an Ambassador annexation and also temporarily blocked Lafayette from annexing the city-owned municipal golf course located between the two cities. All three cities have used emergency meetings and no small amount of subterfuge in their quest to obtain frontage along Ambassador South. Eventually Ambassador South will be a fully developed causeway lined with strip malls, shopping centers, motels and other commercial development. But right now it is simply a bare, bold example of Lafayette Parish's growing pains.

ACA Executive Director Gerd Wuestemann orchestrated
the competion of the center's worldclass theater in 2010

Developing Downtown
Ongoing Streetscape projects, the $10 million Rosa Parks Transportation Center opening, Trynd, Athena, Refinery barberspa, Americas Coffee House, Buchanan Lofts (the former warehouse space above the old Abdalla's building that is now fully furnished residential units offering overnight stays to long-term leasing options) - all were significant downtown developments in 2010. In the years to come, the re-purposing of the 20,000-square-foot Jefferson Street Market, especially its potential to mix a unique residential component with commercial use, will further enhance Lafayette's eclectic downtown landscape (its new owners have yet to settle on a plan, as the building is temporarily housing the library). But the biggest deal of the year was, without a doubt, completion of the Acadiana Center for the Arts' world-class theater, the culmination of a $20 million investment in downtown's vibrant arts scene.

Retail Rebounds
Lafayette Parish retail sales started the year at a snail's pace, falling more than 14 percent during the first two months and almost 11 percent in March, compared with the comparable months of 2009. But did they ever stage a comeback. Since then retail sales YTD have continually improved; three of the past four months actually had monthly totals higher than the comparable months in 2009, helping to bring the year-to-date total within $100 million of last year with two holiday shopping months remaining. In 2009 sales slid 11.61 percent, dropping from $5.4 billion in 2008 to $4.8 billion. Final numbers for 2010 will be reported in February.

Academy North
As first reported in last month's ABiz, Academy Sports + Outdoors, Acadiana's largest sporting goods retailer, plans to open a second Lafayette store in the Stirling Lafayette Shopping Center on Louisiana Avenue at Interstate 10. Hoping to build on the phenomenal success of Lafayette's original Academy, which relocated from Johnston Street to its current 120,000-square-foot space on Ambassador Caffery in 2006 and is commonly regarded as one of the top performers in the Texas-based chain, the new store will be almost 70,000 square feet, Stirling Properties confirmed Dec. 20. If a market analysis conducted by LEDA for a prospect several years ago is any indication, the new store should hit a home run. The analysis revealed that Acadiana has the highest concentration of hunting and fishing licenses in the state, LEDA President Gregg Gothreaux tells ABiz. An Academy at I-10 and Louisiana Avenue would draw from a market area of about 750,000 people, he says. Academy has more than 100 stores across the Southeast.

A number of restaurants opened and closed their doors in 2010, but three stand out for their giant leaps of faith and confidence in the strength of Lafayette's economy. Many business people pull back on major investments during times of economic uncertainty, while others like Nidal Balbeisi, Alan Yen and Gene Todaro take bold - and expensive - steps to bring their dreams to fruition. All three restaurateurs moved forward with their plans to introduce beautifully appointed eateries to Lafayette's restaurant scene, Todaro on the south side, Balbeisi bringing Trynd downtown and Yen launching Dozo on Johnston Street. Todaro opened The Elephant Room, an upscale steak house with monthly burlesque shows, in May. Yen, who has run Shangri-La since 2000, opened the hibachi half of his swanky new Asian restaurant in mid-summer and in recent months rolled out the stunning sushi side. Lafayette interior designer Cheri Roane deserves recognition for her skills fine tuning Dozo, as does Sidney Bourgeois, who is hard at work completing the interior of Italian eatery Trynd in anticipation of a January opening.

Sixteen years ago Ginger Myers sat down at her kitchen table with her husband, Keith, and drafted plans for her own home health agency, St. Landry Home Health Inc. In mid-2005 that same home-grown company, LHC Group Inc., raised an impressive $67.2 million in its initial public offering, creating a multi-million dollar windfall for a number of shareholders and prominent local business people. LHC Group has been on a buying streak since that time, but this May, a Senate Finance Commission began investigating the Lafayette-based company, and in July, the Securities and Exchange Commission launched an inquiry into its billing practices. LHC Group is among four publicly traded companies under investigation by the SEC for allegedly ordering unnecessary home visits in order to reach thresholds and trigger bonus Medicare reimbursements. The investigations were prompted by an April 2010 Wall Street Journal investigative report on the industry's billing practices. The local company denies wrongdoing and says it is cooperating with investigators. The controversy has not dampened LHC Group's third quarter earnings. The company bested by 3 cents analysts' predictions of earnings of 70 cents per share, reporting net income of $13.3 million, compared with $9.8 million or 54 cents per share for the quarter ending Sept. 30, 2009.

Common Courtesy
Buying a dealership wouldn't typically land a business on this list, but there is just no denying that Courtesy Automotive Group has been Lafayette's most aggressive auto dealer in the past few years. And its most recent acquisition, the purchase of Jackie Edgar Ford, is all the more significant because it also signaled the retirement of legendary Breaux Bridge auto dealer Jackie Edgar. The purchase brings Ford back into Don Hargroder's Courtesy group, the state's GM sales leader. Hargroder once owned a Ford dealership in Morgan City for a short time. In connection with the deal, Hargroder moved his Lincoln dealership from its location south of the Mall of Acadiana to Breaux Bridge, creating the new Courtesy Lincoln Ford. In March Adrian Vega purchased Hargroder's Mazda dealership, adding it to his Evangeline Thruway lineup across from the airport.