Rebuilding for Dollars

by Jeremy Alford

Companies continue to flock to Louisiana's hurricane-recovery economy, but will they stay?

If you believe economic development representatives, businesses inside Louisiana and around the country continue to salivate at the thought of gobbling up some of the post-Katrina and Rita rebuilding work in the state. Hurricane recovery can mean big dollars for corporate America, and now there's something more lucrative than Mardi Gras in the Bayou State.

Displaced residents still need new or rebuilt homes; corporations are relocating; children require schooling; cleanup of environmental hazards needs priority â?¦ the staggering list goes on and on.

There's a lot of work to do, and state officials know it. They're promoting that fact on an unprecedented scale, with ingenious advertising inserts explaining what kind of work is available ' as well as their related incentives ' in national publications like Business Week, Entrepreneur and Forbes. Ads have also been designed for the Web sites of CNN and The Economist. Like a coupon for free money, the ads are working; after years of worrying about Louisiana's business reputation and restrictive laws, companies are starting to regard Louisiana as a hot prospect.

But once the rebuilding process slows down, will any of these companies stick around?

Louisiana Economic Development officials argue that the wide variety of tax breaks and assistance programs will entice companies to stay. The business stimulants set the stage for a productive future, and the state's new "open for business" philosophy, in tandem with long-term incentives beyond recovery, only bolsters the belief.

This amalgam is partly what lured Virginia-based Booz Allen Hamilton to south Louisiana this year. It's not your average mom-and-pop outfit; the strategy, management and technology consulting firm employs 17,000 people on six continents and generates roughly $3.6 billion in annual sales. Unlike other companies wanting to cash in on debris removal or other manual labor jobs paid for directly by residents, Booz Allen is trying to drum up business directly with the state, says Bill McDade, a senior associate. The company is already making its rounds to the Louisiana Recovery Authority, Louisiana Economic Development and the governor's office and considering opening an office in Baton Rouge.

Presently, Booz Allen has a Metairie office with 50 employees, which pulls in an estimated $6 million in revenues each year. This office is strictly dedicated to federal contracts, such as the one Booz Allen has with the Minerals Management Service to help streamline offshore drilling leases.

But the Baton Rouge office is where the company's future could possibly reside, and it will be committed solely to state contract work.

"There is an incredible amount of money moving through the state right now," McDade says. "A week after the hurricane hit, we started to do business development offsite and strategizing on our next step, and that major play was state work."

The leap would have come sooner, he adds, but the company had always been slightly worried about age-old perceptions of the state and, frankly, threatened by certain contract laws. For instance, McDade points to an indemnity clause that Louisiana uses to wiggle out of paying vendors if they don't like the work.

"When you look at the bottom line and get into large contracts, that can be a risky proposition," McDade says, adding he has received commitments from the state to possibly work around that clause.

Additionally, the process of rebuilding has placed Louisiana in the national spotlight, he says, and that attention helps serve as a catalyst for corporate responsibility. Donald M. Pierson Jr., assistant secretary of Louisiana Economic Development, says this type of story has been retold countless times since last fall. Due to the hurricanes, companies that would have never considered Louisiana are now working with the state.

While some observers worry the new businesses might be fly-by-night and could pack up after a short stay, Pierson doesn't have a concerned bone in his body.

"Some of these companies are traveling a long way, and they are nationally respected companies that haven't been able to do large scale business with us before," Pierson says. "But in this moment of history, we need all the engineering and technical expertise we can get to speed up recovery. They are welcomed, and they will continue working with us."

Pierson says LED has beefed up its outreach program and is keeping track of new businesses. The department is also making the companies aware of all the incentives available to the state, like Community Block Grant funding and the almighty Gulf Opportunity Zone Act ("Pass the Go Zone," May 10), which provides tax-free borrowing, a slew of write-offs, depreciations and much more.

There are 31 parishes eligible to participate in the Go Zone program, and Pierson says companies are targeting them with a vengeance.

"I think we're going to continue to see a vast number of major U.S. corporations demonstrating a new or renewed interest in doing business with the state," he says. "All of these incentives will help companies that want to make a major investment in Louisiana to put themselves in a favorable position to take advantage of the market."

Anticipation of this declaration was building earlier this month as U.S. Commerce Secretary Carlos M. Gutierrez, along with Donald Powell, the federal coordinator for Gulf Coast Rebuilding, visited Baton Rouge and New Orleans as part of a major investment mission.

"This is really great," Pierson says. "I mean, when you hear about an economic mission, it's usually to another country or something, but the focus is on Louisiana."

A delegation of 37 companies attended the mission, including major Fortune 500 companies and small-sized enterprises. In addition to promoting the incentives, Pierson says an effort was placed on ports, transportation infrastructure and natural resources.

McDade agrees that momentum continues to build, and he's glad Booz Allen is coming in relatively early. He says it would be an unwise business decision for companies to leave the market in the near future. "We're focused on expanding in southeast Louisiana and are dedicated from a personal standpoint," McDade says. "Our employees and partners live in Louisiana, and we want to see both flourish once again."