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Economic Synergies across Southeast Louisiana

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

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Economic Synergies across Southeast Louisiana

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

  2. 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.

  3. The Baton Rouge, New Orleans, and Houma-Thibodaux "super region” (aka Southeast Louisiana) "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. THE BIG PICTURE Source: GNOCDC analysis of data from U.S. Bureau of Labor Statistics CES 2012 and U.S. Census Bureau population estimates 2012.

  4. 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 Source: GNOCDC analysis of data from U.S. Bureau of Labor Statistics CES.

  5. Taking the longer view, we see that Houston outperformed Southeast Louisiana by developing a more diverse economic base after the oil bust. Historical job growth and loss, 1970-2011 (thousands of nonfarm jobs) Houston metro and Southeast Louisiana THE BIG PICTURE Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW).

  6. However, job projections for Southeast Louisiana continue to lag other Southern regional economies. Projected employment compound annual growth rates, 2010-2020 Select metros and super regions THE BIG PICTURE Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW).

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

  8. 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.

  9. 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?

  10. 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 ECONOMIC SYNERGIES Source: GNOCDC analysis of Local Employment Dynamics, U.S. Census Bureau.

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

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

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

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

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

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

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

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

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

  20. The three metros are highly complementary to each other in their economic roles. • 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. ECONOMIC SYNERGIES Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW)

  21. The three metros are highly complementary to each other in their economic roles. • 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. ECONOMIC SYNERGIES Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW)

  22. The three metros are highly complementary to each other in their economic roles. • 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. ECONOMIC SYNERGIES Source: GNOCDC analysis of data from Moody’s Analytics (U.S. Bureau of Labor Statistics; CES, QCEW)

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

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

  25. 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.

  26. THE OPPORTUNITY • 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

  27. 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

  28. 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.

  29. 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).

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

  31. Energy and petrochemical manufacturing: Why is it important? Number of Jobs: 66,900 Location Quotient: 2.9 Average Pay: $88,186 Photo Credits: Ports Assoc. of Louisiana; LED. • 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. THE OPPORTUNITY

  32. Energy and petrochemical manufacturing: What are the challenges? Number of Jobs: 66,900 Location Quotient: 2.9 Average Pay: $88,186 Historical and projected land loss, 1932-2050 Sources: 1932-1956 Land Change Analysis (U.S. Army Corps of Engineers, New Orleans); 1956-1990 and 1978-2050 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 2005-16-0001. 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. New Orleans Houma Barataria Bay THE OPPORTUNITY

  33. Advanced Manufacturing:Why is it important? Number of Jobs: 32,800 Location Quotient: 0.6 Average 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.

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

  35. Clean tech:Why is it important? Number of Jobs: 15,000 Location Quotient: 0.6 Average 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.

  36. Clean tech:What are the challenges? Number of Jobs: 15,000 Location Quotient: 0.6 Average 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.

  37. Digital media:Why is it important? Number of Jobs: 11,000 Location Quotient: 0.4 Average 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

  38. Digital media:What are the challenges? Number of Jobs: 11,000 Location Quotient: 0.4 Average 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

  39. Biosciences:Why is it important? Number of Jobs: 11,000 Location Quotient: 0.5 Average 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 BioInnovationCenter, and LSU and Tulane Health Sciences Centers. THE OPPORTUNITY Photo Credits: LED.

  40. Biosciences:What are the challenges? Number of Jobs: 11,000 Location Quotient: 0.5 Average Pay: $62,863 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. THE OPPORTUNITY

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

  42. Water management:What are the challenges? Number of Jobs: 43,500 Location Quotient: 1.7 Average 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.

  43. 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

  44. 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.

  45. 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.

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