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.
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.
Source: GNOCDC analysis of data from U.S. Bureau of Labor Statistics CES 2012
and U.S. Census Bureau population estimates 2012.
THE BIG PICTURE
Southeast Louisiana has received high rankings for its
economic performance during the Great Recession.
Percent change in nonfarm jobs
December 2007–December 2012
1%
Southeast Louisiana
0.8%
0%
-1%
-2%
United States
-2.4%
-3%
Source: GNOCDC analysis of data from U.S. Bureau of Labor Statistics CES.
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.
Historical job growth and loss, 1970-2011 (thousands of nonfarm jobs)
Houston metro and Southeast Louisiana
Source: GNOCDC analysis of data from Moody’s Analytics
(U.S. Bureau of Labor Statistics; CES, QCEW).
THE BIG PICTURE
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
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.
Predicted Louisiana land loss with 1.0 to 3.3 feet relative sea level rise by 2100
Source: Carbonell, A. & Meffert, D.J. (2009). Climate change and the resilience
of New Orleans: The adaptation of deltaic urban form. World Bank.
THE BIG PICTURE
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.
Number of Jobs: 367,500
Share of Southeast Louisiana jobs: 35 percent
Baton Rouge industry specializations
State Government and University
Heavy Construction and Engineering
Petrochemical Manufacturing, and Oil & Gas
Shipping
Insurance Agencies
Industrial Machinery Leasing and Repair
Fabricated Metal Manufacturing
Waste Management
Paper and Wood Manufacturing
Cement and Concrete Manufacturing
Total Export Jobs
Total Jobs
Source: GNOCDC analysis of data from Moody’s Analytics
(U.S. Bureau of Labor Statistics; CES, QCEW)
2011 “export”
employment
39,695
21,930
13,463
3,358
1,853
1,770
1,610
1,272
829
677
126,298
367,483
2011 Location
Quotient
2.8
3.4
6.3
2.8
1.7
3.1
1.7
3.1
1.7
1.5
ECONOMIC SYNERGIES
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.
Number of Jobs: 588,200
Share of Southeast Louisiana jobs: 56 percent
New Orleans industry specializations
Tourism
Oil & Gas
Shipping
Higher Education
Heavy Construction and Engineering
Ship Building
Legal Services
Insurance Agencies
Food Manufacturing
Motion Picture
Total Export Jobs
Total Jobs
Source: GNOCDC analysis of data from Moody’s Analytics
(U.S. Bureau of Labor Statistics; CES, QCEW)
2011 “export”
employment
39,306
17,821
13,711
11,264
9,515
5,483
3,565
2,843
1,954
1,886
195,507
588,243
2011 Location
Quotient
1.4
3.4
3.0
1.5
1.8
10.2
1.7
1.7
2.1
1.2
ECONOMIC SYNERGIES
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.
Number of Jobs: 92,900
Share of Southeast Louisiana jobs: 9 percent
2011 “export”
Houma-Thibodaux industry specializations
employment
Shipping
8,790
Oil & Gas
5,355
Industrial Machinery Leasing and Repair
2,966
Ship Building
2,804
Machinery Manufacturing
2,763
Heavy Construction
2,255
Management of Companies
1,886
Waste Management
951
Fabricated Metal Manufacturing
875
Seafood and Sugar Manufacturing
380
Total Export Jobs
39,090
Total Jobs
92,892
Source: GNOCDC analysis of data from Moody’s Analytics
(U.S. Bureau of Labor Statistics; CES, QCEW)
2011 Location
Quotient
15.7
14.6
14.8
32.9
12.3
3.4
1.4
7.1
2.1
5.2
ECONOMIC SYNERGIES
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.
• 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)
ECONOMIC SYNERGIES
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.
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.
• 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.
Source: GNOCDC analysis of data from Moody’s Analytics
(U.S. Bureau of Labor Statistics; CES, QCEW)
ECONOMIC SYNERGIES
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
Source: GNOCDC analysis of data from U.S. Bureau of Transportation Statistics,
Freight Analysis Framework.
ECONOMIC SYNERGIES
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
Source: GNOCDC analysis of data from U.S. Bureau of Transportation Statistics,
Freight Analysis Framework.
ECONOMIC SYNERGIES
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.
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
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.
Sources: Louisiana Economic Development, Greater New Orleans, Inc., New Orleans Business
Alliance, Baton Rouge Area Chamber, and South Louisiana Economic Council.
THE OPPORTUNITY
What is Southeast Louisiana's current baseline
in each target sector?
Jobs, wages, and location quotients by target industry sector, 2011
Southeast Louisiana
Source: GNOCDC analysis of data from Moody’s Analytics
(U.S. Bureau of Labor Statistics: CES, QCEW).
THE OPPORTUNITY
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
Energy and petrochemical manufacturing:
Why is it important?
Number of Jobs: 66,900
Location Quotient: 2.9
Average Pay: $88,186
• 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.
Photo Credits: Ports Assoc. of Louisiana; LED.
THE OPPORTUNITY
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
Refineries
Pipelines
New Orleans
Houma
Barataria
Bay
Platforms
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 2005-160001. 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
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)
Photo Credits: LED.
THE OPPORTUNITY
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.
Photo Credits: LED.
THE OPPORTUNITY
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.
Photo Credits: Blade Dynamics, Sundrop Fuels.
THE OPPORTUNITY
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.
Photo Credits: Blade Dynamics, Sundrop Fuels.
THE OPPORTUNITY
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 highprofile. 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)
Photo Credits: LED; LSU
THE OPPORTUNITY
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.
Photo Credits: taxcredits.net
THE OPPORTUNITY
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 BioInnovation Center, and LSU and
Tulane Health Sciences Centers.
Photo Credits: LED.
THE OPPORTUNITY
Biosciences:
What are the challenges?
Number of Jobs: 11,000
Location Quotient: 0.5
National Institutes of Health funding (in millions), 2011
Southeast Louisiana and other select metros
Average Pay: $62,863
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
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
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.
Photo credits: Times-Picayune; LED.
THE OPPORTUNITY
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.