Cultivating and retaining talent to continue building existing and creating next-generation companies in the Baton Rouge metro area is among core concerns for business leaders looking to the future.
Baton Rouge, with its two major universities and community and technical colleges, produces a pipeline of college graduates and those with technical certificates able to work in high-demand industries. However, some leaders are concerned that a threat to retaining those skilled workers are quality of life, traffic congestion and transportation infrastructure, access to education for workers' children, and the economic disparity between residents living on opposite sides of the city. That's because educated professionals and skilled trades people alike are drawn to higher-wage hubs such as Houston, a mere few hours drive away, as are businesses tempted to jump the state line into Texas and other thriving distant economies.
Those issues were among topics business leaders and academic experts gathered to discuss Tuesday during The Advocate's 2020 Economic Outlook Summit. The discussion, which included questions from Advocate readers and editorial staff, ranged from land use, the changing retail environment to business development across the region and within north Baton Rouge.
Potentially tepid but stable job growth in the coming year is expected for the Baton Rouge area, nearly 5,000 jobs for a 1.2% growth rate. Baton Rouge Area Chamber figures show.
In Baton Rouge and statewide, the construction industry has been in a slight lull between industrial projects, but is expected to rebound slightly in the coming year as projects announced several years ago break ground. But don’t expect all of the $180 billion in projects along the U.S. Gulf Coast to come to fruition, said David Dismukes, executive director and president of the LSU Center for Energy Studies. There are external factors such as market conditions, global geopolitical tensions and changes to state incentive programs, which may impact final decisions.
In the budding liquefied natural gas sector, in particular, experts predict that roughly 30% of the projects announced won't be built. But that's much better than the average expectations of a 50% completion rate, Dismukes said.
To keep the large scale industrial projects coming, Connie Fabre, president and CEO of the Greater Baton Rouge Industry Alliance, suggested that a more streamlined economic incentive program would offer companies more certainty about the state tax structure. That's been a common industry refrain since Gov. John Bel Edwards revised the Industrial Tax Exemption Program — a 10-year tax abatement economic incentive — to mandate local taxing bodies be part of the process.
It's just a question of whether new industrial projects are going to continue at the pace of development seen in recent years, Fabre said.
The hope also is to develop more diversity in the economy going forward, built off the foundation of existing industries that sustain the economy.
For Genevieve Silverman, president and chief executive officer of NexusLA, who also oversees the Louisiana Technology Park, this year will be focused on cultivating more technology industry talent for employers, particularly startup companies. About a decade ago, the chief concern for technology startups was access to capital then talent. That has largely been flipped.
“When you ask that question today, talent is the number one answer,” Silverman said, noting her organization's Apprenti program graduated its first class of cybersecurity apprentices recently. “We feel that a lot of our tech companies in our region are having their growth stifled because they are not able to access … skilled talent that they need to grow. That’s one reason why we launched the registered IT apprenticeship program,” she said.
Adam Knapp, president and CEO of the Baton Rouge Area Chamber, shared results from his organization's annual business confidence survey and economic snapshot. Top concerns for businesses in the 65th-largest region in the country are traffic congestion, followed by lack of public school options and private school costs, and workforce development.
Those issues go hand-in-hand when recruiting businesses and competing against other markets, with years of local efforts starting to produce results.
"There has been significant progress to try and address the challenges ... the pressure that's being placed on our leaders by the business community and by residents to address traffic congestion, you're seeing that we're going to extraordinary lengths to try and do that,” Knapp said. "The heart of the bottleneck in Baton Rouge is I-10 and it's been a challenge," Knapp said. “The governor announced for the first time in the history of Louisiana we're going to borrow against future federal funds for the next 12 years to widen Interstate 10.”
There also are plans for a new $1 billion bridge to cross the Mississippi River underway.
Sometimes, economic development is more than just physical infrastructure. A major company was in discussions with BRAC recently, and the business was most interested in partnerships between higher education institutions and businesses — wanting "examples of how there is alignment with big companies to help drive the city and business," Knapp said.
The way local universities educate the future workforce is changing, especially as those institutions have grappled with fewer state tax dollars.
For Southern University in particular, the institution has been restructuring its curriculum to meet student demands for tangible workforce skills that meet employer qualifications, which are rapidly changing, said Domoine Rutledge, chairman for Southern University’s Board of Supervisors.
Southern University watched how its own budget was supplemented by the state up to 70% plummet to 30% over the past few years.
"We're going to see about 30% of higher educational institutions close if they don't make some serious changes in terms of being all things to all people,” Rutledge said. “At Southern, for example, one of the things that we've tried to do is bring some alignment for our core academic offerings to workforce demands. It's not necessarily about getting a degree but marketable skills that they can monetize."
And those efforts alongside that of industry groups such as the Greater Baton Rouge Industrial Alliance led by Connie Fabre have boosted student enrollment in certificate programs at River Parishes Community College significantly, which showed up in BRAC's local economic snapshot data.
River Parishes Community College increased its student enrollment from 377 in fall 2018 to 4,272 in fall 2019. The Capital region as a whole saw higher education enrollment jump from 48,556 students to 52,994 students across the market, including a modest uptick of students at Southern University.
Knapp cited that pipeline as promising for businesses and for its potential to lift the region's stagnant population, which is necessary for business growth.
Partnerships work in other ways as well. For example, ExxonMobil, which opened a new community center in north Baton Rouge, offered office space to the Baton Rouge North Economic Development District, to help drive business and other growth in the area and supports an workforce development program.
The organization is changing its name to Impact Baton Rouge soon, said Executive Director Jerry Jones. The name change signifies north Baton Rouge's economic development is critical for the whole region, especially when it comes to attracting and retaining talent. Jones likened the whole city parish as a body with one arm that is muscular and strong and the other weak and flat — not a very pretty picture for the city, he said.
Knapp cited statistics showing income growth has risen in Baton Rouge in recent years, but the household income of African American residents still has not reached parity with white households. Black households earn on average only 54% of the earnings of white households in Baton Rouge.
One way to close that gap comes from a recent disparity study, which showed a significant disadvantage for small business access to the city-parish's contracting practices. East Baton Rouge Parish officials expect to roll out ordinances to address the issue, such as set-aside contracting similar to what's at the federal level to address economic disparities.
Plans to revitalize Plank Road also are underway, in part seeking to secure a major grocery tenant in a new mixed-use development planned for the area.
"I think a regional grocery store owner is probably going to be the first to locate in the area," Jones said. "There's a lot of factors that go into it … trying to get a grocery store in the area."
This year redevelopment agency Build Baton Rouge expects to take up the task of tracking the current state of the housing stock and affordability across the region, also taking into account the effects of the 2016 flood.
"The problem is that we have not yet done a good job of measuring what that impact was," said agency President and CEO Chris Tyson. "We are in the process with the Mid-City Development Alliance and the city of Baton Rouge for the first comprehensive housing study and housing census that we've done in East Baton Rouge Parish. The idea being that we will be able to have real data to understand not only our existing housing conditions and housing needs and true impact of the Baton Rouge floods."
As for commercial real estate development in the city, that continues to be largely garden-style office condominiums and complexes rather than speculative high-rise towers funded by well-heeled investors, said Jonathan Walker, senior commercial sales and leasing executive at Maestri-Murrell Real Estate. At the same time, new retail development leases are shifting away from traditional retailers toward experiential businesses, such as boutique exercise gyms, fast casual restaurants and clothing stores looking for flagship showrooms for marketing purposes to drive online sales.
"Retail is just a marketing piece," Walker said. "In a market where a retailer has a physical presence in that market, their online sales go up 38% and so that tells me you don't have to have a clothing or electronics store on every single corner anymore."
The multifamily or apartment market has more inventory than demand in part from speculative new construction after the 2016 flood. That led to a temporary spike in short-term housing demand while individuals had homes repaired.
"Now we're seeing some of those apartment complexes having to give away three months free rent," Walker said.
Asked about challenges and concerns among small businesses, HomeBank Chief Financial Officer Joe Zanco said the local financial institution has noticed some businesses being drawn outside of the state for more advantageous tax brackets, such as those without a state income tax.
"We're perceived as a state right now that's not friendly to business, so when we lose a client — and it's pretty rare that we do — it's because those clients are moving their businesses to Texas and Florida to lower tax opportunities," Zanco said. "What small businesses want most from the government is to just be able to serve their clients."
The future of health care may be filled with urgent care centers, with some emphasis for the main campus of hospitals to bring in specialists, said Scott Wester, CEO of Our Lady of the Lake Regional medical Center.
Wester predicted that Premier Health, in which his organization owns an equity stake, has the potential to become a nationwide urgent care provider. Premier Health employs about 500 workers in Baton Rouge alone.
"They are the Raising Cane's of urgent care," Wester said. "They are currently in seven different states with 60 sites and have the opportunity to double in size in a couple of years, every couple of years. So it could be a national provider of urgent care; it's a high growth opportunity."
Beyond that, Baton Rouge area hospital networks have been cultivating a health district in an effort to attract more specialists in the area and build a cancer care cluster.
The hospital system is upgrading facilities, investing in workforce as one of the largest employers and working to make Baton Rouge a larger health care hub and medical destination for Louisiana residents. That's why the system invested in the freestanding children's hospital, which opened in late 2019, and is investing another $13 million at its main campus in coordination with the NueroMedical Center this year to expand its neuroscience unit.
"It's an extremely important ingredient in that attraction," Wester said. "We are attracting patients across the state with cancer."
Philip May, president and CEO of Entergy Louisiana, shared the utility provider's plans to invest in renewable energy such as solar in West Baton Rouge Parish.
In the coming months, Entergy will issue a request for proposals for yet another solar farm where it can purchase electricity for the region. The cost of solar has been coming down but now the focus is on how to optimize those fixed costs even more through battery storage of solar when the sun isn’t shining, May said.
The future of solar is bright for the utility provider, which has been investing heavily in its infrastructure. The company has long boasted having among the lowest electricity rates in the country, which he said is critical to affordability and can drive economic development.
Sponsors for the summit were ExxonMobil, Entergy, Home Bank and AARP Baton Rouge.