After a brief cooling-off period, Baton Rouge’s economy should experience a “renewed growth spurt” over the next two years on the backs of industrial and public construction projects.
A Louisiana Economic Outlook report says the capital region will add 6,000 jobs, or 1.5 percent, in 2019 and 8,100 jobs, or 1.9 percent, in 2020. The metropolitan area is expected to see the second-highest growth in the state, both in the number of jobs and percentage.
“Clearly, the lull is over and a new burst of activity is at hand,” economist Loren Scott said in the report.
"We're going to start really growing moving forward," he added in a speech Tuesday unveiling the report.
Statewide, Louisiana has recovered from its 28-month recession and is expected to add 23,400 jobs, up 1.2 percent, in 2019 and 36,100 jobs, up 1.8 percent, in 2020. The state is now in “relatively healthy growth mode,” Scott said.
But those projections depend on oil prices, now above $70 per barrel for U.S. benchmark crude, rising to $80 a barrel and a national economic expansion continuing. Low natural gas prices, which have fueled industrial expansions in Louisiana in recent years, should continue a modest decline.
Threats like President Donald Trump's administration’s ongoing trade war with China could be “devastating” to the economy if tariffs continue in the long term, Scott said.
"The biggest threat of all is the tariffs that president Trump has put into place," he said.
In last year’s economic outlook, Scott projected the Baton Rouge region would add 2,900 jobs in 2018 and 3,300 jobs in 2019.
Three of six major industrial projects underway in the Capital Region — from Shintech, Shell Chemical and OxyChem — are set to be completed near the end of this year. About 83 percent of industrial announcements in the Baton Rouge area are already completed.
But Scott projects a new wave of investments on the horizon will replace the lost construction jobs.
Among those are Shintech, which announced another expansion of its facilities in Plaquemine; Methanex, which is set to build another $1.3 billion methanol plant in Ascension Parish; and ExxonMobil, which is considering a major expansion of its polyolefins plant in north Baton Rouge.
A half-billion dollars in road projects also will infuse the construction sector in Baton Rouge, Scott said. Plus, $1.4 billion in flood mitigation and relief dollars will provide a “huge injection” of funds into the local economy.
Other announcements also are expected to come online. Ready Shield Solutions is considering a 300-job manufacturing facility at the old Cotton Holsum Bakery in north Baton Rouge. Brown Eagle will start up a new packaging facility at the former Baton Rouge Beer Agency building.
Major health care investments that have been ongoing are set to open in 2019. The Our Lady of the Lake Children’s Hospital along I-10 will open next October. Ochsner’s $100 million complex should open in phases beginning next year. Baton Rouge General is spending millions on a hospital in Prairieville and an expansion of its facilities on Bluebonnet Boulevard.
The tech sector should add some jobs, too. IBM must hire the equivalent of 225 workers by next summer for its downtown Baton Rouge center, or it will be hit with penalties outlined in state incentives agreement.
As of July, Louisiana was already adding jobs at a 26,000-a-year rate, or 1.3 percent, which is about the national average. In 2020, several large industrial projects, including liquefied natural gas export terminals, are expected to make final investment decisions. Rising oil prices should lift the state’s energy sector, Scott predicted.
Here’s the outlook for the state’s other metro areas:
NEW ORLEANS: Industrial megaprojects in places like St. James and Plaquemines parishes, as well as job infusions from the tech sector, will drive growth in the region. New Orleans is expected to add 6,500 jobs, up 1.1 percent, in 2019 and 9,100 jobs, up 1.6 percent, in 2020. In 2018, the region began to grow again, adding 3,500 jobs, or 0.8 percent, below Scott’s previous forecast. Scott projects the region will rank seventh out of Louisiana’s nine metro areas in percentage job growth.
LAFAYETTE: After three years of bleeding, rising oil prices are expected to revive the Lafayette region in the next two years. Scott predicts the area will add 1,400 jobs, 0.7 percent, in 2019 and 4,900 jobs, 2.4 percent, in 2020. The region’s “big five": Stuller Inc., Acadian Ambulance, the Schumacher Group, CGI and LHC Group, will help lift employment as well. Much of the growth in Lafayette depends on a Gulf of Mexico oil exploration revival.
LAKE CHARLES: The Lake Charles MSA was the fastest-growing in the entire country over the past five years, Scott said, on the back of an “unheard of” $117 billion in projects announced since 2012. As of June, nearly a quarter of Lake Charles’ workforce were construction jobs. Three LNG export facilities are expected next year, and Lake Charles will continue to be the fastest-growing MSA in the state. Scott projects it will add 4,000 jobs, up 3.3 percent, in 2019 and 5,300 jobs, up 4.3 percent, in 2020.
HOUMA-THIBODAUX: After experiencing a severe oil-driven downturn in recent years, “the corner appears to have turned in the Houma MSA,” Scott said. Fabricators and shipbuilders are starting to find non-extraction clients, and an oil price of $80 a barrel should bring a “serious revival” in Gulf drilling by 2020. In 2019, Houma is expected to add 700 jobs, or 0.8 percent. In 2020, that growth will ramp up to 2,100 jobs, or 2.4 percent, Scott said.
HAMMOND: Avoiding major budget cuts to Southeastern Louisiana University spells a “positive future” for the Hammond area in the next two years. The region is expected to add 800 jobs, or 1.7 percent, in both 2019 and 2020.
SHREVEPORT-BOSSIER: After falling well below its 2008 employment peak, the region will return to a “positive though modest” growth trend over the next two years, Scott said. Activity at the area’s port and in technology will help add 600 jobs, or 0.3 percent, in both 2019 and 2020.
MONROE: Major area employers like IBM, Graphics Packaging and Vantage Health Plan will provide stability, but Scott “remains concerned” about the Monroe area. The future of CenturyLink after a merger is a source of concern, Scott said. The area is projected to add 400 jobs, 0.5 percent, in 2019 and 200 jobs, 0.3 percent in 2020.
ALEXANDRIA: The region’s growth will be flat for the next two years, after a special two-year information technology project Cleco ends and few announcements exist to take its place. Alexandria will remain flat in 2019 and add 500 jobs, 0.8 percent, in 2020, Scott predicts.