Workers fan out as Crescent City struggles with job growth

18th July 2011   ·   0 Comments

By Susan Buchanan
Contributing Writer

If you’re a New Orleans resident looking for a job, you may have to cast your net far and wide and be willing to endure a long commute. While some workers still head to the CBD in the morning, others battle traffic to the North Shore and River Parishes five days a week or trek up to Baton Rouge.

On the plus side, “New Orleans did better than most metropolitan areas during the recession, mainly because of tremendous construction money being pumped in to rebuild levees, the Twin Spans, the Huey P. Long Bridge, houses and schools,” said Dr. Loren Scott, Louisiana State University professor emeritus of economics. The city’s employment has risen in recent years, and the jobless rate is below the national average.

But jobs that evaporated at the start of the post-Katrina era six years ago have been hard to replace, while payrolls have expanded in the suburbs and Baton Rouge.

New Orleans wasn’t a growing economy before Katrina and Rita hit, and the city would have plodded along without those disasters, Scott said. “But instead, over 133,000 jobs vanished overnight in 2005. Though employment was kind of coming back by 2007-08, it’s far from where it was before Katrina.”

Meanwhile, “Baton Rouge has added 21,600 jobs since Katrina, and set employment records in 2007-08,” Scott said. He is working on the 30th edition of the “Louisiana Economic Outlook,” scheduled for release by LSU this fall.

Scott said 519,400 people worked in the New Orleans metropolitan statistical area in 2010, versus 614,300 in 2004. “That’s down almost 95,000 from before the hurricanes, and results from a number of things, but mostly it’s that Katrina and Rita caused New Orleans to flood,” he said. Property owners learned that their insurance policies didn’t cover flooding, just wind damage, and six years later the city is still recovering.

That, he said, contrasts with places like Lake Charles, which was hard hit by Rita’s winds, but rebounded in a year because “State Farm Insurance wrote Lake Charles residents checks to rebuild homes.”

If you’re in Michael Hecht’s position at GNO, Inc., trying to entice industry to come to New Orleans, it’s a tough sell, Scott said. “He’s looking at boards of directors, who are saying ‘we can consider New Orleans, Nashville, Las Vegas or Chicago.’ The boards are saying ‘look what happened during Katrina and Rita, new levees have been built since but they haven’t been tested, and the city had to be evacuated at least once since Katrina and Rita for Hurricane Gustav.’”

Scott said the New Orleans Metropolitan Convention and Visitors Bureau also hears those concerns and questions from companies looking at the city as a meeting site. Convention business has picked up but remains below pre-Katrina levels.

Michael Hecht was out of town last week, but Curry Smith, spokesman for GNO, Inc., said, “as for the point that New Orleans is a tougher sell than it was prior to Katrina, I can say that we’ve noticed a renewed, growing national interest in our city and region since 2005.” Job growth occurred in New Orleans in 2008 and 2009 and accelerated in 2010, he said. “As for head-to-head figures for the Baton Rouge and New Orleans metropolitan statistical areas in attracting new companies over the past six years, what’s good for Baton Rouge is good for Louisiana, and what’s good for the state is good for Greater New Orleans.”

Smith noted that “in two recent rankings, Forbes magazine named the Greater New Orleans region the number-one market in the U.S. for information jobs and number two on its list of Best Big Cities for Jobs.” Forbes published those rankings this spring.

Smith cited a number of diverse newcomers to the Crescent City, including visual-effects firm Fac­tory VFX, market-research firm Federated Sample, and the marketplace known as The Receiv­ables Exchange, along with Covington-based visual-effects firm Bayou FX.

As for larger industries, Smith said big business is attracted to the region, based on development projects announced in the past year. He listed them, saying: “in July 2010, telecommunications firm Globalstar, Inc. relocated its headquarters from Silicon Valley to Covington with a commitment to create 500 new jobs by 2019; in August of last year, wind-turbine manufacturer Blade Dynamics announced its decision to move to the Michoud Assembly Facility in New Orleans, bringing with it 600 new jobs; last September Nucor Corp. made public its plans for a project that will create jobs in St. James Parish; and in February of this year, Bradken began expanding its steel foundry in Amite to retain 179 existing jobs and create 171 new jobs.”

Scott noted that Federal City, the West Bank complex in Algiers, is bringing in 300 people from Kansas City, and said “even when government personnel come here from other states to work, they’re getting paid here and are spending here.”

Nonetheless, the New Orleans area is losing industrial jobs, while outlying regions expect to gain a number of them. Scott said “4,500 jobs will be lost with the closing of Avondale Shipyard in 2013, and that’s tough for the New Orleans area.” Avondale is located on the West Bank in Jefferson Parish. “And with construction of the last Challenger fuel tank at the Michoud Assembly Facility in New Orleans East, 1,700 jobs were lost,” he said.

At Avondale Shipyard, “there have been about 540 job reductions over the course of 2010 and to date in 2011,” said William Glenn, spokesman for Huntington Ingalls Industries, which builds ships for the U.S. Navy and Coast Guard.

NASA spokesman Michael Curie said with the planned end of the Space Shuttle program, a total of 1,518 work-year equivalents — based on numbers of hours, rather than numbers of employees — provided by contractor Lockheed Martin to the Michoud Assembly Facility are in the process of being terminated. The reduction began in 2008 and has reached 1,399 to date. Workers have been transferred to other positions where possible, he said.

Meanwhile, jobs are slated to grow in the River Parishes. “What’s going on there is that for firms that need to move a lot of product in bulk, like chemical companies and oil refineries, the cheapest way is by barge,” Scott said. “Many of them need lots of water, they need clean-burning fuel such as natural gas, or they require natural gas as a raw material. Because of this river phenomenon and a good job of hustling by the Louisiana Dept of Economic Development, Nucor is coming in, building a big multi-million-dollar, pig iron facility.”

Katherine Miller, Nucor Corp. spokeswoman, said last week, “we needed enough land near a major waterway that would accommodate our need to bring in raw materials and ship out product by barge.” The company wanted access to abundant, reliable natural gas supplies for power. Ground was broken for an iron making plant in March, “and the project’s first phase will create 150 permanent jobs that earn an average, annual salary of $75,000 plus benefits,” she said, without providing a plant start-up date. “During peak construction, 500 jobs will be directly created. If additional phases of the project are constructed, over time Nucor could have total investment of over $3 billion and could increase permanent employment to more than 1,000.”

On the North Shore, “New Or­leans companies are moving across the lake, where it’s perceived as safe, not surrounded by levees and has fewer evacuation problems,” Scott said. “In Pearl River, you’ve got the big, Rooms To Go furniture distribution center. Associated Wholesale Grocers is moving into Pearl River to be near twin, interstate highways, and they will create 300 jobs.”

Meanwhile, the influence of suburbanization on jobs predates Katrina by at least several decades, and more jobs have existed in Jefferson Parish than Orleans for awhile, according to “Job Sprawl in Metro New Orleans,” a study by the Greater New Orleans Com­munity Data Center and Tulane University, released a year ago. “People sprawl” and “job sprawl” occurred as residents moved from the city and into increasingly distant parishes, reducing essential, economic networks, those resear­chers concluded.

This article was originally published in the July 18, 2011 print edition of The Louisiana Weekly newspaper