First quarter industrial report

Announcements get off to slow start with 43 percent drop

By Sam Barnes

First quarter project announcements continued a downward trend that began a year ago, dropping by more than 43 percent when compared with 2002.

Project announcements, much of which are comprised of projects from the industrial/manufacturing sector, dropped dramatically from $1.5 billion in the first quarter of 2002 to $853.7 million in 2003. This followed a similar year-end 2002 announcement drop.

Despite the decrease, there were still some high-dollar-volume projects announced in the industrial sector.

The information was provided by The Louisiana Economic Development's (LED) Division of Policy, which derives its data from applications for tax exemptions filed by the project owners.

Topping the list of first quarter project announcements were the following: a $137 million styrene capacity increase project at Cosmar Co. in Carville; a $125 million liquid products expansion at Proctor & Gamble Manufacturing in Alexandria; a $39.2 million infrastructure, storage and piping project at Enterprise Gas Processing LLC in Norco; a $38.1 million low sulfur gas project at Conoco/Phillips in Belle Chasse; and a $24 million manufacturing facility expansion at Guide Louisiana LLC in Monroe.

In parish-by-parish year-end statistics, parishes leading in first quarter announced projects were Rapides Parish, with $139.5 million in announced projects; Iberville Parish, with $137 million; Bossier Parish, with $110.7 million; Orleans Parish, with $95.1 million; and St. Tammany Parish, with $42 million.

The number of construction jobs created by the investment followed a similar trend, dropping from 9,086 in 2002 to 5,945 in 2003, a decrease of nearly 21 percent.

In their recently released annual report, state economists Loren Scott, James A. Richardson and A.M.M. Jamal said while construction in the chemical industry is expected to remain "troubled" for some time, the refining industry should see a significant amount of construction.

"Construction activity at refineries will be a major force in the Louisiana economy beginning in late 2002," the economists say in the Louisiana Economic Outlook. "By 2004, all refineries must begin producing gasoline with a lower sulfur content for the 2005 model cars. One engineering estimate is that our 11 refineries will have to invest an average of $100 million a piece to meet these Clean Air Act mandates. That means a total of $1.1 billion in new industrial construction spending in the state."

The chemical industry has quite a different projected future.

"Because the industry is hunkering down in the face of lower revenues and higher costs, little plant expansion - the lifeblood of Louisiana's industrial construction sector - is taking place," the report reads. "Applications for 10-year industrial tax exemptions by chemical firms is at the lowest level in years.

"... we expect the price of natural gas to damper progress in this sector for the next two years."

Editor's Note: The preceding data was derived from a DED listing of projects approved for state tax exemptions.