economy

Houma airport receives $1.3M federal grant for unmanned aircraft

The Houma-Terrebonne Airport received a $1.3 million grant from the federal government

today to advance its unmanned aviation system.

The airport commission has been working for over a year to develop the modern aircraft

system through public-private partnerships as a way to diversify and support the local

economy. The $2.3 million project includes building a new 40,000-square-foot hangar, access

road and taxiway.

The unmanned aircraft are expected to provide new services to the oil and gas industry before

developing into new fields. The airport’s close proximity to the Intracoastal Waterway and

access to the Gulf of Mexico has been billed as one of its strongest advantages to develop the

new technology.

“We are most excited by this announcement for its potential to provide new value for our oil

and gas industry in the Gulf of Mexico and along our coast,” Gov. John Bel Edwards said in a

news release.“Louisiana has long been a leader in subsea technology in the offshore energy

industry. Now, we will be at the cutting-edge of aerial technology. By joining our education,

government and private-sector partners, we can make Louisiana a true leader in unmanned

aircraft technology to tackle many of our biggest challenges in the energy, security and military

sectors.”

The program is in conjunction with Terrebonne Economic Development Authority, Nicholls

State University, Fletcher Technical Community College and private companies and is being

called the Gulf of Mexico UAS Center of Excellence, or UGC.

The governor also signed an executive order commissioning the Center of Excellence at a

ceremony held at the airport today.

Houma airport receives $1.3M federal grant for

unmanned aircraft

“This really is what the future should look like,” Edwards said, noting the aircraft’s capabilities

for coastal safety and protection, including the ability to detect oil spills and weather events.

“What a unique opportunity for Terrebonne Parish,” Parish President Gordy Dove said. “This

is really the wave of the future.”

“It’s so good for Terrebonne Parish to be a step up on technology. It’s a testimony to

Terrebonne Parish’s willingness to go into other industries and be the first one out there,”

Dove said.

The grant was awarded by the Department of Commerce’s Economic Development

Administration through efforts by the South Central Planning and Development Commission.

It also requires a $337,500 local match. The airport commission previously set aside $200,000

for the project.

The project is expected to create and retain a total of 220 jobs and generate $50 million in

private investments, according to the Commerce Department.

“Having UAS operations on airport facilities in the Gulf Coast will help attract new businesses

to the area and generate significant economic activity for the state of Louisiana,” Secretary of

Commerce Wilbur Ross said.

The new Airport Commission Director Mert Pellegrin announced the pending grant upon his

arrival in May.

The unmanned aircraft program plans to begin remotely operating cargo operations by 2020,

with fully autonomous aircraft coming to the region by 2025.

Fletcher also announced last week that its first drone workshop is expected to begin in July or

August.

“A UAS facility at the Houma-Terrebonne Airport will facilitate the deployment of drones in

the region, a valuable resource for oil and gas development and other industries, and support

drone research at Nicholls State University,” said U.S. Sen. Bill Cassidy, R-La.

“This is a huge win for Terrebonne Parish after a tough downturn in the oil industry,” said

U.S. Sen John Kennedy, R-La. “Investments like this encourage technological developments

and create jobs.”

“With the addition of an Unmanned Aviation System facility, the Houma-Terrebonne Airport

will soon be at the forefront of this new transportation technology and capability,” said

Republican U.S. Rep. Steve Scalise, who represents southern Terrebonne and Lafourche

parishes.

Staff Writer Julia Arenstam can be reached at 448-7636 or julia.arenstam@houmatoday.com. Follow her

on Twitter at @JuliaArenstam.

Sales tax collections rise in Terrebonne, Lafourche

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Terrebonne and Lafourche parishes saw a combined increase of more than $11.5 million in sales tax revenues last year, a sign that the local economy may be improving.

Local sales taxes are divided between parish government, law enforcement and levee, road and school districts.

According to totals from the Terrebonne Sales and Use Tax Department, Terrebonne Parish collected about $120 million last year. That’s a $3.7 million increase from 2017.

This is the second year in a row of increased sales tax revenue for Terrebonne.

Lafourche’s gains were even stronger. According to monthly collection totals reported by the Lafourche School Board’s Sales Tax Department, the parish collected about $80.2 million in 2018, a $7.8 million increase.

This is the first increase the parish has seen in at least four years and brings collections back up to the level seen in 2015.

“An increase is sales tax revenue means a better, stronger and more viable Lafourche. We continue to promote #buylocal and are grateful to wait for a table to dine in our restaurants,” Lafourche Chamber of Commerce CEO Lin Kiger said.

Numbers at a glance

Terrebonne:

$120 million in total collections.

Monthly collections average $10 million.

Up $3.7 million from 2017.

Continuing two-year upward trend.

Parishwide sales tax rate is 5.5 percent.

Lafourche:

$80.2 million in total collections.

Monthly collections average $6.7 million.

Up $7.8 milllion from 2017.

First increase since 2014.

First time breaking $80 million since 2014.

Parish sales tax rates vary from 4.65 to 5.4 percent.

“We have continued to witness an increase in trucks on our highways and are hopeful that this activity only adds to the sales tax collection in 2019 and beyond,” Kiger said. “We look forward to more jobs and opportunities and growth on the horizon.”

The last time the parish broke $80 million was in 2014 when it collected about $83.2 million. Since the economic downturn, Lafourche sales tax collections reached a low of $72.4 million in 2017.

“As always, it is our hope to see collections continue to grow — allowing additional dollars for infrastructure, education and tourism throughout our parish,” Thibodaux Chamber of Commerce CEO Tammy Ledet said.

Terrebonne’s lowest point in recent years was $98.5 million in 2010.

The sales tax numbers are starting to match up with other economic indicators, said Matt Rookard, Terrebonne Economic Development Authority CEO.

Local unemployment numbers started to stabilize at the end of 2018, signaling the beginning of the slow recovery cycle, he said.

“The increased sales tax revenue is a good sign that our economy is going in a positive direction,” said Nicol Blanchard, Houma-Terrebonne Chamber of Commerce CEO. “Consumers are enjoying the low gas prices allowing them to have more spendable income while the oil and gas industry becomes more efficient and optimistic when planning for the future. The chamber is encouraged by this growth and hopes that it continues.”

In the future, 2017 will probably be known as one of the toughest economic years as the area stayed at the bottom of the down cycle, Rookard said.

“We were at the bottom and stayed there for a significant time,” Rookard said. “I do think there’s a recovery coming.”

As the job market stabilizes, consumer confidence will increase, and that drives sales taxes, he said.

As TEDA continues to look for new development opportunities, companies are pivoting from getting by to planning for growth.

Staff Writer Julia Arenstam can be reached at 448-7636 or julia.arenstam@houmatoday.com.

Report forecasts uptick in Gulf oilfield

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The Gulf of Mexico will see an increase in drilling this year for the first time since an oil bust began in mid-2014, a new forecast says.

“We expect 2019 to be a strong year for the Gulf of Mexico,” William Turner, senior research analyst at the global energy consulting firm Wood Mackenzie, said in a news release. “In addition to exciting new project sanctions, which could usher in more than $10 billion of investment into the region, a couple of historic firsts set to occur next year could set the stage for years to come.”

Whether that translates into new jobs for Houma-Thibodaux, and how many, remains uncertain. But the report from the prominent consulting firm is among the most optimistic since a global crude glut sent oil prices plunging, stripping more than 16,000 jobs from the area’s offshore-oil-based economy.

Shell and Chevron will lead the way, but the actual growth in exploration will come from new entrants, Wood Mckenzie says in its report, “US Gulf of Mexico: 5 things to look for in 2019.” They include companies such as Kosmos Energy, Equinor, Total, Murphy and Fieldwood.

Two major projects serve as bellwethers for the Gulf overall, according to the report, released in mid-December.

-- Chevron’s Anchor project, about 140 miles south of the Gulf oilfield service hub at Port Fourchon, is poised for a final investment decision this year. If approved, it would be the first project using new ultra-high-pressure technology to reach that stage, the result of more than two decades of industry research and development.

“Anchor will be an important one to watch,” Turner said. “The sanction of Anchor will be a significant milestone for Chevron, Total and Venari but also marks a crucial point for the offshore industry as it enters the final frontier in deepwater development.”

Success at Anchor will lead to the next wave of mega-investment in the Gulf, as several other projects using the same technology are waiting to follow its lead. Wood Mackenzie predicts that if Anchor moves forward, more than $10 billion of investment could flow into the region.

-- Shell’s Appomattox development, about 200 miles southeast of Port Fourchon, is set to begin producing oil and gas this year. It will be the Gulf’s first production from a Jurassic reservoir, high-quality oil in sediments that date back about 150 million years. It also required new technology to reach greater depths at higher pressures.

“If the Jurassic roars to life in 2019, it could give operators greater confidence in the play’s potential,” Turner said. “However, if Appomattox disappoints, the Jurassic could continue to lie dormant. The wider region would also be missing an expected strong production growth contributor.”

The report is one of several that predict an uptick this year in the Gulf oilfield. All hinge, in large part, on what happens to oil prices, which are notoriously volatile and difficult to predict, with analysts’ estimates varying widely.

Louisiana economist Loren Scott’s annual economic forecast, released in late September, projects the Houma-Thibodaux metro area, comprised of Terrebonne and Lafourche parishes, will gain 700 jobs, 0.8 percent, this year. It will add another 2,100 jobs, 2.4 percent, in 2020, driven largely by gains in oil and gas. Scott’s forecast is based on oil rising from an average of $65 a barrel in 2018 to $80 a barrel by 2020.

U.S. crude ended 2018 at about $45 a barrel, down 25 percent, the first annual loss since 2015. The trend was similar for Brent, which ended the year at $54 a barrel, down 20 percent. Both ended last week about $3 higher.

In its annual forecast, the LSU Center for Energy Studies predicts increased activity this year but says in the short term the Gulf rig count will remain around 20, where it has been for months.

The Gulf Coast Energy Outlook, released in November, tempers its forecast for offshore job growth by noting what other economists and analysts have said for years. Specifically, it says companies have cut costs through innovation and efficiency, including increased automation and the use of tiebacks that run pipelines from sub-sea wells to existing platforms rather than building new ones.

“This is great news in terms of making the Gulf of Mexico more competitive for future production by lowering costs per barrel of production,” the report says. “However, these productivity gains also mean that fewer workers are needed for a given level of production.”

-- Executive Editor Keith Magill can be reached at 857-2201 or keith.magill@houmatoday.com. Follow him on Twitter @CourierEditor.

Ochsner ups its lowest hourly wage to $12

Ochsner says its recent decision to raise its lowest wage from $8.10 to $12 per hour on Jan. 20 is based on its recent growth and wanting to “make a meaningful impact on a broad employee population.”

What remains to be seen is how other businesses in the economy will respond in the increasing competition for lower-wage workers.

Ochsner’s announced increase follows a 2017 human resources assessment that led to recommendations on programs and changes to “improve the overall financial well-being of our employees,” said Tracy Shiro, Ochsner’s senior vice president for human resources.

“Although Ochsner was already well above the current minimum wage, we wanted to do more. People are our most important asset. All jobs across the system — no matter how big or small — play a role in patient care and it is important to recognize that,” Shiro said.

Among more than 1,200 part- and full-time employees statewide to earn more next year are medical assistants, environmental service aides, patient care technicians and patient escorts. Among its sites, the company operates Ochsner St. Anne Hospital in Raceland and Leonard J. Chabert Medical Center in Houma.

The healthcare industry and its hospitals and clinics depend on a large pool of people to operate efficiently, said LSU economist James Richardson.

“Obviously, they felt that $12 was good number for them in terms of recruiting and maintaining people in those jobs that are very critical in a hospital setting, because hospitals are very labor dominated,” he said.

But what Richardson describes as “an internal decision” by Louisiana’s largest private employer could add wage pressure on companies and businesses in other service-oriented industries, such as hospitality and leisure, as competition and compensation for lower-wage workers has increased.

“The big, interesting part of it is that because they are such a big employer, particularly in the New Orleans area, it will seep over and have an impact on other industries. It will probably make hotels reconsider a little bit, and restaurants and maybe retail places. It will perhaps nudge them to ask themselves whether they are going to be competitive,” Richardson said.

The main benefit to Ochsner will be in retaining lower-wage workers, a problem facing large and small businesses across the economy, said Walter Lane, a healthcare economist at the University of New Orleans.

“These workers can work at any company. The problem is holding on to them. This should reduce some turnover,” Lane said.

In the last couple of years, several hospital systems across the country have announced similar wage floor increases. And Lane thinks Ochsner views itself as not just in competition locally, but nationally as well.

“They want to be one of the big guys. They are still far from that in terms of revenue, but I think when they see other hospital systems do it, that may be some small pressure on them,” Lane said, adding that Ochsner has been “very successful” and that he believes it genuinely wanted to share that with its employees.

Still, the current economic environment and expectations for that environment are always primary factors in any business decision, economists say.

Ochsner’s move comes amid historically low unemployment nationwide and a flattening labor force participation rate, which refers to the total number of people employed or in search of a job.

While Louisiana’s 5 percent unemployment rate is among the highest in the nation, labor economists consider it low by historical standards. And the state’s labor force participation rate has consistently trailed the national rate, which stood at 62.9 percent in November.

The participation rate is important to overall economic productivity, and since peaking in early 2000 has declined primarily due to an aging population. But other factors include more young adults in school and more people wanting to be stay-at-home parents, researchers say.

The unemployment rate for less-skilled and less-educated workers has also fallen significantly.

The national jobless rate for workers 25 years old or older without a high school diploma dropped from 7.7 percent in November 2016 to 5.4 percent in November 2018, while the rate dropped from 4.7 percent to 3.3 percent for workers with a high school diploma but no college over the same period.

The tight labor market has placed pressure on companies and businesses to raise wages. But, generally speaking, they have been reluctant to do so.

The Federal Reserve Bank of Atlanta’s summary of regional economic activity, known as the beige book, said in September that its business contacts were continuing to see hiring challenges, “especially for low-skilled and hourly positions.” But firms were focused on other ways to recruit, retain and reward workers — offering flexible schedules, bonuses, profit-sharing and other incentive pay programs that could be discontinued in a downturn.

“Once you make a wage increase, it is hard to pull that back,” Richardson said. “Maybe you can reduce the number of people you employ, but you can’t really pull that wage back down very easily at all. So, I think companies are very cautious in doing this. We have low unemployment now, but how long is it going to last?”

The recent uptick in wages has also been attributed to states and cities setting minimum wage increases and some large private companies raising pay for their lowest paid workers, adding to inflationary pressures.

In 2018, 18 states increased their minimum wages under previously enacted legislation or ballot initiatives and now 29 states and the District of Columbia have minimum wages higher than the federal rate.

And recent announcements by large national firms such as Amazon increasing starting wages at the lower end of the pay scale “have created broad pressure to raise pay ... across the region,” particularly among hospitality and retail employers, according to the Atlanta Fed’s December beige book.

Yet despite the pressure, industries vary in their capacity to raise wages. While Louisiana’s healthcare and hospitality industries are relatively strong, “other industries in the state are not quite as robust as they are in other parts of the country,” Richardson said.

And the fact that workers typically do not relocate for lower-wage jobs could also dampen any ripple effect from Ochsner’s decision. “If you are merely trying to increase jobs at a hotel, you are going to have a hard time trying to move people in from outside the area at that lower wage,” Richardson said.

Louisiana has not adopted a state minimum wage. It follows the $7.25 federal minimum set in 2009. Many businesses pay more to their lowest wage workers. The median hourly wage in the state is $15.62.

About 3.6 percent of hourly workers in Louisiana -- 39,000 workers, including exempt, tipped employees -- earned an hourly wage at or below the federal minimum in 2017, according to the U.S. Department of Labor.

By Michael Joe / New Orleans City Business

Houma shipbuilder lands two major contracts

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A Houma shipbuilder has landed two new contracts as it works to rebound from a four-year offshore oil bust.

Gulf Island Fabrication will build a 245-guest riverboat for the American Steamboat Company, officials said Friday. The new paddle-wheeler, called the American Countess, will be built using the existing hull of the Kanesville Queen, a former gambling boat built in 1995. It’s expected to sail the Mississippi River starting sometime next year.

Gulf Island officials said they will report revenue and man-hours associated with the project in the company’s public financial statements for the quarter ending Sept. 30.

“We continue to break sales records and incredible demand remains for more capacity on the river with each of our boats continuing to sail full,” American Queen Steamboat Company Chairman John Waggoner said in a news release. “We look forward to collaborating with Gulf Island’s team of skilled workers and craftsmen to deliver a riverboat that will once again exceed expectations of our guests and continue raising the bar on domestic river cruising.”

The latest contract follows Gulf Island’s announcement late last month that it has finalized a deal to build a second 3300-horsepower towboat for an unnamed customer. Delivery of the second vessel is estimated two months after delivery of the first.

“We are pleased to be awarded this option for the second newbuild towboat,” Kirk Meche, Gulf Island president and CEO, said in a news release. “This work will be performed at our shipyard in Houma. ... This is yet another indication of confidence from our customers as it relates to our ability to perform and provide quality vessels.”

Gulf Island, based in Houston, is a leading fabricator of oilfield structures, including offshore platforms and ships. It also builds structures for the petrochemical and alternative energy industries. Its Houma fabrication and shipbuilding operations in Houma employ about 600 workers.

Like many oilfield service companies, Gulf Island’s business has been impacted by a four-year offshore oil bust that has stripped an estimated 16,000 jobs from the Houma-Thibodaux economy.

Meche cited some improvements in an Aug. 9 report on the company’s second-quarter financial results. The company reported net income of $500,000 on revenue of $54 million for the three months ended June 30. That compares to a net loss of $10.9 million on revenue of $45.9 million for the same period in 2017. And it’s up from the first quarter of this year, when the company posted a net loss of $5.3 million.

He cited strong performance from Gulf Island’s services division in Houma, as well as income from the sale of a fabrication yard in Ingleside, Texas, for part of the gain.

On June 6, the company landed a contract to build a second marine research vessel for Oregon State University for $67.6 million. And in March, it received a $63.6 million contract to build the first in a new class of Navy salvage, towing and rescue ships. Both projects are being built in Houma.

The company’s reported a backlog of work totaling $347.6 million as of Aug. 8, including projects through 2022.

“As of today,” Meche said in the report, “our backlog is the largest it has been in four years.”

-- Executive Editor Keith Magill can be reached at 857-2201 or keith.magill@houmatoday.com.

CORTEC, L.L.C. wins state award

CORTEC, L.L.C. Founder Bobby Corte, Jr. accepts the Lantern Award from Louisiana Economic Development Secretary Don Pierson with Stephen Corte (left), Thomas Chauvin and Larry Chauvin on June 5, 2018 at the Louisiana Governor’s Mansion in Baton Rouge.

CORTEC, L.L.C. Founder Bobby Corte, Jr. accepts the Lantern Award from Louisiana Economic Development Secretary Don Pierson with Stephen Corte (left), Thomas Chauvin and Larry Chauvin on June 5, 2018 at the Louisiana Governor’s Mansion in Baton Rouge.

HOUMA, June 4, 2018 – Houma-based CORTEC, LLC, was recently honored for its excellence in manufacturing and outstanding service to the community with the State of Louisiana’s Lantern Award for the Bayou Region.

“Manufacturers drive Louisiana’s economy in the most important ways,” Louisiana Economic Development Secretary Don Pierson said. “They provide good-paying jobs and have a strong multiplier effect, creating even more jobs outside their facilities. Harnessing our talented workforce, they compete in and win in a global economy as they produce vital products that are in demand by companies and consumers.”

Award nominees are judged on contributions to the community, including investment in employment growth and facility expansion, as well as sustaining and growing operations at least three years prior to the award. The 15-year-old CORTEC is undergoing expansion at both its Port Allen and Houma facilities.

CORTEC’s 156 employees design, manufacture, sell and service valve and manifold products for the oil-and-gas industry through the company’s two divisions: Cortec Fluid Control in Houma and Cortec Manifold Systems in Port Allen. From engineering to assembling, through coating to shipping, CORTEC handles the entire process for quality control. Its valves, chokes and flow-line component products are shipped to the Gulf of Mexico and shale plays in the United States as well as internationally to Canada, Mexico, South America, Europe, Asia, Africa and the Middle East.

Since launching the Lantern Awards in 1979, LED has recognized more than 300 Louisiana manufacturing businesses with its partners, Louisiana Industrial Development Executives Association and the Louisiana Quality Foundation. Award winners receive lanterns handcrafted and donated by Bevolo Gas and Electric Lights of New Orleans.

This year’s award to CORTEC, L.L.C., continues a family tradition, as the Corte family previously received a Lantern Award when it owned and operated COR-VAL, Inc., founded by Bobby Corte, Sr.

 

APPLICATION PERIOD NOW OPEN FOR CEO ROUNDTABLES

LED program provides platform for small business leaders to work on, rather than in, their businesses

Louisiana Economic Development opened the application period today for CEO Roundtables, a popular peer program through which executives explore business challenges with each other under the guidance of an experienced facilitator. The application period will extend through March 31 for roundtables beginning July 2018.

Launched in 2014 to help established small businesses grow revenue and jobs, LED’s regional CEO Roundtables convene 15 to 18 qualified key decision-makers from the pool of applicant businesses. Participants meet 10 times for peer-to-peer learning, business networking and support in the yearlong program. Collaborative and growth-oriented, the meetings support a trusting environment in which executives explore business and personal solutions that spur business growth.

TEDA's CEO, Matthew Rookard, spoke at the Houma-Terrebonne Chamber of Commerce General Membership Luncheon

Terrebonne Economic Development Authority CEO Matthew Rookard outlined his organization’s plans for growing Terrebonne Parish’s economy Tuesday before the Houma-Terrebonne Chamber of Commerce.