Southeast Louisiana economy facing challenges as Katrina rebuilding funds dry up
Don Ames Reporting
A recent report by the Greater New Orleans Community Data Center says Southeast Louisiana's economy will soon return to its dependency on traditional industries, such as tourism, oil and shipping as the influx of Hurricane Katrina rebuilding money winds down.
Dr. Ivan Miestchovich, Director of the Institute for Economic Development and Real Estate Research at the University of New Orleans, says between 70 and 80 billion dollars have flowed into the area since Katrina for rebuilding homes and businesses, bond financing, levee and infrastructure improvements.
"We've had lots of money that came in from the outside that has been supporting lots of enterprises in the private, non-profit and public sector," says Miestchovich.
"While some of those projects will continue for the next several years, that pot of money will eventually run out."
Miestchovich says some of the money spent to raise capital and spur entrepreneurial ventures could have a lasting effect, but he hasn't seen a boom in that area yet...anything that might create sustainable job growth.
"And, that pot of money is going to run out at some point," he says. "The question becomes, 'What do we replace it with?'."
Hopefully, he says, we've been investing in the things that will create long-term sustainable employment in the private sector and provide jobs that will contribute to the tax base.
"If we use the venture capital that came in from the federal government wisely, we have a good base to build upon. And, we can rely more heavily on those sectors that have been the traditional sectors plus the new ones that have gotten started...in the areas of technology, digital media, film and video and the like. Also we can reap some of the benefits of the resurging oil and gas industry, which we have traditionally done very well with...obviously with tourism and, very importantly, the port...particularly as the port looks toward what impact the widening and reopening of the Panama Canal is going to have."
"So, I think it's going to be a mixture of the traditional sectors being relied upon, but also continuing to look toward diversification."
Of the traditional oil and gas sectors, he sees promise in the number of projects that are in the pipeline from Houston to Beaumont, Morgan City to Lake Charles..."liquefied natural gas and all the other things that go along with all the new capital investments that are being made."
"Some of that's going to benefit us here, because there've been a lot of new plants and new construction that's been announced for the River Corridor right here in the New Orleans region because of the natural gas and energy advantages we have. It's going to create an environment where you're going to attract people. In fact, we almost have to, because we don't have enough people who are skilled in certain trades to be able to accommodate all the construction that's going to be in the pipeline very shortly."
But, Miestchovich says "the energy situation could be light years better if the federal government would just get out of the way and let the oil and gas industry do what it does best. Let them go to drilling and don't put so many restraints and regulatory requirements on them...or at least don't layer on more. Just enforce what's there correctly and move forward."
He says there are also other restraints facing not only this area, but the entire country.
"And that is the fear of moving forward, if I'm an entrepreneur and I want to create a new enterprise. What kind of hurdles and barriers do I face, from a regulatory standpoint, to be able to take the risk to go ahead and start up a business or expand my existing business?"
He points to the health care law and the effect that it's having on restraining growth. "There are certain thresholds that businesses don't want to go over so they don't have to pay for healthcare for their employees. That kind of regulatory handcuff lowers job creation potential."
He admits there are many economic challenges facing the region.
"But there are also opportunities that go with some of the trends that are going on in terms of world markets...the reshoring or repatriation of manufacturing. When you combine that with relatively cheap sources of fuel to run plants, there's certainly the opportunity to offset some of the challenges we have by creating some enterprises that are actually 'goods-producing' that broaden our manufacturing base...particularly if you link that up with value-added possibilities because of some of the raw product that flows through our port."