BusinessReport.com

Jim Bernhard receives lots of questions about his political aspirations. But all he wants to talk about is education.

“We need to educate the people here and attract more Fortune 500 companies,” he says. “A Fortune 500 company is best served by a community better educated by the local universities. The grads tend to stay in that community, and these companies tend to congregate in stronger communities.”

With an economic downturn and oil prices that only recently have started to climb, Louisiana faces a $1.3 billion budget shortfall that could cut college funding by 15%. Gov. Bobby Jindal has proposed removing constitutional constraints that force the brunt of budget cuts on health care and higher education.

That’s when Bernhard, the president and CEO of The Shaw Group, says he told himself, “‘Maybe you need to step forward’—and I did.”

In early May, Shaw announced it wouldn’t accept a $172.5 million economic development incentive package connected to building its nuclear module fabrication and assembly facility in Lake Charles and creating 1,400 new jobs along with keeping its headquarters in Baton Rouge through 2023. The remainder of the money included forgivable loans and assistance grants.

In a May 6 release, Bernhard says Shaw, which received the incentives when the state had a surplus for economic development purposes, didn’t want to be part of the reason for cuts to education and health care. Plus, the decision offset news that 202 workers would lose their jobs when Shaw closes its West Monroe plant pipe fabrication plant—one of its smallest and with some of its oldest equipment—later this month.

Jindal hailed the return of Shaw’s incentives and committed to working with legislators to route the money to higher education.

“We want to put our money where our mouth is and, hopefully, the Legislature will have the ability now to move forward on funding education,” he says. “You can’t ask somebody else to try to move the ball forward unless you’re willing to go forward first.”

Shaw is returning $13.5 million it has already received and forgoing the remainder, which had been promised over 10 years. Also, the company will maintain and expand its participation in the state’s Quality Jobs Program. If job and payroll expectations are met, Shaw could reap substantially more than the initially promised $37.5 million in the next 10 years.

Bernhard, who has been making the rounds of Democratic committees and political action committees to gauge the level of support he could expect if he challenges Republican U.S. Sen. David Vitter, maintains there’s no hidden agenda behind returning the incentives other than to help strengthen the city and state his company calls home.

“We’re not going away,” he says. “We love it here.”

So what does this mean? With an industrial globetrotter like Shaw driving a nuclear renaissance, and with globalization taking place like never before, the company’s commitment to Baton Rouge is welcome news for Louisiana. Attracting and retaining corporate headquarters has been a priority for Jindal’s administration, which counts Albemarle Corporation’s decision to relocate its headquarters from Richmond, Va., to Baton Rouge and Bercen Inc.’s decision to relocate its headquarters and research facilities from Rhode Island to Denham Springs among economic development wins.

Bernhard is complimentary of Jindal’s ethics reform toward improving the business climate. But he also says universities need adequate funding if the state genuinely wants to attract more corporations, particularly Fortune 500 companies.

For example, Baton Rouge-based Raising Cane’s Chicken Fingers cited its inability to lure executives as one reason for relocating several divisions, including marketing, human resources, accounting/finance, development and operations management, to Plano, Texas, a north Dallas suburb.

“We’re going to be a loud voice for the children who can’t speak for themselves,” Bernhard says. “It seems we’re building roads for our children to visit, but not to live here. We need to fund our universities so they’ll stay here.”

While Bernhard turns up the heat on priming Louisiana for corporations, Jindal has rallied the troops.

Louisiana Economic Development, which handled Shaw’s incentives, has proposed taking more than a 50% budget cut next year. If the Legislature approves, LED Secretary Stephen Moret says his department will take the biggest budget hit of all state departments. “The state is collectively focusing on sustaining education,” he says.

Instead, Moret focuses on the positives despite the mind-set of having to do more with less.

“The toughest impact is to our deal-closing funds,” he says. “We’re not anticipating any new funding to the megafund and expect the Rapid Response Fund to go down 35% to 40%. The point is we’re able, with a couple of exceptions, to preserve most critical activities.”

LED will concentrate on the numerous successes of 2008—business retention, diversification and making the agency one of the nation’s best within three years. The Blue Ocean Target Industry Plan, in which LED identifies high-growth industries Louisiana can realistically pursue, remains a priority.

The project pipeline isn’t gushing these days, but Moret maintains there still are several viable projects. Charlotte, N.C.-based Nucor Steel has said the timetable for building a $4 billion pig iron plant has been slowed by the recession, which has caused a lack of demand for steel. Still, the company recently purchased 890 acres in St. James Parish.

And PanAmerican Capital Group recently purchased the Tembec paper mill, which closed two years ago, in West Feliciana Parish for $16 million with plans to reopen the site and hire a minimum of 200 workers by early 2010.

With Shaw’s commitment to stay boosting Louisiana’s image, Moret says the state is headed in the right direction—even with one of the worst recessions posing what he calls “a tough balance of realism.”

“We do need to make sure the government lives within its means,” he says. “But the business community wants a predictable operating environment.”