On paper, the sheer volume of announced industrial work in Louisiana is unprecedented—pegged by economists at as much as $140 billion since 2012.
But as 10/12 Industry Report details in a feature from its current quarterly issue, in reality the number of projects to break ground could be somewhat lower, should market conditions maintain their current trajectory.
Beyond 2017, industry experts say the crystal ball gets hazier, with the impossible-to-predict price of oil and the Asian economies playing critical roles in determining the course of future industrial development. One thing is clear: It would be overly optimistic to expect all current announced work to materialize or to expect that a similar surge in announced work will occur again anytime soon.
“This is an expansion like none we’ve seen before, and I’ve been watching this state for years,” says economist Loren Scott of Loren C. Scott & Associates. “In the past, if we had $5 billion in industrial announcements, we would’ve thought that was a good year. It’s something that we’ve never seen before. It’s an amazing number.”
However, of the $140 billion in projects, less than half—$65.3 billion—have broken ground, and some industrial contractors grumble that the work may never materialize as a downturn in oil and a strong dollar negatively impact the bottom lines of many industrial companies. This is particularly evident in Baton Rouge, where the work appears to have crested.
Scott says it’s a matter of timing and project delays. “Some of the projects are working through the permitting and financing stages, and in some cases you’re seeing actual delays,” he adds. In the New Orleans MSA, stretching from St. James to Plaquemines parishes, only $3 billion of its $24.6 billion in announced projects is currently underway. And in Lake Charles, about half of its $93 billion in announced projects has broken ground.
In the current oil-price environment, the New Orleans and Lake Charles MSAs stand to lose the most, given that the majority of their projects are in the design stage. In particular, St. James Parish could suffer the greatest impact—a majority of the announced projects in the New Orleans MSA are concentrated there.
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