Connie Fabre, Executive Director, Greater Baton Rouge Industry Alliance
Mathew Laborde, CEO, Elifin Realty
Michael Nizzo, East Baton Rouge Market President, Business First Bank
Nick Pentas, General Manager and Partner, Mercedes-Benz of Baton Rouge
Christel Slaughter, CEO, SSA Consultants
Edgardo Tenreiro, CEO, Baton Rouge General
QUESTION: Please share with us what you see as the most pressing issues for the Baton Rouge community in 2019 and just a little bit about why you feel it will be so critical.
EDGARDO TENREIRO: From my perspective, you know, the key issue for Baton Rouge and it’s not just for 2019, but has been for a few years now and I think will continue to be in the future is improving the quality of a place, the quality of life in the area. Obviously, the passage of MoveEBR was a big plus in that direction. We all know that transportation is a huge issue, but we need to get Baton Rouge to be the type of city that we all want it to be so that we can attract talent and retain talent and we can’t do that artificially from the top down. It’s got to come from bottom up. In my opinion, it’s about creating a city and you know, it starts with what’s been going on with downtown. That needs to expand through to North Baton Rouge, Mid City and then in concentric circles from that. If we don’t have a city to live in that people want to stay and move in, then there’s no amount of anything that the Chamber or any of our individual businesses can do to make that happen. So anyway I think it’s a top issue.
NICK PENTAS: I would also agree with that sentiment. In my notes here, I had retaining talent. I think it’s a pressing issue because a lot of our young people, they go to college here at LSU. They get TOPS and then they move to a city like Houston, which is our number one alumni city. You have Atlanta, two, Dallas, number three. So a lot of our local young talent is getting an education here for free and leaving. So how do we retain that talent? That’s one of the things I struggle with as a business owner is the talent pool, hiring people. So that’s one of the things that I think. I also put notes here on traffic and workforce. So what can we do to retain the talent? How do we make this city more attractive? How do we make the jobs more attractive? There are a lot of things that people do that are kind of gimmicky, you know, you see it on the West Coast and Silicone Valley where they make the offices fun. That might work for the creative minds, but there are also young people that might not be in that creative field. For us, specifically in my industry, are technicians. People have stopped working with their hands. They’ve made that less attractive. Everybody feels like they have to go and get a four-year college degree and a lot of those vocational occupations are very limited. There’s a limited supply of that talent. So I appreciate what they did at BRCC with the school there and the training of technicians so things like that will help us. I think that’s a good start to that beginning. Letting our kids know that it’s OK to work with your hands and get some of those type of jobs. They are very important to us.
MATHEW LABORDE: So, I think the biggest challenge facing us is the divide where there’s two sides pitted against each other and all these big contentious issues that the community faces, whether it’s traffic, whether it’s race, whether it is the St. George issue, whether it’s education. There are two roads that we can pick to go down. It’s either everybody digs in their heels and fights each other or they get together, they work together and they solve the problems. I think, if you look at Mike Wampold, if you look at Jim Bernhard, if you look what the mayor did with MoveEBR, I think that’s a great model for how the city has the opportunity to tackle some of its big issues.
CHRISTEL SLAUGHTER: I think that the other panelists have covered a lot of ground. I think that if we could develop a collective vision for our community and region, I think that would be really helpful. I’m encouraged by the passage of the taxes as well. That made me very optimistic about the willingness of our community to move forward and deal with some of the big problems that we face. I agree with everyone that attracting and retaining talent is the key and there are areas in this state that literally are dying. They’re more rural, but they were nice towns. Vidalia for example, they have one pharmacist left and when he retires that will be it. They won’t have a pharmacy in their town. So clearly, we are not going to that extreme, but you can watch communities stagnate and you are either getting better or you are sliding in the opposite direction. I think that having a workforce, having workforce for all the jobs, we were talking about in terms of technicians, working with your hands. We worked with BRAF on an intern project. Why aren’t we the city—with two major universities here—why aren’t we the city in the nation that has more interns and people graduate from college or with a graduate degree or even an associate degree or certificate and they’ve already had work experience? I mean it would be a fabulous thing. It’s a ‘try them before you buy them’ kind of program so it’s good for the employer as well. I think that we need some leadership to help our community to really embrace that and move in that direction. I think those are our challenges and if I was king that’s what I would fix.
QUESTION: Why do we not have a collective vision? Is it politics?
CHRISTEL SLAUGHTER: I’m not sure that it’s politics. I’m not sure that people really understand the power of a shared vision. So we have elements. We have the health district. We have BRCC and the Career and Technical Academy that’s there and we have the automotive technician training program. We have several things. Everything that’s going on in the Work Baton Rouge for Economic Development. What’s our collective vision? So if we were able to have some of the community leaders or organizations come together and help shape that for example then BRCC would be able to say, “Gee, we are moving in the area of information technology, etc., etc., so let’s put more programs out in that area.” Or we want to be known as the destination healthcare site. What does that mean for all of our businesses that are located here? How do we feed off of that, but also support that? So, I’m not sure that it’s politics. I think it’s just not realizing the dramatic difference it can make. Whereas in a city like Dallas, it’s there and it’s there by neighborhood and it all works together.
EDGARDO TENREIRO: To follow up on that, I don’t think it is politics. I think it’s a lack of understanding of root causes and rational logical solutions and I’m gonna put the blame squarely on the leaders of the business community, or I should say the challenge, really. If the business leaders of this community do not have a collective vision of what they want this city to be 10, 15, 20, 30 years from now, politics will then move us to conflict. The solution must come from the business community and I don’t know that we have had our collective voice. We haven’t developed it. I think the Chamber of Commerce has done a lot of great work in this regard, but there’s a lot more to be done. Obviously, BRAF and other organizations have done a lot of great work individually to help, but collectively, I don’t know that there’s a clear vision of what we want to accomplish. I think the challenge I would like to issue, hopefully through this forum is, “What are we going to do about this? What is the business community going to do about developing that vision?”
MICHAEL NIZZO: I also believe that the Baton Rouge community has taken positive steps towards making this region a place where small businesses want to come, where entrepreneurs want to start new ventures. With that said, we could certainly improve our region by increasing the access and ability to get capital. Being in the finance sector, we recognize that small businesses need capital to grow. We see new startup ventures that have a great visions and a good business plan, but not enough startup capital. If the region had more sources of Venture Capital and lending programs available for startup companies, we would really see our local economy grow.
CONNIE FABRE: I think all the comments that have been said are right on the mark here today. Really, a community is only as strong as its weakest link and one of our weakest links is crime in this community. But crime isn’t the problem by itself. Crime is probably the result of a combination of things. So as one of the others here today said, we need to start in the highest crime areas and let success grow from there. I do think crime reduction is a key because people want to feel safe. Crime is key also for workforce development. We’ve got major industry right here that is trying to access the local community for workers, however, it’s been very difficult. Industrial plants often get asked, “How can you your neighbors get more jobs inside the plant?” Plant’s answer is, “They have to be qualified.” So for many years, there was a disconnect because people didn’t understand what it means to be qualified to work in industry. For starters, people must be drug-free and drugs and related crimes are keeping a lot of people from qualifying for jobs. But we are making some strides with training. There is the North Baton Rouge Industrial Training Initiative that ExxonMobil has been sponsoring for several years and that’s making a real difference, with probably over 120 people trained in either electrical, welding or pipefitting skills already. And I think the other major issue is the traffic congestion. I’m very encouraged by the MoveEBR tax being passed. That is laying the groundwork in 2019. I also think that it is very important for the bridge district to get funded. I encourage the parish presidents to get together and find a way to fund the study needed to determine the exact location of a new bridge. Then we’ll be able to rally around that to get the funding for construction. We have got to figure out the location. Just saying that there are five locations or there are three good locations is not good enough. We need to move it to the next step. Also, the other major issue that I’m seeing is instability in the business climate. There are so many questions around what must be done to do business in Baton Rouge. Maybe there’s a lack of capital, but a business, especially an industrial site, doesn’t know if they will even get approved by the community. They are not sure if the community wants them here and they are getting all kinds of mixed signals, which are being broadcast around the world. So people who are trying to do projects are looking at Louisiana with a big question mark and I’m concerned about that.
NICK PENTAS: With crime, you know, where do you start with crime? I truly believe it is education. In North Baton Rouge, you have the crime issue there. Think about our schools. I have three kids in school. A lot of us feel like we have to send our kids to private school. I grew up here. I went to public school and I think we have some really good public schools here, but a lot of times they don’t get a chance. Some of the parents are afraid of the area or the kids. So I think we need to start with education if we want to solve crime. With that also, the businesses that want to come here, even if they can get the capital, we can grow the petrochemical sector, where are those people going to send their kids? What has been happening in Baton Rouge for the last 20 years? People are moving to Prairieville, Zachary, and Livingston Parish because they have neighborhoods they feel comfortable in and they have good schools there. So from a parent and I know probably everybody here thinks about that, thinks about education. I have two kids in private school and I have one in public school so I think about, “What can we do there? What can we do to improve our education system?” With that, I think the crime will decrease and we can get some businesses up in the North Baton Rouge area. Some of those businesses are scared to open their doors there. Think about the grocery stores, what people have to do to get groceries in that area.
CHRISTEL SLAUGHTER: I agree with education being the foundation for economic development, crime reduction, and a good community. I think that education would come in many forms and from many different sectors, honestly. I think that there are other contributors to crime. We just finished the compensation study for the police department. The Baton Rouge Police Department and they are probably about 30%, generally speaking below; even the city of Gonzales as well state police and the sheriff’s department, etc. So they’ve watched for example, we would have 600 people apply for police academy. Someone told me about 17 years ago when he competed for a slot they had about 600 applicants and it was very competitive. Now we have filled the academy, but we may have 40-60 people. Some of them are not qualified. They wash out. They can’t pass the physical, whatever it is. So I want to live in a community where public services are great, but we have to pay for those. So I think just as transportation was allowed to deteriorate to the point where we absolutely had to take action. I fear that we are not really looking across different sectors, whether it is education in public schools or whether it’s public services, police department; in case my example, to see what are the elements of a healthy community and what is it going to take because just as you said, businesses want stability, consistency, and when they begin to feel like they are not welcome or this maybe is not the place that I am going to attract the best executives, they leave. Smoothie King’s corporate office left the Northshore. They gave fabulous incentive package for hundreds of people to move to Texas with them and not that many people took it because they love Louisiana and that’s great, but why did they move? Because they couldn’t get the executives and the high-power talent that they needed here. For St. Tammany that’s great, but what’s our example of that, you know, and what are the projects that we’re missing from the petrochemical sector or whatever and Edgardo is right. That’s sort of the underpinnings of everything. I think that education is a primary driver. I actually when I was working hard from a volunteer perspective, I wanted to go give a speech to rotary or somebody and say, “Would you like to raise your property values on your home? Have a good public school in your neighborhood and watch it go up.” I think that people know that, but it’s “Gee, I can’t fix that so I’ll move to Ascension or Zachary.” That’s just very sad.
MATHEW LABORDE: I think one of the opportunities for education in Baton Rouge is the new charter schools that have just been attracted to the area. So you’ve got IDEA, you’ve got BASIS, recruited by New Schools for Baton Rouge. They have gone across the country and recruited the top charter schools in the country that have had success in areas like ours with student population like ours. I just got a chance to tour Basis. The curriculum there and the environment, the rigor is very impressive and that’s a public school. That’s a charter school. So I think part of it is on us to make sure that we keep our options open, to get the word out about what they are doing and the programs available, to start changing that perception and to make sure that they are allowed to open additional schools.
QUESTION: Do you think that educational opportunities in Baton Rouge are improving? What is keeping us from making more progress and how do we address that?
CONNIE FABRE: Yes, I think that education opportunities are improving. Still a long way to go, but as just discussed, Basis and the other new charter schools, and East Baton Rouge Parish School Board’s willingness to work with them and allow them is progress, I think. And we are seeing more and more schools that are responding to the grade letter ratings and getting A’s in all parishes. I have one child in private and one child in public school as well. I think maintenance is an area that the public school system really needs some help with to have nice facilities because it’s kind of frustrating to see your child go to the public school and let’s say it’s getting an A rating, but the facility is run down. It’s dark and it’s dingy and paint is peeling off the ceiling of the gym in sheets and the playground is just sad. And then, you can go over to another school and it’s brand new. There’s got to be a balance. Maintenance is really key and I know this so well from working in industry and working with maintenance people daily. One thing I’d like to do is get volunteers from industrial plants and the contractors to offer some help to the East Baton Rouge Parish Schools’ maintenance department or School Board to figure out how to improve maintenance best practices. I don’t know what the answer is there, but maybe when they ask industry for help in ways such as this instead of worrying so much about the property tax and how many jobs you’re going to create, we might get some better results for everyone. What best practices from industry can be shared with the school system or with the city government? The safety program of city government is something very different than what is in industry, and that costs the taxpayers. Industry could share some things like that as part of an investment in a community.
EDGARDO TENREIRO: I think it’s very encouraging that the school board elections and the results where we have now in essence a super majority of reform oriented pro-economic development representatives on that board. So if there ever was a chance for business to get involved in transforming the education system, it will be in this next period. We have a huge opportunity. I’m not an education specialist. I tend to look at it from my own healthcare perspective which is how can we get high school graduates that are prepared to enter nursing school and both Our Lady of the Lake and the General have their own nursing schools and we want quality high school graduates that can become nurses. There is a huge demand for that career. We are all doing our part, but I think we need to go even deeper and lower in terms of where these students are coming from and again, I think the Chamber and others are doing a phenomenal job of transforming this. I think the whole St. George issue is again a sign of how divided we are in terms of what our vision is for the education system. It seems as if there are two sides of this and they are locked at an almost 50/50 issue. And so, that’s discouraging because I think all that’s going to do is divide us more and set us back in terms of the progress that we can make with school reform.
NICK PENTAS: I am going to add to what Connie said about what we can do to help the schools. One of the things I think we can do is take a model out of Habitat for Humanity and get volunteers. Not to take away from that organization, but could we get some of the parents to volunteer? There are plenty of parents that have some experience in construction or have done some light maintenance. When I volunteer at my kids’ school, they always say, “We have a dad here. I need you to pick this up or move this or help, you know, clean this up.” If we get the parents more involved in the construction business owners that volunteer their services and to help maintain the schools a little better. I think that’s an option.
MICHAEL NIZZO: Just to add to all the great comments here on education, currently and going into 2019 and 2020, the environment exists where we are encouraging more and more options for education. To the points of many here, we’ve seen some great charter schools come in; our magnet schools continue to improve. By creating these options, competition is increased and schools begin striving for better results. We have seen greater competition in education over the last couple of years and I certainly hope that continues.
CONNIE FABRE: I want to follow up on that comment exactly. One of the things I’ve been very encouraged with over the last few years is the Department of Education’s change which now allows, encourages, and requires schools to offer career and technical education and especially that kids can get the industry based certifications in their final years and that we have a technical high school diploma which is just as rigorous as the college bound high school diploma. Industry based certifications are becoming a good feeder pool for industry. We’ve been doing a lot of work in that area at GBRIA. We’ve connected with all the high schools. We are giving out awards as the Greater Baton Rouge Industry Alliance. It’s just been amazing to see the trajectory of growth of the number of kids flocking to Industrial career options and just to have their eyes opened up that, hey; it’s not all about just going to a four year university. There are all different kinds of jobs from culinary to healthcare to industry to so many different options and they do pay well as you progress in the careers. I think that’s been very exciting.
QUESTION: We’ve talked a lot about business taking a lead in addressing social issues and other public matters. Do you think we’ve reached a turning point?
CHRISTEL SLAUGHTER: I think that your question is a great one and I think that we realize now that we have to have cradle to grave learning. For example to your point, business needs to support policy at the state level primarily, but also at the local level so that everyone in our community, all children has access to high quality, early childhood education. We used to think it was Pre-K. It’s much earlier than that. We also need to figure out how business and industry can help teachers and, in some cases, guidance counselors, although their roles have shifted in today’s society and I don’t think all business people realize that, but they have to deal with a lot of social issues with their students. But the teachers themselves don’t know what jobs are available today and what the requirements for those jobs are. Edgardo mentioned nursing. I don’t think people have a general understanding at all of how hard it is to be a nurse today, not the physical hard part of it, but the math that’s involved. Thousands of people will sign up for testing at Exxon Mobil or Georgia-Pacific or someplace, but they don’t necessarily have the math skills to get the jobs. So I think that the more business and industry works with the schools, it probably has to be in middle school. Workforce development project that we run as a nonprofit for Louisiana area is called Louisiana Calling and in the initial research we found out that 50% of the people think your only path to success is a four year college degree. So they all want that for their children and it’s hard to get them and their kids to understand, “You can always have that. There’s no door closed to that, but there’s a lot of other doors that open to successful jobs, automotive technicians where they are paying six figures, welders. I mean you hear about some in particular. But the most success we’ve had with Louisiana Calling, interestingly enough, is with the social media campaign. … What it was doing was getting young people to go to a website and actually see, “Well what kind of jobs are these?” They want to see people who look like them. If I’m an African-American female and you’re trying to get me into some technical position, I’d like to see somebody who looks like me doing that job. I’d like to hear, “What was your journey to doing that? What’s your story?” So these are all things that are available. We are trying to help organize that and provide easy ways to connect. We have a program in the river region that’s very successful and we’ve been asked to bring it to the capitol region and I think we will do that in 2019. But again, it’s getting that information out. There are thousands of people every year who transfer from BRCC to LSU. It’s an easy transfer. It would be even possible for those students to get into LSU without that pathway, but not enough people know about those kinds of things. So that’s where I think business can get the word out. They have employees. They have children and grandchildren so what kind of information could we be providing in the workplace that will help people as they are preparing their children for the jobs of tomorrow which is what we really need to do.
CONNIE FABRE: Edgardo brought it up earlier that business can be the driver with vision in the region in Baton Rouge or Louisiana. I definitely think that a common vision put forth by leaders is most important and that it’s been an issue with Baton Rouge and/or Louisiana. It seems that past governors or mayors haven’t been able to put forth a compelling enough vision to solve some of our lingering problems. I do think that business and industry can absolutely make the difference and I’ve seen that recently working with CRISIS, which is the Capital Region Industry for Sustainable Infrastructure Solutions, and working together with MoveEBR. Business and industry, health care…we have had many different sectors come together in CRISIS. With that success, now maybe the business community can continue to grow on that idea and come together as another forum to collaborate with government, and then tackle whatever the next issues are. So I definitely think that having businesses at the table will help drive the vision.
EDGARDO TENREIRO: I want to put it in even stronger terms which is not only those businesses can and should but that it is the only answer to the dilemma. One of the things that impressed me this year when the Chamber did the canvas trip and we went to Cincinnati. The turnaround of that city was led by business. It was not led by interest groups. It was not led by the mayor. It was not even led by the chamber. It was led by the top business leaders of the community and they turned that place around. They put their money where their mouth is and they turned it around. I came back from the trip convinced that only the top business leaders can develop the type of vision that others will follow. If businesses don’t get together with a common voice, there is no hope. That is how strongly I feel about how we need to be involved. Again that’s not to say that we haven’t been involved, but I think we have not been involved with one voice in a coordinated fashion. I think that’s the next step, the next iteration of the efforts that we have had over the last couple of decades.
NICK PENTAS: I don’t think this is anything new. I think if you look at what for example Baton Rouge General did with the Mid-City Redevelopment Alliance. Now we are all seeing the fruits of that work over years today. And also, we got four Rotarians in the room and at the beginning of some of the Rotary meetings; they’ll give like a little snippet of history from what the club has done in the past. The other day, one of the flashbacks to the past was that the Rotary Club of Baton Rouge paid to pave several miles of roads downtown and that came out of the club’s revenue. So this is nothing new. Maybe we just took a step back talking about as a business community and we are seeing the effects of that and rightfully so. A lot of business leaders are stepping up and saying, “We need to take the reins again.”
CHRISTEL SLAUGHTER: The people who need to step up are young people, young professionals and some of the people around this table and their peers. They have great ideas. They have different ways of seeing the world. It is frustrating the heck out of my clients to have young people in their workforce and to try to deal with this rich talent and robust energy that they bring, but I do think from a community standpoint, Matthew is exactly right. We did see some icons of leadership in the past and some of those people are still around and some are not. It’s time for the mantle to be taken up by other people and I think that it’s the next generation that’s really going to take us where we need to go. I know they are and I think your examples are great ones. The business community really does need to provide that leadership in the community.
QUESTION: What are some of the more pressing issues in your industry and/or in your business and how is your company or organization or industry is prepared to deal with them in 2019?
NICK PENTAS: So obviously a lot of us have to deal with this, but rising interest rates. It affects our business. I’m sure it affects Mike’s business a ton. For the auto industry, the tariffs and also distractors. There’s distractors to industry right now. You have these big companies like Amazon that are jumping in other realms and then, you know, think about the small businesses that have been overtaken by big companies like Wal-Mart. You have to think about some of these big retail companies and how big they are getting. That affects our local community. It affects our local business and I think how we stand together is we all need to look inside our community and do business with each other. You have to open the communication there and try to see how you can help each other. With the interest rates, I’m sure Mike will probably have something to add on this, but it’s making things more expensive. It’s going to affect obviously Matthew in real estate, buying homes, buying cars, getting loans. I understand there has to be a need for interest, but it’s also one of those things that nobody likes paying. Interest doesn’t provide value. I know it makes money for some industries, but it doesn’t provide a value to the consumer and then the tariffs. We can probably talk a little more about that later, but those are the topics I’m wanted to bring up.
QUESTION: Are there some conversations that you’re having within your business about addressing that potential disruption or those issues?
NICK PENTAS: Well, just like anything, you have to make adjustments. When there are adjustments, with real estate for instance, there’s probably people that maybe might not put their house on the market or might take a little bit less for their house; same thing with cars. We might have to sell them a little bit cheaper to make the notes more accommodating to the consumer. You will probably see when the interest rates fluctuate and some refinancing. So those are the things that you can do. You just have to make adjustments and see what makes sense for you. Supply and demand is always going to affect pricing and interest rates too. So that’s something that people can adjust. As far as tariffs, I think that we got some good news yesterday as far as what we are doing as an auto industry and specifically German auto makers is we are building a lot of manufacturing plants in the US. So, you got to say is what Trump has done as a negotiation tactic has been successful. For Mercedes, they have a big plant in Alabama. They built their commercial van plant now in South Carolina because they were having to pay tariffs, take the vans apart, ship them, put them back together and they were like, “We are just going to build them here.” So that’s some of the adjustments that the industries are making. It’s actually building more jobs here for us and it’s quicker access for us to get the vehicles. When the tariffs were going on in China, a lot of our popular vehicles or SUV’s that China wanted, when the tariffs were high, we had to keep more of those vehicles here in United States because they didn’t make sense for the manufacturer that produces them here to ship them to China and pay the tariff so they would just assume give it to us. It was, you know, a constrained inventory. SUVs are constrained for us so we were glad to get more cars to sell here. So, you know, there are those adjustments that everybody is going to make. I’m sure Mike is going to add to that.
MIKE NIZZO: Sure; all great points from Nick. As far as the interest rate environment, I think it’s important to note that while we have been in a rising rate environment for some time now, inflation has not become an issue. Since inflation seem to be in check, we are expecting 2019 to be more stable than 2018. In 2019, it should be easier for businesses and individuals to predict their financing costs. Historically, we are still in an overall low interest rate environment.
QUESTION: Any other issues that you are looking at?
MIKE NIZZO: For banks, the regulatory environment is always a focus. The current administration has not really repealed many banking regulations, but we have seen a deceleration in the formation of new regulations. The current environment allows banks to better predict their cost of compliance, which will ultimately benefit the consumer. In 2019, I believe the banking industry will continue to see the changes that we’ve seen over the last several years. Many community banks have merged and have been sold, therefore we have fewer community banks in our region now, but this doesn’t mean local banking is going away. Business First Bank had an excellent 2018 in which we completed two mergers and expanded into the Dallas market. Today we are right over that 2 billion in assets. As a business focused community bank, we have the infrastructure in place to meet the needs of the customers that we serve while continuing to operate like a community bank. We continue to place a high value on creating relationships with small businesses and individuals. We’ve also seen how our larger banking institutions have become bigger as they continue to push their customer base to online and automated application to conduct business. As these trends continue, I would recommend that both individuals and business owners establish a relationship with a community banker. There are so many opportunities that require a banking relationship and cannot be optimized from a customer’s perspective through an online application. Having a banker that truly understands your business can really provide a competitive advantage.
EDGARDO TENREIRO: I wanted to say, too, a few things about interest rates and tariffs. So the first thing is on interest rates. I think it’s a shame that the one market signal that all of business and banks use to determine where to allocate capital is controlled by a group of bureaucrats. Who are they to know what the natural interest rates of the economy ought to be in a capitalist society. So, they are guessing in the dark and that’s why we get bubbles and crashes and business cycles. I’m not going to fix that and we are not going to fix it here, but these guys are just not…
QUESTION: Talk to us about health care issues this year and what we can anticipate this year.
EDGARDO TENREIRO: I am going to give you the answer in terms of our clients, our patients, and our businesses. What we need to do in health care is provide them with high performing physicians and hospitals that can improve the quality of the health of the employees and reduce costs. I don’t know that we collectively have provided to the business community the value that they demand. On the other hand, I don’t know that the business of a community understands the intricacies of what they need to do in order to demand that from their brokers, consultants, networks, insurance companies and ultimately from the physicians and hospitals. So there is a lot of education that needs to happen, a lot of learning on the part of business to understand the levers that they can pull and push to demand the type of care that their employees and families deserve. Obviously, groups like Berkshire Hathaway, Amazon, and companies are dipping their toes with gusto in this environment and we will see where we all have high expectations of what that could be. We are unsure of what that could be, but certainly is going to involve high quality, low cost. So, what we are specifically doing at the General to prepare for that, we believe that regardless of what happens on the healthcare reform environment, on the state level, or even in the private sector, we know that high quality and low cost is going to reign supreme. So that is what we are focused on. We are focused on, cutting our costs, improving our through puts, improving our productivity and improving our quality. If we can do those things at the same time, and I think that we have been able to do it over the years, then we will be prepared and I am certain that other health care systems are attempting to do the same thing. The challenge I would issue to leaders of businesses is to pay attention to what is happening to your health plan. Don’t let the broker or the consultant tell you. You have to get involved. As a CEO, you have got to get into the weeds if you want to control health care costs.
CHRISTEL SLAUGHTER: We have the great advantage of being able to look across industries and lots of different kinds of businesses. The US Chamber published a small business index recently and consumer and business confidence is at a high which is really good for our economy. So people are looking for capital personally in their businesses as well to do a lot of things that they’ve been thinking about for a long time, but now want to pursue. The interesting thing is that there is a lot of disruption in the market, whether it’s tariffs and interest rates, competition, changing technology, data outlets, etc. What we see are clients trying to face those issues and deal with them in appropriate ways and sometimes they require new solutions that they haven’t tried before. We seem to be doing a lot of strategic planning. Sometimes in one particular business line that either has a lot of potential or is not hitting its mark and maybe we need to evaluate to even be in this business anymore, trying to figure that out, a lot of succession planning, certainly family run businesses fall in to that category. We are working with one. They are in their fifth generation and so now they’re struggling with as the membership and shareholders turn, what happens to the philosophy and how do we keep that ongoing sustainability intact. Those are always very interesting kinds of things. A publicly traded company or privately held company has to go through succession planning, too. A lot of them have skimped on leadership development because the economy wasn’t as good or they weren’t growing, but now that the market is better, baby boomers are starting to retire. They are getting in these new workers who are different and research shows that people don’t just quit a job. They really quit their boss a lot of times. If you are analyzing turnover data which we do with our clients all the time, well why are we having turnover in this area? Is it poor communications, they are far away from the home office, or is it supervisory skills that they need? Certainly, the leadership academy that we do with the business report is extremely popular for that reason. But I think, we are seeing more interest in assessments before someone is employed in the promotion of people, executive coaching. You know, I have this talented person, but I really need them to sort of step up to the next mark. We have a client that is getting ready to hopefully cross the $100 million mark in revenue and it’s a long term substantial business obviously, but this a big mountain for them. When I look back on the 360’s that we’ve done, the leadership training, conflict resolution, little diagnostic tools along the way, it’s not a surprise that they are doing as well as they are doing because they really invested in their people all along the way. Now, they are finally really getting that payoff. In 2019, we are going to be investing in our people, too. We just brought in a strategic business development consultant, strategic marketing which is a little bit to the side of our normal design for leadership development skill set. We are going to sharpen the saws of all of our people because our businesses are changing, our clients are changing, the world is changing so we have to be up on that. The last thing I will tell you is that I went to a conference for professional development is important to us too. I went to a government’s conference and they had a speaker on how parennials are making decisions. So that’s a millennial who is a parent. And so, how frightening is that. But your website needs to load up quickly. They need to be able to go on Yelp and see the pediatricians’ rating. They need to be able to see blogs and links because that conveys someone who is more substantial or up to speed on what they are looking for. They want to be able to text their doctor. They want to be able to have a close relationship with their health care providers. It’s really fascinating that they’re evaluation tools and the things that they are looking for are really very different from previous generations. I think that’s really going to shake people up. I told that to someone that I was going to working with, a big clinic out of town and the business manager is probably in his 50’s and he said, “Well, ha, ha. We can fix that. We just don’t even put the bad ratings of the website.” I said, “They are not looking for the ratings on your website. They are looking at other ones for that.” Just goes to show we are not all connecting.
NICK PENTAS: I wanted to circle back on health care and one of the questions on here was what innovative ways can your company make changes. I took some notes on this because I know health care is expensive; I know it’s an issue. But what is the genesis of the problem? Kind of like what we were talking about with crime, you start with education. With health care, I think you start with your own business. One thing we started doing was that I took out all the vending machines that had junk food and I put healthy vending machines in there and I made sure you can use Apple Pay to buy stuff out of them. It’s crazy. The lady that put them in, she is in there every few days. She’s like, “Everybody is buying all these healthy snacks.” Start with that. Smoke free facilities, weight loss competitions, step competitions that people always do. I see people walking around the dealership all the time trying to beat their peer on their break. We have people come in and do flu shots instead of saying, “Go get your flu shot.” Whoever doesn’t have health insurance, we pay for the flu shot. We are giving our employees healthy cookbooks instead of a ham for Christmas. Just some of the things we can do on our own level to make people’s health better so that the cost … obviously you still have to contend with the health care costs and the insurance companies, but athletic activities, we did a company flag football team and we are doing soccer team and we are going bowling. Then you also have team building there, too. The other thing that we can do here in the community that I am really proud of is nutrition and the rise of more diverse, ethnic food places that offer a little healthier option. I know there is great food out there. I love south Louisiana and I grew up here my whole life. And you know, fried seafood is great but that can’t be every meal so just getting that nutrition down to moderation and giving people more options. Another thing is competitions. I’ve seen a lot more runs—Louisiana marathons, 5Ks here and there; just keeping people more active and outside and doing things. That’s some of the things, I think as local business owners, we would want to start with.
EDGARDO TENREIRO: I’m going to get in the weeds, but I would say as business owners, 10-15% of your employees or family members drive 70-90% of your health care costs. You need to think about what are the techniques that my healthcare provider is using to change behavior that is driving 90% of my cost? Again, you have to get down in the weeds and there are techniques and there are programs and structures that you can develop with incentives and so forth to modify the behavior of those who are driving your health care costs. And then engage them in a positive modification of those behaviors so that over time, you can control your health care costs. We know this because at the General, we have started this complex care center where voluntarily, you know, our employees have chosen to go to this center. We have health coaches. We have nutritionists. We have exercise physiologists. We have obviously internal medicine doctors that could have a huge effect on the health of those individuals and obviously, then we modify our health plan to provide the appropriate incentives, financial, to these employees by $0 deductible, $0 copay and it’s been a remarkable journey over the last three years. Those are the kinds of innovative programs that as employers, CEOs should demand of their network of providers so that you can once and for all get control over your costs. Then if you supplement that with the kind of things that we have been talking about before in terms of health and wellness and healthy choices for food and nutrition; and if you add another layer, which is, “What kind of city are we building? How come we don’t have sidewalks? How come do I have to get the car to go from my hospital to the mall to go to a restaurant to eat a healthy salad? Why can’t I just walk?” I tried walking the other day and I videotaped it and sent it to the architects at work on our campus and the folks were working on Bluebonnet. It was a jungle. It was quite an adventure to try to walk basically half a mile. People in a big city or in Europe wouldn’t even think about getting in a car to cross Bluebonnet. What kind of city do we want to build, a bike pass. That’s why I am so encouraged about MoveEBR, but also about the work that BRAF and others have been doing with just having a walkable, bikeable city. So I guess a little bit of the excitement that I sense is that I think that we have turned the corner on that, the kind of city we want to build so that we are encouraging that kind of healthy behaviors that we have not done in the past.
MATHEW LABORDE: I think the original question was, “What’s the biggest challenge facing your industry or company?” On a low granular level in commercial real estate, it is the lack of data. This is more focused on the commercial side, but if you were to ask me how many office buildings sold in 2018, I couldn’t tell you. If you were to ask anybody that, there’s not a person on this planet that knows that information. I recently went to an event with a lot of other agents from around the country and one of the reasons that is, is because of the public records in East Baton Rouge Parish and how they are not linked together. the Clerk of Court doesn’t really talk well to the Assessor. So all of that information is not in a form where you can readily find it so it takes a lot of manual labor to collect it. So what does that mean? That means for investors and business owners making the decision if I need to buy an office building or not, they make their decisions based off of feelings instead of facts. That’s the biggest challenge I see and that’s also the biggest opportunity. If you come to me on February 15 and ask how many office buildings sold in 2018 in Baton Rouge, I will be able to tell you, I promise you that; just because we are putting the people and the systems in place to be able to get those kind of answers to our clients. At the end of the day, we are in the information business, not the real estate business. “Being able to be the expert for our clients and have reliable, accurate data that is put together based off of what’s really happening, rather than our assumptions and feelings about the market, is key.”
CONNIE FABRE: So looking at the situation from our members’ viewpoint, who are mostly petrochemical, heavy industry companies; the top pressing issues seem to be related to some federal gridlock. So on one hand, the Trump administration has stopped so many new regulations coming out which is a good thing, but there’s a couple of things where industry just wanted resolution, for example in safety regulations and things like that. The tariff issue I’m going to throw in there as well. That is one where there is concern. It is raising some costs for steel, etc. Understanding the predictability of doing business is the issue. One member in particular, who just announced a very large project, is moving forward but the tariffs really threw them for a loop and the announcement was pushed by probably 6 months or more because of the unpredictable nature of things. I know that Louisiana Chemical Association is leading a group of managers to go to Washington D.C. to talk to the head negotiator with the tariffs and see if they can help them understand the ripple effect of the tariffs. So I do understand it’s a balancing act of the whole country’s economy, and they’ve got economists working on it all and they are considering, ‘if you raise interest rates over here and you raise tariffs over there, it affects these things over here.’ Is it the best solution for the whole country; who knows? That’s what they think they are orchestrating. At least we have the chance to go and educate our government leaders and help them understand how it is affecting the economy and what industry is looking for, so that’s a positive step. Workforce development is a pressing issue. The large number of retirements is challenging, and the skills gap issues—we need more technical skills and less four-year degree skills. Drugs are taking out a big slice of potential workers. Digitization and utilizing technology to the next level will be a big focus this year in industry. Here is a great story from one of the managers. He said, “In the past, when I gave plant tours, when I was working in the plant, we would take people on plant tours and they would say, ‘Where are the people?’ They would be amazed that the plant was running, and valves were opening by themselves.” This manager took a group of students through recently and they said, “Why do you have people? Why are people running this plant?” Digital manufacturing can make our facilities safer, more reliable and possibly change the nature of some jobs by making them more high-tech. We are going to be focusing on digitization this year a good bit.
EDGARDO TENREIRO: I have a follow up question. So my question is, what are the one or two things that the business community and the political leaders in Baton Rouge and in Louisiana can do to say double the amount of investment that we had in petrochemical in the last five years? What are one or two things that we need to do to make that happen?
CONNIE FABRE: So, certainly predictability, understanding what the rules are; that could increase business a lot. I think that if the area between Baton Rouge and New Orleans could be developed into a super region, as has been discussed often, that could be a game changer. Some years ago, there was a Canadian government entity that wanted to invest in a big intermodal port between Baton Rouge and New Orleans. It never did take off. So, really getting together on something like that and having a strategic vision that we are going to be the gateway to South America or what have you, that could double it. As another example, the Obama administration put together a strategic plan of highway upgrades and new interstate highways and they completely bypassed Louisiana. They had big highways going from the north through Texas down to Mexico. We weren’t on it, a couple of hundred miles off, but getting on that kind of an agenda could double investment here. Another issue is railroad infrastructure; many plants are captive to one rail line and there’s a lack of competition.
EDGARDO TENREIRO: I think this is just my personal opinion; I see the direct connection between success of the petrochemical industry and success of the healthcare industry because again we are downstream from those big capital investments and we all benefit. We have huge, huge, huge competitive advantage. We have the Mississippi River. We got gas. We got oil. We have an existing petrochemical industry. We got LSU. All of these things are interconnected to give us a tremendous advantage and we have the pipelines and the rest of it. This is the first time I hear that we are not investing enough in the infrastructure from a pipeline perspective. Those are things that the business community has got to get behind and we cannot allow special interests that anti-growth, anti-petrochemical, anti-development, to dictate what the direction of this community in Baton Rouge and the rest of the state ought to be. It is up to us in the business leadership area to understand what ITEP stands for and why it’s so critical to have predictability and I would say, it’s not good to be predictable and have high taxes for industry. In essence, you put them through your model and you will go to Texas. We don’t want that to happen so we have to be predictable and we have to be the friendliest toward an industry that we can possibly be and I don’t think that we have been at the level of friendliness that we need to be. So I guess a challenge again to the business community, you got to get involved. You got to understand how all these things are interconnected to your own business. Hopefully again, this will be a good start to get people to understand and get business leaders to understand how important it is to protect that competitor advantage that we have.
QUESTION: Louisiana has always been challenged in meeting workforce demand. And then, on top of that this year the nation has had the lowest unemployment rate since 1969. What challenges are you facing in workforce recruitment.
MATHEW LABORDE: “Engaged,” is the key. And I think it’s important for the leaders of companies, as just said, to establish a bold vision that’s exciting and that people want to buy into. Because I think, speaking as a millennial, the millennial generation wants to be part of something that makes a difference. So at Elifin, our goal is to be the number one commercial real estate brokerage in the Baton Rouge MSA by the end of 2020 or sooner, in terms of volume of business; not number of agents. We’ve had one person relocate from Manhattan, we’ve had one person relocate from Houston and they’re excited to be in Baton Rouge. They’re excited to be on Government Street in Mid City, and to be involved in this growing, unique community that’s in this city right now. But I think setting that vision is really important. It’s not just about being nice, or having the best snacks in the break room, it’s about setting a vision that people really want to be a part of.
NICK PENTAS: Our group started with one Mercedes-Benz store in Baton Rouge…now we’re up to four Mercedes stores in the Southeast and we went from one to four pretty quickly. We got together; me and the other CEOs of the other locations and we decided what our company was gonna be about. We sat in a room with a white board and determined what our culture would be. So we made culture cards, which every employee wears them, it has a mission statement, a company mantra. On the back it has our pillars and we call it our daily, our quiver of arrows and it’s just basically what our core principles are. Some examples are: “Smile, you’re on stage.” “Ethics before profits.” “Dominate your role.” Everybody wears it. If you get caught not wearing it then a co-worker can actually tell to do pushups on the spot or jumping jacks, which makes it fun. Culture is very important to us, so we meet weekly to share “wow” stories about how our employees go above and beyond to take care of our customers. Like helping someone on the side of the road, or doing something extraordinary for a guest. Each week we give the winner a Culture Coin worth $500 and a total of $50,000 in coins per year. The employees cash them in at our annual Holiday party. We have given away a jet ski, 4-wheeler, numerous trips, among other items. It’s a huge investment on our part, but it is well worth It. Everything that we do is based on our culture. We do another event called 15-minute speed dating where we pull all the employees In, one by one and ask them three questions. What do you love about working here, what’s your biggest obstacle, and what Is your best idea to improve our company. It’s all to figure out how we can make it a better place to work. And we compile all that data onto a spreadsheet and share it weekly until we address everything that can be addressed based on our employees’ feedback. There Is a lot more that we do. I could talk about this subject forever. Can we find good people and make them better? That’s how we improve our workforce and that Is why people will move to work for you. I’ve hired people from Vermont, from California. I would rather get people here locally but when you have that family environment and people enjoy coming to work; you’ll get people from out of state as well. And when we asked our employee what they liked most about working with us, the most common answer was the “family environment.” We do some unique things; the 360 reviews are always great, so there is a lot you can do and this is a big topic for the Workforce and that’s how you recruit the best talent.
CHRISTEL SLAUGHTER: Just one brief comment: You can recruit people from anywhere now.
MIKE NIZZO: As I mentioned earlier, Business First completed two mergers in 2018 and for me it was really a case study on how important it is to know and continue to develop your companies’ culture. Every company has a unique culture and that matters not just for recruitment of great employees but also on the flipside, employee retention. At Business First, we spend a lot of time on developing our culture to identify what type of bank we are, and what type of bank we want to become. Every employee is part of this process. In 2018, Business First held a bank wide culture event. This event allowed every employee the opportunity to meet with coworkers in other markets, ask questions to our CEO, Jude Melville, and an opportunity to express what it meant to them, to be part of the Business First family. Having a great culture has also proven to be a great recruitment tool. Many of our new coworkers have come to Business First based on a recommendation of our current coworkers.