The recession came late to Baton Rouge, and with less of a vengeance than in other areas. Some businesses took it on the chin, some remained steady and some grew like there was no economic downturn at all.
Baton Rouge had been riding the post-Hurricane Katrina boom since late 2005, and many businesses didn’t start to feel a slowdown until mid- to late-2009, more than a year after the national economy began to shrink. The Capital Region has consistently ranked among the top-performing metropolitan areas in the country, which might speak to the relative weakness of the national economy as much as the strength of the local one.
At the same time, there’s no way to sugarcoat that 2009, as a whole, was a difficult year for many local businesses, especially those spoiled by the high times. More than half of Business Report’s Top 100 private companies saw their revenue decline from 2008 to 2009.
Industrial construction, a sector that generally dominates the list, was a mixed bag. True to this year’s form, some top industrial-related firms saw their revenue dip, but several did very well.
Performance Contractors, which ranks No. 5, had its biggest volume year in history, growing by nearly 33%, from $492 million in 2008 to $653 million in 2009. Project executive Lee Jenkins says his company was involved in several large jobs that were completed last year, including the Marathon refinery expansion in Garyville.
Jenkins says 2010’s volume could be comparable to 2009, though he sees fewer large projects for the back end of this year and into 2011. Most of Performance’s work has been in the refining and power sectors, while chemical companies have not been spending as much.
“We had a great surge of activity over the past few years along the Gulf Coast,” he says, “and those projects are coming to an end.”
Robert Burgess, chairman of the Baton Rouge Area Chamber’s board and the president of EATEL, which ranks No. 27 on the Top 100, says that he’s “bullish” on the city’s immediate future.
“We’re very fortunate,” he says. “Everybody had to tighten their belt [last year], but nobody saw the dramatic melting down” that occurred in other cities.
The Capital Region definitely saw its share—perhaps more than its share—of what economic development officials call project “wins” in 2009.
BRAC President/CEO Adam Knapp says his organization set a conservative target of 800 jobs gained from projects in which BRAC played a role in 2009, but ended up more than doubling that total. The biggest announcement of the year came from SNF Holding Company, which plans to build a $362 million polymers plant in Iberville Parish.
Many businesses tied to residential or commercial building were wildly profitable during the boom. Today, those companies are competing for far fewer projects against far greater competition, which means their margins have tightened. Locals say more out-of-state firms are bidding for jobs than ever because of a national building slowdown that in some markets is more like an absolute standstill.
Bob Morris, chief estimator with general contractor Milton J. Womack, which ranks No. 35 on the Top 100, says business started to become “a little shaky” in March or April 2009. Projects in the health-care sector provided the foundation for his company’s year; in general, he says, most projects were in the public sector.
“There were several projects on the board that, when the economy stumbled, either went on the back burner or were taken off the table completely,” Morris says. “[The recession] definitely hit here. But it hit late.”
Retail sales have been down nationwide, and Baton Rouge is no exception. Big-ticket items are moving slowly, which is reflected in a revenue decline for almost every automobile dealer on the list.
Tom Olinde of B. Olinde & Sons Company, which ranks No. 42, says he’d like to say furniture is an absolute necessity for consumers. But the reality is that many people are willing to sit on an old sofa if they feel that’s the best move for their pocketbook. Though he says sales in 2009 were pretty good for the first three quarters, Olinde’s closed its Mid City and New Roads locations earlier this year.
“We’re in a lot of network groups with furniture dealers around the country,” Olinde says. “Most of these guys were really crying the blues last year when we’d meet, and we thought, ‘Well, it’s not great. It’s a little flat, but we’re not doing too bad. We must be a little smarter than the rest of these guys.’ And then, in about October, it hit us, and it’s been pretty tough from October until now. It’s one of the toughest stretches I’ve seen in a while.”
By some measures, the recession already has ended here, and the area continues to be recognized as one of the nation’s strongest. In a report issued last month, the Brookings Institute said Baton Rouge was among the 21 best-performing metro areas in the country.
There have been limited signs of a rebound in the national economy, and many people would argue the slow, mostly jobless recovery experienced so far is no recovery at all. Uncertainty still abounds, but it appears the Capital Region has a chance to emerge from the Great Recession, if not unscathed, at least relatively intact.
