Most plant managers in the greater Baton Rouge area don’t anticipate adding employees, increasing capital expenditures or ramping up production over the next six months, according to the latest survey by the Greater Baton Rouge Industry Alliance.
“This stagnant outlook of capital projects could be in anticipation of the presidential election or recent tax hikes passed by the Louisiana Legislature, but most likely it is due to uncertainty in the market due to the drop in oil prices which is having a ripple effect,” says GBRIA Executive Director Connie Fabre in a prepared statement.
The alliance surveyed managers at 42 sites, or 70% of its members. Of them, just 31% said they anticipate a rise in production over the next six months, 19% said they expect capital expenditures to increase and 31% said they will likely increase employment (29% said they expect to hire additional contract employees).
At the same time, 55% of those surveyed said they expect no change in production or expenditures, and 57% said employment levels will stay the same (52% said as much for contract employees). Meanwhile, 14% said they expect production to decrease, 26% said capital spending will fall and 12% said they will likely decrease employment (19% said they expect to have fewer contract employees).
GBRIA generates an index figure based on the quarterly surveys to reflect the strength of the industry. The value is calculated as a diffusion index centered on 50, and ranges from minus 50 to 150. Values over 50 predict an expanding economy, while values below 50 predict a contracting economy. The index for the latest quarterly survey is at 58, unchanged from the first quarter survey.
“Member expectations see a seven point increase for plant production and a six point decrease in capital investment from the previous quarter. The economic outlook has seen a decline in capital investment since the fourth quarter of 2015,” GBRIA notes. “The most common issue plant managers cite this quarter includes increases in taxes and regulations. Other issues consist of low crude oil prices and availability of skilled workforce.”
—Alexandria Burris
