Falling oil prices likely will cause a small number of the many industrial construction projects announced in recent years across south Louisiana to be delayed or even scrapped altogether. But Louisiana Economic Development Secretary Stephen Moret says most of the announced projects will go forward, thanks to continued low natural gas prices.
“The vast majority of the projects are going forward as planned,” Moret says. “We have talked to a representative sampling of the major projects that have been announced as well as some of the other projects we are pursuing. I would be surprised if it was more than a handful of the big projects (that don’t happen).”
Moret’s comments to Daily Report followed his participation in a panel discussion at the Louisiana Association of Business and Industry’s annual meeting today. Other panelists included Calvin Dooley, president and CEO of the American Chemical Council, and Ross Eisenberg of the National Association of Manufacturers.
All three panelists focused on what they called the country’s manufacturing renaissance, which is fueled by low natural gas prices. Most American manufacturers use natural gas as a feedstock, and its slumping price has driven down the cost of producing goods in the U.S. The panelists said Louisiana is at the forefront of this economic boom, with more than $62 billion in capital investments announced across multiple sectors.
“We are home to the biggest manufacturing investment boom in America,” Moret says.
While Moret expects the vast majority of announced projects to move forward, some may be delayed for a couple reasons. First, the financial impact of lower oil prices could affect the ability of companies to finance their projects. Also, because so much industrial construction has been announced in such a relatively short period of time, labor costs have increased.
“When you look at these big projects, a $2 billion or a $5 billion project, 30% to 50% of that capital investment cost is the construction labor cost,” he says. “So to the extent you have a huge increase in the cost of labor it does impact to some extent the competitiveness of those projects or cause them to be delayed.” —Stephanie Riegel
