It wasn’t easy for Tommy Kurtz to leave Louisiana. The former Louisiana Economic Development executive grew up in New Orleans—a Jesuit High School Blue Jay—and his roots run deep. When his former colleague and friend, Iain Vasey, offered him a position at the Corpus Christi Regional Economic Development Corp. in mid-2015, he was torn.
His daughter was a student at St. Joseph’s Academy at the time and, well, south Texas is hard for a boy from the Bayou State to get his arms around.
Vasey understood. As a former executive with the Baton Rouge Area Chamber, he also has close ties to Louisiana. But as president and CEO of the CCREDC, a position he assumed in February 2015, he knew the opportunities that existed in the Lone Star State and was successful in luring Kurtz and family away.
Some 18 months later, Kurtz still misses Louisiana. But it helps more than a little that he and his boss, Vasey, are killing it in their new roles in south Texas: The CCREDC was the lead agency in landing the $10 billion ethane cracking plant being developed by ExxonMobil Chemical Corp. and Saudi Basic Industries Corp.—a deal Louisiana had also been trying to snag.
It was a huge win for Texas. It was a bigger loss for Louisiana, which desperately needs the 650 permanent jobs and $60 million annual payroll it promises. But after talking to Vasey and Kurtz about the way they do things across our western border, you have to wonder if the competition was even close.
For starters, Texas has the infrastructure, immediate access to a deep-water port and rail lines. There is also the proximity to two major shale plays—the Permian Basin and Eagle Ford—and significant pipeline infrastructure.
Another big factor is ozone attainment. Vasey and Kurtz say ExxonMobil weighed heavily the fact that the Corpus Christi site meets federal guidelines for ozone level attainment, something much of the Capital Region does not.
“When we were in Baton Rouge and were trying to locate a company here, if they needed to release emissions, they would have to go buy credits from someone else,” Kurtz says. “If you need to put 100 tons into the air you need to go buy 110 credits.”
Those credits can be costly. Vasey estimates that for a project the size of the ethane cracker it could mean the difference of a hundred million dollars or so. The process of securing the air emission credits is also time consuming. Many companies that have them hold on to them in case they need them in future.
“It’s just another hurdle,” Kurtz says.
One of the biggest factors was the difference in the states’ business climates. ExxonMobil said as much in a prepared statement, citing the “favorable business climate” in Texas as one of the reasons behind its decision.
Business leaders might interpret this to mean the state should seek to reduce the tax burden on business and industry, rather than trying to “level the playing field,” as Gov. John Bel Edwards has said he is trying to do with some of his tax measures currently before the Legislature.
But Vasey and Kurtz say the issue isn’t so much about how much the state is taxing business, but about its tax structure overall.
“Any company will tell you that when there is uncertainty, that is a problem,” Kurtz says. “Companies do not like that when they are planning a $10 billion project.”
Then there were factors like a strong K-12 educational system, and a dynamic community college system that works directly with economic development agencies. Del Mar Community College in Corpus Christi even has a custom workforce training program for specific projects. It’s funded by a local dedicated millage, by the way. This stuff doesn’t come cheap. But Texas taxpayers are willing to pony up, and it’s paying off for them.
Perhaps the biggest factor behind Texas’ success in landing the deal was the collaborative approach local economic development agencies use. They don’t work in silos. Rather, multiple agencies collaborate, and they’re very aggressive. They’re all on the same team.
Vasey estimates as many as “50 to 100 people were involved in helping to pull this deal together … people involved in all aspects from taxes, infrastructure, workforce training, education. It’s everybody.”
That’s not to say Louisiana’s economic development officials do not work together, but there’s not the same level of coordination and participation across the board. There’s not the same level of sophistication, either, nor, apparently, an understanding of how economic development really works and why it’s so important.
In responding to the announcement that Texas had beat out Louisiana for the plant, LED Secretary Don Pierson said he was “very proud of the case we made on behalf of our state. We’re also proud of our record of progress in continuing to attract significant chemical manufacturing projects.”
It’s a nice sentiment from the kind of a state no one ever wants to leave.
But it also suggests an alarming naivete and a lack of urgency about what needs to be done to make sure Louisiana doesn’t come in second next time around.
