Corporate welfare or economic development?
Despite a $1.3 billion deficit and lawmakers vowing independence, Gov. Bobby Jindal has maintained his stroke throughout the ongoing regular session. And nowhere else was that better displayed than in the quick and easy package of legislation to help move along the sale of a shuttered poultry processing plant in north Louisiana formerly operated by Pilgrim’s Pride.
Jindal had the Legislature rewrite state incentive laws to lure Foster Farms of California into the deal, which will be supported by $50 million in state funds. It has been adopted by the House and Senate and became the first bill of the session signed by Jindal. The deal will provide $40 million to split the $80 million purchase price with Foster Farms and another $10 million in site improvements.
Needless to say, it was a top priority for the governor this session, as was a new deal for the New Orleans Saints, which likely is why Jindal released the details of both negotiations at the same time. The dual-announcement set up bargaining chips for lawmakers from both north and south Louisiana, who would normally bicker over such arrangements. Legislators closer to the Arkansas line, though, still tried to sugarcoat their part of the swap—sometimes quite comically. “This is not about a company in any kind of trouble, except that its owner closed it down,” Rep. Hollis Downs, a Ruston Republican, told the House of Representatives.
Jindal and New Orleans Saints owner Tom Benson shook hands on a partnership that would keep the NFL franchise in Louisiana through 2025 and create a new sports entertainment district in the Crescent City. But Jindal still will need lawmakers to make it happen—especially since the governor wants to use $85 million from last year’s surplus to upgrade the Superdome. Rep. Walker Hines, a New Orleans Democrat, says Big Easy lawmakers acted swiftly to work out deals with north Louisiana lawmakers to support the state-subsidized sale of the poultry plant in exchange for help on the Superdome deal. And Hines likewise had an opinion about which of the two offered a sweeter deal for lawmakers. “The reality is that the Saints contribute more to the economy overall,” Hines says. “It does not create more jobs necessarily, but it does contribute more in tax revenues to the entire state and the entire state benefits from that.”
While lawmakers haven’t been shy about doling out corporate welfare this session, there’s also been at least one instance where assistance was kicked back to the state out of what could be deemed an act of pity. Jim Bernhard, chairman and CEO of The Shaw Group, announced earlier this month that his company would decline the more than $172 million in economic development incentive money. The package included $28.5 million to open a nuclear module facility in Lake Charles—a commitment Bernhard says they will honor without the state cash. Instead, Bernhard, who might be considering a run for the U.S. Senate, said he would rather see the money go to education or other needs. And on May 14 when house members met on the state budget, House Bill 1, they directed the Shaw money to the Louisiana Board of Regents, ultimately funding further the state’s higher-education system over economic-development financial aid.—Jeremy Alford
Frontier women
A recurring theme among Business Report’s 2009 Influential Women in Business is that of pioneer.
• Nerjyzed Entertainment co-founder and chairwoman Jacqueline Beauchamp has defied the odds as the owner of a digital media business.
• Bradley-Blewster & Associates principal and co-partner Lynn Bradley is the first architect in Baton Rouge who’s licensed in hospital design and was only the second female to graduate from the LSU School of Architecture.
• WAFB-TV vice president and general manager Sandy Breland received numerous awards for her planning and execution of Hurricane Katrina coverage while at WWL-TV in New Orleans.
• Sharon Cole is the first female site director in the history of Dow Chemical Company’s Louisiana Operations.
• Felder’s Collision Parts owner Patricia Felder has been honored by the largest trade association in her field, proving she’s been successful in a male-dominated field.
• LaPorte Sehrt Romig Hand director Crissie Head is one of only two female directors in the firm.
• Physician and dermatologist Donna Nunnally founded and developed the Dermatology and Aesthetic Institute, Baton Rouge’s first dermatologist-owned medispa.
• Our Lady of the Lake Regional Medical Center chief operating officer Terrie Sterling started at the hospital 20 years ago as a staff nurse.
• And Cindy Wale, a vice president and branch manager for Capital One Bank, in 2007 became the first woman elected to the Livingston Parish Council.
The annual luncheon to honor the recipients is scheduled for 11:45 a.m. on Tuesday, June 9 at the Crowne Plaza Hotel. To purchase individual tickets [$35] or reserve a table for 10 [$325], click here,” or call 928-1700.
Smart roast
Community Coffee has branded a new, more sophisticated look for consumers in offices and its coffee houses—the “premium cup.” Doing away with the theme of “Taste the Difference,” Community Coffee opted for a home-style catchphrase, “Family owned since 1919.”
But the tagline wasn’t the only thing to change. The premium cup looks and feels different, too. After using the same form for 15 years, which was a shorter, coarse paper cup, they’ve decided to incorporate a leaner, smoother cup that’s also glossy.
“We knew customers were looking for a new, upscale cup that is more representative of the brand,” says Janie Page, brand manager for the coffee service division. The new cup includes an image from the traditional retail bag. From conception to application, a team of marketing, sales and advertising experts worked for six months before introducing the new cup to consumers.—Summer Suleiman
Premium clouds
Southern University is entering the world of “cloud” computing. What exactly does that mean? Let’s let Southern grad and IBM university relations executive Elmer Corbin explain:
“Cloud computing is a model for delivering IT infrastructure, applications and data that shifts the emphasis from stand-alone silos of computers to pooled, shared resources, dynamically allocated among various workloads and easily accessed via a network,” Corbin says.
A cloud server is accessed remotely through the Internet and is instantly scalable. Supporters say cloud computing is gaining popularity in the private sector because you only pay for the capacity you actually use. Think of it like a taxi: You don’t buy the cab, you just pay for the trip while the meter’s running.
Southern plans to create a virtual computer lab where users can access a number of applications from anywhere, “from the simple to the extreme,” says Deanna Roquemore, the computer science professor who is leading the project. Advanced programs that were only available through a large mainframe computer can be at a student’s disposal from his or her dorm room laptop.
IBM put up $40,000 in seed money last month to get the project started, which Southern hopes to leverage to obtain other funding. In the early stages, Southern is partnering with North Carolina State University, a pioneer in cloud computing. In the long term, organizers want to create a network of cloud computing platforms at a number of historically black colleges and universities. Southern plans to use the technology to boost the computing power of local schools like Southern Lab and Scotlandville Magnet. In fact, the university hopes eventually to generate revenue by charging small businesses for network access.—David Jacobs
Executive Spotlight: Ann McMahon
COO/Co-founder
The Louisiana Network, Inc.
Hometown: Baton Rouge
After the radio shows have wrapped and the Baton Rouge traffic has been navigated, Ann McMahon grabs her camera and heads to the airport. It is there, inside the cockpit of Delta Fox, McMahon’s Long-EZ aircraft, that she finally relaxes and feels totally free. It began by taking lessons from former Gov. Edwin Edward’s pilots 26 years ago. Since then, McMahon, the chief operating officer and co-founder of The Louisiana Network, Inc., has taken to the skies to create a buzz overhead, just as she did as a pioneer for women in the radio news business. It’s all about making the most out of life. “You only have moments,” she says. “Therefore take nothing and no one for granted.”
To find out more about McMahon, read the rest of her profile and Q&A here.
Book Review: Shaking the Globe: Courageous Decision-Making in a Changing World
Author: Blythe J. McGarvie
Publisher: Wiley
Year: 2009
Pages: 256
The car in your garage came from America. But the television on which you checked the weather this morning came mostly from Japan. Part of your lunch was raised on a farm in Mexico. Several of your household appliances were manufactured in China. Your favorite sweater came from England.
So often, we’re urged to buy locally, but that isn’t always possible. It’s also probably not good for business, says author Blythe J. McGarvie, and in her new book, Shaking the Globe: Courageous Decision-Making in a Changing World, she discusses the future of work in a world economy.
The news is filled with reports of factory closings and job layoffs. Manufacturing is moving overseas, yet more than two-thirds of Americans want tighter restrictions on free trade. Are we heading for a global economy?
“For the past 50 years, Americans … have been accustomed to setting the standards of business for the rest of the world,” McGarvie says in the beginning of her book. But “change is not only inevitable—it is already in rapid motion.”
Major corporations, of course, have been doing business abroad for some time. But you’re just a small operation. Can you still go global? You must, McGarvie says.
At first blush, Shaking the Globe is going to make a few people shake their fists. Not buying American is often blasphemous, but McGarvie has some valid, well-considered points.
“If Americans want to buy products at cheap prices, they must endure having these products manufactured by cheap labor,” she says. She also points out that we need to remain open to a multicultural pool of talent.
Although occasionally dry, if you own a business or aim to own one someday and you want to know your future, Shaking the Globe is a good place to start. In today’s economy, why in the world read anything else?—Terri Schlichenmeyer
Fast Forward
Hot stuff!
Moving the fruit pulp and pepper mash is gooey, sticky, messy business, but it’s proving to be big business for Chris White. His firm, Gray Hog, got started with the invention of a revolutionary shipping bag and has expanded into a service and supply company that is bridging the gap between pepper mash producers throughout South America and buyers in the United States.
When the Business Report first reported on Gray Hog in “Big bags, thick stuff” in the Oct. 26, 2004, issue, White was still new to the industry. At the time, his primary focus was identifying a customer base and raising the capital to get Gray Hog off the ground. But he knew he had a revolutionary product, even before he had a full client list. “We know this works,” said White who spent years working with his father in the petrochemical and food-processing industries. One of Gray Hog’s first major clients was McIlhenny Co., the maker of Tabasco sauce and other food products.
While White says Gray Hog didn’t necessarily make all of its expansion and revenue goals right away, he developed and expanded the company his own way. “Because I have another couple businesses,” White says, “there wasn’t pressure to grow quickly. I was very patient.” Over time, he reinvested profits and maintained control of the business.
Eventually, White says, Gray Hog found its niche within the pepper mash industry. “I started working with growers in South America to promote their pepper mash in the United States,” he says. “And we developed very good relationships with the pepper mash users in the U.S.” So White utilized Gray Hog to connect the growers with the users and now facilitates the entire transportation process.
Gray Hog is bringing in a little less than $2 million in sales, but has a higher profit margin because of the service fees. And White says the company expects to double or triple that profit in the coming year. “It’s a great niche market because there’s a need for the product, a need to save money and it’s a growing market. We’re on a very steep growth curve.”—Olivia Watkins
Nonprofit Spotlight
Baton Rouge Ballet Theatre
Total assets: $368,507
Expenses: $418,655
Revenue and support: $488,502
Highest-paid executive: [more than $50,000]: None
Key projects: “Provide culture and recreation to the general public by performing ballet productions and teaching ballet to local children and adults.”
SOURCE: 2008 Form 990, Guidestar.org and the Baton Rouge Ballet Theatre
Fortnight May 20 – June 2
May 21 – Government reforms and the economic stimulus will take center stage at the Baton Rouge Black Chamber’s “A Conversation About the Stimulus with MidSouth Bank.” The luncheon will focus on job growth, homeowner’s assistance, business assistance and government grants. For more information, visit brblackchamber.org.
May 22 – On this day in 2007 – ?Concern was expressed by the Legislature’s chief economist, Greg Albrecht, that the dramatic fluctuations in the price of oil per barrel made planning for the state’s expenditures risky. He called the situation a “recipe for worry.” Now the state is grappling with the consequences of dramatic fluctuations as legislators push through the session.
May 25 – The ninth International Conference on Computational Science is being hosted by the LSU Center for Computation & Technology. The conference will focus on computational sciences that are advancing the hard science and can be applicable even to the “arts, humanities, media and all aspects of research.” For more information, visit iccs-meeting.org.
May 27 – On this day in 2008 – Senate Bill 733 was read, amended and passed through the House. The Louisiana Science Education Act, which allows local school boards to provide alternative materials on evolution, global warming and human cloning, was eventually signed into law and became the trigger which caused the Society of Integrative and Comparative Biology to move their 2011 conference to Salt Lake City.
May 28 – The Executive Education department at LSU’s E.J. Ourso College of Business is holding a two-day workshop on “Building and Sustaining Supply Chain Excellence.” The workshop, at the Lod and Carole Cook Conference Center, will cover the changes in environmental regulations and new trends on how businesses handle their supply and demand cycles. For more information, contact Robin Kistler at exed@lsu.edu.
June 1 – On this day in 2008 – LSU announced Michael V. Martin would become the next university chancellor. Martin, who came to LSU from New Mexico State University, is now faced with the massive proposed funding cuts to higher education, protests from professors and administrators or the university reorganization and the pressure from community leaders not to target specific entities like the LSU Press or the LSU Museum of Art.
Business of Politics
Full disclosure
Fundraising during the regular session is prohibited, but that doesn’t mean the subject of campaign finances isn’t being discussed. House members seemed visibly shaken during a briefing on the new financial disclosure requirements that took effect May 15. House Clerk Butch Speer walked lawmakers through the forms page by page, explaining disclosure requirements on everything from spousal income to side jobs. The briefing might go down as the best-attended House gathering this session.
Speer was pressed to explain the differences between reporting income from full-time and part-time jobs. He told lawmakers the overriding goal is transparency; they should use their best judgment. “You are giving information to the public,” he says. “So, what do you want the public to know about your employment? And do you consider it full time or part time?”
At the urging of the administration last year, legislators agreed to begin publicly disclosing more about their personal finances. Now that financial disclosure is a reality—as opposed to an abstract campaign promise—the new forms drafted by the state Ethics Board seem to elicit more details than any of them anticipated. A wrong address or incomplete information could draw scorn, Speer warns. “And I guess I should say this now, and I’ll say it over and over again: If you do not have a CPA to give you advice about this, you should get one.”
Rise of the speaker
If there are sparks of legislative independence anywhere, they’re shooting from the gavel of House Speaker Jim Tucker (below), Terrytown Republican. Lobbyists, fellow lawmakers and reporters on the chit-chat have credited Tucker and Senate President Joel Chaisson, a Destrehan Democrat, with keeping the wheels from falling off of previous sessions. To the surprise of many, Tucker, a former chair of the GOP caucus, has gone out of his way to show Jindal—and everybody else watching—that the days of a speaker-as-lapdog are over.
Earlier this month, Tucker co-signed a letter to Jindal questioning whether the governor’s proposed legislation cracking down on sex offenders was constitutional. Even if it does pass constitutional muster, Tucker wrote that it would require too much money in an already tight fiscal year.
Tucker is also bringing a taste of the old school back to the Capitol. Back in his own estate, he has become the proverbial gatekeeper as well. He’s scheduled briefings for the entire House this session on issues important to the body, and personally delivered a detailed update on the state’s negotiations with the New Orleans Saints.—Jeremy Alford
Slow down
The reorganization of LSU’s colleges and departments is proceeding according to schedule or has had the brakes applied, depending on the person to whom you talk. LSU executive vice chancellor and provost Astrid Merget, who is in charge of the reorganization, says the plan is moving forward according to the process announced on April 14.
But the president of the Faculty Senate, AgCenter chancellor and a member of the Board of Supervisors say the process appears to have slowed after complaints from faculty. Many felt excluded from a planning process they believe was rushed and ill-timed, considering the university’s budget crisis.
LSU Faculty Senate President Kevin Cope says the faculty’s negative reaction to the plan was stronger than any he’s witnessed at the university. Also, Cope says LSU Chancellor Mike Martin assured him that, while some changes could take place this summer, “by no means is this whole plan going into effect.”
“All the evidence points the other way,” Cope says. “If you get right down to it, it’s still not clear exactly what’s happening, but I believe from assurances given by the chancellor that we are not under this July 1 ramrod.”—S.C.
Developing divinity
A bill by Senate President Pro Tem Sharon Weston Broome would create the Bluebonnet Conference Hotel Taxing District to finance renovation of the partially completed Jimmy Swaggart Ministries dormitory and turn it into a conference hotel. Developer Mike Wampold bought the dorm on Bluebonnet Boulevard in 2004, with plans to turn it into a Marriott Renaissance Hotel. But the $70 million project has been stymied by the recession and the ongoing credit crisis.
Broome’s bill, which passed the Senate and is headed to the House, would allow for tax increment financing, which would use projected sales tax revenue from the hotel to back bonds to pay for construction or renovation costs. A TIF was used to pay for the renovation of the downtown Hilton Baton Rouge Capitol Center, and there’s a move to set up one for the Hotel King.
Work was halted on the Swaggart dorm in 1989. The bill says the building, located between the Mall of Louisiana and Perkins Rowe, is “an eyesore” that has negatively impacted surrounding businesses.—Timothy Boone
ONTHEBEAT
Sit to die: The more time you spend each day sitting down, the higher your mortality rate, according to a paper published by doctors at Pennington Biomedical Research Center and the Canadian Fitness and Lifestyle Research Institute. The study looked at more than 17,000 Canadian adults over a 12-year period. The risk of mortality was progressively higher based on how much time people spent sitting down, and the effects were consistent regardless of age, sex, smoking status or body mass index.
Dig deep: If you’re getting ready to add a 16- to 19-year-old to your auto insurance policy, prepare to dig deep into your wallet. A report from Insurance.com says Louisiana has the highest-priced premiums for teen drivers, coming in at $7,900 a year. That’s despite a 1.7% average drop across the state over the past year.
Downtown dining: Varnedoe’s is scheduled to open in August at the Kress at Third and Main. Chef Scott Varnedoe says the new eatery will be moderately priced and include fresh seafood and steaks. Also hoping to open in the Kress building by August is 1887 Bistro Bakery and Bar, which will serve breakfast, lunch and dinner and feature an extensive dessert menu.
Belle buoy: Tropicana Entertainment, the parent company of the Belle of Baton Rouge, says a Delaware bankruptcy court has approved its reorganization plans. That clears the way for Tropicana to get out of Chapter 11 bankruptcy. The plan eliminates more than $2.4 billion in debt and more than $125 million in annual interest payments. The plan still has to be approved by gambling regulators in several states, including Louisiana, Mississippi and Nevada.
Running on empty: Kevin Boyd, the executive director of the Old South Baton Rouge Neighborhood Partnership Board, expects to close up shop in June or July because of a lack of money. Boyd, the sole employee of his office, says he has written to the mayor’s office, the Baton Rouge Area Foundation, LSU, the East Baton Rouge Redevelopment Authority and others looking for funding, to no avail.
Saving green: Projects in EBR’s Green Light Plan for road improvements continue to come in below estimate, according to a first-quarter report from plan manager CSRS. The report says the plan saved more than $8.7 million compared to engineer estimates. The competition is driving down prices.
Hold-up: The Shaw Group says its plans to build a nuclear power plant on the Florida Gulf Coast by 2016 have been delayed by at least 20 months. Progress Energy, which wants to build the plant in Levy County, was told by the Nuclear Regulatory Commission that foundation work couldn’t start until the plant gets a combined operating license. Progress wanted Shaw to start excavating and building a foundation while the regulatory process was still ongoing.
Risky business: A new report on consumer delinquency rates put Louisiana as the fourth-riskiest state for extending credit. According to TransUnion, Louisiana residents scored 153.9 on the Consumer Risk Index. The baseline is 100, but the current economic downturn and years of bad spending habits drove the national average up to 124.8 at the end of 2008.
