The pain of letting go
May brought news of significant layoffs in the Capital Region: 180 from a Capital One call center (pictured), 190 by barge maker Trinity Marine Products in Brusly, 49 from The Advocate. Those announcements followed high-profile reductions earlier this year by Dow Chemical and Albemarle, not to mention the unknown number of contract workers let go in recent months from petrochemical plants.
But the big-picture statistics [which don’t reflect last month’s layoffs] continue to show what local business leaders and officials have been saying for more than a year: As the national recession drags on, Baton Rouge continues to hold its own.
“We are pleased to see the unemployment rate remaining stable, as well as job gains for the 12-month period,” says Adam Knapp, president/CEO of the Baton Rouge Area Chamber. “The ability of the Baton Rouge area’s economy to remain stable during the overall downturn nationally and internationally remains one of the best competitive advantages for our area, and we continue to believe it will position us well for long-term growth.”
The Baton Rouge metro area posted a 5.2% unemployment rate in April for the second month in a row, significantly worse than 3.1% in April 2008. But compared to a national rate of 8.6% and statewide average of 5.7%, the region’s numbers look pretty good. East Baton Rouge Parish had the lowest unemployment rate in the area at 5%, while St. Helena had the highest at 8.4%, according to preliminary numbers, released May 27 by the Louisiana Workforce Commission, that had not been adjusted for seasonal shifts in the workforce.
But while the state lost 8,300 nonfarm jobs over the past year, the Capital Region added 800 such jobs. The number of nonfarm jobs is generally considered a reliable indicator of the basic health of the economy.
And consumers are still shopping: East Baton Rouge sales tax collections were up 2.4% over the first three months of this year compared to 2008, driven by spending increases outside of the city limits [think Mall of Louisiana, Towne Center and Perkins Rowe].
Of course, the good news for the local economy is cold comfort if you’re unemployed. In particular, the service-producing sector has been hit hard by the recession, down 1,800 jobs from March to April and 1,300 compared to April 2008.
“I don’t think we’ll ever see this recession as other regions have,” economist Jim Richardson says. “We may have a drop of some degree, but I think for the most part, we are somewhat protected right now. I think our big problem would be if there are really big cutbacks at the state level at some point.”
Knapp says government, including the universities and community colleges, is one of the three main sectors buffering the local economy. While big job cuts at the state level are possible given the budget deficit, Knapp says the impact has been limited to agencies not filling open jobs as opposed to actual cutbacks. Industrial construction remains on a post-Katrina high, but Knapp expects softening in the second half of the year as some major projects start to wrap up.
Petrochemical, the third sector Knapp mentioned, has largely resisted cutting core employees; their workers are highly skilled and difficult to replace. If the national economy picks up, so will demand for goods made with chemical products. If not, the plants will have to make some hard decisions, and next year’s employment numbers likely won’t be so rosy. —David Jacobs
A taxing situation
As the regular session winds down, few solutions have been offered to save higher education in Louisiana from more than $219 million in cuts—at least nothing the Legislature and Gov. Bobby Jindal, who’s holding strong to his anti-tax stance, seem to agree upon. Moreover, most of the ideas floated so far have come from the House and Senate, while the Fourth Floor has remained relatively quiet.
In the Upper Chamber, Senate President Joel Chaisson, a Destrehan Democrat, has thrown his weight behind a three-year freeze on federal itemized deductions as set out in the controversial “Stelly Plan.” The proposal would save Louisiana $188 million annually, and Sen. Lydia Jackson, a Shreveport Democrat who’s sponsoring the related legislation, says the money could be pumped back into higher ed.
Jindal’s you-fix-it approach has prompted special interests to come to the policy table with their own recommendations. For instance, the Council for a Better Louisiana is lobbying Jindal to reduce the cuts by half. “What we must remember is that if a state is to be a good place to live and work, colleges and universities must be healthy enough to play a significant role in economic diversification and helping to create and retain knowledge-based jobs,” CABL President Barry Erwin says.
Jindal, however, hasn’t been completely empty-handed when it comes to policy ideas. Jindal has been open to using the state’s so-called rainy-day fund to ease some of the cuts planned for public colleges and universities. But as of press time, the administration has yet to introduce any firm plans.
As for what has been done to repair the reductions, higher education officials contend it’s all window dressing. Last month, Shaw CEO Jim Bernhard made his money match his mouth when he returned $13.5 million in economic-development funds back to the state with instruction that it be used to help plug the gaps in higher ed. Education officials argue lawmakers made a bad decision—one of many—by not assigning the corporate cash to general operating expenses. Instead, $7.3 million was directed to dual-enrollment programs and $6.2 million was put into library acquisitions.
University of Louisiana System President Randy Moffett also says recent efforts by the House to earmark $50 million for higher education might also not be available from its source, the tax amnesty program. Moreover, the monies generated from the 5% tuition increase approved by the Joint Legislative Budget Committee will only address $13 million in unfunded, mandated costs, which are in addition to the recommended budget cuts. “We’re still looking at a drastic budget cut to our universities,” Moffett says. —Jeremy Alford
Scent of a tiger
There’s something in the air on LSU’s campus, and Masik Collegiate Fragrance President Katie Masich thinks she’s bottled it. Masik has released a men’s and women’s LSU signature fragrance. Created specifically for LSU, the fragrance, which launched this spring, has sold well in the local shops where it is offered, Tiger Central and The Lady Tiger Depot.
“People often say that there is no experience quite like the college experience,” Masik says. “The experiences of watching your team win in the last second of the game, sharing in their heartbreaking loss, walking through campus on a brisk fall night, falling in love and making friends that last a lifetime.”
The LSU fragrance picks up on a number of those experiences through the blend of scents on the Baton Rouge campus like golden bourbon, purple plum, dewy evening jasmine, warm honey and soft oak. The men’s fragrance includes a combination of frozen basil, geranium, oak moss and patchouli.
Donna Canella, general manager of The Lady Tiger Depot, says response to the LSU fragrance has been very good. “I’d say we’ve sold already 50% of our stock.” And because the fragrances are licensed through LSU, a portion of each sale goes to LSU’s general and athletic funds.
Masik Collegiate Fragrances, which is based in Harrisburg, Pa., also has created signature scents for North Carolina, Penn State and Auburn, with Alabama, Florida, Georgia and Tennessee coming soon. —Olivia Watkins
Sneaky ninjas
They are sneaky, secretive, stealth and awesome. They’re ninjas who serve snowballs. Say what?
Starting June 1, Ninja Snowballs will be popping up from the North Gates of LSU to the Garden District. Using primarily Twitter and Facebook, the sneaky snowball masters will be sending out tweets and status updates to announce their location for the day. One of three partners invested in Ninja Snowballs, Ninja Fred [who will not reveal his true identity until the June 1 launch date] says, “We’ll be very visible, but invisible. We want to create a social-network following.”
The business model on which Ninja Snowballs is based, Ninja Fred says, comes from the Kogi barbecue truck in Los Angeles. Using Twitter to announce its location, the truck moves throughout the city. And when the lunch hour rolls around, Kogi BBQ Twitter followers line up around the block for Korean barbeque.
“Snowballs are huge here,” Ninja Fred says. So the moving snowball stand just made sense. But the stand won’t just move around like ninjas; the entire experience will be ninja-themed. “We’re still working, tweaking everything,” he says. “I think we’re definitely going to do original names for our flavors. We’re going to be a social network-based business. But we definitely want to push the concept of being ninja-like.”
You can follow Ninja Snowballs on Twitter at @NinjaSnowballs. For the record, the ninjas say they will not serve pirates, “So don’t bring your ‘argh matey’ around here.”—O.W.
Executive Spotlight: Kathy Fletcher Victorian
Executive director
Baton Rouge Black Chamber of Commerce
Hometown: Ferriday
The first half of 2009 has been a whirlwind for Kathy Fletcher Victorian. She serves on the Junior League, American Cancer Society board and the Capital Area United Way governance committee—to name a few. She has received the Dr. Martin Luther King Jr. Humanitarian Award from Alpha Phi Alpha’s Xi Nu Lambda chapter and the Louise McFarland Award for Excellence in Public Health from the Louisiana Public Health Association. All this while Victorian pursues her passions and priorities as the executive director of the Baton Rouge Black Chamber of Commerce and also as a radio personality with WXOK-AM. Victorian, who watched a family member struggle with breast cancer, has made it a point to use her role with the station to announce health screenings for prevention and early detection. Between her committees, her work at the chamber, the radio station and volunteering, it’s a wonder Victorian has time for herself. “I make time for everything I feel is going to do something to help the next person,” she says.
To read Victorian’s full Q&A, click here.
Book Review: Your Call is [not that] Important to Us
Author: Emily Yellin
Publisher: Free Press
Year: 2009
Pages: 304
You had a pressing little problem.
It started when you called a customer service hotline. The call connected, you pressed “1” for English, “2” for technical support, “4” for the specific product and “9” for a live operator.
But pressing “9” connected you somewhere else so you pressed “0” and heard, “Thank you, good-bye.” You had to start over, pressing this number and that until you hung up in frustration.
What happened to customer service?
Author Emily Yellin wondered that same thing, and in her new book, Your Call Is [not that] Important to Us, she takes a look at the evolution of customer relations and what is done when you press “1”.
With a consumer’s need for understanding and a journalist’s curiosity, Yellin traveled the world in search of stories of customer-service successes and failures.
What she discovered will amaze you and shock you. Or maybe not.
Yellin found people who are ferocious about customer service, including reports of CEOs taking their turn at call-center phones. She spoke with people who make the study of customer relations their life’s work. Conversely, she reports how blogs and Web sites have forced businesses to take action on poor customer relations, and how some companies still don’t get it.
Please listen carefully, as your options have changed. For businesses that want to spend their customer-relations money wisely, Your Call Is [not that] Important to Us gives plenty of positive ideas. For frustrated customers, it’s a reminder that the voice on the other end of the phone belongs to somebody just trying to make a living.—Terri Schlichenmeyer
Fast Forward: The mandating game
Health-insurance mandates continue to create controversy at the state level. Mandates for coverage levels, treatments and procedures hitting the legislative docket typically pit small businesses, business organizations and health insurance companies over nonprofits, consumer advocacy groups and consumers.
When Business Report covered one such mandate in the Feb. 24, 2009, story, “A hard pill to swallow,” the debate was not new, but it still was heated. The insurance mandate would have required coverage of FDA-approved prescription contraceptives. Rep. Karen Carter Peterson, a New Orleans Democrat, sponsored the legislation, which at the time was in the process of being drafted.
While Peterson has pursued this issue several times in the past, it will not be heard in this session. Sources say it was not simply that Peterson missed the filing deadline. She did not return phone calls or e-mails to Business Report.
Still, even if the legislation had made the docket, opposition would have been substantial. Not only is the state now facing a massive budget shortfall for the coming fiscal year, but also many businesses now are feeling the pinch of the national recession. And even though advocates insist the coverage would reduce the financial burden on small-business owners by lessening extraneous costs associated with unintended pregnancies, the threat of a premium increase imposed by health insurance companies frightened many supporters away. “That’s the perennial tug of war between the companies that fight all mandates and their supporters,” Insurance Commissioner Jim Donelon says.
Add to the financial crisis, national recession, small-business opposition and study released last month by the Baton Rouge Area Chamber on the cost of health-insurance mandates, and the chances of the legislation’s success were greatly reduced. Still, Julie Mickelberry, the director of public affairs for Planned Parenthood’s regional office, called the mandate “a cost-effective, common-sense, public-policy measure that helps women, that helps families and saves money.”—O.W.
The Good Life: Oh, sugar, sugar …
Don’t let the name fool you.
The national cocktail of Brazil, the caipirinha, is derived from the Portuguese word caipira—which means hayseed or country bumpkin—with the—inha suffix—which means small or diminutive.
But caipirinha [pronounced “kie-pee-reen-yah”] does not translate to little hayseed or little bumpkin, and most people would rather drink one than become hung up over its name. In fact, this refreshing beverage—which some people liken to a sweet margarita on the rocks—has become the rage of Brazilian churrascarias across the U.S., including Texas de Brazil’s location in Perkins Rowe.
The history of the caipirinha is just as muddled as the lime and sugar used to form the base of the cocktail.
According to one Web site devoted to the drink and its main ingredient—cachaca—many older Brazilians claim the caipirinha was originally a folk remedy used to help alleviate the symptoms of colds and flu. Even today, many Brazilians create a concoction of lime juice, cachaca and honey for the same medicinal purposes.
Cachaca is a uniquely Brazilian product with a distinctive aroma and taste that differs from most rum. While rums are typically molasses-based, cachaca is made from the juice of sugar cane. The cane juice is then fermented from one to three days, distilled at a steady temperature and finally filtered to remove any impurities.
Brazil produces about 2 billion liters of cachaca annually and exports about 400 million liters, leaving 1.6 billion liters for domestic consumption—about 3 gallons more or less for every man, woman and child in the country.
The popular and most readily available cachacas—Pitu, 51, Leblon, 10 Cane or Ypioca Prata—are perfect for making a world-class caipirinha.—Scott Gremillion
Caipirinha
Fortnight: June 3 – June 16
June 3 – Application Security Inc., SecureNation and the Baton Rouge chapter of Information Systems Audit and Control Association plays host to a free lunch on “Grounding Security and Compliance Where Enterprise Data Lives.” The presentation is scheduled from 11:30 a.m. to 1 p.m. at Juban’s Restaurant. For more information, e-mail jpcinman@aol.com.
June 8 – On this day in 1964 – ?The first black student was admitted to LSU. As of 2008, less than 9% of the student body was black compared to more than 76% white.
June 9 – Business Report honors its nine 2009 Influential Women in Business winners at 11:30 a.m. at the Crowne Plaza Hotel. To purchase tickets or for more information, click here or call 928-1700. To read profiles of the winners, click here. To read a? Q&A with keynote speaker Lisa Johnson, CEO of Reach Group Consulting, click here.
June 15 – On this day in 2004 – The Legislature approved a measure to add a ban on same-sex marriages to the September election. While the ban was already a part of state law, the measure would have made the law a part of the state’s constitution. The constitutional amendment, which was later approved by voters, is part of a national debate over the issue that was most recently played out in California, where the state’s Supreme Court upheld a similar amendment.
June 16 – On this day in 2004 – The Louisiana House approved legislation to maintain privacy for state officials regarding their business deals. The law, supported by former Gov. Kathleen Blanco, faced staunch opposition from the Louisiana Press Association. The Jindal administration opposes the possibility of opening up more of the governor’s records to public view.
June 16 – The LSU Executive Education program plays host to the Disney Institute’s Disney Keys to Excellence, a one-day workshop where participants can learn business practices from Disney insiders. The workshop, to be held at LSU’s Lod Cook Alumni Center, also will cover leadership, management, service and brand loyalty topics. For more information, go to keysbatonrouge.com.
Business of Politics
Swashbuckling lawmakers eye coastal loot
Gov. Bobby Jindal’s legislative team was able to defend $300 million in surplus money in the capital outlay budget against mutinous House members last month, but senators from the region are planning one more run at the bounty.
Rep. J. Rogers Pope, a Denham Springs Republican, took the first stab at the money, which the governor set aside for coastal protections. His amendment, backed by Baton Rouge-area lawmakers, failed to strip $45 million from the pool for road projects.
Now that the ship has sailed to the Senate, Jindal’s legislative liaison, Scott Angelle, says another coalition of Capital Region legislators is planning similar amendments. But Coast Builders Coalition President Scott Kirkpatrick, who conferred with lawmakers during the House hearing, says the money is needed to leverage more than $15 billion in federal funds and to satisfy the final state cost-share requirements for constructing a 100-year level of protection for the New Orleans area.
Kirkpatrick says any amendments lessening the $300 million total would also impact an emerging industry that is expected to carry out the state’s massive master plan for the coast. “The funding in H.B. 2 will allow for unprecedented protection and restoration projects to be constructed in the next few years,” he says.
Revenue neutral
When lawmakers and the administration want to know how much money the state has, they turn to the Revenue Estimating Conference. But the May meeting almost didn’t happen, leading to the assumption the news would be bad. Now that official numbers have been tallied, it’s basically a wash. State officials have been preparing for the worst, and updated figures confirm that was a wise course of action.
The biggest change, however, can be found in corporate taxes, which are down $106 million for the current fiscal year and forecasted to drop another $53 million during the next fiscal year, which begins July 1. Greg Albrecht, legislative fiscal officer, says, “It’s highly volatile.”
On the bright side, income tax collections were adjusted up, but officials warned not to read too much into the increase, especially as the economy turns further south in coming months.
Overall, there’s expected to be $30 million less coming in. It might sound like a lot, but when you consider the state is already facing a $1.3 billion shortfall, it wasn’t enough to change the administration’s fiscal forecast. “If this was the only number in front of you, I would say it’s perfectly reasonable not to change anything,” Albrecht told the Revenue Estimating Conference.—J.A.
ON THE BEAT
Busted: David Lester McFadden, a former Baton Rouge securities broker, pleaded guilty in federal court in New Orleans in late May to conspiring to commit securities fraud. The plea agreement calls for McFadden to face a minimum sentence of 18 months or a maximum of two years in prison for conspiring to defraud Exxon employees out of their retirement.
Rock on: The Metro Council’s Planning and Zoning Commission approved zoning changes—from “light commercial” to “commercial alcoholic beverage”—for the building that once housed Perkins Road Hardware. Rock-n-Sake, a popular New Orleans sushi restaurant, will open in a 3,500-square-foot space later this year or in early 2010, says Chad Ortte with Donnie Jarreau Real Estate.
Good-bye, Uncle Earl: Two Perkins Road bars now have new owners. Brian Ott and Jeremy Tucker have taken over the Happy Note and Uncle Earl’s after the original owners sold the properties. Brad Watts, who reopened the Happy Note and Uncle Earl’s, says he and the other owners want to get out of the bar business. Ott says he and Tucker are talking about doing “different things” with the two bars, such as expanding them.
Cash count: The Shaw Group, an engineering and construction company, says it spent $330,000 in the first quarter to lobby on federal stimulus spending, funding for the U.S. Army Corps of Engineers and other issues. The Baton Rouge-based Fortune 500 company lobbied Congress and the Department of Energy on issues related to the federal budget, energy tax credits and nuclear power plants and waste storage, according to the report filed April 17 with the House clerk’s office.
Deliquent: The percentage of delinquent homeowners locally is up from a year ago, but still below the state and national average. According to First American CoreLogic, 4.8% of Baton Rouge homeowners were 90 days or more late on paying their house note in March, compared with 3.1% for March 2008. That’s better than the state average of 5.2% of homeowners being delinquent on their mortgage, compared with 3.6% in March 2008.
A falling out: The global recession and declining prices for oil and crops caused the value of all Louisiana exports to fall by 33.5% in the first quarter. That compares with a 22.5% plunge in U.S. export value during the same period, says the World Trade Center of New Orleans. Even though trade from Louisiana fell more than the national average, it moved up two spots in the ranking of export value per state. Louisiana was ranked seventh, exporting $7.6 billion worth of goods.
High interest: A sister company of Peak Performance Physical Therapy bought the property and a majority interest in two Spectrum Fitness clubs for $6.6 million. The gyms on Perkins Road, near Essen, and in Denham Springs will continue to operate under the Spectrum banner, says Donnie Jarreau, who owns the fitness centers. Peak will work closely in bringing medical wellness and fitness services to the members of these facilities.
Kicking back
The Louisiana State Employees Retirement System is ending its relationship with a firm under investigation in several states for an alleged kickback scheme. LASERS has about $125 million invested with Dallas-based Aldus Equity Partners. Aldus founder Saul Meyer faces criminal and civil charges in New York for reportedly paying for access to invest public retirement funds. Law enforcement officials in several states are investigating Aldus, and Connecticut and New Mexico has taken away their investments, the Wall Street Journal reports.
LASERS has its money in two private equity funds that Aldus controls, including about $70 million with Louisiana private investments. Bobby Beale, LASERS’ chief investment officer, says it will take about 90 days to transfer the money from Aldus. The state is looking at other private equity firms to manage the investment. LASERS officials note they hired Aldus after a public search process and did not go through any third-party placement firms. In a statement, LASERS Executive Director Cynthia Rougeou says Aldus did not engage in any improper contact in connection with its work with the state.—Timothy Boone
Ready for some football?
Super Bowl XLVII won’t be played in New Orleans until 2013, but Baton Rouge tourism officials already are looking at opportunities to get business from the game. “We’re putting on our thinking caps,” says Paul Arrigo, president and CEO of the Baton Rouge Area Convention & Visitors Bureau. “We’re looking at opportunities for mass transit from here and marketing gambling, casinos and golf. We’re only an hour and 10 minutes away from New Orleans.”
The last time the Super Bowl was in New Orleans in 2002, Baton Rouge did some advertising and filled some hotel rooms. But Arrigo doesn’t know the exact amount of business Baton Rouge saw from the game. “We weren’t as sophisticated back then,” he says. The best chance for Baton Rouge to get Super Bowl business will come from average pro football fans who win lottery tickets for the game, or from the 200,000 people who are headed over to be part of the event. Arrigo says if one of the Super Bowl teams is from the west, like the Dallas Cowboys or Houston Texans, that could boost the amount of Baton Rouge business. But he says the strongest competition for the Super Bowl spillover will come from the Mississippi Gulf Coast, which will attract football fans with its array of casinos.—T.B.
