La. loses steel mill but gains respect

ThyssenKrupp AG's announcement Friday that it will build a $3.7 billion, 2,700-employee steel plant in Alabama ended Louisiana's bid to lure the German steel giant to St. James Parish.

But the fact that Louisiana made it to the final round of the competition is noteworthy, experts say, and a sign that Louisiana may be overcoming its reputation for being less than business friendly and is strengthening its hand at economic development projects.

"To be selected as one of two finalists from among 20 states and 67 sites for a project of this magnitude is a tremendous honor and proves that Louisiana is moving forward with extraordinary momentum," Gov. Kathleen Blanco said in a statement Friday addressing the state's loss to Alabama. "Our success with this project demonstrates that Louisiana has established a stronghold in the global economy and can successfully compete for world-class projects."

Louisiana has captured in recent years three new manufacturing projects with investments in excess of $1 billion and several multimillion-dollar projects in multistate competitions, an achievement that has corporate site selectors taking notice.

"Louisiana has handled its own in landing projects recently," said Adam Burns, managing director of Site Selection Magazine, a trade publication produced by the International Asset Management Council, whose members are corporate real estate executives and site selectors. "Certainly (Louisiana Department of Economic Development) is doing a lot of the right things to get the investments that they need to."

In June 2004, shortly after Blanco took office promising to make Louisiana more attractive to businesses, the state got its first hit when Chicago firm Union Tank Car Co. said it would build a $100 million, 850-employee rail car plant in Alexandria. Louisiana initially lost the project to Texas, but the company reconsidered three months later. That plant now is running near capacity, said Bruce Winslow, a spokesman for Union Tank Car.

Winslow said it was, in part, Louisiana's emergence as a pro-business state that won over the company.

"We found that the governor was a friend to business and a friend to Union Tank Car," Winslow said. "At this point we're very pleased with our decision to invest in Alexandria."

The rail car plant is one of 16 businesses to announce an investment of $100 million or more in the state since January 2004, according to the economic development office. That includes three business investments of $1 billion or more and 1,500 jobs total. The figure counts only new business in Louisiana, not companies that expanded operations, such as General Motors Corp.'s expansion of its Shreveport truck plant.

The state got its first billion-dollar investment announcement in 2005 when chlorine producer Shintech said it would build a $1 billion plant southwest of Baton Rouge. The plant is under construction.

The Shintech deal was followed by Lake Charles Cogeneration LLC's $1.3 billion gas plant announcement for the Port of Lake Charles.

The largest project now under way is a $5 billion investment by Synfuel Inc., which is planning to build a major coal gasification plant in Ascension Parish.

Those developments indicate that Louisiana is taking steps to shed its image as a bad partner to business, said Michael Olivier, secretary of the Louisiana Department of Economic Development.

"I think we have achieved a lot of things," said Olivier, who credits his office with helping to erase Louisiana's negative business reputation.

"The problem is that Louisiana is characterized in a way that has not been of great service to us," Olivier said. "We had to change our image. We had to be seen as pro-business, as business-friendly."

In addition to assembling generous incentive packages, the state has made some in-house adjustments in hopes of bolstering its image. Among them has been hiring a "professional economic developer," to head up its research department. That person's job is to sniff out industry trends that would make the state more proactive in its bid to attract business. The job includes monitoring currency exchange rates, for instance, to spot investors from countries that may enjoy at least a temporary advantage from the relatively cheap dollar.

"What we've done is make a conscious effort to improve our product," Olivier said. While Olivier said Louisiana isn't copying any other state's economic development strategy, he'd like Louisiana to aspire to the success achieved in North Carolina, South Carolina and Alabama, states that have made headlines for snagging major deals.

"We believe those are three states that have done a good job of turning around their economy," Olivier said. "We're seeing what they've done and that progression of focusing on certain types of resources."

Louisiana was well on its way to achieving similar success before Katrina, Olivier said. But the storm set the state back.

"Man, I've got to tell you, that set us off course," Olivier said. Before Katrina "we were on fire and everybody knew it."

According to recent surveys, the state still is doing a pretty good job of letting site selectors at major corporations know it's open for business. A survey in Site Selection magazine that ranks states based on the "ease of doing business" there placed Louisiana 17th among 25 states in 2006. Louisiana was tied with Iowa. That's an improvement on five years ago, when the state ranked 24th and better than 1998, when Louisiana did not make the list at all.

Olivier said the ThyssenKrupp deal also will serve notice to an international audience.

"If Louisiana intends to be competitive, it has to be globally competitive," Olivier said. "And the one thing this ThyssenKrupp project demonstrates is that we can be globally competitive."

Five companies already have expressed interest in the St. James Parish site considered by ThyssenKrupp, said Lana Sonnier, a spokeswoman for the economic development office. Sonnier declined to release the names of the companies because of confidentiality issues and for fear of tipping off other states that might want to recruit them. She described the companies as "manufacturing type" businesses in need of access to railroads and water.
Source : http://blog.nola.com/times-picayune