Sunday, July 21, 2024

Economic Outlook 2021 Statewide Virtual Panel Forecasts Louisiana’s Economic Future

by BIZ Magazine

Angel Albring | BIZ. Magazine

The Louisiana economy was undeniably devastated by the COVID-19 pandemic in 2020, however Don Pierson, Louisiana Economic Development secretary, said Friday that the 2021 forecast is “cautiously optimistic.”

“While we are up against these headwinds, we still maintain a lot of economic strength that we can build on, grow on,” he said.

Pierson made his comments during The Advocate’s Economic Outlook 2021 summit, sponsored by Entergy and LCMC Health. The online event took a look at the state economy, both at the impact that COVID-19 had on it, as well as what the future holds.

Local experts provided their thoughts on what Louisiana businesses are facing as the economy recovers.

The panel consisted of Pierson, Gregory Bowser, president and CEO of the Louisiana Chemical Association, Ti Martin, co-proprietor of Commander’s Palace, Phillip May, president and CEO of Entergy Louisiana, and David Dismukes, executive director of the LSU Center for Energy Studies.

Pierson said that the key to economic recovery is going to be how quickly people feel safe to resume their normal activities and consumer confidence returns.

Until that happens, though, the short-term outlook for the restaurant industry is not hopeful. A recent survey of Louisiana restaurant operators found that 54% have seen sales drop and think those sales will drop further, and 30% don’t think they will be able to last six months, said Martin. She said that, nationwide, 79% of restaurants are reporting that sales are down.

“My sales this month are 26% of what they were in January of last year, so my sales are down and costs are up, and that is a really bad formula,” she said, adding that she thinks more federal assistance is needed to help struggling businesses.

The next round of federal Paycheck Protection Program loans “cannot come fast enough,” Martin said, adding that the government needs to do “an industry specific fund” for restaurants, similar to what was done for airlines.

Another critical factor in helping restaurants survive is the COVID-19 vaccine, which is crucial in restoring consumer confidence, she said.

“I am hopeful that when this thing is over, there’s going to be some pent-up demand, but between there and here, we’re going to lose a lot of darn good restaurants,” Martin said. “We have led this country in food for hundreds of years, and we don’t intend to stop now, but we are going to need some help.”

Martin joked that when she looked at the other industries that were being represented at the summit, she didn’t understand why she had been invited to speak, but noted that her favorite Louisiana festival was always the “Shrimp and Petroleum Festival,” so maybe there was a connection she wasn’t seeing.

Unfortunately, that connection may be the loss of jobs.

The recent shutdown of Shell Convent in St. James Parish put around 700 employees out of work, taking out one of the largest contributors to the south Louisiana economy. Oil and gas companies are known to compete with one another, but facilities owned by the same company are now having to also fight against each other for dwindling resources, said Dismukes.

“Exxon Baton Rouge competes with Exxon Baytown (Texas) and that’s only going to get more intense,” he said.

Because of the pandemic, some companies cut capital expenditures between 15- 30%, which are relative to 2019 levels, and 2019 was down from 2018. Dismukes said that while there is some recovery happening, now, there is still a long way to go and that capital spending isn’t expected to rebound to the heights reached in 2019 until 2025.

He said that these numbers, though, will depend on two things: the economic recovery associated with the pandemic and changes in public policy.

While the oil and gas industry is slow-growing, Bowser said the chemical industry is anticipating substantial growth in late 2021 and early 2022.

Aside from the pandemic, the Lake Charles area was rocked by back-to-back hurricanes, which damaged the chemical plants that call the region home, displacing thousands of employees.

“It may be early 2022 before some of those plants come back,” he said.

While that may seem bleak, Bowser said that the slowdown and repairs are an opportunity for plants to use new technologies to reduce emissions, making those facilities more competitive for future productions.

 “We have to build back a little better than before,” he said.

Bowser echoed what Dismukes said and agreed that facilities within the same company will start to compete with one another.

Building back with cleaner energy is something that Entergy has already begun.

“The price of solar energy has dropped pretty dramatically over the past decade and it’s to a point where it’s very attractive,” May said. “That’s why we added the largest solar facility in the state, which is on the west Bank of Baton Rouge, as part of our portfolio, and we are going to continue to add solar as we go forth.”

He said that to go forward with renewable energy, “we’re going to have to get there with new technologies and, to some degree, technology that does not exist.”

Aside from needing new technologies and infrastructure, Pierson said that Louisiana needs more young people going to community and technical colleges to earn a trade degree and added that the state has partnered with colleges and businesses to get people who graduate with trade certificates or degrees directly to work.

“Nothing speaks louder than the market. These young people will see that these certificates allow them to step into well-paying jobs and from there, we will gain momentum, and we are doing that currently,” he said.

May added that he felt that financial aid to help people going into these fields, and people transitioning from other fields, as well as making technical schools more available and affordable is going to be critical in seeing more people enter trades.

Martin said that another hurdle restaurants are going to face as things rebound is finding enough people to keep the restaurants running. She said that any waitstaff and other restaurant workers have found new jobs after restaurants were forced to close, and getting them to come back won’t be easy.

Pierson said that small businesses in Louisiana were impacted by COVID-19 and the 2020 storm season, and they are feeling a lot of frustration with getting the help they need.

“It’s a time of having to endure a shattered marketplace, to embrace new technologies, and it’s probably never been a more challenging time to be a small business owner,” he said “But, with that said, there’s great opportunity out there and there’s a lot of satisfaction from those owners that have pivoted and are doing well. We understand that they are the backbone of the economy and so we try to nurture our small businesses.”

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