Before moving on to 2021, we look at the top business news from the past year in NWLA
There was no bigger single item facing the business community in 2020 than the fallout from the COVID-19 pandemic. After the state took measures to lower infections of the coronavirus by pushing for businesses to temporarily close, many industries suffered as a whole. Swaths of layoffs, entire businesses shuttering, and a decline in spending put the Shreveport-Bossier region in a recession.
Various economists throughout the year shared the data illustrating this carnage, as well as forecasting any sort of timeline for an economic turnaround.
Rob Kaplan, president and CEO of the Federal Reserve Bank of Dallas, was the most recent expert to provide an economic update for Shreveport-Bossier. A virtual presentation in early November, done in conjunction with the Greater Shreveport and Bossier Chambers of Commerce, saw Kaplan recap the devastation wrought by the COVID-19 pandemic.
He noted that in Q2, GDP dropped by 32% with the economy bottoming out in April due to lockdowns. However, Kaplan pointed out the economy recovered before growth stalled in June through August, then picked back up through September. While he expects more positives for Q4, a lot is left to be determined due to COVID cases increasing.
“With all those fits and starts, 3rd Quarter GDP rose by 33%. We’re still behind in where we were, but we’re still on the rebound,” said Kaplan. “We are planning for solid growth for the 4th Quarter, but we are right in the middle of a resurgence of the virus and we’re going to see how much that reduced mobility and engagement and that resurgence in larger cities overwhelms the hospital systems.”
He said the base for 2020 is that the economy will retract by 2.5%, but he said that estimate could improve. He also looked ahead to the beginning of 2021, saying, “The first part of next year will be challenging due to a resurgence of the virus, but the Dallas Fed expects the economy to pick up speed as the year continues and the economy will grow by 3.5% in 2021.”
As it comes to the oil and gas industry, Kaplan said U.S. oil and gas production will decline from 12.8M barrels per day in January to end at roughly 10M barrels per day. Kaplan explained the oil and gas industry suffered from demand shock due to COVID and supply shock from OPEC. He said this will lead production in 2021 to be flat, and that excess inventory won’t be used up until the first half of 2022.
“You’re seeing significant job losses, restructurings, and bankruptcies. It’s a rapidly consolidating industry — players are lowering the cost of production and need more scale,” he said.
An area the Dallas Fed is watching closely is employment. Kaplan pointed to the “sizable number” of workers who lost jobs, saying the unemployment rate will “grind down” in 2021.
In mid-September, Dr. Loren Scott, professor emeritus of economics at LSU, gave his 39th Annual Louisiana Economic Outlook. He noted that the region will not recover from the massive economic downturn caused by the COVID-19 epidemic for some time.
Statewide, April employment data showed a decrease of 271,900, which is -14% overall. The Leisure and Hospitality sector saw employment decrease by -46%, a total of -106,500 employees lost, with the construction sector a distant second at -17%.
“The Leisure and Hospitality sector is where your casinos are. There were 16,000 people employed in those across the state and those casinos were totally closed down (for months),” said Dr. Scott.
Dr. Scott went on to note that Louisiana is No. 2 in the nation for refining capacity. He pointed out that gasoline consumption dropped -42% in roughly three weeks.
“That really hammered the refinery industry and the first thing they did was start laying off contract workers,” he explained.
His report went on to note the -15% employment in the mining sector, which contains the important oil and gas industry. Oil prices were at $60 in early 2020 and then hit a historic low of $-38 for one day this spring. The good news is that the price of oil had rebounded to $40 per barrel by the end of June.
Oil prices are difficult to forecast, partly due to many oil fields across the globe being in the hands of governments, but Dr. Scott said he sees the price of oil being $45 next year and $49 in 2022.
“This is not a good forecast for Louisiana. Louisiana needs oil prices in the $55 range,” he noted.
On the flip side, he sees the price of natural gas almost doubling between now and 2022. This is because the rig count dropped from more than 1,000 to 250 currently.
“In the shale basin, a lot of associated natural gas is un-produced, so the price will go from $1.60 to $3.10. That’s good news for you all because of the Haynesville Shale. I think there’s some good things about to happen there for you folks,” Dr. Scott exclaimed.
April employment data for Metropolitan Statistical Area (MSA) showed the Shreveport-Bossier MSA had a decrease of -13%, a loss of -23,100 jobs.
“Shreveport-Bossier got hit about as hard as anybody did. One of the reasons for this is because you have the second largest casino market in the state. About 4,800 people were employed in the casinos and these were closed in mid-March and not reopened until mid-June,” said Dr. Scott.
Looking at the economy’s recovery since this spring, the Shreveport-Bossier MSA’s economy kept up with state trends — jobs increased by 49% for an overall job loss of -11,900.
Dr. Ray Perryman, a Nobel Prize nominated economist, presented The Price of a Pandemic webinar hosted by Argent Financial Group and the North Louisiana Economic Partnership in early June.
Dr. Perryman stressed that the current state of the world is a very unusual situation as a recession usually comes about because of some external force or structural problem in the economy.
“It was never that our economy ran out of steam, (a recession) was always (caused by) something we had to fix. A few years ago it was the mortgage crisis, then before that it was the dot com crisis,” said Dr. Perryman. “This was a health crisis that created an economic crisis. You can’t fix this (like a structural problem).”
In North Louisiana, specifically, 29,400 jobs will be lost.
“Those are big losses. But, we’re seeing the potential for recovery,” he encouraged.
He said although the local region has still not reached the same level it had prior to the 2008 recession, it still has several things in its corner, including opportunities in the technology sector sector and the manufacturing and packaging sectors are promising.
Staying on topics important to north Louisiana, he zeroed in on the oil and gas industry.
While demand dropped 25% in 30 days, Dr. Perryman added that the price had already rebounded to the mid-$30 range in early June.
“We’re not that far away from the market being able to make a comeback,” Dr. Perryman said optimistically. “As the economy opens back up, we only have to meet half of that reduced production to balance supply and demand.”
Dr. Perryman went on to say the economy won’t get back all the lost jobs until 2022. While that sounds like a long recovery, he cited that the economy took 58 months to recover from the recession in 2008.
ECONOMIC FORECAST
Dr. Loren Scott, professor emeritus of economics at LSU, gave a substantial analysis of the Shreveport-Bossier Metropolitan Statistical Area (MSA) during the 39th Annual Louisiana Economic Outlook hosted by the Port of Caddo-Bossier in mid-September.
While COVID-19 was not kind to Shreveport-Bossier’s economy, the pandemic’s effects were magnified by several key losses, says a state economist.
“Your community took a hit from not only COVID, but some things that are not COVID-related,” said Dr. Scott.
He noted the Shreveport-Bossier Metropolitan Statistical Area (MSA) took some permanent hits in 2020.
Specifically, Libbey Glass is shutting down by the end of the year, taking 450 jobs with it. Another hit was that the DiamondJacks Resort and Casino closed during the COVID-19 outbreak and did not reopen, equating to a loss of 349 jobs.
“That Libbey Glass loss is a big number for any MSA, but especially for one of your size,” Dr. Scott explained. “The Casino sector has been in a decline since 2014 because of competition from Indian casinos in Oklahoma.”
He then warned, “It will be very interesting to see where that (DiamondJacks) license goes. I doubt it stays in your area, I don’t know where it will go, but I doubt it stays in an area which has been declining for some time.”
Dr. Scott also noted the closure of the Dolet Hills Mine and Power Plant in Mansfield, which will result in a loss of 243 jobs.
He went on to highlight some “temporary” knocks to the Shreveport-Bossier MSA’s economy in 2020.
Benteler Steel dropped from 530 employees to 158 due to lack of production for pipes used in oil and gas production.
BJ Services, a fracturing firm in the oil and gas industry, announced in early August it is laying off 273 people and filed for Chapter 11 bankruptcy.
Cactus Wellhead, another oil and gas service industry, is laying off 42 people.
These negative changes were knock on effects from oil prices falling from $60 in early 2020 to a historic low of $-38 this spring caused by oil futures. The good news is that the price of oil had rebounded to $40 per barrel by the end of June.
The reality of these losses adds up to a historic downturn for the area.
He explained that following the majority of estimates, the state will get back 72% of what was lost in the first half of the year.
Applying that to the Shreveport-Bossier MSA, that is going from -23,100 jobs to -10,600 jobs, an overall decline of -5.9%.
That would make this year’s dip the worst downturn since the oil crash in the 1980s.
“Notice that the 1980s downturn occurred over four years, this downturn was over four months,” said Dr. Scott. “Your community is the third hardest hit in Louisiana by percentage, primarily because of the permanent losses you suffered from Libbey Glass, DiamondJacks Casinos and Dolet Hills.”
However, when looking ahead to how things could turn around for the Shreveport-Bossier MSA, Dr. Scott said the state won’t recover its pre-COVID losses until 2023, mainly due to low oil prices.
The Shreveport-Bossier Metropolitan Statistical Area (MSA) is expected to gain 6,400 jobs in 2021 and 1,000 jobs in 2022.
“We expect you won’t recover all your jobs until 2023. If you get (potential) nice hits at the Port and the National Cyber Research Park, that could all change and make this much, much better,” said Dr. Scott.
The primary reasons for this positive outlook is the recovery of COVID losses — restaurants, entertainment firms, etc. — and expected growth at the Port of Caddo-Bossier, National Cyber Research Park, and Ochsner Health System.
The Port is currently building a $14M, 100,000 sq. ft. warehouse for steel products. They also have a prospect for the 2021 timeframe that would see a firm use existing infrastructure to build a $325M plant using a considerable amount of barges.
As for its tenants, Benteler Steel is expected to grow from 158 to 280 by the fourth quarter of 2021 and is making a $1 million upgrade on a furnace floor. OMNI is expected to grow over the next two years and finished a $2M blending process capital expenditure in October of 2020. Ronpak is adding machines through 2022 and expects growth.
The Bossier City-based National Cyber Research Park is seeing construction on the $22M Louisiana Tech Research Institute building that will employ 400 people by 2022.
“That’s a nice little bump to offset the Libbey Glass loss,” Dr. Scott noted.
GDIT is expected to add 100-200 new jobs over 2021-22. And, the CIC added 20 jobs in 2020 and is expected to add another 20 over 2021-22.
“Those are not big numbers, but they’re big payrolls and that’s important for this area,” said Dr. Scott.
His report cited CIC CEO Craig Spohn saying he expects to announce a new 100 person firm on the campus.
Other business gains included Ochsner Health System reopening the CHRISTUS Schumpert hospital as St. Mary Medical Center, adding 133 jobs in the process. They forecast to spend $56M in projects on two hospitals and add 425 jobs over two years.
Dr. Scott noted that Barksdale reversed its recent downward trend of declining civilian and troop counts. It is up to almost 300 jobs. Base leadership also hopes to announce a $170-225M weapons storage facility. Construction is also underway on a new entrance off the I-20/I-220 exchange and a corresponding $46M gate.
Fibrebond worked with the Louisiana Department of Transportation and Development to upgrade 50 miles of highway to better transport its product. That resulted in the 752-person firm staying in the Minden area, a $2.5M capital expenditure come online, and the decision to add 50-75 jobs.
In the natural gas realm, Dr. Scott sees gains in the Haynesville Shale play as the price of natural gas is expected to almost double between now and 2022. This is because of decreasing rig count and new Liquified Natural Gas (LNG) plants coming online in south Louisiana.
“In the shale basin, a lot of associated natural gas is un-produced, so the price will go from $1.60 to $3.10. That’s good news for you all because of the Haynesville Shale. I think there’s some good things about to happen there for you folks,” Dr. Scott exclaimed.
SHREVEPORT UPGRADES
Local business leaders encouraged Shreveport to seek a bond issue and invest in various infrastructure projects that would revitalize the city as it prepares to emerge from pandemic struggles.
In the wake of the Covid-19 pandemic, local business leaders formed the Shreveport Economic Recovery Taskforce (SERT) in May to focus on an economic recovery plan based on infrastructure. The 40-member strong group unveiled a report at the end of July.
Co-chaired by Desi Sprawls and Larry English, the group’s members are top business professionals locally and across the country in the fields of technology, construction, transportation and finance.
SERT specifically focused on infrastructure projects that are or can be shovel ready quickly, along with potential funding sources and encourages local government to explore public-private partnerships wherever feasible.
SERT formed subcommittees focused on Downtown Shreveport Infrastructure, Digital Infrastructure, Transportation, and Future Bond Proposals.
The report notes that Shreveport is experiencing 30% unemployment, a $25 million budget shortfall, the closure of Libbey Glass, the loss of thousands of gaming jobs and “hundreds of small businesses.” The report points out that pre-pandemic, Shreveport’s economic outlook was trending down and COVID-19 “simply accelerated the spiral.”
“However, history shows us that out of great chaos, comes a chance for renewal. We have been presented with a once-in-a-generation opportunity to rebuild our city’s infrastructure to compete in a post-pandemic, technologically driven, global economy,” the report’s executive summary states.
Proposed Downtown projects include:
• New state office building and justice center
• Improvements to make Texas Street more pedestrian and business friendly, such as lighting, security, parking, and walkway coverings.
• Creating a Downtown loop defined by the casinos/Red River District and Commerce Street, Cross Bayou, Ledbetter Heights, and Cotton Street.
• The report adds that the Cross Bayou/Ledbetter Heights area still has great merit and represents “the city’s premier waterfront redevelopment opportunity” and requires connection to downtown with infrastructure such as roads, stormwater systems, sewer connections, sidewalks, etc. The report adds this infrastructure should be built by a private developer with public assistance, using the developer’s future tax dollars to fund the required public improvements.
Digital infrastructure efforts included a survey to gather data about city residents’ internet usage and found that “COVID-19 has highlighted the importance of having access to the internet. From corporations shifting their workforce to remote working, to educational systems relying on distance learning, technology has become essential to how the world will work, play, and socialize.”
The report adds that providing internet access to urban and rural communities is an important initiative to make Shreveport “a destination city for companies and families over the next 20 years.”
Solutions include:
• The creation of a map that accurately shows who has access to broadband technology in Shreveport.
• Developing a survey to identify what group of people in Shreveport are affected to determine who has access to broadband and where the greatest need for internet connection is.
• The discussion around a Tech Village in Shreveport where we will house an incubator, STEM Alliance, Tech Research, and Business Community liaison.
The cost of upgrading Shreveport’s broadband infrastructure will be approximately $250M consisting of $150M in Private Capital and $100M in Public Capital.
SERT’s report also advocates for a new bond issue that would create new infrastructure jobs and upgrade local facilities. Bond items include:
• $250M for broadband access that would create an estimated 1,500–3,000 jobs over a five-year period
• $32M on water and sewer upgrades
• $76M in upgrades and renovations for the city’s police and fire departments, city parks, and other public facilities, all of which were originally proposed in the city’s failed 2019 Bond Proposal.
Lastly, SERT advocated for transportation improvements:
• I-49 Inner City Connector — $550-$640M to build, $802M annual impact when completed, revitalization of the Ford Street Corridor in Allendale, increase labor productivity by 2.9%, minority and women business contracting opportunities.
• Jimmie Davis Bridge Rehab — $125 million dollars in construction contracts, would relieve traffic congestion between south Bossier and south Shreveport, minority and women business contracting opportunities.
• Amtrak Connection — Passenger rail between downtown Dallas and Downtown Shreveport would be the first step to creating high-speed rail between the two cities providing the Shreveport-Bossier region with easy access to one of the largest global airports in the world.
