Region to see big future economic growth

10 12, 2012 by Houma Courier

Houma-Thibodaux is forecast as being the second-fastest growing area in Louisiana in the next two years — right behind Lafayette — because of the thriving oil industry and a third round of BP oil spill settlements.

The region is projected to add 6,000 more jobs by 2014 as the region increases drilling activity in the Gulf of Mexico while procuring further BP claim settlements and increasing demand for shipyard employment, said Loren Scott, a retired LSU economics professor, during a presentation he made Thursday in Thibodaux.

These forecasts are according to the “Louisiana Economic Outlook: 2013 and 2014,” prepared by Scott and his colleagues.

“That is a very strong growth rate,” Scott said.

Scott said unemployment in Houma-Thibodaux and in New Orleans did not suffer as badly as expected, post-Hurricane Katrina, because of BP's cleanup efforts of pumping a lot of money into the economy and satisfying claims made by businesses and individuals. By August 2011, BP had settled 184,011 claims and allocated nearly $1.6 billion in settlements.

Now, a third round of BP settlements is on the horizon and subject to final approval by the U.S. Federal Court in November. The Deepwater Horizon Class Action Claims Unit began its operations in May and is expected to continue for another three years.

The money expected to be dispersed to claimants in Louisiana by the third round settlement is estimated at around $7.8 billion, according to the forecast. Most of that money would go to New Orleans and Houma-Thibodaux, thus providing a considerable spark to the two regions.

Louisiana's employment actually started to show positive numbers in 2010 and continues on a positive track. Scott's forecast estimates Louisiana will reach 1.9 million jobs by the end of 2012, which represents a new employment record for the state. An additional 27,500 jobs are set to be added in 2014.

This is because of several factors, Scott said. One is the state's huge chemical industry doing well from gaining market share from Europeans.

Another is that the oil recovery in the Gulf of Mexico has picked up considerably.

The local region has a significant shipbuilding and fabrication sector — much of it closely tied to the energy extraction industry. In July, 5.8 percent of the local employment was directly in oil and gas extractions, more than double the statewide average of 2.8 percent. However, whenever energy prices get soft, the area's employment declines.

One downside for Houma-Thibodaux, going into 2013, is fabricators, Scott said.

Scott said that while these fabricator companies, such as McDermott and Gulf Island, were making topsides in the Gulf of Mexico, months went by without any drilling.

“What's going to happen in 2013 is Gulf Island and McDermott are going to be sitting there with not very much to do,” he said.

Scott said McDermott, which employs 1,400 people, might drop to 300.

Lafayette is projected to be the biggest gainer in the state, seeing a 6.9 percent increase in the number of jobs over the two-year period. Houma is projected to receive a 6.2 percent gain; Lake Charles, 5.7 percent; Alexandria, 2.7 percent; Baton Rouge, 2.4 percent; Monroe and Shreveport, each 0.8 percent; and New Orleans, 0.6 percent.

Houma-Thibodaux probably would have beat out Lafayette for the fastest-growing region in the state if it weren't for the fabrication issue, Scott said.