International Destination: Louisiana

SNF Floerger, a privately held French company with U.S. headquarters in Georgia, already has invested $220 million toward a $350 million, 510-job project to develop an 800-acre site in Iberville Parish. The project will expand SNF’s production of water-soluble polymers, primarily for use in enhanced oil recovery. The new facility is operating under the name Flopam Inc.

“This facility is the largest single greenfield investment in the history of our company,” said SNF President Peter W. Nichols. The project was made possible “with tremendous support from the State of Louisiana and many individuals in Iberville Parish,” Nichols said. “We look forward to executing our construction plans over the next few years, and having a lasting impact on the parish and state.”

LED worked with SNF to find the site, and the state created a customized incentive package that gave Louisiana a clear edge over other competing locations. SNF cited financial incentives, the state’s trained workforce, and freight costs as the primary reasons for locating in Louisiana.

LED FastStart® – named the No. 1 state workforce program in the U.S. three years in a row by Business Facilities magazine – represented one of the most compelling incentives for SNF. Early on, FastStart provided recruiting, screening, pre-hire training and assessments to help SNF meet its initial hiring needs.

Near the SNF site, a subsidiary of Japan-based Shin-Etsu Chemical Co. Ltd. – SE Tylose – also plans to utilize LED FastStart in establishing a new chemical production plant.

Shin-Etsu’s North American entity, Shintech, has made a multibillion-dollar investment in Louisiana plastics production in the past decade. Now, sister firm SE Tylose will invest $120 million to build a hydroxyethyl cellulose, or HEC, plant at Shintech’s site near Plaquemine. SE Tylose will produce HEC chiefly for latex paints.

"We've experienced great success in Louisiana and the Capital Region,” said David Wise, Shintech Louisiana vice president. “We have every confidence that the outstanding business climate and quality infrastructure in Louisiana will only lead to greater outcomes for Shintech, for SE Tylose, and for our state and local partners."

Major chemical sites aren’t the only foreign direct investment Louisiana is luring. The state increasingly attracts FDI ventures in other industries, because Louisiana can provide talent in strategic sectors.

Paris-based Gameloft, one of the world’s leading publishers of mobile video games, opened a New Orleans game development studio in October 2011 because the state offered a winning combination of digital media incentives (tax credits up to 35 percent on Louisiana-based payroll) and an abundance of local brainpower. 

Gameloft needed to know New Orleans could attract 150 top-notch programmers, animators and support staff for the studio, said David Hague, studio manager for Gameloft New Orleans.

LED FastStart launched a custom Gameloft New Orleans website and advertised on social media sites, including Facebook and Web portals frequented by game software professionals. A banner ad promoting New Orleans as a fun place to work and live, for instance, would pop up on the Facebook home page of people with a background in video game programming.

“In the first seven weeks, we got 1,350 résumés,” said Jeff Lynn, LED’s executive director of workforce development programs. “Once the Gameloft people went through them, they found that 700 were qualified.” Those numbers “blew away” officials with the video game company, Lynn said.

"As we seek to expand our presence in the U.S. we are looking for the most talented gaming professionals to help us maintain our position as an industry leader in digital and social games," said Samir El Agili, Gameloft general studio manager for the U.S. and Latin America. "New Orleans presents the perfect opportunity to not only draw from a rich talent pool, but to incorporate the unique and world-class culture in which the studio resides into our own as well."

When India-based Dr. Reddy’s Laboratories Ltd. wanted to expand its North American pharmaceutical operations, the company found the perfect marriage of location, workforce and incentives right at its front door – in Shreveport, La. That location is the largest producer of silver sulfadiazine cream and the second-largest producer of prescription ibuprofen for the North American market.

LED, the North Louisiana Economic Partnership and the City of Shreveport successfully recruited Dr. Reddy’s and its new $16.5 million capital investment to Louisiana. Working with Dr. Reddy’s to attract new employees, LED FastStart designed more than a dozen computer-based training courses.

Fast implementation of the expansion made an immediate impact on the facility’s production. Dr. Reddy’s produced more than 3.1 billion tablets in 2011, more than doubling its 2009 production.

Reshoring is a rising trend among U.S. manufacturing companies as wage rates in other countries rise, said Hal Sirkin, a senior partner in the Boston Consulting Group. An expert on globalization and operational challenges, Sirkin believes that by about 2015, the cost of manufacturing appliances, computers and electronics, transportation goods, plastics, and rubber in the U.S. will be less than 10 percent higher than in places like China.

“Then when you start adding in things like delivery and being far away from the customer, having lots of inventory on the water, intellectual property risks, and even country risks, it begins to make sense for companies to start bringing the goods back to America,” Sirkin said. “A fairly conservative estimate is that $100 billion to $120 billion worth of goods could return to the U.S.”

Louisiana is working to capture some of that reshoring, as well as international trade in automotive, aerospace, biofuels and distribution centers, by developing a master plan for international commerce. Louisiana Senate Bill 723, passed by the Louisiana Legislature on June 1, paves the way for the creation of a new Office of International Commerce within LED. LED will work with a 23-member board of business representatives from across the state to devise a master plan.

The plan will include an assessment of Louisiana’s existing leadership role in international commerce compared to other states in the U.S.; an analysis of relevant global and regional trends impacting FDI and trade; benchmarking of state and local international commerce activities compared to other states and regions; a clear strategy to expand Louisiana’s role in international commerce; and the identification and prioritization of specific projects that will best promote that expansion.

Louisiana Fast Becoming ‘Best Place In The World’ To Grow Businesses

A dramatic transformation in tax structure, workforce training, regulatory environment and incentives has made Louisiana fertile ground for new business investment and job creation.

In February, the Tax Foundation ranked Louisiana one of the lowest-cost business tax states in the nation: No. 2 for new firms and No. 10 for mature firms. For new manufacturing operations, Louisiana ranked No. 1 in the U.S.

Since 2008, the state eliminated the sales taxes on manufacturing machinery and equipment and the franchise tax on corporate debt; eliminated the sales tax on business utilities and natural gas; and substantially enhanced Louisiana's research-and-development tax credit. The state also offers one of the lowest unemployment insurance tax burdens in the U.S.

In May 2012, Chief Executive revealed that CEOs nationwide rank Louisiana as the most improved state for business in the U.S., according to the magazine’s Best/Worst States for Business ranking.

The Center for Public Integrity named Louisiana No. 1 and the most improved state in the nation for financial disclosure laws. Government ethics reforms enacted by Gov. Bobby Jindal and the Louisiana Legislature continue to gain positive national attention.

Louisiana ranks third in the U.S. in Site Selection magazine’s annual Governor’s Cup awards, as measured by the quantity of significant business wins per capita in a calendar year. Site Selection also ranked Louisiana No. 7 in the nation for best state business climate.

Many incentives make Louisiana attractive to businesses. LED FastStart provides free workforce recruitment, screening and training to eligible, expanding companies.

The Digital Interactive Media and Software Development Incentive provides a 25 percent tax credit for qualified production expenditures and a 35 percent tax credit for Louisiana resident labor expenditures.

The Industrial Tax Exemption Program provides property tax abatement for up to 10 years on a manufacturer's new investment and annual capitalized additions. The Quality Jobs Program provides up to a 6 percent rebate on annual payroll expenses for up to 10 years; and either a 4 percent sales tax rebate on capital expenditures or an investment tax credit equal to 1.5 percent of qualifying expenses.

The recently passed Competitive Projects Payroll Incentive allows LED to rebate up to 15 percent of new payroll for 10 years (a marked increase over the current 6 percent rebate) for highly competitive projects in target sectors, including durable goods manufacturing; pharmaceutical manufacturing; gas-to-liquids conversion; and data services.

The transformation continues, but Louisiana is well on its way to becoming “the best place in the world to create and grow businesses and find a rewarding career,” Gov. Jindal said.

Louisiana: Going Places

In 2011, Louisiana’s per capita exports reached $12,049 ($55.1 billion in total exports), making it No. 1 in the nation for the second year in a row. The state achieved a stunning 33 percent increase in global exports from 2010 to 2011, ranking its rate of growth No. 4 nationwide and No. 1 out of the Top 20 leaders in exporting.

Some 2,700 Louisiana companies contributed to that record haul. And more than eight in 10 of those companies are categorized as small or mid-sized companies. Increasingly, exports are everyone’s business.

“In order to survive in today’s global economy, businesses have to market themselves outside of traditional boundaries,” said Donald van de Werken, director of the United States Export Assistance Center in New Orleans.

Deborah Fehr-Niswanger established Military Truck Parts Inc. in Many, La., in 1992 to tap into the export market. “My husband and I were dealing in local drivetrain repair business with Many Gear and Axle (established in 1986) when we finally got a break to do business with the U.S. military at Fort Polk,” Fehr-Niswanger said. “I decided we needed to start working toward exports, because there were so many opportunities out there for business with foreign military.”

Beginning with the Taiwanese army in 1996, the company has exported to eight countries in its 20-year history. “Exporting is not as hard as it seems,” Fehr-Niswanger said. “The Department of Commerce and LED are there to guide and help with different support services and incentives.”

Military Truck Parts utilizes the state’s Enterprise Zone and Industrial Tax Exemption programs and several tax and employment credits. “Tax credits certainly encourage business in Louisiana, but I could have done business anywhere,” she said. “I love Louisiana. It’s a great place to live and raise a family. The people have a good work ethic, and there is lots of space to grow.”

Guy Barone Jr., president and chief executive officer of Xenetech Inc. in Baton Rouge, La., agrees. As, an exporter, he could establish his physical company anywhere. Louisiana attracted him not only because it’s home and offers incentives and credits, but because of its rich international trade history.

“Due to that history, ports’ presence and the established, multinational corporations, Louisiana has a great deal of exporters’ intellectual capital,” Barone said. “Smaller companies like mine can leverage that multinational experience by benefiting from the stable and qualified workforce and suppliers who serve the petrochemical industry and are used to meeting requirements and specs for higher quality. As a result of that multinational leverage, we are competitive globally.”

Data from Census Bureau, Foreign Trade Division prepared by World Institute for Strategic Economic Research (WISER)