Houma-Thibodaux MSA to add 5,200 jobs: LSU study

The Houma-Thibodaux metropolitan statistical area is forecast to add 5,200 jobs over the next two years, though impending changes to the federal flood insurance program could overwhelm promising economic indicators, a leading Louisiana economist said Thursday.

If accurate, the region, already at a record level, would offer more than 100,000 jobs.

Loren C. Scott, professor emeritus in economics, presented Louisiana State University’s annual statewide economic outlook at the Cypress Columns in Gray. An ongoing boom in Gulf of Mexico energy-retrieving endeavors is attributed for the projected growth, with Scott citing “exploding” activity at Port Fourchon and anticipated hiring at various service companies.

“The main thing that is going on is the Gulf of Mexico is back,” Scott said, noting that the Gulf’s rig count and the pace of permitting are exceeding 2010 levels. “These high oil prices are really good. You people are starting to adjust to the new regulatory regime. … Things are really hopping in the Gulf of Mexico.”

The region has 97,100 jobs this year, according to figures by the LSU forecasting team. Scott anticipates that number to reach 99,700 next year (2.7 percent growth) and 102,300 in 2015 (2.6 percent), an overall growth rate of 5.4 percent.

That rate would outpace five of the other seven Louisiana MSAs, behind only Lake Charles (8.1 percent) and Baton Rouge (5.6 percent).

“I think as long as we’re producing as well as we are in the Gulf and Terrebonne can keep its competitive edge as a service-company area in manufacturing for construction boats and other items, we’re going to continue to do really, really well,” Terrebonne Parish President Michel Claudet said.

Yet, the optimism is tempered until the full effects of Biggert-Waters are either realized or headed off.

“A looming uncertainty that could have catastrophic consequences is the possible implementation of the new National Flood Insurance Program,” the report’s executive summary says. “All bets are off for Houma if modifications are not made to the NFIP.”

Amendments to the program decreed by Biggert-Waters Act, enacted last year in attempt to make the NFIP solvent, include phasing out grandfathered rates, cutting subsidies on secondary homes and increasing premium rates to more accurately reflect flood threat.

Critics of Biggert-Waters say the changes would have a deleterious impact on south Louisiana’s economy and note that hurricanes Katrina and Rita, back-to-back storms that wrought enormous damage, are the primary reasons the program is upwards of $24 billion in debt. In January, Congress increased the program’s borrowing authority to $30.4 billion.

Reports out of St. Charles and St. Tammany parishes have premium rates increasing by cartoonish figures, from $300 to $23,000 in at least one case, according to officials.

Lenders, which require homeowners to maintain flood insurance, could have to foreclose on properties only to be saddled with unsellable lots due to the cost of premiums, Scott said.

The LSU report is based in part on the assumption that oil prices will continue a meek slide from $108 a barrel in 2013 to $95 a barrel in 2015 as petroleum is extracted in greater quantities from previously unreachable shale plays. “This price will still make the Gulf of Mexico a very profitable field for exploration,” the report says.

Blue Cross Blue Shield of Louisiana, ExxonMobil, MidSouth Bancorp and the Roy O. Martin Corporation helped finance the study. The Southeast Louisiana Economic Council, Coastal Commerce Bank and Louisiana Economic Development hosted Scott in Gray.

Scott heralded Louisiana’s resiliency during the national recession, saying it is one of only 14 states to have surpassed pre-downturn job levels, which it did in January of this year. He labeled the national recovery rate “tepid.”

In addition to concerns over flood-insurance program changes enshrined in Biggert-Waters, the report’s authors say the other variable that will weigh on the Houma-Thibodaux MSA is the ultimate BP payout related to its 2010 oil spill in the Gulf of Mexico.

In the months after the spill, Lafourche and Terrebonne largely overcame a moratorium on deep-water Gulf drilling because they absorbed more than $210 million in BP’s damage payouts, Scott said.

In federal court BP is haggling over the Macondo prospect’s spill rate and the degree of negligence for culpability. Depending on the court’s ruling, BP could be ordered to pay tens of billions of dollars in Clean Water Act fines that will be split among five coastal states.

Now that the rate of exploration and development permits has grown to exceed pre-spill levels, extraction companies will increasingly rely on locally based service companies for Gulf operations.

Chett Morrison Contractors is expected to add 400 jobs over the next two years, Edison Chouest will add about 600 at its LaShip yard and Bollinger will look to add another 400 employees to its workforce over the forecast period, Scott said.

But as SLEC Executive Director Vic Lafont said after the presentation, filling prospective new jobs is the hard part.

State and local officials have pledged to shepherd the roughly 350 people laid off through the shuttering of McDermott’s Amelia yard, a shutdown expected to be complete next year. Fletcher Technical Community College and Nicholls State University aim to generate new laborers with each graduating class through petroleum-centric curriculum.

Still, industry leaders continue to bemoan the lack of qualified employees seeking work in a booming economic area.

“We’ll address workforce issues throughout the rest of my career,” Lafont said.