With 2016 in sight, change is on the horizon for many economic sectors as new leadership prepares to move into the governor’s mansion. An altered political course; sustained, historically low oil prices; the low cost of natural gas; the rise in data and security breaches in 2015—all of these factors and more will impact the business community differently starting in the first quarter of 2016. Business Report checked in with decision-makers in seven key sectors of the economy. They share their first-quarter outlook for both emerging and lingering issues and trends that will drive Baton Rouge as companies look ahead to what they hope will be a record-setting year for business in 2016.
HEALTH CARE
Carol Patin
President, Capital Area Medical Society
“I believe the outlook for health care in the Capitol area will be improved for several reasons. With the change in state leadership, new ideas will be vetted. The proposed assurances of the new governor promise an improved ‘listening ear’ that was absent with the last administration. The governor-elect has promised to accept the Medicaid funding that will have a two-prong effect. First, it could make it easier for the uninsured to obtain coverage. I believe this may have a ‘trickle-up’ effect on a population of patients who do not seek medical care because they cannot afford it and assist with patients who have found it difficult to find medical providers who are leery of accepting patients with no coverage. Likewise, providers as well as hospitals who accept Medicaid—which traditionally pays lower reimbursements but have a tendency to pay within an appointed time with electronic billing—should improve collections. All of the above will hopefully improve health care in our community.”
INDUSTRY
William Clouatre
Vice President, Corporate Business Development, Cajun Industries
“We believe crude prices will remain suppressed for 2016, continuing to negatively affect the upstream and downstream project activity for Cajun. However, the availability of low-priced natural gas has helped sustain much of the project development in the chemicals and petrochemicals markets. This is where we see the most significant contributor to Cajun’s backlog for 2016. While we’ve seen announcements of postponement and cancellation for many projects throughout Louisiana, we still see billions of investment here and expect those investments to continue throughout 2016 and on into 2017. Overall, the market is still strong, compared to many years in the past.”
ENERGY
Tom Yura
Senior Vice President and General Manager at BASF in Geismar
“After unprecedented capital growth through petrochemical manufacturing sector due to the low cost of natural gas, the Capital Region will experience some slowing but continued investment. The area will remain in the midst of an industrial construction boom that will carry through the next few years as announced projects are completed. Regarding oil, the current situation is expected to continue for some time with supply exceeding demand and leading to soft market conditions. As the world’s largest chemical company, BASF is in a period of significant investment and growth in North America. Competitive feedstock costs and an expanding economy will sustain the growth and stability of chemical production.”
REAL ESTATE
Justin Langlois
Partner, Commercial Real Estate Adviser, Sperry Van Ness | Graham, Langlois & Legendre Commercial Real Estate Advisors
“The Baton Rouge real estate industry is in a great place—probably better than it feels to most people. Job reports have been positive and have led to a strong appetite for new and existing home sales as well as multifamily rentals. The residential real estate market will continue to see positive growth. The looming interest rate hike from the Federal Reserve is coming—sooner rather than later, based on solid job growth over the most recent three months. The rate increase will spur activity from buyers looking to take advantage of a lower interest rate in Q1 of 2016. You will also see investors and owner/occupants in the commercial real estate market taking advantage of current rates while there is still time. Build to suits, investment-grade sales and owner/occupied transactions have been strong and will remain so for the foreseeable future. The multifamily market continues to defy odds with demand from students, millennials and baby boomers.”
TECHNOLOGY
Devin Zito
President, Teknarus
“The technology industry in the greater Baton Rouge area has seen substantial growth over the last year. In recent years, state and local economic development initiatives have sought to make Baton Rouge a center of excellence for technology. We have also seen Baton Rouge area business and industry more willing to embrace technological advances in order to generate operational efficiencies. In addition, the growth in number of cyber security concerns, both nationally and globally, has required additional technological responses. I am expecting to see these same trends for the first quarter of 2016 and beyond. Technology companies in our area must keep up with these growth trends, and there should be a focus on retaining and attracting the necessary talent to facilitate these efforts. It will continue to be important to build and foster an environment that is conducive to these efforts, while continuing the engagement with our universities and technical colleges to produce this related talent.”
BANKING
Robert Taylor
CEO, Louisiana Bankers Association
“Louisiana banking is strong, highly capitalized, with seasoned management. Headwinds for the Louisiana economy include the continuing low price of oil. Bankers see layoffs from oil-based and oil service companies or in their market areas. But also, bankers report that people from the oil sector losing employment are shifting to other areas of the state such as Lake Charles where industrial expansion is well underway. Studies show that strong banks are better able to better meet customer needs in challenging times than weaker banks. Therefore I am confident Louisiana banking will continue to play a vital part in the state’s expanding economy. Bankers are also devoting a great deal of time to cybersecurity generally and the continued protection of customer information. Cyber threats to the financial sector have become a major focus for banks of all sizes.”
RETAIL
Dawn Johnson
Executive Director, Louisiana Retailers Association
“From the increase in online shopping this holiday season, our brick and mortar stores will feel a decrease this shopping season. The fact that our state continues to lose the sales tax revenue and continues to allow the suffering of stores with a local presence that support our communities is beyond my understanding. Local retailers effectively operate at a massive disadvantage to their online competitors that do not collect sales tax. The issue is more pronounced in a high sales tax state like Louisiana. It is time for Congress to pass legislation that will allow states to compel remote sellers to collect sales tax. In 2016 brick and mortar retailers will continue to find new ways to make the customer have a positive shopping experience while physically being in their stores. The ‘touch and feel’ of a product and great customer service will always be important to many shoppers.”
EXPORTS
Brittany Banta
Acting Director, New Orleans U.S. Export Assistance Center
“In 2014, total exports from Baton Rouge topped $18 billion, accounting for nearly a third of Greater Baton Rouge area GDP, and supporting nearly 60,000 GBR area jobs. The chemicals sector is one of the top industries from the GBR area responsible for such a large volume of exports, and it would have a huge opportunity to export duty free to the Pacific Rim countries that are party to the Trans-Pacific Partnership if Congress approves the agreement. TPP countries are home to 40% of global GDP and 800 million consumers, so we are trying to get the word out to exporters throughout Louisiana about the benefits of TPP. It is anticipated Congress will take up the vote on TPP in early 2016.”
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