A simple question: Could the bad economy be good for Cenla?

OK, I’m not going to write a big narrative on what I think first; instead I am inviting a discussion on this:

This economic downturn, with all of the bankruptcies and business makeovers it is bringing could be really good for a place like Cenla from an economic development standpoint.

Why?

Because as companies like Chrysler and GM and any number of firms look to emerge from this mess (which is really the cumulative effects of bad government policies, bad business policies, and an overall lack of innovation), they will want to be leaner, more efficient operations.

What that means (we’ll use GM for example) is that they may consider shutting down some of their older inefficient factories and assembly plants and replace them with smaller, more efficient facilities.

For a company like GM, they could build a new facility here considerably cheaper than they could in Michigan. They could hire workers more cheaply (and still pay much higher than prevailing wages here). Their executives and managers could build really nice houses here for a fraction of what they could elsewhere. Utilities are cheaper here. Supplemental products and services are cheaper here.

We have an ample transportation system. And I believe we have multiple Free Trade Zones, which means they can import and assemble foreign components without having to clear customs.

Not that I am a fan of the whole race to the bottom concept, but when these big businesses do reorganize and streamline, why not try to get them to do it here?

Even when you consider a company like Microsoft: They have white collar workers. Yet they could pay those workers half the wages they pay them in California here, and those workers would be able to still have a higher quality of life and more expendable income, simply because the cost of living and the cost of doing business in Cenla is so much cheaper than in Silicon Valley.

So, can we actually position our region to be proactive in a time when businesses are looking to remake they ways they operate?

Responses

jada

June 2, 2009

I must disagree with your statement that utilities are cheaper here. That is not the case. I moved here from a large metropolitan area in Texas, and paid much, much less for all my utilities. Ample transportation? Think again. With only ONE major 4-lane highway in and out of here (north-south) any kind of alternate routes means slowing to 35 mph (just think about Hwy 165 south to Lake Charles, and you understand what I’m talking about) many times, and construction delays–even on the stretches where construction is complete. Until there are quick travel routes in many directions, this place will not be considered a crossroads.

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1. Lamar White, Jr
  
  June 2, 2009
  
  Although I agree that utilities are not necessarily cheaper (because of our reliance on coal and natural gas, which actually has been dropping in price), I think you’re only looking at one component of “transportation.” We have a rail network, a port, and a world-class airport (for a City of our size).
  
  Sure, we only have one Interstate, which, by the way, is the only four-lane corridor in the State that directly connects two of the nation’s most important Interstate systems: I-10 and I-20. But considering our location in the center of the State, our State highways, many of which are being expanded (hence the delays), connect all corners of the State.
  
  By definition, we are a crossroads.
  
  Then again, I suppose if you’re used to life in a gigantic metropolitan area in Texas- a place like Houston, for example- then we probably seem quaint.
  
  Reply
  1. Ace Midnight
    
    June 3, 2009
    
    Lamar,
    
    Your comment (“because of our reliance on coal and natural gas”) made me chuckle a little – how are we supposed to generate electricity? The sunshine and unicorn flatulence fueled machines take decades to recoup their initial investment back to the break even point. I’m not even sure we have a viable wind zone in Louisiana for that “clean” option. We have above average potential for solar, but, again, all of that is very slowly improving. Sure, everyone could live in a house that requires no input from the electrical grid, if everyone had $750k to $1.5m to build those houses. And, the next big move is to power our cars with electricity (a concept with which I agree, by the way). There are still no viable, commercial alternatives to burning fossil fuels for electricity, both short and mid term. Even nuclear power (on the scale of France and Japan), of which I am a big proponent for large scale, industrial production of electricity, is a long way off for most areas of the U.S.
    
    So, what am I missing here? Why is our electricity, produced by coal and natural gas, more expensive than electricity produced in other parts of the United States, also by coal and natural gas? Is it because we rely on 50 to 60 year old facilities (or even older)?
    
    Reply
    1. Drew Ward
      
      June 3, 2009
      
      Ace you observations are valid, but a lot has changed in the equation for figuring out the best option on energy costs.
      
      For one thing Louisiana has THE BEST wind energy potential in the North American continent. I know because I worked on the project that did all the studies. Places in Louisiana have 3-10 times the wind potential of even the most successful wind farm locations being built or operating elsewhere. The only reason we don’t have wind energy in Louisiana now is because the Legislature refused to authorize construction of Turbines. All these guys (Jindal included) are so in the pocket of oil companies and Cleco, Entergy, and LABI that they would rather take some bribes from those companies than to provide the people of the state with reliable clean and cheap energy.
      
      As for Solar, the cost of the panels has come down considerably so that the market entry versus electricity produced is becoming quite manageable. The main benefit of Solar in Louisiana is that it can be used as a distributed array in which each business or building has its own electricity-generating capability. Imagine how much electricity can be generated by all the surface area of a Wal-Mart’s roof. Plus, for residents there are federal tax credits (Louisiana has mostly refused to provide state incentives) that cover half the cost of purchasing solar systems for homes, and FHA and USDA loans that will finance the rest. Because most people use electricity mainly in the evening for TV, cooking, and A/C, it means their houses become mainly generating stations during the day, sending their meter running backwards. So it could come out that the average utility bill gets cut in half, demand on the electric grid goes down, and people actually have power during a grid-outage.
      
      As for home design, the costs is only about 30% more than standard spec-house construction. It can be even less here in Louisiana because most green house design aspects are actually taken from the architecture, layout, and scales of our own Louisiana plantation homes. They knew 400 years ago how to build a home that stayed warm in the winter and cool in the summer. We’ve just been reinventing the wheel lately.
      
      But this is all off topic — the utilities should be lower here. We should be using renewable options, and mainly we should be trying to attract green energy companies to the area.
      
      Reply
Chronos

June 2, 2009

Drew,

A couple of quick comments. While I share your sentiment, and agree it would be great for Alexandria to benefit from a new streamlined GM, I think it’s doubtful.

1) The UAW will be a big factor determining where factories will be located. It’s in their self-interest to preserve jobs for current members. Until the UAW grows in CenLa, I doubt you’ll see much attention being paid to areas out of current UAW strongholds.

2) It will be interesting to see if politics starts to creep from merely the self-interest to protect American jobs to the self-interest to reward party members. What I mean is that as long as Rodney Alexander is the US Rep, or Bobby Jindal is the Gov, I doubt you’ll see GM considering a move into CenLa. You won’t necessarily find a closing of a factory, like the truck factory up in Shreveport, but don’t expect to be rewarded in Alexandria, when southern parts of the state have closer connections to Mary Landrieu, Charlie Melancon, and organized labor.

In the meantime use this as motivation to get Alexander, perhaps the most pathetic excuse for a Congressman (come on he got booed at a “Tea Party!”) in Louisiana history, out of office.

Reply
1. Ace Midnight
  
  June 3, 2009
  
  Chronos,
  
  Alexander is worse than Jefferson and Fields? Really?
  
  Reply
  1. Drew Ward
    
    June 3, 2009
    
    Worse is certainly relevant and all three of the people listed there are crooks if you ask me. But at least Fields and Jefferson operated off of a bring home the bacon mentality and took care of their districts.
    
    Alexander takes care of Monroe and only gives Alexandria just enough support to get reelected occasionally.
    
    If we are to ever be politically viable we either need an Alexandria Congressman again, or we need to get our population up so we can have our own district again.
    
    Reply
Drew Ward

June 2, 2009

I don’t know about the UAW. As much as I am for Unions, the UAW has to be recognized as being partially to blame for the ills of the American auto industry. Workers need protections from their employers and unions do provide that. But, the UAW got greedy, really greedy and not only screwed their own members and the companies they worked for by making the labor issue almost impossible, but they have really given unions a bad name over the years. Part of a streamlined GM will be a more streamlined UAW — it will have to be.

GM and other such companies may look toward opening facilities in places like Louisiana where workers demand much less pay and fewer benefits. It’s why Nissan and Mazda are in Mississippi and why Mercedes and KIA are in Alabama.

As for our lack of political power…well yes that is and will probably be the case. But, that’s where the local power to negotiate deals and attract opportunities comes. Plus if we can add bigger businesses then we end up adding people which means a bigger tax base, and more importantly could give us the population we would eventually need to get our own congressional district back again.

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