Economist: LC could see big rebound in near future

Published 4:56 pm Thursday, October 7, 2021

Lake Charles is the only metropolitan area of its size in the country that has less people employed now than the first month of the COVID shutdown. But unlike some Louisiana cities, this area has more opportunity for rebound and even growth.

Dr. Loren C. Scott, president of Loren C. Scott & Associates, presented his annual Louisiana Economic Forecast at the Lake Charles SEED Center on Wednesday.

The kickoff of potential LNG projects, casino revenues, plant completions resulting in permanent jobs, COVID recovery gains at Chenault Airpark, a capital spending injection at the Port of Lake Charles and state road lettings has Scott projecting hope in the form of an additional 9,000 jobs in 2022 and 6,000 jobs in 2023.

“The projection for 2022 is a startling high number,” he said.

It’s important to remember this area is the only one that has shown no recovery from the April 2020 shutdown. He bases growth on “three assumptions that one might label as heroic,” he said.

The first is that more federal aid will arrive this year or early 2022. He blamed the federal government’s slow response to help after hurricanes, ice storm and flood for the area’s poor recovery, calling the $600 million in disaster aid recently announced for Southwest Louisiana as “a drop in the bucket.”

“Second, along with the federal aid will come the beginnings of the recovery to normal from COVID that we have assumed in other cities,” he said.

His report was made available after the presentation. It states, “healthy growth rates will require resurgence in industrial construction employment, and that requires the announcement of at least two Final Investment Decisions (FIDs.)”

“The good news is that when it comes to potential FIDs for 68.3 billion potential LNG projects, the Lake Charles area is not starting from scratch,” Scott said.

Potential projects include Driftwood LNG, Lake Charles LNG, Magnolia LNG, Commonwealth LNG, CP2 LNG and G2 Net-Zero LNG

“We’ve been talking about some of these for years. I think Monkey Island seems to me to be pretty dead in the water. Not all of them are going to happen, but it doesn’t take a lot of them to happen. If Driftwood just pulls the trigger, on theirs, if Lake Charles LNG pulls the trigger on theirs, that’s $27 billion in projects; that would be really good.”

Offtake agreements have been signed for the $16.8 billion Driftwood project with Total SE, Vito and Shell. Commitments are up to 9 million tons per year (mmt/y, just shy of the 9.2 mmt/y that is supposedly needed for the first phase of construction.

The only other city with this much growth projected in this industry is Baton Rouge, according to Scott.

Another reason for the state of the area’s current economy is due to the industrial construction turnarounds that were put on hold. That will change.
“You’re talking about going from 6,000 people (construction jobs) to 82,000 people just for the turnaround part.”

“If Driftwood pulls the trigger, you’ll start seeing a swell in new construction projects,” he said.

Scott called the Lake Charles area “a significant casino market.”

“All the casinos were closed from mid-March to May and when they reopened they were only able to open at 25 percent capacity,” he said. “Lake Charles was tied with New Orleans in percentage as being one of the hardest-hit areas in the state. Your casinos set a record (when opened again at full capacity) you haven’t had since 2017, with one less casino, which tells you where some of the stimulus money went.”

Permanent job growth is part of the future. According to the Lake Area Industry Alliance Survey, there were 7,115 employees at its member company plants in 2021. Over 2022, this region will gain another 420 new permanent cobs and in 2024, another 130. For every 7,115 permanent direct employees, there were another 3,500 or more contract employees. Some large firms in the area were not included in the survey.

Tenants of Chennault Airpark will spur employment gains. These include Northrup Grumman, Citadel Aviation, Landlock Aviation and Louisiana Millwork.

 Two new buildings are on the way at Chennault, one for the Louisiana National Guard and another for Louisiana Wildlife and Fisheries.

 If the Lake Charles Methanol Plant becomes a reality, the Port of Lake Charles will be spending $131 million on support of that project. The Army Corps will spend $123 million over two years and the P3 program, port, industry, state, will put up $7.5 million.

Lake Charles will receive a $133.2 million for state road lettings over 2022-2023: $49.1 million on a new Nelson Road extension and bridge, $12.2 million on ramps and a bridge on US90 over Interstate 10 and $152 million to widen Interstate 10 from the Texas line to LA 108.

 “You will still not be back to where your peak was back in 2018,” Scott said. “We knew this was going to happen, right. We knew that once you spent all that money building those plants the construction workers would leave. You’re way better off than you were in the past.”