Wednesday, April 27, 2011

Lafayette’s best effort pays off, as the oil services giant decides to bring its high-paying jobs to Pont des Mouton Road.

Gov. Bobby Jindal was in Lafayette earlier in the month to announce that, after a global search, Halliburton had chosen Lafayette to be the location of its new completion tools manufacturing facility. LEDA worked with representatives from Halliburton for more than six months to secure the project, which will create 150 direct jobs with an $8 million payroll (plus benefits), which equates to an average salary of $53,000 a year. The facility, the first of its kind in Louisiana, seemed to be a perfect fit for our community. But LEDA needed to conduct some due diligence for our use and some education for the client to demonstrate that this project belonged in Lafayette. We do this in a couple of ways: through a workforce comparison — illustrating the competitiveness and availability of our workforce — and an economic impact analysis — calculating direct and indirect impact.

When LEDA is tasked with assessing our community’s compatibility with a company’s needs, workforce is often the most important factor. In many cases, workforce availability is at the forefront of a company’s concerns. Federal statistical agencies have adopted a universal system, Standard Occupational Classification, to group workers into occupational categories for the purpose of collecting, calculating and disseminating data. As a result, we have a set of 840 detailed occupations to measure against a client’s requirements. We can then look at curricula across secondary and post-secondary educational institutions to evaluate sustainability and growth of an industry or workforce. Institutional data regarding enrollment and graduates are available through UL Lafayette, South Louisiana Community College, Acadiana Technical College and the Lafayette Parish School System and offer insight on what types of workers are being trained for the future.

Then the process of matching a prospect’s needs to our real and potential workforce begins. Once the client identifies its projected positions, the categories can be matched with the Louisiana Workforce Commission’s job seeker database. That number is combined with the number of graduates from respective post-secondary programs in the area to illustrate the local pool of qualified applicants. For the Halliburton project, our survey of and educational institutions showed there were 137 potential machine operators, 476 potential metal fabricators and 99 potential financial analysts to meet its workforce needs. We also compiled information about higher and secondary education curricula to show how Lafayette could further meet its demand for labor.

While the first concern when thinking about where to locate a company is the availability of labor, the next question is, “At what cost?”  As part of the workforce comparison LEDA prepared for this project, a wage analysis was done for specific manufacturing jobs. The analysis shows wages in Lafayette are competitive with other metro areas that were considered during the site selection process. Wage data was collected from the Bureau of Labor Statistics; and an average median salary was computed for 37 different positions identified by Halliburton. The national average median wage was nearly 15 percent higher than in Lafayette (see related chart). When a company can see its bottom line improving, it makes a real impact during the decision-making process.

We’re often asked about the impact a specific company has, or could have, on the local economy in dollars and jobs created. In 2010, LEDA began preparing economic impact studies for specific projects and clients. Our client provides specific details on earnings, spending and employment, and we match that data with the corresponding Regional Industrial Multiplier System to formulate the estimated impact of the existing or proposed business. A multiplier summarizes the total impact that can be expected from change in a given economic activity. For example, a new facility or an increase in production are economic changes that can prompt ripple effects or spin-off activities. Think of multipliers as showing you how much bang you get for your buck.

A company’s direct impact to a community is important, but so is its indirect impact. By creating 150 new, direct manufacturing jobs, Halliburton will stimulate the creation of indirect jobs in complementary industries in the area. An oil and gas machinery manufacturer, like the new Halliburton facility, will undoubtedly work closely with local machine shops for supplies and trucking companies to transport products. New income generated through the jobs created will be spent on goods and services in the retail, entertainment and health care sectors. Based on data from Economic Modeling Specialists Inc., the largest percentage of indirect jobs will be created in the manufacturing industry (61%), followed by health care (7%) and retail (6%). The chart above illustrates the full breakdown of where all of the new jobs will be created as a result of the Halliburton manufacturing facility.

Preparing a workforce analysis and an economic impact study are just two steps in the process LEDA goes through when working with recruitment, expansion and retention prospects. Our staff prepares a customized proposal for each prospect. We conduct extensive property searches to meet the client’s facility or land needs. We facilitate meetings with representatives from other economic development, government or educational organizations. The staff walks our clients through each step — illustrating along the way that Lafayette and Acadiana is the place to be.

Big projects like Halliburton, Transcom and the Stirling Lafayette Shopping Center are energizing to the community, but they only come along once every few years. It’s important to always remember that it’s the smaller projects — existing businesses growing with the parish and new businesses relocating or starting up in the area — that keep Lafayette’s economy fresh, vibrant and diversified.

Gregg Gothreaux is president and CEO of the Lafayette Economic Development Authority.

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