Louisiana’s economic forecast is bright, despite the effects of hurricanes Katrina and Rita in 2005.
With more than 200,000 homes destroyed in the Greater New Orleans area alone, Louisiana expects a 10-year construction boom in the affected areas, impacting the entire state.
Businesses in affected areas are also growing. One reason: the Gulf Opportunity Zone (GO Zone) business incentive package. Features of the GO Zone include 50 percent bonus depreciation and $7.9 billion in tax-exempt bonds.
The post-Katrina economy has truly made Louisiana a state of opportunity.
Louisiana is Moving Forward
Louisiana is moving forward with the most aggressive business incentives package in United States history.
Louisiana's strategic location on the Gulf of Mexico makes it a mainstay of the nation's economy. The state's system of 27 ports is the most extensive in the world and provides waterborne commerce for 35 states through protected inland waterways. Louisiana is also an energy hub for the nation, ranking first in the production of crude oil and second in natural gas.
The state's economy is expanding with incentives and tax relief programs that attract leaders in traditional industries such as manufacturing, aerospace, energy and entertainment, while providing opportunities to the emerging life science, construction technology, advanced materials and information technology industries.
Lower business taxes, infrastructure incentives and a ready workforce give Louisiana a competitive advantage in the global marketplace.
A Strong Manufacturing Sector
Louisiana’s aerospace and automotive industries are important to the state’s growing economy.
The General Motors Shreveport Operations began in the early 1980s. Louisiana's aggressive business incentives and strong labor force continue to be attractive to automotive manufacturers today. GM continues to make investments in the plant, including more than $20 million to expand the production of Hummer H3 SUVs and GMC pick-ups.
Anticipating continued growth in the automotive sector, the state has developed mega sites as potential homes for manufacturing companies like GM. One of these sites, Franklin Farm, is ideally located in northeast Louisiana between GM’s assembly plant in Shreveport and a Nissan factory in Mississippi.
Located along the Interstate 20 Southern Auto Corridor, the 1,440-acre site allows for quick access to suppliers in the region. Less than 50 miles from the Port of Lake Providence on the Mississippi River, the site offers access to 31 states. It is located within 600 miles of Houston, Dallas/Ft. Worth, the Mississippi Gulf Coast, Atlanta and other major cities.
The Franklin Farm site is within 125 miles of over 100 auto suppliers and offers a pool of skilled and accessible laborers. In addition, Louisiana workers earn high marks for productivity.
Franklin Farm also benefits from being located in a federally-designated Renewal Community (RC), offering lucrative tax credits and incentives to qualified manufacturers who utilize the property. Areas designated as RCs receive special federal income tax treatment and other incentives of more than $5 billion in tax credits, until Dec. 31, 2009.
America's “Mission to Mars: Starts in Louisiana
Home to NASA's largest manufacturing facility – one of the largest in the world – America's “Mission to Mars” starts in Louisiana. NASA’s Michoud Assembly Facility is located on 832 acres on the outskirts of New Orleans. Michoud is one of the world’s biggest manufacturing plants, with 43 acres under one roof. The facility has an interesting legacy in America’s space history, primarily known for its role in building the first and second stage Apollo rockets, as well as the Space Shuttle.
The Michoud Assembly Facility is the only facility to manufacture and assemble launch vehicles. Michoud's location on the Gulf of Mexico is critical in moving the external tanks produced at the plant to locations in Florida.
Partially damaged by the hurricane, the facility has delivered several external tanks for the space shuttle program, with more scheduled for production.
As another nod to NASA’s confidence in both the facility and the recovery efforts underway in New Orleans, NASA recently selected the Michoud Assembly Facility to manufacture and assemble the Crew Launch Vehicle upper stage for its next generation of manned flight vehicles. This ensures large-scale manufacturing will continue at the facility for at least another decade and require up to 2,000 employees through 2020.
NASA is investing more than dollars in the Michoud Assembly Facility--the agency is making an investment in America’s space program. Louisiana sees the potential to secure an even greater NASA support role, and is committed to retaining the approximately 2,000 employees at the facility, while growing high tech jobs in the dynamic aerospace industry. A memorandum of understanding signed earlier this year by both the NASA and the State of Louisiana, underscores that commitment.
Education and Partnerships Give Industry Wings
The state is committed to strengthening the aerospace industry in Louisiana with the help of educational resources and partnerships.
One such partnership is the Louisiana Space Consortium (LaSPACE). LaSPACE is a statewide consortium composed of 27 members, including 19 affiliate universities and colleges joined by partners from business, state and local government, state education boards and non-profit organizations.
LaSPACE has one major mission: to promote education and increase interest in space and aerospace related fields. It advances aerospace education and awareness through several different programs, including research grants, graduate fellowships and undergraduate research programs.
The LaSPACE project is a joint federal-state cooperative program with funding from NASA, the Louisiana Board of Regents and the LaSPACE institutions.
Economic Incentives Encourage Growth
Louisiana offers an aggressive business incentives to help sustain and grow the automotive and aerospace industry, along with other segments of the economy. They include the following:
Automotive and Aerospace Industry Tax Credit. Provides a $5,000 one-time tax credit per new job for companies in the automotive and aerospace industries that participate in the state’s Enterprise Zone program.
Industrial Tax Exemption. Abates local property taxes for 10 years on a manufacturer’s investment in buildings, machinery, equipment, and other properties that are part of the manufacturing process and remain on the plant site.
Inventory Tax Credit. Manufacturers receive a credit against state corporate income and franchise taxes for the amount of their local inventory taxes.
Incumbent Worker Training Program. Louisiana leads the nation with a $50 million fund to upgrade the skills of existing workers or to train new employees of a resident industry. Local workforce investment boards, technical colleges and the Louisiana Department of Labor work together to provide this benefit to qualified businesses.
Enterprise Zone Program. Provides tax credits and other incentives to businesses locating in officially designated Enterprise Zones. The program offers tax credits of $2,500 per new job and state sales tax rebates on purchases of materials and equipment during the construction phase.
Louisiana Economic Development Award Program. Provides financing for a publicly owned infrastructure for industrial or business development projects including engineering expenses, site acquisitions and preparation, construction expenses, building materials and capital equipment.
Quality Jobs Program—Grants businesses engaged in manufacturing or other basic industries cash rebate up to6 percent of its annual gross payroll. This program also rebates sales taxes paid on materials and equipment purchased during the construction phase of the project.
Gulf Opportunity Zone Accelerated Depreciation. 50 percent bonus depreciation allows businesses rebuilding in the GO Zone to claim an additional first year depreciation deduction equal to 50 percent of the cost of new property investments made in the GO Zone.
Gulf Opportunity Zone Bonding Authority. Tax Exempt Private Activity Gulf Opportunity Zone Bonds create an additional tax-exempt bond authority to help rebuild damaged infrastructure in the GO Zone. The bond authority is approximately $7.9 billion. These proceeds can be used to pay for acquisition, construction and renovation of nonresidential real property (including fixed improvements associated with such property), qualified low-income residential rental housing, single-family residential housing and public utility property (such as gas, water, electric and telecommunication lines) located in the GO Zone.
Smart planning, coupled with some of the most aggressive business incentives in the nation, Louisiana is moving forward.