NEW ORLEANS – Let the record show that I am noticing. I have actually been noticing for some time now. It would appear that this city is not just back, but it’s better.
Now I’m not just hearing this from economic developers who will sell you a pig in a poke if you let them. No, longtime residents tell me that things are looking up, that the city is changing. Previously I had known New Orleans as an interesting if not largely broken place headed in some very ugly directions. That is no longer the case.
That is not to say that serious deep-rooted problems do not remain. Crime and poverty remains a pox here. Establishing quality public education is still not a top priority for some. And entrepreneurship and diversity is still viewed with antipathy or even suspicion by some old money. But those attitudes are breaking down. People do die.
I am here for a “fam” tour, which I welcome, as it gives me an opportunity to learn about a place. Because of the time constraints of my consulting business, I do not nor cannot accept all such invitations. I will certainly not consider a fam tour in which the inviting community is not covering my travel expenses. I got one of those invitations this past week.
But if my schedule permits, I go to places where a) a corporate client may want to go and b) there is a heightened degree of business activity and c) a community needs help and will pay for my consulting services on how to better compete for private investment.
I arrived in New Orleans a day early so as to knock about on my own, and get a feel for the place.
An Old Haunt
I have been to this city a number of times over the course of many years – the first time as a young hitchhiking vagabond back in 1974. I know I must have worried my parents half to death back then with my youthful antics. I have only vague memories now, but they include a place called Cooter Brown’s, which served a wonderful cheap breakfast.
As a young newspaper reporter in the 1980s, I would knee wobble with friends in the French Quarter into the wee hours only to discover that some of those pretty girls that we were buying drinks for weren’t who we thought they were. Enough on that. Jaegermeister is an evil concoction designed for personal destruction.
Years later, I now look at New Orleans through a much different lens, not so much as Partytown USA, a Gulf Coast version of Vegas, but a place where serious business investment can and does take place. According to a new report from the U.S. Department of Commerce, Bureau of Economic Analysis, Greater New Orleans had the ninth fastest GDP growth in the nation in 2012.
Being a port city certainly doesn’t hurt. Occasionally, even magazine editors can get it right. My friend Jack Rogers with Business Facilities magazine did when he wrote this: “With its proximity to the center of the U.S. via a 14,500-mile inland waterway system, six Class One railroads and a nexus of interstate highways, New Orleans is the port of choice for the movement of everything from steel, rubber and manufactured goods to commodities like coffee.”
Back from the Abyss
New Orleans has been a port city ever since the Spanish and French waved flags here. The presence of a resurgent oil and gas industry also provides for a degree of wealth and stability. But something else is out there that that has changed the environment and even the outlook of the city.
I am not going to be so heartless as to say that Hurricane Katrina eight years ago was a good thing for “Nawlins.” Lives were lost. (About 1,800.) People’s personal finances were devastated and many forever lost their homes and left never to return. But I will suggest that Katrina, a near death experience for this city, has served as a rallying point for one of the greatest turnaround stories in American history.
Americans love comeback stories as it reaffirms hope and what can be. The Great Chicago Fire of 1871 did not stop Chicago. It bounced back. So, too, did New York City when it faced an almost financial meltdown in 1975, but somehow avoided bankruptcy. The cocaine cowboys were shooting up Miami in the late 70s and early 80s, making it a literal war zone between rival drug gangs, but law enforcement eventually regained control.
These cities pulled themselves back from the abyss, which I believe can only happen when local government and the business community band together to fight for positive change. That public-private partnership is key. It certainly happened here.
Winning with Technology
Prior to Katrina’s landfall in 2005, the economy of New Orleans relied heavily on being a port city. Tourism and government were the other major sectors of an economy in decline and the business community was not taking the leadership role that it should have. But that has changed.
Earlier this year, the Brookings Institution identified New Orleans as having the best economy among 100 large metropolitan areas. And while I do not necessarily put a lot of stock in the thinking of muddled editors (I can speak from experience on this), it may be worth noting that the Wall Street Journal named New Orleans the No.1 most improved metro in the country. Bloomberg called it the No. 2 “boomtown” in America, and Forbes ranked it third in terms of winning technology jobs.
But as much as this comeback story is inspiring and deserves further scrutiny (which is why I am here), it is not an absolute given that economic growth is sustainable for the long term. So says my host, Michael Hecht, president and CEO of Greater New Orleans Inc. I thought it quite revealing and candid when he wrote this:
“Our gains are real, but they are fragile. And as tens of billions of Katrina funding wind down, the rest of the country is reviving from the great recession. The ‘new’ Greater New Orleans is about to enter the ‘new’ normal.
“So for all the challenges of the past few years, the coming may hold even more. Competing on a level playing field now will be our opportunity to prove to the rest of the world that the Louisiana Renaissance is real, and that the post-Katrina resurgence was not a swan song, but the prelude to a story of redemption.”
Heck, Hecht can write. How can you not want to stay abreast of a story of redemption?
Issues that inhibited corporate investment, like corruption, vulnerability to flooding, and a problematic permitting and regulatory climate, are being addressed largely at the insistence of the business community. (Detroit, are you listening?)
Now there is no question that federal aid, as alluded to by Hecht, played a huge role. The Federal Emergency Management Agency said last month that it provided $19.6 billion to Louisiana to rebuild and protect property against future storms in the eight years since hurricanes Katrina and Rita struck Louisiana.
But so too does political leadership. I think it safe to say that Louisiana and New Orleans has had some pretty nefarious politicians at the forefront in its history. That might be good for the anointed few but it’s usually not good for the many. In that regard, business can be a progressive force in essentially demanding clean government, much less a pro-business environment. I think that is happening here.
Following in the Mold
The evolution toward a new New Orleans was apparent this past week when Chentech said it would establish a new software development center here. A subsidiary of ChenMed, ChenTech will create 50 new jobs with an average salary of $83,000 year, plus benefits. Economic developers say the same number of new indirect jobs will be created.
I never would have thought of New Orleans for this type of business until recently. But keep in mind that Forbes ranked New Orleans only behind Silicon Valley and San Francisco in the battle for IT jobs. The same magazine ranked the city first in “America’s Biggest Brain Magnets” for attracting people under 25 with college degrees. And that has been a part of the story as the city has repopulated itself after Katrina.
The fact is that when educated young people want to come to your city, that’s a good thing. You have a future based on greater expectations rather than protecting a musty patriarchal status quo. In short, your children and grandchildren are risk takers looking for opportunities to build their own lives and New Orleans is increasingly viewed as an attractive option.
Of course, providing targeted tax relief, greasing the skids so to speak, can always help. Louisiana has a digital interactive media and software development incentive, an offshoot of prior efforts to attract film industry production to the state. The incentive provides a refundable tax credit of 35 percent for most software payroll expenditures for state residents and a 25 percent refundable tax credit for production expenditures related to hardware, software and lease space.
Paris-based Gameloft, a publisher of mobile games, credits the incentive as a reason for picking New Orleans for its second U.S. game development studio. The company is on track to fulfill its goal of 100 employees by 2016.
One of the biggest coups in reshaping the “new” New Orleans happened in 2010, when after a 17-month search, GE decided the Crescent City would get its first IT Center of Excellence for GE Capital. It has meant 300 jobs and six-figure salaries.
A forward-thinking GE Capital wanted to work with academic institutions to ensure a future talent pipeline. To ensure that would happen, the state committed $5 million to fund expanded computer-science programs at the University of New Orleans and other universities. A substantial workforce training and recruitment package also was offered in addition to a 6 percent annual rebate against new payroll for the first 10 years of operation. That sounds like a pretty sweet deal.
Such inducements get my attention and say something about a changing environment. I notice and so, too, is the world noticing a changing New Orleans. No doubt about it. It’s happening.
That does not mean that I will not continue to have questions and concerns. I will always have questions and concerns — about every place, everywhere, all the time. It’s what I do.
I’ll see you down the road.
Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas.
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