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With the Right Incentives and State Support, the Chemical Industry Could Power Louisiana for Years to Come

New report shows Louisiana’s chemical industry is cornerstone of the state’s economy… and growing

The chemical industry is the no. 1 provider of jobs in Louisiana’s manufacturing sector, supports more than $79.7 billion in annual sales for businesses in our state and contributes more than $1.1 billion yearly to the Louisiana treasury, according to a new report conducted by noted economist Dr. Loren Scott. The report, released today by the Louisiana Chemical Association (LCA), The Economic Impact of the Chemical Industry of the Louisiana Economy: An Update, demonstrates the continued strength of the chemical industry in Louisiana and highlights the optimistic outlook for growth in our state. The study also points out potential barriers to future expansion and production, and how the state can overcome these obstacles to support the continued recovery of Louisiana’s economy.

“Chemical companies want to continue improving, expanding and investing in our state,” said Greg Bowser, president of LCA. “For our jobs, our cities and our children’s future, we should be doing everything in our power to make that happen. The chemical industry, which has undoubtedly been a catalyst for past and recent growth in Louisiana’s economy, brings thousands of well-paying opportunities and millions of dollars in investments to the local community. In fact, for every job created in the industry, an additional 8.3 jobs are created in other sectors. You can’t match that type of growth in any other industry.”

During the next four years, more than $14.5 billion in industry investments in Louisiana will come onto the local property tax rolls. Local governments will experience increased tax revenue for parish services, public safety and education because of these investments by the chemical industry, not to mention the jobs and local business partnerships that come with these projects.

“At a statewide meeting of the Rotary Club or Chamber of Commerce, look around the room: one of every seven persons owes his/her job to the presence of the chemical industry in Louisiana,” said Dr. Loren Scott. “Our expectations are that the benefits of the industry are very likely to grow in the future. State decision makers must keep in mind, however, that Louisiana has a very real, robust competitor for these investments: Texas.” 

Other figures of note:

The chemical industry contributes enough money to local governments alone to pay the salaries of 40 percent of Louisiana’s public school teachers.
With an annual average wage of $106,600, employees in the chemical industry make an additional $60,000 more than Louisiana’s median income.
The chemical industry contributes at least $959.5 million annually to local governments across the state.
In one year alone, the industry generates nearly $15.7 billion in household earnings – making up approximately 12.4 percent of all earnings in the state.
Since 2012, there have been $160 billion in announcements of new chemical facilities or expansions. At a minimum, more than 19,000 jobs are associated with these ventures.

Dr. Scott gives insight into some of the qualities that have encouraged growth in Louisiana’s chemical sector. One of these factors is the Industrial Tax Exemption Program (ITEP), which is an incentive used in the state that provides companies up to 100 percent property tax abatement for a specific period of time, in exchange for bringing jobs to the community. After the exemption is over, full property taxes are collected by the local parishes. Some have argued that ITEP rids local government of needed income, however, the report shows that strong ITEP parishes have flourished from the investment. The top eight ITEP parishes all collect much more property taxes per capita than the statewide average of $941. Cameron Parish, for example, has the highest amount of ITEP exemptions and also receives the highest amount of property taxes, $4,850 per person – 86.6 percent of which is paid by businesses.

Recent changes to the program, however, have brought uncertainty to the incentive and have put any current or future investments in jeopardy. For example, Dr. Scott outlines several factors that make Texas, the country’s no. 1 producer of chemicals, more enticing for companies looking to invest or expand. These factors include a unified sales tax collection, no corporate or personal income tax and the second-best business climate in the United States. The ITEP has been one of Louisiana’s attractive attributes that has, in some cases, given our state a leg-up on the competition. As Dr. Scott says, “Incentive programs may not be the primary factors, but the bottom line is the location decision is typically just a matter of math.”

“With $90 billion in potential investments, there is a lot to be optimistic about,” says Bowser. “However, Louisiana has a lot to lose if these projects do not come to fruition. Decisions made today will have meaningful implications for the future of our state.”

To download the entire report, click here.

Dr. Scott Economic Impact Slide Presentation

  • Communications
    Deidra Jackson BASF
  • Environmental Affairs
    Robert Berg ExxonMobil
  • Governmental Affairs
    Jeff Copesky ExxonMobil
  • Health & Safety
    Rusty Daigle Formosa Plastics
  • LCA Board
    Tom Yura BASF
  • LCA Board
    Paul Barletta Momentive Specialty Chemicals
  • Security
    Rick Riener Shell Chemical
  • Workforce
    Connie Fabre GBRIA