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Economic Impact of Louisiana Chemical Industry

Explore the economic impact of the chemical industry in Louisiana, including employment, earnings, tax contributions, and potential threats.

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Economic Impact of Louisiana Chemical Industry

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  1. Louisiana Chemical Industry Economic Impact LCA/LCIA Annual Legislative Conference May 9, 2018 Dr. Loren C. Scott Loren C. Scott & Associates, Inc.

  2. The Industry Chemical Manufacturing (NAICS 325) Plastics & Rubber Manufacturing (NAICS 326)

  3. Rank In Country: 2016(Note cluster at bottom)

  4. Makeup in Louisiana: 2016

  5. The International Connection 2017: $9.7 billion in chemical products exported 18% of Chemical Production 17% of merchandise exported from LA

  6. Impact on the State: The “rock” hits the “pond”

  7. Employment Largest Manufacturing Employer in LA in 2017-III 29,109* jobs About 1/5th of Manufacturing employment #2 Fabricated Metals: 17,042

  8. “Direct Employment”:Grossly Understated • The “contractor” issue • ExxonMobil’s big Chemical Plant: • 1979: 2,200 employees • 2017: • 1,003 ExxonMobil • 1,200 Contractors • Of ExxonMobil’s 3 chemical plants in EBR: 1,493 employees (out of 2,975) are contractors

  9. Employment Largest Manufacturing Employer in LA in 2017-III 29,109* jobs About 1/5th of Manufacturing employment #2 Fabricated Metals: 17,042

  10. Distribution of Employment: 2017-III • Six parishes with 1,500+ • 1. Calcasieu – 4,928 • 2. Ascension - 4,053 • 3. Iberville – 3,425 • 4. EBR – 3,117 • 5. St. Charles – 2,341 • 6. Jefferson – 2,074 • 53 of 64 parishes record at least some employment in the industry

  11. Employment by Parish: 2017-III

  12. The Earnings Side

  13. Average Weekly Wage in Manufacturing: 2017-III • Petroleum Manufacturing $2,112 • Chemicals Manufacturing* $2,050 • Plastics/Rubber $1 ,005 • Average Manufacturing $1,346 • Average Louisiana $ 870 • 52% higher than manufacturing average • 136% above average wage of ALL workers in Louisiana

  14. $2.9 Billion in Total Wages: 2017-III • Highest of any industrial sector in the state • Oil & Gas Extraction: $2.8 billion • Refining $1.4 billion • Very important! Does not include contractor wages

  15. $2.9 Billion in Wages: 2017-III

  16. Distribution of Earnings: 2017-III • Top 6 • Calcasieu - $541.1 mm • Ascension - $491.3 mm • Iberville - $375.8 mm • EBR - $348.2 mm • S. Charles- $297.2 mm • Jefferson- $191.1 mm

  17. The TOTAL Impact Adding in the multiplier effect

  18. Total Impacts - 2017 • Business Sales: $79.7 billion • Household Earnings: $15.7 billion • 12.4% of all earnings in LA • $1 of every $9 earned in Louisiana • 267,601 jobs • 1 of every 7 jobs in the state • Means average wage of all jobs = $58,669 • Average annual wage in LA: $45,240 • Job multiplier of 9.2

  19. Tax Impacts • State Taxes: 2012 • Corp. Franchise & Income: $3,400,060 • Direct Sales Taxes: ? • Indirect Taxes: $1,098,706,000 • Total:$1,102,106,000 • Total collected from gaming taxes & tobacco taxes in FY17 = $1,102,100,000

  20. Tax Impacts: 2017 • Local Government Taxes • Property Taxes: $174,676,308* • Direct Sales Taxes: ? • Indirect Taxes: 784,790,000 • Total $959,466,308 • Enough to cover the salaries of 19,266 of Louisiana’s 46,935 public school teachers (4 out of every 10) * survey not census

  21. ITEP: 2017 • In Force: $89.0 bill • To Chemicals: $62.7 bill (71%) • Chemicals Expiring: 2018-22: $14.6 bill • Iberville: $4.3 billion • Cameron: $1.8 billion • EBR: $1.8 billion • Ascension: $1.5 billion • Calcasieu: $1.3 billion • St. Charles: $1.1 billion

  22. Do High ITEP Parishes Suffer?

  23. Do High ITEP Parishes Suffer?

  24. The Immediate Future: A Huge Expansion Underway

  25. Massive Chemical Expansion60 Projects Since 2012

  26. Threats to the $89 Billion Potentials: The Problem of Texas • TexasLA • Business Climate #2 #40 • Legal Climate #39 #51 • Transportation #22 #44 • Higher Ed #34 #42 • Pre K-12 #33 #45

  27. Threats to the $89 Billion Potentials: The Problem of Texas • No personal or corporate income tax • No tax on manufacturing equipment • No tax on manufacturing inputs • Unified sales tax collection • Lower local sales taxes • Does have a gross receipts tax similar to our franchise tax This is a lot to overcome

  28. Threats to the $89 Billion in Potentials: JBE 2016-26 Essentially created enough uncertainty to make out ITEP = 0 in location calculations Good news: Most were announced prior to June 2016 so are exempt from JBE 2016-26

  29. Threats to the $89 Billion in Potentials: “Fiscal Cliff” • New taxes on business since FY16: • FY16: $575 million • FY17: 1.33 billion • FY18: 1.35 billion

  30. Louisiana Chemical Industry Economic Impact LCA/LCIA Annual Legislative Conference May 9, 2018 Dr. Loren C. Scott Loren C. Scott & Associates, Inc.

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