Who’s To Blame For The Deindustrialization Of Baton Rouge?

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But Zachary’s economy has been based for a long time on heavy industry. Georgia Pacific’s paper plant at Port Hudson, just west of Zachary, is a major employer, and other smaller industrial concerns operating in and just out of the Zachary city limits have been responsible for a disproportionate share of the town’s employment

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That might be changing – and not in a good way. Last week, GP announced it was closing down part of its operations – shuttering a division at its plant making paper for printers and copiers, and laying off some 650 employees. Days later, BASF followed suit, announcing the closure of its chemical plant in Zachary at the loss of some 54 jobs by the end of 2019 and consolidating those operations at its larger facility in the Ascension Parish town of Geismar. And following on the heels of the BASF announcement a third manufacturer, Thompson Pipe, yesterday announced it was shuttering its facility in Zachary at the loss of 120 jobs. Thompson Pipe is consolidating its Zachary operations with a larger facility in Alvarado, Texas and moving those employees who are willing across the border to the Lone Star State. So that’s more than 800 jobs lost in a town of about 17,500 people. And they’re manufacturing jobs – meaning their footprint is massive. Some studies, including those cited by the Baton Rouge Area Chamber, peg the economic impact of a manufacturing job on the economy of an area at 10 to 1, or 10 jobs in supporting businesses for every one job at a manufacturing plant. If that’s even remotely true, losing 800 jobs in these three facilities could mean 8,000 jobs are now at risk.

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One reason why this trend seems to be building is something we’ve talked about over and over – it’s the business climate, stupid. Or, better put, it’s the stupid business climate. Louisiana, after all, hits industry with a whopping inventory tax. So if you’re making a product, if you don’t want to get slaughtered on costs you’d better get that product out of your warehouse in Louisiana as soon as it’s made. You’re also paying a corporate income tax in Louisiana that you’re not paying in Texas or Tennessee or Florida. And while property taxes are higher in Texas, in Louisiana we have a $75,000 homestead exemption that nobody else in the country has, which means business pays 80 percent of the property tax in the state. On top of that, this is one of the most overlawyered places in the civilized world; proof of that can be found on every billboard along the highway. And the highway is terrible, highlighting Louisiana’s inferior infrastructure. And let’s not even talk about the poor quality of the public schools and what that does to the quality of the workforce.

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To get around these things, and particularly the unfriendly tax climate, Louisiana’s politicians created the Industrial Tax Exemption Program, or ITEP. Through that program a business entity wishing to make a capital investment in an industrial facility can get a tax abatement for 10 years of property tax so long as Louisiana Economic Development and the state Board of Commerce and Industry are on board. But after taking office this state’s Democrat governor John Bel Edwards decided through an executive order to change that process and cut local governments in on the ITEP action, and in Baton Rouge that has been an abject disaster – with all of these economic development decisions now at least partially in the hands of parish councils and school boards the Alinskyite leftist group Together Baton Rouge has mounted an all-out assault on ITEP applications, with an eye toward convincing entry-level politicians with zero understanding of economic development that industrial actors seeking tax abatements for capital investments in Louisiana parishes are the bad guys. We’ve reported on TBR’s attempts to deny ExxonMobil ITEP applications. This week they’ve been crowing about the fact they managed to defeat an ITEP application for Georgia Pacific, which plans (or planned) a $42 million investment at its Port Hudson facility to make upgrades to its operations which aren’t being shut down. So for $772,000 in property tax swag which will undoubtedly be wasted by local governments, what do you think the reaction will be in the Koch Industries boardroom? Georgia Pacific has paper plants in lots of places, you know, and if they’re willing to shutter one division of their plant at Port Hudson because they don’t think it makes enough money anymore what makes you think they won’t shutter the rest of the plant and move its operations elsewhere?

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