If we want to grow small business locally, we need to stop giving away construction contracts to out-of-state businesses.
In recent years, Southeast Louisiana has found itself in a new economic climate. In order to fill the gap left by legacy industries such as oil and gas that have shed jobs over the last several decades, renewed focus has been on growing small businesses.
It is becoming increasingly evident that the emerging water management sector can be the innovative, small business hub that spins out major Louisiana employers for future decades.
This so-called “water management” sector includes companies doing coastal restoration work, as well as those doing urban water management. Over the next two decades, at least $8.7 billion from BP will fuel coastal restoration and protection contracts, and with $2 billion from FEMA allocated for water management within the New Orleans levee walls there will be dollars over the next two decades that can go toward Louisiana companies, many of them small businesses.
In addition, there is no doubt that markets for water management expertise will grow worldwide as many coastal areas struggle with rising tides and increasingly frequent flooding.
To optimize the possibility that Louisiana can capitalize on these growing markets, we must ensure that we are using the billions of dollars in our own water management “pipeline” to grow expertise right here in Louisiana.
How can we do this? By engaging locally rooted business in our water management industry.
How many Louisiana businesses have benefited from water management contracts so far? We can largely answer this question by looking at the two main sources for water management contracts: the U.S. Army Corps of Engineers and the Louisiana Coastal Protection and Restoration Authority (CPRA).
On average (from 2010-2014) the Army Corps (who do mostly levee building) was responsible for the bulk of construction contract money, providing $453 million in contracts per year. Of that $453 million, 81 percent (or $367 million) went to Louisiana businesses, leaving $86 million going to out-of-state businesses per year.
The CPRA, on the other hand, is responsible primarily for coastal restoration efforts and has been responsible for substantially less in contracts than the Army Corps with only $94 million in construction contracts per year (or less than 21 percent of the Corps’ numbers) on average from 2007-2014. The CPRA has also been less likely to provide those contracts to Louisiana businesses, with only 39 percent of the contracts remaining in the state. That left $57 million per year on average going to out-of-state businesses.
In the future, more water management contracts will flow through the CPRA. To fertilize the growth of water management expertise right here in Louisiana, it will be important that the CPRA provide more contracts to Louisiana businesses and encourage outside businesses to establish branch offices in Louisiana.
Allison Plyer is executive director and chief demographer of The Data Center in New Orleans. Dr. Plyer is author of The New Orleans Index series, developed in collaboration with the Brookings Institution to track the region’s progress toward prosperity, and she leads The Data Center’s research on the development of the water management cluster in Southeast Louisiana as published in The Coastal Index series.