Top business stories of 2020: A year that saw a decade of job growth erased in one month | Business

The coronavirus pandemic dominated every facet of life in 2020 and was the catalyst for an economic recession that blindsided business owners and their workers in mid-March, erasing the equivalent of a decade of job growth in the Baton Rouge area in just a month.

The pandemic, with the lockdown it triggered to help curb the spread of the virus, marked a drop-off not seen since the Great Recession began in late 2007.

The difference: During the Great Recession, it took about three years for Baton Rouge to gain back jobs lost, but the region has added back 60% of the jobs lost since March as a phased-in and capacity-restricted reopening of businesses slowly kicked in starting in late April and again in mid-May. However, much of the rebound has been tied to jobs in professional services and those requiring a certificate or degree.

Retail took a large hit in the first months of the pandemic, as did the hospitality industry’s restaurants and hotels and service and entertainment businesses such as salons, spas, gyms, bowling alleys and movie theaters, while the energy and petrochemical sectors weighed the uncertainty of the pandemic. Yet, home sales surged as interest rates hit historic lows.

The Baton Rouge Area Chamber said in a recent report that at the height of the pandemic, the capital region had nearly 65,000 weekly unemployment claims, and that’s now below 12,000. While consumer spending is down slightly in East Baton Rouge, it is up in Ascension and Livingston, and there is hope that the new federal stimulus passed last week will boost spending across the region and that vaccines against the virus will allow economies to recover in 2021.

Here’s a roundup of those issues and other major business stories published in The Advocate during the year:

Economy slowly rebounds from steep drop

The number of people working in metro Baton Rouge plummeted as much as 13% in 2020, compared to a 6.2% drop during the Great Recession. Employment improved with the phased reopening of the economy but remains below 2019 levels.

The economic recovery in the capital region continued through November with the addition of 2,000 jobs since October but was still down 4.5%, or by 18,700 jobs to 395,500 from 414,200 a year ago.

Louisiana had 1,908,400 nonfarm jobs in November, up 23,900 jobs from October for an uptick of 1.2%, but still 97,900 jobs below 2019 levels. The unemployment rate in Louisiana was 8.1% in November, up from 5% last year but down from its spike of 15.1% in April during the height of pandemic-related restrictions. In Baton Rouge, the unemployment rate was 7.1% in November, compared to 4.5% a year ago.

Leisure and hospitality employment is still down 20.4% in the metro area from a year ago; education and health services, 5%; financial activities, 1.5%; trade, transportation and utilities, 1.9%; construction, 3.7%; mining and logging, which includes oil and gas, 10%; information, 11.1%; federal, state and local government, 1.4%; manufacturing, 3.6%; professional and business services, 2.6%; and other services, 7.6%.

Financial aid came in the form of direct federal checks to Americans; state and federal unemployment benefits to laid-off and furloughed workers; and a federal Paycheck Protection Program providing potentially forgivable loans to help businesses keep people on their payroll and pay rent, utilities and expenses. 

During the pandemic, the Louisiana Workforce Commission paid out $7 billion in unemployment benefits to 700,000 individuals, depleting its fund and going into borrowing mode to keep it going. The state maximum was $247 per week. The federal government tacked on an additional $600 per week through the end of July — reinstating payments just last week, but at $300 per week — and funded a program that has assisted unemployed independent contractors and self-employed gig workers. Congress also approved additional direct checks to Americans.

Even so, those trying to receive unemployment benefits complained about delays recently exacerbated by two spikes of suspicious unemployment applications suspected to be fraudulent. By December, the state had rejected 160,000 claims during the pandemic considered to be potentially fraudulent.

For Louisiana businesses, more than $7.6 billion in federal Paycheck Protection Program loans were approved by early August, according to U.S. Small Business Administration data. Of that, more than $5.3 billion was for loans of $150,000 or more, for 9,000 Louisiana businesses, supporting nearly 500,000 jobs. The remaining $2.3 billion was for another 68,937 businesses, with loans of less than $150,000 in value. The federal program was renewed last week for another round of forgivable loans.

The health care and social assistance industry was approved for the largest number of loans in 2020, more than 1,300 across the state totaling $827 million. More than 1,100 construction companies were approved for $634 million; 1,000 professional, scientific and technical services businesses for $589 million; 700 manufacturers for $552 million; 374 mostly oil and gas service companies for $379 million; 750 in retail trade for $388 million; 500 in wholesale trade for $282 million; 350 in transportation and warehousing for $263 million; and 787 in accommodation and food services, which includes restaurants and hotels, $374 million.

Low interest rates boost home sales

After Baton Rouge-area home sales dropped sharply in April and May, it looked like the local housing market would be another part of the economy ravaged by the pandemic.

However, sales rebounded in June, and for six months in a row the metro area has seen double-digit percentage increases in the number of homes sold year to year. Through the end of November, 11,360 homes have been sold in metro Baton Rouge, up from 10,098 sales for the first 11 months of 2019, a 12.5% increase.

“It’s a crazy market,” said Kayla Johnson, of Covington & Associates Real Estate in Denham Springs. “I’ve never seen anything like it in my 33 years in the business.”

Local Realtors said spending months cooped up at home made some people decide the time is right to buy a house. And with record-low interest rates, buying a house is more affordable. Real estate experts said lenders are working with potential homebuyers, even those who might have been temporarily unemployed as a result of the pandemic. Banks and finance companies are willing to overlook a temporary lapse in employment caused by the coronavirus.

The market has been so strong, that a lack of inventory is causing issues. In November, there were 2,755 homes on the market, down from 4,402 homes in November 2019. At the current sales pace, there is a 2.6-month supply of homes on the market.

“People want to buy a new house, but there’s nothing for them to buy,” said Chelsea Meng, president of the Greater Baton Rouge Association of Realtors. “It’s a seller’s market.”

Industrial projects span range of extremes

The industrial side of Louisiana’s economy was a mixed bag of extremes ranging from new project announcements to delays or cancellations and even closures of some existing facilities.

Meanwhile, the oil and gas industry across Louisiana has seen a difficult year. The price of oil futures contracts briefly fell below $0 in late April, something that had never happened. The lowest it had dropped previously was single digits in 1973. The energy sector struggled with a glut of oil being produced and in storage, and extraction companies looked to shut wells across the state. Several oil and gas service companies filed for bankruptcy while oilfield service providers laid off hundreds of workers across the state.

Major projects proposed for coming years include:

• A deep-water crude oil export project off the coast of Cameron Parish by Dallas-based Energy Transfer LP, known as Blue Marlin Offshore Port that could become operational by 2023.
• Mitsubishi Chemical Corp. looks to invest $1 billion for a new methyl methacrylate chemical plant in Ascension Parish by 2025.
• ExxonMobil expects to spend at least $240 million to modernize its Baton Rouge refinery by 2023 and process more varieties of crude oil to ensure that it’s more competitive and sets the stage for future investment on the chemical manufacturing side.
• Shintech Louisiana LLC, the U.S. subsidiary of the world’s largest producer of PVC expects to wrap up a $1.4 billion investment for a new chlor alkali and vinyl chloride manufacturing facility in Plaquemine by the end of 2021.

The industrial sector saw some major projects hit the pause button during the recession, even the closure of a major refinery.

• The Louisiana subsidiary of Royal Dutch Shell, Equilon Enterprises LLC, expects to begin layoffs for nearly 700 workers in March at its Convent oil refinery, which it expects to shut down fully in August. 
• Two other oil refineries in Louisiana are laying off workers as the profit margin for producing gasoline and jet fuel has tanked in recent months: Krotz Springs and Calcasieu Refining Co.
• A $975 million chemical plant expansion under construction in Luling was canceled by Bayer Crop Science, a division of Bayer that acquired the Monsanto site, that cited economic uncertainty and a desire to preserve cash.
• South Louisiana Methanol paused construction of its $2.2 billion methanol plant in St. James Parish due to the economic situation but is still seeking critical permits for the project.
• Canadian methanol manufacturer Methanex Corp. deferred $500 million of capital spending on its third methanol plant in Geismar — a $1.4 billion total investment. The plant is expected to remain in limbo for the next year as the company spends about $100 million for completing engineering work and other temporary maintenance. The company has not yet decided to restart the construction.
• Formosa Petrochemical Corp. pushed back pre-construction of its plastic manufacturing complex proposed for St. James Parish due to the coronavirus pandemic and doesn’t expect to begin again until a vaccine is widely available. Due to delays, a global rating agency projected the cost of the construction would increase from $9.4 billion to $12 billion.
• Specialty alumina manufacturer LAlumina LLC laid off 302 workers at its plant in Ascension Parish, even after being approved for at least $5 million but not more than $10 million through the federal Paycheck Protection Program to maintain its workforce.

The liquefied natural gas industry in Louisiana saw a number of delays as companies wrestle with a lack of demand for their product worldwide because of the pandemic and a crowded market.

Two export terminals are operational so far: Sabine Pass LNG, owned by Cheniere Energy, and Cameron LNG, jointly owned by affiliates of Sempra LNG, Total, Mitsui & Co. Ltd. and Japan LNG Investment LLC.

Venture Global LNG’s first export terminal is under construction in Cameron Parish, while the company decided to delay the financial decision about its separate Plaquemines LNG project until 2021. Its third project, Delta LNG, is going through the permitting process.

There are eight more LNG export terminals proposed in Louisiana, which have not yet begun construction.

• Houston-based Tellurian has delayed construction until 2021 and is still trying to secure financing and customers for its $30 billion project. The company dropped plans to build three out of four proposed pipelines for Driftwood LNG.
• Shell dropped out of a deal to build Lake Charles LNG alongside Energy Transfer, but the Houston-based business expects to continue with the project.
• Magnolia LNG, which was sold to Glenfarne Group when Australia’s LNG Ltd. became insolvent, is seeking a five-year extension until 2026 to build its export terminal.
• Local operators Pointe LNG and G2 Net Zero LNG have made some progress but are still raising money for their respective projects.
• Commonwealth LNG looks to make a final investment decision in 2021.
• Delfin LNG was granted an extension due to uncertainty from the coronavirus.

Amazon centers go the last mile

Amazon opened a new distribution center in south Baton Rouge and took steps to open a similar facility in West Baton Rouge Parish during 2020, then announced a massive fulfillment center near Lafayette.

The 111,918-square-foot South Baton Rouge Distribution Center was built by Atlanta-based developer Seefried Industrial Properties on land purchased from Bethany Church near Siegen Lane and Reiger Road.

The warehouse replaces a temporary tent facility along Airline Highway near Interstate 12 that handled what the company calls last-mile deliveries to customers.

In late October, right around the time operations were gearing up at the south Baton Rouge center, the online giant signed a lease with a developer who bought a 63.3-acre site off La. 415 in Port Allen. Seefried bought the land near the Court Street intersection for $8.15 million.

The Port Allen site is said to be similar to the South Baton Rouge Distribution Center, but larger. According to lease documents, Seefried is taking out a nearly $38.2 million mortgage on the Port Allen land. Building permits put the cost of the Baton Rouge distribution center at $22 million.

Scannell Properties, which does construction for the tech giant, closed a deal in mid-December to buy the former Evangeline Downs site just outside of Carencro. It will become a 900,000-square-foot fulfillment center. And the owner of the former Virginia College space at Cortana Mall has said Seefried proposed buying all of the shuttered mall and build a large facility there. But that deal was scuttled, reportedly over issues with getting control of all the mall parcels, such as the Dillard’s clearance center that serves as Cortana’s sole remaining tenant.

Casinos going onshore, consolidating

The sleepy Baton Rouge casino market got shaken up in 2020, with Hollywood Casino announcing plans to move onto land and a Midwest operator striking deals to buy both of the city’s downtown riverboats.

Hollywood announced during the summer it would spend up to $25 million to move off of its aging riverboat and into its current dockside facility.

The facility will be expanded; so by February 2022, Hollywood will have just over 100,000 square feet of space, including a 27,000-square-foot, single-level casino floor. The number of slot machines and table games will stay the same, but the casino will add a sports bar/entertainment venue with seating for 250, a sports viewing area and a Shaquille O’Neal’s Big Chicken Restaurant. Either one of the sports-watching venues could easily become a sportsbook, or wagering operation, now that East Baton Rouge Parish voters have approved legalized sports betting.

In December, it was announced that Casino Queen, which owns two riverboats in Illinois and Iowa, had reached a deal to buy the Belle of Baton Rouge from Caesars Entertainment. The move wasn’t a surprise; there had been speculation Eldorado Resorts would prune some of its holdings after it completed its $17 billion merger with Caesars.

Two weeks later, Casino Queen said it had agreed to buy Hollywood from Gaming and Leisure Properties Inc. for $28.2 million, a move that would give it control of two of the city’s three gambling facilities. GLPI said it was still going ahead with moving the casino onto land.

“We feel that with sports betting coming on, along with traditional gaming, we have a lot to offer to our valued customers,” said Terry Downey, president and chief executive officer of Casino Queen.

Casino Queen’s ownership of two casinos raises a number of possibilities. The company already has a relationship with DraftKings, the daily fantasy sports operator, through its DraftKings at Casino Queen riverboat in Illinois. This could pave the way for DraftKings sportsbooks at the Belle and Hollywood.

The Louisiana Gaming Control Board has to approve both casino sales.

Port snags Grön renewable fuels refinery

The Greater Baton Rouge Port Commission approved a land lease agreement in November with a Texas-based company that plans to build a renewable diesel plant that could be worth $1.2 billion in the first phase of what could be a multiphase $9.2 billion development over nine years.

The company expects to hire 340 employees by 2024 and ramp up to 1,025 by 2031 if all potential expansions are developed. Officials said the jobs would have an average salary of about $100,000.

Officials with Grön, which is Swedish for “green,” said the plant would use soybean and canola oil, tallow and used cooking oil to produce renewable diesel fuel. Grön is shooting to break ground on the plant sometime in the upcoming year.

“We’ve got a significant amount of engineering work that’s going to be done,” said Daniel Shapiro, co-founder of the Houston-based company. “That’s the key thing that will determine when we start in the year.”

Bank, bat, barbecue deals surface

Three big deals were made involving the largest bank based in Louisiana and two Baton Rouge companies that make baseball bats and accessories and an online retailer of barbecue, outdoor kitchen and patio equipment.

• A nearly $4 billion deal combined Lafayette-based IberiaBank with First Horizon Bank, headquartered in Tennessee, in July.

First Horizon’s headquarters remains in Memphis and the company has a regional office in New Orleans. First Horizon also expects to keep IberiaBank’s existing downtown Lafayette office since it owns the property.

The purchase of IberiaBank made First Horizon one of the largest financial services companies across the South and among the top 25 banks in the U.S. The 133-year-old IberiaBank is expected to change its name to First Horizon in mid-2021.

• Baton Rouge baseball bat manufacturer Marucci Sports LLC was acquired by Compass Diversified Holdings for $200 million. The Connecticut-based investment fund planned to keep the company headquarters in Baton Rouge. Marucci has 230 employees. It also has a location in Lafayette. 

Marucci, which was started by LSU athletic trainer Jack Marucci in his backyard shed 16 years ago, is the most popular bat manufacturer with Major League Baseball players. Some of the sluggers who swing Marucci bats include Giancarlo Stanton, Anthony Rizzo, Freddie Freeman and Alex Bregman.

• BBQGuys, a Baton Rouge-based online retailer of barbecue grills, outdoor kitchens and patio furniture, was bought by a private equity firm. Brand Velocity Partners also bought a sister company, Blaze Outdoor Products, which engineers and manufactures grills, smokers and drawers.

While the sale price was not disclosed, Brand Velocity brought in several football greats as strategic investors, including Peyton Manning, LaDainian Tomlinson and Eli Manning. The company said it will launch a multimillion-dollar advertising campaign in the next year to build awareness of BBQGuys.

Plans are to keep Baton Rouge as the headquarters for both BBQGuys and Blaze. Russ Wheeler, the new chief executive officer of BBQGuys, said he sees the company doubling its workforce “every couple of years,” based on sales projections. 

Medical marijuana market expands

It’s been 16 months since patients seeking medical marijuana have been able to buy products in Louisiana and both wholesale manufacturers licensed by state universities have had tinctures hit the pharmacy shelves.

Ilera Holistic Healthcare, the licensee for Southern University, began selling its THC products in July and a major expansion is under construction for a mostly vertical growing operation.

Wellcana, the licensee for LSU, has been active in the market since August 2019. Wellcana expanded its south Baton Rouge facility to accommodate manufacturing of CBD lotions and other products.

Both companies plan to roll out metered dose inhalers and gelatin chews soon.

Between August 2019 and October 2020, Wellcana had transferred 48,700 tinctures to nine licensed pharmacies across the state. Illera had transferred 5,529 tinctures between July and October.

There were 6,120 medical marijuana patients across the state at mid-June, two months before a law change allows any doctor in Louisiana to recommend medical marijuana for any condition. Before the law change, pharmacies opined about the high cost of operating compared to a relatively low patient pool.