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Fri September 20, 2013
Chemicals Industry Makes Baton Rouge No. 1 Most Export-Intensive Metro
Originally published on Mon September 23, 2013 8:59 am
In his 2010 State of the Union Address, President Obama launched the National Export Initiative. As the country was emerging from the Great Recession, the President said he wanted the U.S. to double exports by 2014.
Only four of the top 100 metro areas in the country are on track to meet that goal. Baton Rouge is one. New Orleans is another. That's according to the Brookings Institution's latest "Export Nation" report, which was released earlier this week.
WRKF NEWS DIRECTOR AMY JEFFRIES: What is the secret to success that you see here in southeast Louisiana?
BROOKINGS RESEARCHER RYAN DONAHUE: It'll probably come as no surprise that there's three major industries that we're seeing in Baton Rouge and also in New Orleans that have really driven growth since that 2009 goal was set. And those industries are: chemicals, petroleum, and plastics and rubber.
JEFFRIES: You're looking at exports differently than other than other research organizations, like the Census Bureau, have done. You're measuring the volume of goods produced in a metro area for export, rather than how much stuff happens to leave the country from that particular metro.
DONAHUE: Exactly. And that's a really important distinction. In Louisiana, for example, if you look at the goods that are moving through the state for export, according to our data, that overstates the amount of exports that are being produced by about 40 percent. So, because you're a coastal state, you have a lot of goods coming through from interior states. And so we wanted to look at what metro areas are actually producing.
JEFFRIES: Even though some other data may have been overestimating what was really the export production here, it's really still quite significant.
DONAHUE: Oh, absolutely. There's no shortage of good news whatsoever, really for either city. More of Baton Rouge's economy comes from exports, exports that are produced there, than any other large metropolitan area in the country; New Orleans isn't far behind. They're both at all time highs in terms of exports. And to put Baton Rouge specifically in some perspective, we found that over two thirds of all economic growth since the recession has come from exports, so it's certainly very significant.
JEFFRIES: As you point out, the regional economy here is highly concentrated in petro-chem industries. Are there drawbacks to that?
DONAHUE: Yeah. That is a danger, right. We've seen since the end of the recession that metros, like Baton Rouge and like New Orleans, that are highly concentrated in specific industries tend to either grow very quickly or stagnate somewhat because they're at the whim of global demand for very specific products.
JEFFRIES: So if you were to give advice to the powers that be in the Baton Rouge area, what advice would you give about what they should do to invest in the continued growth of the metro post-recession?
DONAHUE: You need to dig into this data and other data sources, talk to firms, and put together a strategy that both strengthens your current strengths -- which are very clear -- but also seeks to diversify somewhat.
Look at services that are related to these manufacturing strengths, so, selling industrial process licenses to firms abroad.
And really be strategic about finding mid-sized firms that aren't currently exporting.
JEFFRIES: So you might be able to find, for example, a supplier to Exxon who might actually be able to be exporting their own products directly.
DONAHUE: One of the primary strategies of the metropolitan areas that are putting together export plans is to seek out those types of firms and provide services and counseling that can get them into their first international market.