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Hey Buddy, Can You Spare a Microchip Plant?

LA State Wire

By ALAN SAYRE

NEW ORLEANS (AP) — Almost three years after Hurricane Katrina, interest increasingly is focusing on New Orleans’ economy, and whether rebuilding now under way has breathed new life into what had been a back-in-the pack business climate.

Buoyed by billions of federal aid dollars, construction companies are doing well.

Tourism is rebounding. But overall, there’s not a lot of glow in the city’s economic situation.

After levees broke and 80 percent of the city flooded Aug. 29, 2005, there was a tidal wave of ideas about how to jump-start the economy.

There was talk the new New Orleans would be a magnet for corporate investment and high-wage jobs. The Queen City of the South would again challenge rivals such as Nashville and Atlanta.

Then-Gov. Kathleen Blanco floated — and discarded almost as quickly — the concept of New Orleans as a tax-free zone. Mayor Ray Nagin threw out the idea of turning Canal Street into a casino strip. That one flopped, too.

Even the city’s recovery director carted out artist renderings depicting the hard-hit Lower 9th Ward in a French Quarter-esque mix of restaurants and shops. This in one of the most depressed pre-Katrina neighborhoods.

Though corporations opened the checkbook to charitable efforts, they have been distant in long-term investment in the city as a place to do business. Why?

The roots lie to some degree in the problems that deviled New Orleans before Katrina, and have resurfaced since.

Revamped public education systems need time to show they are on the rise. Crime has made a nasty recovery, and there are questions about public leadership.

The dependence on predominantly low-wage tourism jobs that grew in the wake of the oil industry’s 20-year exodus from the city remains.

After Katrina, that weakness was in fact a strength. Tourism was the first local sector to draw outside spending back to New Orleans. Most tourism venues, and especially the French Quarter, were spared the worst of Katrina’s wrath.

But while attention focused on how well Mardi Gras did, three more oilfield giants — Chevron, Murphy Oil and McDermott International — quietly left, joining Amoco, Exxon Mobil and others in the parade of companies that once considered New Orleans an anchor city.

There are bright spots. Health care is slowly recovering and shipbuilding is doing just fine. The sports business is booming.

But a close watch must be kept on NASA’s Michoud Assembly Center where Lockheed Martin Corp. plans to cut 200 jobs by October as the space shuttle program winds down.

While the city struggles to define its post-Katrina economy, getting a good picture from government data is tough.

The Census Bureau recently insisted New Orleans was the fastest-growing U.S. city in 2007, glossing over the fact the population is still far below its post-storm total. The Commerce Department reported the region had the fastest growing personal income in 2007. At least the agency pointed out that was due to billions of dollars in one-time hurricane housing recovery payments.

As all this shakes out, the city has to be concerned about how its image is affecting business decisions. Consider:

— The district attorney’s office broke down as crime made a horrifying comeback. The police department has dealt with several embarrassing internal cases in addition to taking heat for the crime problem. How do you sell a city where the National Guard is still patrolling?

— Federal corruption prosecutions poured in, including the indictment of U.S. Rep. William Jefferson, D-La., and members of his politically powerful family on a variety of criminal charges.

— Mayor Ray Nagin continued to make embarrassing public gaffes. More recently, City Hall has come under fire for accounting practices as a post-Katrina house-gutting program appeared to have paid contractors for work that wasn’t done.

— Then there is the elephant in the room. Will rebuilt levees hold when the next big storm comes to town?

The stakes are high as the city finds it needs much more than great restaurants and the bawdy Bourbon Street scene to wine and dine itself to economic prosperity.
But there is no master vision for rebuilding New Orleans’ economy.

If all else fails, New Orleans can fall back on its historic safety net. After all, Mardi Gras will be back in February 2009.
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EDITOR’S NOTE: Alan Sayre is the New Orleans-based business writer of The Associated Press.