New Orleans: Economy
Major Industries and Commercial Activity
The New Orleans economy is dominated by four major sectors: oil/gas and related activities, tourism, the port and ship/boat building, and aerospace manufacturing. The presence of universities, hospitals, legal/accounting and other professional services, together with key installations of the U.S. Navy and other military operations in the region adds further to its diversified economic base.
Tourism continues to be the driving force of New Orleans' economy. Boasting attractions such as its magnetic French Quarter, America's largest Mardis Gras festival, and river-boat gambling, New Orleans has a history of solid tourist trade. In a city with more than 10 million visitors annually, the hospitality business supplies more than 66,000 jobs in the service sector such as accommodations and restaurants. In 2004, tourists spent $4.9 billion in New Orleans.
At the beginning of the twenty-first century, New Orleans was heralded by several magazines as a top place for small businesses and entrepreneurs. One magazine noted that statistics from the Small Business Administration showed that small businesses in the area create more than 75 percent of new jobs.
Some of New Orleans's largest private employers are shipbuilding firms, where workers build and repair vessels for the U.S. Navy, merchant fleets and cruise ship lines. Martin Marietta, manufacturers of aerospace components for NASA space projects, uses a large work force at its New Orleans operations. In recent years the economy has diversified into such varied fields as health services, aerospace, and research and technology.
The New Orleans region is also a major transportation hub and a leader in production of crude oil and natural gas processing facilities.
Items and goods produced: ships, petrochemical products, food processing, stone, clay and glass products, printing and publishing
Incentive Programs—New and Existing Companies
An exemption from ad valorem property taxes levied by local parishes and municipalities is offered to new and expanding manufacturing industries. In addition, the Louisiana Urban Enterprise Zone program offers tax credits and other incentives to businesses locating in specially designated areas. Manufacturers, distributors, and retailers are eligible to have ad valorem property taxes on inventories levied by municipal government credited against the state corporate and personal income taxes and the corporation franchise tax.
Greater New Orleans, Inc.'s International Business and Trade Development Department was created to position the region as a prominent player in global marketplace. The strategy includes developing the New Orleans Region as a hub for north-south trade with the Americas, thus generating new business opportunities and accelerating job growth. Among these efforts are matchmaking meetings between local companies and international trade delegations and partnerships such as the Louisiana/Honduras Alliance, which is a broad-reaching effort with five major universities in Southeast Louisiana to rebuild Honduras in the wake of Hurricane Mitch. In partnership with other international trade organizations and public-sector officials in the region, Greater New Orleans, Inc. is helping to anchor the New Orleans Region as the Gateway to Latin America.
Louisiana has pledged itself to broaden its business base through liberal development incentives and loan programs. To that end the governor signed three tort reform bills intended to signal the state's new commitment to improving the state's business climate. In addition, the state legislature overwhelmingly passed two new incentives to attract new business. The Louisiana Quality Jobs Act offers a tax rebate of up to five percent of payroll paid each year for 10 years to new or expanding labor-intensive companies that create $1 million in gross annual payroll, conduct 75 percent of their business out of the state, and provide at least 50 percent of premium coverage for basic health insurance. The Louisiana Capital Investment Tax Credit incentive program is aimed at capital-intensive industries and will give a franchise tax credit of five percent per year over 20 years on invested capital in new or expanded facilities.
New Orleans, site of the world's first trade center, has been designated a Foreign Trade Zone. A freeport exemption law allows property tax exemptions on goods imported into the United States and held for export outside of the state or the country, as well as goods in interstate commerce that are stored while in transit through the state. The region of New Orleans has diverse business incentives sponsored by the state as well as special financing programs for companies of all sizes.
Job training programs
Greater New Orleans, Inc., whose mission is to attract new businesses to the New Orleans region, is responsible for the School-to-Career Initiative, which has organized local businesses into industry consortia in the fields of Architecture, Design, Engineering and Construction (ADEC); Culinary Arts; Financial Services; Hospitality, Travel and Tourism; Law-Related Careers; and Petrochemical. An Information Technologies Consortium and a Healthcare Consortium were recently developed. A Consortium on Out-of-School Youth (COSY) has also been established. The industry consortia provide teacher and student shadowing opportunities and internships, assisting with curriculum development and providing guidance and financial support. Speaking through the consortia, the local business community is able to voice its workforce needs and expectations of its entry-level employees. Having heard their needs, the School-to-Career Initiative focuses on creating systems that deliver the quality employees that will ensure profit and success for not only these businesses, but ultimately for the region as a whole.
"The Downtown Revival!," a multi-million dollar project that includes a long list of improvements to New Orleans' entire downtown area, is aimed at restoring the downtown and Canal Street for the millions of tourists that flock to the city each year. By 2005 $2 million had been spent on downtown-wide improvements that included new signs to help visitors find their way, extensive street landscaping, and street pole banners. Beginning in spring of the same year, developers expect to begin a $15 million project that involves major renovations and improvements to Canal Street for businesses and visitors. As part of the project, the About Face Façade Improvement Fund consists of a $156 million program to enhance the city's public transportation by way of a new Canal Street Streetcar Line program and new transit shelters.
Economic Development Information: Greater New Orleans, Inc., 601 Poydras Street, Suite 1700, New Orleans, LA 70130; telephone (504)527-6900; fax (504)527-6950
The Port of South Louisiana (LaPlace) led the nation in cargo tonnage, and the ports of New Orleans, Baton Rouge and Plaquemines were in the Top 10. The Port of New Orleans, the largest inland port in the United States, is a hub of national and international transportation. It is connected to a network of 19,000 miles of inland waterways consisting of the Mississippi River, its tributaries, and other systems. More than 4,000 ship calls are made at the region's deepwater ports every year. French explorers were the first to identify the Mississippi rivermouth region as an important port location that was connected by waterways to a vast section of interior territory. American traders and farmers floated their goods downstream to New Orleans and, after 1812, steamboats transported upriver commodities that ocean-going vessels landed at New Orleans. The modern history of the Port of New Orleans, however, began in 1896 when the Louisiana state legislature created a state agency to serve as port authority. In 1925 the Inner Harbor Navigational Canal was built to connect the Mississippi River and Lake Pontchartrain. Also known as the Industrial Canal, it serves as the mouth of the Mississippi River-Gulf Outlet, built in the 1960s as a route to the Gulf of Mexico that is more than forty miles shorter than the Mississippi River route.
Seventy percent of the nation's waterways drain through the Port of New Orleans, which operates a Foreign Trade Zone, where foreign and domestic goods can be stored and processed without being subject to U.S. customs and regulations. Commercial vessels and ship tonnage entering and leaving the area make the Port of New Orleans one of the world's busiest harbors, with imports and exports serving the iron and steel, manufacturing, agricultural, and petrochemical industries. Port-related activities involve shipbuilding and repair, grain elevators, coal terminals, warehouses, and distribution facilities, as well as steamship agencies, importers and exporters, international banks, transportation services, and foreign consular or trade offices. The port is also a departure point for a variety of pleasure cruises to Caribbean destinations and for upriver riverboat and paddlewheel cruises.
Labor Force and Employment Outlook
In a bold and sweeping move, regional business leaders have closed the books on their 140 year old regional chamber and its economic development arm MetroVison, to take on a new five-year plan to generate 30,000 new jobs and $1 billion in new payroll. Recognizing that the most relevant issue for the region is a stalled economy, leaders have created Greater New Orleans, Inc. to be the new, streamlined organization to implement best-practice strategies to achieve these measurable objectives. Louisiana ranked 19th in the country in high-tech job growth for 2001, with a growth rate of 3 percent.
The following is a summary of data regarding the New Orleans metropolitan area labor force, 2003 annual averages.
Size of nonagricultural labor force: 615,500
Number of workers employed in . . .
construction and mining: 40,700
trade, transportation and utilities: 122,400
financial activities: 35,900
professional and business services: 71,900
educational and health services: 83,700
leisure and hospitality: 82,200
other services: 23,200
Average hourly earnings of production workers employed in manufacturing: $16.91
Unemployment rate: 5.0% (December 2004)
Cost of Living
The following is a summary of data regarding several key cost of living factors for the New Orleans area.
2004 (3rd Quarter) ACCRA Average House Price: $226,244 (Slidell–St. Tammany Parish reporting)
2004 (3rd Quarter) ACCRA Cost of Living Index: 96.1 (U.S. average = 100.0)
State income tax rate: Ranges from 2.0% to 6.0%
State sales tax rate: 8.75% (food sales exempt)
Local income tax rate: None
Local sales tax rate: Varies by parish ranging from 5.0% in Orleans Parish (City) to 4.75% in Jefferson Parish
Property tax rate: 1.70% (residential property is assessed at 10% of fair market value with a $7,500 homestead exemption)
Economic Information: Greater New Orleans, Inc., 601 Poydras Street, Suite 1700, New Orleans, LA 70130; telephone (504)527-6900; fax (504)527-6950
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