2012: The year in business 2012: The year in business Advocate story Jan. 07, 2013 Comments The past year produced a range of business stories in the Baton Rouge-area and state. Here’s a glance at some of the bigger stories from 2012 compiled by Advocate business writers Chad Calder, Ted Griggs and Timothy Boone: Natural gas fueling development in La. Low natural gas prices triggered announcements of billions of dollars in industrial projects in Louisiana in 2012, led by the South African energy company Sasol Ltd.’s gas-to-liquids complex in Calcasieu Parish. The facility will cost an estimated $16 billion to $21 billion, the most costly industrial project in Louisiana’s history. The complex will include a gas-to-liquids plant that will convert natural gas to diesel, and an ethane cracker complex, which will produce the ethylene used in alcohol- and plastic-based products. Royal Dutch Shell is also looking at spending $10 billion on a gas-to-liquids plant in Louisiana. A half-dozen liquefied natural gas projects, each costing billions of dollars, have been proposed in Louisiana. Cheniere Energy’s Sabine Pass project, whose initial phase will cost $5 billion to $6 billion, has already won federal approval to export its LNG anywhere. Sempra Energy has hired an engineering company for its Hackberry facility. The importance of natural gas as a feedstock and fuel is exemplified by Nucor Corp.’s construction throughout 2012 of a $750 million direct-reduced iron plant in St. James Parish. The company announced it will pay Encana Oil & Gas Inc. a portion of costs, plus interest, to drill onshore natural gas wells to lock in a reliable, low-cost supply of natural gas for at least the next two decades, the company said. The first phase should go online in mid-2013, creating a “significant increase in Nucor’s usage of natural gas,” the company said. The Nucor plant under construction in Convent is the first phase of what could eventually be a $3.4 billion facility with 1,250 employees by 2019. Other stages of the project call for a second direct-reduced iron plant, a pellet plant and a blast furnace. The final stage of the project calls for Nucor to build a $750 million steel mill. CF Industries Inc. is investing $2.1 billion in its fertilizer complex near Donaldsonville. The Mosaic Co. is beginning engineering and design work on a potential $700 million ammonia production plant at the company’s Faustina site in St. James Parish. The company, which makes fertilizer, will make a final decision on the plant by mid-2013. If Mosaic goes ahead with the plant, it would create 53 new jobs. Methanex is expected to spend $1 billion to relocate two methanol plants to Geismar. Methanol is used in everything from windshield washer fluid and paint to plastic bottles and plywood flooring and can be burned as fuel. Colorado-based SundropFuels Inc. is building a $450 million “green gasoline” refinery near Alexandria. The facility will combine forest waste with the hydrogen from natural gas to make fuel. And those are just the projects that have been announced. Louisiana is also competing for dozens of other major projects. Ascension Parish alone is in the running for 36 projects representing $8.2 billion in investment. Louisiana Economic Development Secretary Stephen Moret has said the state will need 20,000 to 40,000 workers statewide to handle the work, and that number may be even greater. There are projects out there the state doesn’t know about. And the demand for workers could be even greater if drilling takes off in the Tuscaloosa Marine Shale, an oil-bearing formation that stretches across the middle of the state. Some experts have said drilling activity will accelerate in 2013 as energy companies master the techniques needed to make oil production economical.e_SClBShaw Group being sold to CB&I The Shaw Group, Baton Rouge’s only Fortune 500 company, announced in late July it was set to be sold to CB&I. The Dutch firm, which has U.S. operations in The Woodlands, Texas, agreed to pay $3 billion in cash and stock for Shaw. “We plan to create the most complete energy-focused, engineering services company in the world,” Phillip K. Asherman, CB&I’s CEO said the day the sale agreement was announced. Asherman said the goal was to retain Shaw employees in Louisiana and increase their opportunities. The combined company will be one of the largest in the Western hemisphere with annual revenue of more than $10 billion, a project backlog of more than $28 billion and around 50,000 employees. Shaw was formed in 1987 to acquire pipe fabrication assets of The Benjamin F. Shaw Co. in Laurens, S.C. It purchased and leased additional pipe fabrication facilities over the years and formed joint ventures overseas to produce pipe for projects in South America and the Mideast as it pursued joint ventures in the Far East, such as China, getting involved in everything from building components for nuclear power plants to environmental engineering. In late December, overwhelming majorities of CB&I and Shaw shareholders approved the sale. The deal should close by mid-February. The new company, CB&I Shaw, will maintain a major presence in Baton Rouge, even though headquarters functions will shift to Texas. J.M. Bernhard Jr., the founder of Shaw, said he expects CB&I Shaw to post a net increase in Baton Rouge employees over the next couple of years. The company will play an active role in designing and building liquefied natural gas and petrochemical plants, which are booming in south Louisiana, he said.e_SClBL’Auberge betting on BR Las Vegas-based Pinnacle Entertainment Inc. elbowed its way to the top of the Baton Rouge gambling hierarchy by opening L’Auberge Casino & Hotel. The $368 million complex opened Sept. 1, three days after the originally scheduled date thanks to Hurricane Isaac. Gamblers didn’t appear discouraged by the delay. During its first three months in business, L’Auberge had $36.1 million in revenue. Hollywood Casino had $21.1 million, and the Belle of Baton Rouge had $13.8 million. The amount of money gamblers have dropped at local casino boats is up by more than 60 percent from a year ago’s two-boat market. However, several construction firms say they haven’t been paid for their work on the entertainment complex and have filed liens against the property.e_SClBMovie industry still thriving Yet another banner year came in 2012 for the Baton Rouge movie industry, as more big-budget films were shot in the area and post-production facilities continued to set up shop in the Capital Region. “Oblivion,” a $175 million sci-fi action movie starring Tom Cruise, was shot at the Celtic Media Centre in the spring. At the same time, “The Host,” a $44 million sci-fi movie based on a novel by “Twilight” author Stephanie Meyer, was also filming around Baton Rouge. Both movies will be released in the first half of 2013. Several movies that were shot in Baton Rouge over the past few years were released, including the hit “Breaking Dawn Part 2,” which closed out the “Twilight” saga, and “Battleship.” But the biggest bit of good news for the local movie industry had nothing to do with a big star coming to town or solid box office returns. Pixomondo, a special effects company that won an Academy Award for its work on “Hugo,” opened a studio at Celtic in April. Not only does the Baton Rouge studio work on movies shot at Celtic, such as “Oblivion,” but it assists Pixomondo’s 11 other offices around the world to provide round-the-clock services. Pixomondo plans to have 75 Baton Rouge employees at the end of 2013, with an average annual salary of $65,000, plus benefits.e_SClBBaton Rouge attracts chains Baton Rouge had its share of new retailers open or announce new locations in 2012, but several of them were chains that have long been coveted by the city’s residents. Now, when newcomers or visitors ask if Baton Rouge has a Trader Joe’s, Costco, Panera or Chipotle, you can say “soon,” “maybe,” “soon” and “yes.” After months of rumors about a “specialty grocer” locating at Acadian Village at Perkins Road and Acadian Throughway, Commercial Properties Realty Trust and Trader Joe’s announced in July that the California chain, known for its unique product mix, would open sometime next year, joining Acme Oyster House and Galatoire’s restaurants. Costco filed for a building permit in December to redevelop the former Coca-Cola bottling facility southwest of Interstate 12 and Airline Highway, though the food club warehouse competitor of Sam’s Club has not signed a purchase agreement on the property. Panera Bread, the specialty bakery known for its sandwiches, soups and salads, came close to opening in 2012 but saw its deal to locate at Towne Center fall apart. It proved no matter, though, as the franchisee for Panera expected to wrap up a deal for four acres just south of Towne Center on Jefferson Highway for a 2013 opening. Chipotle Mexican Grill arrived in 2012, opening a location in the Northgate area of LSU, just in time for the school year. News also broke that Steak & Shake will come to Baton Rouge, and Rouse’s Supermarket, which has been opening up in almost every south Louisiana city besides the capital city in recent years, said in 2012 that it will focus on opening new stores in Baton Rouge next year. Land acquired for Smiley Heights In February, the East Baton Rouge Redevelopment Authority completed its $1.96 million purchase of 200 acres the city and state hope will anchor the redevelopment of the area north of Florida Boulevard. Smiley Heights will be anchored by the East Baton Rouge Parish School Board’s new 300-student charter school and Baton Rouge Community College’s east campus, which will have at its center the 250-student Center for Excellence in Auto Technology. The property for the long-planned project is mostly between North Ardenwood Drive and North Lobdell Boulevard, just south of Greenwell Springs Road. That automobile training facility on 15 acres would be funded by about $14 million from the state and another $10 million in donations, grants, equipment and cars from the industry. It will provide training for high-paying jobs fixing increasingly high-tech cars. Studies show Louisiana has more than 2,700 unfilled jobs for auto mechanics and technicians. That number is expected to grow 17 percent by 2020, and the Baton Rouge auto industry will need about 250 automotive technology graduates per year. Construction on the campus and the auto training facility is estimated to begin at the end of 2014 and be completed by late 2015. The School Board’s $18 million charter school, which would be on 10 acres, will focus on workforce development in digital media and culinary arts, among other subjects. The two anchors are expected to spur development of homes and apartments, as well as retail and other commercial development throughout Smiley Heights, lifting the fortunes of that area just north of Midcity. The development is estimated to create 3,500 new households and 20,000 new jobs in the Baton Rouge metro area by 2030.e_SClBBowlers bring boffo bucks to BR The U.S. Bowling Congress returned to Baton Rouge in 2012, and while the city always welcomes conventions, the bowlers come packing an extra punch. In all, 58,704 USBC bowlers and 11,496 guests from around the country visited Baton Rouge for the national bowling tournament, which began Feb. 11 and ended July 10. Just as it was on its first visit in 2005, the tournament was a boon for hotels, casinos and some restaurants and cultural attractions in the area, pumping $113.2 million into the economy during its 151-day run. The city-parish and the USBC are already in talks to bring the men’s national tournament to Baton Rouge for a third time and also bringing the national women’s bowling tournament here. Major development planned downtown Downtown got closer to bagging the white whale of its otherwise exemplary redevelopment — a major infusion of young residents. Lofts and condos have been opening downtown in recent years as former office buildings and shops are re-purposed with a mix of uses. But they’ve tended to come in dribs and drabs — three or four here; five or six there. The Kress building put 19 on the market when it opened up a few years ago. This year, 438 Main opened with 22 units, and the Lafayette House will add nine to the three already in the Tessier building on Lafayette Street. But it was T.J. Iarocci’s purchase of the eight-story Commerce Building at Third and Laurel streets in August that made the biggest news, with plans to put in 100 apartments and try to land a grocery store among its ground-floor retail offerings. Davis Rhorer, executive director of the Downtown Development District, said the infusion of that many residents on Third Street would be a major step forward in downtown’s quest to become a 24-hour destination. Downtown welcomed 18 new businesses in 2012, and major projects like the 137-room Hampton Inn and Suites at Lafayette and Main streets and the revamp of Repentance Park were ongoing. A new Repentance Park, the North Boulevard Town Square and a new park at Seventh and Convention streets are all expected to contribute to a “central green” downtown. The end of the year saw the installation of The Crest, the $1 million sculpture and stage canopy in the town square. Downtown also pushed for legislation that would allow it to go before voters to expand its boundaries to the north and east to help spur further redevelopment, particularly residential and commercial. Just to the east of Interstate 110, work is under way on The Elysian, a 100-unit mixed-income apartment development on Spanish Town Road. Woman’s Hospital opens new campus Woman’s Hospital in 2012 not only moved to a new campus at Airline Highway and Pecue Lane, the hospital sold its old campus … twice. The move to the new campus took place roughly four years after construction began. The project was delayed more than a year when the financial markets’ meltdown increased interest rates on bonds. Woman’s shut down construction in 2009 rather than pay $180 million more in interest payments over the 30-year life of the bonds. Meanwhile, in late May, The Physicians Alliance Corp., a mostly physician-owned group, announced it had signed a deal to buy the old campus at Goodwood Boulevard and Airline Highway. By August, the deal had fallen through. In December, Mayor-President Kip Holden announced the city-parish would pay $10 million for the old campus and spend another $10 million to convert the facility into a public safety complex. The proposed complex will house the East Baton Rouge Sheriff’s Office and the Baton Rouge Police Department. Holden has not discussed how he intends to finance the project.e_SClBPerkins Rowe legal dispute continues In September, U.S. District Judge James J. Brady awarded KeyBank National Association a judgment of $201.9 million, in principal and interest owed on construction loans, involving the Perkins Rowe mixed-use development. The judgment was against developer J.T. “Tommy” Spinosa and three of his Perkins Rowe companies. Spinosa has appealed that decision to the 5th Circuit Court of Appeals. The long-running legal battle over Perkins Rowe didn’t stop retail sales at the mixed-use development from increasing 7 percent in 2012 or the property’s appraised value from jumping $9 million between March and December. A federal court-ordered appraisal showed the development’s value had risen from $86 million in March to $95 million in December, thanks mainly to increased retail sales, low interest rates and increased demand for lifestyle centers like Perkins Rowe. The development includes more than 60 shops and restaurants, a grocery store, fitness center, movie complex, pharmacy and 87 condominiums. The appraisal amount is important because KeyBank of Cleveland wants to use that figure as the development’s base value in a foreclosure sale. KeyBank and Spinosa squared off in a foreclosure battle over the property more than three years ago. The lender and Spinosa remain at odds over the project’s ownership and its value. Selling the property for $95 million would mean Spinosa still owes KeyBank close to $107 million. Spinosa, who is personally on the hook for the loans, has argued KeyBank’s appraisal is too low.e_SClBLouisiana newspaper industry turns a page The Times-Picayune announced that it would cease daily publication of a print newspaper. Instead, the 175-year-old New Orleans daily would shift to an online publication, with print editions being published only three days a week. Prominent New Orleans residents and business leaders came out against the decision by Advance Publications Inc. to cease publication of a daily newspaper. New Orleans Saints owner Tom Benson even asked about buying the newspaper, but was rebuffed. In response, The Advocate launched a daily New Orleans edition on Oct. 1. Several veteran Times-Picayune reporters were hired to staff the office. David Manship, publisher of The Advocate, said the first thought was to just distribute copies of the newspaper in New Orleans to meet public demand. But the decision was made to introduce a special New Orleans edition in response to the outcry about The Times- Picayune scaling back its frequency. “The Advocate is committed to New Orleans,” he said. “We’re not here for a couple of days, we are here to stay.” The Advocate wasn’t the only newspaper to step onto rival turf. The Times-Picayune launched a Baton Rouge digital edition in October and hired several reporters and ad representatives to staff a bureau in downtown Baton Rouge. Officials with the newspaper said the Baton Rouge push had been planned for a while and was not done as a reaction to The Advocate’s New Orleans edition. As of late December, The Advocate was distributing about 22,750 copies a day in New Orleans. The newspaper also added weekly entertainment and community news sections in response to reader demands.