Study: La. is 'second lowest cost state' to run advanced manufacturing company

Study says LA is 'second lowest cost state' to run an advanced manufacturing company
Updated: Jun. 25, 2017 at 10:40 PM CDT
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BATON ROUGE, LA (WAFB) - Since 2000, America has lost 5 million manufacturing jobs to foreign countries. That's according to John Boyd with The Boyd Company, a business management consultant firm. But he also said businesses are starting to return.

"Advanced manufacturers want to do business in America for the first time in a long time. They're feeling pressure about potential new trade policy that could make it more costly to manufacture goods in China and Mexico. Reshoring is happening and Louisiana fits the profile," said Boyd.

With the state's proximity to major ports, a recent study by The Boyd Company said Louisiana is the place to be.

"One of the major drivers fueling reshoring is access to low-cost, dependable energy. Here in Louisiana is the sweet spot for low-cost dependable energy," said Boyd.

The study, A 48-State Comparative Operating Cost Analysis for Advanced Manufacturing, ranked Louisiana as the second cheapest based on labor, real estate, power, taxes, power, and others. The study said annual operating costs in the Boyd study were projected solely for comparative purposes, with only major geographically-variable factors being considered. Those costs not varying significantly with geography, including relocation and start-up expenses, were not considered.

The analysis estimated a 225,000-square-foot plant of 500 workers could be run for about $30.2 million annually in the bayou state. South Carolina ranked the cheapest at $30.1 million while New Jersey had the highest operating cost of $39.8 million.

"Louisiana's fast start program is highly regarded by executives throughout the country and proximity to skill sets and a cluster related to industry and advanced manufacturing, all of which Louisiana enjoys," said Boyd.

Political analyst Jim Engster said job creation is always an important issue in the state.

"This is one piece of the puzzle that's favorable to Louisiana and that's a good thing," he said.

But Engster also said there are other factors in Louisiana that may not appeal to major companies.

"We don't rank well in crime, we don't rank well in education, we don't rank well in healthcare; so those sometimes are mitigating factors in making decisions despite the fact that it costs less. As a state, we have to improve in any number of ways for businesses to find Louisiana as a fertile place to show up and plant their flag."

Boyd and Engster do agree that Louisiana has been a commodity for the rest of the country for years as producers of natural resources. And this study could be a valuable marking tool for the state.

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