Trying to gauge a Louisiana recovery

For a while, and as always is the case when economic fortunes turn south, Louisiana’s slide during the Great Recession took longer to occur and didn’t drag down the state as far.

Now, as the national economy continues its struggle to rebound, the question will be – as always – how strong will the recovery be in a state that has only been truly diversifying its economy away from petroleum over the past decade.

Although projects have been nabbed that will provide new jobs for workers in future years, places in unemployment lines are being reserved for about 5,500 others, such as those working now at the state’s largest industrial employer – the Avondale shipyard – and those remaining at the General Motors assembly plant in Shreveport. Both are slated for closure.

On top of that, although the deepwater petroleum drilling moratorium has been lifted, how long it will take to get exploration started again – and what potentially expensive restrictions will be imposed by Congress – are still unknowns.

A recent study by a group of Louisiana university economists suggested that it could go either way. Their report, although like any economic forecast has a bit of crystal ball to it, is worthy since it focuses on job growth, an anvil currently holding down the national economy.

At best, the report said, anemic job growth will be the rule: 3,100 jobs in 2011 and 7,500 in 2012, for yearly growth rates of 0.2 percent and 0.4 percent.

But even that increase is far from a sure thing.

Although the report was issued before the moratorium was lifted – it warned of up to 21,000 lost jobs if the ban extended into 2011 – the drilling business is far from popping in the Gulf. No deepwater drilling permits have been issued since the Deepwater Horizon disaster in April.

And Greater New Orleans Inc., which is monitoring the federal issuance of drilling permits in the Gulf, said last week that the government is issuing shallow-water permits at a much-slower rate, confirming recent industry complaints.

If one believes that industry will simply bide its time until Uncle Sam is ready to go, some third-quarter earnings reports petroleum support companies might need a quick study.

Halliburton Co. doubled its third-quarter earnings because of onshore drilling – particularly shale gas discoveries – in North America. Likewise for Schlumberger Ltd.

A New Orleans-based support company with deep ties to the Gulf – Superior Energy Services Inc. – posted a 36 percent increase in third-quarter profit as it turned its sights to land drilling and overseas projects. Areas outside the Gulf generated a record $274 million in revenue for Superior – 67 percent more than a year ago.

The message is clear: the industry will go where the opportunities are. And the industry already has warned that if equipment and personnel are tied up on overseas contracts, it won’t necessarily come running back to the Gulf.

The GM closure is calculated into the latest numbers since the plant is expected to be history by no later than mid-2012. Northrop Grumman Corp.’s Avondale shipyard isn’t – it won’t close until the final amphibious assault ship under contract there is finished sometime in 2013.

But in the meantime, if typical shipbuilding schedules hold, workers will be laid off as their tasks are finished, even if the vessel isn’t completed.

The state is trying to find a buyer for Avondale and, of course, trying to find new tenants for the GM plant. But economists have warned that finding one replacement business to fill up all of Avondale is an extreme longshot, at best.

The university economic study also said its job growth prediction could be chopped by other factors out of the state’s control.

For example, after Congress returns in November, the pending expiration of Bush-era income tax cuts is at the top of the list.

There’s still the future of cap-and-trade legislation, hailed by environmentalists and condemned by business. And in Texas, there are rumblings of a 2011 attempt to legalize race track slot machines, which would cut into the gambling take – and employment – in western Louisiana casinos.

If everything in the study comes full circle, anemic won’t describe Louisiana’s job market. The worst, as it turns out, may be yet to come.

– Alan Sayre is the New Orleans-based business writer for The Associated Press.