In The News

Numbers are down because of Katrina, but not by much

Saturday, March 04, 2006
By Pam Radtke Russell
Business writer

With the Mississippi River shut down, ports damaged and workers scarce following Hurricane Katrina, it’s no surprise that the value of Louisiana exports dropped in 2005.

What is surprising is that the drop wasn’t greater.

The value of exports from Louisiana fell 3.5 percent last year, from a record $19.9 billion in 2004 to $19.2 billion in 2005, according to information compiled by the World Institute for Strategic Economic Research from Census Bureau data.

“Obviously the numbers are down—how could they not have been?” said Eugene Schreiber, managing director of the World Trade Center in New Orleans. “I was gratified of what they were. They could have been worse.”

While exports of many products were up last year, a 23 percent drop in agricultural exports—the state’s largest export category—brought the rest of the numbers down. Last year the state exported $7.1 billion in agricultural goods, compared to $9.3 billion in 2004. The port was on track for another record year before Hurricanes Katrina and Rita, Schreiber said.

Usually, exports are products that are made or grown within a state. But grain produced outside the state is considered a Louisiana export because it’s difficult to track where the bulk grain, often sent on barges down the Mississippi River, originates.

The state ranks 15th in the nation for exports. Texas is ranked No. 1 with $129 billion in exports last year. Total U.S. exports in 2005 were $904.4 billion, a 10.6 percent increase over 2004.

After Katrina, the Mississippi River was shut down for five days and the Port of New Orleans was shut down for two weeks. Because of the damage, some companies began shipping out of other states and haven’t returned.

“Companies who were sending stuff abroad had to continue to do that to stay in business,” said Larry Collins, director of international services with the Louisiana Department of Economic Development. “We’re going to have to make up that ground. Anytime we lose business, we have to work a little harder to get that business back.”

The hurricanes’ damage to infrastructure wasn’t the only thing driving down Louisiana exports. The storms damaged a lot of Louisiana’s own rice and cotton, Commissioner of Agriculture Bob Odom said.

A bigger factor, though, was a cyclical change in world grain markets, namely a drop in demand for grain in China. Exports to China fell 14 percent last year.

“China is making a major impact,” said Henry Sullivan, deputy director of the Port of South Louisiana, which handles the majority of the state’s grain exports. But Sullivan said he doesn’t expect the downturn in exports to continue.

“We will see a slight uptick on exports—barring any bad weather,” Sullivan said.

Mexico was the largest importer of goods from Louisiana, importing a total of $2.2 billion, much of it petroleum and chemical products.

Exports of petroleum and chemical products helped minimize some of state’s export deficit. Exports of chemical products rose 4.8 percent, from $4.5 billion to $4.7 billion, making them the state’s second largest export. The value of petroleum products, the state’s third largest export, rose 44 percent in 2005, from $1.9 billion in 2004 to $2.8 billion last year.

International exports actually helped many companies survive following the hurricanes. As local markets dried up and traditional delivery methods became nonexistent, companies found alternative ways to get their products to their international customers.

“Everyone thought it would just wreck the international marketplace,” said Donald van de werken, director of the New Orleans U.S. Export Assistance Center. Now, many of those companies are running double shifts to meet demand, he said.

Ray Kamal, vice president of Computrols Inc., which manufactures and installs the electronic components for building operations and energy management, said international demand for the products has increased as energy prices have risen worldwide.

Computrols was producing its control boards out of its Harvey facility days after Katrina hit. The company relies on UPS to move its small control boards. Right after the storm, Kamal said, he personally took the controls to Houston so they could be shipped out to the company’s locations throughout the nation, and to its offices in China, Russia, Brazil and Panama. Later, the company shipped its products out of Baton Rouge.

Steve Smith, owner of It Straps On, a Covington company that makes stainless steel bands used on telephone poles and street signs, did much the same, opening within a week of the storm, loading products twice a week on a company truck and driving west till he found an operating truck terminal. Two years ago, the company started shipping internationally and saw demand jump 30 percent to 40 percent, he said. That demand for his product didn’t change just because of storm, Smith said.

“If we didn’t continue to manufacture,” he said, “we would lose customers.”

The can-do attitude of the small and medium-sized businesses is just one reason van de werken isn’t concerned about the drop in exports.

“If the drop were 20 percent, I’d be concerned,” he said. “But at 3.5 percent, I would give it a couple of months.”