How unforseeable is unforseeable?

Nobody at Bayou Steel wants to say why 376 people had to lose their jobs all of a sudden. And we do mean, very very all of a sudden. 

Officials on Wednesday offered more details on the closure, which came seemingly out of the blue and surprised union officials who had been in contract negotiations with management up until last week.

David Delaneuville, the district representative for the United Steelworkers union, said his negotiations with Davis and Kristen Barney, Bayou Steel's human resources manager, had gone normally and they reached a three-year deal last Thursday to give workers a 4% pay hike in the first year and 3% in each of the subsequent two years.

Apparently, as far as plant management knew, there was plenty of room available to grant modest pay raises. But then, some "unforeseen business circumstances" happened.

(St. John the Baptist Parish President Natalie) Robottom said she is worried that the sudden notices of closure and bankruptcy and the wording of the letter sent to her mean the company is trying to skirt obligations to pay its workers.

"It is concerning, especially how their letter was written, that they may (have been) writing it in that manner so that they don't have to fulfill the obligation of following the (Worker Adjustment Retraining Notification) Act," she said, referring to passages in the letter that cited "unforeseen business circumstances and the inability to secure necessary capital," as well as a paragraph specifically saying the company did not acknowledge any obligations under the WARN Act.

Ordinarily the WARN act would require the company give at least a 60 day notice, otherwise they would be on the hook for back pay. One of the exceptions written into the law specifically uses the term "unforseeable business circumstances"

Unforeseeable business circumstances: When the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable at the time that 60-day notice would have been required (i.e., a business circumstance that is caused by some sudden, dramatic, and unexpected action or conditions outside the employer's control, like the unexpected cancellation of a major order); or Natural disaster

So, then, what was this "sudden, dramatic, and unexpected" occurrence that Bayou Steel could not have forseen?  They still aren't saying.   It can't have anything to do with their Industrial Tax Exemption expiring next year.  That strikes us as imminently forseeable.  It's a lot of money, though.

One of the plant's parcels had been approved by the state for an industrial tax exemption, which cut the $1.4 million in assessed taxes on the plant by roughly $300,000 annually. Gauff said the 10-year exemption was set to expire in 2020.

I'm reminded here of something industry shill Loren Scott once told us about the "bonanza" waiting for us at the end of these 10 year tax exemptions.

"As an economist, I can only say,'Wow. Holy Cow,'" said Loren Scott, a Louisiana economist who has studied the state for 40 years. "We typically measured expansion in terms of hundreds of millions of dollars. Something like that makes your eyes bug out." He expects, for instance, that once 10-year tax-abatement deals expire, schools boards will "find themselves with a bonanza."

*Bonanza not guaranteed in the case of "unforseen busienss circumstances," I guess. Still, as we say, an expiring tax exemption isn't an unforseeable circumstance so there must be something else going on. 

Another thing we learned here is Bayou Steel is controlled by a private equity firm called Black Diamond.  Apparently, their investment was seriously underwater.

On Tuesday, the parent company of Bayou Steel Group filed for bankruptcy protection. In the filing signed by President and Chief Operating Officer Alton Davis, the company, which is controlled by a Connecticut private equity firm, said it had as much as $100 million in outstanding debts and less than $50,000 in assets.

Whoah how does something like that happen in such a sudden and unforseeable manner?  Those of us not intiated in the priesthood of high finance would very much love to know more about that.  Is it possible the wizzards were unable to cope with the "unforseeable" impact of Donald Trump's metals tarriffs?  The Governor certainly seems to think so.  And with good reasoning too as this Slate article explains.

This is a slight variation on a problem that plenty of critics saw coming when Trump announced his tariffs last year. While many American steel companies manufacture the raw metal from scratch, a number of them don’t. Instead, they specialize in making steel products out of cheap, semi-finished slabs of the material that they buy from abroad. The levies posed a serious threat to that segment’s business model. The administration has tried to skirt around this issue by granting companies waivers allowing them to import steel from countries like China and Japan duty-free, but the process has been contentious and has sometimes led to funny results, such as when one steel company that had spent a year praising Trump’s tariffs later sued the administration after it was denied an exemption from them.

Bayou Steel's operation apparently relied on imported scrap metal subject to the tariffs.  So it makes sense to suspect the tariff as a primary factor in the closure.  But as Slate also points out, steelmakers in similar circumstances have been complaining for a while now.  Bayou Steel was about to hand out pay raises to its workers.  Now they aren't.  And they're also about to tell those workers they aren't owed compensation due to the unforseeable nature of the situation.  Given that the tariff has been in effect for over a year now, is that a credible assertion? Or are they just trying to protect Black Diamond's investors?

Qatar on the Bayou

Fascinating choice of metaphor.

So let's put it this way: We are building a Qatar on the Bayou. From whole cloth, companies are laying new cities of fertilizer plants, boron manufacturers, methanol terminals, polymer plants, ammonia factories and paper-finishing facilities. In computer renderings, the Sasol site looks like a fearsome, steel-fitted Angkor Wat.

In all, some 66 industrial projects—worth some $90 billion—will be breaking ground over the next five years in Louisiana, according to the Greater Baton Rouge Industry Alliance. Tens of billions of other new investments could be coming, says Louisiana's economic development secretary, Stephen Moret. How many projects will actually get built remains to be seen.

Assuming that most will, you realize we are still probably underestimating the positive impact of the gas boom on both local and national economies. The entire GDP of the state of Louisiana is about $250 billion annually.

"As an economist, I can only say,‘'Wow. Holy Cow,'" said Loren Scott, a Louisiana economist who has studied the state for 40 years. "We typically measured expansion in terms of hundreds of millions of dollars. Something like that makes your eyes bug out." He expects, for instance, that once 10-year tax-abatement deals expire, schools boards will "find themselves with a bonanza."

Qatar.

A report in Britain's Guardian newspaper says thousands of Nepalese workers are toiling away in conditions that amount to modern-day slavery.

It says some have not been paid for months, while others have been denied access to drinking water on construction sites.

Journalist Pete Pattison says many of the young men are dying from heart failure.

"We can say with confidence at least 44 Nepalese migrant workers - not migrant workers from other countries, just Nepalese workers - have died between early June and early August," he said.

"Many of these men are dying from some form of heart failure. Many people think it's because of the extreme conditions they work under.

The Angkor Wat  is in Cambodia, by the way.  So it may seem like sloppy imagery to place Sasol's metaphorical "steel-fitted" Angkor Wat into "Qatar on the Bayou"  there's still an underlying consistency.

PHNOM PENH — Cambodia remains on a US watch list of countries that need to do more to combat human trafficking.

The US issued its annual “Trafficking in Persons” report Friday, rating countries around the world on their attempts to fight the crime. Cambodia was rated a Tier 2 watch list country.

“Cambodia is a source, transit, and destination country for men, women, and children subjected to forced labor and sex trafficking,” the report says. “The government of Cambodia does not fully comply with the minimum standards for the elimination of trafficking. However, it is making significant efforts to do so.

“Although numerous forms of human trafficking continued to occur in Cambodia, the government prosecuted and convicted fewer trafficking offenders and identified fewer victims than it did in the previous year,” the report says.

“Endemic corruption at all levels of the Cambodian government continues to severely limit the ability of individual officials to make progress in holding traffickers accountable,” the report says.

So let's hope they aren't taking the aspiration to build these things "on the bayou" too literally.  We want to make sure we're not living in a human rights cesspool of a slave state by the time we finally get to come back and ask Loren Scott where the "bonanza" is.. you know.. in another 10 years or so. 

Update:  While we're waiting on that 10 year thing.. please feel free to enjoy the ride.

Louisiana's waterways are among the most polluted in the nation, with industrial facilities releasing more than 12.6 million pounds of toxic chemicals into rivers, bayous and other waters in 2012, according to a report released Thursday (June 19) by the Environment America Research and Policy Center.

The Washington D.C.-based group is calling on Congress to reinforce protections for waterways under the Clean Water Act. The industry says it's already working to cut down on pollution.

According to the report, industrial facilities put more than 206 million pounds of chemicals into waterways nationwide in 2012.

Dealings with Devils

So by now we know what happens to the levee board Governor Jindal appoints when it antagonizes his friends in the energy industries.  But what happens if all these people get involved?

Even as Republican Gov. Bobby Jindal’s administration launched an all-out assault this year against a state agency’s lawsuit accusing energy companies of destroying coastal wetlands, officials in the Republican strongholds of Jefferson and Plaquemines parishes were quietly preparing their own cases aimed at forcing the oil and gas industry to repair the damage it allegedly has done in those areas.

In coming weeks, both parishes’ councils could file their own suits centered around allegations that the industries have taken an enormous toll that can be measured in terms of land that has simply washed away, multiple sources familiar with the cases told The New Orleans Advocate.

This is an interesting development in light of a couple of big headlines last week.  First, The Advocate became the latest publication to tout the expected industrial renaissance coming to Southeast Louisiana thanks to the nationwide boom in hydraulic fracking.

Louisiana is enjoying its biggest industrial boom since the oil bust in the 1980s, and much of the action — tens of billions of dollars of investment — is happening along the 70-mile corridor between New Orleans and Baton Rouge.

The stretch, known mostly for sugarcane fields and plantation homes before the petrochemical industry began to arrive in the 1940s and 1950s, is riding a wave of capital spending powered by natural gas prices that have hit historic lows. Local and state economic development officials say the construction bonanza will likely create tens of thousands of high-paying jobs and generate billions of dollars in tax revenue over the coming decades.

After an entire generation of post-oil bust writing about the heavy price Louisiana paid in economic, environmental, and political terms from it famous Faustian bargain with the petrochemical industry are we really going to uncritically welcome the Devil back to town when he wants to renew the lease?  Apparently so.

Some of the highlights include: Nucor Corp.’s proposed $3.4 billion steel facility in St. James Parish, which could create upwards of 1,250 new jobs; CF Industries Inc.’s $2.1 billion investment at its Ascension Parish complex, which produces nitrogen-based products used by agricultural and industrial markets; and explosives maker Dyno Nobel International’s $850 million ammonia production facility in Jefferson Parish.

Other major projects have been unveiled but are still under review, such as Shell’s proposed $12.5 billion gas-to-liquids facility in Ascension — which would create 740 new jobs paying average salaries of $100,000. In St. Charles Parish, Valero plans to build a $700 million methanol unit at its Norco refinery, allowing it to compress natural gas into liquid to make chemicals and plastics.

This was one of the more disappointing articles we've seen from John Georges's Advocate. Mostly it collected some dubious.. or at least optimistic statistics and projections from the Governor's office, from  GNO Inc., and from LSU economics professor Loren Scott.  GNO Inc., for those who haven't been paying attention, is the Landrieu era vision of a "public-private" Chamber of Commerce. It basically takes all the marketing bullcrap coming out of the business community and backs it with the imprimatur of quasi public office.  Scott, over the years, has been a reliably-wrong-about-stuff media quote machine. He's calling for 44,000 new jobs in the Baton Rouge-New Orleans region over the next two years.  I'm tempted to discount that by at least two thirds on Scott's track record alone.

Also this week, we read that many of these folks had convened in Orlando to talk about ways to develop a better strategy for regional cooperation among government and business elites.

ORLANDO — The frigidity that historically has characterized the relationship between New Orleans and Baton Rouge melted away Sunday as about 170 government, private-sector and nonprofit leaders from both metropolitan areas gathered in Orlando to explore opportunities for collaboration on economic development initiatives.

The 2013 Super Region Canvas, a partnership between the Baton Rouge Area Chamber and Greater New Orleans Inc., is a three-day conference that includes travel between Orlando and Tampa for seminars on how those cities and others in central Florida work together to improve the region’s digital media and health care industries and attack issues such as crime and poor transportation.

Here's who went on the trip. 

The group includes New Orleans Deputy Mayor Andy Kopplin, East Baton Rouge Mayor Kip Holden and Jefferson Parish President John Young. The private sector is represented by developer Roger Ogden, businessman John Georges, who owns The New Orleans Advocate and The Advocate in Baton Rouge, and entrepreneur Damon Burns, among others.

Not to suggest that Geroges's social and business associations have anything at all to do with the way that circle's interests are covered in his paper, but it's a happy coincidence that this piece of boosterism appeared at around the same time as this get-together.

Still, there's no reason to doubt that Louisiana's energy sector will be adding jobs over the next few years. How many jobs are created, what the overall impact this has on the whole economic picture, and just how long the anticipated boom even lasts is all highly disputable, though. 

And, of course, the negative externalities associated with this activity are all well in evidence.

Thanks to the chemical processing infrastructure already in place, this River Parishes corridor has been famous for nearly 30 years as Louisiana's "Cancer Alley." This year the towns of Geismar and Donaldsonville have been treated to spectacular explosions at plants along the chemical corridor.   Ever since last summer the region has been home to the Texas Brine chemical sinkhole which as of this week was still dangerously unstable.

The Advocate article does a terrible job of touching on any of this. Instead we are presented with one line from Anne Rolfes expressing concern that pollution may scare off the tourists. The health and safety of residents, as usual, doesn't seem to enter into anyone's thinking. 

And then there's the catastrophic damage that oil and gas exploration, extraction, processing, and shipping have done to the Louisiana coast over the years. But I suppose if you can deal with the Devil you can also sue him. 

(Plaquemines Council Chairman Byron) Marinovich described the parish’s relationship to the oil and gas industry as “a deal with the devil to get revenue and jobs.” However, he said, with the parish experiencing rapid land loss, and facing the threat of storms like Hurricane Isaac, which swamped Plaquemines without being buffered by wetlands, something must be done.

“If we don’t, we’re not going to be here anymore,” he said.

With the vast profits energy companies have made in the area, Marinovich said, it is their duty to repair the damage they caused.

“They made millions of dollars through the years, billions actually,” he said. “I think they have a civic obligation to come in and do this thing and make us whole again,” he added.

 Or at least you can until the Governor figures out a way to punish you for it.

Keep "bucking those trends", Louisiana

It's going great.

Also... previously in "trend bucking" news.