Louisiana Leans on Computer Modeling to Lure Foreign Investment

The Louisiana Economic Development department’s goal moving forward is to tap databases about major investments by international businesses every few years to keep the business intelligence information fresh.

by Kristen Mosbrucker, The Advocate / September 9, 2019
Shutterstock/SFIO CRACHO

(TNS) — The Louisiana Economic Development department is using a computer model to help target countries for foreign investment in the state, and the agency says it has hit the mark on some projects.

LED built the predictive investment computer model to help hone its strategy about two years ago, leveraging a $170,000 federal grant through the U.S. Economic Development Administration in 2017. The agency tapped into a customized database that parses through investments made across the U.S. by companies in industries suited for Louisiana's existing infrastructure.

“You go fishing where the fish are biting,” said Larry Collins, executive director of the Office of International Commerce.

The fishing expedition produced a five-year snapshot of companies ranging from advanced manufacturing to chemical makers.

The computer model suggested that companies most likely to invest in Louisiana with new projects were: Australia, Canada, France, China, Japan, Austria, South Korea, Germany and South Africa.

Some of that mirrors past performance.

In the last decade, more than half of the 131 ground-up construction projects in Louisiana came from five countries: the Netherlands, Japan, Germany, Canada and the United Kingdom, according to the U.S. Bureau of Economic Analysis.

People still have to comb through lists of companies in each prospective country, but computer data narrows the search.

“We still have to apply our business acumen so we don’t go chasing everything," Collins said. "The reason South Africa showed up was because we had one very large project here … but that country doesn’t represent fertile ground for us.”

Sasol is the South African company that built a $12.9 billion cluster of plants in Lake Charles to produce ethylene oxide.

But not all the model's suggestions were intuitive.

“The one that surprised us the most was Australia because the last time we had done some things over there was 10 years ago,” Collins said. “But the Australian government has been increasing regulations and making it difficult for companies.”

About a year ago, Australian graphite producers Syrah Resources bought land in Vidalia for a $25 million graphite processing facility. Production began in December for the graphite, which will be used in lithium batteries.

But there may be more investments from Australian companies soon, Collins said.

The data dive also brought up industries not previously targeted, such as advanced manufacturing that builds industrial products for chemical companies.

That led the state to connect with Vega Americas Inc., a German pressure instrumentation manufacturer. The company had a sales office in Cincinnati but was looking to invest in a new factory somewhere closer to industrial customers from Texas to Alabama.

“They were looking at a Gulf Coast site and they could have been anywhere from Matamoros, Mexico, to Pensacola, Florida,” Collins said.

One key factor to closing that deal was the offer of access to the state's workforce training program, which pays for employees to learn new skills.

Now Vega Americas is building a new $22.4 million manufacturing center in Geismar — across the road from German chemical maker BASF — that builds measurement devices used in industrial plants. It is expected to create 120 new jobs.

The goal moving forward is to tap databases about major investments by international businesses every few years to keep the business intelligence information fresh. For example, new tariffs imposed on goods from China happened after the data was collected, so it may change future investments. The department's international commerce office has contracts with foreign representatives around the world but there’s only so much in the budget to pursue potential deals. The data enables the organization to make better-educated decisions.

“It’s one thing to have a lead and it’s another thing to be confident enough to empower a foreign representative to meet with a company,” Collins said. “By having this data, it confirms that we’re going after the right leads.”

©2019 The Advocate, Baton Rouge, La. Distributed by Tribune Content Agency, LLC.

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