Dredging for Trade on the Gulf
Usually, when Secretary of Commerce Carlos M. Gutierrez embarks on a trade mission, his destination is a foreign country seen as a promising new market.
But today and Friday, Gutierrez will bring U.S. business leaders to the Gulf Coast, hoping to persuade them to invest in hurricane- and flood-damaged New Orleans and neighboring areas.
“We see the Gulf Coast as the most attractive developing market that we have anywhere in the world, and it’s right here within our borders,” Gutierrez said in an interview Wednesday.
Hurricane Katrina and the subsequent flooding destroyed huge swaths of the Gulf Coast and displaced thousands. In New Orleans, only about 2,000 of its 22,000 pre-storm business enterprises -- most of them small -- have returned, according to estimates by local officials.
The trade delegation brings together 32 companies of various sizes and sectors, including home-building, retail, transportation and travel and tourism.
“We believe that what will make a big difference in the recovery of New Orleans is private-sector capital: entrepreneurs who go in and invest capital ... and create jobs,” Gutierrez said.
Executives will tour commercial and residential areas, review repairs to the region’s levees and ports, and discuss investment opportunities with local, state and federal officials, including Donald E. Powell, federal coordinator for Gulf Coast rebuilding.
“They don’t have to rely on what they see on TV or a picture they see in a newspaper,” Gutierrez said.
Steve Davis, president of the Gulf Coast division of KB Home, a native of the city’s Lower 9th Ward who was living in Atlanta when the storm hit, said he was overwhelmed when he saw the flood-ravaged neighborhoods.
“I was compelled to come back and help, not just my family, but also some of the people who I grew up with,” Davis said.
By December, KB Home formed a joint venture with the Shaw Group Inc. engineering and construction company to start building houses in Louisiana. In January, Davis had moved his family to New Orleans. At least seven of his senior management team followed suit.
“We would like to be one of the leaders of the rebuilding of the gulf area, not just ... working it but living it,” he said.
Davis spends most of his days scouting finished lots and land tracts where hundreds of homes can be constructed in short order.
Groundbreaking on a 58-home KB Home community in Orleans Parish is scheduled for Friday. The company also plans to build 11,000 to 12,000 units on a 3,000-acre tract in Jefferson Parish, Davis said. And land is under contract for building in Baton Rouge. KB Home built 37,000 units last year.
Gutierrez pointed to real estate development and tourism as key private-sector industries that could help jump-start New Orleans’ recovery.
Tourism “is huge,” said Noel Irwin Hentschel, chief executive and co-founder of Los Angeles-based American Tours International, who is also participating. “It would be shortsighted not to make it a priority,” she said. “It has the greatest potential for bringing in new money, and bringing it in quickly.”
Her company, which has a partnership with the American Automobile Assn., generated between $40 million and $50 million annually in travel to New Orleans before Katrina.
“Our goal is to get back to pre-Hurricane Katrina [numbers], and beyond,” Hentschel said.
Her company’s post-Katrina two- and three-night package tours to New Orleans include a taste of the city’s jazz and culinary culture, a visit to the Lower 9th Ward and a Cajun swamp tour.
Hentschel said her motive for participating was to help dispel the misconception among some tour operators that New Orleans had become a no-go zone for tourists.
Local tourism officials have praised the success of the city’s recent Mardi Gras celebration and the Jazz and Heritage Festival.
But some economic observers expressed doubt that travel and tourism would be enough to fuel a speedy recovery. The industry typically generates low-paying jobs, and in New Orleans is limited to restaurants, music and the French Quarter.
“How much can you turn that into?” asked William Barnett II, an economics professor at Loyola University. “It’s a great resource, but it has its limits. It’s not enough to support our city.”
Barnett also warned that new businesses should be prepared to deal with higher operating costs resulting from spotty electrical service in some areas, potholed streets and a largely unskilled workforce.
“We need to attract business here ... but businesses need a certain infrastructure in order to function,” he said. “The city is virtually bankrupt, and the infrastructure in the city is deteriorating.”
