Trends for 2020 Roundtable by Baton Rouge Business Report

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Trends for 2020 ROUNDTABLE

S P O N S O R E D BY 5 Baton Rouge thought leaders share insights for business and the community in the year to come.

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Meet the roundtable participants Franz Borghardt Owner, Borghardt Law Firm

Stephanie Cargile Public & Government Affairs Manager, ExxonMobil Baton Rouge

Ty Gose

Agent/Broker, NAI Latter & Blum

Jim Henderson President, University of Louisiana System

Michael Nizzo East Baton Rouge Market President, b1BANK

About the Trends for 2020 Roundtable

n mid-November, Business Report invited thought leaders representing each of our sponsors to a unique morning roundtable for a conversation about some of the most critical issues facing Baton Rouge businesses and the community in the coming year. Topics included quality of life, education, criminal justice, industry, workforce, technology, an anticipated recession and more. Participants shared their successes and challenges in addressing various market trends and workforce recruiting. Comments made during the discussion have been edited and condensed for clarity and for space. Read and share the online version at businessreport.com/2020Roundtable. On the cover: Baton Rouge skyline, by Mark Bienvenu Event photography: Don Kadair

BUSINESS REPORT, January, 2020 | BusinessReport.com

S P O N S O RED C O N TEN T

y industry relies heavily on GROWTH. Everything I do—from office leasing to retail development and mixeduse consulting—it all relies on growth, and we don’t have growth right now. We are actually losing population and losing jobs. That’s a major concern for our state, especially when compared to the last 10 years of economic prosperity across the country. We are one of the few states headed in the wrong direction in terms of job growth. I don’t know if anyone has an easy answer on how to navigate the issue. As a state, we don’t compete very well against Texas, Alabama, Florida, and other states that have seen a lot of population growth and job growth. Pragmatic matters must be dealt with, such as quality of life, school performance—all the way up to how our state collects and spends tax dollars. The issues are all interconnected and complex. However, we have more waterways, we have more rail, and we have more pipelines than any other state in the country. So, why do we have this void, and what do we do about it? —Ty Gose

ost business leaders spend time considering FUTURE MARKET CHALLENGES. We have not seen a lot of evidence in the data, but some economists are predicting a downturn in the economy over the next 24 months based on historical trends, although the market is currently at historic highs. At b1BANK, we see our role as a partner for our great community companies that are looking for growth opportunities, while also planning strategies to help them maintain financial strength during potential economic downturns. This is a competitive advantage for us. In the past we have worked with our clients in the oil and gas sector through industry specific challenges and helped them achieve financial strength through adversity. In tough times, you can recognize businesses taking advantage of opportunities in the market due to proactive financial planning. —Michael Nizzo

e have fought so hard as a community on whether to split or stay together that we haven’t really been focusing on improving that which is in place now. I think what Exxon is doing in North Baton Rouge is a great step in the right direction. I think what New Schools for Baton Rouge is doing regarding charter programs is an excellent step as well. Both are important to the criminal justice system. We need to start thinking about where we want our higher education focused. Do we want people to start focusing on trades—specifically trades that will deal with automation? Technology may make the welder as we know it today obsolete but create a field for welding through automation and technology. I am optimistic about growth, but if we don’t get a handle on EDUCATION, we’re going to maintain a lack of growth. Now is certainly the time to address this. —Franz Borghardt

QUESTION

What is the most pressing issue for South Louisiana and Baton Rouge in 2020? How would you lead us through it?

hen you envision the traditional bedrocks of our economy, whether it is manufacturing or agriculture, and think about how advancing TECHNOLOGY has changed even those industry sectors—not just replacing jobs but changed the very nature of those jobs—it’s a compelling picture. I recently spent a day and a half on a 1,000-acre sugar cane farm. I climbed up in the cab of this $250,000 tractor and looked at the LED screens and other high-tech features. I saw the way they are using lasers to level their fields, minimizing the space needed for drainage ditches. Guess what? That’s more production per acre. Yes, even agriculture is being fundamentally impacted by technology and research. The opportunity for us is to develop the talent and advance the understanding that can power those changes. In regards to talent, you’re not prepared if you’re not technologically literate, if you don’t have these broad capabilities from effective communications to working as part of a team to cultural competence, because now the team doesn’t look like the people you might have grown up with—they come from all parts of the world and all different kinds of cultures. Our institutions are preparing a workforce that has those capabilities and that is what will empower us to seize these emerging opportunities. —Jim Henderson

ExxonMobil’s North Baton Rouge Industrial Training Initiative

n 2020, we are going to be focused on supporting the REDEVELOPMENT OF NORTH BATON ROUGE. Whether you live in downtown Baton Rouge or Ascension Parish, the rising of that community is critical to pulling up our entire area. Issues ranging from quality of life and blight to the need for new retail development, higher-quality schools and workforce development in North Baton Rouge can impact our entire region if they go unaddressed. As the largest company in North Baton Rouge, ExxonMobil is trying to plug in resources that can help make a difference. Right now, we are tailoring and growing the North Baton Rouge Industrial Training Initiative to ensure that ExxonMobil neighbors can get free career training at the nearby Baton Rouge Community College campus. This fast-tracked training will graduate about 185 students this year. ExxonMobil along with ISC, Turner, Stupp, PALA Group and others will hire these local graduates. We are also working with New Schools for Baton Rouge and the East Baton Rouge public school system to engage students through programs that provide hands-on learning and job readiness. One example is the Aquaponics Project at Brookstown Middle and Istrouma High School. Students grow hydroponic lettuce and catfish as food sources for their own schools and for marketing to local businesess like Tony’s Seafood. There’s a lot of opportunity to be collaborative, and we want more businesses to be part of the effort. —Stephanie Cargile Daily-Report.com | BUSINESS REPORT, January, 2020

S P O N S O RED C O N TEN T

QUESTION

What’s the most pressing issue facing your industry in 2020 and how are you prepared to deal with it? INDUSTRY THE ISSUE

We still see a residual perception that it’s difficult to do business in Louisiana due to the Industrial Tax Exemption Program (ITEP) controversy in early 2019. That perception impacts how our corporate leadership views Baton Rouge, too. It’s based on the confusion and anti-industry rhetoric that we experienced with the ITEP changes last year. While we got really strong support and unanimous approvals for our more than $500 million polypropylene project, the targeting of ExxonMobil by a vocal, minority still permeates throughout our company.

THE SOLUTION

We have been able to educate many local leaders not only about the opportunity we have for investment here, but also the stiff, internal competition we face to attract larger projects. Our global company has many locations where they can invest the next big project, and Texas cities have attracted billions of dollars in projects already. The vocal support we’ve received from the Mayor and many local business leaders has reached our ExxonMobil leadership. Perception is reality, so together we need to ensure that we are sending a message that Baton Rouge and Louisiana are open for business. It’s a challenge we are still working on. —Stephanie Cargile

DID YOU KNOW?

HIGHER EDUCATION THE ISSUE

For years you’ve heard about the funding crisis, and it was really not just a state disinvestment; it was a fundamental shift in our business model—where we go from relying on state resources to relying on selfgenerated resources, developing public/private partnerships, which creates a need to change our mindset around the business aspects of the higher education enterprise. Our challenge today, though, is even more foreboding than finances: How do we develop people at the scale necessary to succeed in the future of work? Focusing solely on traditional populations, those 45,000 students that are coming out of Louisiana high schools annually, is insufficient. We have to address the needs of the adult population and for the UL System, that is the 653,000 Louisiana adults with some college but no degree.

THE SOLUTION

We launched Compete LA. It is a program designed to meet the needs of working adults with some college credit but no degree. Our model includes dedicated coaches who guide students to adultfriendly programs and assist in the re-enrollment process, then stay connected until graduation. Our system has a robust catalog of online and hybrid degree programs that develop in the individual those capabilities that will empower them to succeed in the workforce of today and prepare them to seize the opportunities of tomorrow. This program has the power to not only meet the needs of these working adults but also the needs of Louisiana employers looking for a talent-based competitive advantage. —Jim Henderson

REAL ESTATE THE ISSUE

We are working on many of the large master-planned projects with some of the best land planners and architects in the region. All-star teams from across the country are designing developments here locally, which is exciting. However, these projects are turning into 15year projects when they should be five. With every new restaurant we put into a project, it unfortunately has the potential to shut another restaurant down elsewhere. There is cannibalization occurring when we should have expansion.

THE SOLUTION

Changes are occurring, but there are some systemic problems that must change. We do work with New Schools for Baton Rouge, which is an incredibly innovative organization, so there are entities and groups creating solutions for some of the issues we’ve been discussing. We are also optimistic about the future, as you see some of the new developments encompassing a community aspect that Baton Rouge hasn’t been able to experience holistically in a long time. Time will ultimately tell. —Ty Gose

CRIMINAL JUSTICE NAI Latter & Blum has a robust retail consulting division that works on mixed-use projects like Americana, Rouzan, Harveston, Heritage Crossing in Gonzales and River District for Goldman Sachs. The company anticipates “some fun announcements” in 2020. 70

BUSINESS REPORT, January, 2020 | BusinessReport.com

THE ISSUE

Cost of criminal justice is the big one. We have an underfunded indigent system that is going to collapse if we don’t fund it, and when it does collapse, it is going to affect the entire legal community because courts are going to start appointing civil firms—big ones, little ones, medium size ones—to represent these folks. Then you’re going to have folks who don’t practice criminal law representing individuals that can’t afford attorneys. —Franz Borghardt

S P O N S O RED C O N TEN T

QUESTION

What is your secret for attracting the best talent?

view this question from the other side of the coin, given that I’m a criminal defense attorney. How do I get these wonderful businesses to be attracted to some of the most seemingly untalented human beings—those individuals with criminal records, those individuals that are in the criminal justice system? We have to do something with these people. A lot of what I do is social engineering, which has nothing to do with the law. How do I convince Exxon to hire this person? Is it that I must get a certain type of resolution so that they can have their TWIC and OSHA card? How do I convince Latter & Blum to give somebody with a criminal history a chance? How do I get b1BANK to let someone be a teller? These are challenges. I think companies are being more receptive. Now does that mean that I’m going to get one of my clients into the corporate executive program in Exxon? Maybe not. But get a guy into the plant and next thing you know, they are able to make a very good wage. And we know that an individual that is working is less likely to be a recidivist. —Franz Borghardt

F O

ur global company recruits employees from around the world, so the folks who are working at our Baton Rouge sites are culturally diverse. It’s a great, unique brain gain for our city. Our leadership has to reflect and engage this global workforce and ensure we are more inclusive. That’s hugely important because our leadership believes that diversity in ideas and perceptions brings a higher quality result in business. We are encouraging our leaders to be receptive to unique perspectives when determining solutions to challenges. It’s important to our future success and to retaining our incoming workforce. —Stephanie Cargile

ttracting talent is all about culture. Building a great culture requires work and focus. It starts at the top with defining who you are, and requires the actions of every employee to implement. b1BANK recently completed two bank mergers in the last two years. As a quickly growing community bank, it was important that we clearly defined our core principles and communicated those principles to our team. Each person on our team has a role in carrying out a company’s culture—to demonstrate that we do live those principles every day. This in turn is reflected in our interactions with our customers, communities and within our teams. Jude Melville, our CEO, and our Executive Team are so devoted in continuing our culture that we hosted a company-wide retreat after the announcement of our second merger. All employees from three previously separate banks spent time defining our guiding principles and discussing ways to continue to improve our culture as a group. While the retreat was a great first step, we continue to evolve and implement new ways of living out our guiding principles. One of the outcomes is the institution of quarterly meetings, led by Jude, where, as a bankwide group, we review company performance and every employee has an opportunity to ask questions and offer ideas to make our bank better. We’ve also implemented b1COMMUNITY, a program that provides our employees paid company time to volunteer in the community—to build relationshipdriven teams outside our banking centers. That has really transformed and enhanced our culture. —Michael Nizzo

aculty are the heart and soul of an institution. They are in large part the determinant factor in creating a transformational student experience, one that not only prepares students for career but for life. Faculty contribute in so many ways beyond the classroom. Think about the breadth and impact of the research activities and the cultural contributions they make to our communities. They become part of the fabric of the community, enriching the culture and improving the quality of life. Optimistically, I believe we are entering a new era for higher ed in Louisiana. We’ve had some budgetary stability and we’ve finally been able to change the narrative—to get away from the dismal message of retrenchment and cutting back, and instead talk about purposeful investment. We need to create an environment that attracts faculty from around the country—and from around the world even—who want to come to Louisiana and participate in a learning renaissance. You have to create cultures where faculty can come in, realize their own potential, and pursue their craft, their calling, in a way that is personally fulfilling and collectively impactful. I can think of nothing more essential to the core missions of our universities. —Jim Henderson

hat we try to do is have a culture that is focused on our team members first and our clients first. That really is the crux of our culture. We share all our information, we share all of our deals, and we thrive together and suffer together. It’s just worked really well for long-term loyalty. —Ty Gose

DID YOU KNOW? The University of Louisiana System serves 92,000 students at nine universities: Southeastern, the University of New Orleans, Nicholls State, UL Lafayette, McNeese State, Northwestern State, Grambling State, Louisiana Tech and the University of Louisiana at Monroe. Daily-Report.com | BUSINESS REPORT, January, 2020

S P O N S O RED C O N TEN T

QUESTION

Share some of the innovative ways that data is helping you better serve your clients.

ata undergirds almost everything we do. New approaches and tools greatly enhance data analysis allowing us to more effectively reach new markets. Our focus on adult students is a perfect example. The richness of the data that we have on students that have come to our institutions and dropped out without graduating is wonderful. But it’s the ability to analyze that data and target the messaging toward those potential students who are going to be most receptive to that message, who are in a place where they can best benefit from what we offer. We are then able to craft a solution that better meets the student’s needs. It enables us to bring learning to the learner. We have never been in an environment that is so conducive to reaching new markets than we are today. It’s all empowered by technology. —Jim Henderson

echnology has revolutionized real estate across the board. One example I can give is retail site selection. As an anecdote, we work with a restaurant using geofencing and cell phone data. A technology company told them not only who their customers are, the age group and what tapestry sector of the city they live in and what they typically do, but also where they were the hour before and where they went the hour after. So what the client can do is take that data and overlay it over other sites they are considering in other markets. What they are trying to do is nail down that specific buyer to meet the sales of the target store or their top store. It’s unbelievable, and while it’s not perfect yet, the technology gains are changing the way retailers are doing business. —Ty Gose

DID YOU KNOW?

At press time, b1BANK anticipated closing 2019 with $2.2 billion in assets, making it one of Louisiana’s largest state-headquartered banks.

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The higher-interest, lower-stress CD. The “C” in CD doesn’t stand for complicated, and neither do we. At b1BANK, we offer Certificates of Deposit with higher Annual Percentage Yield and fixed rate interests. Opening an uncomplicated CD assures that both you and your money are secure. Get started today. Minimum $1,000 deposit. Penalties that may reduce the CD earnings will apply to a withdrawal of principle prior to maturity. The rate will remain in effect until the date of the CD maturity.

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BUSINESS REPORT, January, 2020 | BusinessReport.com

S P O N S O RED C O N TEN T

QUESTION

How is Industry 4.0 shaping up in Louisiana, and where would you put us in terms of the global scene?

n 2017, we were scoping out the opportunity for our recently announced polypropylene project— the largest project built in Baton Rouge in a decade. One of the Baton Rouge executives on that project challenged us to ensure this project was a high-tech venture supporting local businesses. In our discussions with Louisiana Economic Development (LED), they offered us the FastStart® training incentive to help Louisiana compete for the project. After considering the emerging digital manufacturing renaissance across the Gulf Coast and the opportunities to be innovative with this project, we worked with the LED FastStart® team to create the first virtual reality (VR) training suite of modules for the new project. Together, we engaged the Louisiana Technology Park, and they had several start-up, gaming industry firms that ultimately became part of our VR team. Now these firms are hiring more employees and expanding their business contracts because of ExxonMobil’s project. During our search for local IT talent, we found many firms were doing most of their business outside of Louisiana. We realized there was great opportunity to connect our local IT sector to our energy industry’s digital manufacturing needs. Together with the Baton Rouge Area Chamber and the Greater Baton Rouge Industry Alliance, we created the first TECNext conference. At that conference, our energy sector successfully connected with local IT firms further diversifying our local economy. Furthermore, ExxonMobil is funding a VR learning lab at the Baton Rouge Community College North Acadian campus where students and future employees can receive training using new technology. At the ExxonMobil polypropylene project, we will virtually practice the installation of huge reactor towers to assess risks and ensure we get it right before we actually construct them in real life. ExxonMobil has found that when people are engaged in a virtual, immersive learning experience, they take in a higher rate of information. This technology allows for critical training to take place in a safe and controlled digital environment, decreasing the real-world risks while enhancing the rate of retention. —Stephanie Cargile

DID YOU KNOW? Franz Borghardt hosts a radio show on 107.3 called Legally Unfiltered, and is the founder of Geaux Rouge, which celebrates the city’s social, cultural, artistic, and culinary scenes.

THE FOUR MANUFACTURING REVOLUTIONS

Industry 1.0: Mechanization through water and steam power

Industry 2.0: Mass production and assembly lines using electricity Industry 3.0: Computer automation

Industry 4.0: Smart and autonomous systems fueled by data and machine learning

FINTECH vs. THE COMMUNITY BANK I DON’T VIEW technological advances and some of these FinTech companies entering the banking space as bad. The banking industry is always evolving, but one thing that remains the same is the importance of a true banking relationship that only community banks provide. As a consumer, you can get a checking account through Google, but if you have a check that comes through and you’re not really sure if that check was written properly, or if it was supposed to hit your account, good luck getting somebody on the phone to help you—and in a timely basis. For businesses there are now options for lines of credit and loans promising quick approvals, but what you aren’t getting is a true banking partner. At community banks, like b1BANK, we help you develop a strategy for long-term growth, which is different for each customer. At b1BANK, we closely monitor innovation and industry trends, and continually invest in technology to provide our customers with great products and services that make banking convenient and secure. This allows us to accommodate a customer’s lifestyle and does not require them to adjust their life to bank with us. We provide bigger bank-level sophistication while maintaining a small bank relationship-orientation. —Michael Nizzo

Daily-Report.com | BUSINESS REPORT, January, 2020

S P O N S O RED C O N TEN T

QUESTION

Louisiana is coming off the second year of criminal justice reforms. How would you rate performance thus far?

n terms of Department of Corrections utilizing the new laws and actually letting people out of jail at the right time, very poor. And that is going to create lawsuit issues that cost the state money. In terms of the reforms themselves, these were amazing. We had Republicans and Democrats, conservatives and liberals working together holding hands, doing things that we’re not used to seeing. Then, like any good thing, we spent the next session trying to dismantle those things. What we’re seeing and what we are now starting to realize and recognize is that the cost of incarcerating people is expensive. Incredibly expensive! The inability to find something to do with them afterwards, or an infrastructure to do something with them afterwards, so that we don’t put them back in jail when they recommit crimes, is at the forefront of a lot of our thoughts. We’re also now prioritizing mental health and drug addiction. There are still question marks about the legalization of marijuana. I bring that up as a justice reform issue because it will create an enormous amount of revenue for the state that could go back into the funding of an indigent system. We’re not there yet. We were one of two states that had a nonunanimous jury system, but we just passed a constitutional amendment creating a unanimous jury system. Part of that was our recognition that our antiquated system was based on some really poor racial, or racially motivated, decisions. So we’re taking good steps. I would give it a solid B- maybe. —Franz Borghardt

BY THE NUMBERS

Louisiana’s current incarceration rate is 702 people per 100,000 residents.

QUESTION

What trends can we expect to see in office, retail and multifamily real estate in 2020?

The office problem

aton Rouge has a citywide office problem, not just downtown. We’re at 81% capacity. When you factor in sublease space, we would be in the high 70s. That’s the lowest we’ve been since the recession. One of the trends we are seeing on the office side is that we don’t have a corporate presence outside the fences of the petrochemical plants. That industry is robust “inside the fences” at the plants, but the office and more commercial corporate office needs have all done their talking with their feet. They’ve left. There are several components to the office space issue but the one I hear about the most is cost of living and hiring. Employers have a hard time hiring with cost of living adjustments needed for schools and higher insurance costs. Employees that commute from Denham and Ascension are stuck in the car for much of the day. The flip side of this is the void left for small businesses, which overall are doing well currently.

Retail’s ‘mini arms race’

very vanilla suburban retail center now is a service-oriented center. It’s a restaurant, a coffee shop, a nail salon, massage place, dental and medical clinics—it’s anything that you can’t touch or order on an iPad. That’s the new retail. I guess you could call it a mini arms race among retailers. They are going for experience, feel, culture—people want something authentic when they go. They don’t want that iPad experience at the nail salon or grocery store anymore. They want it to feel good and they want to enjoy it. A lot of the work we’re doing and some of the work for an unnamed client has to do with this changing trend in retail. We’ll hopefully have some cool announcements in the next six, seven or eight months.

Multifamily overload?

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BUSINESS REPORT, January, 2020 | BusinessReport.com

ultifamily is simple: Jobs fuel population growth. We should be filling up what we are building right now. I know that the trends are saying that we are building too much and we are just not growing. —Ty Gose

S P O N S O RED C O N TEN T

QUESTION

Talk to us about Louisiana’s Prosper Plan and how you’re working toward that goal.

DID YOU KNOW?

was delighted when the Board of Regents announced a statewide educational goal that 60% of our working age population will have a credential of value, whether it’s a certificate, or an Associate Degree, Bachelors’ Degree, or graduate degree by the year 2030. That puts Louisiana on a path that will make us competitive going forward. Absent that kind of vision, you have people wandering through the desert. That vision is a consensusbuilding, empowering vision that stirs people to action. At the UL System, we have nine institutions and 92,000 students. We’re focused on how we bring our work to the learner in more innovative ways, how we’re embracing technology, and how we’re preparing people for an asymmetric world. It’s no longer a linear path where you can come through a degree program in an occupation that you do for 30 years, get your gold watch, and then retire. The learners that we are preparing today are going to be in jobs we haven’t even created yet, they haven’t even been envisioned yet. What an exciting time! We are inundated with statistics about the future of work, and one that keeps me awake at night comes from the Organization for Economic Cooperation and Development. They predict that 47% of the jobs in the United States have tasks that will be automated. And while that’s a scary proposition, you think about how it frees up that talent to make strategic decisions that affect the organization. Instead of doing mundane tasks, they can actually contribute meaningful value to their organizations provided they have developed the requisite capabilities. That is why we must prepare the most educated generation in Louisiana’s history. We know our future is dependent not only on skill development but intellectual development, human development. As a result of our work, we’re going to realize a quality of life in Louisiana that has eluded us for generations. —Jim Henderson

ExxonMobil has opened a community center within its new office building along Scenic Highway and donated office space to the Baton Rouge North Economic Development District, the Urban Restoration Enhancement Corp. and the ExxonMobil YMCA Community Outreach Retiree Alliance.

Daily-Report.com | BUSINESS REPORT, January, 2020

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