…and that’s not especially good news for Baton Rouge’s future prospects as an economically viable city. Yesterday ExxonMobil announced in a statement they were pulling their applications for tax abatements under the state’s Industrial Tax Exemption Program (ITEP), which in the current chaotic process put in place by an executive order from Gov. John Bel Edwards now involves approval by three local government bodies on top of the state-level oversight the ITEP program has always required. Last week the East Baton Rouge School Board voted to deny ExxonMobil’s ITEP applications, which wounded but didn’t necessarily kill them, amid a food fight sparked by the left-wing activists at Together Louisiana’s Baton Rouge affiliate.
And with the continuing political mess ExxonMobil decided it was time to pull the plug. Here’s the statement the company delivered yesterday…
Statement from ExxonMobil Baton Rouge leaders
Polyolefins Plant Manager Stephen Hamilton, Chemical Plant Manager Dave Luecke, Refinery Manager Gloria Moncada and Plastics Plant Manager Angela Zeringue, regarding the business environment in Baton Rouge, Louisiana
The ExxonMobil Baton Rouge Refinery and Baton Rouge Polyolefins Plant will not pursue their sites’ pending 2017 Industrial Tax Exemption Program (ITEP) applications due to ongoing local uncertainty surrounding the program. For ExxonMobil, there has been little predictability on ITEP contracts in East Baton Rouge. Due to the uncertainty, we will have to assume there is no ITEP incentive as we make cost projections on future investment opportunities in Louisiana.
As representatives of ExxonMobil’s Baton Rouge facilities, our role is to highlight the capital region as a strategic location for future ExxonMobil projects that could employ hundreds in the community. Unfortunately, the perception of Baton Rouge has become one of inconsistent treatment from one company to another, a lack of predictability, and confusion among local elected officials, who are inundated with misinformation from activist groups. We question if anti-business activist groups are opposed to the state ITEP rules or just opposed to ExxonMobil’s participation in the program.
Our company has abided by the state ITEP rules. As the rules have changed in recent months, we adjusted our applications accordingly. Across the state, 54 other companies filed ITEP applications held over from 2017. Each company received state approval for their 2017 application.
The Louisiana Board of Commerce and Industry approved ExxonMobil’s pending ITEP applications unanimously in December 2018. These applications represent more than $64 million in 2017 competitive expansion projects, 18 jobs, and about a $600,000 a year abatement request for 10 years. In January 2019, the West Baton Rouge Parish Sheriff, School Board, Parish President and Council provided a professional and public review of the pending 2017 application for our Port Allen Lubricants and Aviation facility. It was approved unanimously.
The ITEP incentive rules that were in place at the time of the project decision helped attract these projects to Baton Rouge. An advance notice was filed on these applications in 2016, per the program rules at the time. The applications were held until new Baton Rouge ITEP guidelines were finalized and the governor promulgated the new ITEP rules. The Louisiana Board of Commerce and Industry unanimously approved these applications, since they adhered to the state guidelines.
With our decision to cancel these applications, our company must reassess previously-projected costs for these expansion projects. This may include a reduction in investments that grow jobs, expand operations or support community projects.
Our hope is that the current business environment will change to help us bring investment and jobs to this region when we need it most.
We are proud to generate the largest property taxes in East Baton Rouge and in Louisiana and to be the largest manufacturing employer in the state. Currently, the Baton Rouge Polyolefins Plant is considering a more than $500 million polypropylene project that would create dozens of new jobs. This potential project is a part of ExxonMobil’s $20 billion Grow the Gulf initiative. Since the initiative began in 2013, ExxonMobil has announced billions of dollars of investment in Beaumont, Baytown and Portland, Texas. New investment brings jobs and opportunity for everyone from local restaurants to workforce training programs like the North Baton Rouge Industrial Training Initiative. We can’t wait to celebrate with 40 local students at tonight’s graduation.
We appreciate the support from West Baton Rouge Parish Chamber, President, Council and School Board, the Baton Rouge Area Chamber, the East Baton Rouge Mayor-President and several School Board and Metro Council members. We will continue our work to bring projects to our community. We owe it to our employees, hundreds of locally-owned business partners and tens of thousands of citizens who are connected to our facilities. A more predictable business climate must be at the heart of what we can accomplish together in years to come.
Translation: Fine, we’re done fighting battles with you people and if what you want to do is demonize us Alinsky-style for seeking a better deal to do business in Baton Rouge than your lousy tax code would otherwise offer, then what we’ll do is spend our money elsewhere. Guess who makes out badly when we do that?
It’s a pretty serious shot across the bow, not that it’s at all surprising. ExxonMobil is anything but locked in to continuing operations in Baton Rouge at the current level. They can move production of gasoline, polyolefins and all the other things they make in this town to facilities they have elsewhere – gradually at first, but completely down the road. How it starts is by simply not investing money in their Baton Rouge facilities while spending the $20 BILLION they have budgeted for facility upgrades and expansions at their other plants around the country. Then, when the other facilities are more state-of-the-art than the ones in Baton Rouge are and therefore more profitable, that’s when production starts moving to the newer, better facilities. Then come layoffs and transfers, the shutting down of production lines one by one, and sooner or later there’s nothing much left.
Frankly, the people who run Together Baton Rouge aren’t stupid enough not to understand this. They actually WANT ExxonMobil gone from Baton Rouge. Seriously, they do. They think ExxonMobil’s smokestacks are unsightly and that those facilities poison the air people of color breathe, and they’d like nothing better than to see the whole thing gone so they can replace it with…whatever.
Talk to any of them for any length of time and you won’t be able to escape the understanding that’s who these people are. What defies understanding is why anyone would give these nuts the time of day – but that’s what you get with entry-level local politicians who aren’t developed enough in their craft to understand who are the cranks who should be ignored and who are the honest stakeholders seeking to move a community forward.
Baton Rouge mayor-president Sharon Weston Broome, who sat on her thumbs the entire time Together Louisiana’s jihad against her city’s largest employer was taking place, is now effusive in her confidence about keeping ExonMobil happy in town.
“I believe that Exxon will continue to be a strong business partner and part of the fabric of this community,” said Broome. “Exxon and Baton Rouge are synonymous. Exxon has been a part of this community for years and I believe that they will continue to be a part of this community.”
Translation: you’re not going anywhere and I’m not doing anything to put out this fire.
Broome didn’t exactly make the business community feel good with her statement. Baton Rouge Area Chamber president Adam Knapp is in full-freakout mode at present over the ExxonMobil situation, as he should be.
REACTION: @BRAC_BatonRouge already weighing in on the @exxonmobil #ITEP decision, calls it a "wake-up call" for the region. @WAFB pic.twitter.com/o6AkyRGkSz
— Scottie Hunter WAFB (@ScottieWAFB) January 22, 2019
And Louisiana Mid-Continent Oil & Gas Association (LMOGA) president Tyler Gray popped off a statement also sounding the alarm…
“Today’s announcement is a wakeup call to the challenges driving business out of the state. The Capital Area region has already seen a significant loss of manufacturing jobs just this month. When one of the state’s largest employers is negatively impacted by our anti-business culture, all of Louisiana loses.
If our state maintains the reputation of being an unpredictable location for investment, Louisiana will continue to fall behind our Gulf Coast neighbors. With all the production in the Permian and Delaware Basin, Louisiana is in a great position to strengthen its foothold on the refining sector of the oil and gas industry; but not without a fair, predictable tax and business climate.”
The real question at this point is whether the adults will retake political power in Baton Rouge and drive out the fools and rogues giving the Together Louisiana gang such free rein – or whether this place is too far gone to be saved. But what’s increasingly obvious to the city’s largest employer and taxpayer is Baton Rouge isn’t all that great a bet anymore, and they’re serving notice that