Exploring the Path to Economic Diversity in New Orleans

COVID-19 exposed what many in New Orleans already knew – the local economy is too dependent on tourism. As Mark Romig, CMO at New Orleans & Company, put it, “to be in a situation where 40% of the city's revenue depends on retail activity from visitors is not sustainable in the long run.” With this in mind, Phelps and Gulf Point Advisors hosted a series of four roundtables with leaders in hospitality, health care, transportation and education. Together, they discussed the path to greater economic diversity in the face of a global pandemic.

From the roundtables, we learned that New Orleans has a strong foundation to grow outside of tourism. The city’s inherent advantages, such as its alluring culture, talent and location on the mouth of the Mississippi, along with billions of dollars in new infrastructure, put New Orleans in a unique growth position. To make meaningful progress, panelists agreed that major players in each industry need to collaborate, particularly on long-term goals, like landing an NCI-designated cancer center in New Orleans.

And as the city grows, we have to be intentional about diversity, equity and inclusion to lift all boats at the same time while protecting the city’s greatest asset – its culture.

Revolving Themes  

Multiple themes came up across all four roundtables. These included:

• Opportunities and challenges brought by COVID-19
• Collaboration as essential to achieve big-impact objectives
• Diversity in a time of racial reckoning in a city known for its diverse population
• Inherent advantages of New Orleans’ culture, geography and population
• Pipeline for homegrown and out-of-state talent and exposing diverse students to STEM in K-12

Opportunities

Panelists discussed several initiatives and ideas across the roundtables. Those that stood out the most included:

• Attracting an NCI-designated cancer center in Louisiana, which would be the first in the state
• Attracting a commercial aircraft maintenance, repair and overhaul (MRO) facility at New Orleans’ airport
• Promoting wind power development in the Gulf of Mexico and related local manufacturing of wind turbines
• Organizing with the city’s startup enablers—the accelerators, incubators and universities—and capital sources to map out entrepreneurial activity in New Orleans and find ways to engender, coach, mentor and fund it
• Exploring and exploiting supply chain capabilities New Orleans can grow as certain types of manufacturing move back to the U.S. and particularly to Louisiana, thanks to our logistics
• Identifying an area of specialization in life sciences, such as neurological diseases, since our national population of those over 65 is set to double by 2050

Keep reading for highlights of each roundtable and links to the full discussions.

Tourism and Hospitality Roundtable

“… we would actually be a lot stronger as a tourism and hospitality industry if it were the fourth or fifth most important industry in the city. We have to keep working to get to a point where that is the case, where we can grow the pie so everybody gets a bigger piece. That's always been a challenge for our city and for our region, but the opportunity is there to diversify the economy. It will take nothing away from our tourism and hospitality sector. It will actually make it more profitable and healthier. In fact, it will make our whole community healthier and more profitable.”

– Walt Leger, Sr. VP and General Counsel of New Orleans & Company

The first roundtable met on June 17, 2020, and focused on the city’s hospitality sector. The panel was made up of:

• Mike Eckert, Chairman of NO/LA Angel Network
• Deborah Elam, President & CEO of Corporate Playbook Consulting
• Walt Leger, Sr. VP and General Counsel of New Orleans & Company
• Mark Romig, Sr. VP and Chief Marketing Officer of New Orleans & Company
• Susan Taylor, Executive Director of New Orleans Museum of Art

Highlights:

• At the time of the roundtable, the New Orleans metro area was experiencing 50% unemployment in the hospitality sector, the airport had dipped to 6% of its operating level and hotel occupancy was below 10% for several weeks.
• To attract new visitors, messaging will target the drive market (those within an eight-hour drive or one-and-a-half-hour flight), which accounts for about 72% of visitors.
• Cleanliness is key to messaging in the COVID-19 environment, and New Orleans is among the first in the country to have a convention center designated by the Global Biorisk Advisory Council (GBAC), which sets standards for cleanliness.
• It is imperative to get convention business back online. Convention travelers tend to spend three times more during their visit and tend to be more experiential visitors who return.
• Everybody must feel a part of the industry. Diverse visitors often spend money with diverse businesses here, so by marketing to diverse travelers, more dollars will flow into the diverse community.
• Companies should not put diversity on the back burner in exchange for more pressing issues around COVID-19. Like Katrina, this is a hinge moment. With the backdrop of COVID-19 and the social unrest, we can rebuild with intention that will help us be an example for other cities in the country.
• It’s because of the inherent diversity within New Orleans that we see so much gender and racial diversity among entrepreneurs. But we also see diversification in capital sources. We need to put the enablers—the accelerators, incubators and universities—and the capital sources together in a room, map out the different kinds of entrepreneurial activity we have and identify how we can work together to engender, coach, mentor and fund them. It’s about getting the right people in the room to have that dialogue.
• When looking at locations, corporations ask: what kinds of students do your universities produce? Do they produce engineers or STEM majors? What is the economic situation of your white population and diverse population? What is your diversity? What is your city council like? What kind of leadership do you have?
• The tourism and hospitality industry is fueled by culture. The culture of the city is our greatest asset. If we aren’t supporting the culture that drives the creative economy and the creatives, we are missing a big component of how we develop as a strong, vibrant city in the future.

Health Care Roundtable

“Tulane is not my competition. Alabama, Georgia, UAB, UT Texas—these are my competition.”

– Dr. Steve Nelson, Dean of LSUHSC School of Medicine

"One of the opportunities we have is the future of medicine, of health care. A cancer center in Louisiana is not just about treating patients for cancer, because a cancer center becomes a center of innovation for a number of medical fronts."

– Dr. Reynold Verret, President of Xavier University of Louisiana

The second roundtable brought together leaders in New Orleans’ health care and life sciences sectors and included panelists:

• Jonathan Brouk, Chief Operating Officer of Children’s Hospital
• Kris Khalil, President of the New Orleans BioInnovation Center
• Dr. Steve Nelson, Dean of LSUHSC School of Medicine
• Dr. Reynold Verret, President of Xavier University of Louisiana

The discussion showcased the city’s notable infrastructure supporting health care and life sciences, much of which was constructed post-Katrina. It also underscored the opportunities and desire among the panelists to collaborate on big projects, such as an NCI-designated cancer center, as well as pipeline initiatives, research ventures and diversity.

Highlights:

• In some ways, COVID-19 presented opportunities for health care systems. Unfortunately, New Orleans was one of the early hot spots, and many pharmaceutical companies wanted to partner with these health systems to study new therapeutic interventions in our patient population. Even before COVID-19, health disparities in Louisiana’s population attracted pharmaceutical and other life sciences companies due to the large pool of patients with a variety of health concerns.
• Collaboration was the overwhelming theme of the roundtable. The panelists discussed the need to communicate their previous successful collaborations to the right audience in order to build momentum and attract more investments.
• One ambitious project the panel discussed was attracting an NCI-designated cancer center in Louisiana, which would be the first in the state. Louisiana’s population is a good fit for this type of center and NIH has expressed interest in the development if Louisiana can bring all of the parties and resources together. An NCI-designated cancer center would be about a $250 to $500 million investment over 10 years. The center would bring a lot of rich talent and keep it here and a large amount of benefit to the patients.
• In terms of action items moving toward an NCI facility, the panel discussed forming a group and figuring out a way to align operations that would highlight each institution’s individual strengths. Then from there, they’d pick a particular area, whether it's cancer, neuroscience, cardiovascular—three of the major health problems affecting Louisiana and the nation—and devise a pilot project or pilot trial showing how each organization would put some skin in the game and work together.
• The New Orleans metro area has several existing enviable infrastructure assets, including the new VA and UMC facilities, the BioInnovation Center, the LCRC, and the Tulane Primate Center, which is one of only eight in the country. Regardless, over 6,000 patients a year leave the state for cancer care.
• The BioInnovation Center has a great track record of spinning out companies like AxoSim, Obatala Sciences and Advano, which today are attracting tens of millions of dollars in outside investment. But it took a long time to get there, and the center needs more volume.
• The panel talked about the pipeline for medical students and practicing physicians, including a possible early admissions program between LSUHSC and Xavier. Children’s Hospital highlighted how the opportunity to make a difference in New Orleans is a draw for many of their recruits, which was further echoed by the other panelists. Facilities like the BioInnovation Center are also a unique draw.
• Dr. Verret has long advocated that pipeline initiatives to get K-12 students in diverse communities are also imperative. Representation, diversity and the talent pipeline were prominent themes as well, with all agreeing we need to expose children in diverse communities to opportunities at an earlier age. The United States, and especially the Gulf South, is one of the most diverse areas in the world. What is key is how we engage and develop that diversity. There are geniuses in the third and fourth grades that slip under the radar because a lack of resources mean their talent might not be fully developed.

Logistics and Transportation Roundtable

“The Gulf is extremely well positioned. We are making our neighbors very nervous about the potential of our infrastructure, both in water depth and air draft. We really would have the best infrastructure for large ships and the best rail infrastructure to get into those markets. It's a huge opportunity,”

–  Brandy Christian, President and CEO of the Port of New Orleans, CEO of the New Orleans Public Belt Railroad

 

“I think we're at another inflection point. If we're smart now, make the right investments in infrastructure and in people, and tell the right story, there's an opportunity to actually come out of this stronger than we were going in, like what happened with Katrina.”

• Michael Hecht, President and CEO of Greater New Orleans, Inc.

The third roundtable covered infrastructure, logistics and transportation and included panelists: 

• Brandy Christian, President and CEO of the Port of New Orleans, CEO of the New Orleans Public Belt Railroad
• Kevin Dolliole, Director of Aviation for Louis Armstrong New Orleans International Airport
• Michael Hecht, President and CEO of Greater New Orleans, Inc.
• Jay Lapeyre, President of Laitram, LLC

Highlights:

• Economic development is basically about creating the conditions where people feel comfortable investing their capital and raising their family. If you can do that, then the economic development is going to happen organically.
• With logistics dominating retail right now, because of our river, our rail and our highway, we have big opportunities.
• There is an opportunity to bring supply chains for certain types of manufacturing back to the U.S. and particularly to Louisiana, thanks to our logistics. One good example is pharmaceuticals. The fact that a large percentage of the drugs that we use in the U.S. are made in India and China is a massive geopolitical risk that we can rectify here in Louisiana where we make a lot of the raw materials.
• Key regional assets that we market for supply chain opportunities include the river, six Class 1 railroads, a new airport, roads, low utility rates and a workforce to fill those supply chain needs – and that’s for everything from retail goods, to steel, to agricultural products and LNG.
• The recent announcement of the Medline facility on the North Shore—about a million square feet from the biggest medical supplier in the country—is an example of that. They really like our assets in our proximity to transportation infrastructure, some of which will be very sophisticated, advanced manufacturing type of logistics.
• New Orleans already has one of the fastest growing and most inclusive tech communities in the country and is #5 for African Americans and #3 for women in tech per capita in the country. We need to continue to grow that. We're also starting to see employees working remotely for companies like Google move to New Orleans, because now they can.
• Regions like New Orleans that can offer so many modes of transportation and access to a growing South and Midwest are going to fare very well to be a big player in logistics.
• Having a top tier airport is critical in attracting Fortune 500-caliber companies. With the completion of its new terminal, New Orleans’ airport already moved up 12 spots on J.D. Power and Associates’ customer satisfaction ranking after ranking near the bottom with the old facility.
• In terms of technology, a lot of our challenge is simply about getting the word out. New Orleans is now a fairly digitally sophisticated place in terms of our companies and even our workforce capabilities. We have Louisiana’s Community and Technical Colleges and our nonprofits, but the brand is still very analog.
• Investments underway to expand both water depth and air draft on the Mississippi mean New Orleans will have the best infrastructure for large ships, while we already have the best rail connectivity to get into those markets on the Gulf Coast. It's a huge opportunity, and for the first time, you're seeing markets like New Orleans and Baton Rouge popping up on the radar of your Amazons and your distribution centers. That's only going to happen if we deliver this infrastructure. So, it's a top priority.

Education and Talent Pipeline Roundtable

“My hypothesis is that what transformed Austin was when Dell went public in the 80s, it created 2,700 new millionaires. Imagine 2,700 people walking around New Orleans as new millionaires. Imagine 10%, or even 1%, of that number—if New Orleans had 27 new millionaires. What that creates is an entire ecosystem of startup companies, angel capitalists and venture capitalists. It creates funding such that the endowment of schools like UNO and Northshore Technical Community College can grow. It creates funding for nonprofits, great clients for law and wealth management firms and investment advisory opportunities for financial advisors. That's how you transform an ecosystem. …And so, if government makes the investment, even in bad times, and presents the use case, then you build that infrastructure that will create positive economic growth outcomes years later… We have to justify people's desire to be here by having an economy that allows people to not have to sacrifice their aspirations.”

 – Quentin Messer Jr., President and CEO of New Orleans Business Alliance

The fourth and final roundtable covered the education and talent pipeline and included panelists:

• Dr. Trivia Frazier, Founder, President and CEO of Obatala Sciences
• Quentin Messer Jr., President and CEO of New Orleans Business Alliance
• Dr. John Nicklow, President of the University of New Orleans (UNO)
• Dr. William Wainwright, Chancellor of Northshore Technical Community College (NTCC)

Highlights:

• Education saw an acceleration in enrollment in 2020. Moving to a hybrid in-person/online model during the COVID-19 pandemic expanded access to education to more families and more working adults. Our institutions aim to continue growth in this arena post-COVID-19.
• Higher education was designated essential business early on in the pandemic and continued to contribute to the local economy through the crisis.
• Science-based companies are benefiting from New Orleans’ education sector and formal collaborations and programs with these institutions. Dr. Frazier’s background highlights the educational assets available in New Orleans. She earned degrees from Dillard and Tulane, taught at Delgado and Dillard, and collaborates with UNO to support her life sciences venture. Her company, Obatala Sciences, hopes to increase collaborations with other learning institutions in the region while engaging people from diverse backgrounds to pursue entry-level roles at Obatala and other life sciences organizations.
• Messaging is important and was a recurring theme across roundtables. We have to better tell our stories and increase messaging on culture, infrastructure, natural resources, talent and diversity in New Orleans.
• Part of why COVID-19 impacted New Orleans so heavily is because it attacks socialization. New Orleans is a social culture, an event culture, where the draw is not just in the beautiful city, but the warmth of our residents. COVID-19 had short-term success in neutralizing one of our strongest draws, but by now it is clear the city is adaptable and will survive these restrictions.
• Collaboration between education and industry has been effective, with UNO and NTCC both evolving their curriculum to meet industry demands. UNO has developed new programs in justice, including environmental and racial justice. We are at a point where all higher learning institutions are working alongside industry partners to develop curriculum to meet future needs.

Thank you to all of our panelists, who engaged in important discussions and mapped out ways to build a brighter future for the region. Stay tuned for our 2021 roundtable series, which will kick off later this year.