LCA/LCIA Annual Legislative Conference May 9, 2018 Louisiana Chemical Industry Economic Impact LCA/LCIA Annual Legislative Conference May 9, 2018 Dr. Loren C. Scott Loren C. Scott & Associates, Inc.

Chemical Manufacturing Plastics & Rubber Manufacturing (NAICS 326) The Industry Chemical Manufacturing (NAICS 325) Plastics & Rubber Manufacturing (NAICS 326)

Rank In Country: 2016 (Note cluster at bottom) Region Value of Shipments (billions)* % of U.S. Total U.S. $959.0 100.0% Texas 138.9 14.5% California 96.5 10.1% North Carolina 62.6 6.5% Illinois 59.4 6.2% Ohio 53.7 5.6% Louisiana 50.4* 5.3%

Makeup in Louisiana: 2016 Sector Value of Shipments* Total NAICS 325 $49.0 Billion Basic Chemicals $26.5 Billion Resins, Synthetic Rubber, Artificial Synthetic Fibers & Filaments $12.8 Billion Pesticides, Fertilizers, Ag Chemicals 5.0 Billion Soaps, cleaning compounds, toilet preparations $3.7 Billion Paints, Coatings, Adhesives $0.2 Billion Other Chemicals $0.5 Billion Rubber & Plastics products manufacturing (NAICS 326) $1.4 Billion

The International Connection 2017: $9.7 billion in chemical products exported 18% of Chemical Production 17% of merchandise exported from LA

The “rock” hits the “pond” Impact on the State: The “rock” hits the “pond”

Employment Largest Manufacturing Employer in LA in 2017-III 29,109* jobs About 1/5th of Manufacturing employment #2 Fabricated Metals: 17,042

“Direct Employment”: Grossly Understated The “contractor” issue ExxonMobil’s big Chemical Plant: 1979: 2,200 employees 2017: 1,003 ExxonMobil 1,200 Contractors Of ExxonMobil’s 3 chemical plants in EBR: 1,493 employees (out of 2,975) are contractors

Employment Largest Manufacturing Employer in LA in 2017-III 29,109* jobs About 1/5th of Manufacturing employment #2 Fabricated Metals: 17,042

Distribution of Employment: 2017-III Six parishes with 1,500+ 1. Calcasieu – 4,928 2. Ascension - 4,053 3. Iberville – 3,425 4. EBR – 3,117 5. St. Charles – 2,341 6. Jefferson – 2,074 53 of 64 parishes record at least some employment in the industry

Employment by Parish: 2017-III

The Earnings Side

Average Weekly Wage in Manufacturing: 2017-III Petroleum Manufacturing $2,112 Chemicals Manufacturing* $2,050 Plastics/Rubber $1 ,005 Average Manufacturing $1,346 Average Louisiana $ 870 52% higher than manufacturing average 136% above average wage of ALL workers in Louisiana

$2.9 Billion in Total Wages: 2017-III Highest of any industrial sector in the state Oil & Gas Extraction: $2.8 billion Refining $1.4 billion Very important! Does not include contractor wages

$2.9 Billion in Wages: 2017-III

Distribution of Earnings: 2017-III Top 6 Calcasieu - $541.1 mm Ascension - $491.3 mm Iberville - $375.8 mm EBR - $348.2 mm S. Charles- $297.2 mm Jefferson- $191.1 mm

Adding in the multiplier effect The TOTAL Impact Adding in the multiplier effect

Total Impacts - 2017 Business Sales: $79.7 billion Household Earnings: $15.7 billion 12.4% of all earnings in LA $1 of every $9 earned in Louisiana 267,601 jobs 1 of every 7 jobs in the state Means average wage of all jobs = $58,669 Average annual wage in LA: $45,240 Job multiplier of 9.2

Tax Impacts State Taxes: 2012 Corp. Franchise & Income: $3,400,060 Direct Sales Taxes: ? Indirect Taxes: $1,098,706,000 Total: $1,102,106,000 Total collected from gaming taxes & tobacco taxes in FY17 = $1,102,100,000

Tax Impacts: 2017 Local Government Taxes Property Taxes: $174,676,308* Direct Sales Taxes: ? Indirect Taxes: 784,790,000 Total $959,466,308 Enough to cover the salaries of 19,266 of Louisiana’s 46,935 public school teachers (4 out of every 10) * survey not census

ITEP: 2017 In Force: $89.0 bill To Chemicals: $62.7 bill (71%) Chemicals Expiring: 2018-22: $14.6 bill Iberville: $4.3 billion Cameron: $1.8 billion EBR: $1.8 billion Ascension: $1.5 billion Calcasieu: $1.3 billion St. Charles: $1.1 billion

Do High ITEP Parishes Suffer? Value of Exemptions:* 2017   Property Taxes per Person** Amount Rank % Paid By Business Ascension $7,386,817,877 4th $1,043 21st 48.4% Calcasieu 15,201,604,553 2th 1,102 18th 69.1 Cameron 26,599,925,711 1st 4,850 86.6 E. Baton Rouge 4,282,669,094 7th 1,015 22th 44.8 Iberville 5,380,104,623 5th 1,907 8th 86.0 St. Charles 7,500,167,979 3rd 2,748 76.3 St. James 1,879,083,243 2,554 82.6 St. John 4,449,644,399 6th 1,153 15th 59.1

Do High ITEP Parishes Suffer? Average Teacher Salary* Rank Among 64 Parishes Ascension $52,035 14th Calcasieu 51,958 15th Cameron $47,445 41st E. Baton Rouge 51,804 16th Iberville 54,476 6th St. Charles 54,865 5th St. James 57,035 4th St. John the Baptist 47,966 36th State Average $49,801 NA

A Huge Expansion Underway The Immediate Future: A Huge Expansion Underway

Massive Chemical Expansion 60 Projects Since 2012 Capex # Jobs Announced Projects $ 159,532,888,000  60 19,055* Total Potentials $ 89,673,000,000  21 5,273 Total Completed/Underway $ 69,859,888,000  39 13,782

Threats to the $89 Billion Potentials: The Problem of Texas Texas LA Business Climate #2 #40 Legal Climate #39 #51 Transportation #22 #44 Higher Ed #34 #42 Pre K-12 #33 #45

Threats to the $89 Billion Potentials: The Problem of Texas No personal or corporate income tax No tax on manufacturing equipment No tax on manufacturing inputs Unified sales tax collection Lower local sales taxes Does have a gross receipts tax similar to our franchise tax This is a lot to overcome

Threats to the $89 Billion in Potentials: JBE 2016-26 Essentially created enough uncertainty to make out ITEP = 0 in location calculations Good news: Most were announced prior to June 2016 so are exempt from JBE 2016-26

Threats to the $89 Billion in Potentials: “Fiscal Cliff” New taxes on business since FY16: FY16: $575 million FY17: 1.33 billion FY18: 1.35 billion

LCA/LCIA Annual Legislative Conference May 9, 2018 Louisiana Chemical Industry Economic Impact LCA/LCIA Annual Legislative Conference May 9, 2018 Dr. Loren C. Scott Loren C. Scott & Associates, Inc.