Where there’s smoke. Several years ago I was in Houma, La., at the site of LaShip LLC, listening to then Gov. Bobby Jindal rave about the agreement the state had just made with Edison Chouest Offshore, LaShip’s parent company.
According to the deal, Louisiana would put up $42 million and Chouest would guarantee jobs for 1,000 shipyard workers at the site with a payroll of over $50 million. Jindal was smiling, all his lackeys were smiling and even ECO CEO Gary Chouest had something on his face resembling a smile. The only minor annoyance for ECO was that it would have to sustain the 1,000-worker employment level for 42 consecutive months beginning in September 2012 and lasting through December 2015. Failing to do so would mean ECO would have to pay back some of the money. Those dates were eventually changed to March 2014 through June 2017, according to a report yesterday from New Orleans TV station WVUE Fox 8.
The WVUE report said that the dates were changed because in March 2012 the shipyard had only 507 employees. The head of the state’s department of economic development, Don Pierson, told WVUE, “They are out of compliance with the contract. We are absolutely against corporate welfare. We look for these companies to be very accountable.”
Jindal is no longer Louisiana’s governor and that could present problems for Chouest. The state is in the throws of its worst budget crisis in history, and it’s looking under every sofa cushion for change.
According to the report, when the contract runs out next year, the state will present Chouest with a bill for underperforming. “We will indeed claw back, should they fail to meet their performance requirements,” Pierson said. But he added, Chouest is “innocent until proven guilty. They’ll get the full contract period in which to perform, and then they’ll be evaluated. And if they’re short, that’s when we’ll have clear numbers and a clear understanding of how much their underperformance might actually be.”
The report failed to acknowledge that with the bottom dropping out of the oil and gas market over the last 18 to 20 months, there have been some big layoffs at shipyards across the Gulf, not just Chouest. (It does, however, mention that the Chouest family gave $1 million to Jindal’s failed presidential campaign.)
WVUE tried to get in touch with Chouest representatives to get their take on all of this, but Chouest did not respond. I also called ECO’s headquarters in Galliano, La., but, unsurprisingly, have yet to hear back from them.
Meanwhile, local officials in Harrison County, Miss., are exploring rescinding tax breaks granted to ECO’s affiliate TopShip LLC for a lease agreement signed early this year, the SunHerald in Gulfport, Miss., reported in April.
In February, TopShip signed a 40-year lease to occupy the former Huntington Ingalls composite facility, acquired by the Port of Gulfport, promising to bring 1,000 full-time jobs — there’s that number again — and invest $68 million in the project. In return, the company was to receive $36 million worth of tax breaks associated with the project along with a 10-year property tax exemption estimated to be worth $450,000, and a county tax break in perpetuity on personal property shipped out of state, according to the SunHerald. And this came on the heels of Chouest affiliate Gulf Ship in Gulfport, Miss., which opened in 2006, falling way short of employment projections. Gulf Ship had even laid off employees a week before the Top Ship deal was announced.
Two months later, the Harrison County Board of Supervisors asked the county attorney if it could rescind the tax breaks citing incomplete information at the time members signed the memorandum of understanding approving the deal. The SunHerald reported that when the supervisors voted to approve the memorandum at a meeting in February, they didn’t have a copy of the completed document in front of them.
What, are you kidding me? Why approve it then … geez.
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