Oil and gas and healthcare have been the two industries most responsible for growing Lafayette’s economy over the last 50 years. But if we’re going to keep growing over the next 50 years, we need new industries.
We have the tools at our disposal to make this happen — if we set our minds to it.
Oil and gas and healthcare aren’t going anywhere. Together they employ more than 40,000 people in the Lafayette area. But neither industry holds much growth potential unless something changes.
Oil and gas jobs have collapsed, falling from 23,000 in 2014 to 10,000 today, while the industry’s output crashed from $2.6 billion to less than $700 million over that same time period. Cheaper production has shifted away from Louisiana and dramatically reduced the manpower needed for drilling, likely permanently shrinking Lafayette’s piece of the industry.
And it’s unlikely any of these dynamics will change.The world is stumbling into a recession, which should continue to suppress demand for oil. While there’s been talk of Louisiana’s energy industry going green, there hasn’t been much action. Lafayette is being left behind in the green revolution.
Healthcare is now Lafayette’s largest sector, growing to employ more than 30,000 people after steady growth over the last few decades. But that growth has flatlined recently, hovering around 31,000 over the last four years.
Slowing growth isn’t surprising. It’s reflective of a mature industry. Lafayette already dominates regional healthcare. The big three national healthcare companies headquartered here are market leaders rather than up-and-comers and are therefore more likely to grow incrementally, not exponentially. While the healthcare industry isn’t as volatile as oil and gas, it also can’t be counted on to be a big generator of new jobs. That is, unless there’s a significant uptick in high-growth healthcare startups forming in Lafayette. But gains in that arena have been modest in recent years.
In other words, Lafayette can’t count on the industries that have powered its growth in the past. Instead, we need new industries, new companies, and new investments.
For most communities our size, pivoting could be an insurmountable challenge. Losing more than half the jobs and almost three quarters the output of one of your largest industries would simply be too much to overcome.
But Lafayette is standing on a surprisingly strong foundation. We have a variety of tools at our disposal so long as we embrace the future and don’t waste too much time trying to hold onto the past.
Perhaps the biggest reservoir of potential economic growth is UL’s research enterprise. Earlier this year, UL was recognized as an R1 research university by the Carnegie Classification of Institutions of Higher Educations. This places UL among the top 3% of research institutions in the country. Over the last five years, incoming funding for UL research more than doubled from $80 million in 2016 to $164 million in 2020.
Therein lies tremendous economic potential. Not only does it represent a significant amount of money flowing into our economy, but the innovations it supports are where the real upside lies. UL’s research labs are exploring ideas that could seed new companies across a variety of industries, including green energy, cybersecurity, data visualization, and advanced materials manufacturing.
While historically UL’s technology transfer successes have been modest, strengthening the connection between university research and local economic development is a top priority for UL VP of Research, Innovation and Economic Development Ramesh Kolluru. If Lafayette is looking for opportunities to get our economy growing again into the future, UL’s research enterprise offers some of the best potential to accomplish that.
Efforts to foster high-growth-potential startups, which are the most direct way to grow a local economy, are another asset in Lafayette’s toolbox. Lafayette has made progress through the efforts of LEDA’s small business accelerator the Opportunity Machine and the Acadiana Angels, a local angel investing network. These have helped foster companies like Something Borrowed Blooms, which was recently named one of the fastest-growing companies in the Southeast.
But there’s still a lot of untapped potential here, both in terms of encouraging local startup capital formation and nurturing the next generation of entrepreneurs.
A couple years ago, UL economist Gary Wagner observed to me that the reason Seattle became Seattle was because Jeff Bezos and Bill Gates happened to live there. That suggests that the most impactful economic development efforts should center around fostering young entrepreneurs with the ability to realize outsized returns for our local economy.
While there have been small-scale efforts to do just that, like UL’s Accelerate Northside incubator program, there’s more out there we could potentially unlock by investing in our own people.
And it’s not just about encouraging local investors to invest in local entrepreneurs. If Lafayette could position itself as the kind of community that attracts outside investors, then we’d no longer be limited to just the resources available in our backyard.
I’d hoped that Waitr was going to be the vanguard of this movement. Many of its initial investors are from South Louisiana, but it also attracted outside funding and looked to be on track to redefining what was possible for local startups. Waitr’s fall from grace is disappointing, but it nevertheless demonstrates what’s possible.
As a hub of entrepreneurial innovation, Lafayette has a great story to tell: We fostered an innovative oil and gas industry alongside an innovative healthcare industry. We offer a truly unique quality of life that few other communities our size can match. We can operate at the speed of trust and achieve through collective action what many communities only dream of.
No doubt, Lafayette is facing incredibly challenging economic headwinds. But I’m still bullish about what our community’s future can be — so long as we don’t fixate on the past.