“Project U” Makes a U-turn for Alexandria, Louisiana

The Bayou State beats out 11 others to attract Union Tank Car

By Charles Dexter Ward

Like many parts of the rural South, Central Louisiana grew up with strong ties to agriculture. Even today, farmers continue to cultivate cotton and soybeans around quiet towns whose open spaces and affordable housing are as attractive as the surrounding natural beauty.

Central Louisiana also shares something else with other parts of the rural South-- continued industrial growth. CLECO, Procter and Gamble, Plastipak, Calvary Industries, International Paper, and StarTek are a few of the corporations with large facilities in the area. As of July 2004, add Union Tank Car (UTLX).

UTLX is the largest tank car lessor in North America and one of the largest railcar manufacturers in the U.S, with a 110-year history. Originally owned by Standard Oil, and now a part of The Marmon Group of companies, this leading designer, builder, and manufacturer of specialized railcars operates manufacturing facilities in East Chicago, Indiana and Sheldon, Texas. In addition, the company owns a North American network of repair, lining, and On-Site® repair locations.

In a Memorandum of Understanding signed with the state of Louisiana in summer 2004, UTLX said it intends to build a new $100 million manufacturing facility near Alexandria, creating some 850 new jobs.

“Union Tank Car's market-leading combination of product quality and personalized service has spurred demand for both new and existing cars,” said Frank Lester, company president. “As the economy continues to improve, customer demand will require us to build even more.”

The agreement marks the largest construction of a new Greenfield site in Louisiana in well over a decade. With the initial groundbreaking in fall 2004, hiring of both hourly and salaried employees is expected to begin midway into 2005. The new plant is expected to be operational in 2006, with the capacity to produce up to 70 tank cars per week.

Company representatives visited 10 Louisiana cities in mid-April 2004, all along the interstate corridors before narrowing their choices to two locations. Lester said he was drawn to Alexandria because of a synergy between the site and the community. UTLX was looking for an area with a vocational and technical school and where construction suppliers are plentiful.

“Union Tank Car looked seriously at expanding capacity at our other plants,” noted Lester. “But, in the end, Alexandria provided the ideal location, with rail access, highway access, a great full-service business park, and a business-friendly community. It will make an excellent long-term addition to the UTLX manufacturing infrastructure.”

Alexandria is the crossroads of four major state highways as well as recently completed I-49 and two railroads. Plans finalized with the Louisiana Department of Economic Development situate the new plant on a 140-plus acre site mostly covered with cotton plants. It's adjacent to the England Industrial Air Park and Community in Rapides Parish. UP rail service and utilities are already at the property line.

With annual salaries averaging about $36,000 and the potential for creation and growth of secondary companies to serve the plant, state and local officials characterized the announcement as the area's best economic development news in decades. "I don't know whether to sing, shout or break dance," Central Louisiana Chamber of Commerce President Johnie Varnado said.

A dogged pursuit by Louisiana

Led by the Governor, Louisiana built a comprehensive incentive and infrastructure package to develop a long-term environment for UTLX and their supplier companies to thrive. The state also promoted the infrastructure benefits of Central Louisiana and the convergence of water, road and rail transportation. Louisiana's proposal also emphasized web-based platforms to create an integrated supply chain network, respond to community inquiries and pre-screen job applicants.

“We've been working closely with UTLX and their consultants since September (2003) when the State received a letter from the consultants and we immediately responded,” said Von Hatley, director of Durable Goods Cluster Development with Louisiana Economic Development. “Our offer was competitive, but our workforce and infrastructure were critical to the company's decision to choose Louisiana.”

Newspapers characterized the decision as a “shot in the arm” for Louisiana, which has seen thousands of jobs leave the state over the past seven years, many of them to Texas.

Governor Kathleen Babineaux Blanco, calling Louisiana “the Little Engine That Could,” said the Union Tank Car announcement proves her contentions that Louisiana “means business, that we're open for business and we are going to do business. We thought we had lost this project to Texas, but we never gave up. We were ready to turn the project around once negotiations with Texas ceased.”

Hundreds of people turned out at the England Airpark Community Center for the announcement. "We need something to keep people here," local newspapers reported one local resident said. "My son and my daughter, they both live out of town because they can't get good paying jobs here."

The new UTLX facility will be a boon in terms of diversifying the economy of the Alexandria-Pineville area, where the plant is to be located. Simply put, the “numbers” associated with it are not often seen in rural areas of Louisiana.

Research by Louisiana State University economists M. Dek Terrell and Loren Scott, which included the entire economic impact of the plant on the region, found that the project's construction phase would result in $212.8 million in business sales and $68.9 million in household earnings for 2,300 workers. This phase will generate $3.9 million in tax revenue for the state.

Once up and running, the plant will support 2,015 jobs according to the economists, including economic activity spurred by the plant. An estimated $3.6 million in tax revenue will be generated annually.

Scott said Alexandria could use the UTLX jobs and economic benefits. “It's hard for the area to be anything more than a regional retail center,” he said. “This is going to take them up a notch, that's the most important thing.”