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Katrina, Rita still roil business climate

Of the small Louisiana employers that weren't sunk by the hurricanes in 2005, many are still struggling, a study finds.

March 09, 2007|Ann M. Simmons | Times Staff Writer

NEW ORLEANS — Businesses in the parishes that bore the brunt of hurricanes Katrina and Rita have made a slight rebound, but a significant number went under and many are "hanging by a thread," according a report issued Thursday.

"It shows that the effects of the hurricanes were every bit as devastating to small businesses as we have anecdotally heard," said Andy Kopplin, executive director of the Louisiana Recovery Authority.

The report was prepared by the Division of Economic Development at Louisiana State University's E.J. Ourso College of Business and covers fall 2005, when the hurricanes hit, through the middle of 2006. The initial data were drawn from figures submitted to the Louisiana Department of Labor, which requires companies to make quarterly reports on employment and wages.

The report suggests that the second quarter of 2006 was a turning point for many businesses, signaling that "the worst is behind us," said Dek Terrell, a Louisiana State University professor who cowrote the study.

But Terrell cautioned that the recovery was "pretty modest" and many Louisiana businesses would need long-term support for stability. "They're back, they're open, but they're struggling to keep up," Terrell said.

In Orleans Parish, where New Orleans is, nearly 3,400 -- or 35% -- of businesses closed after the storm, and the number of businesses remains below pre-hurricane levels.

The failures were highest among small businesses, where 42.4% of companies that had up to five employees before the storm had closed by summer 2006.

The retail, healthcare and social-assistance sectors in Orleans Parish lost more than 40% of their employers.

The largest net loss of employers occurred in neighboring St. Bernard Parish, where 59% of businesses had closed by the first quarter of 2006.

The construction industry was a bright spot, the strongest sector of employment across Louisiana.

The report's researchers said they continued to analyze data gathered through telephone surveys of employers in the affected parishes.

The Louisiana Recovery Authority has allocated $350 million to help with business recovery.

New Orleans officials did not return calls for comment on the study, but on Wednesday the mayor's office released figures indicating New Orleans was "experiencing a strong financial recovery."

Based on November 2006 figures from the city finance authority, the eight-parish New Orleans metropolitan area has regained 65,000 jobs, 15,000 of them in Orleans Parish.

Unemployment in New Orleans decreased from an 8.9% rate in the months immediately after Katrina to a 5.5% rate in November 2006, and wages climbed by $10,000 annually in New Orleans, according to the city's statistics.

"Although we have a long way to go before we will be back to normal, news such as this certainly helps to sustain our optimism," New Orleans Mayor C. Ray Nagin said in a statement.

ann.simmons@latimes.com

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