Louisiana: The State We're In; 615

You Funding for the production of Louisiana, the state we're in, is provided in part by the Ziegler Foundation of Jennings, Gulf state utilities helping Louisiana bridge the gap to our energy future, and the Kaiser Aluminum and Chemical Corporation. Good evening, I'm Beth George, welcome to this edition of Louisiana, the state we're

in. The holiday season is fast approaching, but for many Louisianaians, it's still a time to worry about future economic conditions in our state. This week we have three reports that may make things a little brighter in the new year. We begin with a program that is dedicated to pumping new money into the state by encouraging industrial and business expansion. We then look at Louisiana's only commuter airline that despite the slump in the national economy, it appears to be soaring, and finally we profile a retired judge who spends part of his holiday time selling Christmas trees. It's all part of a Quanas Club project that has been bringing the Christmas spirit year round to the Baton Rouge community. But first Robin Eckings brings us a report on what the state is doing to attract new industries and businesses in Louisiana. She has two stories, one involving a new small company in Monroe, and another concerning a long time brewery in New Orleans. Things like this have been turning up all too often in North Louisiana this year. Unemployment in Monroe in the surrounding area is well over 12%. You wouldn't think of it as the ideal climate for investing in a lifelong dream of a small

business of your own. But Tom Allen and Joe Machasek say the state helped uncover fertile ground for their plans. I'd like to think that we will be $100 million corporation 10 or 20 years down the line. I think that we are in an area in a business area where we can see this type of growth and development. For three quarters of a century, Dixie Beer in New Orleans has been shipping its special brews to all corners of Louisiana and a few other southern states. This year, the state's only remaining brewery almost celebrated its 75th anniversary by shutting down its production lines. But thanks to more than $3 million in tax breaks from the state over the next five years, Dixie plans to stay in the suds a good while longer. Let me make it very clear that Dixie is not going out of business. Dixie is celebrating its 75th anniversary this year, and we are getting ready to spend 75 more years of activity in the state of Louisiana.

Over the past two years, the economic complexion of Louisiana has been changing. As the activity of the oil rigs and gas pipelines that dot the state's landscape is slowed down, so has the structure it's supported. Slower economic times have also been tough on other labor-intensive Louisiana industries, hitting once reliable sources of employment in the rural and northern parts of the state. In 1981, the Louisiana legislature approved one of the first in a series of programs designed to soften the blow on areas suffering most. The Enterprise Zone Act was a new idea for Louisiana and for the United States, an innovation first explored in England as a way to revitalize declining industrial neighborhoods. The intent of the program is to offer tax inducements to businesses, either to expand if they exist and create more jobs, or to induce businesses to move into the state, relocate from other states, and hire more people.

We give tax breaks on sales taxes and the corporate income and corporate franchise taxes. Urban planner Paul Adams heads up Louisiana's enterprise-owned program. Louisiana is one of the first states to implement the plan. Adams has answered questions about the program for the Reagan administration. The president is hoping to get Congress to approve a federal enterprise-owned act. Basically, enterprise zones work through an agreement signed by government and private business, an agreement by government to lift some of the tax burden for a business that agrees to locate in a designated neighborhood. In Louisiana, not only the state, but the local government in his own, also must agree to tax breaks for the business. We look at the program as a joint venture between state government and local governments. It's not strictly a state program. Local governments must give up something else, they volunteer to relinquish sales taxes. And these are sales taxes on materials used in the construction of businesses, our machinery

and equipment used in the business. Louisiana has over 400 enterprise zones. 39 are found within the borders of washi-top parish, where unemployment insurance claims are among the highest in the state. Tom Allen and Joe Macchasek say the five-year tax break package they've received under the enterprise zone program was a large factor in their decision to strike out on their own in a zone just outside Monroe. Let me ask you, do you think you would have been able to get into business at this time without this help? Yes, whether what this will do is help us stay in business and it is times our, our rough, we're doing fine, we're very pleased with what we're doing. The enterprise zone will, it won't guarantee our success, we've got to become profitable, but it will assist us in a lot, it's nice to feel like somebody out there is on your team a little bit, it can be a little bit lonely at times.

Tom and Joe are hoping that Cal and chemicals will pass the million dollar sales mark in its first year. With the enterprise zone tax breaks, Tom Allen says the company could save $10,000 in state income taxes and an additional $1,000 in state and local sales taxes. With the fifth year production of $4 million in sales holds true, Allen says the company could save as much as $70,000 in state income taxes. While McAllen chemicals may put new blood into the state's economy with the supplies advice and the services it demands, it will not fill a bigger need, large scale employment. McAllen is mostly automated and is not expected to grow past 25 employees in the next five years. Washington Parish needs new jobs now more than ever, pressures from the slumping national economy have forced a local automotive parts plant to half its forces. A large paper company has also slipped into financial trouble and been forced to cut back. Over at City Hall, Mayor Bob Powell says two large manufacturing companies have received

the Green Light from City Council to get enterprise-owned tax breaks for new construction their planning. Should these businesses choose to build or expand in these areas how would it help the city of Monroe? Well they're both labor intensive enterprises and they certainly will stimulate the employment activity in our area and obviously that's one of the things that we're particularly concerned about, aside from the fact that the investment that they have in the community, the payroll, the participation that they do engage in has been an asset and certainly it should be an additional asset to the development of our area. Mayor Powell also says a major mall has shown interest in the enterprise-owned program and may generate new life in a retail area downtown that's been dying. One of the requirements of the enterprise-owned designation is that the local governing authority exempt the business from local sales tax. Is the loss of that revenue concern you?

Well not really because I think it's merely foregoing a rather small portion of the potential revenue that would accrue for years and years to come. In fact the projected figures on the mall as I recall would be something like $90 million a year to generate when it's established and once that is running I can assure you that that would more than offset these tax that would be lost in helping establish that business. Not only are state and local officials showing they're willing to deal with new corporate citizens in these tough times, the state is also showing it hasn't forgotten old friends who are down on their luck, a year that should have meant celebration almost meant disaster for the state's only surviving brewery, Dixie Bear arrived at its 75th anniversary in deep financial trouble. How business was good, sales were good and on the increase as they are right now, but the economic situation here at the brewery was not good at all.

The interest rate situation was a very tremendous drain on us, prices continued to increase and not fast enough to keep pace with the price that we sell our beer for and things were really looking tough. Any President Robert Erglings says his small operation was having trouble competing with major breweries with millions more to spend. Erglings went to the state and asked for tax exemptions under a new act approved by the legislature this year from Louisiana businesses in trouble. After filling out a 75 page application on the company's financial condition and future plans, intensive review by the state's commerce and industry board and a legislative committee and an on-site tour by the governor, Dixie Bear was granted over $3 million in tax breaks over the next five years. Even though the Industrial Assistance Act is new, this isn't the first time Dixie has received a break on the beer excise tax it's required to pay the state. Twice in the 1970s, the legislature agreed to exemptions on the per barrel of beer tax

amounting to over $1.5 million. We have learned how to do our own thing. We have learned how not to compete with the giant brewers. We are making the finest, most unique beer here at the brewery in the world and it's not a run-of-the-mill beer. It's not a beer that has to appeal to the national audience. It's a beer for New Orleans first and for the south second and it has a very unique flavor, a different flavor and you have to taste it to enjoy it but it is just a delicious beer all three of our products and then not the same as the other guys. It's an industry board chairman Jimmy Fitzmora says he doesn't expect to see the company

come back for more. I think what we all need to remember is that at one time we had many local breweries operating within the state of Louisiana and now we have one local brewery per se operating in the state of Louisiana. We discussed those facets with the Dixie Brewing Company people and I believe that this will be the vehicle that they need in order to get over that hump and hopefully that's going to be correct. You foresee the state having to allow many other industries, similar breaks to get by in these times? Well, I would hope that we wouldn't have to do it for anyone because that would mean that the economy would be on the upswing. I don't believe we can look into a crystal ball and try to predict what's going to happen. I would assume that there were other industries in the state who are having problems of a similar nature and meet the requirements of the act that certainly we would give them the same kind of assistance. I don't see a great number of companies qualifying under the rigid requirements of the Assistant Act.

So for now, employees at Dixie Beer can look forward to a paycheck and troubled state and local officials will keep an eye out for more positive signs that businesses continuing to change and rearrange Louisiana's skyline. Commerce and Industry Board Chairman Fitzmora says it may be hard to believe, but this year was Louisiana's second best year ever for attracting new and expanded business with just under $3 billion in new construction plan. The trick now, says Fitzmora, says to see how well business weathers the economic storm with the shelter the state has offered. There's been a lot of talk lately about Louisiana having to diversify its industry, particularly with the fall off of the oil and gas industry. There's also a lot of increasing competition with the Sunbelt states for new industry. And do anticipate Louisiana having to give up a lot more to attract new industry. No, I think that we've gone just about as far as we can go. We have the finest program, but I don't think we can do any better. Well the airline industry has had some hard times in recent years. The bankruptcy of brand-if serving is the most dramatic example.

One of the industry's most profitable airlines, Delta, was started as a crop dusting outfit here in the early 1900s. But now while Louisiana commuter airline is about to become a member of the National Stock Exchange. Royal Airlines plans to make a public offering of its stock in January, which means they will now be expected to make a profit. And these lean economic times that may not be so easy, but his reporter David Young found, compared to what the company has been through to get off the ground, the skies may now be a lot friendlier. It started out as an idea out of the clear blue sky. I did what brought to me by a man who had been involved in Texas. In fact, we didn't know anything about it, and we thought it had some possibilities. We visited a couple of them, and so we decided to give it a try. And for 12 years since, Louisiana's once tiny commuter airline has struggled to get off the ground. The company's founder, DY Smith Jr., was not in the airline business when he was approached with the idea in 1969.

He was, however, no stranger to the airline business, as his father was coincidentally the first president of Delta Airlines. Smith says his wife came up with the Royal, with an E for the name, and the Flurd Elise for a symbol, and the commuter airline was born. Royal Airlines began flying on a shoestring budget to say the least, with 118 passenger aircraft in a small crew, Royal took off in 1969. The company struggled to get into the air. Yeah, more of a struggle than you can imagine. We, like most of them, like some of them, we lost money 44 straight months. We lost all the money that we had put in originally. And since 1970, there had been nine of them that have either come into Louisiana, started in Louisiana, and as long as anyone has lasted besides Royal was eight months. And that was recently, before that, the longest, anyone that survived was about three

months. Although Royal has survived, two ironic twists of fate are responsible for rescuing the state's commuter airline. While Royal had to share air service with the big airlines, and most of the state's boards, rising fuel prices forced airlines during the 1970s to reconsider running the short hops. In 1972, Texas International decided to pull out from Fort Polk, leaving only Royal. Another decision, this one by U.S. Army officials who needed more and more recruits to serve in the escalating Vietnam War, increased the air traffic into the base tremendously, as it became a major training center for troops. And of course, a big bonus for Royal. But success for Royal was not going to be so easy. About two years after the Vietnam War, they changed Fort Polk from a training base to a division home base.

And overnight, if we lost 95% of their business. Another incident, again involving Texas International, gave Royal its second chance. Smith says the airlines fortunes would drift into the point of oblivion, and something almost miraculous would occur to save it. In 1974, it was a strike that saved Royal. My father-in-law, who's 88 years old, was a banker, he used to look for an interest statement and say, how did you do it? How did you keep the thing open? I said, I don't know. Just luck. Again. happen. One time, Texas International went on strike that saved it. Saved by the strike? Yeah. Because they couldn't fly. They lose with people who normally would have been flying on their jets, and they had to fly on these little airplanes. But when Texas International did go back to work, Royal, and it's the layer planes, was grounded

again, with little or no civilian passenger market. But an expansion of their route system in a decision to put the small airline schedule on main flight computers around the country seemed to make the difference. This couple with less and less competition from the so-called big jets, because of rising fuel prices, and Royal was soon using 14 airplanes to land in four states, 12 cities, and finally above the bottom line. So while the fortunes of Royal Airlines are soaring in this state, Louisiana's commuter airline no longer seems content in servicing only Louisiana. With the acquisition of this G1 large aircraft, Royal officials now say the sky's a limit. The new plane was only recently delivered. It offers the conference of most jetliners, including headroom, a bathroom, and stewardest service. Airline officials were happy to hear a passenger remark after a flight that the new plane was almost like a real plane.

The new G1 was refitted for Royal in Canada, and it seats 24 passengers. With it, Royal officials hoped to test market the entire southeast. We have plans to go as far as we're able to go east in the southeast without competing with a trunk area. We don't try to compete with the big jets. We take somewhat what they don't want. About 80% of our business is going in and out of New Orleans. And about 80% of that is in a line. The people going beyond New Orleans, the people coming in from New Orleans, going to Lafayette Lake, Charles Alexander, the big boys bring them in there, they put them on us, we can't go home. That's the philosophy of the whole community. The truth is, Royal is known for its relatively small airplanes and not so small air fares. No doubt businessmen make up the lion's share of their business, who seem willing to pay the price for the added departure arrival convenience that a small in-state airline

can offer. Royal officials admit their rates are high, but they say it's the only way they can fly. Well, we can't operate with cheap rates. There's just no question about it. It's just so much an hour and we have found that cheap rates don't attract enough people that you put on there because when you cut the rates, you cut it for everybody aboard. Not that I wouldn't cut it. Number one, you got to advertise it if you do, and that's not cheap. When I would cut it, if I thought it would attract them, but every time we've done it for instance, we cut it from one time, from Monroe to Streetport to connect people that want to go to the DFW, I think it was $20, not one so. From Fort Polk to Streetport, we cut it to $20 and didn't hold two people a week. Why do you, why a commuter airline, why use royale? I don't have a choice.

I hate to say that, but I don't have a choice. I don't have a nation. It's the only one we have. Are you finding it convenient for a business man such as yourself? Well, I don't like a long drive. It's only four hours for my house in New Orleans, but I'd rather take the plane for 30 minutes to look. I just don't like long driving. I use the plane quite often. Royal Airlines now employs nearly 300 people throughout Louisiana. And due to its recent success, the company plans to sell about 300,000 of its shares of stock on the national exchange of the first of the year. So no longer will it be a private Louisiana corporation, but the trials and tribulations of taking it to its present altitude in the marketplace will not likely be forgotten by those who have seen the ups and downs of getting to the airline off the ground. When you consider that we concluded 98.6 percent of all our schedule flights for the entire 12 months of last year, 88 percent I believe on time. That's better than any trunk area or regional care in America.

So what began as an idea and investment of just a few hundred thousand dollars is now a 19 million dollar airline flying over 200,000 passengers a year. And after a slow start, Royal Airlines does at least found a brief pocket of smooth sailing over the busy southern skies. Well, I find our final story is about a seasonal business that pays dividends throughout the year. Just before Christmas each year, the members of the capital city Kiwanis Club and Baton Rouge go into the Christmas tree business in a big way. The profits are used to aid a variety of projects in the community from meals on wheels to 4-H key clubs in the special Olympics. This year, Robin Eckings visited with one of the men who helped spread this Christmas cheer. The 31 years Christmas trees have been big business for the capital city Coana's Club in Baton Rouge, funding a wide range of the group's community service projects.

Since 1946, we put about $400,000 back into the community. And for most of the last three decades, Linton Sarten has been on hand to watch the dollars come in and the trees go out. Up until four years ago, Sarten sandwiched his regulation of four-hour shifts spreading Christmas cheer between demands of a more somber task, sitting as a judge in Baton Rouge's family court and court of appeals. Although much of his time these days is sped with more relaxing retirement pastimes like visits with his grandchildren and duck hunting, the judge says he always makes sure his December docket includes time for some old-fashioned hard work at the Christmas tree stand. It puts you in the Christmas tree and really does. Things have changed a lot in the world of Christmas tree sales says Sarten. There's more competition from grocery stores and chain stores have recently gotten into the business and of course prices aren't anything what they used to be. The judge says trees

that used to go for as little as 50 cents are now bringing at least $25 or more, but something says Sarten seemed to never change. Do you think this looks all right? Yes, that looks good. Think your life goes in and back? Well, that's always a possibility, you know. It happens every year. The husband will come out to buy the tree and the wife will bring it back. It was either too fat or it was too skinny or it was too tall or it was too short or vice-versa. We had a fellow come out there at the bay. He bought them unwrapped. There's a total bonner up. You know, I said, well, you don't want to take a look at the tree. Unfolded, he said there. He said she's going to have to be ready back anyway. So he brought two of them in the ranch. Judge, they say that people a lot of times resemble their pets and they have special feelings for pets that they have that look strike a warm note in their hearts. Do people have

special feelings for trees? They'll very definitely do. They have generally their mind made up about the type of size tree they want. And because they know where they won't put it, you know, they're going to put in the corner. They're about one side of the tree. They're going to put it in the middle of the room. They want a round tree. So they generally have their own desires and needs in mind when they buy a tree. So even the misfit trees have a place somewhere? It's absolutely amazing. The misfit tree that I tree there would be totally unacceptable to you is just the tree for someone to put in a particular place. Tired now or one? Or a fat skinny one, you know? And we've got all sizes and shapes here, so. Capital City Kiwanis Vice President Mark Rennerson says his club plans to continue the Christmas tree tradition. It's been encouraged, he says, by a growing trend of younger customers in search

of an old-fashioned Christmas. Christmas no manufacturer tree can provide. Judge Sartan says he's beginning to see many of the children of his old customers return with children of their own. How long do you intend to keep on doing this, selling the Christmas tree? Oh, I'm going to do it as long as I can physically do it. I'm not the cashier stage yet, you know, some of the older members of the club who can't pick up a Christmas tree, come out and put their time in cashiering. But you see, I'm not that old. I'm one of the younger, active members in the club. So when the time comes or I can't pick up a tree, then I'll go to cashier. With that story, it doesn't put you in a proper holiday spirit. We hope next week's program will do so. We'll be back on the state we're in with a look at Christmas celebrations around the state. Until then, I'm Beth George. Good night. Funding for the production of Louisiana, the state we're in is provided in part by

the Ziegler Foundation of Jennings. Gulf state utilities helping Louisiana bridge the gap to our energy future and the Kaiser aluminum and chemical corporation.