Mon August 6, 2012
BRAC CEO Calls Shaw Buyout a Good Deal For Baton Rouge
One week ago today, the Shaw Group announced it agreed to be acquired by Chicago Bridge and Iron.
News of the buy-out sent a shock wave through the local business community.
Adam Knapp is President and CEO of the Baton Rouge Area Chamber, which handles economic development for the city-parish. He says there's always reason for concern when a major company decides to sell, but he thinks this deal will ultimately be good for Baton Rouge.
So WRKF's Ashley Westerman asked him: What goes into keeping both Shaw and its likely new parent company, CB&I, happy.
KNAPP: The immediate response is similar to when you find a prospect opportunity. You want to immediately engage to understand what the opportunity is when a prospect is looking at the Baton Rouge area and when there is a situation of a major transition, you want to do exactly the same thing. You want to understand what the status of the company is, what their competitive position is as a firm in your community and nationally or globally and then you want to try to engage them to understand their business, especially the local decision makers that are in your community, and then to understand, in the case of CB&I, to really understand their business as quickly as possible. And if you can try to put yourself in their shoes, what's the value add of the acquisition for CB&I and looking at the Shaw Group so that you can position the opportunities for the Baton Rouge area within their framework.
WESTERMAN: Okay. And bringing this down to a personal level, how is this expected to affect those that work at Shaw now here in Baton Rouge. I guess you can think of it as: What piece of the Shaw employee pie is going to be affected?
KNAPP: You know that's a question best for someone from the Shaw Group or CB&I and I would hate to try to say something about how they're going to be, you know, on a daily life affected or what positions are affected.
The company has said that they don't expect to many any changes in the Baton Rouge team at any point in the near future. So as far as we know, life is relatively normal at the Shaw Group in terms of existing positions and what is there. I'm sure there will be a process of review as the two companies get to know each other. There's always a lengthy period, of sort of two corporations that are coming together understanding their two cultures together and what divisions add value to other divisions. And while that is happening, I think we're also as a state and a nation going through a surge in activity in the sector that these two companies operate in. There's a huge boom of activity in energy-related engineering construction work all around the US and especially along the gulf coast and in Louisiana. And we are not immune to that and so what's going on, I think, is during this period of change you also have an immense amount of growth that can be happening and will be happening within the Shaw Group and so we think that growth will continue to occur within these divisions and probably one of the most important things we want to make sure is that they are continuing to be aggressive even during this period of transition.
WESTERMAN: Okay. And this deal isn't final yet but if it goes through, how do you think the economy of the city of Baton Rouge will be affected? If at all?
KNAPP: That's a great question. I think that is the magic question; the $64,000 question. I think, our expectation is that there will be upside for the Baton Rouge area in this transition in terms of direct economic impact. The existing teams within Shaw that are managed and directed out of the corporate headquarters on Essen Lane as well as the fabrication and manufacturing units that have facilities in the Baton Rouge area, those are very, very important and profitable lines within the company and we expect the opportunity for growth within those divisions is significant.
And when we look at the Baton Rouge economy we know that one of our incredible strengths is the depth of workforce talent we have in the engineering sector. We have a higher percentage of our economy that are made up of engineers, trained engineers than most economies per capita similar to us. We have a great advantage in the Baton Rouge area that gives us a great sense of confidence in looking at this deal is we think it's abundantly obvious that CB&I in value in why the Shaw Group was grown here and based here in the first place is something they don't want to let go.
Where there is potential and hard-to-measure downside is that loss of that designation of owning a Fortune 500 company out, you know, of a presence in the Baton Rouge area. And I think that's almost impossible to measure yet and so that's something you see in time. But from direct economic impact, our goal is to grow it and our expectation is that there's a great opportunity to grow the presence here.
WESTERMAN: Well, Adam Knapp, President and CEO of the Baton Rouge Area Chamber, thank you for coming in today.
KNAPP: Thank you for having me.