Intentional Investment Helps NOLA Bioscience Cluster Take Shape

Written by Amanda Maher

It’s been almost a decade since Hurricane Katrina devastated the Gulf region. Since then, the New Orleans area has shown promising signs of turnaround. The population continues to increase. As of 2013, it had recovered all recession-era job losses. Sales tax revenues from January to May 2014 are 22% higher than the same months in 2005 before Katrina, despite a smaller population. And entrepreneurship continues to expand, reaching 500+ business startups per 100,000 adults – a rate that exceeds the nation by 56%.

Yet the clusters that have traditionally driven the New Orleans economy, namely, Oil Refining and Manufacturing, continue to show losses. In order to diversify and grow the economy, The New Orleans Business Alliance commissioned ICIC to perform a cluster analysis to inform the City’s economic development strategic plan, ProsperityNOLA.  From this analysis, five clusters with the greatest potential to generate quality jobs and impact the city’s competitiveness were selected: Advanced Manufacturing; Transportation, Trade and Logistics; Creative Digital Media; Sustainable Industries; and BioInnovation and Health Services. In particular, New Orleans was well positioned to capitalize on the small, but growing, BioInnovation and Health Services cluster through strategic investments in capital, infrastructure, and entrepreneurial support.

More important than the actual analysis is that New Orleans’ policymakers and business leaders set out almost immediately to grow this cluster.

Spearheaded by the New Orleans Business Alliance, the City is in the process of developing a BioDistrict, an area that encompasses 1,500 acres between Downtown and Mid-City. New Orleans is already home to cutting edge universities and hospitals, and will only add to their portfolio once the $1.1 billion University Medical Center opens in May 2015, and the $995 million Veterans Affair hospital opens in 2016—both of which are being built in Mid-City. Local economic developers believe these hospitals will serve as a catalyst for future growth.

And local investors are banking on it, too.

Earlier this month, JPMorgan Chase announced $500,000 in support for New Orleans bioscience cluster in an effort to spark inner city job and business creation as follows:

• The BioInnovation Center, a life science business incubator, will receive $200,000 in order to grow its programs and lab space;
• The New Orleans Business Alliance was awarded $150,000 to continue its development of the BioDistrict;
• The Good Work Network will receive $100,000 specifically to link women- and minority-owned businesses to opportunities in the biosciences; and
• The Idea Village, an entrepreneur network, will receive the remaining $50,000 to support its annual programs and events.

On November 6th, Kim Zeuli, ICIC Senior Vice President and Director of Research was in New Orleans to present at JPMorgan Chase’s event, Boosting Small Business Growth in Health and BioInnovation in New Orleans, on the ways in which strategically investing in the BioInnovation and Health Services cluster can contribute to a vibrant, sustainable New Orleans economy (full presentation here). For instance, while some often view the life science industry as one that is unattainable to inner city residents, the reality is that there are myriad job opportunities across its sub-clusters: Health Manufacturing; Hospitals; Health Services Support; Other Health Services; and Health Care Providers. Moreover, the healthcare industry is the fastest growing in the United States and two-thirds of the jobs require an Associate’s Degree or less.

While New Orleans has made impressive gains to grow its bioscience industry, it’s important to ensure that as the cluster grows, these economic benefits reach inner city residents. ICIC research finds that from 2003 to 2012, new job growth in New Orleans’ BioInnovation and Health Service cluster has increased 7.5% (8,418 new jobs) versus only 1.5% (704 new jobs) in inner city New Orleans.

One way to ensure that cluster growth leads to opportunities for inner city residents is by intentionally connecting small businesses to opportunities within the growth cluster. In a recent report commissioned by JPMorgan Chase Foundation, ICIC finds that startups experience stronger growth when tied to growth clusters; this positive impact is amplified by aligning small business development with the cluster’s own growth strategies. Cities are increasingly turning to business incubators to do so, as incubators typically offer startup companies affordable space, management education, technical assistance, access to capital and opportunities for networking—critical components in moving beyond the startup phase.

Moving forward, New Orleans’ policymakers should strive to identify cluster-specific gaps, particularly as it relates to attracting further investment from lenders and investors in the region. In doing so, New Orleans is poised to serve as a model for intentional cluster development. While many cities have clusters that spring up organically, few have made such impressive strides in growing a cluster where one stumbled to on its own.