Louisiana Can Learn from State Farm Departure, Says Governor Kathleen Blanco

BATON ROUGE - Gov. Kathleen Blanco will travel to Monroe to meet with community leaders about coping with the loss of State Farm Insurance, Northeast Louisiana's largest private employer.

Blanco also intends to probe State Farm executives as to why they decided to close the offices there.

Big companies come and go with offices.... I wonder if State Farm has recently had an upper level mgmt change.... Sometimes things like this occur afterwards just so they can boast of doing something..... hopefully save a few bucks and look good to the BOD.

State Farm to close in Monroe
By DEE TUBBS and LYDIA TILBURY HAIR, Enterprise Staff
Morehouse Parish up to 100 residents who will be affected by the shutdown of the State Farm Insurance Co. office in Monroe which was announced Wednesday afternoon.
When contacted about the closing, one localemployee, who asked to remain anonymous, stated that she was "devastated". She has worked for State Farm for 25 years and that is all she knows she knows she said. Other employees living in Bastrop declined comment, referring the Enterprise to the State Farm media office.
"Even though we are an outside city to Monroe our economy will suffer. There are 80 to 100 people that work at State Farm and maybe make an average of $40,000 annual salary. That is $4 million that is put into our economy," said Shonnie Hall executive administrator with the Bastrop/Morehouse Chamber of Commerce. "That is crucial to us. Then to think about the older people that left straight out of high school to work there with no college background. They are going to suffer. I just wish they had taken up the governor's offer, but they did not want to get in a battle with states. My heart goes out to all employees from Bastrop and Monroe because it's going to be hard to find jobs."
"It is devastating to the northeast area," said Rep. Charles McDonald (D-Bastrop) "We have employees from Morehouse, Richland, Union, and of course Ouachita, all around the northeast area. These are high paying jobs and the benefits are very good. There is $50 million payroll lost to the community. That will be devastating.
"The governor has indicated she will come to the area, it will probably be tomorrow. I expect there will be a response from her. The wheels are already working. I am working and the other legislators are working, we are going to do our best to recruit another company in the 18 months we have before State Farm shuts down.
"The important thing to know is it is a big blow. The governor has indicated that she will have a team working on it immediately. I don't know if she can get a company that will employ that number but she will certainly do what she can do facilitate that."
Senator Robert Barham (District 33) agreed with McDonald.
"The loss of State Farm is a loss not only for Monroe but for Morehouse Parish and a loss for Louisiana. When you lose an employer that provides 11,000 jobs and puts $50 million into an economy that is certainly not a wealthy part of Louisiana it is certainly a tremendous blow.
"Where do we go from here? The indicators are that Louisiana is not competitive with other states. In my mind, because we have not kept pace with providing a pro business environment. Our tort reform has helped but our tax policy is not a good one. But we are trying to make changes that make it a climate that a business friendly one."
Richard Patrick, executive director of Morehouse Parish Economic Corporation, stated "The economic impact resonates throughout northeast Louisiana, not just Ouachita Parish. I haven't yet evaluated the economic impact to Morehouse Parish, but it will be significant." Patrick also stated that Blanco (Gov. Kathleen Blanco) and our representatives are looking at ways to assist those people who are employed at State Farm.
"This is a wake up call for Morehouse Parish and gives increased opportunities to the implementing of projects like the Plum Lake Development and underscores the necessity of our community working together to advance economic development in the parish." Patrick concluded.
Bastrop Mayor Clarence Hawkins stressed the importance of bringing new business to the area and expressed sympathy for those who will lose their jobs.
"I know a significant number of people from Bastrop and Morehouse work there and it is really devastating news" said Hawkins. "We were hoping that the offers made by the state and the City of Monroe would be enough to get them to stay but it didn't work. It just encourages us to redouble our efforts to encourage industry to expand and come into our area.
"Our heart goes out for the individuals who are losing their jobs. I know some will be made offers to relocate to other areas. We hate to think that they would have to relocate. They have roots here and family here.
"We have to redouble our efforts to entice new industry here. And we have to be prepared. We are getting close to getting the Ditto building back in our hands and have some plans for it. But we have to treasure our business and we have to do everything we can to make it comfortable for them. And we want to do anything we can to help those who are losing their jobs with retraining and such."
State Farm, one of the largest employers in northeastern Louisiana, will close its major administrative operations in Monroe by the fall of 2005.
The Monroe operations center and a related claims office, also slated for closure, have 1,086 employees and a $50 million annual payroll. The operations center performs such functions as billing and communications.
Company officials did not estimate Wednesday how many jobs would be lost, Blanco said she was told at least 400 employees would be offered transfers. State Farm said it would maintain a smaller operational field office in Monroe, though it was not known how many that office would employ.
"It's certainly an unfortunate decision, and I certainly share the disappointment of the people in northeast Louisiana," Blanco said at an afternoon news conference in Baton Rouge
However, a company official said in Tulsa that two operations centers in its central district -- in Tulsa and Columbia, Mo. -- could add as many as 600 jobs through consolidation.
The closure came in spite of Blanco's last-minute effort to save the center, offering State Farm a $33 million, 10-year incentive plan on Jan. 6 to keep the office open.
"I do believe we as a state did everything humanly possible," Blanco said, flanked by state officials expressing their disappointment in the decision.
At the time Blanco made the offer, State Farm officials, based in Bloomington, Ill., said the company was reviewing its offices in the three states on internal efficiencies, not on which state offers the most money.
In making the Monroe announcement, company spokesman Gary Stephenson said those not staying with the company will be given either early retirement or severance packages. Blanco said it would be two months before the first wave of job losses and transfers began.
Stephenson also said the 20 State Farm claims offices in Louisiana would be consolidated into 12 over the next 18 to 24 months. He said it had not been determined how many jobs would be lost in that shuffle.
State Farm will close two claims centers in New Orleans and one each in Bossier City, Houma, Lafayette, Lake Charles, Leesville and Mandeville, Stephenson said. Remaining open will be four in Baton Rouge, three in New Orleans and one each in Lafayette, Lake Charles, Monroe, Shreveport and Alexandria.
It will take until 2006 to finish closing the eight claim centers, he said.
The Monroe operations center, which employs 756, opened in 1968. The claims office, which employs 330 and processes auto and homeowner claims, opened in January 2000.
State Farm claims 36 percent of the auto insurance market in Louisiana and 34 percent of the homeowners insurance market.
In Tulsa, State Farm officials said as many as 250 jobs would be added to that office over the next 19 months. Steve Short, State Farm's vice president of operations, said the decision was based on which of the centers could provide the most cost savings and best service to customers.
Columbia could add as many as 350 jobs in the restructuring, Short said.
"We have impacted, and in some cases devastated, hundreds of lives in Monroe," Short said. "This is very difficult for State Farm."
The governor applauded the efforts of Monroe officials who worked on ways to keep the State Farm facilities open. She said she would continue to work on new business projects in the region.
Blanco said she planned to travel to Monroe in the next few days with Insurance Commissioner Robert Wooley, Economic Development Secretary Don Hutchinson and others to meet with local leaders about the impact of the closures.
Hutchinson said he plans to meet with State Farm officials to discuss the possibilities for the facilities that will be left behind and how to quickly begin marketing those to other companies.
"While I am disappointed, I am not disappointed to the point that I think we cannot recover," said state Sen. C.D. Jones, D-Monroe.
The Associated Press also contributed to this story.

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