GULFPORT -- The state expects a net gain in revenue of $65.6 million by 2025 from Topship LLC, an Edison Chouest Offshore subsidiary that hopes to start construction of a shipyard in 18 months at the state's inland port on Seaway Road, a state economist estimates.
"We know we'll do shipbuilding," Edison Chouest CEO Gary Chouest said Monday. "It's just a matter of to what extent. But the property itself is large enough to support many other facets of the offshore (energy) industry besides shipbuilding, and that's one of the reasons we selected to invest there."
Chouest, Gov. Phil Bryant, Lt. Gov. Tate Reeves, U.S. Sen. Roger Wicker, U.S. Rep. Steven Palazzo and a host of other elected leaders gathered on the top floor of Hancock Bank, overlooking the state port, to celebrate the Topship deal. The company plans to invest $68 million at the inland port, creating 1,000 jobs with an average salary of $40,000, minus benefits. The state is kicking in $11 million, while the state port will spend $25 million to help fund the project.
"The project actually breaks even almost immediately," said Bob Neal, senior economist with the University Research Center. The state's annual cost for the $11 million it is borrowing is estimated at $704,000, he said, while construction at Topship should bring in $600,000 in its first year.
Neal's extended projections are based on 700 jobs at Topship by 2020 and 1,000 jobs by 2022. By 2020, he said, Topship and affiliated companies, including the goods and services they consume, should generate $7.6 million a year for the state.
His cost-benefit analysis does not take into account the $32 million the port spent on the Topship property, which the company is repaying through its lease. It also does not include the $25 million the port is kicking in from federal funds.
Neal did not factor in revenue the state has agreed to forego, he said, because it does not exist without the deal.
The state Legislature has agreed on the following incentives and breaks for
-- A 10-year exemption from state and corporate income taxes.
-- A payment of no more than $25,000 a year for 10 years instead of state franchise taxes.
-- A sales-tax exemption on equipment installed during the initial build-out.
-- A 10-year exemption on real and personal property taxes.
-- A rebate on 90 percent of employee income taxes withheld as long as employment goals are met.
Topship will start construction in about 18 months, Chouest said, when plans for the 116 acres of state property are finalized. A center to preserve expensive spare parts for deepwater energy exploration, staging areas for deepwater projects, and subsea construction, repairs and maintenance also are potential activities on the land, he said.
Recreational yacht building is another possibility. A Chouest company already builds yachts in Washington State, Chouest said, and he knows workers on the Coast have that skill set.
Chouest said he does not know when the goal of 1,000 workers will be reached. Gov. Bryant is anxious to see Topship hit the number.
The state port pledged to create 1,300 permanent jobs in exchange for $570 million in federal recovery funds after Hurricane Katrina. Only 99 permanent jobs had been created through September, the last reporting period for which numbers were available. Most of the money is being spent on West Pier restoration and expansion at the port proper on U.S. 90. Bryant insisted five years ago on changes that accelerated the slow pace of design and construction.
Before the speeches started Monday, Bryant looked down at the West Pier, where buildings are finally starting to rise. Topship, he said, means the port will be able to meet its federal job requirements.
But Bryant and Chouest, who bonded over a love of hunting, don't intend to stop there.
Chouest, whose family-owned global maritime company is based in Louisiana, said the oil industry might be in a slump now, but he's looking 50 years down the road.
"What we execute today is laying the groundwork for when this industry turns around," he told a crowd of 200 or more gathered for the celebration. "We want to be in the position as a team to beat everybody else in the world."