BATON ROUGE, La. — Today, Louisiana Economic Development and IBM announced new contractual terms for the company’s Client Innovation Center in Baton Rouge, with IBM securing two additional years to reach full employment of 800, and the company extending its contractual commitment to the State of Louisiana from 12 years to 14 years. Originally estimated at $1.9 billion, the project’s total economic impact in Louisiana during the CEA period is expected to increase with the two-year extension.
“The presence of IBM in Louisiana has been a transformative boon for economic growth and investment in our state, showing that Louisiana is a great place for competitive industries to thrive,” said Gov. John Bel Edwards. “Today’s announcement means that IBM is doubling down on their commitment to the Baton Rouge area by agreeing to expand their time in the city by at least another two years and by promising a full 800 jobs and at no additional cost to the state. Their willingness to agree to increased penalties should they fail to hit the agreed-upon job creation targets demonstrates that they are investing further in the community as a good faith partner.”
IBM continues to expand in Louisiana and anticipates announcing an additional project in Baton Rouge with the creation of a new customer contact center. IBM anticipates the project will create several hundred new employment opportunities in Baton Rouge that will be in addition to its commitment to create 800 jobs at its Client Innovation Center. Preparations for the new contact center will begin with recruiting activities in 2019.
“I am pleased to hear that IBM and the state have agreed to extend IBM’s commitment here in the capital city,” said Baton Rouge Mayor-President Sharon Weston Broome. “This is a great investment in our economic development and people in our community. It is also another testament that Baton Rouge is a leader in the tech industry. I look forward to the progress outlined in the agreement.”
IBM and the state of Louisiana entered into a Cooperative Endeavor Agreement (CEA) in 2013 that required the company to create 800 jobs by the end of its fourth contract year on June 30, 2017. This is the first project year the company has not met its payroll obligations to the State of Louisiana. In an effort to reaffirm its commitment to the State of Louisiana, IBM has negotiated the following terms with LED that will be part of an amended CEA:
- The State of Louisiana will extend the deadline for IBM to reach employment of 800 full-time-equivalent jobs from 2017 to 2019, with the company committing to maintain that employment until the end of the CEA period.
- IBM will be required to pay a nonperformance penalty of $10,000 for each job below the 800-job threshold should they fall short of the target number by the 2019 project year, a penalty more than 1.5 times the penalty under the original CEA.
- If IBM meets the 800-job threshold by the 2019 project year, IBM will be allowed to repurpose $3.3 million in remaining qualified labor grant funds for training programs to support the additional job growth in subsequent years.
“Through a thoughtful and deliberate process, we have worked out contractual terms that respect the interests of both the State of Louisiana and IBM in this landmark project,” LED Secretary Don Pierson said. “Attracting IBM to develop Client Innovations Centers in Baton Rouge and Monroe, while also expanding its employment in other parts of the state, has helped land Louisiana on the technology map as a major player in the delivery of software and IT services. We now have global technology employers investing across our state, with multiple higher education initiatives funding the expansion of computer and STEM-related degree opportunities in Louisiana. We’re pleased that we’ve negotiated a successful path for extending IBM’s commitment to Baton Rouge, as we help generate additional career opportunities with the company statewide.”
“IBM values our partnership with the State of Louisiana, and we are pleased to expand our commitment to its economy and workforce,” said Christine Alford, General Manager of IBM’s North American Client Innovation Centers. “We thank Governor Edwards, Secretary Pierson and Mayor Weston Broome for their support of this renewed agreement, and for enabling IBM to continue making positive contributions to the Baton Rouge community.”