Analysis Says Formosa Plastics Plant Is “Financially Risky” Yet St. James


Photo Courtesy of Protect Our Parish

St. James Parish is fed up with its council. 

Residents have spent years telling the council that the Formosa Plastics development will only bring sickness and death to St. James, doubling the Parish’s toxic air emissions

They’ve revealed to the council lie after lie that Formosa Plastics told to duplicitously gain land-use approval.

And now they’ve presented the council with evidence that shows that the Formosa Plastics development is financially risky for taxpayers and will likely result in jobs being lost. 

Yet, the St. James Parish Council continues to side with Formosa. 

“Why is the St. James Parish Council putting our hard-earned tax dollars at risk?” questioned Sharon Lavigne, the president and founder of RISE St. James. “Why do they keep making the same bad bets on risky companies with no future?”

In a report from the Institute for Energy Economics and Financial Analysis (IEEFA) it was revealed that there is an excessive financial risk posed by the controversial Formosa Plastics project. 

Based on market trends, IEEFA predicts the Formosa Plastics development’s short-term profitability will be poor, and long-term profitability will be even worse. In fact, it asserted that it’s unlikely that the Formosa Plastics facility will meet its revenue targets, posing a high risk for closure. 

Single-use plastics are facing growing regulations, which will undoubtedly negatively impact Formosa’s profitability. In fact, the reason Formosa Plastics, a Taiwanese company, is building production facilities overseas in Louisiana is because the company’s products are banned in Taiwan. 

Similarly, more than 120 countries have enacted single-use plastics bans, and companies, from Disney, to Starbucks to Unilever, have taken steps to phase out plastics. The market for plastics is shrinking, and it’s just going to continue to get smaller. 

The plastic market’s shrinking size has led to the cancellations and delays of similar petrochemical projects around the globe, including the closure of the Shell refinery in Convent, which lost almost 700 jobs for residents overnight. 

“Why is the Parish Council continuing to support dead-end industries with no future? We need good, healthy jobs and businesses that’ll provide for our children and our grandchildren,” said St. James resident Chasity White. “The Shell refinery closure should be a wake-up call to the Council. The last thing we need is more dying industry.”

White is one of a growing number of parish residents who doesn’t understand why the council continues to focus on declining industries while communities like Galliano and Houma are investing in the fast-growing renewable energy sector, and bringing in hundreds of good jobs for local residents.

“Communities across Louisiana are benefiting from good jobs in healthy, growing industries,” said White. “My question to the St. James Parish Council is, ‘why aren’t we?’”

The St. James Parish Council’s staunch support for the Formosa Plastic’s project comes even after industry giants like Shell, Exxon Mobil, and Chevron have reported “some of their worst financial results in history” in 2020. Louisiana lost 21% of jobs in the oil and gas sector last year alone.

Because of the shrinking oil and gas sector, and the plunging price of plastic, IEEFA estimates that the revenue from Phase One of the project will likely be 20% lower than initially estimated. Markets have been trending away from petrochemical products and single-use plastics, so the new, giant plastic plant is financially a recipe for disaster. 

Not to mention, rising construction costs will also diminish the plant’s profitability. The Taiwan Rating Sevice estimated that the cost of the project will be $12 billion, which is a 24% increase from Formosa’s original 2018 estimate that it would be $9.4 billion. 

Formosa Plastics continues to push to build in St. James Parish, largely because of the substantial tax incentives they received. The company was offered $1.4 billion in local property tax exemptions and a $12 million grant to offset infrastructure costs, along with being grandfathered in under an old tax break program which will result in them receiving a 100% property tax abatement for 10 years.

“This isn’t a joke and it’s not monopoly money. It’s us, the taxpayers, who will be on the hook when Formosa packs its bags back to Taiwan and leaves us high and dry,” said Lavigne.

She, along with White, started the campaign Protect Our Parish to educate parish residents and voters about what is at stake financially, environmentally, and health-wise. They’ve questioned why St. James Parish Council members Jason Amato, Ryan Louque, Mason Bland, Vondra Etienne-Steib, Clyde Cooper, Donald Nash, and Alvin St. Pierre are putting local jobs and tax dollars at risk.

“We’re fed up with the Parish Council wasting our money on dead-end industries like Formosa Plastics,” said White. “They’re putting our futures at risk while other Parishes are thriving because their elected leaders did the right thing and invested in renewable energy projects. We need to do the same in St. James before it’s too late.” 

 



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