New Orleans lands a big corporate fish. Will others get away?

The petrochemical industry, once the bedrock of the New Orleans economy, had long since shifted most operations to Houston, where firms found the political climate friendlier, the tax incentives more generous, and tourism less of a darling of public officials.

It came as a surprise, then, when Shell Exploration & Production Co. announced it would return its 1,000 workers to the hurricane-scrubbed city - especially because the company had toyed with the idea of leaving even before Katrina.

Delighted city officials, who've learned the hard way not to play favorites, hope Shell's move will encourage companies still on the fence to return as well. Several key employers remain in the "undecided" category, and they appear to be watching how well political leaders plan the rebuilding - and how secure the levees can make the city - before committing to New Orleans.

So far, about 70 percent of the more than 80,000 regional businesses affected by hurricane Katrina are up and running again, according to Greater New Orleans Inc. Small businesses make up the bulk of those that are not.

The return of Shell's first 250 employees - to be celebrated Monday in Lafayette Square in a ceremony replete with Cajun food, speeches, and zydeco music - is a huge bright spot, say those with their finger on the pulse of the local economy.

"Shell's return ... is very, very significant," says Mark Drennen, president and CEO of Greater New Orleans Inc. "It has been a major corporate player in New Orleans historically, and its loss would not only have been a huge economic blow, it would have a been a very serious blow to our recovery efforts as well."

Among large manufacturing firms, Northrop Grumman and Lockheed Martin are back, along with a sizable share of their workforces. About 90 percent of the hotels have reopened. Most of the major law firms have also returned.

In the city's Central Business District, Hertz Investment Group has opened four office buildings - and all are more in demand than before Katrina. "We have been pleasantly surprised by how many of our tenants are back," says Gary Horwitz, chief operating officer of the Los Angeles-based firm. "The leasing activity is as strong as we've ever seen [in] the Class A office market in New Orleans."

But some companies that set up business elsewhere post-hurricane may have found that the grass really is greener there. Smoothie King, headquartered in nearby Kenner, La., has accelerated a planned move north because of Katrina. Entergy, another of New Orleans big employers and its only Fortune 500 company, temporarily moved its headquarters to Clinton, Miss., and last month told investors it is weighing a permanent move for at least some of its workers.

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