City March 12, 2010 11:05 AM

Steal the Steel

Steal the Steel
On Niagara Street this week I happened to see an oversize load go by on a flatbed which looked like a wing of a stealth bomber or something (except without the stealth turned on, or I couldn't have seen it, right?).  It reminded me of the occasional posts I've read along the theme of Big Things spotted rolling down our streets.
 
Well, according to The Buffalo News, the Mother of All Big Things Rolling Down the Street rolled into Buffalo today from Canada, across the Peace Bridge.  It was a 100-ton, 215 foot-long load: a giant girder to be used in the construction of a steel mill.  But...not in Buffalo...not in Lackawanna...in ALABAMA.GirderFar.jpg
 
That's right.  According to The News the gargantuan girder, and several more like it, will roll right on through this community that at one time had more steelmaking capacity than nearly any other place on the planet.  Like much of the freight crossing the Peace Bridge, they will be "just passing through" on their way to the sun belt, which over the last half century has been hijacking our industry, hijacking our college graduates, and now even wants to hijack our architecture.
 
Let's see, if someone's looking to build a steel mill, which apparently requires getting mega-girders from Canada, then instead of spending nearly a week (per The News) trying to ship them hundreds of miles, why not take them to a place right across the river from Canada and build the mill?  A place which has one of the nation's largest hydroelectric projects as a nextdoor neighbor?  A place which is a lake-freighter trip away from the iron ore ranges (for virgin steel), and with abundant heaps of scrap for remanufactured steel (or whatever they call it when they make new steel out of crashed Toyotas and my old furnace).  A place that's at a crossroads of all kinds of transportation: road, rail, water, air?  And close to a lot of North America's biggest cities?  A place whose Official Motto is "We're shovel ready!"  And in the same state as the world's financial capital, to bankroll it?
 
So is anyone else seeing this and saying "What the !@#$ is wrong with this picture??  Someone will say yeah, but the labor costs here are too high, that's why they're building steel mills in Alabama.  But didn't they take that issue out of the equation to secure GM's investment of hundreds of millions in manufacturing here, at the Tonawanda plant?  And someone (lots of someones) will say that taxes are too high for anyone to seriously consider building a steel mill here.  But without doubt the folks at ECIDA as well as every federal, state, and local elected leader would prostrate themselves before the Steel Plant Builders and give them whatever tax break they asked for.  For life.  And for their children and their children's children unto the fourth generation.  Sort of like what was done for Yahoo!, and Bass Pro.  Like 100+ years ago, the level of effort the community leadership (who met in wood-paneled clubs on Delaware and smoked cigars) put forth to lure the original Lackawanna plant here (if I remember my Mark Goldman).
 
Until reading The Buffalo News article, I didn't realize that steel mill construction is still something that happens in America.  I guess I figured that game had been taken over by the Koreans and Chinese.  But if there are steel mills being built in America, why aren't we getting them built HERE IN WNY--especially since the plant builders have to go to great lengths (pun intended) to bring the materials through here anyway?  Then WE would have the steel mill that builds the mega-girders to build the next steel mill down the road, etc. as well as the steel to make wind turbine towers and blades that would help power the mills with green electric, and that we could ship all over using our transportation infrastructure.  And so forth.
 
GirderHostage.pngI say, we take the rest of these girders that come across the Peace Bridge out to somewhere around Lackawanna, and refuse to give them up until someone comes and builds a steel mill out of them.  RIGHT HERE.
 
Consider it a reverse hijacking.
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I'm with you!

Your story and pictures offer a graphic illustration of the impacts of accumulated deindustrialization and the related stripping out of sustainable employment.

Thanks to the lack of intelligent national trade and investment policies, we're reduced to being mere spectators watching the parade of imported goods flood our country.

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Well, yeah, that whole thing seems logistically like nonsense. However, I'm sure it makes some sort of financial sense otherwise someone will probably be losing their job.

As far as building a steel mill right here........ I say keep the truck rolling to Alabama. You really want to regress to an industrial economy? I know it provides jobs, but.... come on. That's not where the future is. That's not what's going to save Buffalo. Might as well throw up casinos. Not to mention, isn't it something like 200 years before Bethlehem/ Republic Steel is even usable land? Yeah, lets build a steel plant. Then lets relocate Yucca Mountain.

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There are multiple components to steel making. Blast furnces are what contaminate, not the rolling mills, where most of the individuals are employed.

replied to LouisTully
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ah gotcha. i don't much about steel except i hate the steelers. nice name. keep walking.

replied to johnnywalker
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Wear that on your Tee when you walk around SouthBuffalo.

replied to LouisTully
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"Regress to an industrial economy"? What kind of madness is that? Industry is what *made* Buffalo. There wouldn't be a city here without it. Industry is the only thing that raises our collective standard of living. It provides jobs, material goods, and a sense of purpose. It also boost's the city's reputation when exports are used worldwide.

What would you replace industry with? Graphic design? Pot smoke? Wealth in the end is created by manufacturing. Your aesthetic sensibilities do not override basic economics. Manufacturing is important.

It *can* be done is an ecologically sound fashion too: just look at Germany, the world's #1 exporter by value. We cannot continue to outsource all our manufacturing and sustain a decent standard of living. Real wages have been falling for 30 years. It's unsustainable.

If the future isn't manufacturing, it's failure.

replied to LouisTully
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FYI.....'German steelmaker ThyssenKrupp AG recently chose Alabama's Mobile County for its new plant, but the full cost of Alabama's subsidy package - which at a minimum is the one of the largest in state history - is still unknown. Alabama's deal is valued at $810.4 million, but this does not include an additional tax break that could be worth billions: ThyssenKrupp will be able to take up to $185 million in state corporate income tax credits each year for 30 years, up to a cumulative total of $3.7 billion (the company's apital investment). On June 5th Alabama voters approved a $400 million increase in the state's bonding capacity, about half of which will be used in the ThyssenKrupp package'

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For $400 million cash and $3.7 billion in loan guarantees, Buffalo could clean up every single brownfield site caused by our previous steel industry.

It would probably create more long run jobs, as well.

replied to johnnywalker
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Yeah, it's be nice to see a new steel mill in Buffalo. At this point, though, I'm just happy the new mill is in the United States, and not China.

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Labor costs are to high, taxes are high and only going higher, unemployment insurance, crooked unions, corrupt local and state politicians, etc... NYS is one of the most unfriendly states to do business in.

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For the cost of shipping that beam, you could have purchased the Pohlman Foundry at the last tax auction.

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This just proves that we need the giant waterfront truck parking lot because they say that it will be a good thing and trucks will be able to be there and trucks and will make everything real real good in Buffalo.

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i hope the guy driving that truck all the way down to 'bammma doesn't use his laptop to look at porn to stay awake.

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Per a recent article in The Economist, China has enough steel capacity to meet all of the world's needs and then some. In fact they are idling plants. This sounds like a giant taxpayer subsidized boondoggle. Lets please stay firmly in the 21st century, and let China become a giant superfund site, we have had enough.

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This was a highly celebrated project in both Quebec and Alabama. The 2,700 jobs will be a great boom to an area of Alabama that is still struggling to receover after Hurricane Katrina. The entire state was hit hard economically, and these 2,700 new paychecks will be great for that state.

The same is true for the 77 workers reinstated from lay-off in Quebec. Without this winning bid, which was open to all companies in the US and Canada,these workers would still be laid off.

If either of these two projects were in Buffalo, we would be ecstatic. Let's be happy for the people of Alabama and Quebec, and hope that their success will somehow translate into development in our area.

It is a shame that we do not have the capacity or structure for either one of these projects, but maybe someday we will be competitive again in at least one or two industries.

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Exactly: "If either of these two projects were in Buffalo, we would be ecstatic."

Same if either were in Ra-cha-cha, the people there would be happy.

The article asks "But if there are steel mills being built in America, why aren't we getting them built HERE IN WNY"?

Is that a serious question or rhetorical?

Does anyone who asks that also wonder why Honda, Nissan, and other Asian auto makers have built big plants in places like Ohio, Indiana, and Tennessee but not in WNY? This is still a very business-hostile state and region. High taxes, high unionization, etc. Isn't that common knowledge?

replied to sho'nuff
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It is also common knowledge that the industrial sectors in those states are bought and paid for by the public. Despite all of the government hating rhetoric spewing from the Southeastern US, the manufacturing sector is largely the product of government manipulation. This quote is from an article about gop lawmakers critical of Detroit bailouts but all to eager to pass off manipulation in their own states as a product of the "Free Market".

http://washingtonindependent.com/22236/cars

"But that flourishing didn’t come without significant taxpayer help. Shelby’s Alabama, for example, secured construction of a Mercedes-Benz plant in 1993 by offering $253 million in state and local tax breaks, worker training and land improvement. For Honda, the state’s sweetener surrounding a 1999 deal to build a mini-van plant was $158 million in similar perks, adding $90 million in enticements when the company expanded the plant three years later. A 2001 deal with Toyota left the company with $29 million in taxpayer gifts.

Alabama is hardly alone. Corker’s Tennessee recently lured Volkswagen to build a manufacturing plant in Chattanooga, offering the German automaker tax breaks, training and land preparation that could total $577 million. In 2005, the state inspired Nissan to relocate its headquarters from southern California by offering $197 million in incentives, including $20 million in utility savings.

In 1992, South Carolina snagged a BMW plant for $150 million in giveaways. In Mississippi in 2003, Nissan was lured with $363 million. In Georgia, a still-under-construction Kia plant received breaks estimated to be $415 million. The list goes on."

In Alabama's case, the subsidies have not translated into a healthy economy despite the lack of a"business hostile" environment.

http://www.auburn.edu/~thomph1/alindustrialpol.htm

"Alabama continues to lag economically as reflected by consistently poor grades on economic performance in the Development Report Card for the States (drc.cfed.org). Such performance raises questions about the success of the state’s program of industrial development subsidies. The visible jobs that such subsidies create are a political windfall but an economic cloud of smoke since somebody must pay the underlying subsidy and some resources must be pulled from other activities. One way or the other, taxpayers pay for subsidies and the net economic impact of subsidies remains an open question. "

replied to whatever
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So what's yer point Pitbulls? If we all know the rules of the game then why aren't we able to play along and win? It seems like we know what we need to do but can't seem to get out of the locker room and on to the field, so to speak.

Are you saying their pork barrel projects are different than our pork barrel projects? It sounds like it. So just like the Bills, if we continue to lose year after year then we need to hire a new front office and bring in new coaches.

replied to Armchair MBA
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Im not sure if spending upwards of 3/4 of a billion to lure a factory is much of a "win". Maybe the economic development people in NYS recognize this and decline to be as aggressive in pursuing a sector of the economy that employs fewer and fewer people.

Besides we arent exactly stuck in "the locker room" as far as manufacturing is concerned. Our GM engine plant, with its "business hostile" location and "crooked" labor union saw a hefty investment from corporate not too long ago.

http://www.buffalorising.com/2010/02/gm-invests-in-area-plant.html


Another point of the previous post was to point out that simply slashing taxes doesnt necessarily translate to job creation. If it did Alabama with its elite friendly regressive tax structure would not need to spend so much to lure investment.

replied to STANCSEA
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edit: upwards of 1/2 billion not 3/4.

replied to Armchair MBA
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pitbull>"Maybe the economic development people in NYS recognize this and decline to be as aggressive in pursuing a sector of the economy that employs fewer and fewer people."


If it's 4,000 new workers (2,700 plus the kinds of workers sho'nuff mentioned), that would make a $500M subsidy be $125,000 per full-time manufacturing job created.

The NY state subsidy for the Yahoo data center is over $800,000 per job, so I doubt the $125,000 per job would give our bureaucrats sticker shock.

Now compare to Canal Side, $150M of state money which might "potentially" attract 1,000 jobs. http://nyrej.com/30187
"ECHDC unveils final Canal Side master plan: A $315m redev. effort...When fully complete, the project has the potential to generate 1,000 new jobs..."

Even if 1,000 jobs end up created at CS, that's $150,000 of public money per job, most of which will be low wage retail jobs. If CS creates only 500 jobs, then per-job it would double to $300,000.

Also, new retail will mostly take away from other retail spending here. So even if Canalside employs 1,000 people those aren't all a real gain. Some jobs would've existed anyway at other stores. That's very different from a factory where jobs really are net gain to an area, and full time, better paying than retail - all for less public $ per job compared to Canalside retail, possibly much less.

replied to Armchair MBA
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The subsidy given to Yahoo! from NYS was selling them hydro-power at cost. Unlike the tax abatements, grants, land, and loans in the auto plant subsidies, selling existing hydro-power does not divert resources away from the public or increase the tax burden for those of us not receiving the subsidy. The only loser in that deal is the slush fund accumulating from the open market sale of unused industrial power which isnt going to be reinvested in the community anyway. If selling hydro-power at cost was enough to lure one of these places to NY, Im sure it would have been done but as you can see states with more aggressive and elaborate subsidy packages are winning out.

Comparing Canal Side to this is comparing apples to oranges. There are other goals besides economic development and job creation in that project so evaluating it on a jobs per dollar spent isnt accurate or fair.

replied to whatever
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pitbull>"Is that a fair gauge on how competitive we are as a state?"

So when your earlier comment mentioned an upgrade at GM-Tonawanda which will recall a few 100 laid off workers - that to you is a fair guage of NY state being business competitive... and my question isn't?

Granted, it's selective to single out one industry but it's more meaningful than singling out one project at one plant.

And it's interesting that even a state like Ohio which also has a lot of long term job loss and population loss can attract many new auto industry jobs over the past few decades and NY doesn't.

replied to Armchair MBA
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Whatever> "So when your earlier comment mentioned an upgrade at GM-Tonawanda which will recall a few 100 laid off workers - that to you is a fair guage of NY state being business competitive... and my question isn't?"

Correct. My reference to GMs continued investment in the Tonawada plant was in response to Stancseas claim that we " can't seem to get out of the locker room and on to the field" when it comes to being competitive for industry. The fact that NYS hasnt spend upwards of 1/2 a billion or more to lure a new automobile plant doesnt necessarily translate into a "business hostile" climate for the entire state economy. It could be argued that diverting a that much public money to one company would be "hostile" to other businesses that would foot the bill.


replied to whatever
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Good post! I agree with most of it. I do want to add that increasing the local workforce by 2,700 people, plus the additional dock workers, shippers, truck drivers, etc probably offers a pretty good ROI on that $500,000,000.

I also want to say that although GM has recalled some workers, there are still hundreds more UAW members left unemployed. One estimate by a neighbor (fwiw) is that the local UAW has lost close to 1,500 members in the past 15 years. These are above and beyond those still holding membership privileges and hoping for reinstatement.

replied to Armchair MBA
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pitbull>"Our GM engine plant, with its "business hostile" location and "crooked" labor union saw a hefty investment from corporate not too long ago."

The new project will add 470 workers at GM/Tonawanda, bringing the total to 1,120. In 1990, that plant had 4,300 workers. In 1979, it had 6,000 workers.
http://www.buffalonews.com/2010/02/18/960767/gm-to-invest-425-million-in-tonawanda.html

Many GM plants have closed, so WNY is fortunate to have the 1000+ jobs, even if many fewer than before.

Do quotes around business hostile mean you think that isn't an accurate description for Upstate NY?

Of the new auto industry plants built in the U.S. over the past 20 years, how many have been in NY state?

replied to Armchair MBA
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Well Im not going to say NYS cant be doing a better job but I dont agree that it is "business hostile". When you say "hostile" are you referring to the taxes? Yes taxes are high but they are one of many factors that attract businesses and develop existing ones. Contrary to local folklore, those taxes are reinvested in services that add to our quality of life and dont just evaporate in Albany. These services add to the value of NYS and simply cutting taxes could make a dreary economy worse by diminishing our quality of life. In the long run, wouldnt it be "hostile" to both the business community and the general public if services like education, funding for the arts, and environmental programs were cut? The tax bill would be lower but so would the value of our state.

Not to pick on Alabama but they have the second most elite favorable tax structure in the nation but they are growing only modestly. If low taxes=economic growth dont you think 'bama would be a national leader for job creation?

replied to whatever
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Whatever>"Of the new auto industry plants built in the U.S. over the past 20 years, how many have been in NY state?"

Is that a fair gauge on how competitive we are as a state? The link I posted above shows that landing one of these plants would require a subsidy package in the 50-500 million range not including access to cheap hydro-power. Something like the Yahoo! deal only more electricity and a 1/2 billion dollar gift. Even then that may not be enough to overcome more favorable(to business) environmental restrictions found in southern states.

If those high demands are met you can land a factory that will create jobs and boost exports but that sector is becoming less of an employer with the rise automation.



It is important to retain and develop manufacturing. The continued investment in the Tonawanda Plant shows that we can provide a favorable business environment for this sector of the economy. The fact that we have not played low bidder for new plants does not change this.

replied to whatever
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The Canalside comparison was reponding to
pitbull>"Maybe the economic development people in NYS recognize this and decline to be as aggressive in pursuing a sector of the economy that employs fewer and fewer people"

If your "maybe" is true that NYS economic dev bureaucrats aren't as interested in manufacturing as other sectors, I was comparing to sectors they do seem to aggressively pursue. What came to mind was Canalside retail for more per-job subsidy than the other state's steel plant, and Yahoo's data center with 75 jobs at $800K subsidy each.

I doubt your "maybe" is true. I think NYS econ dev would love to attract steel plants or auto industry plants instead of Bass Pro or Yahoo, if they had to choose. Only they know for sure. I doubt they're so clueless as to seriously think retail and data centers are better for the state to attract than manufacturing would be. I'd bet they try to attract as much manufacturing as they can, but incentives can do only so much. Since the politicians want then to seem to be accomplishing something, the state overpays for things like Bass Pro and Yahoo's data center for the same kind of reason the Bills overpaid for T.O.

replied to Armchair MBA
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Whatever "I doubt your "maybe" is true. I think NYS econ dev would love to attract steel plants or auto industry plants instead of Bass Pro or Yahoo, if they had to choose. Only they know for sure."

Again, Bass Pro is a component of a larger project that has a larger focus than just job creation so we can cross that off. The Yahoo! deal costs us nothing other than the missed opportunity to sell their allocation of cheap power on the open market. To put together a subsidy package to compete with what the going rate is in other states you would have to sell hydro-power at cost AND put together a subsidy package in the 100-500 million range. You complain about selling power to Yahoo! (which costs us next to nothing) but you are in favor of doing that and cheap loans, tax breaks, grants, and free land?

It is possible that the evil state bureaucrats are not in a position to pony up that kind of money to attract that kind of investment. Or its possible that handing out billions to automakers isnt worth attracting factories that are trending up in automation and down in employment.

Whatever "Since the politicians want then to seem to be accomplishing something, the state overpays for things like Bass Pro and Yahoo's data center for the same kind of reason the Bills overpaid for T.O."

Terrible analogy. First, NYS lured Yahoo! by selling them hydro-power at cost which costs the public very little. Second, The Bills paid TO 6.5 million for his 1 year visit which was down from a little under 14million from the year before. http://content.usatoday.com/sports/football/nfl/salaries/top25.aspx?year=2008
Nobody else was willing to sign him and until the Bills threw him a bone at half salary. Thats overpaying?

If you wanted to make the point about the state overpaying you should have brought up the recent reconstruction of rt 5 which cost anywhere between 50-100 mil and did not produce 1 permanent job.

replied to whatever
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I like the discussion. I do take a little issue with the characterization of low cost hydro power as costing us, the general public, nothing. Counter-intuitively, WNY has high electricity costs and we lose businesses because of it. If we can afford steep discounts in the electric rates for a select few, it is only because other rate payers are being gouged. As an economic engine, I would like to see electricity rates more balanced.

(Ditto for taxes. I think we should pass federal law prohibiting tax abatement incentive packages; they are inherently unfair to competitors who aren't bestowed such giveaways and they don't add to the overall economic pie. If only I were king of the world . . .)

I agree with Whatever that if our economic development teams had their druthers, they'd certainly bring in the new steel plant instead of the call center. I further agree that their paucity of accomplishment in the former segment leads politicians to panic spend on the latter (though to be fair, the size of subsidies in the sun belt smells like panic spending, too).

replied to Armchair MBA
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True, manufacturing has many advantages.

And I agree NY state would be better off just using the hydro power to reduce rates across the board instead of trying to pick a few winners for super-low rates and have remaining residents and businesses pay way above average rates. There's a limited amount of hydro power in NYS, the state govt controls it all, and if I'm not mistaken there's no practical way to grow the amount. If so, as demand grows over the years less and less of power used in the state will be hydro anyway.

The News reported over 25% on electric bills in NYS are state and local taxes added on. If the state wanted to be less business-hostile, it would be smart to cut those taxes deeply, but probably won't.
http://www.buffalonews.com/2010/03/07/979794/taxes-make-electric-bill-more.html

pitbull, the Bills paid T.O. much more than anyone else offered and many people think they wanted him for public appearance to fans more than likely benefit. We'll never know Brandon's main motive. If P.R. was the biggest reason, then I see a comparison to the deal NYS gave Yahoo. They're a big name and the announcement made it look like politicians are doing something major. But the number of data center jobs is small and have little spin off.

replied to biniszkiewicz
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Im not a huge football fan so if you feel that plucking a proven WR off the bargain rack for 1/2 price is overpaying you may be right. Im just not sure what the GM's motivation for marketing has to do with the relatively low amount he was signed for.

If you feel the spin off from a few well paying jobs @ Yahoo! will be small you should take comfort in the fact that the _at cost_ power we are selling them costs us very little as well.

replied to whatever
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On hydro-power: My understanding is that the low cost power provided to a select few local industries is reflective of what it actually costs to generate electricity at the Robert Moses plant and is not artificially reduced by "gouged" customers.

Electricity rates are high in statewide because of, among other things, utility taxes and diluting our inexpensive power across the entire state which includes impractical nuke plants and a lot of demand downstate. The only way to make all of our electric bills more reflective of the cost of production locally would be to find a way to generate electricity statewide as cheap as can be produced in Lewiston (impossible), expand the RM plant to the point which it can generate cheap power for the entire state(probably impossible) or to somehow confine the cheap power to our portion of the state and let the rest rely on expensive coal and nukes.

Since none of those options are going to happen we might as well use the allotment of cheap power that we can access to lure employers. I say this is virtually free because the only cost is the missed opportunity to sell the power on the open market for a huge profit. If we decline to use this development tool nobody's electric bills will be lowered rather the NYPA will just sell it and use the proceeds for other things that may or may not involve WNY. At least when we sell the power _at cost_ to local employers we are receiving some benefit of having a hydro-power plant in our backyard.

replied to biniszkiewicz
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On NYS's economic development team: Manufacturing is important to have in our economy for direct and spin-off job creation as well as boosting exports. However I don't think it is wise to make this sector of the economy a centerpiece of a job creation strategy when it is becoming increasingly automated and jobs are trending down in both pay and positions. It may be better to go build an economy around sectors where jobs are more plentiful like life-sciences, education, healthcare etc.

Consider the area's two largest auto plants. Both the stamping plant and the engine plant have received sustained investment over the years but their employment has dwindled from several thousand to about 1700 combined. If you buy "whatever's" argument that nothing positive can possibly happen within the boundaries of NYS, you would think the decline is due to general state dysfunction, covetous union boogymen(who now start at 15/hr), or scorn from the Free Market.

While the local plants may lose out on more investment that now follows large subsidies and "race to the bottom" labor in the south, much of the labor decline echo's national trends that show manufacturing declining as an employer.

http://www.prb.org/pdf08/63.2uslabor.pdf
(page 7 fig 5)

Now if you tasked with attracting jobs to the state, would you throw hundreds of millions or billions into luring a auto and steel plants if you know that their wages and jobs are in decline or whould you spread these resources out to include both advanced manufacturing as well as growth sectors like IT companies, life sciences, education etc?


replied to biniszkiewicz
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pitbull>"It may be better to go build an economy around sectors where jobs are more plentiful like life-sciences, education, healthcare etc."

Education and health care are mostly funded by the govt using tax dollars that have to come from other sectors that are funded mostly by the private sector. NY state has been expanding funding for health care and education a lot over the past decade (as NYC financial industry taxes fueled govt revenues) and that's helped grow education and health care jobs here. But we're starting to see that level of spending growth won't continue forever. Hospitals and school systems in this state will have no choice but to reduce growth and in some cases cut jobs.

Life sciences involves research and manufacturing - both of which involve a ton of competition from other areas and states all trying to grow those kinds of companies and jobs. The same kinds of business environment factors are relevant for life sciences as for other sectors.

I doubt there's any example of where NY state had to choose between attracting a life sciences company vs a company from some other industry. I wouldn't be surprised if the states that do the best at growing life sciences jobs are the same states that do well growing other industries too.

replied to Armchair MBA
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pitbull>"Now if you tasked with attracting jobs to the state, would you throw hundreds of millions or billions into luring a auto and steel plants if you know that their wages and jobs are in decline or whould you spread these resources out to include both advanced manufacturing as well as growth sectors like IT companies, life sciences, education etc?"

Let's take that piece by piece.

I don't know what you mean at the end of that by attracting education sector jobs. Does that mean a state econ dev agency trying to attract private trade schools? That won't accomplish much.

Advanced manufacturing, sure - but the same business factors attract that as auto or steel (which are becoming more advanced too). Most growth in U.S. manufacturing is advanced while less advanced kinds go overseas.

Attracting any sector is much more to do with what a state's legislators and voters do (taxes/spending, labor laws, etc) over long time periods than what state econ dev agencies do to lure a co or project. Incentives and corp welfare do only so much.

You say auto/steel wages "in decline" is a reason to favor IT and life sciences co's. But if an auto or steel plant has a lot more jobs and payroll much higher than a data center for example, what difference does it make if auto or steel plant pay is declining? It's still high.

Auto or steel plant jobs still pay much better than lab technicians or call center workers (and we know NY state tries hard to attract and keep call centers here). Yahoo's data center will be around 75 jobs. Even if great pay, it's much less impact than a plant employing many 100s or even 1000 or more. Also, manufacturing typically has good local job creation spin off and a data center very little. If you're talking about "IT sector" as a maker of computers or semiconductors, that's a kind of manufacturing.

Again though, I doubt it's a choice they really face. Econ dev agencies want to attract life science co's and auto or steel co's, etc., if they could. They do what they can with the hand they're dealt, then they try to make it sound as good as possible.

replied to Armchair MBA
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that stealth bomber analogy was week, especially cause u cant "turn on" stealth

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Ah, but you CAN turn on spellcheck. Weak.

replied to buffaloTrek
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Why in the 9 Hells would we WANT operational steel mills in the Buffalo area any more?

Isn't a couple generations of shorter lifespans and galling environmental degradation enough for you guys?

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Seriously? How can you compare the kinds of steel mills being built today with Beth Steel's Lackawanna plant which was from the 1920s? With all the production and environmental controls, a newer plant would probably be little worse than a GM plant in Tonawanda. It would be great to see Buffalo steel return.

replied to Jesse
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Agreed. Many modern steel companies like Nucor make their money off recycling and are not the polluters of steel past. I would love to see an environmentally responsible steel mill open up in WNY especially if they located on one of our former brownfield sites.

replied to sonyactivision
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right to work states = no new heavy industry in the northeast, EVER

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It's "Right to FIRE" not "right to "work"...

It has EVERYTHING to do with EMPLOYEER not benefits to the WORKER.

It's THE poster boy for our RACE TO THE BOTTOM in the last thirty or forty years.

Instead of bringing up workers' standards of living to OUR level (or what used to be OUR level) - it's bring ALL of our soon to be SLAVE WAGES DOWN to THIRD WORLD level or worse...

And these morons want to get rid of Social Security and invest it in the CORRUPT Stock Market as if the past couple years never happened!!!

Yeah - that's the ticket!!!

replied to Ike
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Is it possible to blow this anymore out of proportion than you just did? Third world wages, slave wages? Seriously, turn off CNN or Fox News for a few minutes, the over-sensationalism is taking a toll on you.

replied to JohnMarko
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And YOU need to pay MORE attention!

And BTW, I never listen to FUX Spews - why listen to LIES and PROPAGANDA.

I get my information from a variety of sources...as should you all...

No one can deny that even in the ballyhoo'd South and West, they're losing their pact with the devil to actual Third World backwaters that pay a dollar a day - that's "slave wages" to me - isn't that to you? If we don't do something to reverse our course, what I said earlier IS our "future"...!

replied to sho'nuff
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JohnMarko - You vehemently deny that you listen to Fox News with your fifth grade play on words, but say nothing about the HLN or MSNBC blaring in the background as part of your daily soundtrack. I don't typically get my news from the TV, unless I am interested in some over-hyped and weakly reported information served to the lowest common denominator. CNN and MSNBC are just as much agenda oriented, full of 'LIES' and 'PROPAGANDA' as Fox News. Keep watching any of the above and you are taking a front row seat in our 'race to the bottom', as you say.

To think that the US is moving towards lowering wages and eliminating worker protections is naive and reactionary. It took the US nearly a century to go from cheap outsourcer for Europe, to world industrial powerhouse, and to enter the decline we are in today. The cycle has started for other countries, as they rise towards industrial prominence and surpass the older economies in terms of output and labor. If you read some of the less biased news sources out there or balanced your news menu with some international and / or more conservative news sources, you might find a line of truth and balance in what is happening in the rest of the world. Have you followed labor news for countries like India, Poland, Manila, and China? As work becomes more skilled and workers become more proficient, they are demanding higher wages and better working conditions. As more companies send work to these countries, more opportunities open for skilled workers, which is causing horizontal and vertical job movement that never existed before. The people of countries have opportunities that never existed before. The middle class is expanding in countries like India, and that is exactly how the Indian government designed it to be.

Many Americans have been slow to respond to the changing economies. We are holding on to the past like a homecoming queen at her 20 year reunion. Hoping that no one sees the wrinkles under the make-up or the fupa under the control top. We need to embrace the changes in the world and take the necessary steps to adapt our workforce, corporate policies, and economic metrics, to become competitive again. We need to understand that our core competencies come from the strength in natural resources, in our relative wealth of our citizenry, in our global companies. Our core competencies no longer include hordes of unskilled laborers looking to do whatever it takes to bring home a paycheck. We have become entitled, choosy, and somewhat lazy as a society. In our country, a dollar a day does nothing for our workers, in a country where some wage earners used to earn a dollar a month, a dollar a day is a jackpot. Over time, that dollar a day will no longer be sufficient and wages increase or work goes to other places.

I hope this helps you to see the world a little differently. You can either open your eyes to the global economy or continue with your Jimbo like crow of "DEY TERK ER JERBS!".

replied to JohnMarko
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It wasnt Jimbo. It was pissed off-redneck-white trash-conservative aka Darryl Weathers (the guy with the red mustache)
http://www.youtube.com/watch?v=E_6-FIeC3JU

replied to sho'nuff
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Great article in todays WSJ about "Onshoring", the trend of manufacturers bringing production back from overseas because shipping costs have skyrocketed. If NYS would ever get its act together maybe those trucks would be coming here.

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It seems the trend over the next couple decades will be a return to economic regionalism as markets struggle to cope with soaring transportation and energy costs... and we begin to reconcile the price of a growth for the sake of growth mentality with the true cost to our society.

replied to sonyactivision
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That sounds like a repeat of the trends predicted in the mid-to-late 70s and early 90s. In both instances, there was an initial reaction and response, then things normalized over time. Over the 30 year period, you see more of a regression to the mean inerms of transportation and labor costs, with certain functions remaining in the US, while others are sent to low cost providers.

Transportation costs are incorporated into the price of goods sold, and that increase in price tends to become normalized over time as well. The price benefit of local sourcing, (through regional manufacturing, farming, processing, etc) is lost in the economies of scale, standardization, and global distribution networks that exist today.

It is difficult to compete with the economies of scale associated with Target, Walmart, Sears, Lowes, ToysRus, Georgia Pacific, Amazon, and GE. They all have supply chains that are vastly superior to anything that can be done locally, and that cost benefit is going to be a tough obstacle to overcome.

I think the report of the localization trends are out there to make people feel better about the future, so far these trends have not panned out as reported.

replied to DTK2OD
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The trends seen during the 70's and 90's were more the result of market manipulation rather than an actual change in people's perception and that's why a period of normalization was quick to follow. People are realizing the "price" they pay at the register isn't really that products true "cost".

Sure I don't think people are going to be setting up foundries in their backyards anytime soon, but there are certain segments of the economy that are better served when a regional/local approach is taken. This is especially true for agriculture.

In an industrialized livestock system you have to fertilize the crop used for feed, treat it with pesticides, harvest the crop, transport the crop, and finally haul away the resulting manure from the animals. In a grass-based organic operation the cows fertilize and mow the grass themselves. There is no need for pesticides, no need for fertilizers, and no need for logistics or transportation (all of which add to the final price). It’s a self-sustaining model that results in a higher quality product.

It's not always about economies of scale.

replied to sho'nuff
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When it comes to locally grown organic produce, you are definitely preaching to the choir. My comment is more in response to you comment about 'soaring energy and transportation costs', as we have seen similar scenarios and predictions in the past that have not come to fruition.

There are definite advantages to regionalism, and I think many Americans are starting to realize this. We see this in the locally grown produce sections at Tops and Wegmans, and the relative success of places like the Lexington COOP and the Main Place farmer's market. Although awareness is becoming more mainstream, the average American has yet to fully embrace the concept. When you shop at Wegmans, there is a significant mark-up for organic foods, why? Because of the scarcity of farms growing organic? Because of the time and risk associated with growing pesticide and fertilizer free? Probably both and a lot more, and this speaks to the economies of scale.

If we want to change the world, we are going to need a lot more people behind us to do it. This is only produce we are talking about, what about social consciousness in manufactured goods? I wonder what it would take to gain enough support to change the way people purchase those goods? Past scares and shortages have only changed behavior for the very short term, we have yet to see a long-term shift in American's thinking, and definitely have yet to see enough of a shift to make a difference at the regional level.

replied to DTK2OD
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A lot of really great points! I agree that while the idea of regionalism has increased in popularity in recent years the critical mass needed to effect significant change is still lacking. However, that's all the more reason to try and justify a shift in popular opinion and people's behavior by using grounded statistics like the rising cost of energy/transportation that your average citizen can better relate to ($4.00/gal. gas?). It's simply one part of a much bigger long-term picture.

replied to sho'nuff
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I remember gasoline shortages in the 70s and again in the 90s due to conflicts in the Middle East and other issues. There were a lot of predictions that the shortages and increases in prices would spark a renewed interest in shorter commutes, mass transit, and the like. We saw a similar short-term shift a few years ago, with more people taking mass transit, car pooling, etc; however it was very short lived.

I think that the combination of increasing fuel costs, renewed focus on environmental impact, political incorrectness of gas guzzling cars, and a general bent towards protectivism and isolationism that we saw in the last Presidential campaign may cause enough sparks to make a fire. So far we haven't had all of this things at the forefront of the public consciousness at the same time. When they do get close to the front, we typically have other issues take first seat in the section.

With all the other issues that America is facing, it is going to be difficult to get enough momentum to really make a difference. People aren't going to move closer to the city if they can't sell their houses in the 'burbs, they probably won't get a more fuel efficient car if they are worried about incurring new debt, they may be concerned about organic produce, but will choose the less expensive option due to the down economy. It is going to take a lot for us to build the momentum to make this happen, but it is worth the effort. The question is, what will it take to get the ball rolling?

replied to DTK2OD
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Love your comments lately.

I read an interesting solution to our trade deficit problem twenty years ago in the Sunday Viewpoints section (whatever it was called then). Being a former econ major, it caught my attention then and I've never seen better. As I see it, if we achieve balanced trade (an ephemeral goal if ever there was one, based upon the past 40 years), we stand a much stronger chance of fostering local production, a greener economy, etc. I agree with you on most of the points you make regarding the dynamics of economic change worldwide.

So then, here's the solution I saw for how to solve the problem of the trade deficit: Limit the value of imports to the value of exports through the following mechanism:

1. Assign 'import credits' to every exporter equal to the value of their export transaction. If Joe farmer sells $1m of potatoes to Russia, Joe farmer is given $1m in import credits by the US government. These credits allow the importation of $1m of foreign goods. Joe sells these on an open commodities market.

2. Require importers to purchase, on that open commodities market, import credits equal to the value of products they are importing. Joe farmer sells his credits on this market, Bob importer buys them.

How much do these credits actually cost? Depends upon market demand. If demand for imports is similar to or less than demand for exports, then their value is nominal. If the demand for imports far exceeds that for exports, then their value is considerable. Are they worth 5 cents on the dollar? 30? It depends on demand.

Under this plan, exports are subsidized directly by imports. All exporters would benefit directly from the demand for imports and all importers would be equally penalized for the relative lack of demand abroad for US exports.

We cannot compete with $1/day wages. You suggested a few days ago that as China's, India's and other nation's economies develop, their labor rates will mature and sooner or later they'll be another Japan, let's say: formerly low wage, poor nation, now high wage first world nation. True enough, eventually.

But our economy might not survive well until that point and even at that point there may still be some third world wanna be that undercuts our wages as well as excess worldwide capacity relative to worldwide demand, the combination of which sends all of our economies into a long lasting depression. Controlling our level of import by constraining it to our level of export would fairly boost and buffer our economy without any of the tit for tat, picking winners, losers and whiners boondoggle of import duties. And instead of gov't getting the money, exporters would.

replied to sho'nuff
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The examples of oil price spikes you cited were TEMPORARY hikes driven mainly by headlines. The current oil price situation is much different...or do you think that oil will drop back to $6 a barrel like it did in 1986? At $80 a barrel today, oil is ALREADY high enough that many manufacturers are rethinking their long-term strategies. And with Peak Oil on the horizon:http://www.eurekalert.org/pub_releases/2010-03/acs-wco031010.php,traders are expecting prices to only RISE. This alone may change the game enough to drive industry back to this continent but to bring it back to Buffalo would require unbelievable changes in Albany, something that may never happen. Either way, the die is cast: cheap oil is gone forever and rising costs will make cheap labor abroad less of an inducement for factory owners and managers. Countries that are able to sustain domestic demand themselves could be more the norm than the exception and suggestions like Bini's above, would really spur those changes.

replied to sho'nuff
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so a billion or so in incentives for about 2700 jobs. not counting construction. my calculator doesn't have that many decimal places, so help me out here. doesn't that work out to a subsidy of about a million per job?

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That is excessive even by Buffalo development standards!

replied to grad94
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sho>"excessive even by Buffalo development standards!"

I'm not so sure about that. First, was it a billion or a half billion?

If it's a half billion, $500M divided by 2700 jobs is $185K per job. If the 2700 jobs are actually 4000 (counting spin off that results from factories), that's $125K per job.

As I pointed out replying to pitbull earlier, that sounds smarter than some well-publicized subsidies given here, both in per-job $ and due to the much better local economic impacts from manufacturing compared to some other kinds of "economic development" (data centers with few jobs and little spin off, low wage retail that reshuffles money spent here anyway, residential, etc.)

replied to sho'nuff
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I'm SOOOO happy that this truck crossed at the Peace Bridge to head south and not at that nasty competing Ambassador Bridge in Detroit. Shows how much a bigger better signature bridge crossing would add to our local economy;-)

I hope the driver stops at the duty free store on the way home - if only we had already demolished scores of homes for the bigger better duty free store proposed by the Public Bridge Authority!

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I miss Buffalo so much, here in San Francisco I can get as many friends I got there.

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