Buffalo News (New York), August 7, 2005, Sunday

WHY NOT BUFFALO?A blueprint for growth
What Buffalo needs to do to attract employers and create jobs
http://www.buffalonews.com/editorial/20050807/1065189.asp
By DAN HERBECK and MATT GLYNN News Staff Reporters 8/7/2005
Robert Kirkham/Buffalo News

NanoDynamics, a high-tech firm on Furhmann Boulevard, will add hundreds of new jobs to its existing baase. Here, technician Curtiss Boyd Jr., left, and Yanhai Du, a senior fuel cell engineer, test a solid oxide fuel cell. Airbus, the French aircraft manufacturer, will build its new American factory in Mobile, Ala. Toyota will open an automobile plant next year, creating 4,000 new jobs in San Antonio.
The same Japanese company will spend $650 million to build a plant in Woodstock, Ont. - two hours from Buffalo - where 1,300 will be employed.
The Buffalo Niagara region had little chance of landing these big employers. Airbus looked only briefly at Western New York before heading south.
Why not Buffalo?
Why can't a community with well-educated people and a strong work ethic find the right formula to attract the Toyotas, the Hondas and the Airbuses of the corporate world?
Too many companies still perceive the Buffalo area as unattractive for expansions or relocations, based on its weather, taxes, and, more recently, its fiscal problems, said Dennis J. Donovan, who is principal in a New Jersey-based firm that helps businesses scout locations.
"We still have that image problem," said Donovan, a local native and principal in the Wadley-Donovan Group.
But the situation is not hopeless. Some see in Buffalo Niagara a land of opportunity with bargain home prices, many colleges, few traffic jams and an array of culture, sports and entertainment.
Definity Health, NanoDynamics, Bass Pro Shops and GEICO Direct have made commitments over the past two years that will bring about 3,600 new jobs to the Town of Tonawanda, Buffalo and Amherst.
"We have a good work force that is high quality and affordable," said Tim Godzich, a former Definity Health executive instrumental in convincing the Minnesota-based company to expand into the Town of Tonawanda.
Business recruiters who promote Buffalo Niagara as a place to expand or relocate are trying to spread that message.
What issues need to be addressed before the community can attract more big employers? Turn to page AXX for six suggestions to expand jobs in Buffalo Niagara.
One. A new community spirit
Many Buffalo Niagara residents are their own worst enemies when it comes to selling their community to outsiders.
According to recruiters, visitors who are considering taking jobs or starting businesses here are often surprised by the community's low self-esteem.
"One of our biggest challenges in recruiting people to work here is the pervasive lack of confidence our community shows in itself," said Thomas M. Pleban, executive vice president of the Calspan research firm in Cheektowaga.
It's understandable to get upset over high taxes and mismanaged government, Pleban said, but people also need to remember the region's natural beauty, its rich history, colorful people and cultural treasures.
Two new GEICO workers are Carl DeSiena and Kelly Toovey, both in their 20s. They moved here from San Diego, one of the nation's fastest-growing cities.
"People told me I was crazy. It would be cold and snowing all the time, and there wouldn't be much to do," said DeSiena, sales performance manager for GEICO. "I got here, and everything was so green. We bought a house near the (Erie) Canal in Lockport that would cost us four times as much in San Diego.
"We ride our bikes along the canal. We go to Bills games, Thursday at the Square, Shakespeare in the Park ... People here are bothered by politics, but they don't realize how good they have it here," he said.
Buffalo Niagara supporters need to keep telling the rest of the country about the region's assets, said Donovan, the site selector. That includes the quality and size of its available work force, its good network of highways, its low occupancy costs, its universities and colleges and the availability of electrical power.
"We have developed this very negative view of ourselves," said James W. Pitts, the former Buffalo Common Council president, now a developer with Norstar Development USA. "We need to develop a new community spirit."
"This is a great place to live, and to run a business. The educational institutions and the work force are exceptional," added John J. Zinno, general manager of the new GEICO operation in Amherst. "It's so obvious to me, I don't understand why other people don't get it."
Two. Make unions a partner
Buffalo Niagara has a high rate of union membership - and some companies won't consider locating here because of that.
Thomas A. Kucharski, president of the Buffalo Niagara Enterprise, believes that is unfair. Unions have helped save some employers here, he says.
"The private sector union guys are friends of ours," Kucharski said. "They are very responsive to us."
High union membership is a reality: about 18 percent of the region's private sector workers belong to one, compared with 8 percent nationally, according to data compiled by two college professors, Barry Hirsch and David Macpherson. Can that fact be used as a selling point, instead of a turnoff, to employers?
Lou Jean Fleron, director of economic initiatives at Cornell University's School of Industrial and Labor Relations, believes it can. She sees value in promoting the skills unionized workers possess, and the active role unions have taken in promoting development.
"I think people are beginning to get a bit of understanding you don't have to be embarrassed of it," she said of the region's union population.
Fleron a few years ago led a study of union-management cooperation at employers like General Motors' engine plant. Such examples can counteract negative stereotypes employers might have of a union town, she said.
Kevin Donovan, Buffalo area director of the United Auto Workers, said he welcomes the chance to talk with business prospects about their perceptions. Union members have a personal stake in their employers' success, he said.
"We don't negotiate contracts to put people out of business," he said.
And a union reputation isn't necessarily a dealbreaker. Woodstock has a sizable union presence, too, but Mayor Michael Harding said that issue "never came up" during his city's quest for Toyota.
Three. Preserve low cost power
Some recent moves in Albany on low-cost electrical power are good news and bad news for businesses in Buffalo Niagara.
In late June, state lawmakers agreed to continue allowing local businesses to buy electricity at bargain rates from the Niagara Power Project in Lewiston. Those businesses employ more than 43,000 people.
The power authority also can continue selling another 42 megawatts of low-cost electricity - enough to power about 59,000 homes - to businesses in the region.
But an additional 70 megawatts of power that had been set aside for expansion of local businesses must now be shared with the rest of the state.
The region's leaders must do everything they can to preserve the low-cost power they now have, and they need to find more flexible ways of putting it to good use, said Buffalo businessman Louis P. Ciminelli, former chairman of the New York Power Authority.
"I'd like to see state legislation that would allow us to sell power into the wholesale market and use the money for economic development."
Selling the 42 megawatts could bring in $12 million a year, Ciminelli said.
Businesses' need for low-cost power is one of the most important issues facing Buffalo Niagara today, said Rep. Brian M. Higgins, D-Buffalo. He has proposed a federal bill to keep more low-cost power in Western New York.
"We generate the cheapest, cleanest and most plentiful electrical power in the country. We need to retain the value of that asset for Western New York," Higgins said. "Help companies cut their power costs, and we'll be protecting and expanding the job market here."
Four. Look North
According to the Buffalo Niagara Enterprise, 64 Canadian firms now have offices or facilities in Buffalo Niagara. The marketing group says it is working to recruit more Canadian firms to start operations here.
The Niagara County IDA recently sent Buffalo Niagara sales teams to Toronto, Hamilton, St. Catharines and other Ontario cities, trying to persuade business people to establish offices in the county.
"Our goal is to contact 200 Canadian businesses by the end of this year," said Samuel M. Ferraro, commissioner of economic development for Niagara County. "It's old-fashioned salesmanship. We have people knocking on doors, spending a day with the presidents or vice presidents of these companies."
Ferraro said a number of the Canadian executives told his sales teams that this is the first time they've ever been approached by business recruiters from New York State.
"Why wasn't it done before? I don't know," Ferraro said. "So far, we've closed deals with six Canadian companies. We're negotiating with two others."
Development agencies need to make it an "absolute top priority" to create better business ties with companies in Ontario, said Kenneth M. Franasiak. He heads Calamar Development in Wheatfield, the home of the $100 million Woodlands Corporate Center II, a business park that is actively seeking Canadian occupants.
Stop looking at businesses in Canada as competition and start finding ways to partner with them, Franasiak urges.
"Toronto is growing exponentially." Franasiak said. "We've got to work with them. Quite honestly, Toronto doesn't need us. We need them."
Five. Businesses need sites
Businesses decide where to go based on a variety of factors. In some cases, connections bolster Buffalo's pitch. Warren E. Buffett urged GEICO to consider the Buffalo area for a customer service center; he is chairman of Berkshire Hathaway, which owns both GEICO and The Buffalo News.
Robert Rich Jr. talked up Buffalo for a Bass Pro store to his Florida neighbor, Bass Pro founder and chairman Johnny Morris.
But land is another consideration: If a region doesn't have readily available land, businesses go somewhere that does, regardless of what connections opened the door.
Amherst met GEICO's land needs for a customer service center, and Woodstock had all the property Toyota could want for its auto plant.
The Buffalo area has many unmarketable properties: brownfields, former industrial sites that are a costly legacy of Buffalo's heavy-industry past. In many Southern states, companies build on "greenfields" without worrying about previous owners.
"We have always had, and continue to have, problems with cleaning up brownfields," said Luke Rich, a local business consultant and formerly an Empire State Development Corp. official.
Solving that problem would open up old sites to growth. For developers, it is difficult to demolish old buildings, clean up sites, and rebuild on them - and still make a profit. Rich suggests that setting up a state-created "demolition fund," to help renew the sites, could make redevelopment more appealing and cost-effective.
Lakeside Commerce Park in South Buffalo - a former Hanna Furnace site - demonstrates the potential. CertainTeed has relocated a plant there, making plastic fences. Delaco Steel Corp. might move in, and additional phases of the park are planned.
There is another element to site availability: having top-shelf office space ready for expanding companies. City View Properties bucked conventional wisdom when it started overhauling the Larkin at Exchange building at the edge of downtown without a major tenant. The complex is now mostly full. Uniland Development took a similar approach with the Sheridan Meadows North office complex in Amherst. It is now full.
It might seem risky, but some local experts see value in having new properties ready, even if an anchor tenant isn't immediately in sight.
Six. Retain and expand
Don't forget about the businesses that are already here.
Existing companies can add jobs, too, and they don't need to be sold on the idea of coming here. The challenge is finding ways to help them remain competitive and expand.
"Retention has become every bit as important as attraction," said Randall L. Clark, chairman of the Buffalo Niagara Enterprise.
Buffalo Niagara might envy the Deep South or Canada for getting new auto plants. But Rich, the business consultant, said the region should focus on keeping the auto industry plants it already has, like Delphi's Lockport plant.
Incentives can help plants upgrade and stay competitive, but risk takers also make a difference. That was true at Calspan.
When General Dynamics decided to sell Calspan, local Calspan executives and a developer acquired the operations and kept the business here. The research company has hired 19 people this year, bringing its employment to 250, and plans more growth.
Other regions would love to attract a company such as Calspan. When Calspan was still under outside ownership and planning a $13 million flight research center, some other cities dangled free land.
"They were saying, "Bring the jobs here. We have a closed air base you can use,' " said John Yurtchuk, senior vice president.
The $13 million center was instead built in Niagara County, supported by a $3 million Empire State Development grant. Calspan, a company started here in 1943, is staying local.
e-mail: dherbeck@buffnews.com
and mglynn@buffnews.com
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