The Business Review (Albany), February 12, 2006, Sunday

Please note: the quote is not accurately represented. Honda does not have a UAW or CAW workforce [correction by Arthur Wheaton]

New York is not on 'auto' in competition for foreign carmakers' business
By Joel stashenko
The Business Review (Albany)
Updated: 7:00 p.m. ET Feb. 12, 2006

Officially, the Toyota Motor Corp. is not building a new engine or assembly plant anywhere in North America.

But the company's soaring sales and market share--it may supplant General Motors in 2006 as the biggest automaker in the world--have states jockeying to be the site of new anticipated Toyota plants just the same.

Not New York. While an often sharp-elbowed competitor among states seeking chip and nanotechnology investments, in particular, New York has been invisible while Ohio, Michigan, Kentucky and others try to entice Toyota with incentive packages.

Ohio Gov. Bob Taft is offering free land and $30 million in incentives for Toyota to put a plant in his state. Michigan Gov. Jennifer Gran?holm is also wooing Toyota, but so far is not making her state's offer public.

Empire State Development, New York state's chief economic development arm, said it is constantly on the lookout for companies that it can lure to New York. But auto manufacturers do not appear to be particularly good prospects for the state right now, ESD spokeswoman Deborah Wetzel said.

"High technology is one of the governor's and ESD's continuing focuses," Wetzel said. "We will continue to work on nanotech. We think the likelihood of getting an auto assembly plant is relatively low because of a variety of issues. However, we will always go after any significant job creation project in a significant industry that would consider a New York location."

Experts said New York is hampered in the automaker sweepstakes by many of the same factors that companies already operating in the state complain about: High taxes, high energy costs and high workers' compensation premiums chief among them.

"I have heard no discussion on some heavy manufacturing investment in New York," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

"Certainly, there is a perception of New York as a high-cost, high-tax state." Shrinking sector Relatively few New Yorkers are employed in the manufacture of automobiles or auto parts.

The state Department of Labor said 37,488 New Yorkers were in auto manufacturing in 2004, the last year figures are available for.

That was down from more than 45,000 in 2000.

The annual income level of those workers, however, showed why states vie so strenuously for auto industry jobs: $62,258 in 2004.

In the Capital Region, 780 workers were classified in transportation manufacturing job titles.

They had an annual average income of $49,563, the Department of Labor said. The largest auto industry presence in the Capital Region vanished when the Ford Motor Co. closed its plant in Green Island in 1989.

The plant, since demolished, employed 1,500 people at its peak. New York state is currently offering incentives to an auto manufacturer, but it is in an effort to save jobs, not attract new ones.

Delphi Corp.'s 3,800-worker plant in Lockport, the largest employer in Niagara County, is imperiled by the company's financial difficulties.

Part of a $20 million incentive package the state is proposing to keep the company in New York is predicated on the state Legislature approving a workers' compensation reform plan proposed by Gov. George Pataki.

American Axle Co. is also in a cost-cutting mode nationally due to General Motor's woes and is reportedly looking at savings in the operation of its two western New York plants.

Matter of course Places like Michigan, Indiana, Ohio and Illinois already have the rail and highway networks and other infrastructure auto plants need to operate, said Kim Hill, assistant director of the economics and business group at the Center for Automotive Research.

"The infrastructure of different industries is in place in some states and not in place in other places," Hill said. "Sometimes, there is an infrastructure in place that almost behooves these states to go after each and every one of these investment opportunities that they hear about."

Hill said he is sometimes asked why Michigan isn't more of a factor in pursuit of high-technology industries, such as the nanosciences.

"I say, 'It's probably because Massachusetts isn't really chasing after the auto industry,'" Hill said.

Daniel Natarelli, president and CEO of Specialty Silicone Products Inc. in Ballston Spa, said New York state officials, their counterparts in other states and auto company executives all know that costs for manufacturers are as much as a third higher in New York than the national average because of high taxes, energy and other factors.

"They know that by passing on this inordinate amount of costs to the auto industry, which is very sensitive to cost, New York is going to be a tough place to woo an auto company," Natarelli said.

Conversely, nanotechnology seems so promising to New York officials right now "because high-tech means high-margin and maybe you have less competition.

You don't get into the commodity frame-of-mind that you're in with the auto industry."

Specialty Silicone makes high-end silicone windshield wipers for the automotive aftermarket.

Arthur Wheaton of the Institute for Industry Studies at Cornell University's School of Industrial and Labor Relations, said New York's perception as a union-friendly state also probably detracts from its attractiveness as host to new auto plants.

Foreign manufacturers are not dead-set against hiring unionized workers--Mitsubishi, Honda and Toyota all have contracts with some United Auto Workers or Canadian Auto Workers employees in North America--but most new production from international makers has gone to less union-friendly, "right-to-work" southern states, Wheaton said.

"New York has one of the highest labor percentages for a unionized work force," Wheaton said.

"Some of the companies have shied away from the higher-unionized states." Sam Williams, community action program director for the UAW's New York and New Jersey region, said the union's efforts have been focused on fending off threats to its members' jobs at Delphi and in other plants instead of attracting new production facilities to New York.

"Our concern is to make sure the facilities stay where they are," he said.

2006 The Business Review (Albany)