4 Comments

1. starbuck says:

   July 6, 2007 at 2:36 pm

   Interesting stuff. Not surprising that out of state entrepreneurs wouldn’t mention Wicks and Taylor laws by name – probably few people outside NYS ever heard of those. Bottom line effect of those laws is to increase taxes anyhow, so really it’s that same issue. The executives who’ve worked here many years and studied it seem to mention those laws a lot as well as the taxes and high spending increasees.

   The fact that the entrepreneurs didn’t mention taxes is interesting, however.

   Hmmm maybe Volcker et al and Gang of 3 are correct after all to keep taxes high then. Why the hell not if it doesn’t matter?

   Seriously, for some types of companies yes – taxes, utility costs, and workmen’s comp are much less of an impact on their competitiveness than for others, when one considers our cheaper real estate and our ability here to accept lower salaries.

   I agree that’s a decent point for some types of companies and industries, and practically speaking since we’ll remain way way above national average for taxes as far as the eye can see, then those are the types that can be candidates to locate here and across upstate. Those and the ones who get special deals from Albany. Others are likely to choose other places without anyone ever knowing they did.

   I think a couple big questions about all this will be:

   - Are WNY’s advantages such as those you list above as truly unique or unusual as many here like to feel they are? – i.e., Even though we kick asses of huge cities such as Brooklyn and Chicago for real estate costs and other overhead costs, how will merto Buffalo stack up vs. other mid-size cities such as a Cincinnatti, Knoxville, Raleigh, Nashville, Omaha, Louisville, and so on, since many businesses moving to a mid-size city will still shop around and not just zero in on Buffalo right away? Lots of competition out there amongst cities with interesting architecture and real estate cheaper than NYC. Hopefully Buffalo competes very favorably on issues that matter to these companies. Real estate and other cost advantages have been present the past few decades here, yet still we and upstate are consistently emptying out faster than almost any place else in U.S., so what’s gonna change now? Perhaps the marketplace hasn’t properly appreciated our advantages yet and eventually might thanks to publicizing and salesmanship. Sound like that’s the hope. I wonder how much our 400 mile to NYC and 100 to TO are really big advantages. They sound nice, and hopefully a lot of substance to that, but then again a plane trip is a plane trip in many cases.

   - What will be ratio of jobs that can be added by types of businesses who find it cheaper to do business here vs. those who find it more expensive here? For example, over the past decade Rich Products has shifted some kinds of work to Tennessee, even very publicly throwing back some Albany incentives a few years ago. On a smaller scale City Mattress recently moved their whole HQ staff from Buffalo to much-lower-tax Florida. Will the types of businesses who find it cheaper here be able to roughly replace the jobs that leave, or will it be more like a slowing our rate of downsizing?

   When you find time, will be interesting if you post some more about what executives said to you during Old Home Week about their near term plans around here.
2. Christopher Smith says:

   July 6, 2007 at 9:29 pm

   Not surprising that out of state entrepreneurs wouldn’t mention Wicks and Taylor laws by name – probably few people outside NYS ever heard of those.

   If you were to listen to local economic development professionals, you will be beaten about the head that laws like this are what prohibits the growth of small business in New York State. While there is some truth to that, it is not a material issue for creative class entrepreneurs from from places like NYC, Boston, etc. Which are exactly the types of companies I feel we need to recruit to the area. Do you really think a web design firm in Williamsburg, Queens gives much thought to these laws?

   Hmmm maybe Volcker et al and Gang of 3 are correct after all to keep taxes high then. Why the hell not if it doesn’t matter?

   Who said that it didn’t matter in a general sense? For larger companies, these are issues of greater significance. However, for the smaller service and design firms which provide the backbone of a local modern economy, they are telling us that it really isn’t a determining factor.

   While I think it is obvious that any businessperson would like to reduce their tax burden, it doesn’t seem quite as important as large scale reductions in operational expenses as it pertains to the types of companies we are recruiting through Buffalo Old Home Week.

   Are WNY’s advantages such as those you list above as truly unique or unusual as many here like to feel they are?

   I think the answer to that question depends on the type of company and their specific business needs and goals. For companies that retain extensive client lists in New York, Boston, Toronto, and even Chicago…Buffalo is a unique option. Especially if that company needs to stay close to the customer base.

   If we are to expand our local economy in a meaningful way, our primary target should be small to mid-size firms in NYC and Toronto. Those two metropolitan areas come with tremendous infrastructure and operational expenses for growing companies. We offer a sensible location for a company to significantly reduce expenses and focus capital on growing their customer base and acquiring new talent. Especially if that company puts a value on quality of life for employees and a city with history and a growing cultural base.

   Do we make sense as a relocation point for a company in Charlotte? No. Are companies currently operating in cities like Atlanta, Denver, Houston, Seattle, or San Francisco targets for Buffalo relo? Probably not, they’ll consider regional smaller cities first and then consider cities outside their region with exceptionally friendly business tax structures and loose regulations. Buffalo loses on both of those counts.

   Which goes back to the original point you made about taxes. If we want to be considered on a national scale as a competitive place of business, serious changes need to be made at a state level to make this a more business friendly environment. Until then, our efforts need to be laser focused on a small subset of companies while we market ourselves regionally as a city in which a business can grow.

   As for companies like Rich Products, Delphi, GM, Ford, et al. I can’t argue the point. I’m sure you are aware that those types of jobs are migrating further and further south as companies continually seek to reduce the bottom line while attempting to grow top line revenue in a competitive global marketplace. While those jobs are currently found in the sun belt, they will most likely continue their southerly march into Mexico, and Central/South America. It’s just a matter of time.
3. starbuck says:

   July 7, 2007 at 3:51 pm

   My crack about taxes not mattering was intended as facetious… that’s why I started everything right after that with “Seriously, …” meaning the stuff just before it wasn’t very serious… (I could’ve wrote “But seriously folks,…” would’ve been clearer…).

   I do recall from your past writings that you think it matters a lot. To answer you question about who says it doesn’t matter, well one example is your sidekick who’s written that quite a few times – which always amazes me – but I’d never accuse you of sharing his brain – yours is plenty strong and I’ve argued with him a few times – don’t mean to overflow that to your side of the fence here. And of course Volker has denied it’s an issue, and many politicians around here think it’s a non-issue, Spitzer acts that way, and so on. So such people do exist who say that.

   About local business leaders’ obsession with Wicks/Taylor/etc., yeah they do harp on it, but I think it’s understandable for them to hammer on those because to a lot of businesses the taxes do matter. And it will be just so difficult to ever make meaningful changes in those kinds of laws that the current crop of those guys (Wilmers, Rudnick, etc.) maybe just think talking it to death is all they can do to have any chance. Gets boring to listen to after a while… similar I think to county politicians harping on mandates… it’s gotten to the point I don’t want to hear it from them… if they want to reduce mandates they should run for state office, not county. And in both cases, Taylor/Wicks and mandates, their chances of ever making a difference are slim and none given the leanings of the statewide electorate. At some point maybe they should just zip it and accept that stuff as here to stay.

   Overall I agree with your point that our disadvantages seem less of a concern for small creative class type firms (wish there was better way to describe those than cc, but can’t think of one). Time will tell whether this area is advantageous to a lot of those over just locating some sprawled distance from TO or NYC, or in other mid-sized places.

   Dunno about the inevitably of everything moving south and west indefinitely. For example, Toyota and Honda in recent years have built plants in Indiana and Ohio – hardly sun belt states. It would be interesting to see a northeastern state or two at some point attempt a seriously less taxing/spending/unionizing approach and see if that has a positive effect on their relative population and job growth vs. states south and west. I can’t think of any northeast states that I’d figure are likely to try such an approach any time soon, however.
4. starbuck says:

   July 7, 2007 at 4:13 pm

   … and of course I didn’t mean literally “everything” in
   “inevitability of everything moving south and west indefinitely”, I meant that for many years to come the northeast states and midwest states should, in theory, be able to attract companies doing relatively state-of-the-art stuff such as (Honda and Toyota) in competition vs. sites in southern U.S. states or Latin America, or otherwise the Ohios and Indianas wouldn’t be still landing new facilities from companies such as those. NYS is a different matter of course. Cheaper products of the widget type yes will move south of the border, just as some creative class stuff will move to Asia and Eastern Europe, although that trend hasn’t accelerated as fast as some had predicted.