Economy’s new math doesn’t add up
The new math for the 21st Century economy isn’t adding up for the Buffalo Niagara region.
That was clear from two events last week.
The news that bankrupt General Motors Corp. would cut upwards of 260 jobs at its Tonawanda Engine Plant—as much as 30 percent of its remaining work force—was further evidence that the loss of 20th Century jobs continues unabated.
A couple of days later, executives at Greatbatch Inc. and local politicians and development officials trumpeted the continued growth at the Clarence medical device and battery manufacturer, especially is expansion of its research and engineering operations here.
Those are 21st Century jobs, exactly what local development officials hope to turn the region into a magnet for with their focus on building up the region’s life sciences corridor.
“These are more knowledge-driven. They’re much more value-added. These are prized jobs,” says John Slenker, the state Labor Department’s regional economist in Buffalo. “We’re changing from the old-line manufacturing where we had autos and steel.”
And that’s where the math problem shows up.
While Greatbatch has brought in 60 of those coveted, good-paying new research and development jobs since the beginning of 2006,GM is chopping four times as many good-paying factory jobs in a matter of months.
You don’t win the Economy Game by adding one, and then subtracting four, in the Good-Paying Jobs category.
Granted, other parts of the local economy had been growing, before the recession hit, but most of that growth was in lower-paying service jobs.
If that keeps up, at the end of the day, the region’s economy will end up weaker because, as Canisius College professors George Palumbo and Mark Zaporowski point out, the service jobs that the region is adding tend to pay only about half as much as the factory jobs we’re losing.
Since the recession hit, even those service jobs have been hard to come by, but the cutbacks there have been less than half as severe as the downsizing among manufacturers. We’ve lost 2 percent of our service jobs over the last year, while 4.5 percent of our factory jobs have vanished. That equates to losing an average of 50 manufacturing jobs a week over the last year.
That’s why it was such a big deal last week when Greatbatch cut the ribbon on its new $20 million headquarters and research center. Not only did the region keep a homegrown company here, but Western New York also came out as a winner after Greatbatch embarked on a major push to consolidate its operations at fewer facilities.
While it was closing sites in places like Maryland, Pennsylvania and California, Greatbatch was investing upwards of $60 million in its new headquarters and research center and the medical battery manufacturing plant it opened a couple of years ago in Alden.
And in economic development, keeping what you have is a big part of the challenge, simply because it’s so hard to find other businesses to replace what you lose.
“Attracting is half of the game, but keeping them here is the other half,” says David C. Hartzell, the chairman of the Clarence Industrial Development Agency, which provided tax breaks for the Greatbatch headquarters and research center.
That’s because 21st Century companies, like Greatbatch, are so hard to find.
“I wish we had more of them,” Hartzell says. “But the odds of finding another Greatbatch are, like, zero.”
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