These days, economic development begins at home.
That's why it was encouraging last week that Rich Products Corp. is investing $18.5 million to expand and upgrade the customer innovation center it operates at its Niagara Street headquarters.
While the project isn't heavy on job creation – just 17 new positions will be added at the company's headquarters, which employs 651 — it will firm up the local food company's position here.
Just as important, it will strengthen Rich Products' product development and research operations here, which is what plants the seeds for future sales and other opportunities for growth down the road.
“That's what's going to drive growth in the future,” said Christina Orsi, the regional director in the Buffalo office of Empire State Development, which is ponying up $4.9 million in capital grants and tax credits through the Excelsior Jobs Program to help make the project happen. “This is exactly the type of investment we're looking to make.”
“The key for Buffalo business and the manufacturing side is how we promote innovation,” said John Cappellino, the executive vice president of the Erie County Industrial Development Agency. “The companies that continue to invest in research and development are the ones that are going to be successful.”
And it all starts by taking care of the companies that already are here, like Rich Products, a family-owned business with $3 billion in sales whose operations now touch 110 countries and involve more than 8,500 employees on six continents.
“It's been courted very heavily,” Orsi said. “If we don't keep our existing employer base, it makes it that much harder to attract new companies.”
“Many companies have picked up and moved elsewhere,” said Erie County Executive Mark Poloncarz. “This was a success story that was created right here and it needs to continue here.”
From the taxpayer's perspective, this isn't a cheap project. The state aid, coupled with nearly $491,000 in sales tax savings that Rich Products is expected to receive through the Erie County IDA, means the company is getting almost $5.4 million in public incentives – a figure that will grow after low-cost electricity from the Recharge New York program is added to the package.
That works out to nearly $318,000 for every one of the 17 new jobs the project will create. If you consider that the project will help cement Rich's 651 existing headquarters jobs, then the direct incentives average out to a little less than $8,100 per job.
Assemblyman Sean Ryan, D-Buffalo, has been a leading critic of the lucrative tax breaks local IDAs have been doling out for car dealers, pizzerias and doughnut shops that serve a largely local customer base and don't bring new wealth into the region. But Ryan said the Rich project is just the type of project the region's economic development apparatus should be supporting. “It's actually true economic development,” Ryan said.
“We're not reshuffling the deck by helping a company move from one part of the region to another. We're not re-slicing the pie,” he said. “They're bringing money from outside the region into the region.”
Over the last 23 years, Rich Products has brought more than 10,000 customers to its innovation center, and William Gisel, the company's chief executive officer, said the expanded facility will continue to attract hundreds of visitors a year.
Rich uses the center to work with its customers to develop new products that are tailored to the customer's specific needs. A Rich Products customer, like a restaurant chain, might send a team to Buffalo, some of whom might meet with Rich's sales and marketing people, while others might work in a test kitchen that's been laid out to match their own. Rich Products also can bring in focus groups to sample the prototype products that result.
“They're coming into a space that's been specifically designed for them,” Gisel said.
“They may be here for a week. We've had teams come in for a few days,” Gisel said. “These days, speed is everything. They have no time to dwell on projects.”
And if there isn't enough time to complete their work during the visit, the enhanced customer innovation center will have technology that will allow the kitchen work to continue in cyberspace. “It will be like they're right here, only in a virtual environment,” Gisel said.
“We do some of this now, but we'll have an ability to do it more rapidly and efficiently than we do now,” he said. “It's really important to have a state-of-the-art technical capability.”
It's really important that it happen here.
“We are in such a competitive environment today,” Lt. Gov. Robert Duffy said. “When companies like Rich's decide to expand and stay here, it makes such a difference because they have choices.”