THE YEAR IN REVIEW
What local business stories came out on top in 2008?
Gas prices, impact of financial meltdown were the leading picks
It’s no surprise that the top 10 local business stories of 2008, as selected by the reporters and editors of the Business Today section, were largely influenced by global and national economic forces. The economic meltdown has cast a long shadow:
• 1. When gasoline prices spiked above $4 a gallon in May, people changed their ways — fast. Suddenly car-pooling and mass transit made sense. Families parked the second car, and car shoppers looked past SUVs to test drive gas sippers.
But as gas prices began to recede elsewhere in the state, prices in Western New York stayed mysteriously high. Gas in the Buffalo Niagara region was often the highest in the continental U. S. Federal and state inquires have been launched, but an investigation by The Buffalo News pointed to a dearth of suppliers as a principal cause for high prices. Since the story ran, prices in the region have dropped to around $1.86.
• 2. Western New York banks largely avoided the credit crisis that took down some of the nation’s most venerable institutions. Area banks did not get too heavily involved with the subprime and alt-A loans that crippled so many other banks.
The stable Western New York real estate market (see No. 9 below) kept speculation — and the risky mortgages — to a minimum.
However, most of the region’s banks have decided to sell preferred shares to the federal government under the Troubled Assets Relief Program as a means to raise capital. The hope is that the government money will loosen up lending and get people and businesses spending again.
• 3. The stock market collapse reverberated across the region — devastating retirement and college savings accounts, undermining consumer bravado and threatening to tighten credit everywhere. The federal government’s unprecedenced infusion of capital into the banking system has been a desperate attempt to loosen credit and boost markets. But just ask anyone who has checked their 401(k) statement lately or tried to get a mortgage: It’s still tough out there.
• 4. Developing Buffalo’s waterfront around the original Erie Canal terminus has been slow — painfully slow — but the region finally got a look at what may be in store when the master plan for the site was unveiled in December. The water- themed development with a giant Bass Pro store, a museum, hotel and many other attractions got very encouraging reviews. A local company will start tearing down the Aud this winter and real work should get under way soon after . . . provided the promised government funding comes through.
• 5. Things looked bright for the legendary Statler Towers at the start of the year, as a young British investor named Bashar Issa proceeded with plans to renovate the first hotel in the Statler chain. But things went bad. Workers at the site filed labor grievances against Issa, he stopped renovation work and sought new partners. One promising deal with a Canadian developer fell through when Issa was accused of constantly changing terms of the contract.
At the end of the year, the hotel was largely vacant, the city had not heard from Issa, and Mayor Byron Brown called the Statler “a building the city can’t afford to lose.”
• 6. The United Auto Workers union has taken its share of criticism as the Big Three car companies scramble to survive. But before the economic crisis drove the companies to the brink of collapse, the UAW did approve a new labor contract that cut the wages of certain new hires by 50 percent. It was a step in the right direction of lowering costs that was largely overlooked when the crisis spun out of control.
Now the U. S. auto industry is in a desperate race to regain its footing. Government assistance is helping, but structural change that will require more sacrifices by all parties, including the UAW, seem like the only route to survival. The Western New York economy has a lot riding on this one.
• 7. Amid the national real estate meltdown, a mysterious 20-something buyer from Cleveland did the amazing. He bought two houses in the Town of Hamburg for about $3 million each — both record prices for the region.
The homes make up an estate on Boston State Road, and the price far outstripped the region’s previous record of $1.4 million for a single-family home. The buyer is listed as Phantom Holdings One LLC.
• 8. In July the state pulled the plug on what would have been the region’s largest industrial project: a $1.6 billion rebuilding of the Huntly Power Plant on the banks of the Niagara River in the Town of Tonawanda. The plant was to become a “clean coal” facility with the carbon dioxide emissions being captured and injected deep into the earth. Some estimates said the costs would climb to $2.3 billion. But the incentives and the ultimate cost of the electricity made it just too expensive to work.
What was lost? At least 1,000 construction jobs, 100 new plant jobs and the possibility of leading the nation in the new technology. Instead the state is helping fund a $285 million “clean coal” plane in Jamestown, to test the technology.
• 9. For once, our “never-too- high, never-too-low” local housing market made us the envy of the nation. While people in many parts of the country saw their home values plummet — by as much as half in some communities — median prices in the Buffalo Niagara region have actually risen slightly.
Although home sales slowed significantly toward the end of the year, dropping by 21 percent in November compared to last year, the prices have stayed strong. That gives some comfort to people whose other investments have been gutted.
• 10. Local retailers are thanking Canada for keeping them strong at a time when sales were soft elsewhere. Earlier in the year, when the Canadian loonie was worth $1.20 U. S., the malls were crowded with cars bearing Ontario plates, and buses brought thousands for the deals.
Many stores adjusted their inventories toward Canadian tastes, and put out more receptacles for discarded clothing, as many shoppers wore their purchases home.
The Canadian shopping wave slowed somewhat as the loonie swooned, but our guests from the north did help prop up local sales during a dismal holiday shopping season.
