North Coast Online

Blame The Foreigners, It's Easy To Do

Donn Esmonde pens a paean to protectionism today.

There are 650 workers at American Axle on Delavan Avenue. That is half as many as a year ago. A year from now, there may be none. Union leaders say the company told them the plant, which makes axles for a declining line of Chevy trucks, will by idled by year’s end.

It is an old story. Higher-wage American autoworkers are an endangered species. Jobs once monopolized by Americans now are done in low-wage, little regulation plants from Mexico to China.

The loss of those 650 jobs will be a huge blow to the local economy, but do you realize that in 23 years the GM Powertrain plant in Tonawanda has lost 8,400?  Yes, and not one of those went to "little-regulation" plants from Mexico to China. 

In 1984, the GM plant was Buffalo's largest employer with 10,000 workers on the assembly lines.  Today, though the numbers seem to vary from one report to the next, it employs only about 1,600.  Yet it manufactures more and better engines now than it did twenty years ago.  Mechanization has made the difference.

And while it is true that some Buffalo jobs have been lost to overseas, the problem is not so much our high American wages as it is our high American taxes.  Adding New York's corporate tax to the federal tax gives New York the honor of charging one of the highest corporate tax rates in the world.   It costs too much to do business here.  It's so bad that choosing between France and Buffalo as a profitable location to set up shop would be a real head-scratcher.

Esmonde knows that, too, but it wouldn't have made for a good tear-jerking end of week column.

[UPDATE:] Don Boudreaux with some evidence that labor unions have nothing at all to do with improving workers' economic conditions.

Ayn Rand Spins In Her Grave

The Tonawanda GM plant is competing for the production of a new diesel engine line.  The Erie County IDA is planning to kick in between $77 million and $88 million of incentives -- approximately 1/4 of the total investment needed.  And get this -- no new jobs will be created.  But, this is one time I won't fault the Erie County Industrial Development Agency.

I'm opposed to this sort of corporate welfare, but every city and every state is engaged in it, and we have to compete as best we can.  I wish the federal government could outlaw the practice, but the only legal grounds I could see would be a constitutional amendment declaring a separation of state and economics.  And there's fat chance of that.

2,000 New Jobs -- Let The Pigeons Loose

There are a lot of ways to look at job-creation statistics.  David Robinson, the very competent Buffalo News business columnist, chose one of those to report the latest figures from the federal government.

The Buffalo Niagara job market added jobs for the fourth straight month during April as the region extended its strongest streak of job growth since the fall of 2004, the state Labor Department reported Thursday.

The region added 2,000 jobs over the last year, growing at a 0.4 percent annual pace that was slightly slower than the 0.6 percent and 0.7 percent annual growth rates that the area enjoyed during the first three months of the year.

Now, that's all true and Mr. Robinson does take pains to point out that the area still lags miserably behind the rest of the country.  Nonetheless, he might leave some today with the impression that things are improving.  I can't resist pointing out that the number of jobs in Buffalo has dropped by 6,000 just since last December.  Of course, it would only be fair to criticize me for taking a short view -- job numbers do tend to rise and fall quickly.

OK.  How about this? The number of jobs in Buffalo-Niagara this April just finally reached the level we "enjoyed" in April 2001 (ah yes, those were the good times) -- but is still down some 10,000 from April 2000.   OK, they're basically meaningless.  The monthly job figures are certainly interesting but until we start seeing numbers like 5,000 or 8,000 new jobs year over year, we should probably ignore them.

As it stands now, our economy's so stagnant that we hang on statistical blips in job numbers while the number of people moving away tells us all we really need to know.  When the new-jobs-created number equals 1/3 of 1% of the total, it's hardly worth paying attention to.

New York's Carbon Footprint Continues To Shrink

More bad news for the Governor's new economic development team.

General Motors will close its Powertrain plant in Massena in northern New York by the end of 2008, eliminating almost 500 jobs, according to broadcast reports. The closing is not expected to affect the Powertrain plant in the Buffalo area.

I really wonder if Dan Gunderson knew what he was getting into when he accepted the job of upstate development chairman?  This GM closing comes as a huge blow especially after the big employment drops at Delphi in Rochester and Lockport and the expected shutdown of the Buffalo axle plant. I don't think that those are losses that can be overcome by savvy marketing and a ration of cheap electricity.

It is true that these closings and downsizings reflect a general decline in the American car-making industry, but nonetheless, in the rest of the country manufacturing continues to grow.  Honda's building a new plant in Indiana that will employ 2,000 and just this week, German steelmaker Thyssen-Krupp announced plans to open a new steel mill with 2,700 planned jobs.  Yes -- a steel mill -- in America.

The Bureau of Labor Statistics will soon release the April job numbers for Buffalo and that will serve as the starting point from which we'll judge the success or failure of the Governor's economic plans for upstate New York.  Only fair, I think, to start in the month that his first budget was passed.  But this is going to be a tough slog, and without the actual numbers, it sure appears that we're just falling further and further behind.

And all the chambermaids and restaurant servers this side of Glasgow isn't going to change that.

Priorities

So, how does this winter stack up against the historical average?  Pretty normal, it turns out.  According to the heating degree day data provided by the New York Energy Research And Development Authority, this winter was quite a bit colder than last year's, but just slightly milder than the 30 year average.  April, it seems, has been cooler than usual.

Week Ending	This Year	Last Year	Normal (30 years)
12/23/06	170	269	253
12/30/06	202	207	264
01/06/07	150	212	275
01/13/07	210	179	282
01/20/07	281	233	287
01/27/07	316	239	287
02/03/07	319	178	287
02/10/07	368	271	287
02/17/07	353	225	281
02/24/07	285	285	270
03/03/07	245	304	257
03/10/07	302	222	239
03/17/07	201	173	222
03/24/07	193	247	205
Totals for Winter 2006-2007	3,595	3,244	3,696

I only bring this up to reassure everyone that our local climate remains steady and that attempts to steer our attention away from economic development to climate-friendly "sustainable" projects are not supported by the current data.  The weather this year in Buffalo is still quite normal -- our economy however, still isn't.

Movin' On Up

We can talk all we want about new businesses in Buffalo, but we can't ignore the old ones no longer here either.  City Mattress, a Buffalo-born company, has moved its headquarters to Florida.  Now, the owners moved there, so you could just chalk it up to weather and retirement.

But you'd be wrong.  If the tax situation in New York were more favorable than Florida's, the owners might have moved south anyway -- but you can be assured that Buffalo would still be where they conducted their business.  It isn't and that's our problem.

Prosperity Comes Before Pretty

The Vernor building in the 700 block of Main Street is finally being torn down and Scot Fisher is sad.

“It’s heartbreaking,” Fisher said. “The real crime here is that it’s such a significant, historic building, and there will be some project here now that will look no different than a project that could be in Phoenix, Arizona, or Atlanta, Georgia, or San Diego, California, and that’s not what makes Buffalo different.”

Interesting choice of cities.  What makes Buffalo different from them is that they're growing and we're dying  --  and Scot, you're not helping.  Look, Buffalo's old-city urban feel is part of the reason I live here, too, but the economy is so thin that I have to always consider myself one layoff away from leaving.  We need growth here more than we need to preserve the past. 

The irony is that Buffalo will be much better able to preserve its history once it's created some wealth. 

Entrepreneurs

Two that got away from us.

Latina's Closing.

Latina's closing Elmwood Avenue store. Well, you can't say I didn't see that one coming.  It's too bad, though, because that part of Buffalo can support a decent supermarket.  Latina's just expanded too fast. 

I suspect that someone else will go in there and I hope it's Budwey's or Jack Dash, though I fear it will be Aldi's.   There's nothing wrong at all with Aldi's;  that neighborhood is growing poorer and the location attracts shoppers not only from Allentown and the West Side but over into the near East Side.  Aldi's, with its back-to-basics format might very well find it a good location. 

But there's still a lot of people in Allentown with money to spend at a decent deli, on fresh produce and a good meat selection. In the meantime, it's back to Wegman's for me.

Starting Off In The Hole

It looks as if the long-rumored closure of the Buffalo American Axle plant is near.

American Axle & Manufacturing plans to close its sprawling Buffalo Gear and Axle Plant, top United Auto Workers officials told union members late this week.

But the UAW is hopeful the plant on East Delavan Avenue, which employs about 650 union workers, will attract new work that could save the facility.

Well, at least we have Governor Spitzer paying attention.  I mean, it ought to be a cinch to replace a lousy 650 well-paying jobs in Buffalo, us having our very own development czar right here in town and all.  And with Spitzer's business tax cuts in place . . . oh, that's right he didn't cut them, he raised them.   Never mind.

I sure hope this Gunderson guy's as good as they say he is.