“Creative destruction” and a smaller, smarter, richer Buffalo

Nobody here wants to deliver the Buffalo version of that famous opening soliloquy in Shakespeare’s Richard III, in which the angry, passed-over guy snarls out a sneer at the fresh spirit of hopefulness the new prince has brought forth. Thus only a few barroom buzzards and fringe purists have grumbled about Governor Andrew Cuomo’s announcement last week that a few bucks of New York State money will bring two California high-tech green-energy manufacturing firms here. No hunchbacked connivers could be seen at the governor’s announcement, nor were critics solicited for early news commentary—maybe because this effort is in deadly earnest, and this is no time for history plays or other literary exercises.

The question is not about the winter of our discontent made glorious summer by this son of York; most of the clouds that lower’d on our house are still here. So is the gnarly question we’ve been asking about economic development in Buffalo for the past four decades: What will replace the old wealth-creating manufacturing industries that we lost to globalization? As the lean years have dragged on, as the manufacturing workforce shrunk from a high near 250,000 in the mid-1950s to today’s bold assertion of 50,000 (a report from the New York State Comptroller had the Buffalo metro at 75,000 in 2008), the question, as asked, is asked sadly.

The answer we now have, as of last week, is a challenging one. We’re going to get 800 jobs in green energy, in high-tech manufacturing, with a smart re-use of a brownfield site, and withal a shot, a pretty good shot, at joining the international next-wave of high-value-added work—but only if we’re smart, educated, and competitive.

Blue-collar guys, take note. Advocates for the poor, listen up. For a generation, since the departure of the mass-employment structures known as steel plants and their affiliated metal-bending industries, the political class has been promising the masses of low-skill workers here something like a replica of what was. As the incredulous proletariat wised up and started to move west and south, the answer to the question of what’s next started to morph: not a promise of new smokestacks, but a curt directive that we should stop asking, shut up about the low-wage jobs that are now the norm, and meanwhile just take some of this-here walking-around money, and stand up and salute whenever somebody from Albany brings the Rigases up from Pennsylvania, or Bass Pro in from the Ozarks.

It’s as if the family has been awaiting an oft-promised Thanksgiving dinner, but has been given a jelly bean here and there and told to stay put, with some of the ever-faithful still believing that the real meal is coming as it did before—to hard-working, red-knuckled, strong-backed boys and sure-handed girls.

As we’ve waited, jobs have drifted away: As recently as when Chris Collins was Erie County executive, there were 580,000 people employed hereabouts. Now? Around 550,000. The Bureau of Economic Analysis says that only a quarter of our gross metropolitan product comes from making things.

But this announcement is no jelly bean. This is a sector-changer. And though the inevitable local real-estate developer will, as always, get the state contract to erect the $200 million worth of taxpayer-funded buildings in which the two California firms will do their business, this is different from the hundreds of millions of state funds pumped into new buildings for existing hospital functions, existing UB Medical School functions, existing law firms, etc. Andrew Cuomo’s money will bring new firms in new global industries that require new talent newly trained in the newest technologies to solve an old problem: getting Buffao back into the export business.

The Brookings Institution’s researchers track the metros that have recovered from the Wall Street speculators’ disaster of 2008: The cities that have come back are the ones that make stuff and sell it to the world. Buffalo-Niagara is 44th on the top 100 list, the region’s main exports being the chemicals made in Niagara Falls and the auto parts made on River Road and in Woodlawn. Good stuff, especially as both Ford and General Motors have added jobs since 2008. But the region is still down 20,000 jobs since then.

New jobs in new industry? Excellent. Needed. A very positive change for the better. And this, too: There will not be a payday for the chronically unemployed here—unless in their new numbers, the designers and fabricators and marketers of solar photo-voltaics and of light-emitting diodes are 10 times the promised 800, and, by the force of their high average salaries (the comptroller’s report pegged median salaries for high-tech and engineering jobs in a range from $46,000 to $90,000), raise all other boats. Neither will there be a payday for the chronically under-skilled of this urban core, where male unemployment of all races is 35 percent and workforce disengagement is above 50 percent.

The key differentiator of this public input is that, unlike almost all the others we’ve seen, it’s not about moving existing dollars around inside this region, nor is it another empty promise to fix every last thing that’s so long been broken. For the first time in decades, New York State is investing in making Buffalo an exporter—and producer for a waiting world—of something besides its best human capital.

This investment is, then, about the next Buffalo, much more so than about the one here now. The National Science Foundation counted 2,778 doctorates awarded in scientific and engineering disciplines in New York State in 2011. In May 2012, UB awarded 670 engineering degrees. Nearby Cornell awarded more than 300 degrees in electrical, chemical, and computer engineering. The University of Rochester currently has 1,334 undergraduates enrolled in its engineering program. Alfred University produced another 62 engineers from its programs in glass, ceramic, electrical, mechanical, and materials engineering.

Western New York supplies these BAs, MAs, and PhDs to the world. Now there will be more demand for them here, on the Buffalo River.

Creative destruction?

In Rochester’s annual report on itself to the bond-rating agencies, there’s a self-conscious paraphrase of the late Austrian economist Joseph Schumpeter’s endlessly quoted phrase about capitalism being best when it is a process of “creative destruction,” when the old makes way for the new. In Rochester, they know about this: Kodak, the behemoth that made Rochester wealthy for a hundred years, went under. Kodak Park is a great big old brownfield. Well over 25,000 people worked for Kodak in Rochester in its not-so-ancient heyday. (A decade ago, 60,000 also worked for them in the Finger Lakes region.)

And now? Rochester had Kodak, and Bausch & Lomb the lensmaker (which is, happily, now making lenses again), and Xerox, and still has the replenishing close-in academic engines of the Rochester Institute of Technology and the University of Rochester, which last year won five times more research grants than the much larger UB did. So it should be no surprise that “creative destruction” in the city 60 miles from us means that today there are dozens of engineer-led startups and other tech firms of very recent vintage.

Yet does smug and virtuous Rochester struggle. Yet does Rochester sprawl. Yet does Rochester suffer from concentrated poverty and from crime. But Rochester also has experienced a phoenix-like rise of many new firms, some of them defense contractors, some of them data-miners, even advertising and web-enhancing “creative-class” firms, from the ashes of old industry. Rochester’s old industry used to design and market stuff to the world. Rochester is still an exporter, 33rd on the Brookings Institution Top 100 list for 2012, 18th overall in terms of the share of its gross metropolitan product derived from selling things and services beyond its borders. Buffalo-Niagara is 46th and 44th.

Buffalo’s old firms? Not so much. Our business leadership here, for decades since the old WASP elite sold off or lost its industrial companies, has been transaction-oriented. Lawyers, bankers, brokers, real-estate guys, construction managers—not industrialists who market to the world, who have to know the outside world. Not creators.

Now, with Cuomo’s tasking of the Albany nanotech guy, this changes in Buffalo. Now, as if everybody has been reading Catherine Tumber’s prescient study/advocacy tome Small, Gritty, and Green (reviewed here in May 2012), our iconic Rust Belt brownfield gets green technology not just in the form of a purchase of somebody else’s technology (we already have the first urban wind farm), but in a better form: as the new site for that technology’s development, production, and distribution.

The next Buffalo will certainly be smaller in overall population—but if there are more firms like the California imports, the pay-per-job will grow. Cynics, pessimists, nay-sayers, skeptics, or even people who say anything but hallelujah are going to have to work harder, though, to say that smaller automatically means poorer, or that smaller is eo ipso a disaster, if the hoped-for clustering of energy-technology firms occurs.

This is a good development. The grasping classes here will, of course, continue to grab most of the state subsidy dollars for bad development that chases only local dollars. Until, that is, the good catches on and becomes normative. That transformation, from bad rent-seeking to a virtuous cycle, would best be enabled if the troubled parts of our workforce, precisely in the geography where the brownfield green-tech is sited, got un-troubled.

How could that happen? The fix is easy. Put the workforce-training operation near where the new jobs will be, i.e., downtown, just one mile away, and not 12 miles away in Amherst. New York State needs to tell Erie County to put Erie Community College’s science, technology, and mathematics-education training center smack dab in the middle of where Cuomo is putting the rest of New York’s money, i.e., downtown, between Erie Canal Harbor and the Main-High medical campus. Today, Erie Communtiy College’s training center for advanced manufacturing is located in Amherst, which is more than 12 miles and a two-hour NFTA bus ride round trip from where the unemployees of this region are concentrated—that is, when the buses are running, because the courses in Advanced Manufacturing start at 6pm, and the last bus leaves the general vicinity of the North Campus of Erie Community College at 8pm, before that Advanced Manufacturing class is complete. Is it really New York State’s plan to invest public money on advanced manufacturing, a new medical school, a huge Erie Canal Harbor project all within one mile of City Hall, but otherwise to keep sprawl alive?

Bruce Fisher is director of the the Center for Economic and Policy Studies at Buffalo State College. His recent book, Borderland: Essays from the US-Canada Divide, is available at bookstores or at www.sunypress.edu.