Factories here are transitioning into advanced manufacturing
Western New York has a proud manufacturing heritage, but the region is hardly stuck in the past in that sector. Consider a few developments:
• The state will pour $225 million into creating RiverBend, turning a former industrial site in South Buffalo into a clean-energy manufacturing complex. Two California-based companies plan to invest $1.5 billion of their own money in the venture.
• A planned Institute for Advanced Manufacturing Competitiveness will help local manufacturers develop new products by providing them with access to state-owned resources they might not have.
• A large business park - known as the Science, Technology and Advanced Manufacturing Park, or STAMP - is in the works for Genesee County. It would cater to big, high-tech employers such as semiconductor manufacturers, while drawing workers from the Buffalo and Rochester regions alike.
• Manufacturing employment stabilized in 2013 after several years of declines.
The individual efforts speak collectively to a larger point: The region, with a big financial lift from the state, is determined to make manufacturing an important piece of its economic growth. While low-skill manufacturing jobs have migrated overseas, economic development and government leaders are bullish on advanced manufacturing, the kind of production that is higher-tech in nature and not easily duplicated by competitors in low-cost countries.
Ben Rand, president of Insyte Consulting, which works with area manufacturers, said the Buffalo Niagara region is in a good position to attract more manufacturing jobs and investment.
"We're a manufacturing community," he said. "They can see there's this commitment that's really coming through loud and clear from the state government and other partners."
The Western New York Regional Economic Development Council, which leads the state's economic development work here, has made advanced manufacturing one of its priorities.
"No region in decline has ever reversed its fortunes without growth in the advanced manufacturing sector," the council said in a recent progress report. The council notes that the region has strengths to build on, from medical devices and precision instruments to advanced materials and energy storage. But, the council cautions, "the time to take advantage of these assets is passing."
Christina P. Orsi, Empire State Development's regional director, said she sees a "lot of momentum" in manufacturing, with companies investing in and expanding their operations.
State labor statistics show manufacturing employment in the Buffalo Niagara region is nowhere near what it once was. In 2013, the sector averaged 50,636 jobs through November. The region averaged 83,000 manufacturing jobs in 2000, and 92,600 in 1990 - 45 percent higher than last year's number. Plants can run with far fewer workers due to technological advancements, and the rise of manufacturing options overseas in lower-wage countries has eliminated other jobs in U.S. plants.
But Richard Deitz, regional economist for the Federal Reserve Bank of New York, noted that while the Buffalo Niagara region's manufacturing employment fell for years, the 2013 average was virtually unchanged from the year before.
"The fact that manufacturing employment has stabilized is actually a very big deal for the region," he said.
The factory jobs that have endured tend to require higher skills, such as more education for the workers who fill them, Deitz said. "It's definitely an important sector for the economy."
Even if the head count is dramatically smaller, advanced manufacturing operations attract large-scale investments, such as the $825 million that General Motors poured into two new engine lines in the Town of Tonawanda and the $150 million that Ford Motor Co. is putting into its Town of Hamburg facility.
Both investments led to additional jobs.
Smaller manufacturers such as Eastman Machine in Buffalo, which produces cutting machines and cutting equipment, have found a way to survive and compete by focusing on higher-end products.
While increased automation is a fact of life in manufacturing, it is not the whole story, said Robert Stevenson, Eastman's chief executive officer. "We always need people to do certain jobs," including higher-skilled jobs such as programming the computer system on a production unit, he said.
Stevenson said local manufacturing took a hit in the 1990s when a lot of work migrated overseas, lured by lower costs. "China was a the major beneficiary of that, but their wages are rising," he said.
Stevenson sees other reasons overseas manufacturing has lost some luster. Shipping costs are going up, and smaller customers might not be able to schedule deliveries as quickly as they like. Those factors have brought some manufacturing work back to the U.S., he said.
Still, the Buffalo Niagara region is not angling to bring back low-wage, low-skilled production. The focus instead is on higher-end, specialized work that cannot be easily moved to another country or performed in a low-cost setting by inexpensive workers.
Nadine Powell, a senior director with the Buffalo Niagara Partnership who works with the organization's Manufacturers Council, said many area manufacturers had a strong 2013, evidenced by their expansion projects and investments.
Some of their growth is driven by exporting to markets such as Brazil, the Middle East and Asia.
"Our manufacturers really do have a global presence," she said.
Some of the biggest splashes in advanced manufacturing - such as the RiverBend clean-energy complex and the STAMP project - won't happen immediately. But advocates say those projects will pay large dividends in the long run by getting in on cutting-edge technology and, ideally, drawing other companies here.