KWR Special Report

Revisiting Buffalo Niagara’s Competitiveness as a Renewable Energy Manufacturing Center
Discussion with Thomas Kucharski, President & CEO, Invest Buffalo Niagara

David Mortlock

Interview by Keith W. Rabin

Good afternoon Tom, nice to speak again. Before we begin, can you tell us a bit about Invest Buffalo Niagara (InBN) and its role in the Buffalo Niagara region?

Source: Invest Buffalo Niagara

InBN was organized in late 1990s when Western New York was suffering from many problems. This included a lack of investment, population loss, environmental problems due to industrial waste and a range of other issues. Recognizing the need for change, local companies hired consultants and their biggest conclusion beyond the need to take steps to address a range of legacy issues to make the environment more competitive was the need for a regional marketing organization and I came on in 2000. We had a lack of confidence given the state of the region at the time – and our group was formed as to help us create a competitive landscape for investment and job creation. We served as a communicator for industries and companies here and helped to coordinate among various chambers and organizations among the eight western-most counties in New York.

About ten years ago InBN recruited KWR International (KWR) to study the potential for renewable energy manufacturing in a report titled Buffalo Niagara: Where Industry Creates Energy. Can you talk about Buffalo Niagara at that time and what led you to commission this study?

Source: KWR International

By that time we had assessed our problems and had a whole list of sectors where we felt we had potential strength and necessary resources and wanted to get both more information and validation on the directions we wanted to pursue. We knew where we had come from but the world and technology was changing as well as the direction of various industries. So to quote Wayne Gretsky, "We were trying to go where the puck was going" rather than to where it was. One sector that attracted special interest was the potential for renewable energy manufacturing. We saw growing interest in environmentalism and being green and realized we had industries that we could potentially convert to compete in this area. New York State was also aggressive in this area. Bottom line – we recognized this was a growth area and wanted someone who could take a closer look. National Grid provided funding and the report comissioned to define our strengths and weaknesses, a well as which areas proved particularly attractive and how we might move forward and communicate our interest in the sector.

Source: Invest Buffalo Niagara

It has been about a decade since we released our findings. How has the region advanced in respect to its efforts to build a presence in renewable energy and related manufacturing?

The study helped to provide depth and context and to build consenus within our community as to how to move forward and compete in the sector. There has been substantial progress and as green manufacturers want to find a site where they can use green energy, they have been attracted to our area by Buffalo Niagara’s ability to access Niagara Falls to provide low-cost hydropower. They are also attracted by our ability to provide water and an ambient temperature as well.

Yahoo has a opened a data center which has expanded twice and Citigroup has as well. Tesla and Panasonic also have a partnership in their 1.2 million sq. ft. facility in Buffalo producing solar cells. These wins have validated the direction we chose to follow.

Source: Invest Buffalo Niagara

Perhaps the major finding of the Buffalo Niagara: Where Industry Creates Energy. study was to recognize InBN’s strength across industrial processes that allow competitiveness in most renewable energy technologies. We viewed this as an advantage given the importance of integrating these technologies within a balanced energy mix and advocated that Buffalo Niagara position itself as a hub, and to take steps to make itself attractive to renewable energy companies. Can you tell us what steps were taken, and the advantages of InBN as a location for renewable energy manufacturing?

What has happened is we went from an area reliant on heavy industry given our history as a manufacturing center to where now we are more like other metro areas with a more diversified mix. We emphasized green growth and technologies as well as smart city initiatives and learned to use our resources more efficiently. For example, we just updated Buffalo’s building code for first time since 1963 and it is now called the Green Code. As previously noted, we have also leveraged our reliable and affordable hydropower when marketing to companies.

I always say "it takes a little while to make an overnight success". We still have 11% of our economy devoted to manufacturing and are still attracting new facilities – but it is now all green and innovative.

Source: Invest Buffalo Niagara

Buffalo Niagara has traditionally been strong in manufacturing and as a logistical center, both of which declined as jobs moved overseas and to the Southern US. Given all the talk about bringing manufacturing jobs back to the US, how important is manufacturing and logistics to the region? Most importantly, how are you dealing with international competition and making Buffalo Niagara competitive compared to lower wage centers in the US and overseas?

In manufacturing specifically we are still very strong. We have water, low cost power, competitive incentives, a strong workforce, and more on the way graduating from our 21 colleges and universities.

Foreign companies are also now looking to diversify and to set up operations in the US. Costs have risen in other countries and we are stable, with very aggressive tax credit programs. Given that we have been operating under capacity for several decades you are also spared the cost of building infrastructure and there are workers here.

Source: Invest Buffalo Niagara

One of Buffalo Niagara’s strengths is its skilled and underutilized infrastructure and skilled labor, a legacy of the days when Buffalo was a thriving city - the 10th largest in the US with a strong industrial base. This workforce and infrastructure is aging and and technologies and manufacturing processes have changed dramatically over the years. How is Buffalo Niagara responding to these changes, the aging of its infrastructure and workforce and maintaining the vitality needed to remain competitive in today’s economy?

That point I would argue is the biggest challenge we have before us. We are one of the few regions that undertake a labor market assessment every three years to see what companies are looking for. We did the first one in 2004 when the unemployment rate was about 12% as compared to somewhere around 4% now. That is a major decrease. While our population has begun to grow and the University of Buffalo is a major force which now includes about 40,000 students including New York’s second largest engineering school, we still have a manufacturing retirement cliff looming so we need to replenish our talent pipeline.

We just recently opened the Northland Workforce Training Center, which is training people for the industries of tomorrow in advanced manufacturing and energy. They are expected to graduate about 400 students a year. It’s a beautiful state-of-the-art facility that incorporates industry input into equipment purchasing and even curriculum. There’s really nothing else like it in the country and it is a major new asset for our region.

Buffalo has also seen a great increase in immigrant resettlement to the area, which is a big reason for our population uptick and has been a huge boost to our workforce. So while this does remain a challenge, we’re being proactive.

Source: Invest Buffalo Niagara

In our work facilitating trade, investment and economic development in cities, regions and countries around the world there is substantial emphasis on the development of Public-Private Partnerships (PPP) and as well as education, culture and other advantages that make a destination attractive to companies and investors. How does BN stack up in these areas and how important are PPP’s and government cooperation on national, state and local levels to the regions development?

This has now become part of every discussion. New York State is allocating resources in a way that is now mimicked by cities and other organizations. They are willing to put in incentives amounting to about one fifth of incoming investment. This should not be viewed as buying jobs but investing into them. In the old days you would pit community against community and they would compete with each other. Now they are more cooperative and so long as we can show 80% of investment from private sources and there is real interest, the state and city is willing to facilitate. Governors, mayors and county executives are all embracing this modeal and seeking to set up PPP-oriented projects and investments.

Source: Invest Buffalo Niagara

We also place a great deal of emphasis on identifying and balancing a region’s strengths against their weaknesses to help them brand and position themselves in a way that helps them to attract outside interest within an integrated strategy that allows development in a sustainable manner. That was the reasoning behind titling our study as BN: Where Industry Creates Energy to emphasize both its industrial and manufacturing strength as well as its potential as a RE center. How do you view BN’s positioning and the importance of strategic outreach and what steps does InBN take in this regard?

I often say we are the Midwest of the Northeast. We are a low cost option and and if you want to be part of this new and vibrant communitywhere millenial population is growing at about 10% and you can afford big city amenities like professional sports teams and world-class art museums, we are a viable destination. And that message is resonating as seen in our success.

Source: Invest Buffalo Niagara

Buffalo Niagara is more than Buffalo and your reach extends to the eight western-most counties in New York. How do you balance your work to encompass this region and what are the advantages and weaknesses to having to approaching development on a regional level?

We have come a long way in the last 20 years. When I came in 2000 we were all fighting with each other and this was due to not having a plan and explanations as to why it was beneficial to cooperate and compete together. It has taken a lot of time and investment and the communities are cooperating more than ever before. Having a plan and spending time together to build consensus is extremely important. We put a lot of emphasis on this and are much more coordinated now than 15 years ago. This has led to many synergies, and has allowed us to better discern what we have to offer and where we fit in.

Source: Invest Buffalo Niagara

It is much easier to organize and commission a study than to build consensus to facilitate movement behind its findings. That is why we spent so much time visiting the area, interviewing key stakeholders and briefing media, business leaders and other important constituencies in your offices. How does InBN view that process and what steps do you take to develop cohesion among important stakeholders in your area?

My grandmother used to say "you can’t listen while you are talking". We did not really understand that at the beginning and it took a long time to bring people together in the area. So now when we are targeting companies we seek input from various stakeholders. We visited people who were unhappy that we were not consulting with them and we apologized. We then worked to help them to define their own needs and objectives so that they could better integrate into a regional approach. This involved negiations and analysis of tradeoffs . Most important, however, we needed to make everyone part of the plan, shuffle meetings around to different parts of our region to decide on an agenda and otherwise involve them. This strengthens our overall competitiveness as we are able to approach this as a region with a stronger offering than what could be offered within the city alone.

Thank you Tom for your time and attention. Look forward to speaking again soon.

While the information and opinions contained within have been compiled from sources believed to be reliable, KWR does not represent that it is accurate or complete and it should be relied on as such. Accordingly, nothing in this article shall be construed as offering a guarantee of the accuracy or completeness of the information contained herein, or as an offer or solicitation with respect to the purchase or sale of any security. All opinions and estimates are subject to change without notice. KWR staff, consultants and contributors to the KWR International Advisor may at any time have a long or short position in any security or option mentioned.

KWR International Advisor

Publisher: Keith W. Rabin, President

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