Sunday, August 18, 2013

Nanotech: What's the Real Cost?

Rochester's Democrat & Chronicle has an interesting article today: Nanotech: Albany's boom industry is getting traction in WNY
In Buffalo, a $250 million pharmaceutical research facility is being built. Last month, a $100 million solar-energy research and manufacturing center was announced in Rochester.

And in June, construction started on a $500 million computer chip commercialization center in Utica.

All of it is the offshoot of SUNY’s College of Nanoscale Science and Engineering in Albany, the wildly successful research hub that has 3,000 employees and $17 billion in public and private investment. . . .
This all sounds very hopeful . . . but you have to dig deep to figure out what this is costing the taxpayers.
A half hour north of Albany, GlobalFoundries, aided by $1.3 billion in state money, has a booming semiconductor chip manufacturing plant — a spinoff from the nanocenter’s research.
According to an article this past week in The (Albany) Business Review, that plant  has created 2100 jobs.  Do the math:  That's almost $620,000 per job!

The Rochester article describes the Utica commercialization project as "a $500 million venture with the goal of 900 jobs." That's $555,000 per job!  A photovoltaic center in Rochester is described as a $100 million facility with $65 million being from the private sector. That means $35 million is from public funding for a mere 100 jobs or $350,000 per job.

To be fair, all this "investing"  may be setting the stage for future growth.  The Albany article linked above reveals that Global Foundaries is planning to install a SECOND fab in Malta.  And there are rumors about town that there is an actual company interested in our own Marcy Nanocenter to the point where an actual proposal can be incorporated into OC's wetland's permit.  These are all signs of potentially good things on the horizon that hopefully will come to fruition.

But, with the seemingly good news, we still do not know the real costs.  The ones mentioned above are only for state money.  What about local "investments?"  Oneida County taxpayers are bearing the highest sales tax outside of Manhattan apparently for "economic development" purposes.  As noted in past posts, Greater Utica sewer users are being tapped in their sewer fees to expand facilities for "economic development."  One suspects that Herkimer County residents and businesses along West Canada Creek will be paying a price in diminished creek flows (which has an economic consequence for some) for such development since the local Nanocenter was a consideration in the Water Authority - Canal Corporation settlement that was brought about WITHOUT a formal environmental impact study and statement.  Will "success" in attracting government-sponsored private sector investment become an excuse to take even more from taxpayers?

What is the cost in NON-state-subsidized-government-beholden-nano-tech jobs that are being squeezed out of NYS by the state's policies to foster nanotech? You cannot give $billions from the taxpayers to one industry sector without it harming others.


Anonymous said...

This is an excellent post. In the old days, pre big government, business sprung up or moved in for labor, location and site related reasons. Little to no government money was involved. We boomed due to the free market place and a great labor force. Today, we have big government, high taxes and taxayer financed business. The government picks those who benefit. Given all the subsidies of grants, loans, tax deals, labor credits, etc., the cost/reward is hard to judge. The major gain for our area is that new brain power may be brought in. Otherwise, the public paying per job is not worth it, given the high cost ratio for less than 1,000 jobs. Insofar as future growth stimulated, what makes anyone think that more subsidies funded by the taxpayer will not be piled on?

Anonymous said...

fracking is the answer. it must be that all the other states that allow it just don't care about their citizens. NY the land where EVERYTHING is political would rather give corporations our tax monies .

Anonymous said...

The real cost is that a whole bunch of Mohawk Valley employers are about to lose their best and smartest employees to a higher paying job at the chip plant.

Anonymous said...

But, their best and smartest employees can be repalced with other good and smart employeea; that's called dynamic capititalism. We have preciuos little of that here. A labor plantation does not grow overall wealth and growth. Neither do high taxes and massive subsidies.

Anonymous said...

When a chip plant is announced, it will be comical to observe the politicians and EDGE folks take bows and credit. The reality of our upside/down so-called economic deveopment is that the taxpayer is, in effect, buying jobs at a cost that may never be returned in full. This governemnt based economy cannot bring prosperity to our region or any other.

Keith said...

As with all projections of this type the costs will be higher and the number of jobs lower than the projections. Your actual mileage may differ from that on the window sticker.

Anonymous said...

That's an interesting point. The OD and the politicians quote employment projections yet no one seems to report the actuals once the businesses receiving our largess are operational.