Last month, Yahoo! announced layoffs of 2,000 jobs. That’s their sixth layoff - and largest – since 2008. The other 5 ranged from 150 to 1,000 job cuts each and totaled 3,950 jobs lost. In the aggregate the internet giant has cut 5,950 jobs (or 30% of its workforce) in 4 years.
As bad as the layoff news was, local officials were quick to proclaim a silver lining. Senator George Maziarz told this paper that the Lockport site was spared any layoffs. “Not only are all of the jobs safe in this area, but they have chosen the Town of Lockport as one of the facilities to expand their services and bring more jobs to Niagara County,” he said.
The latter was not news, but previously announced, dating back to March and April of 2011 when Yahoo! indicated it would be investing $500 million in 5 existing datacenters (including Lockport) and new sites yet to be determined. At the time, Yahoo! was granted 1 more megawatt of low-cost hydropower in advance of the final decision, contingent on the company adding 20 more jobs to the local venue, which, if all goes as promised, would bring total employment at Lockport to 145. It should be noted that the 145 is a far cry from the current job rolls of 75. The 75 also fall short of the 125 jobs that were committed to in the initial $268 million incentives package offered by local, state, and federal officials.
Taking the above into consideration, we need to be less parochial and adopt a world view when it comes to economic development. Isn’t the point of corporate welfare to inspire growth of the corporation and achieve a return on investment that, in the terms of the public dollars donated or not realized, equates to more jobs? Sure, Yahoo! is maintaining employment here and (hopefully) adding more, but, looking at the Big Picture, does it really matter? They’ve cut 5,950 jobs throughout the corporation!
At the very same time all of those job cuts occurred, Lockport, New York and the federal government gave Yahoo! the world to come here. Simply put: We were used. Round after round of layoffs occurred while the corporation was negotiating with officials, yet their demands were catered to. What makes it especially frustrating is that Yahoo! is a very profitable company ($1.05 billion in net income from $4.98 billion in revenues in 2011, even with the excess of employment). It’s not like they needed the hefty package to stay economically vibrant, especially with so few jobs created locally and so many jobs destroyed globally.
Also, consider the following aspects of the incentives afforded them…
16 megawatts of low-cost power: When you look at the hoops that small businesses must go through to get electricity from NYPA (and then, it’s only crumbs), it’s disheartening that the State bent over backwards to give them 16 MW. That’s enough to power all the homes in 16 villages the size of Middleport. As I’ve written before, cheap power is best shared with the masses (including homeowners). Likewise, I’ve had numerous utilities executives tell me through the years that local economies lose when so few companies possess so much power. If many more companies had easy access to cheap power, many more jobs would be created – and by a multiple no less!
10-year property tax exemption: A PILOT (payment-in-lieu-of-taxes) would make perfect sense in the case of Yahoo! Unlike other IDA projects in Western New York which support hotels, restaurants, and doctors offices, this PILOT would support an facility that without a doubt could be elsewhere. But, there’s something missing here: the payment. Yahoo! is exempted from taxes (even a PILOT) for the first 10 years. A true PILOT would have seen local jurisdictions receive some money. But, here, they get none, despite a revenue crisis and unprecedented cuts.
A $9.9 million sustainability grant from Washington: This was the largest grant (free cash) ever provided through the Department of Energy’s Green IT program. It’s just another in a long line of green gimmicks that have absolutely no payback to society (Solyndra, anyone?). Basically, $10 million was given away to a very profitable corporation in an era when the Buffet Rule, the Ryan Budget, Social Security insolvency, and Medicare cuts dominate Washington conversations because things are so bad in terms of over-spending.
This mess – when looked at in toto - should serve as a lesson-learned for Niagara County and other development-starved locales. When next a gigantic firm comes to town promising the world, don’t do the same. There’s a good chance there won’t be any measurable benefit locally, nationally or abroad.
Bob Confer is a Gasport resident and vice president of Confer Plastics Inc. in North Tonawanda. E-mail him at email@example.com.
This column originally ran in the 30 April 2012 Greater Niagara Newspapers