Friday, August 3, 2018

Why your family left New York

The chances are good that someone very close to you left the state….a brother or sister, a son or daughter.

Over the past 40 years, Western New York has lost 214,000 people. The City of Niagara Falls alone saw its population drop from just over 100,000 down to 48,000 over that period.  

Why did they leave?

The answer is always the same: they left upstate New York because there’s not much here for them. Long gone are the days when a long-term job – a career -- that provided a decent wage, benefits and retirement potential could be readily had in the region. Unable to find such livelihoods, workers have no choice but to find their American Dream elsewhere, typically in a far-away state where the metro economies are healthier.

To truly understand why this is happening, the question should be taken one step further. People need to ask "why have the jobs gone?"

The answer to this is that the large companies that once dominated our landscape have either closed shop or moved to other states because our elected officials have made it incredibly difficult to own and operate a business in the Empire State and be competitive. Thanks to high taxes, foolish regulations, a worsening energy crisis and an ever-growing government, the cost of doing business in New York is among the highest in the union, which is why state officials have to court new companies with exorbitant giveaways – it’s the only way to overcome and mask the glaring weaknesses.  

A glutton for punishment, I often analyze Confer Plastics’ competitive cost structure to determine just how much money we lose by operating in New York. I look at seven key cost factors that our elected officials have control of or impact upon: electricity, natural gas, workers compensation, health insurance, auto insurance, gasoline, and property taxes.

With every one of those factors, New York is much more expensive than the states which offer my greatest competition (Ohio, Indiana, Tennessee, and Utah).

New York’s odd high-input, low-output comp insurance costs 40% more here.

Because of our broken Medicaid system, they pay less than half what we do for property taxes.

Health insurance costs 14% more in the Empire State.

The one cost that stands out the most, though, is power since electricity is our third highest expense behind material and labor. Our foes pay exactly half what we do.

Taken in total, the seven factors combined come to annual hit of $740,000. We pay three-quarters of a million dollars more than what my competition pays for the same exact things. Consider that $740,000 the “cost of doing business in New York.”

Such agony is not unique to the plastics industry because the same cost factors are shared by any manufacturer regardless if it might specialize in metals, chemicals, computer technology, or processed foods.

This is significant. Assume that a New York manufacturer makes a part that he could sell to a client for $100. His domestic competition might come in at $98 because of lower input costs. If this is a high-volume part the client would definitely say "no!" to the New York manufacturer, especially in this era when consumers and purchasing managers fight for every penny.

The businesses that stay here and try to compete under such circumstances face an uphill battle every minute of every day, looking for ways to cut costs while attempting to develop new technologies and processes that negate the monetary edge that our competitors have. That’s how my company has survived: We invested in a handful of very large machines and the people to make them work – things that very, very few of our competitors have. Our mantra is “go big or go home.”

But, most companies can’t do that. Many executives don’t have ties or roots as strong as ours, and maybe their industry is mature from a technology and productivity standpoint so it doesn’t have any unusual niches that could be capitalized on like we did. So, they choose instead to wisely move to another state, one where it’s cheaper to do business and easier to make a profit.

That’s why your loved ones left you.

It was no fault of their own. They only sought what was best for their families and followed those businesses to prosperity -- a place far away from New York and our crippled, politically-directed economy.

From the 06 August 2018 Greater Niagara Newspapers and Batavia Daily News

No comments: