The Daily Star, Oneonta, NY - otsego county news, delaware county news, oneonta news, oneonta sports

April 27, 2013

A closer look at our economy - Part II

By Mike Zagata
The Daily Star

---- — We have talked about the public sector component of our economy. Now let’s take a brief look at the manufacturing and retail/services sectors. Our early history is steeped in the entrepreneurial tradition and includes our railroad, lumber, hops and the dairy industry. Back then Oneonta was encouraging growth and, as a result, prospered and grew. Today we are passing moratoria to restrict the use of our roads and to the keep “unwanted” business out. What has changed and why? Who defines “unwanted”?

The manufacturing sector is generally a capital, labor and energy intensive component of the overall economy, and one that is vital to having a vibrant and prosperous “middle class”. The capital and labor are needed to fulfill the vision of an entrepreneur seeking to make a profit. Chobani Yogurt in South Edmeston is an example. They invested in buildings, machinery, equipment, trucks for distribution and hired about 1,500 local people (labor). Together the people and equipment take raw material including milk from nearby farms (if they can meet the need), water and energy to create a product that has a greater monetary value than the sum of the costs it took to make it. That value is what we know as profit, and it’s that profit that drives a healthy economy. When either manufacturing or retail can’t make a profit, they either leave or go out of business. Consider a comment the governor made in response to questions about what is being done to keep Remington Arms, and the 3,200 jobs it supports, from leaving New York. He said: “That kind of thing is a regular occurrence. We have to deal every day with companies that want to leave NY.” (paraphrase).

Economic incentives provided by local government (like tax relief for a period of time) to the manufacturer or retailer help attract the new company to the area and help insure their viability. Chobani, and the people it employs, pay the taxes and fees which the public sector requires in order to provide both the company and the community at large with public services like education, health care and government.

If the manufacturing concern is locally owned, it is likely it will use other local businesses like farmers, banks, insurance companies, energy providers, local retailers and other services. This helps illustrate how one economic sector depends upon the other sectors.

If a business is deemed “successful” and attracts outside investors, it may go “public” and issue shares of stock that people in our community could buy. If that happens those buyers expect, no demand, “their” company make a profit so that they, the shareholders, get an acceptable return on their investment in the form of dividends, additional shares or an increase in the value of the shares they hold. It is those kinds of stocks that comprise our public retirement systems and 401(k) plans. Our local newspaper is a publically owned company and thus traded on Wall Street.

Because these manufacturers have a tie to the community, they generally are generous in their support of local “causes” or needs. Much of this area’s “old money” resulted from investing in IBM stock when it was just starting up and has been plowed back into the community to support the public sector via endowments and other donations.

Our area has several manufacturing operations. They include large companies like Chobani, Amphinol and MeadWestvaco, and smaller firms including, but not limited to, injection molding of plastics; electronics; sauces, producing lumber and specialty woods from logs, wine making and conversion of vehicles to serve as high-tech mobile health care providers. It is important that we recognize their contribution to our economy and encourage them to remain. In conjunction with that effort, we need to attract new manufacturing businesses. Growing new manufacturing businesses will help stop our current “brain drain” by providing career paths that enable our children to find quality work and will attract new talent to our area.

The retail/services sector provides the goods and services that we use in our everyday lives. This sector is impacted by location (remote or close to population centers) and population density. Over the years retail has changed from being dominated largely by local entrepreneurs to one which is now dominated by the “Big Boxes”. In the past there were many “ma & pa” businesses which were the backbone of our community, e.g. Stevens Hardware or Hotaling’s Grocery store on lower River Street. They not only provided the goods and services the community required, but they also supported the community by using local non-public sector services such as banks, insurance companies, car dealers, etc. They served on the local school boards, in local government, service groups and not only gave their time but also donated their resources. This has changed with the dominance of the “Big Boxes”.

However, their large product selection and perceived low price attracts customers from outlying towns and villages to come here to shop, eat and buy gas. The area benefits from the sales tax generated and from the property taxes and wages they pay. A mix of locally owned and operated businesses and businesses that are part of a chain based somewhere else seems to be a workable alternative.

Based upon what has been learned from other communities, having a diverse base for our economy seems prudent. Businesses tied to tourism and agriculture need to be a part of that economy. However, as we have learned from other communities, like Lake George, they cannot be the only components. Manufacturing that is compatible with our area and retail business must also play a role in order to grow the tax base needed to support the public sector and to provide much-needed jobs.

Main Street Oneonta is experiencing the same difficulty as “Main Street” almost anywhere. That may be as much a symptom of how our society has changed as any of the other possible explanations, but it is a problem and needs to be addressed. Efforts like “Main Street Oneonta”, being promoted by the mayor and others, are exploring ways to revitalize our downtown.

In order to bring prosperity that is sustainable for our area, our elected officials must be willing to look beyond their own views or preferences and consider the well being of the citizens within their political jurisdiction. For example, if a candidate receive 400 votes asking him or her to ban wine in the county and 100 asking him or her not to, would that constitute a mandate to ban wine if the county had 10,000 residents? As we all know, it’s often easier to get folks excited about something they’re opposed to and more difficult to get them mobilized about something they support – that is, until it’s taken away. The reaction to the governor’s gun legislation illustrates that point.

MIKE ZAGATA is a former state Department of Environmental Conservation commissioner, Ruffed Grouse Society president and oil executive. Contact him at citizenvoices@hotmail.com.