Upstate New York Revival

As for increasing Upstate New York's appeal to Corporate America, Maguire says the state has moved forward. In 2000, the state's greatest efforts were the repeal of the gross receipts tax and the expansion of the economic development zone program, says Maguire.

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        The gross receipts tax (GRT) on energy was repealed and took effect immediately for manufacturers, and it will phase in for other businesses between now and 2005. "The GRT is a classic example of something that is Upstate-friendly, because the Upstate economy depends much more on manufacturing than does the New York City economy or the downstate as a whole," says Maguire. "And manufacturing is much more energy-intensive than other business sectors."
        The expanded economic development zone program, which played a large role in IBM's decision, was another Upstate-friendly move. The new Empire Zone program, which provides a virtually tax-free environment, double the size of 22 of the existing 52 Empire Zones. The state also plans to expand the number of Empire Zones to 58 later this year.
        This year's legislative session is considering new measures to further enhance the Upstate economy. In Pataki's State of the State address, he proposed two items of interest to manufacturers: the Alternative Minimum Tax repeal and the single sales factor.
        The Pataki Administration had previously cut in half New York's Alternative Minimum Tax (AMT), which requires companies to pay New York's corporate tax at a minimum rate of 2.5 percent, down from 5 percent. The governor proposed in his address to eliminate the AMT over the next five years, offering the opportunity for companies that invest in New York to be free of state corporate tax.
        The governor has also proposed enacting a single sales factor for manufacturers. This would cut the corporate tax on manufacturers by enacting a single sales factor for manufacturing businesses. "Under the current policy, corporate taxes are based on sales, jobs and capital in state, with sales counting twice," explains Maguire. "Sales is double-weighted, which means that sales determines 50 percent and property and payroll determine 25 percent each. That policy effectively encourages a company to put jobs and plants in another state to lower its New York State taxes. Many states are already moving toward basing their corporate taxes on just one factor: sales. And this proposal will do the same in New York so that there is no reward in placing jobs in another state."
        If approved, the measure would be phased in over five years, beginning retroactive to Jan. 1, 2001."We strongly support both the AMT repeal and the single sales factor," says Maguire. "We argue that these proposals are very focused on creating benefits that will be beneficial statewide and will be especially appreciated in Upstate."
        Despite reports that Upstate is not seeing the economic boom that the rest of the state has experienced, Upstate's job growth for 1999 (at 2.5 percent) beat the national average (2.3 percent). "Upstate New York is now at a record job-level high, and its overall job growth consistently outpaces industrial states in the U.S. Northeast and Midwest," reports Gargano. "The January 2001 numbers show that the Upstate region is growing at or above national rates."
        Several industry clusters have been active in Upstate in terms of corporate locations and expansion. Those include retailer warehouse/distribution centers (Kmart, Kohl's, Pep Boys, Staples and Home Depot), electronics and photonics (Corning, Philips Semiconductors and Planar Semiconductor), transportation equipment (Stardust Cruisers, Shepard Niles) and printing (Northeast Printing and Quebecor). Other growth industries include plastics (Tessy Plastics), software (ATTO Technologies), forest products (International Paper, Metro Paper Industries) and back-office/call centers (Bank of New York).
        One key announcement in Upstate is Adelphia Communications Corp.'s $100 million Northeast regional operations center in downtown Buffalo. The new facility will create 2,000 jobs and retain 500. "This project will serve as a catalyst for the revitalization of downtown Buffalo into a premier business community for the 21st century," says Gargano.
        Also in Western New York, General Motors announced plans to construct a new 711,000-sq.-ft. (66,054-sq.-m.) engine plant in Tonawanda. GM will invest more than $500 million to construct a new high-tech engine, bringing the investment in Upstate New York by transportation manufacturing firms to more than $2 billion under Pataki.
        In other regions, Metromedia Fiber Network will add 750 jobs to its White Plains headquarters in the Mid-Hudson Region, while Corning will establish a new $50 million plant near Rochester (Finger Lakes Region), creating 440 jobs. Alstron Transportation, a manufacturer of rail cars, will create more than 400 jobs at is Hornell plant in the Southern Tier Region, and Borg Warner Morse TEC, a producer of engine timing chains, is expanding its Cortlandville (Central New York) operations by 300 new jobs.
        The North Country Region has in particular come a long way, especially considering that it is a lightly populated region that includes most of the Adirondack preserve. Montreal-based Optimal Robotics Corp. will open a major U.S. assembly facility in the Clinton County Air Industrial Park in Plattsburg, and Mold-Rite Plastics, a manufacturer of plastic closures, jars and pill vials, is adding 100 jobs to its existing work force of 360. Nexia Corp., another Montreal-based firm that is involved in biotechnology and genetic research, also started up operations in Plattsburg.
        Plattsburgh, which was named Site Selection's No. 5 top small town for corporate locations in the March 2001 issue, is benefiting from its location on the U.S. side of Montreal. "Montreal is one of the most exciting metropolitan areas in North America -- in fact in the world -- particularly in terms of all of the cutting-edge sectors the economic developers in America say they would like to get a piece of," says Garry Douglas, president and CEO of the Plattsburg-North Country Chamber of Commerce. "Information technology, aerospace, phonetics, biotechnology, pharmaceuticals -- Montreal is a leading player in all of those. Consequently, Plattsburg has found itself in the last 10 years, not being isolated, but actually being very strategically located. We have emerged as Montreal's U.S. suburb, making us the location of choice for those Montreal-area companies that reach the point where it is time for them to have a U.S. presence."

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