September 28, 2011

A Local Economy In Transition

By: Chris Churchill, Business Writer

Source: Times Union

What a mixed bag of a day for the Capital Region's economy.

Early on Tuesday, Gov. Andrew Cuomo announced a massive private and public investment that will bring new jobs and enhance the region's position as a center of computer-chip research.

But then, just a few hours later, came results of a Public Employees Federation contract vote -- a rejection that could trigger 3,000 statewide layoffs, including many in the Capital Region.

One step forward, it seemed, followed by one step backward.

But Tuesday's events also show the continuation of long-term employment and economic trends in the region, shifts away from heavy reliance on state government jobs as the high technology sector grows.

Numbers tell the story: In 1990, there were 59,000 state government jobs in the Capital Region. That total has since fallen to 47,700, a 19.1 percent decline, according to the state Department of Labor.

High-tech is headed in the opposite direction.

There were 21,200 scientific and technical services jobs in the region in 1990, according to the labor department. Now, that number is up to 28,900, a 26.6 percent jump.

And the number undercounts high-tech growth, said James Ross, a labor department analyst, because it doesn't include tech jobs in sectors such as education and manufacturing.

Cuomo said the deal announced Tuesday will bring about 800 new jobs to the Albany area as a consortium of tech companies -- IBM, GlobalFoundries, TSMC, Samsung and Intel -- invest in research at the College of Nanoscale Science and Engineering at the University at Albany. That research will focus on the transition to computer chips that are 450 millimeters in diameter -- and will be far more profitable than chips now being made.

Also, Intel has agreed to establish its headquarters for 450-millimeter development in Albany.

Company spokesman Chuck Malloy said Tuesday it's not immediately clear how many workers Intel would have at its headquarters, but said 450-millimeter researchers worldwide will be on their way to Albany.

"It's critically important to our industry," Malloy said of the consortium, "and it demonstrates a significant technological presence in the Albany area."

The overall private and public investment would total $4.8 billion, although some of that money is headed elsewhere in the state.

The state is contributing $300 million for the construction of the chip-fabrication plant that's now under way across Washington Avenue Extension from the existing NanoCollege campus.

The New York State Energy Research and Development Authority and New York Power Authority will contribute a collective $100 million in energy subsidies.

Each of the five private companies has committed about $75 million in funding to the group, Malloy said, and will work together in the chip fab.

To be sure, the announcement Tuesday doesn't represent something entirely new.

The NanoCollege became a leader in 450-millimeter research when Sematech moved its headquarters to the school in early 2011, bringing with it an International Sematech Manufacturing Initiative that has a 450-millimeter program funded by various chip companies.

But the program was considered merely a "seed program" by NanoCollege officials this summer -- and the new infusion of capital should boost the program significantly.

That's a big deal for the Capital Region.

F. Michael Tucker of the Center for Economic Growth in Albany said the school's new partnership with the private companies could "catapult the region onto the world stage."

Unfortunately, though, it's likely that a wave of state government layoffs would have an immediate economic impact -- at least in the short term -- hitting stores, the housing market and a wide range of other areas affected by consumer confidence.

"I'm hoping it doesn't come to that," said Kajal Lahiri, economics professor at UAlbany. "The Albany area is quite sensitive to state layoffs."

And that's the case, even with the region's high-tech job growth.