LONG ISLAND BUSINESS NEWS
PUBLISHED: OCT 12, 2015
As businesses continue to flee, Long Island must act
By WARREN STRUGATCH
Five months ago Suffolk County awarded Festo Corp. a bundle of exemptions, abatements and tax breaks in return for the company agreeing to buy a manufacturing site in Melville and stay put. Now Festo has pivoted, announcing it would relocate some 75 jobs to the Cincinnati, Ohio area.
Those plans for Melville? Fuhgeddaboudit.
Why? The German-owned company manufactures automation equipment in a market where finding skilled labor is an art form, where energy costs are perpetually off the charts, where taxes are sky-high and where access to transportation routes is migraine-inducing.
Ohio, in contrast, is effectively the opposite. The Buckeye State has – rest assured this is not a coincidence - a vibrant and growing manufacturing sector.
Building a manufacturing company on Long Island is possible but most unlikely. The corporate exodus continues, in fact gives every indication of accelerating.
The old bluesmen sang:
If you don’t believe I’m leavin’, baby
Just count the days I’m gone.
The employers are leaving. Better start counting.
Tempting as it might be to lavish last-minute subsidies and incentives on companies en route for the bridge, such blandishments matter little. Long Island no longer is a place to build businesses that require manufacturing, assembly, a battalion of skilled workers, affordable energy costs, access to other markets, or a well-maintained infrastructure. Did I leave anything out?
Well before Festo’s announcement, I sat down for a conversation with a man who, perhaps more than anyone else, understands the triggers behind this corporate exodus. That man is Tom Stringer, a South Shore resident who is BDO’s consulting managing director in Manhattan. His job involves helping executives around the country determine the optimal locations to grow their businesses. Stringer deals often with recruiters targeting Long Island companies. He
deals not at all with companies looking to move to Long Island.
“Long Island never comes up as a destination for a company moving a facility,” he says. “We are effectively the most expensive location for everything in the U.S. As a result migration is a one-way street. Consequently we cannot be in the business of attraction. We have to be in the business of retention and cultivation.”
Over a cup of coffee we talk about the fact that Long Island companies, including businesses with as few as 20 employees, are among the most heavily recruited in the nation. Offers pour in most weeks of the year and inevitably find takers.
Stringer offers three reasons for the outward flow.
#1: Taxes. “Long Island,” he notes, “is the most expensive place in the country to do business. Our taxes are the highest in the country, bar none.”
#2: Transportation. “Our infrastructure is third-rate. We’ve outgrown it. It will not serve the economic needs of a new generation. We need to keep building in order to grow, which means expanding the railroad system, the highway system. We have to build that bridge to Connecticut” proposed in the 1970s but since blocked by environmental advocates.
#3: Power. “We have to address the outrageous power costs, the lack of redundancy that leaves us so vulnerable. Hopefully Hurricane Sandy taught us something.”
#4 Housing. “Long Island’s growth was based in the post-war years on affordable housing, on building homes young families could afford. We have to embrace that past with a new version of affordable housing.”
As we tuck in our chairs and stand up, Stringer strikes an optimistic parting note. “Long Island can turn things around, if we have the will,” he says. “Other regions, including Florida, Texas and the Carolinas have restructured themselves and enhanced their appeal to employers.”
He adds: “We can too.”
About Escape from Long Island
My column, Escape from Long Island, runs biweekly in Long Island Business News.
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