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GEICO BREAKS GROUND ON $40 MILLION CENTER <br> FAST-GROWING UNIT IN AMHERST WILL EMPLOY 2,500 EVENTUALLY

Fourteen shovels hit the dirt Wednesday morning in Amherst as a who's who cast of local, state and national politicians broke ground on the new Geico Corp. service center that ultimately will bring 2,500 jobs to Western New York.

Political leaders from Gov. George E. Pataki to Erie County Executive Joel Giambra praised the nation's fifth-largest auto insurer for choosing Western New York as the site of its newest facility to serve customers. The operation, the company's 13th nationwide, represents one of the biggest job gains in years in a region that has seen a litany of layoffs and other losses.

"The most important thing for a family, for a community, is a growing economy," Pataki told more than 120 dignitaries and others sporting dark suits as they gathered under a white plastic tent next to the mud-covered site at CrossPoint Business Park. "You have to have a job. And now, because of Geico, 2,500 people will have good jobs in Western New York."

The governor cited his success in lowering taxes, reducing regulation and creating the Empire Zone incentive program to entice businesses like Geico. And other politicians cited Geico as an example of how cooperation between various levels of government and the private sector can benefit the entire region.

"It sends a message about the collaboration that exists in Western New York between city, county, state governments and the private sector. We bent the rules -- a bit. We changed protocol. But we got it done," Giambra said. "People are beginning to recognize that there is value in locating in Western New York."

But Pataki also said more needs to be done to lower the tax burden, make the state more competitive, and market the benefits of locating a business in New York, especially to reach his goal of 1 million new private sector jobs in the state by the end of the decade.

"We have to make sure we get the message out that New York state does have a great quality of life and our economic climate has improved," he said.

Washington, D.C.-based Geico, one of the nation's fastest-growing auto insurers, has 5.9 million policyholders nationwide and insures 9.5 million vehicles. The company employs 22,000 in its 13 major locations. It's owned by Warren Buffett's Berkshire Hathaway, which also owns The Buffalo News.

Geico had been looking in New England, Ohio and Pennsylvania for a location in early 2003 when Pataki -- who had met Geico Chief Executive Olza "Tony" Nicely several years earlier -- called the Geico leader on vacation and urged him to consider Western New York. That was the only call Nicely received from a governor.

The benefits of doing business in the region were also touted to the company by Buffett and by Stanford Lipsey, publisher of The Buffalo News.

As a result, Geico announced in December that it would expand in Western New York to meet its growing sales and service needs in the Northeast. In exchange, it received $100 million in tax breaks after the Town of Tonawanda transferred part of its Empire Zone credits to Amherst to seal the deal. It will also be eligible to apply for a $1 million capital grant from the Empire State Development Corp. for reimbursement of project-related expenses and for discounted power rates from the New York Power Authority.

Geico is spending $40 million to build a two-story, 250,000-square-foot building at the CrossPoint park, located on North French Road and owned by Uniland Development Co. The building won't be completed for a year, so in the interim, the company temporarily opened for business in March in 50,000 square feet of space in another Uniland facility on John Muir Drive.

But the insurer's pace of growth is prodding the company and Uniland to accelerate their plans. Geico already has been hiring aggressively for sales and services positions, holding a pair of targeted job fairs in certain neighborhoods but mostly recruiting through the Web. It has 372 employees now and expects to have 500 by the end of the year and 650 by June.

However, it's already bursting at the seams. Its parking lot is full, and it runs shuttle buses to the Amherst Pepsi Center to accommodate employees.

"Wherever I go, people thank me for bringing Geico to Western New York," said John J. Zinno, assistant vice president and general manager of the Amherst operation, who served as master of ceremonies Wednesday. But, he said, "it is we who should thank you -- thank you for allowing us to recruit a world-class work force. We could not be more pleased with the associates we've hired here."

In the meantime, Geico's growth continues unabated. Nicely said the insurer has increased the number of policyholders by 10 percent since December, and is aiming for 12 percent growth a year. At that pace, it expects to overtake No. 4 insurer Farmers Insurance Group, a subsidiary of Zurich Financial Services, by year-end.

And its decision to return to selling policies in New Jersey in August after 28 years means faster expansion in Amherst, which handles sales and service for that state in addition to other parts of the Northeast.

"We will continue to hire in that temporary location and will cram as many people as possible into that location," said Nicely, who started at Geico as a clerk and has been CEO for nine years. "But we'll need that building ahead of schedule."

Pataki challenged Geico to go even further, citing the 3,000 jobs Geico has in Woodbury, on Long Island, and suggesting a further building might be needed here. "This should be bigger than Long Island. Let's not stop here," he said. "I'm confident that you'll continue to grow in this part of the state."

e-mail: jepstein@buffnews.com

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