You know things are looking up when you can look back at the past year and it’s easier to pick out the winners than it is to identify the losers.
After so many years of struggles, it’s a strange feeling.
A good one, too.
But it’s more than a feeling. Job growth is at a 25-year high. Unemployment is back down around 5 percent. Between the Buffalo Niagara Medical Campus, SolarCity and other projects, we’re in the midst of the biggest building boom in a quarter century.
That’s real progress.
• SolarCity – Until last month, the nation’s biggest installer of residential rooftop solar systems was facing an uncertain future. A key federal tax credit, equal to 30 percent of a solar system’s value, was set to expire at the end of 2016, casting a dark cloud of uncertainty over its future and prompting it to scale back its growth plans to put the money-losing business on better financial footing.
Then Congress agreed to extend the credit for another five years, and suddenly, the future looks bright again for SolarCity – and the 1,460 workers that the company expects to hire at the solar panel factory being built in South Buffalo, backed by $750 million in taxpayer money from the state.
The extension buys SolarCity – and the entire solar energy industry – five years to bring their costs down to the point where electricity generated from the sun can compete on price with power produced by utilities that burn global-warming causing fuels like coal and natural gas, or running potentially dangerous nuclear power plants.
If SolarCity gets there, it will be good news for its Buffalo workers and all the companies that supply the local plant.
• Local workers – It’s finally getting easier to find a job.
Just three years ago, one of every 11 local workers was out of a job. Today, it’s just one in 20 – a level that is roughly on par with where we were before the recession hit eight years ago.
It’s been a long, slow recovery, but hiring has picked up in a big way, fueled by a big jump in construction jobs. The 1.6 percent increase in job growth through November is more than double the pace of hiring in 2014 and, depending on what happens in December, this could be the best year for employment growth since 1999.
With all the hiring, the unemployment rate is back down to around 5 percent, only a little higher than the low jobless levels the region enjoyed just before the recession.
Of course, it’s all relative. Our job growth is slower than the rest of the country. And our wage growth, which ran at 2.1 percent during the second quarter, isn’t making anyone rich.
But it is a big step in the right direction.
• M&T Bank – Patience finally paid off for the Buffalo-based bank.
A year ago, M&T was on the loser list because its $3.7 billion acquisition of Hudson City Bancorp was still in limbo, nearly three years after striking the deal.
Now it’s a winner because federal regulators finally approved the deal, more than three years and two months after it was announced.
The deal gives M&T a solid presence in New Jersey and expands its footprint in downstate New York. But to get there it pumped hundreds of millions of dollars – and hired more than 600 people – to fix shortcomings the regulators saw in M&T’s systems to identify and prevent money laundering. That took a toll on M&T’s profits along the way.
But once M&T got the deal done, it unfroze a bank merger market that had been seized up while bankers waited and watched to see how the M&T-Hudson City deal would be resolved.
• First Niagara Financial Group - The Buffalo-based bank is a cautionary tale about what can happen when a deal goes bad. First Niagara, under former CEO John Koelmel, built the bank into a major upstate player with a series of acquisitions. But his biggest deal – the purchase of HSBC Bank USA’s upstate branch network – proved to be the undoing of both Koelmel and First Niagara, mainly because First Niagara paid way too much for HSBC branches in a slow-growth market.
It cost Koelmel his job, and new CEO Gary Crosby tried his best to get First Niagara back on track. But fixing the bank was going to take years and take millions of dollars in new investment – something that First Niagara’s frustrated shareholders and directors weren’t willing to accept, especially when there was a much quicker fix: Selling the bank.
So, First Niagara is on its way to becoming part of Key Bank. Its shareholders will pocket a quick profit from the deal’s premium. Key will become the upstate banking powerhouse that First Niagara sought to be.
And in Buffalo, First Niagara’s workers are left to wait – and wonder – whether they’ll have jobs once the deal closes and the wake of destruction comes crashing in from a buying binge gone bad.
• Muller Quaker Dairy – It didn’t take long for the owners of the Greek yogurt factory in Batavia to pull the plug on a venture that seemed so promising just two years ago.
Back then, Greek yogurt was all the rage, and Pepsico and Germany’s Theo Müller Group, built the $200 million plant to grab a piece of the growing market for healthier foods. But the Greek yogurt craze didn’t last, with industrywide sales levelling off.
It was even worse with Muller Quaker Dairy, which for all of Pepsi’s marketing might, never found a niche with consumers. Even worse, sales were down by double-digits this year, Pepsi said in a filing with U.S. securities regulators.
The excitement of the project had drawn Gov. Andrew M. Cuomo and PepsiCo Chairman and CEO Indra Nooyi to Batavia in August 2012 to dedicate the plant.
But Pepsi didn’t show much patience. By the end of March – less than two years after the plant opened in June 2013 – Pepsi had taken a $65 million write-down of its investment in the Greek yogurt venture.
Now the Dairy Farmers of America – the company behind the radio ads from “the guys with the cows” – are buying the plant, with hopes of preserving some of the 64 jobs that were lost when the Greek yogurt operation turned sour, and the plant’s tremendous thirst for locally produced milk.
• Chemours – Not even millions of dollars in cheap electricity – enough to power more than 22,000 homes – could keep Chemours Co. from deciding to shut down its Niagara Falls factory.
The shutdown will cost the jobs of 200 workers by the end of next year.
But the bad news has a silver lining. The plant – a remnant of the region’s bygone industrial era – receives the fifth biggest block of low-cost hydropower from a program run by the New York Power Authority. When the plant closes, it will be available to other businesses, hopefully in 21st century fields with the potential for creating far more than 200 jobs.