Powerful Utility Savings a Plus for Canadian Companies

Many Canadian companies considering US expansion are heavy power users and electricity costs can easily eat away at profits.  As Canadian companies seek US expansion for many reasons (made in USA requirements, supply chain, bridge issues/delays, etc.), being able to manage operating costs is yet another major consideration.

When BNE is working through the due diligence process with a prospective company, energy needs and consumption are discussed.  With a large power user, we typically run a comparison between Canadian costs for monthly usage and what the same usage would cost in Buffalo Niagara.  The company shares its current electric bill and our local utility runs the numbers.  Most times there are significant savings.

Many of the larger power users are companies in plastic injection molding or extruding, food processing, or steel processing and fabrication.  A recent example is a plastics company that currently pays $0.13 per kWh for power in Canada. By comparison, they would pay an estimated cost of $0.082 per kWh for that same operation in Buffalo Niagara and realize a savings of over $18,000 each month. A different plastics company could save more than $20,000 per month by reducing their electric costs from $0.14 per kWh to $0.098 per kWh. We were able to identify over $50,000 in monthly savings for a food processing company currently paying $0.19 per kWh for electric.  Their pricing in Buffalo Niagara is estimated at $0.083 per kWh.

Steel processing in Buffalo Niagara.

In addition to standard utility savings, companies may also qualify for special incentive programs that further reduce power costs. New York State offers some programs and others are administered by the local utility.  Many are contingent upon the number of new jobs that the company will be creating and the total investment into the new facility.  Prospective companies should consider these programs once they have identified a potential building or land site.   Thanks to our ability to offer low-cost power, selecting Buffalo Niagara for US expansion can make great economic sense for our Canadian neighbors.

by Carolyn Powell, Business Development Manager

Low-Cost Hydropower Grants

[Unifrax and others get Low-Cost Hydropower Grant]

Living next door to one of the world’s Natural Wonders as well as two Great Lakes, it’s easy for us to forget that water is a precious and often scarce commodity in other parts of the country as well as all over world.

Thanks to our renewable water resources, Buffalo Niagara is uniquely positioned to offer low-cost hydropower to companies that are seeking to locate or relocate in the United States. Electricity can be a large portion of production costs to manufacturers, and these energy costs are projected to rise in the coming years, particularly as the global economy rebounds from the Great Recession and competition for electric grid capacity rises.

In the past few years, BNE has seen an increase in companies exploring Western New York specifically because of hydropower. Because we can offer not only cheaper utility rates but also a great labor force and an abundance of colleges and universities, you can see why we are an intriguing place for a variety of high-tech manufacturers.

The New York Power Authority has been an excellent partner in our pursuit of securing new jobs for the region. They are receptive to our requests for assistance and provide a multitude of services to those companies we introduce to them. The BNE values that partnership as well as New York State’s hydro-related programs. They are indeed a point of pride and we promote them as one of the many reasons a company should choose to locate in Buffalo Niagara.

by Tony Kurdziel, Business Development Manager

New York is Committed to Nanotechnology

by Jenna Kavanaugh, Marketing Director

Over the last several years, New York State has made significant investments in the semiconductor industry, propelling itself as the preeminent location for industry specific research, commercialization and collaboration attracting more than $20 billion in investments.

New York Academic / R&D and Industry Asset Maps

The Albany region, led by the Center for Economic Growth (CEG)  has made a name in the industry with the NY Loves Nanotechnology brand and New York’s first Nanotech Manufacturing Mega-Site at the Luther Forest Technology Campus in Saratoga County.  This site is home to GlobalFoundries’ fab operation.

This year at the leading convention for the micro-electronics supply chain, SEMICON West July 9-13, 2013, upstate economic development partners Buffalo Niagara Enterprise (BNE), CEG, Greater Rochester Enterprise (GRE), Genesee County Economic Development Center (GCEDC), Mohawk Valley Edge, NYSESDC and National Grid are collaborating to represent NY Loves Nanotechnology and showcase our Tech Corridor. In addition to Luther Forest, the team will highlight the Marcy Nanocenter at SUNYIT near Utica, NY and Western NY Science Technology, Advance Manufacturing Park (WNY STAMP) near Batavia, NY. Representatives from NY’s AAU member universities with collaborations and focuses in this industry will be present.

To better prepare for the event BNE, GRE, and GCEDC visited RIT this week to learn more about the chip fab process. Dr. Michael Jackson gave us a brief history and overview of microeletronic engineering, walked us through the process and provided a hands-on tour of their MircoE cleanroom. Not only did we get better insight into the supply chain and workforce, we learned just how small is “small” and discussed other products that can be made with microelectronic processing.

Ready for the Clean Room at RIT

At BNE, we are particularly excited about representing WNY STAMP at Semicon West and marketing this site with our partners at GCEDC and GRE in the future. This 1250⁺ acre site in the Western New York / Finger Lakes region is developed as the next generation sites to support large scale semicon and nanotechnology based R&D and manufacturing employment. Semicon firms looking to site the next generation of 450mm Chip Fab projects, with industry projections pointing to significant growth and billions of dollars in investment in the coming years, prefer large green-field “mega-sites” in excess of 1,000 acres like the STAMP site.  These mega-sites need to offer access to large capacity, low cost utility and transportation infrastructure and proximity and access to university centers for R&D collaboration as well as a sizable workforce to support employment and production needs as well as a state/region with a supportive investment climate.  This site has it all.

Private and public sector investments have spurred tremendous growth in the eastern portions of the state where spectacular employment growth in Nanotechnology has created 12,000 new jobs statewide. We believe there is more to come – this is the future of advanced manufacturing.

How Real Property Can Provide a Real Tax Benefit

Guest Blog: By Robert J. Bauer, CPA, Principal, Tronconi Segarra & Associates LLP

It’s not often that a company can use real property to significantly decrease its tax obligation and increase its cash flow. However, businesses that have recently or plan to construct, renovate or acquire a facility do have an opportunity to maximize the tax benefit of these capital costs, and potentially increase their cash flow.

This opportunity comes in the form of a Cost Segregation Study, a formal accounting-engineering process designed to accelerate depreciation deductions on the component parts of real property. As a result of having a Cost Segregation Study performed, a business can reduce its tax liabilities for the current and future tax years and free up those previously designated tax dollars for business expansion, to improve cash flow, or to pay down high-interest debt.

Whenever a business constructs a new facility, a Cost Segregation Study can be done simultaneously with the construction so that the tax advantages can begin immediately upon completion of the building. This is perhaps the most simple and straightforward type of Cost Segregation Study, because the property’s components are brand new and more easily identifiable.  A Cost Segregation Study can also be performed when an existing building undergoes major capital improvements, for example, due to renovation or a build-out.  Businesses can also have a Cost Segregation Study done when they acquire and take ownership of an existing facility. Finally, there is also an opportunity for businesses to perform a Cost Segregation Study on property acquired up to 15-years ago and “catch-up” depreciation in the current year.

Buffalo Niagara: A Manufacturing Moment?

Tom Kucharski, President & CEO, Buffalo Niagara Enterprise

An April 2012 report published by the Metropolitan Policy Program at Brookings examines a resurgence that some are calling the “manufacturing moment” from the standpoint of its staying power and geography.  Elements of that report, combined with BNE’s experience, reinforce my belief that the commitment of public and private resources in this sector will produce growth opportunities for our region.

As the Brookings report confirms there has been in recent years a re-shoring of manufacturing by U.S. companies, driven in part by growing wage scales in emerging countries.  Mid-western states in particular have seen an increase in machinery and auto manufacturing.  While the advanced manufacturing in our region has been very diversified, we have seen trends in steel and steel processing, packaging and opportunities for high tech manufacturing.

While the mid-west has experienced more of this re-shoring to date, northeastern states and regions have compelling assets and are developing tools that are growing their competitive advantage.  Consider some of these examples in our state and region:

• Affordable & available real estate – our market has over six million square feet available and an average price per square foot that is $6.55 less than the U.S. average.  We also boast 10 shovel ready certified sites whose benefits are coveted by projects driven by speed to market.
• With 10.8% of our total employment in the manufacturing sector, we offer a motivated and productive workforce, highly trained in engineering, physical sciences and the construction trades.
• Buffalo Niagara is cross-border community with seven international ports, two of the largest Foreign Trade Zones in the U.S., an advanced transportation infrastructure, and easy access to major U.S. and Canadian markets.
• Contrary to what many would think New York State has low taxes on high tech manufacturing.  The state is also home to multiple sites ideal for high-tech and Nano-tech manufacturing, one of them right here in Genesee County.
• Manufacturing companies who invest in our region can be eligible for a wide array of valuable incentives, one of which can’t be offered by the majority of our competitors – clean, reliable, low-cost hydropower.

Our growing competitive advantages run much deeper and include our strong supply chain, work ethic and manufacturing heritage.  So if this manufacturing moment exists, as we think it does, what are we doing to take advantage of it?

Advanced manufacturing is one of six key strategies in Governor Andrew Cuomo’s billion dollar commitment to Buffalo.  It will be supported by the development of the state-of-the-art Buffalo Niagara Institute for Advanced Manufacturing Competitiveness.  The institute will focus on applied research services and workforce training while providing export assistance and services to develop process excellence.

In our current fiscal BNE anticipates spending in excess of $70,000 on a very targeted advanced manufacturing campaign consisting of advertising & public relations, direct mail, e-communications, events in Canada and the development of new advanced manufacturing mini-site hosted on our website.  Specific companies are being targeted based on their size, geographic location and product.

Our public partners across all eight counties continue to commit significant resources to the development of sites for us to market to our targets.  This is one of the most important contributions the public sector can make to the success of attracting manufacturing opportunities to our region.

Is the moment real and will these efforts be worthwhile?  Only time will tell.  Since our inception BNE has supported 89 advanced manufacturing project wins that have created and retained over 12,000 jobs while investing more than $1.4 billion in our region.  The direct and indirect economic impact from only 12 of these projects that have come to our community since 2010 is $607.9 million.  The potential that exists and the impact of the results have me convinced that manufacturing will be an important part of our future economic success.

Site Selection Insights from Women in Economic Development

I recently attended  The Woman in Economic Develop Forum in Chicago, IL  where I met with several site selectors to get an update on what they are seeing and hearing from companies.  Many companies throughout the world reach out to a site selection firms to request assistance in  location analysis, site selection, and strategy comparisons.  These site selectors learn firsthand what companies need in order to expand or relocate, as well as how industries are growing, contracting or otherwise changing.  Much of the information shared at the forum was repeated by more than one expert.

Overall there are positive trends and activity regarding company requests and growth needs.  Most site selectors are predicting an increase in activity for 2013 across the country and industries.

Key points that were discussed during the forum:

Project Trends

• Fewer consolidation projects happening and there are more expansion needs.  Not all of these expansions are taking place in new locations, many are happening at a company’s existing facility.
• Companies are looking for new locations to set up regional facilities in order to be closer to their customers.

Industry Trends

•  There has been a lot of activity in the steel and aircraft industries.  The aircraft demand is specific to the commercial segment,  due to the aging of existing aircraft and growing markets.

Workforce

• Workforce concerns continue to be a growing and hot topic.  Many companies are doing a lot of due diligence to better understand a region’s workforce trends. Companies want to know if a region has experienced workers and their ages.
• Companies find it important to locate in regions that have strong programs at local trade schools, colleges and universities.
• Companies are looking to state programs to assist them in providing  younger workers with  the skills they need to work in their available manufacturing positions.

Incentives

•  Incentives are an important factor in a company’s decision making process.  Companies look for a clear explanation of incentive programs, including how and when the incentives will be paid.
• Companies desire front loaded incentives, but they are also facing more claw back provisions in the first couple years.
• The timing of needed infrastructure plays a role and how incentives can be utilized to develop that infrastructure.

Wetlands & Site Development

Lesta Ammons, a biologist from the US Army Corps of Engineers’ Buffalo Branch, spoke at this month’s breakfast meeting of the WNY chapter of the New York State Commercial Association of Realtors (NYSCAR). The topic of wetlands is a critical concern for commercial real estate and site development. While the issues of wetlands can pose challenges to site development, being properly educated and prepared can help mitigate any development delays.

– What are wetlands and why are they important?

Anatomy of a Site Selection Project

Canadian Business Finds a Home in Buffalo Niagara

Electro Sonic, Inc. President Eric Taylor talks about their expansion to Buffalo Niagara. Electro Sonic wanted to invest in a facility that would enable it to efficiently enter the U.S. market. At the same time, the distributor needed to maintain its existing service metric of next-day delivery for all customer orders. Watch the video below to learn why Tonawanda, NY was their ideal choice…

Weather – a Big Factor in Data Centers Site Selection

Hundreds of factors go into the site selection process for a data center location. When Yahoo! was looking to build their most advanced facility to-date utilizing ambient air cooling, one of the reasons they chose Lockport, NY was because they needed a climate where they could bring the outside air in year round and operate the facility and computer equipment within specific heat tolerances. Yahoo! evaluated over one hundred years of our region’s climate history to ensure that the facility would be able to operate at the efficiencies that they wanted.

Buffalo Niagara is  conducive to data centers  for a number of reasons, including its  lack of natural disasters. Meanwhile, between the summer floods, tornados, blizzards and drought in other parts of the country, total economic damage from natural disasters in the U.S. are exceeding $35 billion in 2011 alone according to a National Climatic Data Center report released in August – and that’s pre-Irene.

Soon, the Buffalo Niagara region will have another shovel-ready certified site ideal for data centers ready and available to break ground. Between low-cost power at roughly three to four cents per kWh, Personal Property Statutory Exemption, and Property Tax Abatement we’ll have a lot to talk about as we attend data center industry trade shows and events this fall. 

 

Lorrie Abounader, Business Development Manager