The Demise of the Big 3 is Good for our Community

Last week’s announcement of the acquisition of Xerox by Fuji, Ltd. is another nail in the coffin of Rochester’s Big 3.  I would contend that they have been long dead and good riddance.

I don’t mean to minimize the suffering of those who may lose their jobs as a result.  Nor, am I ignoring the emotional impact on a community that long identified with our erstwhile leading employers and benefited from their contribution to our community. 

I am simply saying that these events over the last 25 years or so are part of the natural order.  Just as the Bronze Age gave way to the Iron Age, companies come and companies go.  Both Xerox and Kodak were part of the Nifty 50 highflying stocks in the early 1970’s, a list that includes many companies that are long gone.  Those that have survived, including GE, IBM, and AT&T, have done so by morphing into something else.  A time traveler from the 70’s wouldn’t recognize them today.

I am tempted to quote Michael Douglas’ “greed is good” speech from the movie “Wall Street.”  But, the last time I did that I was buried by hate-email.  I could also quote its counterpart in economic theory, Schumpeter’s “Theory of Creative Destruction.”  But, that would put you to sleep. Instead I’ll simply point out that the demise of the Big 3 is not one of the Seven Deadly Sins and, moreover, we are complicit. 

As a consuming society, we have explicitly expressed a preference for email over the post office and Netflix over Blockbuster – to say nothing of the number of businesses that have been disrupted by the Internet from travel agents to Big Box retail.  No one looks back and mourns the loss of jobs from those transitions.  We’re too busy consuming what they sell.

And, so, the Big 3 are no longer Rochester’s biggest employers because their customers now prefer the better products and services of others. 

For the most part, the impact of the Big 3 on the local economy has been gradual.  The move of Xerox’ headquarters, the big layoffs at Kodak, and the sale of Bausch & Lomb occurred over a 30 year period.  And, what has happened in the wake of those activities?

Entrepreneurs have founded companies, like Conserve, eHealth Technologies and SunCommon NY, which have grown quickly, providing jobs and healthy working environments.  In short, our community has become less dependent on large mega-corporations and thrives on fuel provided by smaller companies with local owners. 

Local business owners are more likely to be good citizens of our community.  They support local charities, create jobs locally, and ask less of taxpayers in the form of infrastructure and tax breaks. 

We -- their neighbors, customers and stakeholders – should stop mourning the loss of a bygone era and begin to identify with the community we have become.

Are Pro Sports Teams a Public Good?

ROCHESTER'S FRONTIER FIELD,

One of America’s founders, our second president John Adams, used the Latin phrase Res Publica (literally Public Thing) to describe the need for government to support the common good in order to ensure Americans would live in strong communities.

Yet, it’s hard to imagine that even someone as visionary as Adams could have anticipated the importance of professional sports to 21^st Century American society much less think of pro sports as Res Publica. But, that’s where we are.  Medium sized cities like Charlotte and Jacksonville have elevated their status by attracting NFL franchises.  Those cities have committed time, energy and capital to the effort to attract their teams and would work just as hard to keep them if the billionaires who own those franchises threaten to leave. 

I recall attending a Chamber of Commerce meeting in Miami where the management of the Florida Marlins made their case for public financing of a new stadium.  It was the midst of the Great Recession and many in attendance were struggling to keep their doors open.  Concurrently, the federal government was considering a bailout of the nation’s largest banks.  During the Q&A, one business owner expressed the view that a professional baseball team shouldn’t need a bailout from Miami’s taxpayers.  His comment opened a floodgate.  The Marlins executives never knew what hit them.

Nevertheless, the city and state government supported the team’s owners and they got their stadium supported in part by public financing.  Now, they play their home games at a beautiful stadium and have the third lowest attendance in Major League Baseball. 

Hardly seems worth it. 

Lop a few zeroes off Miami’s scenario of a few years ago and you can imagine the pressure felt by New York’s Monroe County Executive Cheryl Dinolfo.  The county’s largest city, Rochester, has earned a reputation for embracing minor league sports.  In addition to the baseball’s Red Wings, we have hockey’s minor league Americans as well as professional soccer and lacrosse teams.  Collectively, their presence creates a public good.

That public good is in jeopardy.  Our soccer team is sitting this season out; and, its owners are at war with the city that is its landlord.  Ditto our baseball team whose franchisor this week threatened the “nuclear option” of cancelling the franchise, effectively putting the team out of business, if reasonable lease terms were not agreed to by the county.

The question for our political leaders, and by extension voters, is whether to finance the teams’ deficits and bear the brunt of public ownership of their stadiums. 

It’s tempting to blame the politicians.  (No one likes politicians anyway.)  However, I am more inclined to point my finger at the teams’ owners.  The teams are capitalist enterprises whose profits, should they be earned, go into the pockets of their investors.  And, like any capitalist enterprise, they should bear the risk of any losses.

Ms. Dinolfo ran for office on a promise not to raise taxes and has a budget, 85% of which is the result of unfunded mandates from the state.  I admire her efforts to hold the line on behalf of taxpayers. 

I’m getting worn out paying New York’s taxes anyway.

WHO WILL LEAD?

We Shouted; They Listened

When I tell folks I moved to Rochester from Florida, they think I’m nuts.  “This is a great community,” I tell them.  But, they don’t get it.  This week’s interaction with the management of the NYS Canal Corporation validated my theory.  Indeed, we live in a great community. 

In case you haven’t heard, the Canal Corp. has begun a project to clear the earthen embankments of all vegetation along 122 of the canal’s 524 miles. They were so confident they’re doing what’s right, they plunged ahead with no public hearings and barely a heads-up to those affected.

Local politicians have supported the community’s call for officials to address the reasons for the project and its sense of urgency.  So, senior management arrived in our region this week to conduct a series of meetings to convince the community of the wisdom of their plan.

They told the editorial board of the local paper their sense of urgency results from an imminent danger of a breach of the earthen structures that protect adjacent properties.  When asked if there was anything or anyone that would stop or slow their project, they replied that only a “higher power” would do.  I’m not sure if they meant God or the courts.

At their first town hall meeting, they played the “Fear Card”, showing how a breach could affect the Jefferson Avenue School in Perinton.  Yet they haven’t notified anyone in jeopardy of imminent danger.  As for why there has been no breach in the last century, despite the existence of vegetation on the embankments, they have no answer other than to say it could happen at any time.  Where’s Nostradamus when you need him?

A local citizens group led by Fairport’s Elizabeth Agte did some research in anticipation of the meeting.  Their conclusion:  they’ve cherry-picked the science to support their plan, refusing to consider alternative guidance. The owner of a local excavation company told me he faces similar challenges almost daily. Vegetation should be removed if the soil is clay, he asserts.  On the other hand, if the soil is sandy, root systems stabilize embankments.  The approach would vary depending upon not only the type of soil but also the types of trees.  Deep root systems stabilize banks.  Shallow ones do the opposite.  You would have to take soil samples and analyze what types of trees are present before taking action. 

When I asked if soil samples had been taken, we were told us it wasn’t necessary.  Yet, when challenged by a Perinton resident whose 5-acre property is mostly sand, they responded, “we'd need soil samples.”

Faced with a possible lawsuit by three towns, they backed down.  Thursday night, they announced a modified plan – one that takes into consideration possible differences in soil types and vegetation.  We got what we asked for. 

"Yes," I thought. "Rochester is a great community."

It's time for labor unions to change

This post was adapted from an essay in the January 6, 2018 edition of Rochester's Democrat & Chronicle.

In a guest essay in Rochester’s Democrat & Chronicle, local union leader Ove Overmeyer advocated

for strong trade unions to strengthen the negotiating position of today’s workers.  I couldn’t agree more.  With unemployment at an historic low, it’s the perfect time for labor to take advantage of their negotiating power through collective bargaining. 

Absent from this argument is any mention of how labor unions should operate in the 21^st Century, leaving me to speculate that Mr. Overmeyer would continue the approach unions pursued during the last century.  I would like to suggest that the union operating model, which is older than Bernie Sanders, is due for an update. 

The booming economy of the 1950’s created a middle class throughout the Midwest and northeastern US underpinned by union workers.  This was the culmination of a decades long battle where labor and business were adversaries.  Union leaders from Eugene Debs to Harry Bridges were jailed for activities that are legal today.

By the 1970’s, however, the impact of a new, more global economy called for a paradigm shift. Union wages and benefits added costs to the manufacture of finished goods that made US industry uncompetitive on a global scale. And so union membership has declined precipitously. In 1950, 25% of American workers belonged to a union. Today, the percentage is less than half that. And, tellingly the percentage among employees of private companies is 6.4% while over 34.4% of public employees are union members. 

If a business had seen such a precipitously decline in its fortunes, it would have to transform itself or face liquidation.  Instead, unions have resisted change.

I am puzzled. Why would anyone think that the 19th Century model honed to perfection 60 years ago will work now?

Further, Mr. Overmeyer’s call for unions to use their political power to advocate for higher minimum wages. This argument suggests a continuation of the entrenched warfare between management and labor and bypasses an opportunity for both unions and their members.

The greatest challenge businesses face today is lack of qualified workers. Manufacturing has become more high tech, requiring math and science skills. Such jobs are plentiful. Rather than advocate for higher minimum wages, unions should focus on training workers for higher paying jobs.  A well-trained workforce would add economic value, expanding the size of our economy.  Rather than fight for a larger share of a static pie, unions should help make the pie larger. 

Were they to position themselves as a solution by transforming into Centers for Human Capital Development, businesses would view unions as beneficial to their business rather than as an adversary.  If unions offered benefits – healthcare, 401K’s – to their members in addition to training matched to employers’ needs, their value proposition would be more attractive to prospective members. Everyone would be a winner: the employers, the employees and the unions. 

Isn’t it time?