Hitting Rock Bottom
If there’s a silver lining to hitting rock bottom, it’s that the only direction you have to move is upward. Though it is all too common for cities that have fallen on hard times to remain stuck in an economic rut, Buffalo—much like Chattanooga, Tennessee—has staged a remarkable comeback over the past 15 years.
Once a thriving production hub and regional economic driver, Buffalo saw its labor market implode following the decline of its manufacturing base. The city consequently suffered through a decades-long economic slump, as more and more manufacturers idled their factories.
This mass exodus of employers had a stark effect on the region’s jobs market, with unemployment steadily rising. It also left the city’s finances in ruins: According to the city’s comptroller, Mark J.F. Schroeder, Buffalo’s debt burden had ballooned to more than $435 million by 2003, leading to credit downgrades from rating agencies like Moody’s and Standard and Poor’s.
Climbing Back to the Top, One Strategic Decision at a Time
With its finances in disarray, Buffalo was in the midst of an existential crisis when city and state officials, along with business and community leaders, began to work together to repair the city’s flagging economy. Buffalo started issuing less debt than it retired each year, established a “Rainy Day” fund for unforeseen expenses, and invested idle funds.
New York’s governor, Andrew Cuomo, also allocated more than $1 billion to help revitalize the city and the broader economy in the western part of New York, according to The Economist. Buffalo has tapped into that vast financial resource as it seeks to create a long-term plan for ensuring its economy remains on sturdy footing not only in the medium-term, but also in the long-term.
To do that, the Buffalo metropolitan area is targeting industries where it has a comparative advantage over other cities, reports The Buffalo News. Among the architects of this strategic initiative is Howard Zemsky, a Buffalo-based developer and managing partner of the Larkin Development Group. The well-respected businessman has drawn a steady stream of allies—including the governor—as he’s forged forward with the plan, which has earned the backing of business groups like the Buffalo Niagara Partnership.
Starting With Health Care
What industries has Buffalo singled out? Education and health care, for starters. Leading this charge has been the University of Buffalo, which ranks as one of the biggest employers in the city. The university is currently in the process of moving its medical school downtown, a change that is helping revive a neighborhood that’s long been dotted with blighted buildings rather than men and women in white lab coats.
The years-long process is now well underway, with work nearing completion on what will include a 628,000-square-foot, eight-story facility. When it opens in 2017, the state-of-the-art medical school is expected to attract an increasing amount of research dollars to the region, as well as more medical students, thanks to an increase in class size from 140 to 180 students.
Since one of out every four doctors stays in the region, the innovative new campus will have major implications for the broader regional economy, according to school administrators: It will help improve the state’s health care system, and it will drive an influx of researchers, faculty members, and entrepreneurs to the region.
Beefing Up High-Technology and Clean Energy
While Buffalo might not be the first city you associate with high-technology and clean energy, it’s rapidly becoming a major player in those industries. Over the past five years, billions of dollars in public and private money have gone toward major construction projects in the Buffalo metropolitan area, including a $5.8 billion solar panel manufacturing facility, which alone is expected to create some 3,000 jobs.
Spurred in part by the governor’s pledge to prop up the region’s economy with public money, IBM also announced that it would create 500 jobs at a state-owned information technology center in Buffalo. Apart from its immediate effects on the jobs economy, the project is expected to train local workers over the coming decades, teaching them critical—and increasingly sought after—skills in the energy, health, and defense sectors.
Buffalo Today, and Tomorrow
After nearly following the fate of bankrupt cities like Detroit, Buffalo is in solid financial footing again. Its debt burden has plummeted by nearly $150 million, and all three major rating agencies have raised its credit rating by multiple notches. The city is also beginning to see results from the economic seeds it has sown: Employment at the under-construction medical campus has shot up from 7,000 in 2002 to 12,000 today. By 2017, that figure is expected to reach 17,000.
Economists and state policy makers are equally optimistic about the payoffs that will come from investing in high-tech and clean energy. But what does all this mean for locals, and what about the abandoned buildings that for decades served as a sharp and painful reminder of Buffalo’s industrial decay? We’ll answer those and other questions next week in the follow up installment of our ongoing look into Buffalo’s economy.