State’s economic development plan leaves for improvement

Maybe, just maybe, New York State is on its way to lessening the destructive competition for economic development among the different levels of government that has long impeded efforts at growing businesses in the Empire State. Fostered by the Andrew Cuomo administration, the newly adopted regional approach, identifying business opportunities in each area of the state, is intended to change patterns of communication and decision-making in a stressful and contentious arena.

Or maybe not. Some degree of conflict among jurisdictions in economic development is inevitable, and pretending that a magical bullet in the form of a nifty decision-making system can eliminate competition is not realistic. The best such a system could accomplish may be to devise boundaries for that competition.

Michael Oates, a former state economic development official now president of the Hudson Valley Economic Development Corporation (HVEDC), spoke at SUNY Ulster Tuesday, March 20, giving the annual lecture at the college in honor of the late Howard C. St. John. His topic was “Diversifying the Economy: The Importance of Cluster Development in the Hudson Valley.”

When the governor began to advocate for a regional approach to economic development within the state, Oates said, “At HVEDC we were thrilled by that.”

HVEDC has been supporting the idea of business clusters, which deals with the concentration of interconnected business, suppliers and associated institutions in a particular field and geographic area. Clusters are considered to increase the productivity through which companies within a region can assemble resources (read Silicon Valley, The Research Triangle, Wall Street, etc.) to compete with other regions. Oates reported at the lecture that HVEDC and the state-created and resources-rich Mid-Hudson Regional Economic Development Council (Mid-Hudson REDC) were in agreement with each other on identifying nine Hudson Valley business clusters. He recommended a visit to the HVEDC website ( for a list of the nine.

It’s an informative website. The list of Hudson Valley industry clusters contained nine items: biotech and pharmaceuticals, data centers, distribution, film production, financial services, food and beverage, green tech, semiconductors, and tourism and hospitality. From what Oates said, HVEDC has done the most work so far on the biotech cluster and more recently on the food and beverage sector.

The list of clusters on the HVEDC website isn’t the same as the state’s. Last November, the Mid-Hudson REDC published its own list of ten clusters: agriculture, distribution, food and beverage, high-tech manufacturing, natural resources, biotech and life sciences, financial and professional services, health care, information technology, and tourism, arts and culture.

Analytical, but not a prescriptive tool

As was underlined by the resignation last week of Ulster County Development Corporation president Lance Matteson, this is not an easy time for economic-development officials to deliver on their goals. Oates, who lives in South Salem in Westchester and whose office is in New Windsor, did not hide the fact that his has been an uphill struggle. “Let’s be honest, these have been very difficult times,” conceded Oates. “There’s been a ton of uncertainty in the marketplace. There’s been a very slow expansion recently, and retention [of companies] has become more important.”

HVEDC, financed at its founding largely by Central Hudson, is a marketing-driven organization whose major services include comprehensive proposals to business prospects, site search consultation and collaboration with local officialdom. The county economic development directors, as well as a variety of other local movers and shakers, serve on its 34-member board of directors.

Cluster analysis is more an analytical tool, albeit a powerful one, than a prescriptive one. The existence of clusters doesn’t resolve policy questions about what to do with them. Cluster analysis alone is not capable of producing an answer to the question of what industries and businesses a region should seek to support.

In his lecture, Oates listed only the advantages of clusters of like-minded companies in the same marketplace. He provided a case study of a company, OSI Pharmaceuticals, which consolidated its operations at various locations to Rockland County. Oates said that more than 100 firms in the biotech and life sciences industry have been identified. According to local economic development sources, there are many biotech companies in Ulster County that Oates does not yet know much about. March Gallagher, Ulster County executive Mike Hein’s deputy director for economic development, said she plans to remedy that deficiency.

Neither Oates nor REDC regional director Aimee Vargas returned phone calls seeking more information about the process of identifying regional clusters. Jason Conwall, senior press officer for the state’s Empire State Development, said that the governor has decided that a bottom-up approach in economic development was best. Reform efforts are still new, he said. There was of course room for improvement.

Does the Mid-Hudson REDC constitute grass-roots economic development? For the most part, the 32 members who attend four meetings a year are the usual notables, not much different from the HVEDC board or for that matter from the Hudson Valley Pattern for Progress board. And the most impressive part of the REDC strategic plan published in November was how quickly it was produced, not its in-depth analysis or its factual accuracy. Though the region wasn’t a winner of state challenge-grant funding, its application was a good start, and there will be other rounds of funding.

Backed by the carrot of state support on the table, the REDC strategic plan was able to identify three top priorities, a biotech incubator at New York Medical College in Westchester, a cloud-computing center at Marist College, and an assessment clinic for the disabled in Sullivan County. Also-rans deemed “in development” included an Ulster County high-tech manufacturing center, a medical school affiliation for one of the Orange County regional medical centers, and a law-enforcement training center in Putnam County.

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