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Cuomo details high-tech RiverBend hub for Buffalo

November 21, 2013, 10:47 am
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In the largest down payment on his Buffalo billion-dollar commitment, Gov. Andrew M. Cuomo this morning announced the creation of a clean-energy research campus on 90 acres of land along the Buffalo River that will include two tenants investing $750 million apiece to create a total of 850 jobs. The initiative will be dubbed Buffalo High-Tech Manufacturing Innovation Hub @ RiverBend.

“Today we come full circle,” Cuomo said, referring to the old use of the site, Republic Steel, now to be reused for clean energy. ““Buffalo’s future is the future of the state of New York.”

The companies were indentified as Soraa and Silevo. In discussions after Cuomo’s speech concluded, officials said the state will invest $225 million in the project, leveraging $1.5 billion investment from the two companies.

Construction of the 275,000 square foot facilities for the two companies is expected to be finished in 18 months; officials said it would take up to one year after that to reach the promised employment of 850 jobs, with 375 jobs at Soraa and 475 at Silevo. The state would purchase the equipment for the two companies, and the facilities and equipment will be owned by the state.

Cuomo received a standing ovation as he walked on stage before a standing-room only crowd at the Adam’s Mark Hotel this morning to make the announcement.

The governor fleshed out a proposal, first made last month, to make this region a hub for high-tech research, manufacturing and work force training.

“This is going to reap benefits for the people of the state of New York,” Cuomo said. “Yes, Buffalo has a proud history, but I’m more excited about its future,” he concluded, receiving another standing ovation.

The RiverBend project calls for $225 million in state money to build the first two of six buildings on a brownfield site that Cuomo administration officials believe will become the center of some of the nation’s leading clean and green energy research.

The RiverBend project will be run by the State University of New York’s Research Foundation, which is headquartered in Albany, and has the help from top officials at the College of Nanoscale Science and Engineering, the State University of New York’s newest college, which has become a major source of jobs in Albany with its focus the past two decades on nanoscience research.

Alain Kaloyeros, head of SUNY’s nanoscale college, speaking at the Adam’s Mark today said: “Folks, this is real. This is like the Yankees coming to Buffalo. This is like the Bills winning the Super Bowl.”

The first two tenants in the first of six planned buildings are being lured, like those in Albany to the nanoscale facility, with the promise that the state will provide the space and expensive equipment that they could not otherwise afford on their own to do cutting-edge research in the field of clean energy.

Officials say the model works because companies, once they locate, find it difficult to leave because they cannot replicate a facility with so much expensive equipment upon which research is conducted. In Albany, the nanoscale center has attracted a who’s who of computer chip makers and other high-tech firms from around the world.

Cuomo vowed in 2012 to pump in an extra $1 billion in state money over several years to try to provide an economic rebirth in Buffalo, which he said has been ignored for too long by the state.

“The Buffalo Billion is intended to be transformative,” said Howard Zemsky, co-chairman of the Western New York Regional Economic Development Council in opening remarks before Cuomo spoke. “We’re the capital of clean energy in New York State.”

The plan for the high-tech hub includes a SORAA fabrication facility with 375 jobs, a company official said. “We’re coming to Buffalo today because of the progressive incentive program of Governor Cuomo allows us to compete globally.”

County Executive Mark Poloncarz: “I can’t think of a better way to turn around the economy than to repurpose the sites of our past.”

The state in October began seeking bids from developers to work on the high-tech campus, saying it was seeking proposals to create “state-of-the-art facilities and cutting edge infrastructure” at an unknown site in this area.

Several major developers in this region have expressed interest in the contract, and they have until Dec. 10 to respond.

The project will be constructed on the former Republic Steel and Donner Hanna Coke site.

The previously contaminated industrial property, which is now vacant, takes up more than 200 acres in total, bounded by the Buffalo River to the north, Tifft Street to the south and a set of railroad tracks and the Tifft Nature Preserve to the west.

Mayor Byron W. Brown this morning talked about the city’s role in preparing the property for redevelopment. The city in 2008 bought the former Republic Steel site for $4.6 million, readying the foundation to create a shovel-ready site ripe for a developer’s investment.

Buffalo Niagara Riverkeeper has led a federally funded habitat restoration of the property. The Buffalo Urban Redevelopment Corp. is the lead redevelopment agent and has proposed a mix of commercial, residential and retail uses for the site.

Among those in the crowd were Erie Community College President and former Congressman Jack Quinn and former Erie County Executive Joel Giambra.

Also today, the governor visited the Ford Stamping Plant in Woodlawn, the site of a planned $150 million investment by the automaker that is tied to expanded production across the border and will create 350 new jobs. Cuomo praised the workers at the facility for their efficiency, and noted that the state was putting $7 million toward the project. “This investment in the plant will make sure that the 680 jobs we have in the plant will still be here... and 350 new jobs will be created,” Cuomo said.

That project is in line to receive $1 million from the New York Power Authority.

email: swatson@buffnews.com and tprecious@buffnews.com
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Profiles of high-tech hub companies Soraa, Silevo

November 21, 2013, 10:47 am
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Soraa and Silevo

A quick look at the companies planning to invest $750 million apiece in the Buffalo High-Tech Manufacturing Innovation Hub @ RiverBend.

Soraa

 – Soraa develops and makes lighting systems based on an advance in LED technology that is said to make illumination systems brighter and more cost-effective.

– Its LED lighting was developed in house.

– Those three professors, Shuji Nakamura, Steven DenBaars and James Speck, founded Soraa in 2008 in Goleta, Calif.

– The company is now based in Fremont – Silicon Valley – and has about 250 employees, according to an interview printed in February in the Edison Report, a website about the lighting industry.

– Soraa, meaning sky in Japanese, had raised some $100 million to further its growth.

– The company has won nearly $8 million in contracts from the federal Department of Energy’s Advanced Research Projects Agency Energy.

Silevo

 – Silevo, also based in Fremont, Calif., produces cheaper, higher-efficiency solar panels.

– It was founded in the summer of 2007 by a pair of executives from Applied Materials Inc., Zheng Xu and Jianming Fu.

– The company received $3 million from the U.S. Department of Energy in 2009 to further develop its proprietary solar cell technology called Triex.

– It claimed about 200 employees in the United States in 2012.

– Silevo has production facilities in Fremont but maintains a low-cost, high-volume factory in Hangzhou, China.

– Silevo announced in June that it was seeking to build a production plant in the United States to grab more market share domestically and avoid shipping costs and anti-dumping fees on products from China.

– Silevo, according to Bloomberg News, also was considering building a third plant in Europe or the Middle East.

– During a conference in June in Munich, Germany, the company announced the industry’s first greater-than-350 watt-peak solar module made with 72 of Silevo’s Triex 156 mm solar cells.
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Buffalo home to state's 'clean energy business'

November 21, 2013, 12:15 pm
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Gov. Andrew M. Cuomo is hoping to duplicate in Buffalo the success the state had in turning the Capitol District into a hub for nanoscience.

But Cuomo’s announcement for a $225 million state investment in a Buffalo hub for high-tech and green energy businesses doesn’t involve nanotechnology.

Cuomo is hoping the economic development model that was so successful in Albany can catch lighting in a bottle a second time in Buffalo.

“There will never be a Nano 2,” Cuomo said during a meeting with reporters and editors from The Buffalo News. “But it’s the same basic concept.”

The idea is to build a research and development center that has the right combination of expensive equipment needed by clean energy firms to develop new products – gear that is too costly for them to buy on their own. By giving those businesses access to state-of-the-art facilities, the Cuomo administration hopes green energy firms will flock to the Buffalo hub, much as chip manufacturers have beaten a path to Albany and the cutting edge facilities that the state built years ago under the direction of Alain E. Kaloyeros, the senior vice president and CEO of the SUNY College of Nanoscale Science and Engineering.

“He’s taken the best of his model to Western New York,” Cuomo said. “It’s a different application. Albany is in the chip-making business. This is in the clean energy business.”

email: drobinson@buffnews.com
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Deck the halls with LED lights

November 21, 2013, 1:01 pm
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LED lights can be a great gift to the holiday decorator. Even though they cost more than other types, they last longer, produce far less heat and use less energy.

The letters stand for “light-emitting diode” (but if you’re like some of my neighbors, they might more appropriately stand for “love elaborate displays.”) Unlike incandescent bulbs, LEDs are solid-state. There’s no filament that heats up with wasteful thermal radiation. Instead, light is released when electrical current excites electrons in the diode.

Just in time for the peak decorating season, here’s a stocking full of tidbits about LED lights, compiled by our researchers and based on interviews with highly rated lighting and electrical experts and other sources:

• Plan to spend about four times more for a string of LED lights than for traditional bulbs. However, according to the U.S. Department of Energy, a typical strand of incandescent lights may last three years, while a comparable strand of LEDs can last 20 years or more.

• An LED bulb generally consumes 75 percent less energy than its incandescent counterpart.

• You can connect up to 25 strands of lights end-to-end and not worry that you’ll blow a fuse.

• Size matters: Earlier versions of holiday light bulbs began with what are known as C6 bulbs, where the C stands for “cone-shaped” and the 6 refers to the diameter of the bulb in eighths of an inch. Modern versions of the C6 are strawberry-shaped bulbs often used indoors or draped around doorways. C7 and C9 bulbs are commonly hung along rooflines or to wrap around trees.

• Popular LED holiday bulb types include the globe-shaped G series, or T, which are small tubes. Mini-tube LEDs are recommended for indoor Christmas trees.

Other types of LED lights that can make your holiday bright include rope lights, which are encased in flexible plastic tubing, and net lighting, which can be draped over a bush or tree, avoiding the usual tangled mess.

Colors of LED holiday lights are as varied as their incandescent counterparts. Newer versions can match the warm, candle-like hues of incandescents.
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Making ‘Made in the USA’ worth something

November 21, 2013, 1:02 pm
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Accessories for the iPhone, bottle holders, lens cleaners, and dog collars and leashes were among items for sale by a Utah company on its website and by third-party sellers such as Amazon and REI. The company claimed products were “Made in the USA” and “Truly Made in the USA.”

“Our source of pride and satisfaction abounds from a true ‘Made in USA’ product,” the company said on its website.

Turns out, it lied, at least about some products, the Federal Trade Commission alleges. In fact, the company imports some products and components, the FTC said.

The company, EK Ekcessories, recently settled with the FTC after the agency alleged the company was deceiving consumers with its claims of products being American-made.

EK Ekcessories said in a statement it was unaware of the FTC’s “strict application” for Made in USA guidelines.

The FTC case highlights the confusion – and sometimes, deception – around what exactly Made in the USA means to consumers.

Buying American-made products is a big deal for a lot of people. In a survey by Consumer Reports National Research Center, 78 percent of Americans would rather buy the American product when given a choice between it and an identical one made abroad. And more than 60 percent said they would buy American-made clothes and appliances even if they cost 10 percent more than imported versions.

The topic of buying American can get emotional and political. But Spending Smart is often about getting better value for your money. If you believe part of a product’s value to you is that it is American-made, here are some things to know.

• What Made in the USA means: The standard to claim a product is made in the U.S., according to an FTC rule from 1997, is that “all, or virtually all,” of the product was made in the United States. The product should contain “no, or negligible,” foreign content. But there are no hard-and-fast percentages. The FTC looks at such factors as the final place of assembly, product costs attributable to various countries, and how far back in the manufacturing chain the foreign content is, said Julia Solomon Ensor, the FTC attorney in charge of the EK Ekcessories case.

The Utah company says it only recently started to offer “a few new lines of products” that had components made offshore. And those products were assembled in the U.S., it said.

Still, it failed to meet the strict requirements for Made in the USA for some products.

• How to determine if something is American-made: Many products are not legally required to carry a label identifying where they were made, nor are retailers required to disclose the information. But, according to the FTC, most textiles and wool products must identify where they were made.

Automobiles made since Oct. 1, 1994, for sale in the U.S. must have a label stating where the car was assembled. The label also must specify the percentage of equipment made in the U.S. and Canada, and the country where the engine and transmission were made.

Unfortunately, it’s “nearly impossible” for the average consumer to determine whether a product is truly made in the U.S., Ensor said. But if you find a company is making an overly broad claim about Made in the USA, file a complaint at FTC.gov or call 877-FTC-HELP.

“It’s a tough question that I get asked a lot,” Ensor said. “I wish I had a better answer.”

• Read labels carefully: A loophole in the strict Made in the USA rule is that a claim can have qualifiers, such as “Made in the USA, with some components assembled in Mexico.” In those cases, the FTC has to make a decision on whether to crack down on such a claim. It uses the test, “How would a reasonable consumer, seeing the claim in context, understand it?”

A picture of an American flag or advertising with imagery associated with the United States does not mean it was made in the U.S.

• What an American car is: The notion of buying an American car is especially complicated because so many foreign automakers use American-made parts and have assembly plants in the U.S. while profits flow to a foreign company. Meanwhile, some U.S.-based automakers use some foreign parts and labor. So that becomes a judgment call based on your personal definition of “American car.”

• Follow the profits: Roger Simmermaker, author of the book “How Americans Can Buy American,” suggests starting more simply than with vehicles and appliances. Start in the supermarket “where, ultimately, you spend more of your time and more of your money.”

Making choices at the supermarket often involves similar items about which consumers don’t have a strong preference. So it’s easy to make a switch if buying American is important to you, he said.

His idea is not to just buy American-made products but products from American companies, which pay more taxes than foreign firms.

For example, even though both are American-made and known to be quality brands, Clorox is owned by an American company and Lysol is owned by a British company. Prego is American-owned; Ragu is owned by Unilever, which traces ownership to England and the Netherlands.

Simmermaker says that if you have a strong preference for a brand, go ahead and choose it. But when it’s a toss-up, buy from an American company.

• Get an online assist: Several websites identify products made in the U.S. and/or made by American companies. Simmermaker’s website, HowToBuyAmerican.com, can help you identify which companies make which brands. Other sites sell items they claim are American-made. They include MadeInUSAForever.com and AllAmericanClothing.com.

• Retailer help: Some major retailers will help you identify American-made products. One trick is to try typing “Made in the USA” into a retailer’s online search box, Simmermaker said. Sometimes the search will return products that are American-made. It works with Nordstrom.com, Walmart.com and Amazon.com, for example.
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Amherst may lose rare green space with country club redevelopment

November 21, 2013, 4:23 pm
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The owners of one of the last privately owned green spaces in the Town of Amherst – the Westwood Country Club – say they want to develop it as a mixed-use project.

Mensch Capital Partners LLC, an investor group that bought the 68-year-old country club from its members in 2012, informally approached the town planning board two weeks ago with the idea.

No formal plans have been submitted to the town, and planning director Rick Gillert said he doesn’t expect anything to be filed until at least January.

He declined to elaborate on the nature of the talks or the concepts, noting that details could change significantly before anything is submitted. However, options would likely include some combination of office space, hotel, retail and housing, some of which may require rezoning by the town. The property is now zoned as a community facility.

“We’ve had informal discussions with them, but nothing that I could really discuss as a proposal,” he said.

Meanwhile, the investor group began conducting soil tests “to understand the constraints of a site,” said Andrew J. Shaevel, the managing partner of the group.

“We’re evaluating our options,” Shaevel said. “We’re doing what we have to do to make good informed decisions.”

The development talks follow the collapse early this year of negotiations for a land swap between the Mench Partners and the Town of Amherst – the 170-acre Westwood property in exchange for 170 acres of the 213-acre town-owned Audubon Golf Course.

Mensch felt the Audubon property – located between Millersport Highway, North Forest Road and Maple Road, and near University at Buffalo’s North Campus – was more suited to redevelopment than Westwood, which is sandwiched between North Forest and Maple roads and Sheridan Drive.

Amherst officials rejected that proposal, which they said wasn’t a fair swap because the land is valued differently, and further talks went nowhere.

At Westwood, speculation about the ultimate intentions of the club’s new owners began the moment they bought it for $2.5 million, with many observers expecting they would ultimately turn to commercial or residential development of the site rather than keeping it as a golf course.

Besides Shaevel and Paul J. Kolkmeyer, both of Essjay Partners LLC, the group includes Paul Ciminelli, CEO of Ciminelli Real Estate, and Mark and Dan Hamister, of Hamister Group.

Opportunities for large-scale development in Amherst are becoming fewer, as there are few large parcels available that aren’t set aside for parkland or wetlands. So developers are eager for any opening they can find. For example, the former Evergreen Golf Course on Tonawanda Creek Road is now a Marrano/Marc Equity housing development called Evergeen Landing.

That’s what worries Amherst Town Supervisor Dr. Barry Weinstein.

“Personally, I’m very concerned about the loss of a golf course, and the loss of open space and the loss of recreational area,” he said, although he would not take a position on the proposed development. However, “I’m not surprised, based upon previous discussions.”

But there’s no guarantee the group can get the town to go along with developing Westwood. Heavy opposition by area residents, particularly in the Fairways neighborhood, derailed Benderson Development Co.’s efforts to build on the former gun club property along Maple Road, and opponents had already started speaking out against the land swap when that was pending.

Also, Weinstein and the Town Board took heat during the recent election over their approval for prior hotel developments on Main Street in Williamsville and Snyder.

“They can come to the town board just like anybody else, and if it fits with the master plan, I would think the town board would consider rezoning it,” said Town Board member Steven Sanders. But “they probably would be held to a slightly harder test, just because of the factors in that neighborhood. I imagine that we would look at this under a microscope, making sure everything is clean.”

Originally founded in 1945 with 200 members, Westwood grew and thrived for decades but fell into decline as its original purpose – a club for Jewish people who were not allowed to join other existing organizations – was no longer necessary. Membership plunged, finances deteriorated and debts mounted, forcing the club to put itself up for sale or be closed.



email: jepstein@buffnews.com
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NRG falls short on California car charger quota

November 21, 2013, 5:27 pm
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LOS ANGELES – A New Jersey energy company required by an unusual legal settlement to build an extensive network of electric car chargers throughout California has delivered just 10 percent of what it promised in the first year.

By fortifying the state’s still-spotty charging infrastructure, the settlement between NRG Energy Inc. and California energy regulators was sold as the key to jump-starting enthusiasm for the nonpolluting vehicles. With more places to “refuel,” more people would have confidence that they won’t get stranded by a dead battery. And widespread adoption of the cars would help the state meet ambitious air quality goals.

Instead of Californians plugging in, however, progress has been plugged up: Just 110 of the 1,040 stations that NRG committed to installing by early December are ready. NRG also supplies power in Western New York and owns the Dunkirk Power Plant.

The subsidiary responsible for building the stations over four years, NRG eVgo, blames a series of unanticipated problems, including a reluctance among owners of malls, offices and apartment buildings to provide space for the chargers – even when the company subsidizes their cost.

The count of new stations so far, released to the Associated Press, is likely to renew concern over the settlement and whether NRG eVgo will be able to comply with it. By the end of 2016, the company is to spend $90.5 million to install at least 10,200 new charging stations statewide.

State officials promoted the deal as a creative way to resolve a decade-old legal claim California filed on behalf of electricity customers amid the state’s power crisis. NRG co-owned power plants sold the state electricity at inflated prices; the company inherited the entire liability when it took full ownership of the plants.

From the outset, skeptics suggested that the settlement doesn’t adequately compensate Californians or penalize the company for the alleged price gouging. For one, NRG keeps profits from the chargers.

“How is that a penalty? You’re giving them more locations. And they’re earning revenue from them,” said John Gartner, research director of smart transportation at Navigant Research.

While California’s many environmentally inclined consumers may seem eager for electric cars – and, led by Gov. Jerry Brown, the state is relying on 1.5 million zero-emission vehicles to reduce air pollution – the lack of charging stations remains a barrier.

In a series of interviews, NRG eVgo’s vice president of business development in California both acknowledged difficulties in the rollout and insisted “great progress” was being made.

“I’m absolutely confident this is not only realistic but absolutely transformational” for air quality and electric vehicle adoption in California, NRG eVgo’s Terry O’Day said.

So far, little has been transformed, save corners of a few shopping mall and apartment complex parking lots. O’Day said property owners have been surprisingly skeptical.
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Weak sales, big discounts drive third-quarter loss at Sears

November 21, 2013, 5:51 pm
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HOFFMAN ESTATES, Ill. – Sales declines at Kmart and Sears stores led to a widened loss in the third quarter for parent company, Sears Holdings Corp. The ailing department store chain also was hurt because it had to do some heavy discounting to get shoppers to spend.

Sears is the latest retailer catering to lower- and middle-income shoppers to post disappointing results. Several, including Walmart, also have cut their outlooks for the upcoming holiday shopping season because of the uncertain economy. But Sears faces additional pressures: The retailer hasn’t adapted as bigger, nimbler rivals have lured away customers over the years.

For the three months that ended Nov. 2, Sears lost $534 million, or $5.03 per share. That compares with a loss of $498 million, or $4.70 per share, a year earlier.

Revenue fell 7 percent to $8.27 billion, mostly because it had fewer Sears and Kmart stores operating. Revenue at stores open at least a year – an indicator of a retailer’s health – dropped 3.1 percent.

At Kmart, sales at stores open at least a year fell 2.1 percent due to declines in consumer electronics and toys were partially offset by increases in clothing and seasonal and outdoor living products. At Sears, the figure fell 4 percent as it suffered a decline in most categories, including consumer electronics, tools and home appliances.

To improve its business, Sears is shifting away from its focus on running a store network into a business that is members-focused, where its most loyal shoppers receive incentives to buy. The company said that transition has weighed on results as it continues to do traditional promotions while investing in its membership loyalty program called Shop Your Way.

Eddie Lampert, a hedge fund billionaire and Sears’ chairman and CEO, acknowledged on Thursday during an interview with the Associated Press that he thought the company would be profitable by now.
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Dow closes above 16,000 for first time, on track for best performance in a decade

November 21, 2013, 5:57 pm
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NEW YORK – The Dow Jones industrial average finished above 16,000 for the first time Thursday as the blue-chip index races toward its best performance in a decade.

The Dow has been on fire lately, propelled higher by a combination of solid corporate earnings, a steadily strengthening economy and easy-money policies from the Federal Reserve.

Since the start of the year, the Dow is up 22 percent and has now topped three 1,000 point milestones in 10 months. It eclipsed 14,000 in February and 15,000 in May. If it holds onto its gains, it would notch its strongest performance since 2003.

“The market has come a long way,” said Dan Seiver, an economist at San Diego State University. “It’s a sign of just how far financial markets have recovered.”

The Dow has more than tripled since its bear market low in March 2009.

Back then, the country was in the worst downturn since the Great Depression, the housing market had collapsed and individual investors had abandoned stocks.

Now, with the economy recovering and confidence returning, small investors are coming back in.

“People are getting out of bonds into stocks,” said Steven Ricchiuto, chief economist at Mizuho Securities. “We’re in the early stages of a recovery.”

The Dow rose 109.17 points, or 0.7 percent, to close at 16,009.99 Thursday. The Standard & Poor’s 500 index rose 14.48 points, or 0.8 percent, to 1,795.85. The Nasdaq composite rose 47.88 points, or 1.2 percent, to 3,969.15.

In a sign that investors are taking on more risk, small-company stocks rose at a much faster pace than the rest of the market. The Russell 2000 index jumped 19.83 points, or 1.8 percent, to 1,119.62.

The Labor Department reported before the market opened that applications for unemployment benefits dropped last week to the lowest level since September. The number of applications is close to where it was before the Great Recession.

General Motors rose after the U.S. government said it expects to sell its remaining stake in the company by the end of the year. The Treasury Department got shares after bailing out GM five years ago, but once its sells, the automaker will be free of restrictions on executive pay that came with the bailout. It would also be free to pay dividends.

GM gained 43 cents, or 1.1 percent, to $38.12. The stock is up 32 percent this year.

“Having the Treasury out is probably something that is going to be positive for the shares,” said Jeff Morris at Standard Life Investments. “Some investors are probably a bit spooked by having a meaningful amount of government ownership.”

Johnson Controls was among the biggest gainers in the S&P 500. The company, which makes heating and ventilation systems for buildings, said its board approved a $3 billion increase in its share buyback program. The company rose $2.13, or 4.4 percent, to $50.35.

In government bond trading, the yield on the 10-year note edged down to 2.79 percent from 2.80 percent Wednesday. The yield, which is a benchmark used to set interest rates on many kinds of loans, including home mortgages, is the highest it’s been since Sept. 17.
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Unemployment benefit applications fall to 323,000

November 21, 2013, 6:05 pm
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WASHINGTON – The number of people applying for U.S. unemployment benefits fell 21,000 to a seasonally adjusted 323,000 last week, the lowest since late September and further evidence of an improving job market.

The Labor Department said Thursday that the less volatile four-week average fell for the third straight week to 338,500. Both figures are near pre-recession levels.

Applications are a proxy for layoffs. They had spiked in early October because of the partial government shutdown and processing backlogs in California. But first-time applications have now fallen in five of the past six weeks. The decline indicates that employers are laying off fewer workers.

“If claims can remain at this week’s level it would be easier to believe in the idea that ... payroll growth could break out to the upside,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Some economists warned that last week’s Veterans’ Day holiday may have exaggerated last week’s decline because many state government offices were closed Nov. 11.

But the broader trend has been downward. The steady declines suggest hiring will remain healthy in the coming months. Employers added 204,000 jobs in October, shrugging off the 16-day shutdown.

Job growth accelerated over the summer. Employers added an average of 202,000 jobs per month from August through October. That’s up sharply from an average of 146,000 in May through July.

The solid gains should help boost economic growth next year. Greater hiring, combined with modest increases in pay, appears to be supporting more spending. Higher retail spending last month has raised hopes that the holiday shopping season will be better than many analysts expected.

Still, the economy is far from healthy. More than four years after the recession officially ended, the unemployment rate remains high at 7.3 percent.

And nearly 3.9 million people received benefits during the week ended Nov. 2, the latest data available. That’s down about 33,000 from the previous week. That total has fallen 26 percent in the past year. Many of the former recipients have likely found jobs. But most have likely used up all the benefits available to them

The Federal Reserve is closely monitoring the job market in deciding when to reduce its economic stimulus. The Fed has been buying bonds to keep long-term interest rates low and encourage more borrowing and spending.
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U.S. expects to sell last of GM stock by year end

November 21, 2013, 6:05 pm
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DETROIT (AP) – The U.S. government expects to sell the last of its stake in General Motors by the end of the year, bringing an end to a sad chapter in the 105-year-old auto giant’s history.

The Treasury Department, in a statement issued Thursday, said it still owns 31.1 million shares of the auto giant, less than 2 percent. It plans to sell them by Dec. 31, as long as the price holds up.

Shares of GM briefly hit $39 in trading early Thursday. They pulled back a bit by midday, but still were up 76 cents, or 2 percent, to $38.45. The shares have gained 34 percent this year.

The government received 912 million shares in exchange for a $49.5 billion bailout during the financial crisis in 2008 and 2009. So far it has recovered $38.4 billion of the money, but selling the remaining shares at Wednesday’s $37.69 closing price gets the government $1.17 billion, leaving taxpayers short by roughly $10 billion.

The government says the bailouts of GM and Chrysler were needed five years ago to save the American auto industry and more than a million jobs. It never expected to get all of the money back.

“Had we not acted to support the automotive industry, the cost to the country would have been substantial – in terms of lost jobs, lost tax revenue, reduced economic production and other consequences,” Deputy Assistant Treasury Secretary Tim Bowler said in the statement.

The lack of government ownership should boost GM’s car and truck sales, North American President Mark Reuss said Wednesday at the Los Angeles Auto Show. GM was tagged with the derisive moniker “Government Motors,” and, at least initially, taking aid from the taxpayers kept some buyers away from GM vehicles. But company research later showed that subsided.

Taxpayers’ initially got a 61 percent stake in GM in exchange for the bailout, which was needed because GM nearly ran out of cash and may have faced liquidation. Treasury gradually has sold off its stake since a November 2010 initial public offering. The Canadian government, which also took part in the bailout, still owns about 8 percent of GM stock.

Once the U.S. government exits, GM will be free of restrictions on executive pay that came with the bailout. CEO Dan Akerson has complained that the restrictions have hurt GM’s ability to recruit executives.

GM went through bankruptcy protection and was cleansed of most of its huge debt, while stockholders lost their investments. Since leaving bankruptcy in 2009, GM has been profitable for 15 straight quarters, racking up almost $20 billion in net income on strong new products and rising sales in North America and China. It also has invested $8.8 billion in U.S. facilities and has added about 3,000 workers, bringing U.S. employment to 80,000.

The company now is sitting on $26.8 billion in cash and is considering restoration of a dividend. It hasn’t paid U.S. federal income taxes since leaving bankruptcy due to write-offs from net losses.
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Yellen nomination to lead Fed advances in Senate

November 21, 2013, 6:31 pm
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WASHINGTON – A Senate panel Thursday advanced Janet Yellen’s nomination to lead the Federal Reserve, setting up a final vote in the full Senate after lawmakers return from a two-week Thanksgiving break.

The Senate Banking Committee approved her nomination on a 14-8 vote. Sen. Joe Manchin, D-V.Wa., was the only Democrat to oppose Yellen’s nomination. Republican Sens. Bob Corker of Tennessee, Tom Coburn of Oklahoma and Mark Kirk of Illinois supported her.

Yellen’s path to confirmation also became easier Thursday when the full Senate voted to change its rules for approving all presidential nominees other than Supreme Court selections. Now a simple majority will be required, instead of 60 votes.

Republicans could still try to delay the final vote to focus attention on other issues. For example, Sen. Lindsey Graham has threatened to hold up nominations for government positions until survivors of last year’s deadly attack on the diplomatic post in Libya appear before Congress.

But Democrats control 55 votes in the chamber, so such tactics could easily be overcome.

Yellen was nominated by President Obama in October to succeed Ben Bernanke, whose second four-year term as chairman will end Jan. 31.

She would be the first woman to lead the Fed and the first Democrat to do so since Paul Volcker stepped down in 1987.

Yellen made clear at the committee’s hearing last week that she’s prepared to support the Fed’s extraordinary efforts to bolster the economy until there are clear signs of a sustained rebound and further improvement in the job market.

As a result, the Fed’s low-rate policies are expected to continue under her leadership. Yellen has been a close Bernanke ally, first as president of the San Francisco regional Fed bank and then since 2010 as vice chairwoman of the Fed board in Washington.

Yellen and Bernanke are both considered “doves”– Fed officials who stress the need to fight unemployment during periods of economic weakness. By contrast, “hawks” tend to worry more about inflation that could arise from the Fed’s policymaking.

In the view of Fed watchers, Yellen’s testimony last week solidified her dovish reputation. She maintained that the Fed’s bond-buying program has successfully supported the economy by keeping long-term borrowing rates. And she minimized concerns that critics have raised about the bond purchases.

The Fed is adding to its investment portfolio with $85 billion a month in bond purchases. Its holdings are nearing $4 trillion, more than four times their level before the financial crisis struck in the fall of 2008.

Republican critics say they fear that by flooding the financial system with money, the Fed has inflated stock and real estate prices and could create asset bubbles that could pop with dangerous consequences for the economy.

Some say they also worry that the Fed’s eventual unwinding of its investment holdings will unsettle financial markets, sending stock prices falling and interest rates rising and threatening the economic recovery.

Sen. Mike Crapo, R-Idaho, said before Thursday’s vote that he would oppose her because of his disapproval of the Fed’s easy money policies.
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Buffalo’s future looks very green with state’s investment in high-tech facilities

November 21, 2013, 7:07 pm
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The Cuomo administration is committing $225 million – the biggest single investment by the state in a new business venture in the Buffalo Niagara region – to try to turn Western New York into a Silicon Valley for green-energy companies.

The massive investment, which accounts for nearly a quarter of the funds pledged through the Buffalo Billion initiative, is part of an all-in effort by Gov. Andrew M. Cuomo that, within the next 18 months, would build a pair of state-owned high-tech facilities, bigger than a Walmart store, packed with the type of state-of-the-art equipment and machinery that clean energy firms covet but can’t afford on their own.

“It’s probably the most exciting economic development announcement that we’ve had statewide since I’ve been governor,” Cuomo said. “This project, I believe, is a game-changer for Western New York.”

At the heart of Cuomo’s plan is a six-building hub for clean-energy research, development and manufacturing that will be built on 90 acres of a 200-acre brownfield site of the former Republic Steel plant on South Park Avenue.

Two California companies – one making a new type of LED lighting and the other solar panels – have committed to move into the center’s first two buildings, pledging to invest $1.5 billion of their own money in a venture expected to bring 850 jobs to the site. That brings the entire investment in the project, including the state’s portion, to $1.7 billion. State officials said almost 800 of the positions are expected to be filled by new hires from Buffalo Niagara or by those who move here from elsewhere.

The idea is to create a cluster of green-energy businesses – all drawn to the site by the coveted resources inside the state-owned facility – that will build on itself, becoming a powerful magnet that will attract other businesses in the same industry.

Adding further to the appeal: Companies that move into the 90-acre site’s four other buildings – but not the two California firms – likely will be able to avoid paying any state taxes for 10 years under the Start-Up New York program that begins next year.

“How do you compete with zero taxes?” Cuomo asked.

Leading the way to the new complex, to be called the Buffalo High-Tech Manufacturing Innovation Hub at Riverbend, are two companies now based in California.

Soraa, a Fremont, Calif., company that makes high-efficiency LED lighting with different material than most lights of that type, is pledging to invest $750 million of its own funds in a facility that will employ 375 people. Soraa executives said the company will relocate its R&D and manufacturing operations to RiverBend.

Thomas Caulfield, Soraa’s president and chief operating officer, said the company’s technology can produce LED lights that are brighter and more cost-effective than LED lights that use conventional technology. The investment in the Buffalo facility will help it further expand and refine its technology.

“The light quality and efficiency will continue to improve,” he said.

Silevo, also based in Fremont, makes solar panels that it says are cheaper and more efficient.

The company said in June that it wanted to build a factory in the United States to increase its market share and avoid the shipping costs on products made at its factory in China. Zheng Xu, the company’s chief executive officer, said the company picked the Buffalo site despite being courted by four other states that offered “very competitive incentives.”

Xu said the benefits of the clean-energy hub, combined with the pool of engineering talent produced at Western New York universities and the region’s low-cost electricity, helped sway the company, which expects to produce its solar panels here just as cheaply as it can make them in China.

Silevo, which has about 40 employees at a California office that will remain open, hopes to eventually hire 475 people to work at its Riverbend factory, which is expected to be ready to begin production in early 2015.

Once the facilities are ready, the companies are expected to take a year to 18 months to get up to full employment, said Alain E. Kaloyeros, the senior vice president and CEO of the SUNY College of Nanoscale Science and Engineering.

The jobs could cover a wide range of skill levels, from high school and community college graduates, to people with advanced university degrees, Kaloyeros said. Green-energy jobs also tend to pay about 50 percent more than the average job, which would further the economic impact from the green-energy investments.

Kaloyeros, the driving force behind the Albany nanoscience initiative, said the two companies were picked to be the pioneering businesses at the clean- energy hub from a group of about 30 firms from within the industry that were vetted by state officials.

“Those weren’t just two companies that were picked because they showed interest in New York,” he said. Kaloyeros said Soraa and Silevo were picked because their technology has been shown to be viable and the companies have shown a strong bent for innovation.

The companies also use sophisticated manufacturing methods, not unlike those used by computer chip manufacturers, “that China cannot steal and put them out of business,” he said.

Silevo, for instance, has orders for solar panels that could generate about 300 megawatts of electricity. With the company’s Buffalo manufacturing plant expected to have a capacity to produce solar panels with a combined generating capacity of about 200 megawatts each year, Silevo’s current order backlog is big enough to keep the plant operating at full capacity for 1½ years, Kaloyeros said.

Xu, the former Applied Materials executive who co-founded Silevo in 2007, said the company currently is not profitable, although he hopes the business will break even by next summer. Once the Buffalo facility is fully operational, he said, the company could be earning gross profits of as much as 30 to 35 cents for every dollar of sales.

“The production costs in Buffalo are as good or as cheap as in China,” where the company’s factory can, in a single year, make enough solar panels to generate 30 megawatts of electricity, Xu said.

Silevo may have to raise “a little bit” of money from investors to fund its investment, but Xu said he expects its next major round of fundraising to come through an initial public stock offering, possibly in 2015 or 2016.

Behind the state’s plan is the hope that the same type of economic development strategy that has lured billions in investment and created thousands of new jobs through the nanoscience industry in the Capitol District can be duplicated with the green-energy industry in Buffalo.

The idea is to build a research and development center that has the right combination of expensive equipment needed by clean-energy firms to develop new products – gear that is too costly for them to buy on their own.

By giving those businesses access to the facilities, the Cuomo administration hopes green-energy firms will flock to the Buffalo hub, much as chip manufacturers have beaten a path to Albany and the cutting-edge facilities that the state built years ago under Kaloyeros’ direction.

“He’s taken the best of his model to Western New York,” Cuomo said. “It’s a different application. Albany is in the chip-making business. This is in the clean-energy business.”

But the overall concept is the same: “The companies come to us because they want access to the facilities we own,” Cuomo said. As that happens, “then you start to get what you call a cluster economy.”

Within hours after Thursday morning’s announcement, Kaloyeros said it was apparent companies in the green- energy industry already are taking notice: He received an email from the CEO of an unidentified company that previously spurned the state’s entreaties. Now, the executive was asking to meet with Cuomo and talk about the green-energy opportunities at the Buffalo hub.

email: drobinson@buffnews.com
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Kaloyeros: ‘Like the Bills winning the Superbowl’

November 21, 2013, 7:16 pm
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Leave it to Alain E. Kaloyeros, the salesman-scientist with the outsized personality, to succinctly explain how a clean-energy campus planned for a South Buffalo brownfield is connected to his multibillion-dollar university research megaplex in Albany.

The $1.7 billion high-tech development eyed for the former Republic Steel site here won’t make computer chips, so how will this green-energy project tie in to the nanotechnology economy now booming at the other end of the state?

To answer this question for a roomful of people, Kaloyeros took his smartphone out of his pocket.

The SUNY Albany College of Nanoscale Science and Engineering run by Kaloyeros develops ever-smaller and more-powerful computer chips, including those that run smartphones, tablets and laptops, Kaloyeros said.

The two companies moving to the RiverBend site – Soraa and Silevo – work in the green-energy realm where the batteries and the lights behind the screen displays for those devices are made, he said.

The other tie that binds the two projects is Kaloyeros himself – and he wasn’t shy about predicting success for his latest high-tech initiative.

“Folks, this is real. This is like the Yankees coming to Buffalo. This is like the Bills winning the Super Bowl,” he said at Thursday’s news conference in Adam’s Mark Hotel.

Kaloyeros was in town Thursday to help Gov. Andrew M. Cuomo announce the $1.7 billion clean-energy facility because the governor has tabbed the high-octane, preternaturally enthusiastic researcher as his economic-development point person in the state. The project includes $225 million from the state and $750 million from each of the two private companies moving in.

Kaloyeros’ nanotech college leveraged a 20-year, $1 billion state investment into $13 billion in private-sector investment – including massive computer-chip plants scattered across the Capital District – and Cuomo wants to follow the same model for Buffalo.

“Dr. Kaloyeros is the father of the nanoscale, nanoscience Albany revolution,” Cuomo told the The Buffalo News Editorial Board.

Kaloyeros is a sports-car aficionado and the highest-salaried state worker, at $1.3 million, but he prefers a black T-shirt and jeans to Saville Row suits.

He already played economic-development rainmaker once for Buffalo in helping to persuade Albany Molecular Research Inc. to take the role of anchor tenant in a life-sciences innovation center, planned for the Buffalo Niagara Medical Campus and fueled by a $50 million state investment.

The AMRI project would follow the same course as the nanotech center and the planned clean-energy campus here – the state pays to construct, and equip, a cutting-edge research and development building that attracts high-tech companies to the region.

The state doesn’t directly pay a subsidy to the companies, limiting the loss if a company backs out of a deal or later goes bankrupt because the state still will own the facilities, Kaloyeros and the governor said.

“These guys are not getting a dollar of state money,” Kaloyeros told reporters after the governor’s news conference, noting that the Obama administration is trying to learn from this model.

Cuomo said the state can’t create a second nanotech center here, but he believes New York has placed its chips on the correct new industry to focus on for a high-tech facility in Buffalo using the same public-private partnership.

“I think the area is right, the industry is right and the model is right,” Cuomo told the editorial board.

The nanotech college will help evaluate proposals from developers for the project and will help manage the state-owned facility once it is constructed, Kaloyeros said. Also, Soraa, one of the companies relocating to Buffalo, has been and will continue to be a research partner with the nanotech college.

Kaloyeros said he’s prepared to head west from his Albany home base to the home of the Bills as much as needed.

“I work for the governor, and so this is a high-priority project for the governor. And I expect that – I never thought in my life I would be in Buffalo five, six times in less than two months,” he said.

email: swatson@buffnews.com
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Full coverage on Cuomo's visit

November 21, 2013, 9:24 pm
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Risk, years of work precede high-tech deal

November 21, 2013, 9:33 pm
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When Alain E. Kaloyeros, hailed as a visionary for turning nanoscience research into a billion-dollar industry, got out of a car parked on South Park Avenue outside of a nondescript tract of land in May, he declined a big tour.

“He indicated that he liked the feel of what he saw,” said Peter M. Cammarata, president of Buffalo Urban Development Corp. “We spent relatively a short period time there. He had a vision immediately when he saw the site.”

In the months since that visit, Cammarata provided state officials with information about the property, but it wasn’t until Wednesday that he knew for sure that RiverBend, a remediated brownfield site on the south shore of the Buffalo River, had been chosen for a $225 million state investment and 850 high-tech jobs.

The process of transitioning from Buffalo’s old economy to the promise of a new one started long before the state’s first expression of interest in May.

Mayor Byron W. Brown said that when he was elected, there was a concern that there were no shovel-ready parcels large enough to attract a company that needed a lot of land.

The city took a risk in 2008, spending $4.6 million to purchase 185 acres that once belonged to Republic Steel and Donner Hanna Coke, and had been privately remediated at a cost of $19 million.

“There were some at that time, some naysayers, fortunately not Council members, that said it’s a lot of money, why are you spending this? There’s no project right now, it’s kind of speculative,” Brown said. “But our strategic plan and vision was to have land available so we could do this kind of deal.”

The keys to drawing the interest of high-tech companies to RiverBend include proximity to major highways, an electrical infrastructure that includes a 115-kilovolt power line, and a ready workforce.

But it also includes urban amenities, such as the waterfront and outer harbor, Tifft Nature Preserve, the Larkin District, three nearby bus lines and bike paths, economic development officials said.

“It’s got a lot strategically going for it,” said Brendan R. Mehaffy, executive director of the city Office of Strategic Planning.

The city was in competition with suburban sites, and even other New York cities, for the project, Mehaffy said.

The announcement that 90 acres would be transformed from what was once a remnant of Buffalo’s heavy industrial past to high-tech manufacturing is a validation of years of planning, said David A. Stebbins, vice president of BUDC.

“It really is all we could have hoped for for this site,” he said.

email: jterreri@buffnews.com
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Surge puts S&P 500 on track for ‘Perfect 10’ in 2013

November 21, 2013, 9:36 pm
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NEW YORK – The stock market is poised for a “Perfect 10.”

As stocks surge this year, putting them on course for their best annual performance in a decade, all ten industry groups in the Standard & Poor’s 500 index are closing in on gains of 10 percent or more for 2013.

That hasn’t happened in almost two decades.

The last year that all 10 industry groups in the S&P 500 closed the year higher by 10 percent or more was in 1995, when the overall index rose 31 percent. There have been several years of big yearly gains since, but none that has seen all the sectors notch double-digit jumps.

The S&P 500 gained 26 percent in 1998, but materials and energy stocks fell. The broader index advanced 26 percent in 2003, but phone companies and makers of consumer staples fell short of the 10 percent hurdle.

The reason for the broad gains this year? It’s the first time since the Great Recession that investors are starting to believe that the economic recovery, while tepid, is sustainable, says Natalie Trunow, chief investment officer at Calvert Investments, an investment manager.

The housing market is recovering, hiring has picked up, and people are less scared of losing their jobs. That has helped boost consumer confidence and support spending.

“Only 12 months ago, the markets were not convinced that we were in recovery mode,” says Trunow, who notes there were fears the economy could slide back into recession as recently as this summer.

Here are the 10 industry groups in the S&P 500 index, which is up 26 percent so far in 2013, and how each sector has performed:

Health care: Some stocks in this sector offer the prospect of explosive growth because of new drugs or medical devices. Other, more established names like Pfizer tempt investors with attractive dividend yields.

This year’s gain: 36 percent.

Consumer discretionary: This year’s gain: 36 percent.

Industrials: Delta Airlines and Southwest Airlines are among the biggest gainer in this sector. This year’s gain: 31 percent.

Financials: Banks, insurers and other financial stocks have gained on optimism that the industry is healing after the financial crisis and the Great Recession. This year’s gain: 30 percent.

Consumer staples: Makers of essential, everyday products might not offer the most exciting growth prospects, but they pay a healthy dividend. This year’s gain: 22 percent.

Energy: U.S. oil prices rose, and U.S.-based drillers increased production dramatically, helping push domestic production to the highest level in more than two decades. This year’s gain: 20 percent.

Information technology: Big things were expected from the technology industry at the start of the year. Corporations were supposed to invest in technology to boost productivity. This year’s gain: 19 percent.

Materials: This year’s gain: 18 percent.

Utilities: Power companies are seen as safe and steady. This year’s gain: 10 percent.

Telecommunications: Phone companies could keep the S&P 500 from its “Perfect 10” status. They are the laggards in the index and the only group falling short of 10 percent gains. This year’s gain: 8 percent.
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Ford plant gets reassurance about its future with $150 million investment, 350 new jobs on the way

November 21, 2013, 9:36 pm
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Ford Motor Co. gave its stamping plant in the Town of Hamburg a $150 million vote of confidence, an investment that will also add 350 jobs to the facility’s work force.

The new investment, announced Thursday, will allow the Route 5 plant to install new machinery and equipment and solidify its relationship with a Ford vehicle assembly plant in Oakville, Ont., near Toronto. The upgrades also mean job security for the plant’s current work force of about 620 hourly and salaried workers, and will prepare the Hamburg plant to make stamped metal body parts for additional vehicles yet to be disclosed.

The Ford plant will steadily capitalize on the new investment and jobs, starting now and proceeding into next year, said David Buzo, the plant manager. “As we bring our equipment up and launch our equipment, they will gradually be put on to the rolls,” he said.

The Hamburg site has a key relationship with the Oakville plant, sending parts it makes up the QEW for the Ford Edge and Flex and Lincoln MKX and MKT. The plant also supplies parts for the Ford F-250, F-350, Focus and Econoline vehicles, which are assembled elsewhere in Ford’s manufacturing network.

On the plant floor, the investment will translate into more than 25 new subassemblies, including hoods, doors and fenders, more than 500 new dies and a new blanking line, which is used to cut sheet metal.

“It will improve our quality, it will improve our reliability, it will improve our up-time and it will allow us to compete with the best in the world,” Buzo said.

Ford will also upgrade and refurbish equipment to support “future product programs” for additional vehicles. “That’s in our cycle plan and I can’t discuss that,” Buzo said.

With the new jobs will come training for the new employees, Buzo said. “If you took a look at the equipment, we’re probably the most highly automated assembly area within the stamping business unit. And it takes a lot of training to be able to handle and maintain this equipment.” The Hamburg site will add a third shift in its press room to help increase plant capacity.

Ford, United Auto Workers and elected leaders credited the plant’s work force with making the investment and jobs a reality.

“This is a sign that Ford trusts us, is invested in us, is going to help us move into our future together,” said Patrick Radtke, president of United Auto Workers Local 897, as he spoke to the plant’s work force.

Scott Adams, director of the UAW’s Amherst-based Region 9, said the Hamburg plant workers “have gone through many, many changes, some of them very hard to explain. But you did what you were asked, and the ultimate reward of job security and long-term viability is here. It doesn’t get any better than that.”

The Hamburg announcement comes on the heels of a $682 million investment Ford said in September it was making in its Oakville facility, which will secure 2,800 jobs and expand manufacturing capacity at that site. The investments give both plants reassurance about their status within Ford’s system.

Gov. Andrew M. Cuomo said the Hamburg plant’s workers had proven themselves in a “highly competitive market,” results that he said influenced Ford’s decision to invest there.

“You’re in competition every day,” said Cuomo at the plant Thursday. “You have to create a product that is the best and you have to do it for the lowest amount of cost possible, because if you don’t do it here, someone else will.”

New York State is backing Ford’s investment with a $7 million incentive package. That includes $5 million NY Works Fund capital grant, to cover a portion of the machinery and equipment purchases connected to the facility’s renovation. Ford also qualified for up to $2 million in performance-based Excelsior Jobs Program tax credits in return for the company’s investment and job creation commitments.

“The state’s assistance helped us build a business case to invest in Buffalo,” said Paul Kosaian, Ford’s director of manufacturing for stamping operations.

The Western New York Power Proceeds Allocation Board is recommending the New York Power Authority award $1 million to help train 100 new employees. The Power Authority board is set to vote on that recommendation next month.

Sen. Charles E. Schumer, said he had spoken to Ford’s CEO, Alan Mulally, in October to push for adding jobs at the Hamburg plant, and told Mulally the “pre-clearance” program at the Peace Bridge would provide for a reliable international crossing.

“The size of this investment shows that Ford believes in Western New York and is a powerful message to other manufacturers that this a great place to do business,” Schumer said.

Eddie Duncan of Lancaster, a 19-year-employee of the Ford plant, says the investment “is what we strive for. We put the hard work in, we did what we needed to do, and the outcome proved itself.”

Duncan said the investment translates into job security. “Not only that it secures our future, but even if our children would like to work here, to know that they have a good place to make a living also. That’s what it really means.”

Yrma Mrowinski, a 20-year-employee who lives in Buffalo, said the investment reflects that the Ford workers are “doing a really good job. People realize that our vehicles are better than the imports, and because people are buying the vehicles, we’re getting more work in here. I’m really excited.”

email: mglynn@buffnews.com
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Buffalo health care startup sold for $215 million

November 22, 2013, 8:40 am
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Liazon Corp., the 6-year-old Buffalo-based startup that operates private health insurance exchanges, has been sold for $215 million, a dramatic win for its founders and for the city where it was born.

Towers Watson, a global consulting company, is paying cash for the firm with 120 employees on Main Street. The deal, a vindication of the innovative model for an online benefits marketplace, is also a big cash-out for Liazon’s financial backers, including Buffalo-based Rand Capital Corp.

For Buffalo, it marks the third recent example – after Synacor and Campus Labs – of a local “next-generation” company that grew to the point where it was acquired or went public.

Additionally, it offers a significant growth opportunity for Liazon and the city, including added business for the company and increased local hiring to meet the demand that Towers Watson wants to create.

“A big part of our deal was making sure that we were building around what we already had,” said Liazon co-founder and CEO Ashok Subramanian. “They’re looking to be big, to grow, and Buffalo’s going to be a big part of that.”

Liazon has attracted attention in recent years as its model foreshadowed the public benefits exchanges established under the Affordable Care Act. Because it came out much earlier, it gave employers and employees a chance to see how the concept could work.

Others have since followed suit, and many large corporations are already starting to switch to such models for their workers. Rival brokerage firm Mercer has already signed up more than 50 employers for its marketplace, so Towers Watson wants to leverage Liazon to capture that business.

“We were not looking for this. They came to us, and obviously they made a fairly aggressive and attractive offer,” Subramanian said. “We were excited about the ability to continue to grow the company and, frankly, do it a lot faster with Towers Watson than we could do on our own ... We’ll have access to many more resources than a small company like ours has alone.”

New York-based Towers Watson is a $8 billion human resources consulting and professional services firm that employs 14,000 worldwide. It specializes in benefits, talent management, rewards and risk management. Its shares, which closed at $110.95, down 62 cents, Friday, have almost doubled so far this year.

The firm pushed heavily into the benefits exchange business with its June 2012 purchase of Extend Health, which was a leader in private exchanges for retirees, and then sought out Liazon as the leader in exchanges for active workers. In fact, the deal went from the first approach by Towers Watson to closing in just a month.

“It was probably the quickest closing I’ve every been associated with,” said Pete Grum, president of Buffalo-based venture investor Rand Capital Corp., which owned 3 percent of Liazon. “From the time they came to the door, it’s been a month. It kind of makes your head spin.”

Rand invested in Liazon as part of two funding rounds in November 2010 and again in April 2011, paying a total of $1.13 million. Using the current deal’s price, Rand’s stake is now valued at $6.45 million – nearly a sixfold profit. “This is unusually good and unusually quick. This one will pay for some of the ones that didn’t do so well,” Grum said. “It’s a good way to start the holiday season.”

Liazon, which was founded by Buffalo-area natives Subramanian, Tim Godzich and Alan Cohen in 2007, will now become part of Towers Watson’s Exchange Solutions division, which will continue to be led by Managing Director Bryce Williams, former CEO of Extend Health.

Subramanian will join the Exchange Solutions executive team as managing director of Liazon, which will maintain its brand, while its operations will stay intact. All other executives and employees of Liazon, including Cohen, who is chief strategy officer, will retain their jobs and titles.

“The Liazon name will remain in the market, so our partners and brokers and carriers will still be doing business with Liazon. We’ll just be a subsidiary of Towers Watson,” Subramanian said. “All the people are going to be doing the same jobs. It’s business as usual.”

Liazon roughly doubled its staff in the past 12 months, and Subramanian said the company now expects over the next year to add “even more employees than we added this year,” especially for technology, operations and support roles.

Additionally, the company is planning to move early next year to the former Fairmount Creamery Co. building at 199 Scott St., which Ellicott Development Co. is renovating into a $14.7 million mixed-use project with office, residential and retail space. Liazon had planned to occupy the top floor of the eight-story facility as the anchor tenant, but Subramanian said they are now in discussions with Ellicott to add at least one more floor.

The three founders, all health insurance industry veterans, formed Liazon to create a more-efficient and cost-effective way for employers to offer insurance benefits. The goal was to give more freedom of choice to employees, while enabling employers to more accurately budget for the expense each year.

Liazon operates the Bright Choices online benefits “portal,” or marketplace, allowing workers to take a fixed amount of money from their employer and decide how to spend it toward the purchase of an array of benefits.

The company works with more than 2,400 small to mid-sized employer customers in 23 states nationwide, providing benefits to more than 10,000 employees. It works through more than 400 brokers, including nine of the nation’s 10 largest. Clients range from sole proprietors to businesses with 3,500 employees, but Subramanian said Towers Watson now wants to offer the Bright Choices service to its largest corporate clients as well.

email: jepstein@buffnews.com
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Big banks face stiffer competition

November 22, 2013, 9:00 am
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Remember Bank Transfer Day two years ago? That’s when mad-as-hell consumers were supposed to bring giant banks such as Bank of America, Chase and Citibank to their knees by moving their money to nonprofit credit unions.

It was a bust, says Consumer Reports. Few people switched, in part because of the grip big banks had on them with their alluring online and mobile banking services.

Now the top 10 credit unions have caught up, and new competitors have entered the fight for your dollars. Here’s the lowdown on four alternatives worth considering.

Credit unions

 • Why? They offer all of the services of a bank (and federal deposit insurance) but tend to charge considerably less for checking accounts and loans. And they generally pay higher interest rates on savings.

• Why not? The customer-satisfaction rating for credit unions dropped 5 points last year, to 82, according to the American Customer Satisfaction Index (ASCI), which tracks 48 industries. Nevertheless, they still outscored Chase (74), Citibank (70) and Bank of America (66).

• Where to find them. Membership is open only to people in a specific group, such as employees of a company, members of an association or residents of certain communities. Go to mycreditunion.gov to find prospects near you.

Regional banks

 • Why? If you’re uncomfortable cutting the cord to a traditional bank, check out a regional or midsized bank. They now offer the same technological bells and whistles but also provide significantly higher satisfaction than the four biggest national banks, according to the ACSI. Their satisfaction score was 79 last year, placing them below credit unions but above the big banks.

• Why not? Smaller isn’t always better. In Texas, Regions Bank ranked last among 13 banks assessed in J.D. Power’s 2013 Retail Banking Satisfaction Survey. That was worse than Wells Fargo, Citibank and Bank of America, though Frost National, another regional, topped the Lone Star State list.

• Where to find them. Go to jdpower.com for rankings of regional banks serving your section of the country.

Virtual banks

 • Why? They typically charge no monthly fees, have low penalties or none at all and offer FDIC insurance, direct deposit, electronic bill payment, debit cards, photo check deposit and national networks of fee-free ATMs.

• Why not? There are no physical branches, which might be unsettling unless you’ve embraced mobile banking and rarely need to set foot inside a branch. Plus the low- or no-fee business model might be jeopardized at some virtual banks that partly finance their operations from the fees they collect every time a customer uses a debit card to make a purchase, because in July a federal court ruling signaled that those fees might be regulated lower.

• Where to find them. Search online for virtual banks including Ally, Capital One 360 Checking, GoBank and Simple.

Prepaid cards

 • Why? Once a high-priced option for low-income consumers who couldn’t qualify for a checking account or credit card, prepaid cards have moved into the mainstream and offer many of the features of a checking account. Almost all of them come with FDIC insurance. And when Consumer Reports rated 26 cards in July on value, convenience, safety and other measures, it found that consumers could avoid the few fees that the best ones had.

• Why not? All prepaid cards aren’t created equal. And while Consumer Reports’ Ratings didn’t compare the cost of checking accounts against a prepaid card alternative, it did find that the worst prepaid cards have high, unavoidable charges, including activation and monthly fees, and that one lacked FDIC insurance.

Four prepaid cards to avoid: AccountNow Gold Visa Prepaid Card (MetaBank), Reach Visa Prepaid Card (Tom Joyner), Redpack Mi Promesa Prepaid MasterCard and American Express for Target.

• Where to find them. Consider the best Consumer Reports found: Bluebird with direct deposit (American Express), H&R Block Emerald Prepaid MasterCard, Green Dot Card (Green Dot Bank) and Approved Prepaid MasterCard (Suze Orman) with or without direct deposit.
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