A tech future

TechMoney350px

Most of the founders of the American republic — Alexander Hamilton was an exception — could not imagine the people who didn’t farm ever outnumbering those who did. It seemed outlandish (literally) to imagine more people being involved in manufacture than in farming.

Over time the economy changed and our thinking changed. Just as once we couldn’t imagine more people working in making things than in not making them, it came to pass that we could no longer imagine the opposite: more people making things than not making them!

As the service economy inexorably grew in the latter part of the twentieth century, we found it hard to believe that the number of jobs in only one category of service — say education, government, health care, retail or leisure — could ever outnumber the number of jobs in making things. But now each one of them does.

Advertisement

There’s more change to come. Once-small high-tech job categories will continue to expand their numbers. How can the Hudson Valley position itself in such a way that it can benefit from what is likely to occur? I feel our political and economic leaders are for the most part and with the best of intentions doing a rotten job in leading that transition. (It isn’t the purpose of this piece to share my feelings on this subject, but I’d be glad to on some subsequent occasion.)

Last week a New York City think tank called Center for an Urban Future, publisher of an influential 2012 report called “New Tech Future,” presented a short new data paper explaining how New York City’s manufacturing sector was “finally showing signs of strength.” After losing an at least 5000 manufacturing jobs every year from 1997 to 2010, the report said, employment in the sector in New York City had held steady since then. It had sustained a plateau at about 76,000 jobs for the past three years. Could this be the start of a manufacturing revival?

We have been assured that the new manufacturing economy is different from what we’re used to. The new manufacturing economy “integrates networks, 3D printers and other proficiencies into business strategies to further develop manufacturing practices,” explains a management expert. Hubs of “universities, high-tech manufacturers, software service providers and highly nimble start-ups” are a needed urban economic development strategy.

The Center for an Urban Future’s chart tracking the changes in manufacturing employment indeed did show three years of stability after the bleak pattern of steady loss for the 14 years prior to that. Is that recent shift a blip or a trend?

 

Digital Alley

For a sector that accounts for only two jobs of every hundred in the New York City labor force, the attention to manufacturing may seem overblown and nostalgic. But such criticism is partially misplaced. Any sector that contributes two good jobs per hundred can be extremely valuable. In Ulster County, two per cent would be about 1300 jobs; the county presently has about 3300 manufacturing jobs, or five per cent of its workforce.

In the past year, the New York City papers have been full of business news about the rapid expansion of office space by high-tech giants like Google, Facebook, Microsoft, Apple and IBM. These companies are gobbling up space in a slice of Manhattan roughly between Canal Street and 34th Street. Not coincidentally, that’s where the new media, software startups and high-tech business incubators and accelerators have been concentrating. Just a few of the better known of the many local start-ups that have received substantial venture capital have included Tumblr, Fab.com, Gilt Groupe, ZocDoc, Foursquare, Etsy and BuzzFeed.

Here’s the bottom line. If you’d argue that this glamorous sector, dubbed Silicon Alley, is too small to be compared to something as central to the economy as manufacturing, you’d be wrong. As of February 2014 New York City employment in computer systems design and related services was 64,200 (as compared to 33,100 February of ten years ago and 45,500 five years ago). At this pace of growth, in two or three years there’ll be more New York City jobs in this modestly defined sector (less than 15 per cent of all professional, scientific and technical service workers) than in all manufacturing. Other employment estimates that define this sector more broadly put the high-tech numbers much higher, of course.

The figures have this category breaking 100,000 at the state level for the first time this past December.

“What makes New York [City] so interesting as a tech hub is that technology and design are now intersecting with so many different industries,” Matthew Brimer, the 27-year-old founding partner of General Assembly, described as a feeder school for the tech industry, told James Panero of City Journal recently. “New York is already such a big commercial hub. So many industries have amazing creative business talent. Take a place that is super-dense with these different types of talent, bring those people together, and they can start to transform these different industries — that’s a perfect petri dish for interesting stuff to happen.”

With the evolution in emphasis from general hardware and communications tools to software for specific industries, New York City’s Digital Alley seems to be coming into its own in a very big way. Perhaps nothing symbolizes the ambitions of New York City’s efforts better than the educational partnership between Cornell University and the Israeli school Technion. A two-million-square-foot facility which will host an engineering, communications and media program is currently under construction on Roosevelt Island in the East River. The initiative, born from a competition sponsored by ex-mayor Michael Bloomberg, will join the efforts of other New York educational resources in trying to buttress the high-tech economy. Cornell-Technion is systematically organizing its efforts around hubs focused on key New York City industries.

 

Sleepy Ulster

The most recent annual county business patterns survey (2011, the new one’s expected in May) from the federal census bureau provides data on the distribution within the state of jobs in computer design services. Unsurprisingly, almost nine of ten of these jobs in New York City were in Manhattan. Of the 6700 in the Hudson Valley economic development region, two-thirds — probably IBMers — were located in Westchester County. The remainder were widely scattered throughout the valley, with 579 in Dutchess County, 560 in Orange, 215 in Ulster and 13 in Sullivan.

A cursory review shows little growth in these unspectacular numbers in recent years.

The statistics also indicate size of firms. Forty-eight of Ulster’s 53 establishments employed fewer than ten persons. Four employed between ten and 19, and only one had more than 20 jobs. In Manhattan, by contrast, 58 of the 2165 establishments in computer design services employed more than 100 persons.

I have not personally been impressed by the quality of local firms presently providing these services. However, this is simply one person’s observations.

Most of the people in this industry are young. Real-estate brokers report that they have been represented in the recent surge of young persons looking at second homes in the mid-Hudson region. Our lifestyle and theirs seem culturally compatible. These people may well be among the young families one can observe on the streets of Kingston and New Paltz on weekends and the weekend singles scenes in local pubs and clubs. One can imagine many of them finding the region an attractive place to live.

The social theorist Richard Florida wrote about how the legendary urban planner Jane Jacobs praised the mix between permanent residents who provided community continuity and newcomers who provided fresh creative input. That’s what’s been happening in the Hudson Valley for many decades. “People are more likely to personally commit to selecting and maintaining if it is a diverse, desirable, authentic and cohesive place to live and work,” said Florida in The Rise of the Creative Class. Host communities need to make it easier for people of all sorts to become involved.

No, we’re not a big city, let alone the big city, though there’s considerable potential advantage to being close to the biggest of them all. There may be no single magic bullet that will transform sleepy Ulster County into a place where “hubs of universities, high-tech manufacturers, software service providers and highly nimble start-ups” are commonplace. But there’s no reason other than a lack of imagination that this region could not provide a climate known for entrepreneurship, the nurture of human capital, and a culture of innovation.

 

Post Your Thoughts