Economic Summary: Western New York Region

February 18, 2010

The Western New York region -- Erie, Niagara, Chautauqua, Cattaraugus, and Allegany counties -- has added jobs over the past year despite a slowing national economy. From the first quarter of 2007 to the first quarter of 2008, the region's total nonfarm job count rose by 2,200, or 0.3 percent, to 645,400. The bulk of local job creation has been in service-providing industries, especially professional and business services. In contrast, job losses have been largely confined to goods-producing industries -- manufacturing and construction.

Private sector employment in the Buffalo-Niagara Falls decreased by 9,300, or 2.0 percent, to 448,900 over the 12 months ending December 2009.  Job gains were centered in educational and health services (+1,600), professional and business services (+500) and other services (+200).  Losses occurred in manufacturing (-4,500), leisure and hospitality (-3,800), trade, transportation and utilities (-1,800), natural resources, mining and construction (-600), information (-500) and financial activities (-400).  Government employment declined by (-2,000) over the year. 

Over the last year, American Axle closed its Buffalo facility and eliminated 700 jobs. A strike settlement between the company and the United Auto Workers will result in the closing of their plant in Tonawanda and the loss of another 400 jobs over the coming year. Most production in these plants was focused on axle and driveline components used in SUVs. However, demand for these components has slowed as sales of SUVs have dropped dramatically with the steep run-up in gasoline prices. 

There are positive areas to look at.  While manufacturing continues to decline overall, some companies are expanding in the region. Globe Metallurgical will reopen its plant in Niagara Falls to produce the premium-grade silicon used in the solar power industry. The company is expected to invest $60 million to retool the plant which will create 500 "green" jobs and be in full production by 2011. 

Professional and business services experienced the strongest job growth in the region over the past year. This trend is expected to continue with the opening of a major call center in Cattaraugus County by The Connection, a Minnesota-based company, which eventually could provide 600 jobs.  Expansion in the gaming industry continues as the Seneca Nation further develops its three casinos in the region, which are in Niagara, Cattaraugus, and Erie counties. A temporary casino in Buffalo is being phased out, and will be replaced by a permanent one, which will employ over 1,000.1

The Center for Excellence in Bioinformatics & Life Sciences in Buffalo (Erie County) has been a major catalyst for the region's emerging biotech sector. Businesses such as ONY, Empire Genomics and PharmIdeas, which perform research, clinical trials or support analysis, were drawn to Western New York due to the center. Expansion at these companies has resulted in increased demand for workers with the appropriate skills. Medical and clinical laboratory technicians are in short supply.

In Western New York, the transportation equipment industry's share of regional employment is about 20 percent higher than the national average. The local sector's above-average wage level ($84,700) adds to its economic importance. Among the largest local employers in this sector include: General Motors, Ford Motors, and American Axle (Erie County); Delphi (Niagara County); and Cummins Engine (Chautauqua County). All of these companies have been downsizing over the past few years except for the Cummins Engine facility, which remains strong. 

In recent years, job gains at service-providing industries have more than offset the losses experienced by goods-producing industries. One factor that will affect both sets of industries going forward is Western New York's long-term population decline. Out-migration continues to exceed in-migration. This situation, combined with the looming retirements of the baby boomers, creates opportunities for jobseekers. However, it is also expected to result in spot labor shortages. 

Looking ahead, ongoing national economic problems -- especially record-high energy prices and the credit crunch -- will likely adversely affect the region's transportation equipment and construction industries. However, the region's diverse industry mix and the growing importance of emerging industries, such as biotech and green manufacturing, will help to buffer the region from these forces.