Signs of economic change

 

The sign outside AngioDynamics' medical device plant in Queensbury, N.Y., says the company is now hiring, but the factory is set to shut down at the end of 2025. Employee shortages are one reason the company has cited for its decision to close its local plants and outsource all of its manufacturing. All photos by Joan K. Lentini.

 

By MAURY THOMPSON
Contributing writer

 

The region’s supply of good-paying manufacturing jobs will get a big boost over the next decade as GlobalFoundries carries out a planned $12.5 billion expansion of its semiconductor plants in Saratoga County and northern Vermont.

Backed by a $3.1 billion federal aid package announced in February, the company plans to enlarge its existing factory in the town of Malta, which already employs nearly 3,000 people – and build a second computer chip plant at the site. The end result will be about 1,500 new jobs in Saratoga County — as well as 1,900 temporary construction jobs.

But even as the region’s political and business leaders celebrate GlobalFoundries’ expansion, hundreds of area manufacturing jobs lately have been disappearing as a handful of large, longtime employers have shut their local factories – or announced plans to do so.

In Saratoga, Warren and Washington counties alone, plant closings completed or announced within the past year include Lehigh Hanson Cement Co. of Glens Falls, Essity Tissue’s papermaking operations in South Glens Falls and Greenwich, Quad Graphics’ magazine printing plant in Saratoga Springs, and AngioDynamics’ medical device factories in Glens Falls and Queensbury. Between them, these four companies had employed more than 1,000 people locally.

Area economic development officials caution, however, that the health of the region’s manufacturing sector cannot be evaluated purely on a mathematical basis of jobs added or cut.
“What we’re seeing is the emerging of 21st century manufacturing as opposed to 20th century manufacturing,” said J. Gregory Connors, president of Saratoga Economic Development Corp.
From that standpoint, Connors and others suggested, the pending GlobalFoundries expansion is likely to be more consequential for the region’s economic future than job losses in some older industries that already were struggling.

“Jobs, no matter what industry, are always evolving,” said Chuck Barton, chief executive officer of Warren Washington Counties Industrial Development Agency. “Manufacturing is no exception.”
In New York’s Capital Region, which includes Warren, Washington, Saratoga, Rensselaer, Columbia and three other counties, overall manufacturing sector employment decreased by 400 jobs between March 2023 and March 2024, according to state Department of Labor statistics.
Jobs overall are plentiful, with unemployment rates across most of the region near historic lows, but well-paid manufacturing workers displaced by plant closings won’t necessarily find new work immediately at comparable wages.

 

A high-tech push
The GlobalFoundries expansion appears to be a direct result of the new federal CHIPS and Science Act, which President Biden has touted as one of his major legislative achievements. Using funding authorized by the new law, the Biden administration is providing a $1.5 billion grant and up to $1.6 billion in loans to help GlobalFoundries increase its domestic production of computer chips.

The CHIPS act, which was championed by U.S. Senate Majority Leader Charles Schumer of New York, received significant bipartisan support in the Senate but was opposed by most House Republicans including local Rep. Elise Stefanik, R-Schuylerville.

Biden and other supporters have said the law will help to counter China’s dominance of the semiconductor industry and avoid a recurrence of Covid-era supply-chain problems in which a shortage of chips disrupted domestic automobile manufacturing and other industries, contributing to a major spike in inflation.

New production at the GlobalFoundries complex in Malta will focus on chips used by the automotive and defense industries, according to a press release from U.S. Rep. Paul Tonko, D-Amsterdam. GlobalFoundries has an agreement with General Motors to supply the automaker with computer chips.

But while the new jobs offered by the chipmaker’s expansion eventually will be beneficial, “right now all it is is a step in the right direction,” said Mike Jarvis, business manager of Local 773 of the United Association of Plumbers and Steamfitters, which represents workers at GlobalFoundries and trains workers for the industry at its training center in Queensbury.
“Right now, that’s all it is is news,” Jarvis said, explaining that it will take awhile before GlobalFoundries’ new jobs replace those that have been eliminated at area manufacturing plants.

Over the winter, 85 members of Local 773 did not have work in the area, he said. Some of them have taken temporary jobs in Texas and Indiana until the local job market rebounds.
Jarvis also said he is concerned that the region is losing its manufacturing diversity, making it overly dependent on a single employer that could leave someday.

Jarvis said he has been focusing on convincing more contractors to employ union workers in construction projects such as medical offices and apartment complexes. These are entry-level jobs a young person can start right out of high school and gain enough experience to later enter the union’s apprenticeship program and train for higher-paying work at GlobalFoundries, he said.

 

Housing crunch
For local government and business leaders, the pending expansion at GlobalFoundries presents the usual challenges, such as workforce development and housing.

Already, one of every six GlobalFoundries employees lives north of Saratoga Springs -- in an area that already has a housing shortage, said Warren County Economic Development Corp. President Jim Siplon.

“We continue to build to take advantage of the opportunities that are around us,” he said.
The pandemic-fueled transition to remote working has been a factor in the housing shortage, said Jeff Flagg, economic development director for the city of Glens Falls.

Remote workers have been moving to the region for its quality of life and its proximity to recreational opportunities and cultural attractions. This limits the housing stock needed to recruit new manufacturers, he said.

But Flagg pointed out that a critical mass of remote workers might prove equally beneficial to the region’s economy. One hundred remote workers moving to the area is equivalent to a small factory opening, without any of the economic development incentives or infrastructure improvements usually required for recruiting new employers, he explained.

 

Changing industries
The reasons for traditional manufacturers closing include the aging of factories, high electricity costs, labor shortages and changing market trends and business models, economic development experts say.

Connors, of the Saratoga EDC, said long-term skilled workers are retiring, while younger workers are not eager to work at traditional manufacturing plants.

The Lehigh Hanson Cement Co. plant in Glens Falls and Queensbury, which closed last year, was built in 1893. The plant probably would have closed sooner if the Covid-19 pandemic hadn’t temporarily prevented U.S. construction companies from buying cement from Canada, said Flagg, the Glens Falls economic development director.

“I think it got a stay of execution, if you will, when Covid hit,” he said.
The Essity Tissue plant in South Glens Falls, which closed last year, was built in the 1880s, and the company shifted production to a more modern facility outside the region.

Even the AngioDynamics medical device plants in Glens Falls and Queensbury, which are phasing out production by the end of 2025, are 35 years old, said Siplon, of EDC Warren County.
AngioDynamics plans to stop manufacturing medical devices to focus exclusively on research and development, finding a specialized niche in an industry where it has been hard to compete against larger manufacturers. The company has cited the difficulty of hiring workers in a tight labor market as one factor in its decision to transition out of manufacturing.

The closing of the Quad Graphics plant in Saratoga Springs, which formerly printed magazines including Time, is mainly the result of the ongoing shift away from print periodicals to online advertising.

Because most manufacturing companies now have multiple plants around the nation, local manufacturers often are competing within their own companies for survival, economic development experts said.

That can put local manufacturing plants at a disadvantage if their age or other factors, such as labor or energy supplies, result in higher costs of production.

New York, for example, has the ninth highest electric power costs of any state, according to an analysis published in May by USA Today. The average cost of electricity in the state is $23.44 per kilowatt-hour – or more than double the price in the two lowest-cost states, Nebraska ($9.85 per kwh) and North Dakota ($9.88 per kwh). Vermont, at $20.98 per kwh, had the 10th highest cost for electrical power, while Massachusetts ranked fourth in the nation, at $28.34 per kwh.
“Energy costs are through the roof,” said Todd Shimkus, president of the Saratoga County Chamber of Commerce, adding that New York’s push to curb climate change by shifting away from fossil fuels makes future costs uncertain.

 

Long-term trends
Connors, of Saratoga Economic Development Corp, said he has little hope for any substantial growth in the region’s traditional manufacturing sector. He and other area officials said the best that can be done is to stabilize the traditional manufacturers that are left.

“Our job is to continue to support the manufacturers that are here,” said Siplon of EDC Warren County.

Siplon said it’s important to consider the health of the region’s manufacturing sector from a perspective that acknowledges its long-term decline.

Manufacturing accounts for less than 10 percent of the jobs in Warren County, and “that has been the case for a while,” he said.

In the eight-county Capital Region, manufacturing accounted for 6.5 percent of jobs as of March, according to the state Labor Department.

Others take a more optimistic view by pointing to modest growth at some existing traditional manufacturers in the region.

Praxis Technologies, which makes metal compounds from titanium powder for use in prosthetic devices, recently relocated from Kingsbury to the former Andritz building on Pruyn’s Island in Glens Falls, and is adding jobs, and Medline Industries, a medical device manufacturer at Glens Falls Technical Park, is steadily adding jobs, Flagg said.

And Finch Paper, long one of the largest employers in Glens Falls, “seems to be on stable ground for the manufacturing work,” he said.

Barton, of the Warren-Washington IDA, said Specialty Sales, a California-based company that makes equipment for cleaning cow hooves, is opening a local plant to service eastern states at the Carey Industrial Park near Exit 18 of the Northway in Queensbury.

Fort Miller Group, Hollingsworth & Vose, Saint-Gobain Performance Plastics and Telescope Casual Furniture in Washington County all appear to be doing well, as are BD medical devices, Hacker Craft boats and Ames Goldsmith in Warren County, he said.

“We tend to hear more bad news than good news,” he said. “Companies that are doing well do not always broadcast good news.”

Siplon also said plant closings tend to make headlines, while companies that are healthy and expanding incrementally may not garner much attention.

“When we get these announcements” of plant closings, he said, “they come as a gut punch.”
Barton said that before the recent round of cutbacks, the number of manufacturing jobs locally had been increasing. Warren County had 2,824 manufacturing jobs in 2020 and 3,309 in 2023 — “a solid gain over three years, but what will the new number be for 2024?”

Washington County had 2,562 manufacturing jobs in 2023 — nearly unchanged from 2,575 in 2019, he added.

Manufacturing employment in the Capital Region was estimated to increase by 6,000 jobs, or 18 percent, between 2020 and 2030, according to the state Department of Labor. That estimate does not appear to factor in recent developments.

Under the state’s estimates, paper, printing and textiles were the only subsets of manufacturing with projected job losses over the decade.

Saratoga County officials are optimistic about continued growth at GlobalFoundries — and the potential for recruiting similar high-tech manufacturers. One advantage, they say, is that the existing GlobalFoundries plant is only a little more than a decade old, completed in 2010.
“It’s modern,” Shimkus said. “It was made to compete.”

The federal government views growth of domestic computer chip manufacturing as a national security priority and has established incentives that are not necessarily available to other manufacturing sectors, Shimkus added.

The state government also has shown a commitment to the level of incentives necessary to compete with other states for high-tech manufacturing, Connors said.