Transcript: Need to Know Rochester for May 7, 2010

Associated Show Highlight: 
Upstate NY and the Innovation Economy

Coming up on Need to Know Rochester,

 

Award winning business journalist Michael Mandel on putting the new economy to work for upstate New York.

 

Also, Rochester's world-renown metal sculptor Albert Paley is making a move.

 

"It's like building a ship inside a bottle.  It's so confined, it's ridiculous."

 

And a look at this week's State of the City address.

 

"The cruel pain of educational failure occurs slowly."

 

Rochester's News Magazine since 1997. This is Need to Know.

 

I'M JULIE PHILIPP, THANK YOU FOR JOINING ME FOR THIS EDITION OF NEED TO KNOW ROCHESTER.  IF YOU WATCH REGULARLY, YOU MIGHT HAVE NOTICED THE NAME CHANGE.  WE ADDED ROCHESTER BECAUSE TONIGHT W-X-X-I PREMIERES A NEW NATIONAL PROGRAM FROM P-B-S.  AND IT'S CALLED NEED TO KNOW.  YOU CAN WATCH THAT NEED TO KNOW NEXT ON WXXI.

 

BUT FIRST, THE INNOVATION ECONOMY.  ONCE RELIANT UPON A STRONG MANUFACTURING BASE, UPSTATE NEW YORK IS STRUGGLING TO REDEFINE ITSELF.  ROCHESTER INSTITUTE OF TECHNOLOGY IS SPONSORING A SERIES OF LECTURES ABOUT THE OPPORTUNITIES AND CHALLENGES OF EXPANDING THE INNOVATION ECONOMY HERE.  AND THEY'RE DOING IT IN PARTNERSHIP WITH STATE ASSEMBLYMAN JOSEPH MORELLE.  ASSEMBLYMAN MORELLE IS HERE ALONG WITH THE LATEST SPEAKER IN THAT SERIES MICHAEL MANDEL, LONGTIME BUSINESS JOURNALIST, AUTHOR AND FORMER CHIEF ECONOMIST FOR BUSINESS WEEK MAGAZINE.

I wanted to start out just by defining what the inovation economy is and I will start off with you because you're launching this lecture series with RIT.

 

(Joseph) several years ago I became very interested in what we needed to do as we are shifting from a manufacturing to, the question was , "to what?" and of course innovation has been something that people are talking about for a long time so I wrote a report about five years ago, called creating a state of innovation, the notion behind it was that NY needed to do much more to be able to participate fully in the national economy.  Most recently Dr.A professor at RIT have been having a number of conversations and we thought it would be great to have a lecture series where we would bring in national speakers to talk about innovation from their perspective.

 

(Julie) So from your perspective what really is the innovation economy?

 

(Michael)  Well you made a separation between the innovation economy and the manufacturing economy and I don't make that because if you think about companies like Kodak and Bausch and Lomb those were originally built on innovation, jobs come from the creation of new products and services that people want to buy, that's where the jobs come from,  So really when I'm talking about innovation economy I am talking about getting back to the roots and you create something new whether it's in energy or in life sciences which could be the next hot area .  You create something that people want to buy and thats how you get the jobs, so really it's almost simpler than a sounds, because when Kodak grew up they were doing something new , back to the roots.

 

 (Julie) what do you see particularily to upstate Rochester as the challenges of creating this economy

 

(Michael) I'm going to put this in a national context, first this decade has been terrible for innovation so very few parts of the country have actually been successful at innovation driven economic development. when I look a Rochester I don't see Rochester doing poorly compared to other parts of the country what I see is that this is a story that has actually been repeated over and over again.  Part of the reason why the US economy is in such bad shape is precisely because of this lack of innovation. I think that the next decade will be stronger.  And the question there is which regions will be able to ride innovation the wave

 

(Julie) Why was it such a bad decade and will how do you see it getting better.

 

 

(Michael) Why? Because we invested enormous amounts of money in all sorts of potentially innovative areas, primarily in life science's,  health care, gene therapy, biotech we invested money in other things as well as it turned out very little came to fruition over this period, we produced very few products if you ask people what do you remember about the last decade people said the I phone, Google,  that's what they remember the don't remember anything sometimes Facebook,  nobody talks about the great breakthrough drug that cured something, you don't hear that.

 

(Julie) so did we go off in the wrong direction

 

(Michael) no, what happened was we invested money probably in the right thing,  it just took longer than we expected. the universities in the Rochester area have been putting a lot of money in the life sciences as well.  Rochester upstate New York is in the same boat as everyone else, that's the main message that i wanna leave here thats both bad and good,  it's been a bad decade that's bad but going forward...

(Julie) are we at a tipping point?

 

(Michael) I'm hoping that a lot of the money that we've put in over the last 10-20 years will turn up in terms of positive stuff. I want to make a , distinguish between life sciences and energy here, on  Life Sciences U.S. is a leader, you could consider building new companies that become the Kodak's of the next generation, or the Googles, or the Microsofts, On energy the US has not invested enough green technologies, so what we have to be is a fast Follower, bring ideas,  companies from other places to make the U.S. ,make upstate New York hospitable for companies to land.  I would say It's a new race, nobody got off the starting line over the last 10 years so where we are now is a race to see who will create the next great companies who will be the areas of the country that will propel us forward Rochester has as good a chance as any.

 

(Julie) does Rochester have as good a chance  as any, when you have a dysfunctional government like Albany,  is Albany standing in the way of innovation in your mind?

 

(Joseph) I certainly think it hasn't helped there's the question of  whether or not The tax and regulatory burden they face is a barrier to capital formation and the creation of jobs

 I think that's something that we've talked about for sometime, I think the bigger issue is a lack of consistent effort on innovation.  I think that we have made most recently a $50 million investment in the University of Rochester clinical translational sciences building we made a substantial investment and hope to continue to invest in RIT's institute on sustainability so those are two areas we're essentially putting more resources into,  but there's got to be a greater effort I don't think there has Been I think there has on in my mind too much of this emphasis on economic development traditional buildings as a way of trying to stimulate economic development I think too little of an emphasis on things that will really prompt innovation as Mike said talk about how  we will create jobs in the 21st century.

 

(Michael) time is actually running out because there's a window of opportunity where people are open to new things because things have gotten so bad there are new technology that are probably right on the verge.  and so you're going to look back 10 years from now and say here was five great companies that were formed in this period

Where did they form who is the next Seattle?

where microsoft lands Nobody would have guessed it. Seattle was going to be a software capital that makes no sense, why did Texas become the computer manufacturing capital, out of nowhere so there's a window here an effort between the private sector academic sector, the government sector can potentially improve the odds of creating the next great company that produces a lot of jobs.

 

(Julie)  so being nimble is important, you recently wrote "the lack of good data on innovation and globalization is horrifying given the economic importance of these topics to the World.  How can people make these kind of decisions and know which way to go if the data is not there?

 

(Michael) You know kinda what direction you need to go, but we don't really know what's working so part of what we have to do, we're looking in two directions and you need to know what's going on in terms of innovation what are people doing where ,how much money are really putting into things that are genuinely innovative, the other thing is that you have to know something about trade, globalization is extremely important in terms of whether or not we will prosper as a country and the trade is terrible especially in terms of things like high tax on services so we are living in a world where unfortunately we really don't know what's going on. that doesn't mean that we can stop moving but it does mean that we had to divert a little bit more of our attention to figure out... when they say the NY exports $50 million what are they talking about?

 As it turns out the single biggest export of NY state is diamonds.   we don't make any diamonds in New York and so it's interesting looking under the Surfaceof the statistics and say who's growing who is not,  who is really investing in innovation and what could potentially pay off in the futurein New, good jobs.

 

(Julie) so where are the success stories? where are you seeing it starting to work?

 

(Michael) We are going right now, still in this financial crisis as you know it has not gone away, we know historically that new companies , it's easier to start new companies in hard times its cheaper to hire workers, it's cheaper to get buildings everything is cheaper and easier so we're seeing at this point we're seeing new companies being formed we're seeing in Life Sciences that scientists think they're getting closer to the way to use Biotech and other new techniques to actually  produce products that actually work.   we don't know where they're going to come from.  nimbleness, agility, being ready to ride the wave no matter what direction it comes from, absolutely essential you don't want to make a bed in one direction  and discover it comes from someplace else.

 

(Julie) Do you see this happening in other communities

 

(Michael we see the beginnings of a communications boom, If I sort of looked at what's happening in the economy you see jobs being generated for example in internet related industries which are actually not true for most of last decade so were talking about the Googles, and YaHoo's and Facebooks of the world,  have finally become big job generators we're seeing jobs in wireless it's hard to see what's going on in biotech right now because you have the contraction by the big farming companies as they merge and that's kind of swapping the data, so look at NJ,  New Jersey is losing jobs in life sciences because the old companies are merging so it makes it a lot tougher to figure out when the new ones are starting it's a little bit of like what's happening during the financial crisis leading up to it you didn't have the data so your not going to be able to tell until it's done nobody knew that Google was Google until four years down the road Nobody knew that Cysco was Cysco if you look back to the beginning of Kodak nobody to funny story from the beginning of apple where there were some suppliers for apple who refused to accept stock as payments  because they were just two guys in a garage.   who knew? and thats what you have to realize there are no guarantees here

 

(Julie) theres things bubbling

 

(Michael) They're bubbling but you don't know which bubbles are going to turn into big bubbles,  since this is the only game in town, you know that this is coming, you have to sort of say we want to be in position for this, you cant get guarantees, but all you can say is that innovation creates jobs it always has and always will and you have to put yourself in position to take advantage of it and I don't see any reason why Rochester and the border area can not do this.

 

(Julie) we only have about a minute left your take away from what he has said during his time in Rochester?

 

(Joseph) We have to continue to have a sustained continued effort on providing resources for innovation and continue to support that whether or not we've had big wins, I think he's indicated that we have not ,I think it's pretty clear if you look around the community that doesn't mean that we need to stop making that investment and we have to make sure that policy makers understand that that continued investment is neccessary and we will ultimately succeed we will just have to continue to focus on it and not lose sight of where we need to be.

 

THANK YOU ASSEMBLYMAN JOSEPH MORELLE AND MICHAEL MANDEL, WHO WILL SOON BE SERVING AS A SENIOR FELLOW AT THE WHARTON SCHOOL OF BUSINESS.  MR. MANDEL GAVE A PRESENTATION AT ROCHESTER INSTITUTE OF TECHNOLOGY THIS WEEK ABOUT THE INNOVATION ECONOMY.  YOU CAN WATCH HIS PRESENTATION ON OUR WEB SITE. WXXI DOT O-R-G.

 

ALSO, WXXI IS LEADING A NEW REGIONAL JOURNALISM CENTER  FOCUSING ON THIS VERY ISSUE.  LATER THIS YEAR WE'LL BEGIN EXTENSIVE REPORTING ABOUT THE INNOVATION ECONOMY ALL ACROSS UPSTATE NEW YORK.  I'LL KEEP YOU POSTED.

 

NOW IT'S TIME FOR THE BUSINESS SECTION WITH THE DEMOCRAT AND CHRONICLE.

 

MATT DANEMAN, BUSINESS REPORTER WITH THE DEMOCRAT AND CHRONICLE JOINS ME IN STUDIO.

 (Matt) Julie, good to be back in the U.S.

(Julie) Xerox is why you were there.

(Matt) Yeah, this was their first investor conference that they had done with affiliated Computer Services the big Dallas based Business process out sourcing giant sort of under their belt. Alot of the talk, this big meeting at NY stock exchange in front all these investors, a lot of the talk was about how much Xerox expects to be a growing company, with growing revenue and growing profits ,  a lot of that driven by ACS.  Here's a company while Xerox has been very profitable, alot of it has been born on the backs of cutting costs, reducing workforce, things of that nature cutting costs to help bring the and bottom line into the black but actually growing their revenues and growing and becoming a larger company which would be a significant change for Xerox

 

(Julie) so what direction are we going in?

 

(Matt)  Xerox is a company that is increasing we think of it as a photo copier company and it really has been that for year's but their talking about their business model going forth being much more business process services to companies so ACS does things like finance companies, use it to handle their credit-card application processing and Xerox making a lot more money doing that. more of that work in the future making it much more a bigger part of what they do they will still be making these big digital printing presses.  But increasingly that's a smaller sideline business compared to the business process stuff that there's going to be very much the driver of their future growth

(Julie) are shareholders buying into this are they excited about this?

 

(Matt) The last couple months we've really seen Xerox stock start to pick up and grow a little bit since February when the ACS deal took place, as one wall Street analyst put it here's a case where it seems Xerox had been talking about this since last fall How ACS is going to change it and how ACS is going to be this great Boom to Xerox and the indication withthe stock started to grow a dollare here a dollar there, that message is starting to resonate people are starting to buy into it and go "Huh?" maybe that's the case the proof will obviously be in the pudding as we see through 2010-2011 what happens with their bottom line but there is at least some optimisum and confidence as xerox is going in an interesting growth direction.

(Julie)   Some concern over on Lexington ave.  where the GM plant is?

 

(Matt) Very much so, both Senator shumer and Leuis Slaughter, congresswoman for much of the rochester area Both have been very active the last few days and contacting GM's top corporate esulanes and basically saying we understand there's some dangers at the GM on Lexington Avenue closing all of this prompted by GM UAW negotiations according to the UAW GM is saying we want very substantial pay cuts for the hourly manufacturing workers or the spigot of work going into that plan ..

(Julie) Playing a bit of hardball

(Matt) Playing a bit of hardball

(Julie) whats that mean to Rochester?

(Matt) 650 people work in manufacturing jobs in that plant, not the biggest employer by far but here's alot of very important jobs to the community manufacturing jobs, these worker's have already taken substantial pay cuts , when that plant was owned by Delphi, until GM bought it last year now they are looking at having to do perhaps further pay cuts, it could be a big financial hit in the wall for those families, also for the Rochester area if that plant closes.

 

(Julie) Darien Lake opening...

 

(Matt) As we sit here right now they are still finishing up the final touches on a 7 million dollar water park expansion there, another big investment in the park which is interesting considering the amusement park economy last year all over the place was just flat, Roseland doing some investment too, sea breeze doing some investment, so you're seeing everone gearing up.

 

(Julie) maybe we'll have some fun!

THANKS MATT DANEMAN, BUSINESS REPORTER WITH THE DEMOCRAT AND CHRONICLE.  WE TURN OUR FOCUS TO ARTS AND THE ECONOMY.  MANY VISUAL AND PERFORMING ARTISTS AND ARTS ORGANIZATIONS HAVE BEEN HIT HARD BY THE RECESSION.  BUT WXXI'S CARLET CLEARE RECENTLY CAUGHT UP WITH ROCHESTER'S WORLD RENOWN SCULPTOR ALBERT PALEY AND FOUND OUT HE'S MOVING MERCHANDISE AND…HIS STUDIO.  SHE FILED THIS REPORT FOR ARTS FRIDAY ON 

NEED TO KNOW ROCHESTER.

 

(Carlet) ROCHESTER SCULPTOR ALBERT PALEY IS BANGING OUT ANOTHER ONE OF HIS UNMISTAKABLE, STEEL ART FORMS.

A 40 FOOT LONG CHANDELIER TO HANG IN A STAIRWELL FOR A CLIENT IN CALIFORNIA.

 

“When we design something for a site we like the work to amplify that site, to bring focus to the site.

(Carlet) PALEY SAYS PEOPLE ARE WORRIED ABOUT GETTING INTO CONTRACTS BECAUSE OF TOUGH TIMES. BUT "They are doing there research and getting ready. So when they feel it's appropriate to move forward. They are ready to move forward. So we are much more active and much more busy in that respect.

(Carlet)"WHILE MANY ARTS ORGANIZATIONS ARE FEELING THE PINCH OF A DOWN ECONOMY, PALEY SAYS HE REALLY DIDN’T. THAT’S BECAUSE HIS LARGER COMMISSIONED PROJECTS TAKE THREE TO FIVE YEARS TO COMPLETE. PALEY SAYS THIS IS WHAT CARRIED HIM THROUGH. PALEY STUDIOS DIRECTOR JENNIFER LAEMLEIN SAYS THE ONLY SLOW MOVING AREA OF PALEY’S BUSINESS IS SELLING DECORATIVE ART. “We were actually very busy even over the last few years. Through a tough economy because we already had large projects in the loop that Albert had to work on, design and go through fabrication. So really the areas that were hurting most were the galleries."

(Carlet)HOWEVER, EXIBITIONS ARE ON THE RISE. PALEY’S BOOKED THROUGH THE NEXT FIVE YEARS. INCLUDED IN THAT IS THE MEMORIAL ART GALLERY. ITS SHOWCASING THE LAST TEN YEARS OF HIS WORK.THE EXHIBIT INCLUDES DESIGN DRAWINGS, CARDBOARD MODELS AND THE SITES WHERE THE PIECES ARE INSTALLED. EXHIBIT DIRECTOR MARIE VIA SAYS THERE’S 9 AND A HALF TONS OF STEEL IN THIS ROOM "We had to open up the back wall in the gallery in order to get them in, cranes and forklifts, and so on. We actually had to sure-up portions of the gallery’s floor to accept the weight." 

         BUTT-TO

"And so it was definitely a logistical challenge.

(Carlet) "VIA SAYS IT’S BEEN OVER 15 YEARS SINCE PALEY’S WORK HAS BEEN IN THE GALLEY, AND THIS THE FIRST TIME FOR SCULPTURES.

 “There’s a yellow sculpture at the art gallery that’s actually been the largest one that’s been completed. That’s in Monterrey Mexico. It’s a hundred feet tall. There’s also a red sculpture exhibition that’s for the clay center.”

(CArlet) PALEY SAYS BUSINESS IS BOOMING AND PROJECTS ARE PICKING UP. BUT SPACE IN HIS WASHINGTON STREET STUDIO IS RUNNING OUT… “It’s like building a ship in a bottle. it's so confined it's ridiculous"SO TO GIVE THE CRAFTSMAN MORE ROOM TO WORK IN, THE STUDIO’S IN THE PROCESS OF PACKING UP SHOP AND MOVING FROM THIS 15-THOUSAND SQUARE FOOT LOCATION OF 25 YEARS ……to this facility that is nearly triple the size. Paley says in this new space, he’ll be able to house all his work under one roof, including new equipment, leaving endless creative possibilities for new work in the future."We will have a furnace, a gas furnace for heating the material and bigger presses and hampers. So we'll be able to forge a 10 inch bars of steel, 10 inch in diameter. It’s going to be massive."“We'll be able to do our large scale builds right outside the facility and not have to rent other locations. So that's very important when you are building a 70-foot sculpture." (Carlet) LAEMLEIN SAYS THEY EXPECT TO BE IN THE OLD VALEO BUILDING BY JUNE. UNTIL THEN, PALEY CONTINUES TO TURN UP THE HEAT ON HIS CREATIVITY. "The newness of the work is based on experimentation.”

     BUTT TO

 “Where you literally paint yourself into a corner and the creative aspect is how you get out of the corner.”

(Carlet) AND FIRE OUT A RANGE OF COMPLEX STEEL MASTERPEICES“Everyday it’s very, very challenging and the type of work we do is very satisfying.”I’M CARLET CLEARE, FOR NEED TO KNOW ROCHESTER.

 

FINALLY, THIS WEEK ROCHESTER MAYOR ROBERT DUFFY DELIVERED HIS ANNUAL STATE OF THE CITY MESSAGE.  HE CENTERED THE SPEECH AROUND THE SAME THREE OBJECTIVES HE HAS HIGHLIGHTED SINCE FIRST TAKING OFFICE -  MAKE THE CITY SAFER, DEVELOP THE CITY'S ECONOMIC BASE, AND IMPROVE THE CITY SCHOOL SYSTEM.  WE'VE POSTED MAYOR DUFFY'S ENTIRE ADDRESS ON OUR WEB SITE, WXXI DOT O-R-G.  I LEAVE YOU NOW WITH A BIT OF IT.  I'M JULIE PHILIPP.  HAVE A GREAT WEEK.

 

(Mayor Duffy) It will report our public saftey teams success in lowering the incidents of crime and fire i WILL PROUDLY SHARE our economic development progress as well.  But unfortunately despite investing  more than 70% of our city's tax dollars I can not REPORT SIMILAR progress IN education our graduation rates are still below 50% student achievement scores are too low, too many schools are failing,

WE CAN NO LONGER SETTLE FOR TWO OUT OF 3 , our work to improve public safety to strengthen the economy will eventually fail unless we do more to improve education and do it now if you saw a school bus filled with students who were in trouble.

THERE IS NOT AN ADULT IN THIS ROOM THAT WOULD STOP, call 911 and do everything possible to help, well our children are in trouble and have been for decades but we as a community have not done whats needed to help, the cruel pain of educational failure occurs slowly one child at a time is allowed to be truent, gets promoted without basic learning skills, takes to the streets after school, decides to drop out, it isn't as easy to see but it's just as real, it's happening before our very eyes and the preformance numbers I showed you, to many adults are standing by and saying that nothing can be done.  Something can and must be done!

 

(ANNCR) Previous Need To Know broadcasts can be seen if you have Time Warner's on demand service. Go to Rochester On Demand channel 111. Then look for WXXI news. There you'll find a selection of recent Need To Know Programs.

»