Friday, July 29, 2011

How a place goes from riches to ruin

Back in the 1980s and early 90s I lived and worked off and on in Binghamton in the southern tier of New York State.  This was historically a very prosperous area dating back to before the revolutionary war days, being an an important port at the confluence of the Chenango and Susquehanna Rivers.  It continued to be prosperous during the 19th century and the city and adjoining towns grew quickly.  In the early 20th century the Endicott-Johnson Shoe Company employed thousands of people, amongst them many new immigrants.  One of the things heard by people from immigrants leaving Ellis Island were people who spoke little English asking, "which way EJ?"  IBM had its founding as a modern company in the Binghamton suburb of Endicott. It remained a busy manufacturing facility as well as having their Glendale Labs there until the mid-1990's.  Edwin Link founded Link Aviation in Binghamton and invented the flight simulator.  The Link Trainers also known as Blue Boxes were used in World War II to give basic flight training to young pilots with no aviation experience.  It grew into a company that at its height employed almost 5000 employees and was the leader in flight simulation.  General Electric had a large high tech facility.  Other companies popped up and added high tech, high paying jobs, like Universal Instruments, photography company GAF, and many smaller companies that did contracting work for the larger industries. Binghamton had a VHF TV station, WBNG channel 12) years before many much larger cities had any TV. 

In the 1980's this area peaked and quickly declined.  Early on, you could see how busy the area was by just showing up at Binghamton Regional Airport at 7am any weekday morning.  There were at least 2 or 3 large jets going to USAir hubs, along with dozens of turboprops going to all the New York City area airports, Boston, Washington, and around the state.  These were planes filled with business travelers from Singer-Link, IBM, GE and numerous other local companies.

There were numerous factors that caused the decline of the area, not the least being an over regulated and over taxed business community.  Endicott-Johnson moved it shoe manufacturing to countries with cheaper labor.  There is no more EJ in the USA.  IBM decided that rather than caving to the high tax schemes of New York State politicians in Albany, closed most of it's factories in the state and moved a large portion of its business to places like North Carolina.  Singer-Link had a lot of issues, with arrogance and mismanagement not being at the bottom the reasons for their demise.  The Link Division of the Singer Company began losing contracts and new business to the competition from abroad, especially in the commercial business.  They introduced technology didn't work well and attempted to shove it down the throats of customers, and lost them in droves.  The entire Singer Company was bought out by Paul Bilzerian and he promptly sold off the divisions he could at a huge profit.  The military systems division of Singer-Link was sold to a Canadian simulator  manufacturer CAE Electronics.  The commercial business was not so easy to sell, as its was not an entirely independent entity.  All of it's manufacturing was done in the plant that made the military based equipment.  That piece of Link was only sold after Bilzerian sold off all the divisions, declared bankruptcy and was in the process of shutting down what whatever was left.  Bilzerian later went to Club Fed for a year for SEC violations.  A Maryland Company, AAI Corporation, bought the commercial assets and tried to make a go of it, but due to law suites by CAE over technology rights and the fact that the company had lost credibility, it t lasted only about a year.  The current owners, L3 Communications, of the company that Ed Link built now employs fewer than 100 people on top secret projects that can not be moved to other contractors.

Other companies either failed or moved.  GAF is long gone, Universal Instruments moved most of its business abroad, GE sold the division to British Aerospace, and they have significantly downsized their operation and may leave shortly.  The area that was once a mini Silicon Valley, is now a mini Death Valley.  Downtown Binghamton is a dismal place full of closed and boarded up buildings.  It's amazing that Boscov's Department Store can remain in business there.  There is little else left besides government buildings and a few banks. The airport is almost vacant and the remaining airlines board fewer than 300 passengers a day to just one or two airports.

So what caused the decline and abandonment?  First, high corporate taxes, over regulation and union problems drove many companies south.  Second, bad and corrupt management of certain companies sped up their doom.  And finally, the high cost of labor forced the rest to choose more fertile grounds to expand their business.  This is an area that I love, but it is a shell of what it used to be, and is a perfect example of government trying to tax companies and people to prosperity.

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