Everyone Wants a Fab

Posted by & filed under CGR Staff, NY Sun.

In the 1960s and 1970s, every country wanted an auto industry. In a world obsessed with the automobile, being in the car business was central to national pride. In today’s economy, the chip fab seems to have taken the place of the auto industry. Nations and U.S. states offer dramatic incentives to capture these massive manufacturing facilities. A modern chip fab—those producing 300 mm wafers—cost more than $3 billion to build and incorporates the latest manufacturing technology.

Enticing a chip fab has long been a goal of the Pataki administration. The Luther Forest Technology Park in Saratoga County received substantial state and federal money to support site assembly, permitting and infrastructure. The Luther Forest brochure promises “up to 10,000 good paying jobs for our young people” for the estimated 2 million square feet of manufacturing space. So far, so good.

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Gas Tax

Posted by & filed under CGR Staff, Rochester Business Journal.

Visiting Yosemite National Park last October I encountered a vacationing Brit at the park campground, driving a motor home the size of a city bus. “Must be tough to fuel up with these terrible gas prices, eh?” Looking at me blankly, he replied, “I don’t know what you mean. I could never drive a rig like this in England. Petrol’s a bargain here.” Eager to continue the conversation with my new acquaintance, I blathered on, “But the crude oil price went up worldwide. Your prices must be really awful now.” “Oh, they’ve gone up a bit, I suppose. Haven’t noticed, don’t you know?”

Well, the morning coffee finally kicked in and it all made sense. You see, of the $6.20 per gallon the British were paying last October, $4.05 was tax. Our taxes, on the other hand, average about $.39 per gallon. Remove the tax and gasoline was actually more expensive in the U.S. last October—an average of $2.75 per gallon v. $2.15 per gallon in the U.K. From the beginning of 2004 to October 2005, gas prices had gone up 85% for Americans while the average price paid by the Brits had gone up only 20%.

Yes, you guessed it: I’m going to suggest that we raise the gas tax. Keep reading anyway.
What’s wrong with cheap gas? Let me count the ways:

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Pricing for Self Pay in Health Care Marketplace

Posted by & filed under CGR Staff, Rochester Business Journal.

“Dad, I’m at the emergency room.”

Oh, great. Send your daughter off to college—across the country, for heaven’s sake—and one thing you notice right away: You have REALLY lost control. Unless you own a Lear or a nice $20m Gulfstream, there is no way to get to California quickly in a crisis.

OK, maybe not a crisis. Turned out she was fine—too much caffeine, too little sleep. They put in an IV, did some blood tests, then sent her back to campus.

I wish I could say that there was nothing wrong with ME when I got the bill! Are you sitting down? The hospital sent me a bill for $2,335. If that wasn’t bad enough, I soon got the bill for the “accessories,” like the extras you get with some gadget on a late night infomercial: “But that’s not ALL! Buy the hospital visit today for only $2,335 and get a doctor for ONLY $547! And don’t miss the lab work! Call the toll free number on your screen and get your personalized pathology report (YES, we test YOUR OWN BLOOD) along with your hospital visit WITH the doctor for a mere $354.25! That’s right—the whole emergency room visit for just $3,236.25!!

Many of you have had a similar experience. What’s my point?
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Pharmacy Price Variation

Posted by & filed under CGR Staff, Rochester Business Journal.

Need drugs? The legal kind, I mean? I think you’ll agree that there is no shortage of sources. I did a quick check of the phone book and found ten places to buy prescription drugs within a two mile radius of my house (3 Eckerds and 2 Wegmans plus Tops, Rite Aid, CVS, Kmart, Walmart and Medicine Shoppe). And there are more planned—Target & Walgreens will be in the radius by the end of the year.

Doesn’t this seem rather odd? Let’s put aside the places that do drugs as part of a one-stop-shopping model, such as the grocery and department store chains. It is the stand-alone pharmacies that puzzle me. How can Eckerds make money with three stores in my backyard? I can’t remember a time when these places were particularly busy. Waiting at the check-out is a rare event. Offhand, this doesn’t look like an efficient model. So either they are ready to go bankrupt (Ah, that must be why Walgreens is entering our market—they want to share in the losses!) or the margin between the price they pay and the price we pay is pretty rich.
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