Pessimism about the economy comes easily to most of us. We’ve been told that it takes fewer muscles to smile than to frown. Nonsense. Pessimism is our natural state.
And when the Rochester economy outperforms the state consistently over a three-year period, we suspect either mischief or incompetence: Someone at the Department of Labor made a mistake that will soon be discovered. Yet while the rest of the state has been shedding jobs since September 2008, we’ve pretty much held our own here in Rochester. We lost less than 1% of jobs while others did much worse. Long Island and Albany, for example, dropped nearly 4%. And for the year just passed, we’re 10th in the nation (out of 372 metro areas).
Rochester isn’t being propelled by a single firm or a single cluster or a single sector. Of 11 major sectors, 8 grew over the year. And in 8 major sectors (not exactly the same ones), Rochester’s outperformed NYS.
I attended the Rochester Top 100 event last week and was tremendously encouraged by the winners. First, there are 42 on the list with 100 employees or more. These companies are driving enough revenue growth to secure a place on the Top 100 and are managing a substantial workforce. Many are poised to continue growing, particularly as the global economy recovers.
Second, many of these firms are selling outside the region. Easily half are in the “traded sector,” the part of our economy that earns revenue from the state, nation and world. Local service providers are important to our daily lives—but only by trading outside the region can we increase total jobs and income.
Third, many of Top 100 firms sell products and services that are—hmm, can I say this?—rather boring. It is fun to boast about firms that are doing things most of us don’t understand—Sydor Optics or iCardiac. And we’ve lots of great companies like these. But most products and services in our economy aren’t new. The general mercantile store has been with us as long as trade has existed. Wegmans succeeds by making a pedestrian business exciting—that’s why the opening of their new store in Worcester, Massachusetts was a newsworthy event. A local news blog titled its story, “Wegmans Aftershock” and told of 25,000 first day shoppers. It wasn’t that someone had opened a supermarket—no, they’d opened a Wegmans.
Four firms in the Top 100—employing more than 1,500—are in the packaging business. Empty boxes just aren’t that exciting. Lewis Tree Service reports 3,555 employees. Yes, they cut trees—throughout the Eastern & Southern States. Lapp Insulators employs 1,146 making—you guessed it!—insulators for power lines. Companies that succeed when they aren’t protected by patents are just outperforming the competition. Hear, hear!
Finally, the Top 100 companies are fabulously diverse. Yes, we’ve a number of optics/photonics firms and we’re proud of them. But not all of our growth comes from a narrow base. We have successful firms in a wide range of sectors. Our diverse economic “portfolio” insulates us from a downturn or technological change in one industry or another.
I’m going out on a limb and making a prediction: Rochester is getting back into the growth habit. I doubt that we’ll be at the head of the pack when the national economy really gets heated up. But we’ve the makings of steady, broad-based growth that will bring us long-term prosperity.
ORIGINALLY published in Rochester Business Journal 11/11/11