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^ \ JOB DEVELOPMENT AND THE ECONOMIC FUTURE OF THE SOUTHERN TIER Y 4. B 22/1: 103-152 Job Oeyelopnent and the Econonic Fu. . . FIELD HEARING BEFORE THE SUBCOMMITTEE ON ECONOMIC GROWTH AND CREDIT FORMATION OF THE COMMITTEE ON FINANCE AND BANKING, URBAN AFFAIRS HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS SECOND SESSION JULY 8, 1994 Printed for the use of the Committee on Banking, Finance and Urban Affairs Serial No. 103-152 u j '"-^ ' 1S3A U.S. GOVERNMENT PRINTING OFFICE 81-702CC WASHINGTON : 1994 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-045984-2 ^ \ JOB DEVELOPMENT AND THE ECONOMIC FUTURE OF THE SOUTHERN TIER Y4.B 22/1:103-152 Job Oevelopnent and the Econonic Fu. . . FIELD HEAKING BEFORE THE SUBCOMMITTEE ON ECONOMIC GROWTH AND CREDIT FORMATION OF THE COMMITTEE ON FINANCE AND BANKING, URBAN AFFAIRS HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS SECOND SESSION JULY 8, 1994 Printed for the use of the Committee on Banking, Finance and Urban Affairs Serial No. 103-152 I .jf' iif^Y DP- U.S. GOVERNMENT PRINTING OFFICE 81-702CC WASHINGTON : 1994 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington.DC 20402 ISBN 0-16-045984-2 HOUSE COMMITTEE ON BANKING, FINANCE AND URBAN AFFAIRS HENRY B. GONZALEZ, Texas, Chairman STEPHEN L. NEAL, North Carolina JAMES A. LEACH, Iowa JOHN J. LaFALCE, New York BILL MCCOLLUM, Florida BRUCE F. VENTO, Minnesota MARGE ROUKEMA, New Jersey CHARLES E. SCHUMER, New York DOUG BEREUTER, Nebraska BARNEY FRANK, Massachusette THOMAS J. RIDGE, Pennsylvania PAUL E. KANJORSKI, Pennsylvania TOBY ROTH, Wisconsin JOSEPH P. KENNEDY II, Massachusetts ALFRED A. (AL) McCANDLESS, California FLOYD H. FLAKE, New York RICHARD H. BAKER, Louisiana KWEISI MFUME, Maryland JIM NUSSLE, Iowa MAXINE WATERS, California CRAIG THOMAS, Wyoming LARRY LaROCCO, Idaho SAM JOHNSON, Texas BILL ORTON, UUh DEBORAH PRYCE, Ohio JIM BACCHUS, Florida JOHN LINDER, Georgia HERBERT C. KLEIN, New Jersey JOE KNOLLENBERG, Michigan CAROLYN B. MALONEY, New York RICK LAZIO, New York PETER DEUTSCH, Florida ROD GRAMS, Minnesota LUIS V. GUTIERREZ, niinois SPENCER BACHUS, Alabama BOBBY L. RUSH, Illinois MIKE HUFFINGTON, Cahfomia LUCILLE ROYBAL-ALLARD, California MICHAEL CASTLE, Delaware THOMAS M. BARRETT, Wisconsin PETER KING, New York ELIZABETH FURSE, Or^on NYDIA M. VELAZQUEZ, New York BERNARD SANDERS, Vermont ALBERT R. WYNN, Maryland CLEO FIELDS, Louisiana MELVIN WATT, North Carolina MAURICE HINCHEY, New York CALVIN M. DOOLEY, California RON KLINK, Pennsylvania ERIC FINGERHUT, Ohio Subcommittee on Economic Growth and Credit Formation PAUL E. KANJORSKI, Pennsylvania, Chturman STEPHEN L. NEAL, North Carolina THOMAS J. RIDGE, Pennsylvania JOHN J. LaFALCE, New York BILL McCOLLUM, Florida BILL ORTON, Utah TOBY ROTH, Wisconsin HERBERT C. KLEIN, New Jersey JIM NUSSLE, Iowa NYDIA M. VELAZQUEZ, New York MARGE ROUKEMA, New Jersey CALVIN M. DOOLEY, California PETER KING, New York RON KLINK, Pennsylvania ERIC FINGERHUT, Ohio (II) CONTENTS Page Hearingheldon: July8, 1994 1 Appendix: July8, 1994 59 WITNESSES Friday, July 8, 1994 Adams, Kay, Executive Director, UnlPEG 19 AUee, Dennis H., Senior Deputy Commissioner, Department of Economic Development, StateofNewYork 15 Brooks, Jeff, Chair, Commercial Competitiveness Council, Binghamton University 21 BCaurdtienr,,MGolrernins,, PDirroefcetsosro,rTEimoegraitCuosu,ntUyrbEacnonPolmaincniDneg,veBlionpgmheanmtt&onPlUnainvneirnsgity . 2138 Dellow, Donald, President, Broome Community College 26 Li, Che-Yu, Director, ElectronicPackagingProgram, Cornell Unive—rsity 29 Meyer, Frank C, Vice President and CFO, Loral Federal Systems Owego 30 Monroe, Brian, Project Director, Office ofEconomic Adjustment, Department ofDefense 11 Monroe, Michael, AssistantProfessor, Ithaca College 32 Paris, Frederick, Regional Director, Department of Economic Development, State ofNewYork 13 Straub, Chester J., Jr., Deputy Assistant Secretary, Program Support, Eco- nomic DevelopmentAdministration, U.S. Department ofCommerce 4 Tennant, Victor, President, Broome CountyFederation ofAFL-CIO 35 Van Atta, Richard H., Special Assistant, Dual Use Technology, Assistant Secretary forEconomicSecurity, U.S. DepartmentofDefense 7 APPENDIX Prepared statements: Kanjorski, Hon. Paul E 60 Hinchey, Hon. Maurice D 62 Adams, Kay (with attachments) 149 Budin, Morris (with attachments) 160 Carter, Glenn 147 Dellow, Donald 203 Li, Che-Yu 209 Meyer, Frank C 212 Monroe, Michael (with attachments) 217 Paris, Frederick 74 Straub, ChesterJ., Jr 64 Tennant, Victor 263 Additional Material Submitted for the Record Paris, Frederick, Executive Summary, "Economic Adjustment Strategy for the Southern TierRegion ofNew York State,"July, 1993 82 Tennant, Victor, "Toward a New Economic Strategy for New York State," NewYork StateAFL-CIO, May, 1993 268 (III) JOB DEVELOPMENT AND THE ECONOMIC FUTURE OF THE SOUTHERN TIER FRIDAY, JULY 1994 8, House of Representatives, Subcommittee on Economic Growth and Credit Formation, Committee on Banking, Finance and Urban Affairs, Washington, DC. The subcommittee met, pursuant to notice, at 1:15 p.m., in the City Council Chambers, Government Plaza, Binghamton, NY, Hon. Paul E. Kanjorski, [chairman ofthe subcommittee] presiding. Present: Chairman Kanjorski and Representative Hinchey. Chairman Kanjorski. Today, the House Subcommittee on Eco- nomic Growth and Credit Formation holds the eighth in a series of field hearings on credit availability, job creation, and economic growth. Today's hearing will focus on the needs of the New York Southern Tier, particularly Broome County, Tompkins County, and Tioga County. Much of what we learn today will also address the needs ofUlster County. Today's hearing is the first the subcommittee has held in New York, and I would like to thank my colleague. Congressman Maurice Hinchey, for inviting the subcommittee to the Southern Tier ofNew York to hold this hearing. As a Congressman who represents northeastern Pennsylvania, I feel a particular affinity for my neighbors to the north, the New York Southern Tier. The area I represent suffers from many ofthe same economic problems as the Southern Tier. We know the dis- advantages which accrue from being a secondary market instead of a primary market, like New York City and Philadelphia. As a result both regions must develop a capacity to grow fi-om within. The people of the Southern Tier, particularly the 26th Congres- sional District, were very fortunate to be represented for most of the past two decades by an extremely thoughtful and hardworking and admired Member of Congress, former Congressman Matt McHugh. Like Maurice Hinchey I, too, succeeded a Member who served for several decades, who was a living legend in my district. As a result, I know how difficult it is for a new Congressman to live up to the high expectations and the standard of excellence set bv his predecessor. I am pleased to report to the people of the 26th Congressional District ofNew York that they have once again chosen wisely. Maurice Hinchey has already made his mark as one of the most knowledgeable, determined, resourceful, and respected Members of Congress in a very large fi'eshman class. What has particularly im- pressed me about Maurice is that he is a firm believer that individ- (1) uals can control their own destiny, and he has both the vision and a plan to build a better economic future for the Southern Tier. Job creation is clearly his top priority, and he understands the many complex elements that must be part of any successful job creation strategy, from credit availability to regional cooperation, job training, defense conversion, reindustrialization, and infrastructure repair. When my subcommittee began work on legislation to create new jobs and businesses by promoting the transfer of emerging new technologies from government laboratories to the private sector, Congressman Hinchey was one of the first Members to understand itsjob creating potential. He offered constructive suggestions to im- prove the bill, and he was the most single, active, vocal, and per- suasive advocate for the bill when it reached the House floor and was approved by a two to one bipartisan margin. Maurice asked me to hold this hearing in the Southern Tier because he understands the importance of bringing together Federal, State, and local offi- cials, area business and labor leaders, academics, and economic development experts so that we can learn from each other. All too often people view congressional hearings as inquisitions. This hearing is meant instead to be a learning experience. Each participant brings a unique perspective to the problem before us of creating new jobs and economic prosperity in the Southern Tier of New York and areas like it across our Nation. The advice Con- gressman Hinchey and I receive today will help us advise our col- leagues in the Congress on the next step we can take to increase job creation and promote sustained economic growth both here in the Southern Tier of New York, in northeastern Pennsylvania, and across the Nation in the many secondary markets that are similar to these. Without objections, our witnesses' prepared statements will be made and submitted as part of the full record of the hearing. After Congressman Hinchey has made his opening statement, I will ask each participant to identify themselves, and then to summarize in 5 minutes or less the main points oftheir written statements. Once the participants are done with their opening statements, I want this to be a very free-flowing and open dialog where everyone feels comfortable to question and comment on the statements of others. And I may add that I expect you to do so to myselfand the Con- gressman here. So often the appearance is that we are above chal- lenge. Hardly the thing. What I want to really indicate is that both Maurice and I are more acutely aware than ever that what we take back from these hearings to help us in Washington is the insightftilness that you will give us by questioning some ofthe atti- tudes we have, and thought processes we have. So please do not allow us, because our bench here is just a little higher, to make the assumption that we should not be challenged. Perhaps we want to do away with that difference. We are all on an equal plane, a peer group here, and anything we can learn and experience would be most helpful. And now it is my distinguished pleasure to represent the distinguished Congressman from the 26th District of New York, and my very good personal friend. Maurice. Mr. Hinchey. Well, thank you very much, Paul. Mr. Chairman, I sincerely appreciate your kind words, and I am also extremely grateful to you that the subcommittee has chosen Binghamton as the site oftoday's hearing. I am anxious to hear the testimony of our impressive set of witnesses, and I have only a briefstatement to make before we get down to business. As we all know, the Southern Tier faces many important and complex economic challenges in the years ahead. I have just an- nounced the results of my 1994 questionnaire that was circulated throughout the 26th District, and it is clear that the future of the economy of the Southern Tier is on everyone's mind. Forty percent of those surveyed stated that they are not optimistic about their economic future, while only 35 percent felt that they were optimistic. This outlook is a result of a local economy that has suffered greatly because of the cutbacks in national defense, the restructur- ing ofmajor corporations, and the recent recession which has made a terrible impact particularly on the manufacturing sector of the American economy. I believe that the Federal Government must be doing more to create good, decent paying jobs for the thousands that are out of work in our area. The good news is that we are working hard to find solutions to these challenges, and this hearing marks an invaluable opportunity to explore some of the potential solutions that we may have to these problems. Many people have meaningful suggestions to make in the context of that questionnaire that I mentioned, and I feel that they ought to be considered in Washington. They included providing low inter- est loans for businesses located in communities impacted by defense downsizing; expanding and improving job training programs; and a variety of other thoughtful suggestions. One of the most dra- matic results of the survey is that 75 percent of people responded supporting the Federal Technology Commercialization Act that you created and sponsored, Mr. Chairman, in the Congress. This is a worthy tribute to your diligence, creativity, and understanding of the value of good jobs. I was pleased to have the opportunity to participate with you in the fight to get this legislation passed by the House, and I will continue to look forward to the opportunity to work closely with you as we proceed to conference with the Senate. Another issue that I know many of you are interested in is the transfer of ownership of the Broome County Industrial Develop- ment Agency of the Martin Marietta plant. This transfer has been approved by the full House of Representatives as part of the De- fense bill, and this week I have personally appealed to Senator Moynihan as well as Senator D'Amato for their support. I am optimistic that this will become a reality before the end of the year. These steps are only part of the solution to the economic challenges that we face here in the Southern Tier. I want to reaffirm what the chairman said in his statement, that this is not by any means an inquisition of any sort, it is a learning opportunity for us; I hope for everyone participating. We have assembled an impressive array of witnesses, as we have representatives from both the Federal, State, and local levels, as well as people from the business, academic, and labor communities here in the Southern Tier. I look forward to the unique input of each participant, and again, Mr. Chairman, I want to thank you for traveling up this way from Pennsylvania and for choosing this site for one of your field hearings. Thank you very much. Chairman Kanjorski. Thank you very much, Congressman. I have to say that maybe I should give a transportation report. Ifyou are traveling on 81 north or south a lot, time was lost coming up. It is a tough traffic situation. But as one of my assistants said, ob- viously New York received the benefit of some ofthe transportation money most recently passed by the Congress because you are out there correcting that highway. As the Congressman indicated, we have an impressive—array of witnesses today. And as I indicated in my statement if we will now move that all the statements of all the witnesses —be incor- porated in the record as iffully read. And I will ask them ifthere is no objection we will do that, and I ask them to summarize, as best they can, for about 5 minutes those statements. Because, quite frankly, we will get an opportunity to read them, the people that read the record will get an opportunity, but we will not get an opportunity to talk to these people on a formal or informal basis as we would like to, because some of the insights you may have may be particularly helpful, and we will have the benefit ofyour written statements for as long as history occurs. So at this time I would like to introduce, representing first ft-om the Federal executive branch, Mr. Chester J. Straub, Jr., Deputy Assistant Secretary, Program Support, the Economic Development Administration of the U.S. Department of Commerce. Mr. Straub. STATEMENT OF CHESTER J. STRAUB, JR., DEPUTY ASSISTANT SECRETARY, PROGRAM SUPPORT, ECONOMIC DEVELOP- MENT ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE Mr. Straub. Mr. Chairman, Congressman Hinchey, other distinguished witnesses, ladies and gentlemen, thank you for this opportunity to appear before the Subcommittee on Economic Growth and Credit Formation today as we focus upon economic conversion and job growth, and the efforts of the Economic Development Adminis- tration and the Federal Government to assist American communities to adjust to the needs of today's global economy. And Con- gressman Hinchey, I thank you for inviting us to New York. Being a native New Yorker, I do not get up here as much now that I am down in Washington. I appreciate the opportunity to do so. Mr. Chairman, I commend you for the timeliness of this hearing. The challenges facing economically distressed areas around the United States today are vastly different than they were just a few short years ago, where the local economic development needs of many of America's communities once was purely public works and infrastructure to enable economic growth. Today the same communities are faced with different types of challenges, including in- creased competition, both domestic and foreign, and changes in governmental policies, including shifts in defense spending and in- creased sensitivity to the protection ofthe natural environment. These new challenges have impacted dramatically on America's traditional industries, and have affected every community in this country. And with these new challenges comes the need for new ap- proaches at the local. State, and Federal levels to government's role