Jun

25

There is a quiet rumble of economic activity in the Mohawk River Valley.

My mom just sold her house in Dolgeville, NY, for $15K more than she had it listed for. An Indian (subcontinent-type) gentleman wanted her particular house because it was close to his new factory! He wanted it for his employees so they could live close to the factory.

It wasn't quite that easy, of course. He tried a couple of low-ball offers that were just a waste of my mom's time, but when a second party made an offer close to the asking price, he made an offer my mom could not refuse. I was more than amazed. Even people that grew up in Dolgeville aren't that anxious to stay there.

I was a little suspicious. This was looking too good to be true. My sister talked to the real estate agent. His last four sales were to Indians, and he says that Indians are buying in all the little Mohawk Valley towns. They want the factories.

That is actually fairly stunning since the Mohawk Valley, like most of Central New York State, has been going downhill for many decades. The towns are dotted with closed mills and factories, and the countryside is covered with what used to be family dairy farms. There are still a few left, but most of the farms are either not being worked or owned by giant corporations. A working factory is very hard to find.

That is apparently starting to change in a small way. Businessmen from other countries see perfectly good factory buildings, in many cases with free hydroelectric power from turbines that are still there and still work perfectly, and the cost of the buildings is a tiny fraction of their current construction cost. In some cases, they open a factory making exactly what it did thirty years ago when it was abandoned by its American owners. Sometimes the businesses are new. None seem to employ very many people, but it's a long time since those factories employed anyone.

It's too early to say if these new ventures are going to be profitable, but the people buying them have done well enough in the past so that most of these sales are all cash with no lender (at least no visible lender) involved.

If this is happening in the Mohawk Valley, it has to be happening all over the North East since there is a mill everywhere there is a waterfall east of Ohio. The Mohawk Valley is pretty, but even New Yorkers think the weather sucks. The biggest item in the town budget is snow removal! Yet someone from Mumbai is drawn here for the economic opportunity. Is this an economic opportunity Americans are missing, or are these people making a bad bet?

Let's see. Free power, using locally available raw materials, and housing near the factories for the employees. Isn't how these mill towns happened in the first place?

On a related note, this is third story I have heard lately of businesses relocating because of hydroelectric availability. The older story is that Washington and Oregon have become home to huge server farms (mostly driven out of California by Enron) because they don't want to have to deal with middlemen for the electricity they require. There are new cities growing along sections of the Columbia previously known primarily for windsurfing.

There is also a battle in Western New England for some old mills with hydroelectric generators. New technology gets more out of the old generators making them a bargain. At least one company is coming in, fixing the old generators and installing upgrades at their cost, and splitting the profit from the power generated. Just a few years ago, the best idea anyone had for any of these old mills was to turn them into antique malls, but how many antique malls do we really need, anyway?


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4 Comments so far

  1. Rod Clifton on June 25, 2010 10:34 am

    Nice story. I guess the maxim “when all you have are lemons, make lemonade” holds true.

  2. Gary Rogan on June 25, 2010 11:54 pm

    People usually don’t abandon factories until it seems completely hopeless to produce there or there are dramatic advantages in moving production elsewhere. It would be interesting to analyze what makes it possible to profitable and advantageous to run the factories making the same things they did thirty years ago using thirty year old equipment today. Do all of them extract more energy from the generators? Has the cost of energy become that much more important relatively speaking? Are they using sub-minimum wage labor? Or simply non-union labor (most likely yes, but is this the deciding factor)? This seems too good to be true, and yet it’s evidently happening.

  3. mark marino on June 28, 2010 6:43 pm

    A couple of weeks ago had the pleasure of attending the US Citizenship ceremony in Campbell, CA. These events usually swear in approximately 500 new citizens. There is a point in the proceeding where they have the newly inducted from over 70 countries stand up as they alphabetically role call country by country. Being in California i assumed that the largest group to stand would be from Mexico. To my surprise when the call came to India more than half the room stood up, dwarfing the numbers of any other nation by many fold.

  4. vic on June 29, 2010 10:56 am

    What a great pleasure Mr. Marino had. I wish I could share it. One of the worst things in the world to me is how people deny immigrants the rite to improve themselves because they are not Americans. I believe they are humans and that they have the rite to enter into mutually beneficial transactions to benefit themselves. Oh yes, the neo-con says, "they fill up the jails and take too much room in the emergency". Yes, indeed if you make it illegal for them to have jobs, they will go to jail when they are picked up. And they will take advantage of welfare when it is available to everyone else. The problems, as Don Boudreaux points out very eloquently, are the regulations and the interventions, not the immigrants taking jobs away from those who would choose not to compete. vic

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