New York state has the potential to be LED into a prosperous future as long as its leaders know when to let it go.

The city of Dewitt will be welcoming Soraa, a California-based manufacturer of LED lights, later this year in a deal that the plant will be built and owned by SUNY Polytechnic Institute to be leased to Soraa for an indefinite amount of time. With Soraa projecting to invest $1.3 billion into the project within the next decade, the plant will bring 420 new jobs to the region, according to Syracuse.com, and will be a local fixture for years to come.

The state is wise to use part of the $500 million awarded to the region from the Upstate Revitalization Initiative (URI) to partner with the private sector and cash in on developing technologies. As long as the state eventually sells the manufacturing plant to the company —  a question which has not yet been formally answered — both sides, and most importantly central New York, will come out well from the arrangement.

The manufacturing plant is an expensive project, which is why the state has promised $90 million to build and equip the facility. Coupled with the fact that Soraa will not pay rent on the facility, this might seem to be a questionable investment — at least initially. But $70 million of the startup money will be taken from the URI, the purpose of which is improving the central New York economy.
Investing in manufacturing plants certainly has the potential to yield great returns for central New York, considering one of the reasons that the region has won this grant for revitalization is a desire to cash in on the clean and budding technology that New York state has been excelling in creating as of late.

Albany has recently become a hub of nanotechnology, thanks to similar efforts by SUNY Polytechnic and the state to consciously create a mini silicon valley in upstate New York. The tax breaks and subsidization is certainly a gamble, but they are ones that seem to be paying off so far. Tax-free zones that have been set up around SUNY campuses have helped many businesses get off the ground and contributed to the growing nanotech scene in Albany. In addition to its aim to supplement the local film industry, these measures and past examples certainly have garnered enough good faith for us to lend our support to the Soraa facility.

Soraa itself is the child of a group of professors who used their education to innovate. With SUNY Polytechnic and other regional schools creating jobs, there is a precedent for a multitude of skilled and well-educated professionals in New York that should be encouraged to settle down in the state so similar companies may take root.

Michael Wasylenko, senior associate dean for academics and administration and professor of economics in Syracuse University’s Maxwell School of Citizenship and Public Affairs, was clear to praise the state’s recent actions.

“Many states have been doing this (direct investment into businesses),” said Wasylenko. “I think it’s a good idea. It’s a better way to do development, act as a venture capitalist.”

But the failure to release the plant after the company has proven themselves would be a blunder that would cause the state more problems and implode a smart program. It is neither the job nor expertise of New York to run a major manufacturing industry. If Soraa is as successful as projected after a few years of running, the state should sell the factory and reap the return on investment because retaining ownership yields few positives in the long run.

However, it should be clear that Soraa is profitable and stable before selling to them, lest central New York end up with another barren factory. The facility would serve as insurance that the state still has a semi-permanent asset that can be leased to another tech company if Soraa is not the right fit. As long as the state is prudent enough to sell when success has been proven, there’s little risk regardless of whether the company succeeds or fails.

It could be argued that the state should stay out of the investing business entirely and stick to a more traditional tax-reduction strategy for attracting business. Yes, the state could attempt that, but as any business knows, you have to stand out or you’ll be passed over. Basing its strategy on tax reduction has its risks — most arguably holding onto the plant and not selling it — but to stick to the status quo would be a fatal blow to the ailing state economy.

“I think eventually the state should get out of the business of holding the factory and sell it to the company if it’s successful,” said Wasylenko.

New York is wise to invest in Soraa and other emerging tech companies. The state’s strategy of constructing plants and offering subsidies is one of the smartest and safest ways for New York to stand out in a crowded business space. And while companies may see central New York as a starting point, it’s key to make them stay after the tax subsidies and startup investment wear off.

Upstate New York may well be on its way to becoming a major technology center. But only through balanced business deals will future projects light up across the upstate scene.

Theo Horn is a sophomore political science and public policy dual major. His column appears weekly. He can be reached at tahorn@syr.edu.

Published on March 7, 2016 at 1:18 am