February 24, 2014

IBM to bring 500 new jobs to Buffalo

By: Tom Precious

Source: The Buffalo News

ALBANY – IBM is committing to bring 500 jobs to a new, 100,000-square-foot, state-owned computer information technology center in Buffalo to train future and current industry workers and to create cutting-edge software for energy, health, defense and other industries, Gov. Andrew M. Cuomo plans to announce today.

Big Blue, as IBM sometimes is known, has also agreed to bolster a separate – though likely linked – endeavor by becoming the first corporate technology member of the recently announced New York Genomic Medicine Center, a $100 million new partnership between a genome research facility in Manhattan and the University at Buffalo’s center for computational research, according to Cuomo administration officials.

Some details of the announcement were provided to The Buffalo News on Sunday.

The new facility to house IBM, and what the state hopes will be other private sector companies involved in the expansive field of information technology services, is expected to open in downtown Buffalo in early 2015. Officials said a precise location for the new site downtown has not yet been finalized.

Cuomo is scheduled to make the announcement this afternoon at a banquet and conference hall in Amherst, according to sources who received invitations to the event.

It is the latest in a series of economic development plans the Democratic governor has unveiled the past few years in Western New York, including the recent $1.5 billion RiverBend project.

But unlike RiverBend, which so far involves two California energy companies, the endeavor Cuomo will tout today involves the world’s biggest technology services company, which operates in 170 countries and had a fourth-quarter net income in 2013 that totaled $6.2 billion.

International Business Machines, founded 102 years ago in New York State and first known as the Computing Tabulating Recording Company, is headquartered in Armonk in Westchester County. Its history in the state has been one of an on-again, off-again cycle of boom and bust, especially in the Southern Tier near Binghamton as well as in the Mid-Hudson Valley, where layoffs are reportedly on the horizon in coming weeks.

Officials said Sunday the IBM jobs for the Buffalo project are new for the company and are not part of a relocation effort from other areas.

IBM is being lured to Buffalo, in part, with $55 million in state funding toward the project that officials said Sunday is coming out of Cuomo’s Buffalo Billion dollar commitment. The money, steered through the Albany-based College of Nanoscale Science and Engineering, which is part of the State University at New York system, will include $25 million to build what state officials called a “high-end software development center’’ downtown whose first tenant will be IBM.

An additional $30 million will go for the purchase of various software, computers and servers. Using the model the state has employed before, notably at its nanoscale facility in Albany, taxpayers will not provide IBM with any direct subsidies for the purchase of the equipment; instead, the state will purchase and own the equipment that private companies can then tap into as part of their rental agreements.

State officials said Sunday they expect the 500-job target to be hit in three to five years, and that IBM will put an emphasis on recruiting software engineer and researcher graduates from Buffalo-area colleges – a move that could help slow some of the “brain drain” of young people the region has experienced for years.

The governor will announce that IBM will be the first anchor tenant of what he is calling the Buffalo Information Technologies Innovation and Commercialization Hub, a title similar to two other “innovation hub” ventures he has announced for projects at RiverBend and the Buffalo Niagara Medical Campus that involve partnerships among government, universities and the private sector.

“From medical and clean energy innovation to now, cutting-edge software development, we are making strategic investments in emerging fields that will position the city of Buffalo and the entire Western New York region as a leader in the high-tech industry and a pioneer of new discoveries,” Cuomo said in a written statement.

Ginni Rometty, IBM chairman, president and chief executive officer, said Cuomo’s push for the new facility will “create new opportunity for Buffalo developing the next generation of software in growth areas like mobile, cloud and analytics.”

The state will own the downtown information technology facilities center to be used by IBM.

The administration says the new deal with IBM is part of an effort involving the Western Regional Economic Development Council, the state’s own data center in Albany that is used by all state agencies, the nanoscale college in Albany and the University at Buffalo.

Officials say its software developments in the information technology field could end up being used by an assortment of industries, including genomics and molecular research, as well as unspecified defense sector applications.

Besides the IT jobs and software project, IBM is joining Cuomo’s program for a New York Genome Center that is expected to use UB’s large computing capacity to help with turning genome research underway at a Manhattan facility into practical health care advances that founders of the group say could show up quickly in hospitals and doctors’ offices.

Cuomo has proposed to split $105 million between Buffalo and Manhattan. The money still has to be approved in the 2014 budget talks that are expected to get more serious attention when lawmakers return this week from a vacation, though there is little chance the money will not be included in the final fiscal plan.

State officials envision a connection between the new software center to be constructed with IBM as the first major tenant and the genome program; they say software developed at the newly announced information technology hub could be used to help decipher the humane genome.

IBM for years has been one of the key tenants at the ever-growing, 1.3 million-square-foot nanoscale campus in Albany, which has contributed to the reputation of the Capital Region as a high-technology address for research and manufacturing companies from around the world. The Albany nanoscale’s head, Dr. Alain Kaloyeros, who has increasingly become a trusted adviser to Cuomo, was part of the team to bring IBM to Buffalo.

The two other “hubs” announced recently by Cuomo for Buffalo are the High Manufacturing Innovation Hub, which calls for a clean-energy facility on the former Republic Steel property on the Buffalo River that so far has attracted a LED lighting maker and solar panel manufacturer, and the Buffalo Medical Innovation and Commercialization Hub, which calls for $50 million in state money to build a biomedical facility with state-owned equipment on the grounds of the Buffalo Niagara Medical Campus that has attracted two initial tenants so far.

Saying the economic development needs of Western New York have been largely ignored over the years by state officials, Cuomo in 2012 pledged to spend $1 billion in state money to help with job creation efforts in the region. The timeframe for when the money would be spent has been somewhat of a moving target, though in his new 2014 budget plan Cuomo proposed the state set aside the remaining uncommitted $680 million from the original $1 billion pledge. That does not mean that amount would be spent in the coming year, but rather would create a placeholder in the state’s bank account that could be tapped in future years without having to be a part of the annual budget process.