News

April 13, 2012

The Springs That Heal

By:

Source: The Economist

AMERICA’S wealthy, lured by the mineral springs, flocked to Saratoga during the 19th century. Gilded-Age figures such as J.P. Morgan, the financier, summered there. The race course, which opened in 1863, became a huge draw. Even James Bond placed a flutter at the Saratoga track in “Diamonds are Forever”. Yet, until recently, Saratoga did not have much else going for it. Although colleges and universities crowd the Greater Capital Region of New York, the five-county spread where Saratoga sits, there were few jobs around. Things are different now.

Thanks to a cold call placed by the Saratoga Economic Development Corporation in 2005, pitching the area as an ideal site for a factory, GlobalFoundries, a semiconductor manufacturer, is building a $4.6 billion, 2m-square-foot campus in a Saratoga forest (above). The main site, a former secret missile-testing range, is as big as six American-football fields. The Semi-Conductor Association estimates that the five-year cost of building and operating a factory making the wafers needed for semiconductors is $1 billion dearer in the United States than elsewhere. Luckily, New York state offered a $1.4 billion incentive package. Some resent the subsidies, but the state anticipates a return of $2.54 for every dollar spent on the project.

The investment will also create 1,600 direct jobs and about 8,000 indirect ones, creating an annual payroll of some $300m. The first hires come from all over the world, but about 50% are local, and GlobalFoundries expects this proportion to grow. It is working with local colleges and universities to create a labour pool for the future. More than half the jobs require at least an associate’s degree (ie, one granted by a technical or community college) in electronics or semiconductor manufacturing. Along with other high-tech companies, GlobalFoundries is working closely with Hudson Valley Community College, which has a dedicated semiconductor-training campus, called TEC-SMART, nestled in the same forest. It shares the space with local high-schoolers. “In a way we’re preparing for jobs that don’t exist yet,” says Joseph Dragone, a district superintendent.

The nearby University of Albany’s College of Nanoscale Science and Engineering (CNSE), the first college in the world dedicated to nanotechnology, is doing much the same. A decade ago Alain Kaloyeros, who runs it, set up a partnership with industry and the state government. Some 300 companies have provided $13 billion to the college for labs and cleanrooms, and the state has contributed a further $1 billion. CNSE has provided some 80,000 square feet of professional-grade cleanroom space which it shares with the nano-industry. Students work both alongside and for private companies. Competitor firms, such as Tokyo Electron and Applied Materials, work almost next to each other.

Arguably, the area has returned to its roots. GE Global Research, founded 112 years ago, traces its origins to a carriage barn in nearby Schenectady. After shrinking its manufacturing arm in the 1990s, it is bringing it back to New York, making high-energy-density batteries and digital x-ray-detectors. Other companies are also arriving, such as Air Liquide, one of GlobalFoundries’ suppliers, and Panalpina, a specialised logistics company. Sematech, a chip consortium, has moved to Albany from the high-tech magnet of Austin, Texas. Sinclair Schuller established Apprenda, his cloud-computing start-up, in Saratoga because it is in a “sweet spot”: boasting an educated workforce, and just a few hours’ drive from Montreal, New York City and Boston. And, just to ice the cake, the area has the lowest per-capita county taxes in New York state.

The ripple effects in the community have been profound: new housing, busy restaurants, more cultural diversity and jobs. The Capital Region’s unemployment rate, at 8.2%, is lower than both New York City’s and the nation’s. The story goes that the warring Mohawk and Mohican tribes could agree on just one thing: not to tell early European settlers about the healing springs of Saratoga. Today, Saratogans are only too happy to boast about the healing powers of high-tech.