Rich Products Makes Hometown Investment

Earlier this week, Rich Products announced that it plans to invest $18.5 million in an expansion project at its Niagara Street headquarters that will bring major improvements to its customer innovation center and could potentially lead to future growth in our region. 
According to CEO William Gisel, the state-of-the-art upgrades will make the customer innovation center here in Buffalo the focal point for Rich’s customers from around the world. This facility is a site dedicated to collaboration between Rich and its clients from various restaurants and food companies who are working on product development. Gisel says the upgrades will incorporate culinary centers, laboratories, and communication capabilities to amplify their interaction with global customers. While Rich is no longer a local manufacturing center, it has invested approximately $70 million locally over the last five years in research, development and information technology. 
Work on the facility upgrade is slated to begin within the next month and reach completion by March 2014. Rich expects to add 17 new jobs with this expansion, as well as keep 651 existing employees at its Niagara Street location. According to New York State Lieutenant Governor Robert Duffy, Rich’s investment conveys the company’s commitment to the West Side community. “[Rich] is a name that is clearly one that has made a huge impact here, it’s one of the largest family-owned food businesses in the country,” he said. “It’s a great company, it has a great workforce here, and this investment ensures a long-term commitment.”
New York State will be supporting Rich’s project with $4.9 million in capital grants and tax incentives, including a $2 million grant from Empire State Development and $2.9 million in tax credits through the Excelsior Jobs Program. Tax incentives totaling nearly $419,000 are anticipated to come through the Erie County Industrial Development Agency as well. 
The City of Buffalo and Niagara Frontier Transportation Authority (NFTA) are also making efforts to boost Rich’s investment by planning infrastructure upgrades along the Niagara Street corridor, stretching from Niagara Square to Tonawanda Street. The City will dedicate $5.6 million to a four-phase revitalization program that will conclude at the end of 2014. NFTA will follow suit with a $4.5 million urban transit project that will improve Metro Bus services in that area. “This is a global company that could make this investment anywhere in the world,” said Mayor Byron Brown. The City has recognized Rich’s commitment to its hometown and the West Side community and plans to do its part to compliment the company’s efforts. 
“We are in such a competitive environment today,” Duffy said. “Other states are pulling in our companies, trying to pull our jobs away. When companies make decisions like Rich’s to stay here and grow, it’s time to celebrate.”

About the author  ⁄ Kyle Gunn-Taylor

42 comments
whatever
whatever

Ok, now I see what you meant.

That's very well said this time.

Still, I'm skeptical that an epiphany happened about the concept of taking $ from all taxpayers and giving it to a few government-selected businesses.

More likely, perhaps some might just prefer that it be given willy-nilly to businesses which are in the city like Rich's but are more p.c. in some way (either much smaller in size, &/or in an industry they like better - maybe 'green' products, or anything involving tourism, or trendy residential, restaurants, data centers, … )

benfranklin
benfranklin

What I was attempting to point out, poorly, I'll admit, is that there are two sides to redistribution. The only certain one is that you're taking from the wealthy.

Who receives the funds, and why, is inefficient. It's not market driven, but the whim of a bureaucrat.

It appears that the recipient of the governmental largesse, in this case, has triggered an epiphany for some on the left that there are shortcomings in any system that takes hard earned profits from some, and hands them willy-nilly to anyone with their hands outstretched. While those on the left appear open to new ideas, perhaps they would reconsider that those that have unlocked the code to earning a profit might be the best arbiter as to where these profits should be reinvested to earn the greatest returns.

whatever
whatever

sbrof - although I doubt any are paid min wage at Rich's HQ and research center, I'd still disagree with your view of "probably yes" for NY state taxpayers to give around $300k to Rich's (or to any private business) per $50k new job.

$5M divided by 17 new jobs is $294k.

That would be giving taxpayer $ for almost 6 full years of wages per $50k new job. How is that practical or sensible as a general policy?

It isn't fair to other, often less politically connected, businesses who are the vast majority in NY state. They aren't given it yet it's they who have to pay the taxes to fund it.

Numbers can't work to give it to everyone. Not even close.

There's around 450,000 private sector jobs in metro Buffalo. Median wage is $33,000 and average is $42,000.

That means about a third of WNY's 450,000 private sector jobs are paid $50k or more.

150,000 jobs x $300k from NYS would be $45 billion. It would cost the 'Billion for Buffalo' times 45.

And that's only to give that much to co's in metro Buffalo area, not even considering Rochester, Syracuse, and the rest of upstate. As the saying goes, eventually you run out of other people's money. For this, 'eventually' would be instant.

So only a very select few businesses can be given anything like this.

Who decides which? Politicians and their appointees. Crazy.

(Robinson in the Buffalo News today argued in favor of this handout by using the total existing jobs then saying it's $8,000 something per job at almost 700 jobs. To me, that looks like b.s. because nobody is even hinting the facility would be at real risk of moving without this $5M, and NYS isn't giving even $8,000 to every private employer per existing job they keep in WNY or the state.)

whatever
whatever

I think for small startups it's probably just as bad, for some of the same reasons as for big or medium - like favoritism which is always very difficult to prevent.

Even in cases when deliberate favoritism doesn't happen, there's de facto favoritism because there simply isn't anywhere near enough govt $ available to help them all equally with these kinds of targeted handouts (or ben might prefer to say redistribution - same thing).

An extra problem more prevalent for small startups is regardless of funding the failure rate is very high for many reasons, so projections of jobs to be created by any of those are really almost meaningless.

(Nanodynamics, Smart Pill, … )

Politicians and their appointees just won't be good at predicting which are more viable than others. It's very difficult even for venture capital experts to do.

Much better for govts to just focus on trying to keep the playing field as level and efficient as possible rather than handing out taxpayer $ to a selected few.

grad94
grad94

i stand corrected. thank you.

Postermaster
Postermaster

Listen, you got knocked down with the last hit. Keep your chin up and you'll come back again, just gotta bring a stronger game. Stay with it.

whatever
whatever

ben>"money from the rich to ...well... the Rich, is a problem. Why is that?"

Maybe that's a facetious question not serious, but just for fun there's an obvious answer even if setting aside comparisons to safety nets.

Even if you give any examples of other govt redistributing which people agree were bad ideas then argue "Well, if our govt redistributed public $ for A, B, etc and we think those were bad ideas, then now why shouldn't it also redistribute to C, D, E, ...?"

.... That's as dopey a justification for this as it would be if/when anybody ever argues the past public redistribution for data centers or stadiums should justify redistributing public $ to Irish Classical Theater or some politically connected storefront art org, etc.

Or like saying since the City redistributed public $ to Gigi's and One Sunset, then it should also redistribute public $ to Chef's or Empire Grill.

Call it a slippery slope if you want, or two wrongs don't make a right, but clearly it isn't a logical way to decide what should be spent on.

It looks like saying since Terrell Owens was given the Key To The City, then that should justify keys also being given to Mario Williams, Ville Leino, …

ben>"did you get this worked up about Solyndra?"

'Worked up' isn't accurate for either - but oppose & criticize Solyndra funding? Of course.

No_Illusions
No_Illusions

Obviously it is much easier to find employment when you do not have a place to live, or food to eat.

Social welfare's aim is to break the cycle of poverty, and to provide a safety net. This is what the Democrats support. Every able body is needed in order for social welfare to work. However, you are right. Our current welfare programs do indeed trap people in poverty. Not by design, but as a result of half assed policies. Reform is needed, and policies that better promote upward mobility need to be implemented.

davvid
davvid

Even your trolling is lazy and insufficiently provocative or disruptive. When you can't actually come up with a good counterargument (which is often) you always resort to writing hostile nonsense. Its boring.

Also, it seems like people who still criticize the casual use of Wikipedia are people who do not use Wikipedia or any other encyclopedia very much.

http://en.wikipedia.org/wiki/Reliability_of_Wikipedia

I hope BRO bans you again.

davvid
davvid

You are conflating the cycle of poverty concept with entitlements. Also by loosely throwing around the term entitlements you are lumping together Social Security and medicare with food stamps and welfare. If you talk to seniors about this they will make the difference between S.S/Medicaire and Welfare very clear to you in about 2 seconds.

I found it very helpful to see what the list of US Entitlement Programs includes.

529 or Coverdell

Home Mortgage Interest Deduction

Hope or Lifetime Learning Tax Credit

Student Loans

Child and Dependent Care Tax Credit

Earned Income Tax Credit

Social Security--Retirement & Survivors

Pell Grants

Unemployment Insurance

Veterans Benefits

G.I. Bill

Medicare

Head Start

Social Security Disability

SSI--Supplemental Security Income

Medicaid

Welfare/Public Assistance

Government Subsidized Housing

Food Stamps

Postermaster
Postermaster

Let me put it to you this way: your idea of hard work is to Google Wikipedia, his is to build a worldwide food processing empire. I’ll take his definition, thank you.

davvid
davvid

When you say that a corporation is doing "hard work" who are you picturing in your mind doing the actual hard work? Are you picturing a person, a Mr. Rich Products Corporation? According to Wikipedia, the "rugged individual" that founded Rich Products, Robert E. Rich Sr, died a very rich man indeed ($2 Billion) in 2004 in Palm Beach, FL. My point is he no longer does the "hard work" and no longer cares about reward from gov't or "snide" from us. I also want to note that the Wikipedia page says that he started his first business with money that he borrowed from his father.

The old American Dream was a very real and constructive idea. The "new American dream" is like funhouse mirror delusion where corporations are people, campaign spending is free speech and personal wealth reflects how hard a person has worked.

benfranklin
benfranklin

The only thing I'll agree with BRL is that the wealthy are getting wealthier, but we would disagree on why.

Most of the 'new' wealth I'm seeing created comes from the web. Little restriction on what you can do, little capital needed to get things rolling. With a successful web business, there's no role for anyone that isn't technically capable (at a minimum). There are fewer jobs that once would have gone to a blue collar worker.

There's a successful distribution business in the Tri Main Center, employs about 30 people, but all of the manufacturing is done in Poland, China, and other countries. To compete, these companies must use cheap foreign labor.

This has little to do with left/right, democrat/republican, but the competitive environment manager's find themselves in.

Black Rock Lifer
Black Rock Lifer

Karl- The Democrats are way too far to the right for me and the good of the country. Many Democrats seem to be much too comfortable with Wall St, big business, and the wealthy. They are far from perfect but are certainly the lessor of two evils. The Republicans have become little more than lobbyists for the rich and powerful and have no clue how to reach or advocate for the majority of hard working Americans. Republicans should be ashamed for the blatant contempt they hold for the average working Americans that are truly the wealth creators.

My ground isn't holier, I am just fortunate to have values that don't revolve around materialism and greed. I don't understand the obsession with accumulating wealth more than is necessary for a comfortable lifestyle. Not saying I want to live in poverty but I truly don't understand the fools that believe great wealth is in any way related to happiness and contentment.

Postermaster
Postermaster

For the record, it is an average of $61k per job, so you 1/3 under counting things. Add to each job rough $23k in benefits and you are around 85k per job. They'll have 668 employees at their location in Buffalo with an annual payroll under $70 million. Sounds like they pay their fair share of atxes. STFU now, thanks for coming.

sbrof
sbrof

I think you might have double counted a little.

"$4.9 million in capital grants and tax incentives, including a $2 million grant from Empire State Development and $2.9 million in tax credits through the Excelsior Jobs Program" the 4.9 is the 2.9 + 2. The ECIDA is still on top of that so it would be just over 5M in subsidy.

Postermaster
Postermaster

The talking points are just as silly, absurd and stale as the talking point you put forth as Republican mantra.

You are just blinded by a holier ground you think you've staked. in reality you've enslaved the very people the Democrat party provides kool aide out to represent.

Black Rock Lifer
Black Rock Lifer

The one third you claim is of course dominated by the elderly and children, unless you are willing to throw grandma and small children out to the curb there is little opportunity to reduce that number. I would also point out the fact that growth in those poverty programs can be traced to the economic collaspe brought about by far right ideology run amuck, mainly deregulation and incompetent oversight of the financial market.

There is no Democratic strategy to entrap people in a cycle of poverty, that is a silly talking point and even reasonable Republicans (the few that still exist) know that idea is nonsense. Besides, poor people do not vote at the same rate as the middle class or wealthy. It is those on the right that seek to limit the power of workers, they have a clear agenda of driving down wages, breaking unions, and coddling the wealthy and big business. We would not need many of these safety net programs if we required a fair and equitable wage. The concentration of wealth also drives the growth of these programs as the wealthy continue to take a larger and larger share of our nations wealth.

Postermaster
Postermaster

I agree business AND citizens need to break the cycle of entitlements.

More than one in three Americans lived in households that received Medicaid, food stamps or other means-based government assistance, so I guess I should of said 1/3 of Americans and growing exponentially everyday. Certainly the last four years have shown nothing but a commitment as welfare alone has soared 32%. The Democrats want to entrap people in a cycle of poverty so they become dependent of assistance and thus vote party line. Instead of looking out for the people, they are enslaving us 1/3 at a time. It is simply shameful.

Black Rock Lifer
Black Rock Lifer

Well to begin with almost all great fortunes are inherited, most of the uber-wealthy are part of the idle class born into the lucky sperm club (see Mitt Romney, George Bush, Donald Trump, Bob Rich Jr., etc ad naseum) As for the "dole", I agree we need to get business to be self sufficent and stop depending on working people for taxpayer handouts. Finally, those on the "dole" as in non-working welfare recipients make up about 4% of the population, hardly "everbody".

Postermaster
Postermaster

Because hard work and success should be rewarded with stifling taxes, public scrutiny and snide. It's the new American Dream: everybody on the dole.

Black Rock Lifer
Black Rock Lifer

I agree there is a real problem with how these public dollars are handed out, I think it would be more reasonable to provide some incentives to small start ups or mom and pop businesses. This system of public subsidies to highly profitable established businesses is not defensible and certainly reeks of favoritism.

Black Rock Lifer
Black Rock Lifer

Why is that?, because those that have wealth should be able to pay their own way. I have no problem paying for food stamps, medicaid, housing, or any of the other programs that help business by subsidizing their employees. I don't even mind that those food stamp, medicaid, and housing dollars all end up back in the hands of the wealthy (the poor are simply a pass through mechanism) I do take issue with my tax dollars being handed directly to the wealthiest among us, seems that big business is incapable of making capitalism work without handouts from the taxpayers.

As for Solyndra, it is one of the only 2% of loans that when bad, Obama must be pretty sharp to have a success rate of 98%, the private sector can't match that performance.

http://www.factcheck.org/2012/04/straining-the-facts-on-federal-spending/

Tom
Tom

because the rich already have money..

benfranklin
benfranklin

It's getting hard to keep this straight. We're in favor of redistributing money from the wealthy to the poor. But money from the rich to ...well... the Rich, is a problem. Why is that?

Seriously, did you get this worked up about Solyndra?

grad94
grad94

first paragraph states that rich is investing $18.5 million. not sure if that figure includes the $10.2 million from you and me or is on top of the $10.2.

ladyinwhite
ladyinwhite

So basically the State, City and NFTA are financing the project but RICH products gets the credit? Or...did BRO just give a misleading header?

grad94
grad94

ack! grammar lapse! should have been:

"...while having none of the rights and privileges..."

grad94
grad94

and yet rich products is credited in the headline of this story for investing in buffalo, when in reality, you and i and the taxpayers of new york state are investing in rich products, without having none of the rights & privileges of shareholders.

for every dollar forked over in benefits or abatements, we should get voting rights equivalent to rich's share value on the day the deal is signed.

PaulBuffalo
PaulBuffalo

The New York Times has a sobering series that started today: As Companies Seek Tax Deals, Governments Pay High Price

http://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.html

The New York Times spent 10 months investigating business incentives awarded by hundreds of cities, counties and states. Since there is no nationwide accounting of these incentives, The Times put together a database and found that local governments give up:

$80.4 billion in incentives each year

http://www.nytimes.com/interactive/2012/12/01/us/government-incentives.html

Chris
Chris

If your state/city doesn't offer something someone else will...

Rich foods is one of the few bigger multinational companies Buffalo has hqed here. Their access to emerging global markets and ability to grow cant be ignored. In today's world of development the public/private partnership is a fact of life. Arguing about the numbers is pointless.

300miles
300miles

Any details on the improvements planned for Niagara St? I remember a while back there were unofficial plans to narrow the street and add adding bike lanes, trees, crosswalks... Is that part of this project?

grad94
grad94

let's see if i have the math right for 19 new jobs:

4,900,000 capital grants

2,900,000 tax credits

2,000,000 grant

419,000 ecida

_________

10,219,000

this works out to $537,842 per job. excluding the city & nfta expenditures, which presumably will benefit the entire neighborhood, not just one company.

we aren't told if those 19 jobs are part-time or full-time, if they are accompanied by benefits, or what the salaries are. (hint to journalists: why aren't you asking these questions? get a clue!)

so let's give rich the benefit of the doubt and say that each job is full-time and pays $40k with benefits.

elsewhere on this blog people are complaining about prevailing wage (pw) rates. let's take a look at that.

if you work pw all year long every year (unlikely given the seasonal nature of most construction work), and you are paid $45 an hour, you gross about $80,000. more like $40k for 6 months work, followed by seasonal layoff.

why is it bad for a skilled tradesperson to potentially earn $80K for hard work and it is good for rich products to be awarded $537,842 apiece for 19 jobs that pay $40k, or more than 10 years of publicly subsidized wages? when the subsidies run out, will those 19 people be retained or quietly laid off before their pensions are vested?

why does the private sector continue to flatter themselves that they are the "job creators," when they now routinely demand government handouts before creating any new jobs? kind of casts them and their typical anti-government hypocrisy in an ungrateful, unpatriotic light. have any rich products executives publicly endorsed "unshackle upstate?"

if we're obligated to subsidize all new jobs at public expense, we should get more for our $10 million than only 19 jobs.

sbrof
sbrof

While I tend to agree. We make seem to constantly subsidize a favored few companies but do nothing for the rest or smaller (and potentially higher growth) companies. $290k isn't horrible. It sounds like a lot, but assuming the jobs will make $50k each, that would result in $850k in new salaries and spending power for the region. That means it would take 6 years before the state investment would 'break even.'

Are these 17 jobs work $4.9M, who knows. If they are minimum wage probably not. If they are 50k or more / probably yes.

Buffaloian
Buffaloian

Like Rich Products really needs $4.9 million for an expansion. I guess when local and state governments make FREE tax payer money so easily available even very profitable companies grab what they can.

LouisTully
LouisTully

Talk to Mayor Weekes. He'll make it happen and give you a job for such a great idea.

Rcc
Rcc

I always thought renaming Niagara street international blvd from the peace bridge to Niagara sq would be a great idea. You could have flags or banners from different nations hanging from decrative lamp poast. Low interest loans that would encourage different ethnic businesses along that route. A heavely landscaped boulevard with flowers and shrubs that were native to other nations.

ivan putski jr
ivan putski jr

Gateway from abandoned buildings and vacant lots to the pulse of the city......

whatever
whatever

Ugh. Almost $5M of public $ for supposedly 17 new jobs? $290,000 each?

Why should Rich's be given that by NYS govt when 90%+ of businesses here aren't?

The city maintenance on publicly owned Niagara St is overdue and will benefit many people, businesses, groups, etc.

That's how things should be done, not by very selective hand outs.

sbrof
sbrof

"they" were the city. They have had a Niagara Street Gateway project on the books for the better part of a dozen years. Ever since they repaved the road and put all those bone shaped pavers in, they have been thinking about this as the Niagara street gateway. Too bad they just never got it yet.

paulsobo
paulsobo

they have been talking about creating a gateway entrance from Tonawanda Street to Niagara Square along Niagara Street for DECADES...to welcome visitors to downtown, westside and black rock.

It never happened.

Glad to see that it will finally happen. Lets hope they do something nice and tasteful...and not screw it up like most everything else the city does.

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