S2,E7 - Rob Simpson

This is Talk CNY, presented by NBT Bank, a semi-monthly podcast by CenterState CEO, Central New York's premier leadership and economic development organization. Join us as we meet the people and explore the projects driving the regional economy forward. 

Thanks for joining us for Talk CNY, presented by NBT Bank. I'm Katie Zilcosky, director of communications at CenterState CEO and your host for Talk CNY. We are already a quarter of the way through 2024 and the team at CenterState CEO is working to keep pace with the region's growth. We're engaged in a wide range of projects from convening a housing task force to creating new career pathways with our partners. We're also helping our current members grow their businesses and building a new center of innovation on Harrison Street. To talk about all of what is going on right now and how it impacts Central New York, joining me today is CenterState CEO President Rob Simpson. Rob, welcome back. Thanks for being here. 

Awesome. Thanks for having me. 

So let's jump right in. You just got back from a recent trip to Taiwan. There you met with several companies. You went to a conference. Can you tell us a little bit more about that trip and some of your biggest takeaways? 

Yeah, so first it was a really remarkable experience. This was my first time in Taiwan and I think our community's first effort at building relationships in Taiwan with the expressed purpose of working with companies in the advanced technology space and specifically semiconductor supply chain partners who will be important to Micron's success, inviting them to come to Central New York and have us be a part of their corporate future. It was incredibly rewarding to be over there with the county executive and the mayor and the executive director of OCIDA working together hand in hand government, the private sector, to tell this story of what's happening in Central New York and why Central New York and the entire upstate New York corridor is so important to the future of the semiconductor industry, not just here in the U.S. but to the world as a whole. For those who aren't aware, more than 60% of all the semiconductors that are made in the world are made on the island of Taiwan, which means that the supply chain to support that production has also been built up in Taiwan. 

And many of the companies that we met with over there, seven meetings in total, many of those companies have never opened a facility anywhere other than Taiwan. So we learned a lot about some of the trepidation they have, right? They're watching production start to occur in places like Europe and the U.S. They know they need to expand their footprint, but it's new to them. It's a little scary. And so I think it was a great chance for us to be able to explain how working together state government, local government, private sector, our job is to make them successful and to demystify the process of building here in the U.S. as much as we possibly could. I literally can't think of a more productive five or six days of time that we spent, and I feel really good about the fact that many of those same companies that we met with are planning to come and visit us here in Central New York sometime over the summer. So already there's some follow-up and there's some engagement, and I don't think it'll be long before people start to see some of the seeds that have been planted on this trip start to bear fruit for Central New York. 

Now, part of that trip was telling the Central New York story, so what was some of the reaction and feedback to that story from the Taiwanese people? 

Well, I think you have to understand one of the things that since many of these companies are in Taiwan, they all took a serious look at the U.S. about four or five years ago when TSMC announced their projects in Arizona. I think that one of the things that we have always articulated that is an advantage that New York has over places like Arizona is we just have an ample amount of water. So on our very first slide in our deck, we have a little map that shows Syracuse, the dot, exactly where we are in relation to New York City and other places in the Northeast. But I think what grabbed most people's attention was the Great Lakes. I think we were able to share with them that 25% of the world's fresh water is within 30 miles of the site here in Onondaga County, and I think that made a big impression. 

I also think it was very material to them to hear us talk about just how much of Micron's global production for memory is going to occur here in Syracuse and Central New York. Fifty-five percent of all the memory that Micron makes globally by I think 2033 is going to be made here in, is going to be made here in Central New York. So there's a huge volume and for a company that's thinking about wanting to come over and make a big capital investment, they need stability, and they need revenue. So that volume mattered and more than just Micron, I think the final thing we were able to share that people found exciting is that New York has this very long history of investing in the semiconductor industry, starting with the work over in Albany Nano(tech) 30 plus years ago, Global Foundries, Wolfspeed, Cree over in Utica, Menlo Microsystems, down in Ithaca, Micron and extending that corridor to the west to Rochester and Buffalo. 

And I think that mattered because if companies are going make the decision to move 12,000 miles across the ocean, open a new facility which will come at great capital expense, they want to know that they have more than one customer. They want to know that they can sell to a larger area. And we're able to point out to them that 25% of all the U.S. based semiconductor production in the United States by the year 2033, 25% of that total U.S. production will be within 350 miles of where we're sitting right now. That's pretty remarkable, and it's the highest concentration of production of any geographical region in the country, which makes us a pretty safe bet, maybe a better bet than any other part of the country. And that was certainly the message that we were carrying. 

So Micron is at the top of many people's minds and rightfully so. We are expecting a chips and science funding announcement at any time. Why will that be a big milestone when it comes? 

Well, I think that for those who are still skeptical and there are a couple of people out there that are still a little bit skeptical about whether this is real. I think it'll be one more very significant indication of just how serious this project is and the pace at which this project is going to impact Central New York. I think everyone, certainly when the Micron announcement happened, understood that this investment is going to happen over 20 years. I think there's a pressure now because of geopolitical reasons to ramp that production up and have things happen maybe even a little bit faster than was previously anticipated, which means that the jobs impact, the construction impact, the capital investment impact is going to happen faster. It also means that some of the pressure on our systems like water and wastewater and transportation, housing, healthcare, those impacts will come sooner too. 

So while I think it's going to be welcome news that Micron might be working even more quickly than previously anticipated, I think that's been hinted publicly, I think it also increases the pressure on our civic capacity, our elected officials, our philanthropy, the business community to dial up our efforts to respond to the pain points that the rapid growth we're about to experience is going to create. I do think though that listen, when the federal government announces what will inevitably be a very large scale financial investment in this project, some of those people who are reluctant, who've been skeptical, who maybe have been sitting on the sidelines waiting, watching, are going to sit up and take notice as they should. It's the last real critical component of the capital stack and we're really looking forward to seeing that come to fruition. 

As you said, things are happening fast, they will continue to happen fast. So what are some of the leading indicators that we are watching of this growth? 

Yeah, I think you can see it first and foremost that the growth we're talking about is not just Micron-related growth, it's growth that's already happening. I think this is one of the things that I feel like it's important to remind listeners and viewers, that a huge amount of the last 10 years of our economic trajectory has been building up towards this moment. And yes, Micron's the sort of cherry on top of our economic turnaround, but many of our local homegrown companies, whether it's our defense manufacturers, our medical device companies, our healthcare companies, our technology startups are also growing rapidly in some cases exponentially. So how is that translating and manifesting itself into data that people can understand? Well, one, over the last seven years, 57% increases in the cost of renting in Onondaga County, 57%. Actually, there was an article that came out within the last couple of weeks that suggested that Syracuse has one of the fastest rates of rising rents of any city in America. 

And for those of us like myself who've been around Syracuse professionally for the last 20 years, it almost is difficult to believe because there was a time when you just couldn't command rent to live in places in Syracuse. There just wasn't demand for that. But today, demand far outstripped supply, which is why we're seeing rental prices go up so much. It's both a sign of a healthy and growing market. It's also a cause for concern because some people, including our nurses or firefighters or police officers who earn a middle-income wage are being priced out of housing options in and around Central New York and not just in nice apartments downtown, but in our neighborhoods and in our suburbs as well, and that's something that is only likely to accelerate. To put it in perspective, in 2023, we added about 350 units of housing. Over the course of that year, we estimate we probably needed 2,500, so 15% of the units that we really needed to build, and right now on the housing front, it's very difficult to take on new projects in part because interest rates are so high and so it's going to be a couple more years before the machine starts turning. 

The markets start working the way that we need them to, and that is only going to put more pressure on rents and put more pressure on families here in the community, which is why we've issued some calls to action to our corporate leadership, to our banks and financial institutions. Obviously, our elected officials are rolling up their sleeves. We've got to develop creative solutions here so that we can create more housing, affordable housing, quality housing for people who live here in Central New York. But there's other encouraging signs as well. Our economic development pipeline, which in July of 2019 was $530 million just this week took a look at it. It's 10 billion in projects that we're tracking, right? It's a 20 x increase over a five-year period of time. That's exponential. 

I want to dig in a little bit more on that housing piece. You wrote a letter to the editor in syracuse.com, back in March, and highlighted the need for those creative strategic solutions so that this community has more supply and housing so that everyone can afford a place to live when this growth happens. We'll need to expand how we think about housing in order to do that. So how do you hope the community sort of thinks differently when it comes to housing in terms of encouraging this growth? 

Well, let's start with the basic math, right? We added 350 units of housing the last two years. We needed 2,500 per year. So we're already behind the curve next year and the year after that, we anticipate we're going to need 2,500 units a year. It's not complicated math. This is all based on population growth projections for what we anticipate happening post Micron. In order to do that in low interest, in a high interest rate environment, we need to create additional incentives for some of these projects to pencil out and to get in the ground. So Onondaga County recently passed a change to their uniform tax exemption policy, their pilot program for workforce housing, for senior housing, for market rate housing. Those are changes and tools and incentives that we support. The city of Syracuse has launched a new housing trust fund. Those are changes and tools that we support. 

The governor has come out with what she's calling a pro housing community designation. In other words, if as a community you pass a resolution through your legislative body and you commit to building a certain amount of new housing in your community every year you can get access to state resources that otherwise will be withheld from communities that don't embrace the pro-housing perspective. Those are tools and incentives that we support. Our message, I think in that opinion piece is that more tools are needed, not less. There's been some pushback in communities to say, 'Hey, we don't need new pilots or a trust fund or what the state's doing is stepping on our ability to determine our own future as a community.' And I say, I just fundamentally don't agree. Every community and Onondaga County, every community in Central New York is going to benefit from this new moment that we're in of rapid growth, and we need every single one of those communities to step up and bring creative solutions to the table. 

There are some communities right now saying, Hey, hold on. We're going to pause. We're going to wait six months. We're going to wait 12 months. We want to do some thoughtful planning. The reality is I understand that instinct. It's not wrong, but the reality is waiting 12 months puts us farther and farther behind the curve. It's going to get harder and harder to catch up, and I would encourage people who are taking that approach to think about a different way of doing things, to think about maybe saying yes in this moment, building some additional capacity, building more multifamily projects, getting more housing units online, and recognize that if you permit one or two or three new projects over the next 12 months while you're doing your planning, you're not going to fundamentally change or mar the character of your community. We can do both things, right? We can build and plan smartly for the future. Simultaneously, pushing pause and saying No in this moment I think is the most dangerous thing we can do. 

Housing is just one of the points that we are going to have to address when this growth inevitably comes and is happening now as well. What are some of the other factors we need to address in order to keep pace with the growth that we're experiencing? 

Well, we've talked a little bit about healthcare, and this is something that's near and dear to me, and I think to many in the business community. We've had a lot of conversations about the capacity of the healthcare system post pandemic. We know that all of our healthcare systems are strained, whether it's our nursing homes, our doctors groups, our hospital systems, they're all facing intense pressure and that has made it very difficult for them to plan for the future, including updating antiquated facilities. In some cases, you look at some of our hospitals, some of our emergency departments around the region, and they haven't seen meaningful investments in some cases in dozens upon dozens of years. That's a challenge, and not only does it create a poor customer experience when you walk in to an outdated hospital, but it also isn't the most cost efficient way to deliver service. 

It doesn't maximize revenue for that hospital, which allows them to continually invest in their staff and their doctors and their nurses and their facilities in ways that are necessary. So healthcare is one that I am certainly paying attention to and concerned about. We also have transportation needs. I mean, I think one of the great successes of the last five to 10 years has been the growth of the Syracuse Airport.Syracuse Hancock International today is the fourth busiest airport in New York state, which is pretty remarkable. In the last 12 months, we passed Rochester and Albany and we are now behind only Buffalo, JFK, and LaGuardia. 

That's a sea change from where we were just a decade or 15 years ago, and we anticipate that that growth is going to continue, but our airport, like our hospital system and our housing stock needs investment and the price tag on those investments, everything from terminal upgrades, new baggage systems, new sensing networks, a new car rental facility, a new parking deck, these are not cheap solutions. There's probably a billion dollars in total investments that our airport alone needs, and I think that's both the thing that is exciting for me in this moment. And the thing that gives me pause is we are now having conversations about not about tens of millions of dollars of investment that's needed to help start turning our community around. We're talking about needing billions of dollars in investment in order for our community to maximize the moment, and it's scary. 

I was having a conversation just today at lunch. I ran into a couple of bankers here in town and talking about how some of the sort of legacy attitude around what's possible in Syracuse is still holding people back, right? They're used to the economic market forces from 20 years ago where things didn't pencil out. They're used to thinking, Hey, maybe we take one micro step in the direction we want to go because we're afraid to do more than that. We're not sure it'll work. We don't have that luxury today. We actually, I think we need to readjust our horizon and our expectations for ourselves. We need to set a new long-term vision for what this community can be, and it's very different from what this community is now, and it's enabled by the growth that we've all worked together in order to create, I think it's a wildly exciting moment, but we are now the only thing that stands between our community and success, our attitude and how we show up every day and how ambitious we're willing to be and how big we're willing to dream. To me, that's the limiting factor to where Central New York can grow. And if our listeners know one thing, it's that this organization is going to push that limit as far as we possibly can and drive towards the most ambitious, most modern and progressive view of what central New York can be in the future. 

We will continue this conversation in just a moment, but first we're going to take a quick break and hear a word from our presenting sponsor NBT Bank. 

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Welcome back. You're listening Talk CNY, presented by NBT Bank. I'm Katie Zilcosky, host of Talk CNY, and director of communications at CenterState CEO. Joining me today is CenterState CEO President Rob Simpson. Rob, thanks for being here. 

Absolutely. 

So April, state budget season, and in this year's state budget, there is an item that we are involved with. It's a pretty big item, ON-RAMP. So can you tell us a little bit about ON-RAMP and how it builds on the work that we've been doing? 

Yeah, so let me set the context. 15 years ago, if you looked at our economic development pipeline, 85% of the jobs in capital investment in that pipeline was reflective of growth in the professional services space, education, healthcare, call centers, financial services, and insurance. Today, 75% of the jobs in capital investment in our pipeline are coming from advanced manufacturing, and so there's been this rapid shift in what we anticipate the jobs of the future are going to look like. The governor, Governor Hochul, to her credit in this most recent budget process has been hearing from folks here in Syracuse and in Buffalo and in Rochester and Utica and Albany about the shift that's occurring and the need to bring our communities along so that the people who live here in upstate New York who've lived here for a long time have access to the jobs that we are working to create for the future. 

The ON-RAMP program, a $200 million investment that the state is making across the thruway corridor, designed to create training centers and nodes in historically underserved communities throughout upstate New York with the intent of making connections between community-based organizations, training providers, educational institutions, and ultimately employers here in Central New York. We were chosen CenterState CEO was chosen to help coordinate the local response to that and to work together to put a coalition and a plan together of partners that will not only build this new center, but that will operate the programs and resource this work on a go forward basis. It's deeply grateful to the state for their vote of confidence in us and our leadership on helping to set the strategy, but more importantly, this is likely to result in a $50-plus million dollars infusion of workforce dollars and capital dollars into our community to help make jobs in advanced manufacturing accessible to people who've historically not been able to access them. 

That's something that I don't think we talk enough about at CenterState CEO about. We love the strategy and we love the data and we love the work, but the human impact, I don't about you, but that is a huge part of what brings me back to work every single day. Just knowing that we're able to influence people and their family's economic trajectory on a level that is pretty hard to compare to. So it's wildly exciting. It's going to be a lot of work, but we're very, very grateful to the state for the support they're putting into workforce development. It is necessary, it's needed, and I think we have enough pilot programs here between partnerships with SUNY EOC and the Syracuse Surge Advanced Manufacturing Program with the city, OCC, our partners at MACNY. There's this great ecosystem and we just need to pull that ecosystem together and get them laser focused on training for the jobs of the future and put those resources behind it. Great time. 

Yeah, I mean ON-RAMP, everything we talked about before the break, all of these projects even just a few years ago might have been the sole focus or the major thing going on at the moment. Yeah, that's true. All of them are happening now at one time 

Simultaneously 

And on top of the ones 

Sometimes in the same day, right? 

Yes, exactly. And on top of all that we've mentioned, we're also overseeing a $30-plus-million-dollars expansion of the Tech Garden on Harrison Street. So can you talk a little bit about the latest on that project and how that fits into all of these other big moving puzzle pieces? 

It is. This is the largest capital project that CenterState CEO has ever been involved in, and it's something I'm remarkably proud of. I am personally proud of the fact that one of the largest bets that this organization has made has been in the innovation ecosystem. I feel very passionately about the fact that successful communities in the long run over multiple years and decades, successful communities are those who build more companies than they lose. And 20 years ago, our innovations ecosystem was pretty defunct. There weren't many supports for entrepreneurs who wanted to start a new business, and today that ecosystem has evolved and it's become wildly robust. It's no longer just the Tech Garden, which is great. It's our friends at SUNY Upstate who run the Biotech Accelerator and Le Moyne College and the Keenan Center, the Blackstone LaunchPad and other tools at Syracuse University and on and on and on. 

And so the more partners that have come into this work, the more effort we collectively need to put into coordinating that ecosystem and bringing those resources together so that entrepreneurs get a seamless experience. The expanded Tech Garden is designed to be the hub of that activity. It's something that frankly we've been talking about for just about eight years now, and I just drove by today on my way to the Salt City Market for a coffee meeting this morning. And the second and third floor are going up with the steel super structure. And so people are finally getting to see what this new building might look like and how it's going to represent a more modern, more innovative, future-oriented economy than the square former parking garage that the original Tech Garden was sort of built inside. And it's just so gratifying to be at a point in our community's trajectory where we can make these investments thanks to partners, thanks to the state, thanks to every member of our state delegation to corporate partners like National Grid and Northland Communications and so many others. They're the ones who are helping to resource this and allowing us to make this investment in our founders and our entrepreneurs. And that's something that I am immensely proud of, but it's a critical component of the strategy. We need to create more companies than we lose over the long run. And so investments in that innovation ecosystem are fundamental to our long-term success. 

Now, before we wrap, our annual meeting is tomorrow. And you will be delivering remarks I'm told as the president. Yes. So be ready. 

I got to work on that tonight. 

Can you give us a little bit of a preview of what you will be talking about tomorrow? 

Yeah. I think first we're excited to welcome Elizabeth Kelly, of the AI Safety Institute, to talk a little bit about the rapid change that AI is foisting upon our economic and social landscape. In a lot of ways she's a great choice for our annual meeting this year because the change that AI is creating is not all that dissimilar from the change that Micron and all these other investments are having on our market. We are also as a community, going through this moment of remarkable change. And that change comes with both exciting opportunities, but it also comes with the need to build some human-centered guardrails around how we choose to grow, right? We talked about earlier, we talked about housing and making sure we're investing in innovation and our transportation infrastructure so that people aren't left behind in this moment. And we really give ourselves the opportunity to realize our vision as an organization to create a place where business thrives and all people prosper. 

And so I think that's the message I'm hoping to deliver tomorrow, is how we're in that moment and what's required. And I think perhaps the most important thing I alluded to earlier, which is the market conditions pulled against us for 30, 40, 50 years. Today, market conditions are in alignment. The wind is at our back. We are now solely responsible as community leaders, as organizations, as elected officials. We are now responsible for how we manifest and realize opportunity in this moment. And that is a wildly exciting thing. We have agency and we have control in a way we haven't before, but we have to get it right. And there's a lot of pressure, and there are a lot of people watching, and there'll be a lot of civic debate around what getting it right means, but that's the moment we're in, and I wouldn't want to be any other place. 

Well, Rob, thank you so much for your time today. 

Thank you, Katie, and I'll see you tomorrow 

At the annual meeting. 

All right. Look forward to it. Excellent 

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