This article illustrates life works of Peter Cann, a mechanical engineer who helped foster three expansions and a relocation in Madison County, NY, boosting the employment rolls and tax base of a region that industry had left years previously. The state established the Madison Country Industrial Developl11.ent Agency (IDA) as a public-benefit corporation in 1976. Reduced energy costs helped convince Owl Wire & Cable to expand copper wire production at its existing manufacturing site in Canastota, New York. Low-interest loans and tax abatement encouraged Dielectric Laboratories to make additions to its existing capacitor-manufacturing facility in Nelson, New York, rather than relocating. Cann and the Madison IDA rallied local agencies and companies at a luncheon to provide incentives to Owl.
The contributions of mechanical engineers are often measured in technical terms—by designing manufacturing equipment, for example, that will substantially increase production or reduce manufacturing costs. However, mechanical engineers often play a less-heralded role as professionals who use their technical and management skills to foster job creation and corporate investment in regions seeking development.
One such engineer is Peter Cann, a mechanical engineer who helped foster three expansions and a relocation in Madison County, N.Y., boosting the employment rolls and tax base of a region that industry had left years previously. Cann traced a circuitous route to his present assignment, having graduated with a bachelor’s degree in mechanical engineering from Northeastern University in Boston. He began working for Carrier Air Conditioning in 1964 during his sophomore year and retired after 30 years in the technical, marketing-product-planning, and program-management divisions. Cann earned a master’s degree in mechanical engineering and another master’s in business administration from Syracuse University in Syracuse, N.Y., during that time.
“I’ve lived on a 70-acre tree farm for 25 years,” he said. “When Carrier relocated to Indianapolis, I did not want to leave, so I started a business designing World Wide Web sites, then joined the Madison County Industrial Development Agency as executive director in January 1996.”
The state established the Madison Country Industrial Development Agency (IDA) as a public-benefit corporation in 1976. The agency answers to a board of directors and is partially funded by county contract. The IDA’s mission is to increase jobs and expand the tax base in the county by serving as a business advocate in the community, providing assistance to business in financing, tax abatement, relocating, expanding, training, networking, planning, and reducing energy costs.
Cann said his mechanical engineering and business back-ground equipped him well for his duties at the Madison County IDA. “I can work with manufacturers because I understand technical issues, such as power requirements; with managers because I understand administrative tasks; and with owners because I understand the business aspects.”
From Tractors to Lawn Mowers
Madison County is located approximately 20 miles from Syracuse and Utica in central New York. The 661-square-mile county’s economy traditionally has been dominated by agriculture, a fact that shaped the county’s industrial heyday in the 19th and early 20th centuries.
From 1852 to 1892, Wood, Taber & Morse Steam Engines in Eaton, N.Y., designed and built steam engines used to power farm machinery such as threshers and corn grinders, according to Mary Messere, historian for Neighbors for Historic Eaton. She added that the company developed portable models able to be transported by horses to power cotton gins, woolen mills, and other agricultural machinery.
“By 1882, the company connected the engine to transmission gearing to make it self-transportable using all wheels once in the field,” Messere said. “This was the first four-wheel drive and the precursor of our modern tractors.” In 1892, the last of the principals died with no provision made for transition, and the company folded.
In nearby Stockbridge, N.Y., the Munnsville Plow Co. supplied farm implements from the mid-19th century until 1927. That firm’s demise reflected the industrial trend of manufacturers leaving small towns to set up factories closer to major markets in larger cities. At the same time, workers could afford automobiles to commute from smaller towns to the big cities. Manufacturing would not return to Stockbridge for 60 years, when industry moved back from larger metropolitan areas to small towns in search of open space, lower costs, and a more attractive quality of life for its workers.
In Stockbridge’s case, that company was Ferris Industries Inc. in nearby Vernon, N.Y. The firm needed to expand its commercial-lawn-mower manufacturing a year ago because of burgeoning sales. It required a sizable piece of property to consolidate its manufacturing, sales, and warehousing operations at a single location. Despite being wooed by other regions around the country, Ferris was determined to stay local to reward the loyalty of its longtime employees.
“This made us inventive in our search,” said company president Dave Ferris. “We looked at seven different sites until [we] identified the old Stockbridge high school and felt it would make an ideal headquarters.” This property is a 15-acre site 10 miles from Vernon that comprises the redundant Stockbridge high school buildings, now superseded by a newer building.
The old school consisted of two 12,000-square-foot Butler buildings, steel structures that are ideal for conversion to manufacturing space, joined by the classrooms and gymnasiums. By removing the second story of the classroom building and linking the two buildings with a new 35,000-square-foot structure, Ferris will be able to move into its 55,000-square-foot facility for approximately $1 million, less than half the $2.5 million expense of building a completely new structure.
The Madison IDA did its part to assist Ferris’s move to Stockbridge, providing a $100,000 loan to cover soft costs of the project. In addition, Madison County has entered into a lease/leaseback arrangement. Under the terms of the arrangement, the Madison IDA leases the expansion and leases it back to Ferris, so on paper the agency owns this expansion. This excuses Ferris from mortgage-recording tax and sales tax, and it reduces the property tax owed.
The lawn-mower manufacturer also received a $400,000 grant from the state and a $75,000 loan from Syracuse’s revolving loan program. As these low-interest (6-percent) loans are repaid, the money is reinvested in other business incentives.
Ferris began the Stockbridge conversion in January and expects to move in by July 1. Among the equipment being installed is a new $400,000 Trumpf CNC sheet-metal machining center that will be used to punch the metal parts of Ferris mowers. These parts will then be washed, dried, and powder-coated before being cured in a heating booth. Three final assembly lines will construct the final product. This will include the IS, the first commercial mower equipped with independent spring suspension. “This will provide mower operators with smoother rides so they can run them faster and get finished quicker,” Ferris said.
The executive said that his company’s current production of 15 million units per year should more than double when the new factory is completed. This is part of his goal of reaching $50 million in annual sales to its U.S., Canadian, British, and French markets by 2002. “The new facility will also add 10 employees per year to the 80 who currently work for us,” Ferris added.
The Ferris relocation was aided on the community side through the Hamlet Program, co-organized by Cann and Adam Weinberg, assistant professor of sociology at Colgate University in Hamilton, N.Y., to promote investment and job creation in Madison County. “We ran a series of community forums to show local residents how they could use the Ferris relocation to improve their own businesses and to encourage Ferris to partner with the local school system,” Weinberg said.
Greener Pastures Closer to Home
Owl Wire & Cable Inc. in Canastota, N.Y., fabricates 4 million pounds of uninsulated copper wire each week that it sells to insulators in the appliance, automotive, communications, and construction markets. Founded in Syracuse in 1954, the company moved to Canastota in 1966. “By 1992 to 1993, we established Raven Wire in Carrollton, Ga., both to follow our customers’ relocation to the Southeastern states and to avoid the high cost of doing business in New York state, and what we felt was marginal local support for business,” said Philip Kemper, president of Owl.
Kemper faced a second increase in product demand in 1996 and, coupled with the desire to launch related product lines, determined another expansion was necessary. “However, by this time, New York government was more welcoming to manufacturing,” Kemper said. “This time, local and state government were encouraging us to set up shop in Canastota.”
Cann and the Madison IDA rallied local agencies and companies at a luncheon to provide incentives to Owl. The key incentive, according to Kemper, was the ability to negotiate with the local utility, Niagara Mohawk Power, to obtain lower-cost energy for the energy-intensive wire-drawing process.
The Madison IDA and state government provided a low-interest $5 million industrial revenue bond. Under the bond’s terms, the IDA takes possession of the expansion so it is free from sales tax and mortgage-recording tax, with reduced property tax. The new 50,000-square-foot building that Owl built cost $1.5 million, saving $70,000 in sales tax alone, noted Cann, who calculated the total savings package at $400,000. This includes a 10-year pilot program, under which Owl pays a 50-percent assessment of the property tax for the first five years, then an additional 10 percent annually for the next five years.
Ground was broken on the expansion project in September 1996, and full operations began in June 1997. VIP Structures in Syracuse constructed the new building to join with the existing Owl factory in Canastota. Kemper credited VIP with finishing the new building in several weeks ahead of time and thousands of dollars under budget. Within the building, 5/i6-inch domestic copper rod is cold-drawn through diamond dies to sizes ranging from 0.003 to 1.5 inches.
The Owl project added 23 jobs to the local economy, with more on the way. Cann calculated that encouraging the company to retain its original production lines in Canestota and expand there has pumped $10 million per year in the local economy.' “Because manufacturing money passes through communities three times before leaving them, we estimate a $30 million benefit,” he said. Owl continues to invest in Madison County: The company recently purchased an abandoned warehouse in Canestota with a rail siding for shipping their products.
Expanding Capacitor Production
Dielectric Laboratories Inc., a part of Canastota-based Dover Corp., needed to expand its production of ceramic capacitors by the mid-1990s. The company’s product lines include single-layer and multilayer capacitors used in high-frequency applications from 900 megahertz to 60 gigahertz as well as high-dielectric-constant substrates used in higher-frequency applications for circuit-size reduction. DiPak, a new product line, uses low-temperature cofired ceramics on a metal base to provide packaging for integrated circuits and high-frequency power applications.
At first, Dielectric Laboratories considered moving out of New York, largely due to high energy costs as well as local and state regulations regarding storm-water runoff. “The primary reason we stayed was because of the people we have as our core support for the many ceramic processes that we have established,” said Bruce F. Semans, a ceramic engineer, vice president, and general manager of Dielectric Laboratories.
Although it financed its own $2.5 million expansion in Trush Industrial Park in Nelson, N.Y., Dielectric Laboratories also benefited from a lease/leaseback arrangement through the Madison IDA, providing an estimated savings of $196,000. In addition, the Empire State Development Corp. paid 50 percent of the cost of training personnel. This expansion generated 20 jobs, with five more expected per year.
The expansion at Nelson involved building additions to the east and west sides of Dielectric Laboratories’ existing structure, adding 28,000 square feet to provide a total of 53,000 square feet. Ground was broken in September 1996, and construction was essentially completed in November 1997. Every department in the company moved at least once to accommodate the improved manufacturing process.
The process itself involves mixing ceramic raw materials together then heating them to 1,200°C. The resulting powder is tape-cast into thin sheets using a water-base binder that holds the ceramic particles together. The ceramic sheets are then baked and fired in an oven.
After firing, a metalization is applied to each flat side of the fired ceramic. Individual capacitors are then diced out of the substrate into individual capacitors, some measuring as small as 0.01 by 0.01 by 0.04 inch. The capacitors are then electrically and visually inspected, packaged, and shipped.
Dielectric Laboratories’ latest expansion will not be its last in Nelson. “With our new DiPak packaging line, we are expecting growth to exceed the 6,000 square feet we currently have allocated to this product within the next two years. When that happens, we will be looking to create another 50,000-square-foot facility,” Semans said.
A Strong Work Ethic
Marquardt Switches Inc. in Cazenovia, N.Y., is a wholly owned subsidiary of Marquardt GmbH in Rietheim-Weilheim, Germany, a leading supplier of switches for power tools for Bosch, Atlas Copco, Black & Decker, and other companies. Marquardt began manufacturing in Madison County in 1981 when it bought out its North American licensee to begin operations.
By the 1990s, Marquardt had to increase production in Cazenovia to supply its growing share of switch sales to major computer, appliance, office-equipment, and instrument manufacturers. It also had plans to produce switch assemblies for the automotive industry. “Although New York state is not viewed as a prime manufacturing area, we decided to build more capacity here because of the good work ethic in the area and the local government groups that have helped us with tax abatement and financing,” said Jerry Groff, Marquardt president and an ASME member. “I’m proof that a mechanical engineer can do lots of different things,” added Groff, who became Marquardt’s president after 30 years in R&D management.
Among the government and government-affiliated groups that assisted the Marquardt expansion was the Madison County IDA, which offered the firm a lease/ leaseback arrangement. The Syracuse-based Metropolitan Development Association helped the company acquire grants and low-interest loans from the Empire State Development Corp. The Central New York Regional Development Office provided additional funds to train personnel.
The expansion itself began in July 1997 and was completed the following April. It involved the addition of 28,000 square feet of manufacturing space on the existing factory plus 12,000 square feet of office space devoted to sales, marketing, and administration. Groff drew on his experience as a research engineer at what is now the National Renewable Energy Laboratory in Golden, Colo., to design windows that maximize daylight and minimize energy use for lighting. New building design software available from the Passive Sales Industries Councils enabled Marquardt’s architects to integrate the design concepts.
The production facility uses plastic injection molding to fashion parts for switches and automated, semiautomated, and manual means to assemble the switches. “We expect to first double, then triple production with the new facility,” Groff said. For some high-end cordless-power-tool switches, “that means making up to 2.5 million units.” The expansion has already added 100 jobs to the Cazenovia area, and 50 more will be added over the next 18 months.
Many companies considering where to locate or relocate their expansions are concerned only with operating costs, but to Groff this is short-sighted. “1 know we can operate for less money in other parts of the country, or in another country for that matter, but there are more important considerations, such as the evolution of the available labor pool and the nearness of your customers, to growing a business.”
Indeed, a skilled labor force was cited as a primary motive by all the expansions and relocations to Madison County. Semans of Dielectric Laboratories advised companies to consider the availability of trainable employees when deciding whether to relocate for expansion. Reasonable electrical costs and government regulations are other factors that have to be weighed, he added.
Weinberg of Colgate agreed that a strong labor force was essential to industrial expansion, and to the sustainable development of rural communities themselves. “It is in manufacturers’ own interest to see their company and their host community as having common fates,” Weinberg said. “Years ago, a company could hire a worker’s body for 8 hours of labor. Today, enthusiastic, highly trained workers are needed to compete in a global marketplace.” Weinberg said that manufacturers can develop such workers in rural communities with a strong work ethic, but stressed that industry must do its part by becoming involved in local communities, especially the school systems. Mechanical engineers are appropriate ambassadors between town and factory, in Weinberg’s opinion, “because their methodical approach toward problem solving and systematic thinking lets them see these connections more clearly than most.”
For example, after having won Ferris over, Weinberg devised ways to strengthen the ties between the manufacturer and the community. “We have discussed mentoring programs and life-skills classes to prepare local students for working at Ferris Industries,” he said. “They are also open to bringing classes of students into the plant to see the evolution of an idea to a completed product.”
Kemper of Owl endorsed the need for manufacturers to become involved in the local school system and pointed to his own company as an example. “We use Morrisville College in Morrisville, N.Y., to train some of our personnel. We are also involved with the Manufacturers Association of Central New York, an organization that provides a curriculum to assist manufacturers with supervisory issues, ISO 9000 accreditation, and the like.”