ERIE 2017 SECTION K
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hree massive construction projects, all of which are in the planning stages, have the potential to provide jobs, bolster the local tax base and encourage spinoff investments in Erie’s east bayfront community. The projects include: • TOP: Eighteen years after Erie-based Scott Enterprises bought 12 acres on Erie’s bayfront, the family-owned company hopes to break ground this spring on a $150 million development that’s expected to include residential and commercial space, restaurants, a skating rink and at least one hotel. • MIDDLE: Erie Insurance expects to break ground this spring on a new 346,000-square-foot, seven-story building that is expected to cost $135 million. Construction of the new building is expected to come during a three-year period in which the company hopes to add 1,000 Erie-based employees. • BOTTOM: UPMC Hamot will finish plans this year for a $111 million seven-story addition to the hospital that’s expected to be built at the site of the current Hamot Professional Building at at 104 E. Second St.The addition will include 64 intensive care unit beds and an expansion of Hamot’s imaging department.
INSIDE
A look ahead to Erie’s economy: There’s reason for optimism. 2K
What economic indicators show about region. 5K
Shift takes place in list of region’s top employers. 8K
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Region enters 2017 with optimism By Jim Martin jim.martin@timesnews.com
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he past 12 months remind us that only change is constant. Both institutions and assumptions in the Erie area tumbled during 2016. For the first time in generations, GE Transportation’s status as Erie County’s largest employer came into question. Sears and Erie County Farms —one an enduring emblem of American commerce, the other a reflection of the diversity of Erie’s people and food and its unflagging love of thrift—both disappeared from the local landscape. AndDevelopErie, an organization that brokered deals and voiced some of the most ambitious dreams for Erie in memory, fell victim to the size of those dreams, or at least to the failure of those dreams to come quickly to fruition. It was the bankruptcy of the Greater Erie Industrial Development Corp., an affiliate of DevelopErie, that left that agency in ruins. It was the realities of the global economy— including a historic decline in mining — that prompted GE Transportation to eliminate 1,500 of Erie’s best-paying jobs. But the past 12 months were not simply a year for counting losses. Instead, 2016 brought the completion of some large and important projects, including the $54 million Courtyard by Marriott and adjacent parking garage on Erie’s bayfront, and the $16 million Advanced Manufacturing and Innovation Center at Knowledge Park. The pace of investment is expected to accelerate in 2017, with three massive building projects, each valued at more than $100 million,expected to begin in Erie. Many in the community, including Erie County Executive Kathy Dahlkemper, are excited by the energy, the jobs and the potential to make lasting improvements.But Dahlkemper said she’s even more excited about something else— a growing interest in entrepreneurs and a renewed interest in fixing what’s broken. Working together For Scott Slawson, president of Local 506 of the United Electrical, Radio and Machine Workers of America at GE Transportation, what’s broken is a system that can’t provide jobs for nearly 1,500 union members who lost theirs in 2016. That’s why he reached out to Dahlkemper a few months ago. “I have to give credit to the union leaders,” she said. “They said we have workers with these great skill sets. They are not getting their jobs back, but how can we market them to the rest of the country and the greater world?” Dahlkemperconvened a series of meetings, beginning in October, that have brought together representatives from the Workforce Development Board, the Erie Regional Chamber and Growth Partnership, the governor’s staff, Local 506 and the state Department of Labor & Industry’s Rapid Response Team. Slawson, who has had testy exchanges with the Erie Chamber as recently as a few months ago, said he’s been impressed with the spirit of cooperation as committee members work toward a common goal of creating opportunities for displaced Erie workers. “We don’t always get along and I understand that,” he said, referring to himself and other members of the committee. “But when you are all together you understand how much you can accomplish.
It’s a determined group of people.” Dahlkemper said plans are in the works to conduct a national marketing campaign, with the hope of marketing the specific skills of Erie workers to companies looking to expand or relocate. External forces Many of the area’s local businesses have needed more than determination over the past year. At a time when the nation’s economy seems to be at its strongest point since the last recession, Erie lost ground in 2016. The lost jobs at GE Transportation were part of the problem and much of the reason that Erie County lost 10 percent of its manufacturing jobs as the seasonally adjusted unemployment rate climbed as high as 7.1 percent. But there were other factors at work, including the fact that many Erie-area manufacturers build things for the energy and defense industries, sectors hardest hit by an era of falling energy prices and a federal policy of sequestration that has led to deep cuts in military spending. A weak energy market contributed to the loss ofhundreds of jobs during 2015 and 2016 at Joy Global, a mining equipment manufacturer in Franklin, and to smaller job losses at Lord Corp., Eriez Manufacturing and FMC Measurement Solutions. Acutec Precision Aerospace Inc., which has plants
Acutec Precision Machining in Meadville struggled through a tough 2016 because of a slowdown in the defense and energy sectors. But CEO Elisabeth Smith is optimistic about a stronger 2017. [GREG WOHLFORD/ERIE TIMES-NEWS]
LEFT: Erie County Executive Kathy Dahlkemper said she is excited about ongoing efforts to address the region’s challenges and encourage entrepreneurs. [FILE PHOTO] BELOW: Distribution of gambling revenues from Presque Isle Downs and Casino in Summit Township continues to face an uncertain future. The state legislature has until May to craft a new gambling revenue law that is both constitutional and will continue the flow of gaming revenues to communities in the Erie region and elsewhere in Pennsylvania. [FILE PHOTO]
in Meadville and Saegertown, makes parts for both commercial and military aircraft. But the slowdown in the energy sector, especially offshore drilling, also cost the company work, saidElisabeth Smith, Acutec’s CEO. That left Acutec and its more than 400 employees scrambling to engineer and develop new products. “It was running like hell just to stay in place,” Smith said. “This year should bear more fruit. We are starting to see an uptick in oil and gas programs.” That expectation was one of the reasonsAcutec held on to its employees during 2016. “We kept a head count that wasn’t sustainable,” she said. “Public companies might not have been able to do that, but we sacrificed our profitability for a year in order to facilitate future growth.” Like Acutec, Team Hardinger, an Erie-based trucking and warehousing company with about 150 employees, was hurt in 2016 by slowdowns by certain customers, especially those in the heavy equipment industry, said Harold Bender, the company’s owner. But Bender said he’s optimistic about 2017, thanks in part to a diverse customer base that has spread the company’s risk around. “Most of our customers account for just 2 or 3 percent of the business,” he said. “It’s a nice mix.” In the chips A key source of money
to facilitate growth in Erie County— and an important source of income to stabilize the budgets of Erie County and several municipalities— is in jeopardy as this is written. The Pennsylvania Supreme Court ruled in September that the municipal share of the tax on Pennsylvania slot machines violates the state Constitution. The court has extended its original fourmonth deadline and is giving the General Assembly until May to fix the 2004 law that legalized casinos. In Erie, a lot rides on the legislature’s ability to craft a law that is both constitutional and allows money to continue flowing from the casino to the community. Since it opened in 2007,Presque Isle Downs & Casino, Summit Township, has paid county government about $11 million a year, an even split between the county coffers and the Erie County Gaming Revenue Authority. Summit Township also receives roughly $1.2 million annually as the casino’s host municipality. Four other municipalities —Millcreek, McKean, Waterford and Greene townships —receive smaller amounts. Barbara Chaffee, president of the Erie Regional Chamber and Growth Partnership, said she sees the Legislature’s work on casino funding as a top priority. “It’s a big deal,” she said. “One of the things we need to see early this year is the PA state Legislature coming together on an agreement on the casino legislation.” Uncharted territory
Harold Bender, owner and general manager at Team Hardinger, an Erie-based trucking and warehousing firm, says no single customer accounts for a large share of his business. Economists say this is a good practice in today’s business climate. [FILE PHOTO]
It is a measure of how much has changed that one of the top financial stories of 2016 was the emerging interest in medical marijuana. Legislation signed into law in April by Gov. Tom Wolf made it possible to establish licensed growing facilities and dispensaries.Today, less than a year later, three separate groups in Erie County are seeking licenses through the state Department of Health that would enable them to
Barbara Chaffee is the CEO of the Erie Regional Chamber and Growth Partnership. Chaffee is working with an informal committee that is trying to find jobs for local displaced manufacturing workers. [DAVE MUNCH/ERIE TIMES-NEWS]
produce or sell medical marijuana. As executive director of the Erie County Redevelopment Authority, Rick Novotny is often focused on finding commercial tenants, putting together deals and lining up loans. In recent months, he’s been working to do some of those things not for a traditional manufacturer, but for a company looking to build a $10 million marijuana growing facility near Corry. Novotny sees potential. “I think there is always initial value if you are first to the party, ” Novotny said in an earlier interview. “And I See OVERVIEW, K4
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OVERVIEW Continued from K2
think for the right people, the right investor, it will be a very lucrative business.” On the horizon There is a well-known story in Meadville about what happened when the Talon Co., which once made 70 percent of the world’s zippers, began to see its fortunes decline as Japanese competitors stepped up their game. The company eventually left Meadville after it was sold in 1978, but left behind a culture of toolmaking expertise that earned Meadville the nickname of Tool City and led to the creation of dozens of tool shops. Maggie Horne, director of the Small Business Development Center at Gannon University, doesn’t know if the loss of hundreds of jobs at GE Transportation will spawn a new wave of new Preque Isle State Park drew more than 4.3 million visitors in 2016. It remains a key component of the Erie region’s tourism sector. [FILE PHOTO] business owners. “We will see what happens with GE,” she said. “I feel we Horne and her staff interact Talon, are exploring opporsaid. “It’s not only a more to shoulder at Erie County have the talent and the capac- daily with would-be entretunities in manufacturing. positive mindset, which we Farms on a Saturday. ity to do that. The question is preneurs who are hopeful Others have plans to open do need here in Erie, but the Older generations rememwhether or not we have the of becoming part of Erie’s restaurants, run service trickle-down (benefits) that ber the end of first shift at people who are willing to take business community.Some, businesses or find their place help smaller businesses and GE Transportation and the the risk.” like the toolmakers who left in Erie’s growing tourism industries.” wave of cars that poured onto sector. Chaffee said she feels con- Water Street and Franklin In a community where fident those building projects Avenue and what all that trafsmall business owners won’t produce the only posi- fic said about the strength of account for a slim share of tive headlines of 2017. Erie. our total income, Horne sees “I believe there will be But there’s also promise in plenty of people trying to momentum in 2017,” she what’s ahead, including the change the math. said. “There are a number of growing importance of Erie’s “I am very optimistic about new location projects we are tourism industry, shaped our small business commuworking on right now that are in large part by Presque nity,” she said. “They are very strong and may come Isle State Park, Waldameer putting in the hard work and to fruition in 2017. I am very Park & Water World, Splash doing what is needed to be a excited about what we see for Lagoon Indoor Water Park business owner.” the future.” and the region’s wineries. Dahlkemper is excited by It’s more than tourism, Big investments many of the same things, and though. worried too, especially about Aaron Lewis, whose story It is hard to fully measure the state of education and is told in these pages, might the effect of any investment that what she sees as unfair have invented a device that in the community. What’s funding might leave a gencould change the way brakes being built? How much tax eration of young people at a are made. Only time will tell will it pay? How many jobs disadvantage. if his invention finds favor will be created? But what intrigues and and what that mean for Erie. By most any measure, three excites her most is something Other changes are projects announced in the that can’t be quantified. coming.For the first time in closing months of 2016 hold It is the notion that plans 12 years, Erie will elect a new the promise, each on its own, for the future, including the mayor in 2017. A growing list of helping to transform an city’s Erie Refocused, might of candidates has stepped up Erie neighborhood. actually count for something. to offer a version for Erie’s Together, the three It is the idea, she said, that future. projects— a new an ever-growing number of Duane Clement, founder 346,000-square-foot people recognize Erie’s chaland CEO of Data Inventions, building at Erie Insurance, lenges and are working to do an Erie-based company that a seven-story patient care something. creates technology that helps tower at UPMC Hamot “I am really bullish on manufacturers improve their and a sprawling mixed-use Erie County,” she said. “It operations, is among those development that Scott seems to me there are more who believe Erie has a strong Enterprises has planned for and more committed people foundation on which to build. Erie’s east bayfront— repre- coming together to solve the “Usually, people start sent a collective investment issues of our community. I thinking about what’s not of more than $350 million. think that has been a change.” here,” he said. “Take a look Like many others in the around. We’ve got talent community, the Chamber’s Looking ahead here. We’ve got to start Chaffee sees the potential building off our successes of those investments to Many people, it seems, are here.” create jobs and energize the most bullish on the Erie that community. lives on in their memories. Jim Martin can be reached Agriculture and tourism are both important beneficiaries of the Erie “I believe there is someWe remember with sadat 870-1668 or by email. region’s wineries. Shown here is a bottle of wine from Burch Farms thing bigger (that will come ness the sound of clanking Follow him on Twitter at Winery in Harborcreek Township. [DAVE MUNCH/ERIE TIMES-NEWS] out of the investments),” she carts as we shopped shoulder twitter.com/ETNMartin.
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Region’s economic indicators
A brief look at the state of Erie County and Crawford County.
Per capita personal income
Electric rates
The more we make, the more we spend.
Lower rates mean residents have more cash.
Erie metropolitan area:
$40,425 in 2015
Penelec rates:
$107.36 in January
Down $2.39 from January 2016 Based on 750 kilowatts per month. Lower bills mean The more money in verdict: our pockets
Natural gas rates
Manufacturing Erie County: 20,500 employment Manufacturing remains a key employment sector.
in December
Crawford County:
7,800
in December
The verdict:
Down 1,800 from Dec. 2015 Up 100 from Dec. 2015
Manufacturing jobs are not growing in Erie region.
Unemployment
Employment is one of the most important indicators of economic well-being. The verdict:
Erie: 6.6%
in December
Up from 4.9% in Dec. 2015
Meadville: Up from 6.0%
in December
Service employment
Service industries include fast food, banking, insurance and other jobs.
Erie, Crawford counties’ rates are rising.
in December
$73.06 in February
Crawford County: Up 400
Up $19.49 from February 2016
in December
Gasoline prices
Up 46 cents a gallon from early February 2016 The verdict:
Pump savings means consumers can spend money elsewhere
Thumb’s down in Erie, but better news in Crawford County
The verdict:
Customers are paying more than they did a year ago
$2.47 (early February)
jobs from Dec. 2015
24,900
Based on 97,100 cubic feet used per year.
Erie metropolitan area:
Down 300 jobs from Dec. 2015
Erie County:
104,800
National Fuel rates:
The average cost of a gallon of regular unleaded.
A modest gain is still good news
The verdict:
4.9% in Dec. 2015
As rates rise, residents spend less elsewhere.
The verdict:
Up from $38,200 in 2014
Flights
Park visitors
Visitors help drive local tourism.
Presque Idle State Park attendance: 4.35 million in 2016
Up 290,000 from 2015. The verdict:
Erie’s relatively dry summer and typical temperatures attracted visitors
Employment at plant
GE Transportation’s Lawrence Park plant is Erie County’s largest industrial employer. The verdict:
Sources: Pennsylvania Department of Labor and Industry; Erie International Airport; VisitErie; AAA; U.S. Census Bureau; GE Transportation; National Fuel Gas Distribution Corp.; Penelec; Presque Isle State Park
The number of people boarding planes at Erie International Airport is a reflection of business and leisure travel.
GE Transportation: 2,900
in 2016
Down about 1,200 from 2015
Erie International Airport:
87,568 in 2016
Down 2,019 from 2015 The estimated number of local jobs has dropped over the past year
The verdict:
Fewer passengers hurts local economy GATEHOUSE MEDIA
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Unofficial counts say UPMC Hamot is top employer Erie County’s top employers
By Jim Martin jim.martin@timesnews.com
Forseveraldecades,GE Transportation’s position as Erie County’s top employer was a constant, as certain as the sight of a shiny new locomotive roaring up the GE test track. The most recent report from the state DepartmentofLabor&Industry, which reflects employment during the second quarter of 2016, suggests no change. The Department’s ranking of the top 50 employers shows GE Transportation in the top spot, followed by Erie Indemnity Co. in second and UPMC Hamot in third. Things have changed, however, since that employee head count was taken almost a year ago. Recent employee counts from the top three employers indicate that UPMC Hamot, not GE Transportation, is now Erie County’s largest employer. The hospital system has 3,526 total employees or the equivalent of 2,976 full-time employees, according to a spokeswomanforUPMCHamot. For now, evidence suggests that GE Transpor tat io n and E rie Indemnity, both are which to believed to have between 2,800 and 2,900 employees in Erie, are in a virtualtieforsecondplace. For GE Transportation, which had 5,600 employees as recently as 2008, that represents a substantialdeclineduring a period that has seen the company move its headquarters operation from
2nd quarter 2016
Recent employee counts from the top three employers indicate that UPMC Hamot is now Erie County’s largest employer. [JACK HANRAHAN/ERIE TIMES-NEWS]
[FILE PHOTO]
[CHRISTOPHER MILLETTE/ERIE TIMES-NEWS]
GE Transportation, left, in Lawrence Park Township, has been Erie County’s top employer for years, but recent employee counts from Erie County’s top three employers indicate that GE is in a tie for second place with Erie Indemnity Co., right.
Erie to Chicago and build asecondlocomotiveplant in Fort Worth, Texas. Perhaps even more importantly, the rail freight business continues to face tough times, partly as a result of a historic slowdown in the mining sector. Through a combination of layoffs and retirements, the company reduced its Erie workforce by about 1,500 people during 2016. Meanwhile, employment at Erie Insurance has been inching upward and seems likely to surge over the next few years. Only recently, the company announced plans for a new $135 million, 346,000-square-foot
building to be built south of the company’s existing headquarters. Timothy G. NeCastro, the new CEO of Erie Insurance, said the company expects to create 1,000 new jobs over the next several years. But nothing is for certain, not even the apparent reality that GE Transportation is no longer Erie County’s top employer. Following past layoffs, some involving hundreds of employees, many of the affected workers eventually returned to their jobs. As it stands now, just one of Erie County’s top 10 employers is in
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manufacturing,whiletwo of the top 10 employers are health care facilities. In neighboring Crawford County, two manufacturers, Acutec Precision Aerospace Inc and AinsworthPetNutrition LLC., hold two of the top 10 positions. Another category of top employers reflects the often-temporary nature of our employment. Two temporary staffingcompaniesinboth Erie and Crawford countiesrankamongthetop50 employers. Jim Martin can be reached at 870-1668 or by email. Follow him on Twitter at twitter.com/ETNMartin.
1. GE Transportation 2. Erie Indemnity Co. 3. UPMC Hamot 4. State government 5. Wal-Mart Associates Inc. 6. Saint Vincent Hospital 7. Federal government 8. Erie School District 9. Erie County 10. Dr. Gertrude A. Barber Center Inc. 11. Presque Isle Downs Inc. 12. Millcreek Township School District 13. City of Erie 14. Lord Corp. 15. Country Fair Inc. 16. Plastek Industries Inc. 17. Pennsylvania State University 18. YMCA of Greater Erie 19. Gannon University 20. Regional Health Services Inc. 21. Millcreek Community Hospital 22. PA State System of Higher Education 23. Mercyhurst University 24. Saint Vincent Med Ed & Research Institute 25. The Tamarkin Co. 26. Wegmans Food Markets Inc. 27. Voices for Independence 28. Lakeshore Community
Services Inc. 29. Erie Homes for Children & Adults 30. Saint Mary’s Home of Erie 31. McDonald’s Restaurants of PA Inc. 32. Infinity Resources Inc. 33. Dr. Gertrude A. Barber In Home Services 34. Scotts Development Co./Scotts Splash Lagoon 35. Waldameer Park Inc. 36. Welch Foods Inc. 37. Port Erie Plastics Inc. 38. Pleasant Ridge Manor 39. Stairways Behavioral Health 40. Associated Clinical Laboratories LP 41. C.A. Curtze Co. 42. Lowe’s Home Centers LLC. 43. Northwest Bank 44. Lake Erie College of Osteopathic Medicine 45. Harbor Creek School District 46. Career Concepts Staffing Services Inc. 47. Parker White Metal Co. Inc. 48. Presbyterian Homes Inc. 49. Fort LeBoeuf School District 50. Sarah A. Reed Children’s Center
Crawford County’s top employers 2nd quarter 2016 1. Meadville Medical Center 2. State government 3. Crawford County government 4. Wal-Mart Associates Inc. 5. Crawford Central School District
6. Allegheny College 7. Acutec Precision Aerospace Inc. 8. Ainsworth Pet Nutrition LLC 9. Penncrest School District 10. Wesbury United Methodist Community
Source: Pennsylvania Center for Workforce Information and Analysis 2nd quarter 2016 is the most recent data available.
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Economic players Several agencies work to lift the region. Who are they? Erie Together About: “A movement of local individuals, organizations and businesses working together in strategic ways to prevent and reduce poverty, elevate prosperity and make the Erie region a community of opportunity where everyone can learn, work and thrive.” Accomplished: “Convened and mobilized stakeholders from all sectors on a regular basis to identify and address community challenges and pursue relevant opportunities” like increased career exploration experiences for youth. Info: 456-2937, www. erietogether.org
County by guiding the implementation of the region’s 25-year plan for sustainability through collaborative and inclusive leadership.” Accomplished: Commitment among community leaders, creation and maintenance of a structure for implementation of the plan. Info: 454-7191, Ext. 143, www.emerge2040. org Erie Refocused About: City’s comprehensive plan that “addresses Erie’s needs over the next 10 years and beyond in a number of areas, including housing, transportation, land use and economic development.” Info: refocused@erie. pa.us, www.erie.pa.us
Athena Erie
Unified Erie
About: Nonprofit “supporting, developing and honoring women leaders. Inspiring women to achieve their full potential. Creating balance in leadership for the Erie community.” Accomplished: Helped more than 45 women take their businesses to the next level, become more powerful in the community and be key contributors to it, increase their revenues and employees and help other women and men. Info: 504-6362, www. athenaerie.org
About: Collaborative “violence reduction initiative” with a “purpose of reducing crime and violence in Erie County,” beginning with law enforcement, encompassing prevention and to include reentry.
Innovation Collaborative About: Nonprofit “independent voice for innovators, facilitating, measuring and communicating progress for northwest Pennsylvania’s entrepreneurial ecosystem.” Accomplished: Worked “to change the culture in Erie to one of hopefulness and prosperity” as “entrepreneurship, innovation and collaboration are top of mind as all of us in the community are working together to change our region’s future for the better.” Info: 490-5295, https://innovationcollaborators.com
Gannon Small Business Development Center About: Affiliate of national network of Small Business Development Centers that works with entrepreneurs in Erie, Crawford, Mercer and Warren counties to help them businesses set goals, develop new products and services, gather sophisticated information about their industry or find new global markets. Accomplished: Served more than 10,000 entrepreneurs, assisted startups and existing businesses in obtaining $278 million of capital funding and provided more than 800 educational programs including Women in Leadership Development. Info: 871-7232, www. sbdcgannon.org
Emerge 2040 About: “A focused partnership for the Erie region’s future” that “creates a thriving, educated, livable, green and connected Erie
ourwestbayfront.org Erie Regional Chamber and Growth Partnership About: Organization leading “the effort to identify key regional initiatives that promote economic health while providing the leadership for business attraction, retention and expansion.” Accomplished: Catalyst and collaborative partner identifying and moving forward important initiatives in the community like Emerge 2040 and Erie Refocused while providing everyday connections and assistance to more than 850 members to help them connect and grow. Info: 454-7191, www. eriepa.com
Manufacturer & Business Association
Launched prevention efforts like the Take Me To Worship campaign to increase the number of youth participating in organized religion within Erie County, encouraged cooperation among law enforcement offices and recently created a reentry arm. Info: 580-8247, www. unifiederie.org
About: “Not-for-profit employers’ association whose focus is to help businesses succeed.” Accomplished: Provided services that include professional training, discount insurance, energy and logistics programs, human resources services and government affairs advocacy to lower the cost of doing business, ease the burden of compliance and increase productivity for its members. Info: 833-3200, www. mbausa.org
Ben Franklin Technology Partners
Erie Regional Manufacturer Partnership
Accomplished:
About: “Technology-based economic development program” that provides “earlystage and established companies with funding, business and technical expertise, and access to a network of innovative, expert resources” and is the first initial investor a tech startup is likely to get money through. Accomplished: Averaged nearly $1 million a year in tech startups in the nine-county northwest Pennsylvania region. Info: 863-4558, www. cnp.benfranklin.org
Our West Bayfront About: Partnership of residents, businesses, employees and institutions that aims to “enhance the quality of life in Erie’s West Bayfront neighborhoods by promoting civic involvement, thoughtful development, historical preservation and neighborhood pride.” Accomplished: Completed a community-led plan and launched implementation of it with an initial focus on improving housing stock, addressing blight, enhancing safety and security, and transforming public green spaces. Info: 870-7050, www.
About: Industry-led partnership dedicated to ensuring that manufacturing remains a strong contributor to the regional economy by developing and implementing a plan to identify and recruit individuals for manufacturing jobs Accomplished: As part of the Greater Oh-Penn Manufacturing Apprenticeship Network helped secure a $2.9 million American Apprenticeship Grant from the U.S. Department of Labor to increase manufacturers’ ability to meet their needs for highly skilled and credentialed employees. Info: 330-501-0081, www.industryneedsyou. com/about-us/ermp
Erie Technology Incubator About: “Not-for-profit business incubator dedicated to stimulating the development of advanced technologies and promoting the formation, growth, and retention of early stage technology-based companies that will generate ‘new economy’ job opportunities in Northwest Pennsylvania.” Accomplished: Grew membership from 20 to 31 in 2016, including companies that created 35 jobs and raised $5 million in investment capital. Info: 459-6110, www. erietech.org
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Rough year leads to DevelopErie’s collapse County’s economic development groups fill gap left by GEIDC bankruptcy and its parent company’s failure By Kevin Flowers kevin.flowers@timesnews.com
Roughly one year ago, officials with DevelopErie, the region’s lead economic development agency, promised a major refocus after high-profile failures, major cash flow problems and the departure of the agency’s longtime chief executive. Today, DevelopErie is all but dead in large part because of the collapse of a key affiliate, the Greater Erie Industrial Development Corp., which filed for Chapter 7 bankruptcy in April. An agency that boasted 17 employees and had several major economic development projects on the table across the region just two years ago now has no paid employees. GEIDC’s mission was to focus on industrial development, including the construction of business parks, developing transportation and utility infrastructure, and environmental cleanup. In court filings, GEIDC claimed assets of real estate and personal property with a total value of $13.4 million and secured and unsecured debts of nearly $24.6 million. GEIDC’s bankruptcy trustee, Joseph Spero, has been aggressively working to sell hundreds of acres of property that the agency controlled as the agency moves to liquidate assets to settle its debts. DevelopErie spent millions of dollars on failed initiatives that never materialized, such as the Erie Inland Port plan and a proposed rail terminal in Harborcreek Township. The Inland Port was a multimillion-dollar project that would have developed logistics hubs at multiple sites. The rail terminal project focused on creating a $60 million rail freight terminal at a 23-acre
The Greater Erie Industrial Development Corp. and Penn State Behrend were partners in Knowledge Park on the Behrend campus, but that relationship ended as part of GEIDC’s bankruptcy. [FILE PHOTO]
“
I THINK THERE NEEDS TO BE ONE PLACE FOR ANYBODY WHO LOOKS AT DEVELOPING IN ERIE TO GO, WHETHER THEY’RE LOOKING AT GROWING THEIR EXISTING BUSINESS HERE OR RELOCATING HERE. — Erie County Executive Kathy Dahlkemper parcel on Walbridge Road in Harborcreek. That project was shelved after fierce opposition from Harborcreek Township residents. As a result, the Walbridge Road site is one of several that is up for sale in relation to GEIDC’s bankruptcy. Former DevelopErie Chief Executive John Elliott resigned in October 2014. Shortly afterward, DevelopErie officials acknowledged that the failed rail project left the agency
overextended in terms of debt. All of that turmoil has prompted a county economic development agency to get involved. Several DevelopErie affiliates, in December, entered into cooperation agreements with the Corry-based Erie County Redevelopment Authority to take on loan and grant preparation work, environmental cleanup, blight reduction and other types of assistance to local businesses that DevelopErie
once handled. That arrangement will continue for at least the next 12 months. “GEIDC filed for bankruptcy, and it was the main financial entity that brought in most of the money for DevelopErie to pay employees and continue its operations,” said Rick Novotny, executive director of both the Erie County Redevelopment Authority and the Corry Redevelopment Authority. “That’s why staff was cut, and then they had no money to do the work for the other affiliates,” Novotny said. “We will handle the work for those agencies.” The county Redevelopment Authority’s agreements are with the Erie County General Authority, which has the power under the Pennsylvania Municipal Authorities Act to
provide tax-exempt financing to qualified nonprofits; the Erie County Industrial Development Authority, focused on assisting in the development and redevelopment of industrial properties and financing such as industrial revenue bonds and tax increment financing; The Erie County Community Services Financing Authority, which provides tax-exempt bond financing to qualified nonprofits; EIDCO Inc., which provides credit enhancements on long-term, low-interest real estate financing to manufacturers working with the Pennsylvania Industrial Development Authority; and the Economic Development Corp. of Erie County, the private nonprofit that staffed and coordinated DevelopErie’s affiliates. Novotny said the county Redevelopment Authority will be paid for its work on behalf of the former DevelopErie affiliates on a per-project basis depending on the type of work involved. Erie County Executive Kathy Dahlkemper said the county Redevelopment Authority’s work on behalf of DevelopErie affiliates is a temporary solution until local officials determine the best “economic development model” for the region moving forward. “I think there needs to be one place for anybody who looks at developing in Erie to go, whether they’re looking at growing their existing business here or relocating here,” Dahlkemper said. “One place to call where they can be directed to the resources they need. Right now, we’re still a bit fractured.” KEVIN FLOWERS can be reached at 870-1693 or by email. Follow him on Twitter at twitter.com/ETNflowers.
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Sphere Brake designer and company owner Aaron Lewis holds part of a spherebrake assembly inside NaviTek Machining in Fairview Township recently. Lewis works with NaviTek to help develop and supply the new technology. [GREG WOHLFORD/ ERIE TIMES-NEWS]
FACES OF THE
ECONOMY
NEW BRAKE:
A sphere of possibility
Harborcreek man works to develop new brake system that could be built here revolutionize the way brakes are used on heavy trucks and military vehicles. Some people use their down And the Harborcreek Towntime to read a book, catch a ship resident came up with the movie or exercise. design as he and his fellow U.S. Aaron Lewis used his down Army National Guard soldiers time in a way that would put got acclimated to the heat in slackers to shame: He came Kuwait,whilewaitingtobesent up with a design that could to Iraq in 2009.
By John Guerriero Contributing writer
INSIDE
He scratched out the early designs on a piece of paper for what he calls sphere brakes, a new type of brake that he said will improve on the efficiency and stopping power of disc and drum brakes. Hemailedhis“raw”drawings to an attorney in Chicago, who filedthepatentapplication.The
As sales slow, GE Transportation focuses on technical services. 2L
U.S. Patent Office awarded the patent in 2013. Flash forward to the present: Lewis, now 32, has contracted with a Fairview company, NaviTekMachining,todevelop multiple prototypes for his brakes. He has successfully tried them on a Mack truck on a test track in State College.
Erie Insurance has big plans for the future. 8L
And at a private company in Detroit, the brakes were successfully tested on a machine that simulates vehicle weights and types of vehicles. “Now wejusthaveto(refine) it for a commercial (and military) product,” he said. See BRAKE, L5
Financial group plans for schools’ future. 10L
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GE Transportation CEO Jamie Miller is shown recently in the Global Performance Optimization Center on GE’s Lawrence Park Township manufacturing campus. Asked about the future of GE Transportation in the Erie region, Miller said: “Erie is a critical site. It’s a strategic design and development center. We have a deep technology force here.” [CHRISTOPHER MILLETTE/ERIE TIMES-NEWS]
Value added
GE Transportation focuses on service as locomotive sales remain slow By Jim Martin jim.martin@timesnews.com
You’ll find some of GE Transportation’s best locomotive troubleshooters here at the company’s Global Performance Optimization Center in Erie. Twenty-four hours a day, seven days a week, they gather around a bank of computer screens, keeping an eye on The Weather Channel and checking in on video links with crews working at three other centers around the world. Technicians here keep tabs on 17,000 locomotives running on tracks around the globe, sifting through more than 2 million cellular messages a day and analyzing them with both artificial and human intelligence. From their chairs in Erie,members of the optimization team know if a locomotive is moving through a tunnel, spinning on wet tracks or if the No. 7 cylinder seems sluggish. They can even tell their customers when the oil needs to be changed or if someone just siphoned off fuel, a common problem in some areas. The work done here for 53 different railroads in 23 countries is at the center of an expanding focus on service at GE Transportation. What this center won’t do, however, is provide jobs to 1,500 manufacturing workers at the Erie plant who lost theirs in 2016. But at a time when 4,000 North American freight locomotives are sitting idle, the work done here — and the service contracts attached to thousand of GE locomotives around the world — is part of the reason GE Transportation remains profitable, returning a fourth-quarter profit of $317 million on an operating margin of more than 25 percent. The future is digital — and competitive Jamie Miller, General Electric’s chief information officer before she was named CEO of GE Transportation in October 2015, sees digital,
Diagnostic Specialist Chris Harpst monitors possible performance issues on locomotives in service across North America recently from his work station at the Global Performance Optimization Center at GE Transportation in Lawrence Park Township. Company officials have invested in remote technology that can be fitted on to any locomotive to allow workers at GPOC centers in Erie; Fort Worth, Texas; Kazakhstan and Brazil to provide real-time service and performance updates to railroad companies about their fleet of locomotives.
“
ERIE IS A CRITICAL SITE FOR US. WE HAVE BEEN HERE FOR A LONG TIME. WE ARE GOING TO BE HERE FOR A LONG TIME. I THINK WE ARE PART OF THIS COMMUNITY AND IT’S IMPORTANT TO US. — CEO of GE Transportation Jamie Miller
technology-based solutions as a key to the future at a company that’s struggling these days to generate new sales of its signature product, the locomotive. But improving the company’s digital game won’t address all of Miller’s concerns. Miller continues to see problems with what the company views as above-market-rate wages in Erie, where the
average production employee makes more than $30 an hour. “The costs that go into producing a locomotive is what we use to compete in the marketplace,” Miller said during a recent interview with the Erie Times-News. “When we go to different regions, whether it’s Africa or the Middle East, Russia or CIS (former Soviet republics), we are competing against global competitors that
have a different cost structure than we do.” The company attempted last summer to address that cost structure, offering to invest $114 million in plant modernization and retirement incentives in exchange for concessions from its union workforce that would have included lower wages for new employees and a reduction in the number of job classifications. After weeks of negotiation, the company and a negotiating team from Local 506 of the United Electrical, Radio and Machine Workers of America failed to come to an agreement. Richard Simpson, vice president of the company’s global supply chain, said: “When we compete with international competitors, we don’t get any extra points because we
happen to be from Erie, Pennsylvania. They have a different wage structure, but we still have to compete. I think it’s important we never lose sight of that.” Miller described herself as “deeply disappointed” that the company and the union couldn’t reach an agreement. Committed to Erie But she spoke at some length recently about the company’s commitment to Erie, citing both its investments in the plant and more than $2 million a year in charitable contributions to the community. “Erie is a critical site for us,” she said. “We have been here for a long time. We are going to be here for a long time. I think See GE, L4
AUTOMATIC FOLIO WILL APPEAR HERE
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GE Continued from L2
we are part of this community and it’s important to us.” But Miller shows no sign of backing away from the company’s ongoing push to control costs. “We don’t have a choice if you look at the market and where it is globally,” she said. “We have to be competitive in our bids. The only way to be competitive is to have the lowest cost and the best products to compete.” While the company’s Erie manufacturing workforce has been cut in half, Miller and a group of other company leaders are stressing that other segments of the business, including the engineering team that developed the Evolution locomotive, remain in Erie. Erie native Alan Hamilton, general manager of engineering for GE Transportation whose grandfather and father both worked for the company, acknowledges that the Erie plant is best known for the things it builds and the people who build them. “But side by side with the manufacturing team, this design team has been growing and is an extremely important part of this plant,” he said, citing a long list of innovations that have been made at the Erie plant since it opened its doors more than a century ago.
ABOVE: GE Transportation CEO Jamie Miller. LEFT: John Manison is the general manager of locomotive modifications at GE Transportation. GE Transportation officials are investing in performance-based locomotive modifications and upgrades to give their customers more options to only replacing older units with expensive new units. [CHRISTOPHER MILLETTE/ERIE TIMES-NEWS PHOTOS]
“
Just like new
model to create a structure that was conducive to modernizing one broken-down locomotive at a time. “The competition for this work are hungry little shops. We refer to them as the junkyard dogs,” Manis said. “We had to be the biggest, baddest dog in the yard. We had to eat first and eat what we wanted. That is how we looked at.” Whatever the approach, Manison thinks it’s working. “We have some substantial orders coming at us,” he said. Miller said she sees the modernization program as a win for both customers and employees. “Our customers can extend the life of a locomotive for a really good price,” she said. “For our employees, it’s a win because it actually takes more labor to modernize a locomotive than produce a new one.” Waiting for a turnaround While workers in Erie are focused primarily on building locomotives for foreign sale,
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most of the Evolution locomotives, developed in Erie, are being built on a new assembly line in Fort Worth, Texas, where workers build an average of 10 locomotives a week, Simpson said. But without new orders, that work won’t last forever, Miller said. And GE Transportation hasn’t sold a new North American locomotive since 2014, said Deia Campanelli, a spokeswoman for the company. Miller predicts “a very challenging year for locomotives,” but she doesn’t offer a guess when this long uphill climb for the industry might come to an end. “One thing we do know about this industry,” she said, “when it turns, it can turn very quickly.” In the meantime, she said, the company remains focused on developing new technology and working to make itself more competitive. Recent conversations with union leaders in Erie have her feeling optimistic, she said.
— Scott Slawson, president of Local 506
“We are seeing some positive outcomes from that,” she said. “As we continue to work through this process it can only help to keep jobs in Erie. The more conversations we have, the more chance we have to drive change together.” Scott Slawson, president of Local 506, agrees— to a point. “I think the relationship has definitely improved. There is no two ways about it,” he said. “She (Miller) is making a valiant effort to keep communications open between us and her. We have some management that seems pretty dedicated in working with the guys on the floor. As the plant manager says, working more with brains than brawn.” But Slawson is reserving judgment. “We have to see where that leads to,” he said of the talks.
“We have been down this road before, and it’s failed in the past. But that willingness to listen wasn’t there. It seems like the relationship has changed.” For her part, Miller acknowledges that she took the helm at a difficult time. But she is equally clear that’s she’s not afraid of the challenges the company is facing — and the need to make changes. “It’s a lot easier to manage when volume is going up,” she said. “But it’s more interesting to work when volume is going down. It means you can actually see the real issues in front of you and drive change. It’s a healthy part of the cycle.” Jim Martin can be reached at 870-1668 or by email. Follow him on Twitter at twitter.com/ETNMartin.
*)&$(#'""%!
Now, at a time when locomotive sales are slow, the company’s engineering team, under the direction of Erie native John Manison, has launched a new initiative to provide railroad customers with a lower-cost option to a new locomotive. The company has always done a certain amount of work to modify old locomotives, he said, replacing old and worn parts and technology with new ones. But traditionally, it could take months to engineer a solution for a single locomotive, he said. Under a new business model the company launched six months ago, the time needed for engineering has been trimmed to just two weeks. During that time, Manison said, modernization sales have grown 800 percent and are expected to grow substantially more. “Our customers are facing a capital crisis. We said we are going to help them get through this,” he said. “The capital efficiency for the customer is you can take this 20- or 30-year-old machineand they can come in, do a modernization and take it to the same technical capabilities of a new locomotive.” What’s more, he said, “They can do it for half the price.” Manison said it took a new mindset and a new business
I THINK THE RELATIONSHIP HAS DEFINITELY IMPROVED. THERE IS NO TWO WAYS ABOUT IT. SHE (MILLER) IS MAKING A VALIANT EFFORT TO KEEP COMMUNICATIONS OPEN BETWEEN US AND HER. WE HAVE SOME MANAGEMENT THAT SEEMS PRETTY DEDICATED IN WORKING WITH THE GUYS ON THE FLOOR. AS THE PLANT MANAGER SAYS, WORKING MORE WITH BRAINS THAN BRAWN.
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Erie Times-News | GoErie.com |
BRAKE
Machinist Jerry Stepnowski, 60, turns part of a sphere-brake assembly inside NaviTek Machining recently. [GREG
Continued from L1
Lewisissopersonallyinvested in his project that, in 2015, he retired as a captain from the National Guard and quit his job asabusiness leader atGETransportation in Erie. “I was pretty much burning the wick at two ends and I knew that it was not going to be healthy progressing on all (three) careers,” he said. Lewis is also a husband and father of a 17-month-old boy, Noah. Lewisfounded SphereBrakes, LLC at the beginning of 2016. With sphere brakes, two hemispherical brake pads sit on the outside of a gray iron surface — shaped like a sphere — and the padsclampdownonthatsurface when the brakes are applied. Lewiscan’ttalkpubliclyabout thedetailsofhisformulabecause it is intellectual property. Buthesaid,“Thedesignallows for a greater brake torque in a smaller brake package.” Brake torque is the force that’s applied at the brake wheel to stop the motion of a vehicle. His brakes provide better safety and reduce the weight of a vehicle, resulting in reduced emissions and better fuel efficiency, Lewis said. Lewis said the industry is especially excited about the new brakes because mechanics don’t have to remove the wheels to change the brake pads. “You just reach in between the wheel well and change the pads out. Oursisabout15minutes foreach wheel,” he said, as opposed to what now takes about 90 minutes with drum or disc brakes. Harvey Downey, president of NaviTek, said Lewis is “changing the way brakes work” for heavy-dutytrucks,suchastractor-trailers, refuse trucks and dump trucks. Lewis also hopes thegovernmentuseshisproduct for heavy military vehicles. Lewis has received positive feedback from both military
WOHLFORD/ERIE TIMES-NEWS]
About Aaron Lewis
table,” he said. In fact, Lewis said he hopes thateverythingfromengineering Age: 32 Family: Wife, Amanda Lewis; child, Noah, 17 months to manufacturing will be done in Occupation: Chief executive of Sphere Brakes, LLC Erie. Lewis said he can’t predict Prior experience: Business leader at GE Transportation, October how many jobs would be cre2011-December 2015 ated,buthehopestostartlimited Military service: U.S. Army National Guard, December 2003-Decemproduction in late 2017 or early ber 2015 2018. There are multiple ways Education: Pennsylvania State University, master’s in business that could play out, either by administration, 2013; East Carolina University, bachelor’s degree in continuing to subcontract the furniture design, 2007 work with Erie manufacturers Honors: Include Bronze Star and Meritorious Service Medal or getting his startup company to do the manufacturing itself, Disc vs. drum brakes he said. Lewis has attracted the Disc brakes use a flat, disc-shaped metal rotor that spins with the attention of investors. He has wheel. A caliper squeezes the brake pads against the disc when the received $52,000 in seed money brakes are applied, and that slows the wheel. for high-risk projects from the Drum brakes use a wide cylinder, open at the back, with an appearErie Innovation Fund, which is ance similar to a drum. When the brakes are applied, curved brake funded jointly by Ben Franklin shoes inside the drum are pushed outward, rubbing against the Technology Partners and the inside of the drum and slowing the wheel. Erie County Gaming Revenue Authority. He’s also received Source: About.com. $500,000 from local investors, and $9,000 from a Gannon and commercial interests thus he doesn’t want to get hopes up University Entrepreneurship far, and he plans what he calls prematurely. Microgrant. a “capstone event” with truck “Wheretheyarebuiltdepends “He’s one of the more excitmanufacturers and government on the outcome of our final pre- ing entrepreneurs that the fund agencies in late March. That’s sentation.Hopefully,theywillbe haslookedat,”saidPerryWood, when he will present the results built in Erie County. But (truck executive director of ECGRA. of his testing, accomplishments manufacturers) dictate where “He’s dedicated enough to quit to date and a final design. and when, so I don’t want to get his job at GE. And he’s in a very Could this be the start of the anyone’s hopes up about what niche market — in this case next major manufacturer for could happen,” he said. heavy machinery and military “We will plead the case for equipment that his brakes will Erie? Lewis wants to mass pro- Erie, by all means. There’s defi- be going on. That’s the kind of duce out of the Erie area, but nitely value that we bring to the market that’s in a growth phase
Sunday, February 19, 2017
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right now.” “And those are the kind of entrepreneursthatweneedtobe supportingasacommunity.He’s local,he’sgoingtohirelocal,he’s going to spend his dollars local and eventually, as his company grows, he’s going to add jobs to this region. And that’s the way ofinvestinginthefuture,”Wood said. Told that local production is not a given, Wood said, “If we don’t take these chances, we’ll never know.” NaviTek, a company that provides engineering, design work, product development and precision machining, could do part of the manufacturing if the brakes go into mass production, Downey said. It’s tough to predicthowmanymoreemployees he would hire, but it could be significant, he said. His company, which now employs15,ishiringmorepeople already for other segments of its business. Aside from making the prototypes, NaviTek provides Lewis with an office and other “incubator” services such as product development. In addition to working with NaviTek, Lewis gives a shoutout to Harold Bender, the owner ofTeamHardinger,afleettrucking and warehousing company in Erie, for providing him with input from the “end customer perspective.” And he said BB’s Truck and Auto Service in Erie has helped to install and remove the prototypes on his truck. Lewis said there are a lot of startupsdoinggreatthingsinthe Erieregion.“I’mbutoneofthem. I guess it’s appealing because we’re a Rust Belt city and we’re one of the few that’s doing a manufacturingstartup,”hesaid. He hopes that his product will help the local economy to gain traction. “That’s what I pray for every night,” he said. John Guerriero can be reached at johnguerrierowrites@gmail. com or on Twitter at Twitter.com/JGuerriero814.
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Erie Times-News | GoErie.com
Tim NeCastro, chief executive of Erie Insurance, stands near the site of a planned 346,000-square-foot building to be built on the company’s Erie campus beginning in spring 2017. [GREG WOHLFORD/ERIE TIMES-NEWS]
‘An excitement and energy about the future’ Erie Insurance boss sees investment in downtown Erie as vital
Fortune 500 company opened a new company history center, went through a leadership change as By Jim Martin former CEO Terry Cavanajim.martin@timesnews.com ugh retired and Timothy G. NeCastro was named to take The past year has been one his place, andannounced of big moves for Erie-based plans to build a $135 million Erie Insurance. building in downtown Erie. The only Erie-based NeCastro, a trained
accountant and Gannon University graduate, recently responded to email questions from the Erie Times-News. Those questions and his responses are presented here: Q: What’s been the reaction following your announcement of a new $135 million investment?
A: The response has been overwhelmingly positive. Having a company of our size so publicly commit to the region speaks volumes. Q: Your company’s planned investment is one of several very substantial projects planned in and See INSURANCE, L9
Bio box Timothy G. NeCastro Position: CEO of Erie Indemnity Co. Previous job: Senior vice president and regional officer of Erie Indemnity Age: 55 Education: Gannon University Personal: He and his wife, Lisa NeCastro, have five children
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INSURANCE Continued from L8
around your neighborhood. What impact do you expect those investments will have on the larger community? A: Building a vibrant Erie community is essential to our company’s success and the well-being of so many others who live and work here. We’re seeing a strong emphasis on public/private partnerships including announcements of planned investments from us, Scott Enterprises, UPMC, Gannon, Rick Griffith Properties, Knox Law and VNET. Those investments are expected to total almost a half billion dollars and generate at least 2,400 jobs. Additionally, the Susan Hirt Hagen Center for Transformational Philanthropy has committed $10 million in transformational grants to continue to renew the region. By working together, we can energize our community and realize our collective vision for this region. A revitalized and vibrant downtown is vital for regional growth and I’m personally excited by the growing number of community business partners. Q: We know there’s already a need for more space, but you also expect to hire hundreds of new people. What’s driving that growth? Are there near-term plans to expand the company’s geographical footprint or is it something else? What will
all these additional people be doing? A: I’m not able to publicly share what our future growth plans look like but we’re very much looking forward to what the future holds for Erie Insurance. What I can say about what’s driving our expansion is that it is in response to the evolving marketplace. More than any generation before us, we face a pace and scale of change that’s unprecedented. New tools, new processes, new products and markets — and the expectations of consumers — have created a workplace norm defined by collaboration and networking, technology and human touch, profit and purpose. We must be positioned to meet those needs. Q: You spent several months working closely with former CEO Terry Cavanaugh as you prepared to take over. Are there any important lessons he shared? A: Erie Insurance was fortunate to have a leader like Terry, who not only pushed us to new heights, but also remained here after he announced his retirement in order to ensure my smooth transition and Erie’s continued success. I’m grateful to him for helping me to hone my skills and understand the nuances of the role. Something he said to me that I think about often is the need for balance. In this role, everything is a high priority and it could be easy to find yourself overwhelmed if you don’t take time to balance it all. Prioritize, keep focus and take the time for yourself to
stay centered. Q: There’s always talk about the difficulty of recruiting top talent. Has that been a big concern for Erie Insurance, especially in light of the violence and urban decline that Erie has faced? What have you done
management training and higher education, and a firm commitment to volunteerism that we know is so important to our employees and really at the heart of who we are. Q: Erie-area residents have grown accustomed over the years to companies
“
BY WORKING TOGETHER, WE CAN ENERGIZE OUR COMMUNITY AND REALIZE OUR COLLECTIVE VISION FOR THIS REGION. A REVITALIZED AND VIBRANT DOWNTOWN IS VITAL FOR REGIONAL GROWTH AND I’M PERSONALLY EXCITED BY THE GROWING NUMBER OF COMMUNITY BUSINESS PARTNERS. to address that concern? A: Finding and retaining top talent is vital to any organization that wants to grow and thrive. We face the same challenges most employers face — finding and keeping great employees, helping them excel in their careers, keeping them motivated creatively and continuing to innovate. To be an “employer of choice” we have to provide the employees throughout our footprint with competitive salaries and benefits. It’s part of why we provide many contemporary perks like flexible work arrangements and telecommuting (nearly 40 percent of our workforce takes advantage of them), professional development opportunities including
pulling up stakes and downsizing their local presence. What can you say about the health of the company that addresses concerns about the future? A: Erie (Insurance) is in tremendous shape. In some ways, my role is the easiest and the toughest simultaneously. Our historical success could lead to complacency, but I trust in our employees and agents that it will not. I’ve been with Erie Insurance for more than 20 years in many different aspects of the business. I understand our culture, and our strategy and our commitment to what we do. We will look to the future, prepare for what’s ahead and embrace every opportunity. There is truly
Sunday, February 19, 2017
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an excitement and energy about the future that has never been stronger. And we are well-positioned to capitalize on the opportunities before us. Q: Finally, what can you tell us about how you expect to measure your success and the success of the company in the years ahead? A: Two words: Growth, satisfaction. The only way we can continue to grow and ensure our customers, employees and agents are happy is if we continue to evolve. We’ve proven that we’re not afraid to tackle our changing marketplace head on. Look at what we’ve done with ridesharing and new technology like drones. Rather than put our heads in the sand and hope the sharing economy goes away, we became the first insurer to find an insurance solution for ridesharing drivers. We looked at drones and their potential for improving the claims process and we became the first insurer to use a drone in a claims situation. Those are examples where we found new and unique ways to meet our customers’ needs and keep our employees satisfied by challenging them to be innovative. If we’re willing to stay nimble and creative with our ideas — find opportunity where others see hurdles — we’ll continue to win in the marketplace. Jim Martin can be reached at 870-1668 or by email. Follow him on Twitter at twitter.com/ETNMartin.
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Erie Times-News | GoErie.com
Teaming up for change Financial advisory group helps Erie School District chart its future
By Ed Palattella ed.palattella@timesnews.com
Jay Badams quickly realized he needed help when he took over as superintendent of the Erie School District in the spring of 2010. The district was saddled with a $26 million deficit that Badams inherited from his predecessor, James Barker. Badams needed advice on how to resolve the mess. He needed guidance on how to make the Erie School District solvent in the years ahead. And, sometimes, he just needed someone to listen to him explain the depth of the Erie School District’s problems. Badams got what he was looking for by forming an outside financial advisory team in the fall of 2010. The group, which now numbers six, includes business executives such as Joel Deuterman, the CEO of the Erie-based Velocity Network, and Steve Danch, the chief financial officer of UPMC Hamot. The financial advisory team meets about 90 minutes once a month with Badams and Brian Polito, the Erie School District’s CFO and Badams’ successor as superintendent. The team members review the district’s finances and discuss the district’s options for reaching financial stability. And, in a nod to Badams’ desire for an understanding audience, the team has been known to just listen to him with sympathy. “Sometimes it is just commiseration,” Badams said. But whatever the context, the financial advisory team’s most valuable asset is its candor, Badams said. He said the members have given him a straightforward analysis of the district’s finances, no matter howpoor the outlook. “The first ever piece of advice they gave me,” Badams said, “was that we were in as bad of shape as we thought we were in.” The financial advisory team has no authority over the district’s budget, which the Erie School Board approves. But the team has given Badams’ financial ideas a valuable outside review, which has enhanced the ideas’ credibility among the nine members of the School Board. “We are trying to get a perspective outside the norm. That is why we go to private businesses,” said Erie School Director Robert Casillo, who is also on the financial advisory team. “The board really does look at the recommendations seriously.” The other current members of the financial advisory team are Marlene Mosco,
Joel Deuterman, at left, and Jay Badams are members of the Erie School District’s Financial Advisory Team. Deuterman is also the CEO of Velocity Network. Badams is the superintendent of the Erie School District. [CHRISTOPHER MILLETTE/ERIE TIMES-NEWS]
retired president of PNC Bank in northwestern Pennsylvania; Jim Ohrn, vice president of Custom Engineering in Erie; and Tom Tupitza, president of the Erie law firm of Knox, McLaughlin, Gornall & Sennett. The financial advisory team will be a fixture for years to come, though Badams is leaving June 30 to run a school district in Vermont and New Hampshire. Polito was appointed Feb. 1 as Badams’ successor, starting July 1. Polito said he will continue to meet with the financial advisory team as well as other advisory teams that Badams established, such as one for education. “We need them now more than ever,” Polito said. “It is my intention to tap into all the advisory teams to create a vision of what we want the district to look like in 10 years.” Referring to the financial advisory team, Polito said, “We run everything by them. It brings more of an outside view. It brings more of a business perspective to our decision-making.” Badams said the group came together shortly after he took office and gave a presentation to the Erie Regional Chamber and Growth Partnership about the Erie School District’s budget woes. Badams said he
put out a call for volunteers to help him plan the district’s future, and he created the financial advisory team. Deuterman, the head of Velocity Net, remembers Badams’ Chamber talk well. He said Badams’ frankness about the Erie School District’s financial state, including its $26 million deficit, led him to join the financial advisory team. “He’s not pull-any-punches whatsoever,” Deuterman said. The financial advisory team met with Badams over the plan that helped offset the $26 million deficit, including cutting 240 jobs in 2011 and closing three elementary schools — Burton, Irving and Glenwood — at the end of the 2011-12 school year. The team also backed Badams’ plan, which is pending in Harrisburg, to ask the state for $31.8 million in annual additional funding, starting in 2017-18, to keep the 11,500-student Erie School District solvent. Deuterman said the financial advisory team agreed with Badams that the district could cut no more, and needed outside financial help to survive. “If the district is cutting too much,” it risks “becoming a business no one wants to work within,” Deuterman said. “Attracting and retaining good people becomes a problem. That also goes to the quality
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of the product.” Danch, the Hamot CFO, said he and the other members of the financial advisory team are committed to helping the Erie School District succeed because the region needs a strong public school system to thrive. Danch said the school district has undergone massive changes, but that he has learned, by serving on the team, “that change is slow relative to funding decisions at the state level.” Ohrn, the vice president of Custom Engineering, said the financial advisory team shares Badams’ concerns about inequities in state education funding. Badams said the state needs to change its funding formula further so that urban school districts, such as Erie’s, no longer get less funding than more affluent school districts in the suburbs. The Erie School District’s $31.8 million plan reflects the disparities. “The proposal that we have given the state is legitimate and the concerns are real,” Ohrn said. Ohrn, like Danch, Deuterman and Tupitza, has been on the financial advisory team since its inception. “It has been an eye-opening experience for me,” Ohrn said. “Hopefully we have been some benefit to the organization.” Tupitza, of the Knox law firm, said the team’s work
has been “mutually beneficial” — he and the other team members have gained a deep understanding of the Erie School District while helping to shape the plan meant to ensure its future. “Everybody on that committee has brought a valuable view,” Tupitza said. “Like any organization,” he said, the Erie School District “can benefit from people not inside every day.” Mosco, the retired regional president of PNC Bank, said she has been on the team for about three years. She said the team, like the school district, determined that the district, after years of cuts, now needs an infusion of state aid. “It was a daunting effort but without totally dismantling this education system, the only viable conclusion was to petition the governor for much additional funding,” Mosco said. She said she believes the team helped establish a foundation for why the Erie School District needs assistance. “I was happy to participate and believe we became ambassadors for the community to understand the problem,” Mosco said. Ed Palattella can be reached at 870-1813 or by email. Follow him on Twitter at twitter.com/ETNpalattella.
Erie Times-News | GoErie.com |
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ERIE 2017 SECTION M
Erie entrepreneurs, from left, Mat Silva, 28; Max Weber, 23, and Josh Layhue, 37, meet outside at the Gannon Technology Incubator in Erie recently. [GREG WOHLFORD/ ERIE TIMES-NEWS]
FACES OF THE
ECONOMY
Entrepreneurs bet on Erie’s technology economy They’re starting up and hoping to grow new businesses right in the downtown
By Sarah Stemen sarah.stemen@timesnews.com
Max Weber and Josh Layhue sat across from Mat Silva at a black cafe table in the bottom of the Erie Technology Incubator at Gannon University on a dreary January day —each with his nose buried in an illuminated MacBook and his fingers hustling across the keyboard. What was happening at that cafe table sharply contrasted
INSIDE
the clouds and gray skies that hung over the building at 900 State St. What was happening at that cafe table was the exchange of fresh information and ideas — as well as suggestions. This is what innovation looks like. “It’s whenwe present what challenges we have, talk to each other about what’s working or what hasn’t worked for us, what they’re doing that could work for us,” Silva, 28, of Erie,
said. “That’s wheninnovation technology company in the happens. And it happens here beginning stages of researching often.” and developing a SmartSilva is the cophone app that will founder and chief track customized View photos technology offinutrition, helpof tech cer of RendrFX ing users monitor entrepreneurs in Inc., a business their weight, goals Erie: GoErie.com/ based in Erie that and food intake photos offers online video all while providing motion graphics. accountability. Weber, 23, and Layhue, While they’re devel37, are the creators of 3sixty5 oping completely different health innovations, a fitness products, the three have a lot
Meadville owners saved jobs by selling to employees. 2M
Hansen’s Errand Service owner delivers for 10 years running. 5M
in common— they’re entrepreneurs who are part of a growing technology economy in Erie. Thetechlandscape isstillsmall, intimate even, in Erie, but it’s undoubtedly growing. Thereare31companies,many of them technology-based, housed in the Erie Technology Incubator at Gannon University in 2017. That number is up from 20 companies at the See TECH, M4
Corry hospital adds doctors after joining LECOM Health. 6M
M2
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Erie Times-News | GoErie.com
Employees now own Meadville plastics company When buyers came calling, company’s owners decided to keep the business local by selling it to employees By Ron Leonardi ron.leonardi@timesnews.com
Dennis Frampton spent nearly 50 years working at Meadville’s C&J Industries, a custom plastic-injection molder and medical device contract manufacturer, founded in 1962. When retirement beckoned for the company’s president and chief executive in 2016, he and his family members serving on C&J’s board of directors opted against selling the plant to an out-of-town company or private investment firm. Selling to an outside interest, they determined, would not have guaranteed the future of the company and its 315 fulltime jobs remaining a vital economic cog in Meadville. Instead, they elected to sell all of their family-owned company stock to C&J Industries and its employees, making the business a 100 percent employee stock ABOVE: Employees make ownership plan. “I knew I needed to retire precision plastic parts in just one sometime, but when I met with area of sprawling C&J Industries our accountants, we sat down in Meadville recently. Employees and discussed some options, now own the company after the and they said one option was former owner retired and sold to turn it into a 100 percent them the business. ESOP,” Frampton said. “It took me about 30 seconds to say yes. RIGHT: C&J Industries toolI said I would like to sell it to the and-die maker Eric Glover, 49, employees because it would stay removes burrs on a piece of in Meadville for a long time and metal. [GREG WOHLFORD/ERIE TIMESI wouldn’t have to worry about NEWS PHOTOS] it being sold off.” Frampton, 68, who lives in Meadville, All of Frampton’s To see photos started working at family-owned stock from C&J the company as an was purchased by the Industries: apprentice toolcompany on Sept. GoErie.com/ and-die maker when 30, when the comphotos he was 18. pany transitioned to C&J Industries was its 100 percent vested a small tool-and-die shop employee ownership status. known as Meadville Precision “Dennis and the other family Tool when it was founded in members had a meeting and 1962 by Harold Corner and decided what’s the best thing Dick Johnston (their last initials for C&J and the community, became the company name in and they put themselves last,” said Rob Marut, who was named 1982.)
C&J’s CEO following the Sept. 30 sale and transfer of ownership. “It was very admirable what they did.” “We put a plan together,” Marut said. “We purchased the shares. Myself and (C&J Vice President) Jerry Sargent are trustees to the ESOP, which meanswebasicallyrunthecompany and we pick the board of
selling the company to a private investment firm.” C&J industries, which shipped a record 450 million parts in 2016, has six target market segments— industrial, telecommunications, medical, pharmaceutical, consumer products and transportation. Its plant complex at 760 Water St. houses 55 injectionmolding presses, four Class 8 clean rooms and one Class 7 assembly clean room. The plant complex totals 214,000 square feet on 26 acres. Clean rooms range in size from 2,000 square feet to 7,500 square feet. The company has about 1,000 molds, including some that weigh hundreds of pounds and others that exceed 10,000 pounds. Their value ranges from $10,000 to $500,000. Before the September sale, employees owned about 20 percent of the company. “Having been involved with the previous ESOP, you see the share value over time increase, and you realize you have some impact in that valuation,” said Mark Fuhrman, C&J’s director of sales and marketing, who’s been with the company for 23 years. “I’ve seen that share price appreciation, and the employees now involved with the revised ESOP are going to see the same thing— the cause and effect of our growth and our profitability demonstrate itself in the share value,” Fuhrman said. Marut, in his eighth year with C&J Industries, said the ESOP transition is progressing well. “Now the employees are part owners in this company. A company still has to have the normal corporate structure, just like any company,” Marut said. “However, we try to empower all of our managers and employees
directors for the company. With that, we can keep the business in Meadville. If, for any reason, the company would come up for sale again, or someone would try and buy the company, with us being a 100 percent owned ESOP, votes like that have to go to the entire employee population. No longer can just one or two people decide that we’re See C&J, M3
Erie Times-News | GoErie.com |
C&J Industries President/CEO Rob Marut, 45, left, talks with Lynn Prenatt, 58, who was changing a screw in one of the company’s presses. [GREG WOHLFORD/ERIE TIMES-NEWS]
C&J Continued from M2
to really own the processes that they are working with now. ... I think once we go through our first full year and the shares are released to the employees, and they realize their contributions throughout the year affect the stock price of the company, they’ll see the value start to build.” As C&J Industries embarks on its employeeowned future, plans to expand the plant also are taking shape. C&J officials on Oct. 25 announced the purchase of the former Penn Plaza — 52,000 feet of building space and 10 acres of property — adjacent to the north side of the C&J complex. The acquisition increased the plant’s square footage to 214,000 from 162,000 and its acreage to 26 from 16, and
will enable the business to address future warehouse and manufacturing needs. “We were land-locked prior to that purchase,” Fuhrman said. “Now we have 26 acres. You can kind of look at yourself differently and perhaps restructure the way your facility is laid out, whether it’s warehousing or manufacturing space. This gives us that opportunity.” Warehouse space will likely be the initial focus of the expansion upgrade. “As we’ve grown in size and added additions to this building, we’ve had to eat into our warehouse space to make room for additional clean room molding, assembly operations, and clean assembly work for our medical devices,” Marut said. “Our big focus initially is we want to connect the two buildings so we can transfer material back and forth easily, and also to put some of our warehouse over there.” The company added
a 30,000-squarefoot expansion in 2001 and a $6.8 million, 28,000-square-foot expansion in 2011, including a new metrology lab and controlled environment molding room. “It’s really a remarkable story to be able in the last 15 years to grow as we have,” Fuhrman said. “It’s a testimony to the vision of the leadership and ownership as well as the employees. They’re the ones who make it happen.” More than $5 million has been invested in plant technology upgrades in the past five years. “The family was always heavily involved with reinvesting profits back into the company to build a solid company, and we don’t see any changes in that plan,” Marut said. Ron Leonardi can be reached at 870-1680 or by e-mail. Follow him on twitter at twitter. com/ETNleonardi.
Sunday, February 19, 2017
M3
Warm Advice from National Fuel
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Erie Times-News | GoErie.com |
Sunday, February 19, 2017
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Hansen’s Errand Service owner delivers Company has expanded vehicle fleet, services By Madeleine O’Neill madeleine.o’neill@ timesnews.com
When Peggy Allin took over Hansen’s Errand Service 10 years ago, the business had one vehicle and one employee. Allin saw the chance to grow. The company now has a fleet of 12 vehicles that traveled more than 300,000 miles in 2016, offeringcourierandtransportation by appointment to customers in the Erie region. Allin, 61, took over as company president Dec. 15, 2006, after leaving a snowplowing company she had built with her husband.Shehadnoideawhat she wanted to do next, until Hansen’s caught her attention. “I really had to do a lot of soul searching,” she said. “I opened the newspaper one day and under businesses for sale was Hansen’sErrandService.” Allin said she bought the company from its original owner, Barb Hansen, who had herself run the business for about 10 years. Taking over a much smaller company was a significanttransition,Allin said. She didn’t intend to grow Hansen’s to its currentsize,butdidsobecause the business kept exceeding her expectations. “I bought a building for myvehiclesthinking...this is huge, I’ll never outgrow this, and within two years I had outgrown the building,” she said. That growth has also
included the acquisition of Flagship Trolley, which Allin took over in 2009. The seasonal trolley service offers rides for wedding parties, wine tours and other events. Allin credits the growth to demand in the community for Hansen’s services, andtothecustomerservice the company offers. “We try to be very accommodating to our clients, whether it’s transportation or courier,” she said. “I’ve got great drivers who really cater to the people,whetherit’shelping them with their groceries or their luggage or getting them in and out of the car to their appointment.” Laurie Lewis, 56, said she has been a customer of Hansen’sformorethansix years. She said customer service is a major benefit of working with Hansen’s. “They pick you up in a timely manner to get you toyourappointmentwhen you’re supposed to be there,” Lewis said. “They don’ttry and cut corners.” Lewis, who is legally blind, said she uses Hansen’s for rides to regular doctor’s appointments. She said Hansen’s drivers even hold doors for her when she is picked up and dropped off. “Chivalry is not dead,” Lewis said. The company’s growth over the last 10 years has been in contrast to that of the courier industry at large, according to the head of a logistics trade association. JohnBenko,presidentof the Customized Logistics and Delivery Association, said that sector of the transportation industry has been “constricting,”
Peggy Allin is the owner of Hansen’s Errand Service and Flagship Trolley.
in part because of changes in technology. “For the person that stays ahead of this and keeps their ear to the ground, I think there’s an opportunity to grow your business,” Benko said. Although Allin said she has felt some pinch from incoming competitors like Uber, which entered the Erie scene in April 2015, she sees her company’s transportation-by-appointment service as distinct from thatoftheapp-basedridehailing service. Allin said her business caters to the needs of seniors who need help getting to appointments or purchasing groceries, many of whom aren’t technology-driven. That population is also where Allin finds much of the meaning in her work. “I can’t tell you how manytimesI’vehadpeople say,‘You’veallowedmeto stay in my home,’” Allin said. “That is so rewarding that I can help those people.” Madeleine O’Neill can be reached at 870-1728 or by email. Follow her on Twitter at twitter.com/ETNoneill.
Hansen’s Errand Service driver Ron Kraut, at left, loads a walker in his vehicle for client Bob Protzman, at Protzman’s Erie home. Kraut was taking Protzman to a medical rehabilitation appointment. “The service is terrific,” said Protzman, 80, who has been transported by Hansen’s to and from his medical appointments for several months. “(The drivers are) always on time.” [CHRISTOPHER MILLETTE/ERIE TIMES-NEWS]
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Medical jobs provide new lifeline Health-care and education jobs drive larger part of Erie County’s economy By David Bruce david.bruce@timesnews.com
Corry Memorial Hospital is now affiliated with and partially staffed by LECOM. [FILE PHOTO]
Corry hospital adds doctors after joining LECOM Health By David Bruce david.bruce@timesnews.com
It’s not as difficult to schedule an appointment with a physician in Corry now that Corry Memorial Hospital is part of LECOM Health. Four primary care physicians now work full-time for the Corry hospital and several specialistsareseeingpatients in Corry on a weekly basis. “We’ve been able to recruit physicians to go to the Corry area, which had been a problem,” said John Ferretti, D.O., LECOM Health CEO. “It’s developing slowly, but I’m quite happy with the progress.” Erie County’s two smallest acute-care hospitals joined forces in November2015,thelatest in a series of affiliations and mergers involving northwestern Pennsylvania hospitals. Fifteen months later, the affiliation has worked well for both Millcreek Community Hospital and Corry Memorial, Ferretti said. “Corry is a medically underserved area and by joining LECOM, Corry Memorial has been able to utilize the physicians we have here,” Ferretti said. “We are seeing an increase in patient referrals to Millcreek Community, though a majority of them are still going to UPMC Hamot and Saint Vincent. We’re seeing more behavioral health and orthopedic referrals.” Some of those referrals are coming from a new clinic at Corry Memorial that includes an orthopedist, gastroenterologist, urologist, obstetriciangynecologistandageneral surgeon, who travel to Corry from Erie at least once a week. “In the past, we would have had to hire someone like an orthopedist full time to get one here,” said Mike Heller, Corry Memorial’s chief financial officer. “But there really wasn’t enough work for the doctor to be successful. Now we can have one come once or twice a week.” The affiliation also has helped Corry Memorial bolster its emergency department. It now uses physicians from LECOM Health’s Medical AssociatesofErietostafftheER. These physicians are
more likely to stay in Corry longer than the previous ER doctors, who were hired by contract through an out-of-town company, Heller said. Thenewclinicmightbe the most visible change since Corry Memorial joined LECOM Health. Many Corry residents might even be unaware the hospital has joined LECOM Health, said Rick Novotny, executive director of the Corry Area Redevelopment Authority. “From a community standpoint, it seems that people are happy with the servicestheyreceivefrom the hospital,” Novotny said. “I hope that LECOM continues to invest and provide support to Corry Memorial.” The affiliation hasn’t solved all of Corry Memorial’s financial problems. Figures for fiscal 2015-16 aren’t yet available, but the hospital posted a net deficit of $746,161 in fiscal 201415 after losing nearly $1.8 million the previous year. Those losses likely would have been higher except that Corry Memorial is a critical access hospital, a designation that allows the government to pay 101 percent of a hospital’s costs for treating Medicare patients — a rate significantly higher than it previously received. “The hospital is currently losing money but because of LECOM Health, the losses are subsidized,” Ferretti said. “OurgoalistoseeifCorry Memorial can make it to a break-even point.” To achieve that goal, LECOM Health’s plan includes cutting costs by sharing some nonclinical services at Millcreek Community and Corry Memorial such as payroll, purchasing and information technology, Ferretti said. At the same time, LECOM Health looks to add medical services at Corry Memorial. “It’s a new facility, better designed to provide outpatient services,” Ferretti said. “We will see whether we can move senior health services into the Corry area. We might bring in independent personal care, similar to what we have atRegency (at South Shore in Erie) and Parkside at Westminster (in Millcreek Township).”
“
FROM A COMMUNITY STANDPOINT, IT SEEMS THAT PEOPLE ARE HAPPY WITH THE SERVICES THEY RECEIVE FROM THE HOSPITAL. —Rick Novotny, executive director of the Corry Area Redevelopment Authority
UPMC Hamot President Jim Fiorenzo only has to look out his office window to see how much Erie’s bayfront is changing. But before multimillion dollar hotels popped up along the bayfront, Hamot was already expanding its medical campus. Now LECOM Health is doing the same on Upper Peach Street around Millcreek Community Hospital. “Healthcarehasbecome a valuable, supportive industry in Erie County that draws people here from outside the county,” Fiorenzo said. LECOM Health President John Ferretti, D.O., spoke even more enthusiastically about the role health care plays in Erie County’s economy. “Health care and education is a new economic engine in the county,” Ferretti said. “It’s driven by nonprofits and I think it’s a great thing.” Recent data supports Ferretti’s statement. About 15.7 percent of Erie County workers were employed in health care and social assistance in 2015, higher than the percentage employed in manufacturing, retail trade or government, according to the U.S. Bureau of Economic Analysis. The percentage of Erie County residents employed in health care and social assistance actually declined from 17.7 percent in 2011, but the percentage of those employed in manufacturing declined even more duringthattime,from23.4 percent to 14.1, the bureau reported. Erie County’s percentage of workers employed in health care and social assistance nationwide is also higher than the national percentage of 11.2 Health care and social assistance are also responsible for a higher percentage of Erie County’s gross domestic product (12.75 percent) than they are nationally (7.3 percent), and they are a larger contributor to the county’s net earnings (17.4 percent) than the country’s (11 percent). This is good news for several reasons, said Ken Louie, an economist and director of Penn State Behrend’s Economic Research Institute of Erie. “These numbers reflect the diversification of the local economy,” Louie said. We are relying less on the more traditional heavy industry that Erie has always been known for having. Diversification allows the economy to absorb unexpected shocks to the system better than if it relies on a couple of large manufacturers.” Another positive aspect of the rise of health care as an economic driver is that it offers a wide variety of jobs, Louie said. Some jobs, such as cardiac surgeons and neurosurgeons, pay more than $1 million a year, while others pay little more than the minimum wage. “A majority of our new jobs are in nursing and those average about $50,000 a year plus benefits,” Fiorenzo said. “Though our kitchen and housekeeping positions might pay similarly to other local employers, the advantage to working in a large health-care system is you will have an opportunity to improve
During morning rounds recently at Millcreek Community Hospital, Lake Erie College of Osteopathic Medicine student Adi Cosic, center, speaks with resident Omar Ahmed, D.O., as James Lin, D.O., right, checks a patient. Cosic, 26, stepped forward to help translate for the female patient speaking Bosnian. LECOM students Roger Gregush, 27, and Alex Huynh, 25, are at left. [GREG WOHLFORD/ERIE TIMES-NEWS PHOTOS] James Lin, D.O., center (blue jacket), speaks with residents Omar Ahmed, D.O., left, and Robert Puckett, D.O., right, during morning rounds recently Millcreek Community Hospital. Lake Erie College of Osteopathic Medicine students, background from left, Alex Huynh, Breanne DeMarco, Adam Smith, and Adi Cosic join the group.
your situation through access to education and to a job market that includes 60,000 positions systemwide.” The biggest concern is if the rise in health care is mostly related to the aging of northwestern Pennsylvanians, Louie said. Older people often require more medical attention. “If it’s related to the demographics, then it’s not necessarily a reflection
of more job diversity,” Louie said. “It’s just taking care of the population.” Both Ferretti and Fiorenzo said they are confident the rise of health care as an economic driver in Erie County has causes beyond an aging population. “We are fortunate to havetwolargeplayerswith UPMC Hamot and Saint Vincent who are providing medical services that
haven’t been available to people here,” Ferretti said. “And when we opened LECOM, there were only 119 cities in the country with a medical school. We have an unusual mix for a city Erie’s size and we are fortunate to have it.” David Bruce can be reached at 870-1736 or by email. Follow him on Twitter at twitter.com/ETNbruce.
Erie Times-News | GoErie.com |
Sunday, February 19, 2017
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Erie Times-News | GoErie.com
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ERIE 2017 SECTION N
Laith Alrubeay is the owner of Anwar’s Fresh Meat Market, in Erie. [JACK HANRAHAN/ERIE TIMES-NEWS]
FACES OF THE
ECONOMY
Rise in immigrant-owned businesses helps Erie’s economy Immigrants start businesses at twice the rate of the average U.S. resident
By Gerry Weiss gerry.weiss@timesnews.com
Laith Alrubeay parked his truck in front of his eastside Erie market shortly before 8 p.m. on Jan. 25, and immediately got to work. The 32-year-old Iraqi native and one of his employees had just returned from Detroit, where they picked
INSIDE
up fresh produce from a West Coast food distributor that Alrubeay used to work with in California. The truck was packed with tomatoes and cucumbers, peppers and eggplants, and much more, one of two weekly food hauls Alrubeay makes to Michigan, including runs to get breads, meats, fish and other groceries.
As quickly as Alrubeay, his countries, including Sudan, employee and a few relaSyria, Libya, Iraq and tives could unpack the Nepal, had made truck and stock the purchases. View Erie Timesshelves at Anwar’s “It’s all word News photos Fresh Meat Market, of mouth,” from Anwar’s 2601 Parade St., Alrubeay, a husFresh Meat customer after band and father Market: GoErie. customer filed into of three young com/photos the store. By night’s children, said of end, more than 150 how his customers people from several different find out about when he’s
Learning while you earn gives jump start to careers. 4N
Big projects to move ahead in 2017. 5N
returning with food. “They know I’m coming with fresh stuff, food for their different cultures, and they tell friends. They tell everybody.” When Alrubeay fled wartorn Iraq for the United States as a refugee in 2008, he landed in San Diego. He started in America, he says, See IMMIGRANTS, N2
Conneaut Lake Park has turned a corner. 6N
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IMMIGRANTS ContinuedfromN1
ABOVE: Belal Abdukader, left, and Husen Manan Mohemed, right, shop at Anwar’s Fresh Meat Market, in Erie. LEFT: Laith Alrubeay, right, owner of Anwar’s Fresh Meat Market, in Erie, serves Semmal Gnanapragasam and his son Imayan, 2. [JACK HANRAHAN/ERIE TIMES-NEWS]
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Manom, 25, of the Sudan, and her daughter, Yasmeen, 4, the youngest of her four children. The mother and
daughter ordered a shish kabob and side of rice, which Alrubeay prepared on the spot. While he cooked he also rung up groceries purchased by a Ukranian woman, some candy by two Iraqi children, and a couple of cans of sodafrom a lifelongErie resident. His market is not big, but he features what he callssixdepartmentsinthe store: butcher, produce, groceries, ready-to-eat meals, dishware and antiques. Alrubeay said he hopes
to open another business next to his market this spring, selling antiques, carpets and more. “I really like the food he has here,” Manom said of the market, of which she frequents roughly twice a week. “American food is OK, but I like to have the food and cooking spices I’mfamiliarwithfromback home.” Gerry Weiss can be reached at 870-1884 or by email. Follow him on twitter at twitter.com/ETNweiss.
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of Israel, works as a chef at Habibi Mediterranean Cuisine, 127 W. 14th St. Both became U.S. citizens in 2015. “There are at least 60 to 70 families of Syrian refugees who have needs for Arabic foods that would be our patrons,” Dabbah said of his coming market. “Foods you don’t see at traditional Erie supermarkets.” On a recent afternoon lunch hour at Anwar’s Fresh Meat Market, Alrubeay waited on Sara
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He also ran a profitable business coordinating events. But Dabbah, with a wife and four children, had to start from scratch when he came to Erie. He took a job in the floral department at the Giant Eagle supermarket in Yorktown Centre and eventually started his own flower shop in the city. Now he plans on opening a Mediterranean grocery store and bakery later this month at 12th and Wayne streets. “I think we will do well,” said Dabbah, who also works as a program coordinator at the International Institute. His wife, Nibal Abdelkarim,
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opened here in March 2016. “Yes, I’m doing well. I work sometimes 16, maybe 18 hours a day so everything can be right,” said Alrubeay, now a naturalized U.S. citizen, who also speaks three languages: Arabic, English and Spanish. He only has one employee, and said he gets help in the store from friends and relatives from time to time. A healthy economy needs,amongotherthings, to have independent businesses that thrive, and Erie’s economy is far from thriving. Yet while a smallerthan-average piece of the current local economy comes from independent business owners, the region’s immigrant and refugee communities have been starting businesses at a strong clip the past few years, according to Erie-area economists and leaders in the refugee community. Immigrants start businesses at twice the rate of the average U.S. resident, according to an analysis that came out of the Economic Research Institute of Erie’s 2016 annual conference, an event this past July that highlighted how immigration has shaped both the local and national economies. “Immigration does moregoodthanbadforthe economy, that’s for sure,” said Ken Louie, the institute’s director. He added that while there is no local data on immigrant and refugee entrepreneurship, anecdotally, the spike “is obvious.” “I was driving on State Street the other day and saw an Asian grocery store that wasn’t in that spot a year orso ago,” saidLouie, whose parents brought himtotheU.S.fromChina when he was 4. Dylanna Jackson, executive director at the International Institute of Erie, 517 E. 26th St., for thepast fiveyears,saidher agency has seen an uptick in refugees arriving here withbusinessbackgrounds fromtheirhomecountries, most notably Syrians. Jackson knows of several institute clients who are planning to open businesses in the city this year, including coffee shops, grocery markets and jewelry stores, with the potential for much more refugee- and immigrantowned business in the future. “It’s the American dream for refugees. To be able to take care of your family and to own something that’s yours. It’s a big source of pride,” Jackson said. “I think it’s great that you have people coming to this country that want to contribute to the community. Erie is in a time of transition. It is trying to redefine itself. A big part of that will include immigrants and their businesses.” Jackson said some immigrant-owned businesses here, like the UK Supermarket, 1105 Parade St.,havecrossedoverfrom serving mostly Bhutanese refugees to now becoming “an anchor in the neighborhoodforany resident.” “Yes, (the market) has an ethnic flair, but they alsosellmilk,bread,eggs,” she added. “That’s crucial when there are no supermarketsintheinner-city.” Bassam Dabbah, 35, a Syrian refugee who fled to the United States in 2009, was the head florist in a five-star hotel in Jordan.
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Appenticeships help fill manufacturing jobs to develop and implement a plan to identify, qualify and recruit workers. The organization now has 43 members, said Diane Karlin,ERMP’sprojectmanager. The need for skilled workers in manufacturing has brought together manufacturing comBy Kara Murphy petitors for a common goal, she Contributing writer said. “We need skilled workers, At just 23, Mike Field has a life many of his high school class- we need to develop a credenmates who went on to college tialed workforce. They need to can’t even dream of yet. He has be trained, and there’s no better bought a house. He’s engaged to place to train them than inside be married. He even has a new our own plants right here,” she said. “Establishpuppy, named Ryder. “I know college ing apprenticeship gives you ‘the programs starts hardware’—the to put in that For more information about diploma — but pipeline of joining ERMP or learning fromwhatI’ve young workabout manufacturing seen, experiers who gain apprenticeship ence counts the skills and opportunities in the region, too, and I’m competenvisit www.industryneedsyou. learning every ciestheyneed com/about-us/ermp. day,” he said. to step in and “At the same replace retiring time, I’m earning workers, while also developing the a paycheck.” Field chose to go to foundation for a great work at Industrial Sales and manufacturing career.” Manufacturing (ISM) after high school instead of attend- Learn while you earn ing college. Officials from the company, located at 2609 W. Apprenticeshipsareanimpor12th St., chose him to continue tant part of the equation when on in a formal apprentice role considering how to grow the last year. As an apprentice, Field workforce, said Jim Rutkowski spends time in each department Jr., the general manager of ISM. of the manufacturing sections of Hiscompanyhasagoalofadding the company, becoming skilled anapprentice everyyear.Fieldis at each area before moving on the first. to the next, said Lori Dever, “An apprenticeship is a valuISM’s workforce develop- able tool in that process because ment manager. By the time the it’s a learn-while-you-earn apprenticeship is complete, model,” he said. “And it comFieldwillhavereceivedanation- bines on-the-job training with ally recognized certificate of job-related instruction tied to apprenticeship, coupled with the attainment of national skills more than a dozen National standards.” Institute for Metalworking Skills As part of the efforts to ramp credentials. up the number of local apprenISM is just one of the Erie ticeships, ERMP helped the Countycompaniesparticipating Greater Oh-Penn Mfg. Apprenin the Erie Regional Manu- ticeshipNetworksecurea5-year facturer Partnership (ERMP), $3 million grant from the U.S. which was formed in 2014 by a Department of Labor in 2016. In its first year, Oh-Penn, group of 20 local manufacturers
Learning while you earn gives a jump start to careers for young workers
Industrial Sales and Manufacturing apprentice Mike Field, 23, foreground, is being mentored by team leader Joe Zielinski, 64, background. Zielinski has more than 40 years of experience, while Field has been in the training program for about three months at the Millcreek Township facility. [GREG WOHLFORD/ERIE TIMES-NEWS]
whose footprint spans 14 counties in Ohio and Pennsylvania, exceeded its goal of placing 25 apprentices. Fourteen of those placementsareatmanufacturing plants in Erie County at companies including small machine shops and larger businesses, Karlin said. Companies like ISM that hire an apprentice receive a sliding reimbursement for training costs, starting at $6,000. But thatreimbursementisjustadrop inthebucketintermsofexpected returnoninvestment,Rutkowski said. “I’m expecting to lose 10 percent of my workforce every year
for the next 10 years to retirement,” Rutkowski said. “So we’re working hard to get young peopleintomanufacturingandto dothat,wehavetoinvestinthem and they have to invest in us. If we’re going to be successful in the future, we need those young people here.” ISMandotherlocalcompanies introduce students to the idea of a career in manufacturing — and the benefits of apprenticeships — early by taking part in recruitment efforts like inviting high school classes in for tours of the plant and participating in a summer manufacturing camp. “Part of that goal is to get our
young people to look at manufacturing in a different way,” said Dever. “People in the past have viewed manufacturing as darkanddingy,butmanufacturing today is high-tech. It’s bright and shiny. We’ve got the latest, most up-to-date equipment. You have to, to remain competitive in the global marketplace. But that’s also the kind of thing that changes young people’s mindsets, and gets them interested in a manufacturing career. The chance at an apprenticeship — where you learn while you earn and really get a jump start on your career — is another recruitment tool.”
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This is an artist’s rendering for Trippe Hall, a $28.4 million, 251-bed residence hall, part of which will be reserved for students with an interest in international business at Penn State Behrend in Erie. [CONTRIBUTED/ETN]
The changing face of Erie Big projects to move ahead in 2017
By Jim Martin jim.martin@timesnews.com
Four massive constructionprojects,threeofwhich should begin this year, top most everyone's list as among the most transformational projects Erie has seen in years. Those projects, each of which is valued at more than $100 million, include a $150 million commercial, entertainment and residential project on Erie's bayfront by Scott Enterprises,aplanned$135 million office building at Erie Insurance, a $111 million addition to UPMC Hamot that is expected to begin next year, and a $115 million expansion project, announcedFeb.10,atSaint VincentHospital.Workon that project, which will create a new emergency department and operating rooms,isexpectedtobegin in May. But those aren’t the only major projects expected to take shape in the Erie area during the months ahead. There is a substantial list ofmajorconstructionprojectsthatareeitherplanned, under way or are nearing completion. They include: • Sarah Reed is moving ahead on an $18 million addition and renovation to its Reed House skilled nursing center, located at 227 W. 22nd St. The 40,000-square-footadditionportionoftheprojectis expected to be completed sometime this spring. DinaScribner,marketing directorforSarahReed,said thenumberofresidentswill remain unchanged at 106, but the addition and renovation will provide more space for those residents, all of whom will have privateroomsaftertheworkis complete. The project also includes a series of communal kitchens. • Gannon University’s NashLibrary, builtin1973, is in the middle of $16 million renovation that will include new entrances, interior and exterior
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This is an architect’s rendering of the proposed view of the third-floor open study area of Gannon University’s Nash Library, which is currently undergoing a $16 million renovation. It’s scheduled to be open by January 2018. [BUEHLER & ASSOCIATES/ CONTRIBUTED]
renovations, a coffee shop and a full-service technology desk. • Ground was broken in December for Trippe Hall, a 251-bed dormitory being builtonthecampusofPenn State Behrend at a cost of $28.4million.Construction ofthe65,000-square-foot building is expected to provide housing for both first-year and upper-level students, including international students. Work is expected to be complete in timeforthefallsemesterin 2018. • The ongoing expansion at Waldameer Park & Water World continues this off season with the construction of a $2 million addition to the water park.Theexpansion,which includes a 40-foot-tall water feature, is expected to be done by June. • The transformation of the Former Glenwood SchoolonPeachStreetinto thenewheadquartersofthe Erie Federal Credit Union is nearing completion. The credit union is spending about$7milliontoreinvent the 50,000-square-foot building. Jim Martin can be reached at 870-1668 or by email. Follow him on Twitter at twitter.com/ETNMartin.
Officials at Waldameer Park & Water World plan to make this water feature a centerpiece of a water park expansion, to be located between the existing wave pool and Kidz Zone splash park at the Millcreek Township facility. The main water feature will be about 40 feet tall. The expansion will have the capacity to hold about 400 people and will cost about $2 million. [CONTRIBUTED/ERIE TIMES-NEWS]
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Conneaut Lake Park patrons are reflected in a puddle after a summer rain. [FILE PHOTO]
Conneaut Lake Park looking ahead after bankruptcy The lakeside amusement park has turned a corner, and its board will focus on revitalization.
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By Valerie Myers valerie.myers@ timesnews.com
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CONNEAUT LAKE — Reorganize. Revision. Revitalize. It’s the three-step plan to retool Conneaut Lake Park. Step one is nearly complete. Steps two and three are in progress. Managers of the amusement park have reorganized its finances and reached agreements to pay more than $3 million in debts. They’re selling surplus property to help finance the repayments. Most recently, a lot fronting Conneaut Lake sold for $255,000 in January. The lion’s share of the proceeds went to local taxing authorities, toward the park’s $1.3 million property tax debt. A December auction of items no longer used by the park, including vintage Dodgem and Blue Streak cars, raised more than $28,000 for park operations. Now the Economic Progress Alliance of Crawford County, which operates the park through a management
agreement with volunteer trustees, continues to repay park debts and re-imagine the park’s future. The goal: To make the park a year-round attraction. The plan calls for the construction of a new performing arts center, expo center, beach club and pavilions over the next five to eight years. The to-do list also includes continued amusement park improvements, including a new midway. It’s an ambitious undertaking, with fires to put out along the way. “The challenges are a running list. You take care of something at the top of the list, and something else creeps up,” said Mark Turner, executive director of the Economic Progress Alliance. Park finances are improving but are still far from robust. “We’re a not-forprofit coming out of bankruptcy,” Turner said. “Right now, it’s very much about managing resources, staying on course and not losing money. That’s stopped;
the bleeding has stopped.” Park revenues in 2016 were up 26 percent from the previous year, Turner said. “Games, gift shop sales, concessions, wristband sales, all were up over the prior year. The park didn’t lose money; it made a little money. That’s the first really important corner it’s turned,” Turner said. Helping the park attract visitors and dollars were water attractions reopened in 2016. The lazy river, water slide and wading pool had been closed because of maintenance issues for a decade. The water park should continue to attract visitors this summer, Turner said. “We’re not going to be doing a lot new this year. We’ll be doing more of what we already do,” Turner said. “We’re looking at extending hours and at being open more days a week.” The amusement park was open weekends through summer last See PARK, N7
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WE’RE A NOT-FOR-PROFIT COMING OUT OF BANKRUPTCY. RIGHT NOW, IT’S VERY MUCH ABOUT MANAGING RESOURCES, STAYING ON COURSE AND NOT LOSING MONEY. THAT’S STOPPED; THE BLEEDING HAS STOPPED. — Mark Turner, executive director of the Economic Progress Alliance
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)! 1)@2-8 %&72-8 !)7 &7#& 5#-2)759 People ride the Paratrooper at Conneaut Lake Park in Conneaut Lake. [FILE PHOTO]
Erie Times-News | GoErie.com |
Conneaut Lake Park visitors ride the Blue Streak roller coaster.
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year. The water park was open six days a week. Camperland, a neighboring campground owned by Conneaut Lake Park, will be expanded in 2017. The campground will have about 200 campsites, up 47 from 2016. An additional laundry and restrooms also will be added. Founded as Exposition Park in 1892, Conneaut Lake Park through recent years lost money and fell into disrepair.Park trustees filed for Chapter 11 bankruptcy protection for the park in December 2014.
Now, with regular maintenance and debt repayments in progress and prospects for grants and private investments in the park, its future is positive, Turner said. “We’re on the path we hope to be on,” he said. “Public reaction has been very positive. It’s certainly not the biggest economic development project we’ve been involved with, but it’s the one that’s received the most public support.” The park’s fortunes are linked with the fortunes of Crawford County, said Juanita Hampton, executive director of the Crawford County Convention and Visitors Bureau. Conneaut Lake Park traditionally has
been a major draw for tourists, second only to Pymatuning State Park. “For Pumpkin Fest alone, in October, 30,000 visitors came in one weekend,” Hampton said. “The downtown fills up. The streets are full. People are eating at local restaurants. It’s huge for local businesses.” And the value of the park goes beyond tourism, Hampton said. “It’s one of only three public accesses to Conneaut Lake. As long as the park is there, that access will be there, forever and ever,” she said. Valerie Myers can be reached at 878-1913 or by email. Follow her on Twitter at twitter.com/ETNmyers.
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FOR PUMPKIN FEST ALONE, IN OCTOBER, 30,000 VISITORS CAME IN ONE WEEKEND. THE DOWNTOWN FILLS UP. THE STREETS ARE FULL. PEOPLE ARE EATING AT LOCAL RESTAURANTS. IT’S HUGE FOR LOCAL BUSINESSES. — Juanita Hampton, executive director of the Crawford County Convention and Visitors Bureau
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