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U.S. Region: Tapping into the Northeast's Population Center

by Ken Krizner, World Trade Magazine 
December 5, 2010

Major markets in the U.S. and Canada are just a day's drive away. 
 

The Northeast United States’ huge population base makes it an attractive region for expanding manufacturing companies, as well as for firms looking to locate distribution and warehouse facilities. Companies that operate facilities in the region have one-day access to large metro areas, both in the U.S. and Canada, and that access offsets the higher cost of doing business in the region.

There is significant industrial development in the Northeast U.S., as well as numerous ports, international airports and highway infrastructure to support a decision to locate a facility in the region.

Buffalo-Niagara takes advantage of location

Canada is the United States’ largest trading partner, and about 14 percent of all goods flowing between the two countries crosses the border in the Buffalo-Niagara, N.Y., region, which lies on the shores of lakes Erie and Ontario. The region has eight international ports of entry—four for vehicles, three for rails, and one for shipping vessels.

Nearly 60 percent of Canada’s population lies within 500 miles of downtown Buffalo, as does about 40 percent of the U.S. population. This puts Buffalo-Niagara within a day’s drive of such populous metro areas as New York City, Boston, Toronto, and Montreal.

“We provide a market that no other city in the U.S. or Canada can match,” says Tom Kucharski, president and CEO of Buffalo Niagara Enterprise.

Thanks to technology and cooperation between U.S. and Canadian officials, crossing the border is a relatively quick process, given today’s security concerns, Kucharski says.

The relative ease of crossing the border helped convince a Canada-based company, electronics and electrical components distributor Electro Sonic, to expand in the Buffalo-Niagara region in a $20 million project that includes a highly automated electronic distribution center.

“The company wants to take advantage of the U.S. market and also have quicker access to Southern Ontario,” points out Kucharski, adding that access to Southern Ontario is quicker from the Buffalo-Niagara region than from the northern portion of the Toronto metro area, where Electro Sonic is headquartered, because of traffic congestion and the transportation infrastructure.

The Buffalo-Niagara region has diversified its workforce from its traditional roots in heavy manufacturing, allowing it to attract companies in such industries as advanced manufacturing, clean tech (green industry), life sciences, advanced business services, and agribusiness.

The region has access to five interstates, including Interstate 90, the country’s longest interstate, running between Boston and Seattle.

A new intermodal hub opened in Buffalo in November, meaning increased capacity, improved technology, and additional service lanes, adding to an already developed rail infrastructure system.

Collaboration to promote wind energy

Buffalo-Niagara is part of a larger region that is approximately the midway point between a major commercial center that includes New York City, Chicago, Toronto, and Pittsburgh.

Access to those markets, as well as an existing base of suppliers and transportation infrastructure, and the strong wind patterns of the Great Lakes has led to a cross-border collaboration between Buffalo Niagara Enterprise, Greater Rochester (N.Y.) Enterprise, and Niagara (Ontario) Economic Development Corp. to capitalize on the growing wind energy industry sector. The three organizations announced a partnership earlier this year to create the CanAm Wind Energy initiative.

CanAm Wind Energy combines the industrial assets, skilled workforces, advanced technologies, and strategic locations of the region, Kucharski says. “It will further diversify and strengthen the regional economies through new energy opportunities,” he points out.

The Rochester metro area has a strong wind industry supplier base, which includes more than 100 companies with related expertise to manufacture components of wind turbines.

Gleason Works, one of Rochester’s oldest manufacturers, is at the forefront in the design, application, testing, analysis, and production of gears for the wind energy industry. There are several wind farms in the metro area, with a combined capacity to generate 517 megawatts of power and serve more than 131,000 homes.

“Regional collaboration is key to economic success,” says Mark Peterson, president and CEO of Greater Rochester (N.Y.) Enterprise. “Through this partnership, [the region] will be in a better position to compete globally for jobs and investment.”

The state of New York boosted the wind energy industry last year when it began promoting the construction of a large wind farm off the shores of Lake Erie or Lake Ontario. The goal of the development, which will cost an estimated $1 billion, is to erect a cluster of turbines (between 25 and 40) and nurture an industry to manufacture and assemble windmills for projects taking root around the Great Lakes region.

Port of Philadelphia launches major expansion

The Port of Philadelphia is at the beginning stages of its first major expansion project in 50 years. Port Authority officials envision the Southport Marine Terminal, a public-private partnership, as a state-of-the-art facility strategically positioned to handle growing international trade volumes.

With an improved national economy and growth in retail sales and distribution supply, the Port of Philadelphia’s international trade volume is expected to grow substantially, says John H. Estey, chairman of the Philadelphia Regional Port Authority.

The project is part of an overall expansion initiative that will eventually more than triple the port’s total capacity of container facilities.

Located south of an existing terminal, the Southport project will be supported by three Class I railroads and a network of highways to enhance intermodal opportunities. The acreage on the site will offer the potential for future growth and expansion.

“We are poised to capture a substantial amount of the increasing cargo volumes that will be coming,” Estey says. “The Southport project offers us not only the opportunity to maintain our competitive edge, but allows us to seek new opportunities and attract new cargo. Other parcels of this size, backed up by first-class rail and road infrastructure, do not exist on the Eastern Seaboard.”

The commonwealth of Pennsylvania has earmarked up to $25 million to fund environmental studies, permitting, land acquisition, geotechnical work, site preparation, utility analysis, and site access work.

While Southport is a future project, there is growth currently underway. The Port of Philadelphia in August began receiving shipments of Hyundai and Kia vehicles from South Korea. Once unloaded, the vehicles are transported by truck and rail to Hyundai and Kia dealerships across the country.

It marked the beginning of an agreement to import and process 150,000 Hyundai and Kia vehicles annually through the port’s Packer Avenue Marine Terminal.

Glovis of America, the logistics affiliate of South Korea-based Hyundai Motor Co., previously imported the vehicles through facilities in Newark, N.J., and Baltimore.

Vehicles still key for the Port of Baltimore

Despite losing some business to the Port of Philadelphia, the Port of Baltimore continues to rely heavily on auto imports as part of its strategic plan. Last year, Germany-based BMW signed a five-year contract to bring 50,000 new vehicles annually through the Port of Baltimore. The first BMW vehicles arrived at the port earlier this year.

BMW, which had imported its vehicles into the U.S. through the Port of Charleston (S.C.), says the deal will help with shipping logistics and will be more cost efficient. The Port of Baltimore is the closest East Coast port to the Midwest.

BMW will utilize Mercedes-Benz’s vehicle processing center at the port’s Fairfield/Masonville auto terminal, where employees will add specific features to the automobiles once they are off-loaded.

In fiscal year 2009, the Port of Baltimore handled about 400,000 autos, though that is a decrease of 32 percent from fiscal year 2008.

Officials broke ground earlier this year for construction of a new 50-foot berth at the port. The project will support 5,700 jobs and, when completed, accommodate larger ships and attract more cargo to Baltimore. Port officials hope to attract larger ships once the Panama Canal expansion is completed in 2014.

Port Authority of NY/NJ acquiring property

Like other ports, officials with the Port Authority of New York and New Jersey believe the economy will soon rebound and with it, the shipping industry.

The Port of New York and New Jersey is the third-largest seaport in North America and the largest maritime cargo center on the East Coast.

To help make sure that the port is positioned to enjoy a share of future economic growth, the Port Authority announced in June the acquisition of waterfront property, the 98-acre Global Terminal on the Port Jersey peninsula in Jersey City and Bayonne.

Together with the Port Authority’s 2007 agreement to change the use of an adjacent Northeast Auto Terminal lease to allow for container handling, this agreement will lead to the expansion of the Global Container Terminal to 170 acres, which will assist in handling future cargo growth. wt

Ken Krizner is a freelance writer based in Cleveland, Ohio, where he writes often on economic development and technology issues.

Ken Krizner