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August 5, 2006

A weblog about the politics and affairs of the old and glorious City of Albany, New York, USA. Articles written and disseminated from Albany's beautiful and historic South End by Daniel Van Riper. If you wish to make a response, have anything to add or would like to make an empty threat, please contact me.

August 5 , 2006

Suburbia Commits Suicide

Luther Forest will destroy Saratoga County

* * * UPDATE * * * Jan 13 2007 AMD stock takes a dive on the same day the Dow hits a record. It seems that Intel is fighting hard for that shrinking chip market.

* * * UPDATE * * * From the Hearst Times Union, October 21, the AMD deal is supposed to be made binding, but somehow that's not gonna happen any time soon. Notice there's no mention in the article that the AMD deal has been put off indefinitely.

* * * UPDATE * * * Can I call ‘em, or what? This short, sad article popped up in the Daily Gazette for August 1, 2006, jammed in the corner of page B3: “AMD Plans won’t Come Until 2007.” (Not a word in the Hearst-owned Times Union.) Gee, it looks like everything is on hold, but the taxpayers are still bleeding $1.2 billion in subsidies for AMD. Meanwhile, the Associated Press put out this article about massive layoffs at Intel on September 5. It seems that the chip business isn’t doing so well. So much for corporate socialism as the salvation of our economy.

All through the early part of summer the local corporate media was as shrill and excited as quarantined children anticipating ice cream. An honest to goodness high tech corporation from California was seriously considering locating a chip factory up in the suburb of Malta, right outside of Round Lake in Luther Forest.

When the announcement came on July 5 it was whoop it up time for all of the local politicos of the Republican Party. Pataki, Bruno, Sweeney and all the other big boys had prepared the way with years worth of tax subsidies, environmental degradation and outright gifts of large wads of taxpayer money. All was ready for large scale corporate rape of the local economy.

The corporate rapist they’d been waiting for turned out to be Advanced Micro Devices, usually known as AMD. This Silicon Valley based corporation has happily consented to accept the massive tax breaks and subsidies offered, with no strings attached, of course. AMD is under no obligation to stay in the area, they can pack up the proffered loot and leave without any notice any time they want.

Attracting AMD was a triumph of corporate socialism, that is, the political philosophy that human beings exist solely for the purpose of serving and enriching corporations. This is the guiding idea behind today’s Republican Party and their Democratic Party allies. (Back in the 1930s corporate socialism was called national socialism, but that name was dropped after it accumulated some bad public relations.)

Current lame duck Governor Pataki is a hardcore corporate socialist. Take a drive across upstate New York and you can see the results of his economic policies in numerous struggling towns and blighted small cities. Pataki’s policy of awarding tax money indiscriminately to corporations, such as his infamous Gardenway Giveaway, has done much to make upstate’s economy what it is today.

But despite the naysaying of naysayers like me, AMD really is planning to build a chip fabrication plant in undeveloped Luther Forest. Or, at least they say that they are. Why, you might ask, are they not building their plant on vacant General Electric land in Schenectady, or some other burnt out industrial landscape? Why on pristine land?

Well, you see, there’s something called 485B. Four Eighty Five Bee. This is a deep tax discount for building on land that has never been built upon. The purpose of this boondoggle is to encourage sprawl. There is no equivalent tax break for building on or renovating land that is in, say, a city. You wouldn’t want AMD to miss out on that, would you?

No matter. There will be 1200 new jobs! High quality jobs! Three jobs will be created for every one of those 1200 jobs! 4800 jobs for the suffering unemployed of... Saratoga County?

There are some who say that importing 1200 workers and planting a chip factory among the suburban tract houses will “change the character of the community.” Perhaps providing infrastructure for 1200 imported factory workers could have an impact. Some think that the changes to Saratoga County would not be desirable.

Suppose, they say, the chip factory dumps chemical pollutants into the ground water. Suppose AMD refuses to clean up their poop. Look how General Electric refuses to clean up the Hudson River. Look how IBM refuses to clean up the Endicott Plume.

Endicott is west of Binghamton NY. The Wife grew up there as an IBM brat when it was a company town. Today you can buy a nice four bedroom house there for five thousand dollars, or less. That’s because IBM left behind a plume of toxic horror that is slowly but steadily spreading through the groundwater, and nothing is being done about it. Thanks to IBM, Endicott is becoming a ghost town.

Okay, suppose AMD is, as they claim in a recent propaganda mailing, “a good corporate citizen.” There’s plenty of pathetic municipalities across the country and beyond willing to bend over the mattress for a chip factory. Why did they choose our suburbs?

AMD corporate headquarters is located in an overpriced suburban hole called Sunnyvale, California. (Yes, I’ve been there.) Their main chip manufacturing plant is in Dresden, Germany. They have another factory run by a contractor in Taiwan, and recently opened a second one nearby. In addition, they have a big research facility in Bangalore, India.

So then, Saratoga County is supposed to be the new jewel in the corporate crown, alongside all these exotic locales. Right?

Maybe not.

Perusing the Hearst owned Times Union last July 8, I spotted a very interesting little Associated Press article on the bottom left corner of page B10. It seems that AMD is not having a good year:

AMD late Thursday warned second-quarter revenue would be ... about 9 percent below the previous period ... It pinned the lower estimate on declining sales of processors for desktop and notebook PCs.

Oops. That doesn’t sound too good. So if they are in trouble, why do they need a factory in Malta? The article continues:

With AMD’s share [of the chip market] hovering around 21 percent, company executives last month said they were preparing to supply 30 percent of the market’s needs by 2008.

Wait a minute here... construction for the factory is not supposed to be finished until 2009, and is supposed to start operating at partial capacity by 2010. I guess it’s good corporate policy to be optimistic, but doesn’t this mean that Malta is supposed to produce chips BEYOND a thirty percent market share for the company?

Since it started in 1969, AMD has been in a struggle to the death with rival chipmaker corporation Intel. Sometimes AMD gets the upper hand, other times Intel comes out on top. According to Wikipedia, AMD has been doing pretty well these last few years because they’ve had some excellent state of the art product to sell.

But this does not mean Intel is planning to curl up and die. They are doing whatever it takes to grab back that market share. From the article:

Steep price cuts from Intel, the world’s biggest chip maker, appear to be throwing a fork in those plans, analysts said.

By themselves, price cuts mean very little. But it appears that Intel is cutting prices in anticipation of shipping a new generation of chips:

Intel ... also has been talking up future price cuts that are to coincide with the release of three new products, due by midsummer.

The guys who run AMD are not a bunch of fools, they know how to prosper and grow in the highly volatile chip industry. I’m sure as hell not a knowledgeable insider, but it seems to me that AMD got where it is today by not taking unnecessary risks. That's just common sense.

And, it seems to me, when they have to take risks, to cover their butts as much as possible. Always make sure someone else cleans up your mess and pays the bills. That’s just corporate sense.

Building a new factory in anticipation of new demand is great, but what if the new demand never materializes? What better way to minimize risk than to let some pathetic throwaway municipality in Upstate New York hold the bag and dispose of the trash.

Anytime without warning, AMD can cut and run, leaving an empty hulk of a building and endless parking lots sprawled across the former Luther Forest. They will also leave as many as 1200 unemployed workers, not to mention 3600 more workers who depend on the salaries and wages of the first 1200. That’s 4800 abandoned breadwinners earning nothing but doggy droppings.

“Come visit Malta in Saratoga County, home of the unemployed and site of abandoned factories. Be sure to taste our toxic groundwater. We’re changing our name to Endicott.”

Meanwhile, back in the real world, the latest inflation figures are the highest in eleven years. Have you checked out the price of gas at the pumps lately? The oil corporations are literally sucking us dry.

Like an old song says, “a dollar ain’t what it used to be.” Or as one of my neighbors put it the other day, “My rent’s going up but my paycheck’s the same.” Lots of people are going to do without a new computer this coming winter. They’ll be paying their heating bills instead. Many of those who do buy computers are going to be looking for bargains.

At this point, the best thing that could happen to Malta and Luther Forest is for AMD to quietly change its corporate mind and go away.

A worse scenario would be for them to clear the land, build the factory and then disappear. Then no one could collect 485B tax reductions because the land will no longer be pristine.

The absolute worst case would be for AMD to build their factory, import 1200 workers and make the local economy dependent. When AMD packs up and leaves, the impact will be overwhelming to the already strained economy of suburban Saratoga County.

Rising gas prices will continue to hit the suburbs the hardest, because you can’t do nothin’ in the suburbs without burnin’ gas. You know, things like eat, go to work or go home. Expensive gas is steadily destroying the wealth of the suburbs.

Conversely, as wealth contracts in the suburbs it will grow in the City. This is because the remaining wealth of the suburbs will migrate to the place where wealth will go the farthest. That is, to the place where you have to buy the least gas.

The only hope for suburbs like Malta is to desperately try to reorganize themselves into urban entities. Indeed, back in the 1990s the town board of Malta declared that they wanted to “adopt the look and character of a New England town.” They even tried to implement some planning initiatives in that direction.

That did not last into the new millennium. Encouraging their sprawl to transform into a real community proved to be too much for the town leaders. Today, the Malta town supervisor contents himself with suggesting that Malta open a library. Hopefully, he says, this will help make Malta “a quality 21st century town.”

I seriously doubt that the current supervisor has the political skills to deal with the coming economic collapse of the suburbs brought on by rising energy prices. Not too many people do. It is clear that Malta only anticipates becoming a continuation of Clifton Park, an automobile slum spread across Saratoga County like dog poop on a dead lawn.

Corporate socialism leaves a trail of destruction. The decline of the suburbs is inevitable, but in many places it will be a slow decline. If AMD sets up shop in Malta, then Malta will crash overnight. What will be left north of the Mohawk River will not be pretty.

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