Thursday, November 1, 2012

New York's New Race for Relevancy

You know they're thinking it.

And maybe even talking about it.

Corporate leaders across metropolitan New York City today, in Hurricane Sandy's wake, wondering if it's worth staying.

"Storm of the Century" Moniker Hits Home When It's THIS Century

Indeed, the Big Apple took a big hit this Monday with Sandy, while coastal New Jersey and parts of suburban Long Island took even bigger hits.  Sure, she might have been a once-in-a-century storm, but in our modern century today, can so many communities across such a wide swath of our country afford the complexities, inconveniences, and delays of our modern rebuilding processes?

It's not like 100 years ago, when a storm would wash away streets and homes, and maybe telegraph and electrical poles.  Today, electricity runs so much more of our society than it did back then.  Mere hours without it can be crippling to certain businesses, medical patients, communication networks, and mass transit systems.

And the New York metropolitan area is America's king in all of these areas.  Sure, it's faced challenges before, such as white flight, bankruptcy, drug epidemics, massive blackouts, terrorism, and crime waves, but resiliency has become the city's unofficial motto.  It's still home to more corporate headquarters than another city in the country.  Its hospitals are more than world-class; they set the bar for the best in medical standards.  New York is the media capital of at least the Western Hemisphere, if not the world.  And it boasts one of the world's most efficient - albeit outdated - mass transit systems.

Well, it did - until this past Monday.

In a way, failures in any of these strengths get magnified during an emergency simply by virtue of each one's sheer importance to the heavily populated Tri-State area.  In addition, having every major news network headquartered in New York, along with bureaus for all major international media outlets, you're going to have reporters and journalists tripping over each other - trying to scoop each other - on how bad things are.  Staten Island, along with the Jersey Shore's quaint seaside communities, may be finding it hard to compete for attention against mighty Manhattan's submerged Subway tunnels, but the city's signature borough provides a plethora of compelling stories just by itself.

Iconic hospitals being evacuated.  Elderly residents trapped tens of stories into the sky with no elevators.  Masses of people lining up for buses.  Seeing the devastation from beachside towns only grips news audiences so much, since living by the ocean has always been inherently risky.  Sometimes it's hard to feel sorry for people who flaunted their seaside lifestyle, all the while knowing they were one hurricane away from devastation.

Traffic gridlock crippling a region, on the other hand, is something with which many more people across America can empathize.  How being without electricity can cripple a community, too, is far easier to understand.  Throw in a rickety mass transit system that a region cannot do without, part of a mobility, electrical, and communication infrastructure that's old and dubiously maintained, and before too long, places like Texas, with its miles of relatively cheap land, look pretty good.

It's taken less to convince other companies that they'd be better off elsewhere.

When Is It Time To Say "Uncle?"

Which undoubtedly helps beg the question for companies trying to be loyal to the Tri-State area:  can they truly afford to keep limping through these emergencies?  Don't times like these make New York-based companies less competitive with their peers in other parts of the country?  Granted, these emergencies don't come frequently, and they don't incapacitate everybody at the same time.  Yet the wallops with which they hit seem to be getting increasingly harder to recover from.  Since America has numerous other cities in far more stable locations that aren't located on a sliver of rock barely above sea level, the logic of staying in a geographic zone so prone to disaster only gets murkier.

Of course, New York's metro area isn't the only one at the mercy of Mother Nature.  Earthquake-plagued California, for example, has for years been the butt of jokes regarding its beautiful weather apparently being worth losing everything in The Big One.  Some companies have moved from the state in recent years, but most of those relocations eastward have had more to do with the suffocating costs of doing business there than environmental threats to economic stability.  New York, New Jersey, and Connecticut may not have the balmy weather Southern California has, but they certainly have a similarly costly business climate.  And so far, that hasn't caused a mass stampede for the door.  Over the years, many companies have left the metropolitan area, of course, but many more have stayed, and new ones have flourished.  If that wasn't true, Manhattan and its surrounding corporate centers wouldn't be able to command the high rents businesses pay to play in the region.

And speaking of logic, for New York itself, one ace in its favor is the city's strong allure for creative types and ambitious career climbers.  These people already willingly - and enthusiastically - tolerate its high costs and often absurd "quality" of life.  At its very beginning, New York started out as a boisterous haven for misfits and aggressors, and to this day, it's home to the most bizarre mix of cultures, incomes, opportunists, and free spirits in the world.  It's been said that nobody with common sense moves to New York, and few native New Yorkers with common sense stay.  So in terms of logic being the best argument for staying in or around New York, that's already been lost.

Then, too, it's not like all is lost in terms of making the city more weatherproof.  For coastal New Jersey and Long Island, it's likely nothing can be done to prevent the type of devastation they experienced Monday night.  But for the city, a variety of new tools and technologies are coming online that could actually plug tunnel openings, re-route communication systems, and who knows what else.  Being the crucible of innovation that New York has always been, it's far too early to begin writing its epithet, at least in terms of how much more effectively future responses to emergencies can be managed.  It's just that our business mindset in America doesn't have much patience anymore.  Waiting can be costly.  And corporate New York may already have begun riding on patriotic post-9/11 adrenaline like cars run on fumes.  How much more altruism can New York's businesses absorb?

Already, filling the massive new skyscrapers being constructed in the new World Trade Center complex has been a daunting task.  Goldman Sachs built a billion-dollar headquarters tower across the street, but only after the city coughed up millions in incentives for them to do so.  With technology evening the financial playing field, having a bricks-and-mortar stock exchange at the fabled corner of Wall and Broad streets is more anachronistic than efficient.  Indeed, most of the tenants they've been able to woo into the World Trade Center are non-finance-related, and many of the venerable office buildings around the New York Stock Exchange no longer host financial firms of any kind.  They've gone condo, since their outmoded infrastructure can't readily accommodate all of the technology new office tenants require.

Isn't Normalcy Cheaper Elsewhere?

Mayor Bloomberg has been frantically trying to push the city back to normalcy - or what passes for normalcy in the Big Apple - since its sprawling Midtown corporate district escaped relatively unscathed from Sandy's wrath.  Yet hundreds of thousands of workers are having an excruciatingly difficult time trying to get into the office because of the city's lingering transit issues.  Right now, bedlam has been held in check by hollow promises that subways will be back to normal within days, and electricity will return to Lower Manhattan soon, too.  But New Yorkers live with blood-pressure-corrupting stresses all the time, meaning that their reserves of composure exist at abnormally weak levels.  After most ordinary storm surges, power failures, and blizzards, things sputter back to life within those crucial "days" city officials say will be required this time.  Hopefully, city officials will be right.  New York has managed to dazzle its detractors with the incredible before.

The question is:  how many more lives does this ol' cat have in it?  How many New York companies can keep shifting back-office work out-of-state (not to mention overseas) before realizing that Gotham remains simply too vulnerable for their economic comfort?

Resentment is growing among many New Yorkers about Mayor Bloomberg's push to have the city's annual marathon proceed as scheduled this coming Sunday.  Thousands of people can't even get to work, and thousands more don't have electricity:  how can Hizzonor think about a race through the streets?  The answer is clear:  money.  The New York City Marathon rakes in an estimated $350 million in economic benefits, and considering the amount of business it's lost this week, the city needs every penny of that.

Bloomberg may not believe he has the luxury of cancelling the marathon for economic reasons.  Plenty of the region's companies, however, may see staying put as a luxury they can no longer afford.

Whether the marathon goes ahead on Sunday or not, the city's newest race for continued relevancy has already begun!
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TO HELP WITH HURRICANE SANDY RELIEF EFFORTS:

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