The Unmaking of Manufacturing

...Neither the truth nor the falsity of that claim can be proved...

...Then in 1983, the federal Environmental Protection Agency found that the factory violated federal clean air standards, a condition that could be corrected only by extending the factory smokestacks to a height of seventy feet and installing special exhaust-filtering equipment...

...Over the years, residential neighbors moved in alongside the factory...

...When it assists a weak enterprise, it often stands accused of making the survival of the strong more difficult, perhaps impossible...

...Originally passed to encourage the installation of heating systems in tenement houses that had previously lacked them, it proved to be flexible enough to make economically feasible the restoration of thousands of old buildings...

...By contrast, the negotiators on the business side simply want profit...

...The costs of handling goods are high because of urban congestion as well as the inconveniences of multi-story buildings...

...It was clear to careful observers that the traffic congestion, the dependence on elevators to handle goods for a number of unconnected manufacturers in the same building, and other expenses of mid-city operation would inevitably make New York's multi-story factory buildings obsolete...

...Homeowners do not seem to care that a factory may even be forced to close its doors or leave the city if it is not permitted to expand...

...One of the most poignant aspects of the conflict between local residents and the industrial enterprises in their midst is the amount of political and civic energy that must be expended in the New York style to resolve it...

...It cannot build modern, highly subsidized manufacturing space for enterprises paying subnormal wages without running into opposition from those who claim that it is subsidizing management but not labor...

...What made them leave New York was not the environmental problem in its simple physical sense...

...If New York creates the right atmosphere, the city might be tempting to any number of daring entrepreneurs who have in the backs of their heads ideas for an urban equivalent of the ski...

...An even deeper set of questions underlies the problem of selecting a proper number of zones that will strike the right balance between effectiveness and political plausibility...

...It is not inconceivable that someone somewhere will invent something that can do for the city what the ski did for Vermont...

...And yet it cannot do the opposite...

...Local residents always enjoy favorable political odds over industrial enterprises...

...The manifold services it provides-and that bulk so large in its expenses-seem to the New York mind more essential than cutting taxes...

...The garment industry flourished in New York because its fairly skilled workers from Europe provided the entrepreneurial skill to organize a mass-production clothing business...

...The consequences of this exposure to criticism-threats to livelihood and reputation-lead the deputy mayor to believe that the ordinary rules of business conduct do not apply...

...No one wants to re-create the conditions that existed before the Triangle fire, but if cheap factory space cannot be found in which to use the cheap labor, how are the new arrivals to support themselves...

...In practice, it has turned out that New York neighborhood groups have become unsympathetic to the need to retain jobs and will do whatever they can to prevent nearby factories from expanding, whether or not the factories are causing nuisances...

...The local people did not care whether the factory was closed down or not...

...The difficulty of stimulating economic growth, or of even so modest a goal as simply hanging on to what the city already has in business and jobs, is best understood by reviewing the reasons why businesses leave...

...In the early postwar years, imaginative real estate people were chagrined that dress factories kept such valuable real estate from attaining its "highest and best use"-meaning office buildings, whose tenants could pay much higher rents per square foot...

...High wages can be offset by high productivity, but in the relatively primitive industries left in New York today, there seems to be no clear way in which productivity can be improved and jobs simultaneously be made more plentiful...

...The argument has some validity, but it is more persuasive at first hearing than after serious examination...

...The cost to the economy might, if someone bothered to analyze it rigorously, be greater than the normal profits on privately owned housing...

...Housing reform laws pushed industrial production from the tenement houses...

...To decry profits at the same time that one seeks to restore or at least maintain the city's industrial employment is obviously futile...

...In the case of cable TV, for instance, some believe the city should seek maximum franchise fees...

...A more complicated form of interference between residential and industrial land involves another New York City law, J-51...

...But there's always fear that relaxing the wage standard will have a depressing effect on future contract negotiations with the employers of the union's scale-paid members...

...That was an economically forlorn state resting on little more than its maple sugar until Europeans pointed out that skiing was fun and that Vermont was quite a convenient place for it...

...Others ask for maximum employment for minorities...

...But the city was genuinely sorry to see the garment manufacturers disappear...

...Not so surprisingly, therefore, the Koch administration has not succeeded in actually putting together, to the point of signing papers and getting the work underway, any of the large industrial development deals on which it has announced it was working...

...If the deputy mayor is perceived as being too generous with such items as low-cost electricity from hydropower generated upstate, or too harsh in terminating previously negotiated promises, he will be criticized...

...The city's inability to establish principles to guide its economic development policy leaves it trying to bargain with each business separately...

...Business bargaining is not what city government does best...

...Manufacturers are beset with a variety of difficulties, and space is perhaps the least of them...

...Under New York City law, when the city puts such an imaginary street on the official map, it need not pay for the land until it actually moves to build the street, an event that may never take place...

...It should be obvious that a city that has lost 600,000 manufacturing jobs in a single decade must have lost many manufacturing enterprises...

...When government provides housing that the private market cannot profitably provide, it must charge rents that, together with the subsidies it dedicates to housing, cover not only the immediate costs of the housing operations but all the elaborate governmental superstructure needed to run them...

...Many garment workers contracted tuberculosis in the airless rooms in which they both lived and worked...

...It was not until thirty years after the end of the war, when the Federal Bureau of Labor Statistics announced that the city had lost 600,000 manufacturing jobs in ten years, that New Yorkers who had never set foot in a factory learned that they had been living in a factory town...

...Here, sometimes in new brick-faced elevator buildings that looked like extraordinarily solid office buildings and sometimes in older structures on the choking side streets, the women's garment industry made its headquarters...

...Moreover, the city needs all the money it can lay its hands on to restore its own weary capital plant...

...They were right...

...Matters that seem quite simple-the erection of bus shelters by private concessionaires who would sell advertising space and share the revenue with the city is one-have so far baffled the best efforts of the Beame and Koch administrations...

...The ordinance was comprehensively revised in the early 1960s...

...The Queens elected officials were persuaded that the opposition was too strong politically to oppose, even though it seemed likely to cost seventy-five jobs...

...It may mean a loss of jobs to overseas production centers, or the growth of non-union employment practices that will even more seriously threaten the pay standards of the union's older members...

...A third question is: If the restraints are lifted only temporarily, until new enterprises establish themselves, will the same industries be able to withstand the shock of the reimposition of normal regulations...

...The ski revitalized overgrown farms and deserted villages with remarkable efficiency...

...Washington under the Reagan Administration has been proposing a similar set of zones for the United States...

...It is a fact that new garment shops are springing up on the edge of Chinatown in lower Manhattan, perhaps even in the houses in which Jewish immigrants once sewed overcoats a hundred years ago...

...And, even if it covers its costs, government housing does not directly help accumulate new funds in the hands of entrepreneurs who then invest in new projects...

...Ultimately, they fear, the industrial buildings will be demolished by their owners (the dress manufacturers usually rent their space from others) to make room for high-rise offices...

...In the garment industry, there are still thousands of workers employed at union scale in New York City...

...Are special zones not more likely to encourage familiar types of enterprise that compete with other companies outside the zones...

...The city was properly afraid that the industry was already too fragile to move...

...Until the end of the Second World War, the city's mayors and business and political leaders did whatever they could to encourage manufacturing and to reduce the factory workers' cost of living by maintaining the low subway fare and providing subsidies to housing...

...Their former factory floors have not been refilled by other manufacturers...

...That activity, they claimed, resulted in the loss of badly needed industrial jobs for relatively poor people in order to pile up profits for those who constructed less badly needed housing for the wealthy...

...When the catastrophic event of the Triangle Shirtwaist fire in 1911 killed 146 workers, mostly women, factory reform laws were passed as well, and the union, The International Ladies' Garment Workers, grew enormously in power and importance...

...It makes the sympathetic observer of the city's economic problems wish that the leaves cut from the calendar could be reaffixed to it, so that modern New York could enjoy the same enthusiastic innocence with which the city greeted economic activity back in the nineteenth century...

...They put ink on paper, stamped out small pieces of metal to make electrical fittings, prepared food, and brewed beer...

...It tries to give as few concessions on taxes and regulations as it can get away with...

...Since the deputy mayor's income, or position with the city, is not dependent on the size of the city's "profit'-there is none-critics can always argue that too much generosity was shown for reasons at which they can only hint darkly...

...Why should exemption be available only for the benefit of the weakest enterprises...

...A multi-volume study of New York's economy, headed by Raymond Vernon of Harvard, predicted in 1960 the decline of New York's manufacturing sector, but concluded that expanding service enterprises would put an equivalent number of New Yorkers to work...

...Instead of getting shelters in all the boroughs that would keep passengers warm and dry while they wait for a bus, the city has gotten lawsuits and bad publicity...

...Perhaps if the national economy continues to reduce inflation and increase employment, the cultural attitude toward enterprise will soften...

...Everyone, including the rulers of the Middle East, celebrated the conversion of its coal-burning plants to oil...

...Taxes are high because both local and state governments pay high wages, though not uniquely so, and then supplement them with unusually high pension and other fringe benefits...

...Critics are, it seems, bemused by the spectre of profits, an economic term that has been tarred with a certain opprobrium in New York since the end of the Second World War...

...Several states had already established them within their borders, but since the states generally impose fewer restrictions on industry than does the federal government, mere exemption from state regulation is a rather small stimulus...

...one of the major changes was an attempt to classify industries by performance standards so that innocuous manufacturing processes could be located nearer to homes...

...Chemical plants that produced synthetic tiles and rendering plants that made tallow and fats produced horrible smells in parts of the city...

...The company manufactured the rolled labels with adhesive backing that supermarkets use to put prices and advertising materials on cans and boxes...

...If we let them disconnect their electric cutting machines, they won't stop moving until they get to Alabama, officials said, probably correctly (within a few years they would not have stopped before reaching Korea...

...THE AMERICAN SPECTATOR MAY 1985 that leadership had given to the cultivation of manufacturing...

...Of course, New York's factories did not always look like factories, at least not like modern factories-one-story boxes floating in a parking-lot sea...

...No one except their employees and suppliers regretted their departure...

...The official responsible for handling the negotiations, now called the deputy mayor for economic development, has to bargain in full view of the public, while corporate negotiations are carried on with all the discretion of wartime meetings between enemies...

...Nor did other typical New York manufacturers present worse problems...

...New York had some multi-story reinforced concrete buildings, designed to carry heavy machinery on their extra-large floors and clearly labeled by design as buildings within which objects were produced...

...By 1970, when environmentalists in the Middle West were beginning to celebrate the disappearance of chimneys and black smoke from their midst, their fellow citizens had their first chance to breathe clean air...

...Sometimes neighbors will find a legal technicality that can be used to prevent an expansion whose purpose is to comply with new regulations designed to improve air quality...

...The smell they exuded was the salty smell of herring, and the only danger they presented to passing pedestrians was that of being bumped by one of the handcarts in which unfinished dresses were rolled from the buttonhole-maker to the hem-stitcher...

...The rest of the country never had known...

...Taste-makers may look at entrepreneurs with respect in place of scorn...

...Many pieces of land in New York were subject to ownership covenants that prevented their use for obnoxious purposes like glue factories, but that was not enough protection...

...Organizing the workers in the ladies' garment industry was difficult enough before the passage of the Wagner Act, in the days when the workers were immigrants, unsure of their rights, and fearful of their future if they alienated their employers...

...The British long ago recognized the difficulty that local governments face in trying to mobilize their inadequate resources to stimulate industrial development...

...Last year, for example, the following situation arose in Queens...

...Obviously, every state with economic woes wants its enterprise zones, or a fair share of them...

...Within specially designated areas that were suffering from high unemployment rates and showing other signs of economic stagnation, Hall suggested, the government could provide sanctuary against the taxes and intrusive rules and regulations of welfare statism...

...Although the zoning law permitted enlargement of the building, the residential neighbors thought that they would be able to stop the expansion by urging the Board of Estimate to refuse permission to build in the mapped street...

...Though stockholders and directors may disagree over the best course for their company to follow, there's little disagreement about the ultimate goal: to maximize the financial return to everyone connected with the enterprise...

...For a city, even so banal a goal is impossible to frame universally...

...Whenever the city negotiators offer terms acceptable to the entrepreneurs, they are criticized for giving too much and asking too little...

...Although they had lived alongside it for many years, most of them having moved in with full knowledge of its presence, they persuaded the Queens borough president that their "quality of life" would be imperiled...

...After the end of the war, however, growing interest in the "quality of life" and in the sociological problems of race relations, advanced health care, juvenile delinquency, and substandard housing overshadowed the attention Roger Starr is a member of the New York Times Editorial Board This article is adapted from his new book, The Rise and Fall of New York City, to be published later this year by Basic Books...

...The cost of manufacturing space is high because land cost is high and so is construction...

...Then they learned that the city had mapped a possible future street in that part of the property...

...Others demand priority for community broadcast facilities...

...New York's manufacturing businesses included some that did produce obnoxious noises and smoke...

...There are also thousands of new arrivals, some of them undocumented aliens, who are willing to work below the regular union scale...

...Control of factories for the safety of workers was only a short step from governmental control of factories for the protection of nearby buildings and the neighborhood...

...Despite sophisticated electrostatic devices that removed most gritty particles from their smoke, the dust and fly ash that remained seemed to be irresistibly attracted to the human eye and to the hamburgers that penthouse dwellers were grilling on their terraces downwind of Consolidated Edison's stacks...

...Under present circumstances, a new difficulty has arisen...

...The law permits the city to forgive existing taxes on substandard buildings that need rehabilitation and to exempt from taxation the value of improvements to render them modern...

...Employment soared, but only as long as the special tax benefits lasted...

...Manhattan residents have been legally entitled to purchase cable TV since 1970, but it has not been possible to get cable TV operators to sign final contracts covering the other boroughs...

...they made no smoke, except what came from cigars smoked on Seventh Avenue during the postprandial noontime "schmooze...

...The owners, however, may not build at any time on the demarcated street site without special permission from the Board of Estimate following a public hearing...

...They also feared that seventy-foot factory stacks would make their houses less salable...

...The problem of factory obsolescence was not limited to New York...

...Nor, assuming that Congress decides in the affirmative, is there agreement on just which taxes or labor and environmental rules should be waived, or exactly how many zones there should be...

...The reason is fundamental...

...First must come the high wages prevalent in New York City, pushed up by the high cost of housing, transportation, and practically everything else that goes into the standard of living...

...Their job is easier to define, but in view of the uncertainty across the table, their goal is difficult to attain...

...So far, Congress has been unable to decide whether to make Enterprise Zones national policy...

...The public policy question is not whether it is bad to permit builders and owners of buildings to make profits on their investments but rather, who would invest and operate buildings if there were no profits to be made from them...

...The owners decided to do this on a section of the property alongside the railroad and as far as possible from residential neighbors...

...The alternative, however, of dropping the lesser paid workers from the union altogether is equally dangerous...

...First they raised home production to its uttermost limits of inhumane efficiency...

...But the more zones there are, the less attractive their benefits become...

...Its power stations burned coal until the 1970s...

...A he problems New York faces in restoring its industrial base are far more intractable than they were when the original industries were established...

...The same can be said of previous administrations...

...When it assists a strong, prosperous enterprise, it opens itself to the accusation that it is simply wasting valuable resources, perhaps for corrupt reasons...

...Are the zones needed by new enterprises in which highly motivated innovators are likely to run big risks in the hope of earning very substantial rewards...

...Factory workers do vote, but they generally live far from their work places...

...competition will tend to obscure their charm...

...Peter Hall, a geographer at Reading University, suggested that the national government could help by creating what he called Enterprise Zones...

...The immigrant families worked in their tenement homes, disturbing domestic tranquility, raising dust, and exposing children to adult language and behavior that greatly disturbed some of the settlement house reformers...

...The question of why exemption from regulation-including environmental regulation-should be necessary to eliminate unemployment, balance the budget, and balance overseas trade is hidden under the proposal for the zones...

...It's rare indeed to find a public official who has enough experience in the private sector to carry on these negotiations successfully and yet understands the ways of government well enough to know how to modify business practice sufficiently to mollify critics...

...A dispute may ultimately be compromised in a way that would have kept the factory alive, but only after such a long period of uncertainty that it either kills off the enterprise or leaves the company so angry that it moves the factory anyway...

...The state and local governments also conduct programs that other cities avoid, including paying a significant share of Medicaid and Aid to Families with Dependent Children...

...The Enterprise Zones may prove helpful, even in New York, but they would be more helpful yet if the nation and particularly the city bothered to understand why such legislation came up for discussion in the first place...

...Adjacent were the furriers...

...And rather grubby factory jobs at that...

...The critics then aimed at the use of these tax concessions to turn an industrial building into a residential building...

...Roger Starr THE UNMAKING OF MANUFACTURING The rise and fall of industrial New York City...

...The ILGWU has agreed to establish a special secondary wage scale, recognizing that the new workers are competing not with regular union members but with offshore labor working at even lower rates...

...This law in its original form permitted industrial uses only in areas that were classified as "unrestricted," a deprecatory label that few landowners wanted to attach to areas that might sometime respond to residential demands...

...Bemusing other cities with its symbolic office skyscrapers and the penthouses serenaded by songwriters, New York did not let the rest of the nation know that in fact a very large fraction of its population worked at factory jobs...

...But that is how it has been since the Second World War, and particularly since the phrase "quality of life" has come into common speech...

...Finally, power costs are higher than just about anywhere else...

...The critics also know that laws taxing owners of real property on the capital value of the improvements they make to their property tend to discourage them from making such improvements, truly the last thing that intelligent tax policy should aim to do...

...Scattered in other parts of the city, and perhaps even outside it, they lack the means of stimulating local officials to support their case in the Board of Estimate, the city's executive governing body...

...Puerto Rico's Operation Bootstrap offered tax concessions to mainland companies that opened plants on the island...

...Others think nothing is so important as the number of channels accessible to citizens who want to enlighten or shock their friends...

...The city is unprepared in the 1980s to accept working conditions that were made illegal, bit by bit, over years of reform legislation...

...It also makes the lesser paid workers feel that the union is not truly solicitous of their welfare...

...In 1916 the city adopted the first true zoning ordinance...

...They discovered, unhappily, that it smelled of unemployment...

...When the union permits employers to pay some workers a much lower wage than others doing similar work, it creates a division between its own members, making the better-paid members worry that their own pay scale will be imperiled by the union's acceptance of a lower scale...

...Until that equivalent arrives, the best thing the city can do to prepare a proper welcome for it is to cultivate a hospitable attitude toward the people who risk obloquy and scorn for devoting their lives to getting rich by finding a way to make what people want...

...A second question asks: If it is necessary and desirable to exempt industries in some locations from regulatory restraints, why should it not be advisable to lift those restraints everywhere...

...Yet the taint on the word profits never seems to fade anymore, whether the speakers are discussing the hard-won small percentage of turnover made by highly competitive supermarkets or the regulated profits of natural monopolies...

...Even today, what's left of the dress business fears that the proposed reconstruction of 42nd Street and Times Square will raise the value of the land under the remaining dress factories...

...A company called the Quick Roll Leaf Manufacturing Company had for fifty years been operating a plant in Queens, adjacent to the tracks of the Long Island Rail Road...

...Elected representatives are well aware of the residents' interest in the quality of life because the representatives themselves live in the same area...

...New York, in fact, was the only factory town in the nation that could lose 600,000 factory jobs and still retain 600,000 people working in factories...

...This inability to get matters finally pinned down hints broadly that a city as large as New York, whose leaders represent so many groups of people with different interests and goals, simply cannot conduct negotiations with business firms in the way that a business firm can...

...Nor can it be too generous in its assistance to businesses that pay normal wages and that threaten to leave the city because of its high costs...

...The law increasingly aroused the indignation of so-called progressives on the City Council, who argued that rehabilitation would have occurred without the two tax concessions...

...In the present climate, it is hardly surprising that New York City's efforts to stimulate business with government intervention has produced so little...

...One question raises the fundamental national policy question: Do Americans want their industrial development investments to be made in the cities that have always had their share of industries, at least until lately, or in those places that are most likely to be able to use the zones effectively...

...The critics of the law that gives tax concessions for the conversion of buildings from industrial to residential use surely know that cutting out the concessions will not do anything to improve the prospects of manufacturing companies in New York...

...The simplest stimulant that city and state governments might apply to business is tax reduction, but that would leave so many other problems untouched that the prospect of doing so seems remote...

...In a city in which 70 percent of the people live in rented apartments and do not know that they pay real estate taxes to the city every time they pay rent to their landlords, that spirit of largesse is practically invulnerable to the wiles of sober selfishness...

...The zones would not be necessary if the leadership of city and nation had not for years been taking for granted that the spirit of enterprise would always be loose in the United States...

...If the general public was unaware of the extent to which the city economy was based on manufacturing, the dependency was noted by the city planners...

...It was inconceivable, when the city was growing rapidly, that its taxpayers would try so hard to impede economic and job growth...

...But the busiest factory district in the city was incongruously located in central Manhattan, just south of 42nd Street and the theater district...

...Samuel J. Lefrak suggested moving the whole garment industry to a site over the vast Sunnyside rail freight yards in Queens and offered to build new, modern factories if the city would only lend him the money...