Friday, March 16, 2007
Sayonara, Sony
Here’s a cautionary tale for fans of government-funded and government-directed economic development. Sony, once the golden child of the region’s hope to rekindle a manufacturing base, has decided to cut 900 jobs at its Westmoreland County plant.
The reason it is doing so is because the market is changing as consumers develop a preference for flat-screen televisions as opposed to the rear-projection models made here. “The [TV] business and technology have changed incredibly over the last three years,” and “The public is looking for the flat panel displays” were the words of one Sony official.
It is not an uncommon occurrence—the only problem is that this market shift not only affects those displaced workers, it also affects the taxpayers of the Commonwealth, who became compulsory investors in the plant when an incentive package of $40 million, was given to Sony. That was on top of a $75 million investment in a Volkswagen operation years earlier. Not surprisingly, changes in the marketplace (in this case, a drop in the price of gas) rendered that operation obsolete. That’s $75 million down the Rabbit hole.
So while Sony is reacting to the market, Pennsylvania and its local governments still try the same old approach to economic development. Chasing after companies with huge subsidies represents “Alice in Wonderland” thinking. Instead of improving the situation statewide by limiting spending, eliminating red tape and regulations, and cutting taxes for everyone, they bet the house on the big project.
Unfortunately, the lesson here will go unheeded by the administration and policy-making officials.
The reason it is doing so is because the market is changing as consumers develop a preference for flat-screen televisions as opposed to the rear-projection models made here. “The [TV] business and technology have changed incredibly over the last three years,” and “The public is looking for the flat panel displays” were the words of one Sony official.
It is not an uncommon occurrence—the only problem is that this market shift not only affects those displaced workers, it also affects the taxpayers of the Commonwealth, who became compulsory investors in the plant when an incentive package of $40 million, was given to Sony. That was on top of a $75 million investment in a Volkswagen operation years earlier. Not surprisingly, changes in the marketplace (in this case, a drop in the price of gas) rendered that operation obsolete. That’s $75 million down the Rabbit hole.
So while Sony is reacting to the market, Pennsylvania and its local governments still try the same old approach to economic development. Chasing after companies with huge subsidies represents “Alice in Wonderland” thinking. Instead of improving the situation statewide by limiting spending, eliminating red tape and regulations, and cutting taxes for everyone, they bet the house on the big project.
Unfortunately, the lesson here will go unheeded by the administration and policy-making officials.
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I disagree with your assessment. The plant will still be a television production facility. It doesn't need as many bodies:
This summer, around the same time when the last employees are being let go, the plant will be converted to automated production for the Bravia TVs and to a distribution center for small to mid-sized retailers on the East Coast, said plant spokesman Rick Clancy.
The plant will have 200 to 300 employees after it is reconfigured, said Clancy, adding that the plant is and will remain a center for customer service.
Sony is moving Grand Vega production to the Tijuana plant because of lower employee wages and the facility has the needed production lines and capacity for those TVs, said Clancy.
http://www.heraldstandard.com/site/news.cfm?newsid=18086767&BRD=2280&PAG=461&dept_id=480247&rfi=6
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This summer, around the same time when the last employees are being let go, the plant will be converted to automated production for the Bravia TVs and to a distribution center for small to mid-sized retailers on the East Coast, said plant spokesman Rick Clancy.
The plant will have 200 to 300 employees after it is reconfigured, said Clancy, adding that the plant is and will remain a center for customer service.
Sony is moving Grand Vega production to the Tijuana plant because of lower employee wages and the facility has the needed production lines and capacity for those TVs, said Clancy.
http://www.heraldstandard.com/site/news.cfm?newsid=18086767&BRD=2280&PAG=461&dept_id=480247&rfi=6
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