The Big Project Syndrome

There has been so much negativity in the news recently about the city of Niagara Falls, New York. This is the city on the American side of Niagara Falls, there is another city by the same name on the Canadian side. But all of the articles seem to just rehash what we already know. The city is struggling economically, to put it mildly. I would like to actually explain the workings of what has happened to Niagara Falls, NY, in a way that I have never seen it explained.

Yet, this is not a local issue at all and it is not necessary to be familiar with the area to understand it. Niagara Falls, NY suffers from what I have termed "The Big Project Syndrome". This is what takes place over time when a city is host to a major project of some type. The city may greatly benefit from the project. Indeed, it may even be the reason for it's existence. But as time goes on, and economic conditions change, both the thinking and the geography of the city are warped by the big project so that it ends up worse off in the long run.

I am going to use Niagara Falls, NY as a case study in the Big Project Syndrome, but it's lessons will apply to many cities across the world.

Here is a map link, which includes satellite imagery, that you may find helpful: www.maps.google.com .

Niagara Falls, NY occupies a very strategic location because of it's namesake waterfall. It's importance began with what is known as the Portage. This was a route by which things had to be carried from boats in the upper Great Lakes to boats in Lake Ontario, which linked to the Atlantic Ocean. The obvious reason for this is the fact that boats could not go over the falls. The legacy of this is that there are streets named Portage Road today on both sides of the river.

The flow of water was first used to generate power on a large scale, for milling operations, with a hydraulic canal across the downtown of what is now Niagara Falls, NY. Water would flow along the canal, from the upper river (above the falls), drop down a wheel pit with a turbine at the bottom which would be turned by the kinetic energy of the falling water, and then flow out of a shaft to empty into the lower river (below the falls). A lot of mills had operations along this canal.

Next came the generation of electricity by using the force of the falling water. The Adams Power Station (there are articles and photographs online) was a historic use of water to generate large amounts of electricity, using a generator at the bottom of a wheel pit.

After this came the Schoellkopf Power Station, which was constructed at the bottom of the gorge, alongside the lower river. There were actually three separate stations. There is a similar power plant today on the Canadian side of the river, just below the falls. The Schoellkopf Station was further downstream.

It was this Schoellkopf Power Station that really brought industry to Niagara Falls, NY, with abundant and inexpensive electricity. Many industries relied on electricity for their operation, particularly for refining aluminum. Unlike other common metals, aluminum cannot be separated from it's ore by smelting but requires electrolysis. Along the way it was discovered that sand and coke can be fused together by extreme heat to make an inexpensive but effective abrasive, and the name of Carborundum became one of the industrial names associated with Niagara Falls, NY.

On the Canadian side of Niagara Falls, the abundance of electricity brought the vast Cyanamid factory that used to stand just north of Hamilton Street, with another factory of the same name on the other side of town.

Niagara Falls not only revolutionized industry, but also bridge construction. The original Honeymoon Bridge was torn from it's foundations by icebergs in 1938, but the area hosts some of the finest examples in the world of steel arch bridges spanning the river.

Not only was there all of the industry, drawn by the inexpensive electricity, but visitors came from all over the world to see the falls.

It was just a place that spawned fantastic plans. A man named William Love began a canal which was to run from the upper river, well upstream from the falls, to the Niagara Escarpment to the north where it would generate the power for what would be known as Model City.

A vivid example of the visions of the future and the grand plans of Niagara can be seen in the now-closed Summit Park Mall, just east of the city limits of Niagara Falls, NY. What city would have a shopping mall built on what was essentially a country road? This could only happen in a city with nearly unlimited faith in it's ecoomic future.

But times began to change. In 1956, a massive rock slide destroyed the Schoellkopf Power Station. The wall of the gorge which collpased was almost certainly weakened by the wheel pits and tunnels along the hydraulic canal years before. The grandest project of all was constructed to replace it, the Robert Moses Power Plant, but now electricity was more expensive and was also not of the same frequency of alternating current as before. As the rest of the world developed, wages were much lower in other countries and factory work could be done with less cost there. The factories that had been the backbone of the Niagara economy began to leave or drastically reduce the local workforce.

This began the present dilemma of Niagara Falls, NY. People began to leave also, and today the city has only about half of the population that it had in 1960.

I find that industry has not left, it has only changed in form. Instead of massive industries employing hundreds, or even thousands of workers, there are smaller specialized industries employing far fewer workers, but with a higher skill level. These smaller industries of the new economy tend to cluster together in industrial parks for ease of delivery. It is as if industry has moved from the age of massive dinosaurs to the age of smaller, but more intelligent, mammals.

To understand Niagara Falls, NY, and other cities suffering from the Big Project Syndrome, it is necessary to understand what is known as the "paradox of plenty", also known as the resource curse. There are articles about it online. This is the phenomenon in which the countries that are blessed with the greatest natural wealth are paradoxically the ones where the average person is likely to be worse off than those in countries with much less natural wealth.

The paradox of plenty comes down to human nature. When a country does not have natural resources, it also has nothing to be corrupt with. The great natural wealth often ends up enriching only a few people, or used by a corrupt government to keep itself in power. A country without such natural wealth is more dependent on the will of it's citizens to remain in power, and so is more likely to be a democracy. It must also make the most of the skills of it's people so that it ends up better off in the long term. (See "the Language Paradox, on the world and economics blog, to see my impression of how this relates to language also).

The paradox of plenty applies to cities as well. Niagara Falls, NY was blessed with the possibility of generating inexpensive electricity and otherwise making use of water power. But now the thinking is stuck in this big project mentality. It does not grasp the new economy of modern industrial parks with smaller, but higher skill, industries.

What Niagara Falls, NY sorely needs is something like the Audobon Industrial Park, that can be seen some distance away in the Buffalo suburb of Amherst. Instead, Niagara Falls, NY keeps thinking in terms of big projects while looking for something to turn the city around.

First, there was the massive convention center downtown. It was an arc of concrete, appearing as if it was an engineering sibling of the Robert Moses Power Project, as was the Earl Brydges Library. In the 1980s, there were plans for a "mega-mall" in downtown Niagara Falls, NY. Then there was the casino.

In the Little Italy project of Pine Avenue, there is nothing in itself wrong with this idea but the same thought patterns can be seen at work. Just as water once flowed through the hydraulic canal to generate milling power, just as water flowed through the penstocks of the Robert Moses Power Plant to generate electricity, so visitors will flow between the arches of Little Italy to generate wealth.

This is related to two other postings on the world and economics blog. In "The Inverse Geographic Prosperity Principle", we saw that there are natural places in North America where we would expect to find cities, but the ones that we can be sure are prosperous are actually the ones where we would not usually expect to find a city, or at least such a major city. In "The Cardinal Rule Of Military Strategy" I explained how when a nation has won a great military victory, it cannot help trying to replicate that victory in later combat and this provides a clue as to what to expect from it's military strategy. Niagara Falls, NY just cannot help trying to replicate it's glory days of massive projects.

The city did handle projects like a new water plant and a new police station. But, once again, these are big projects. The industries of the new economy are still missing.

Promoting Niagara Falls, NY is not really  the answer. It is already a world-famous name. There are many stores and shops in the city and the adjoining Town of Niagara, as well as a nice mall. But most of these businesses are owned from elsewhere. These stores attract great number of Canadian shoppers, from across the river, but the bulk of the money that they spend does not stay. After paying out wages and taxes, the rest of the money goes to the distant corporate headquarters of these stores and restaurants.

An economy of stores is unsustainable. At some point, we must actually make something to generate wealth. The casinos in the area only redistribute wealth, by taking it from somewhere else. Las Vegas is based on casinos by tapping into the heritage of the American west as a place where prospectors went looking for gold. But the heritage of Niagara Falls is industry, we should be making things here but are still stuck in the big-project mentality of what we can call the dinosaur era of industry and have failed to grasp the new economy of modern industrial parks with smaller but higher-skill level industries.

Just outside the city limits of Niagara Falls, NY, there are a few of such smaller modern industries. But in all of Niagara County there is very little of this modern industrial economy. There is just something about the name "Niagara" and big project thinking.

Lockport, NY is the city in the middle of Niagara County. It also displays signs of the Big Project Syndrome. Lockport is where the Erie Canal climbed the Niagara Escarpment by way of locks, hence the name of the city. It's economy is largely based on big industry, just as that of Niagara Falls was. The major employer is the Delphi auto parts factory, and there is also a newer facility of Yahoo!

This does represent the new economy well, better than nearby Niagara Falls. But for a city to base it's economic future on one or two major industries is maybe not the best of ideas. Middleport, the town at the eastern end of Niagara County, really suffered a few years ago with the closing of it's major industrial employer. Isn't it better to have an industrial park with 30 or 40 separate modern industries?

In the midst of all this gloom, sorrounding communities that are far less well-known than Niagara Falls are doing much better.

Niagara Falls, Canada is also afflicted by the Big Project Syndrome, to some extent as the observation towers near the falls attest. But the Canadian side of Niagara Falls has adapted much better to the new economy. The Cyanamid factory is long gone but all along the Queen Elizabeth Way, The QEW which runs north to south across the city, there is the industrial park that represents the new economy and is the economic backbone of the city. It may be that since the electric power projects on the Canadian side are much older than the Robert Moses Plant on the American side, the Big Project Syndrome on this side is further in the past and this has made adapting to the new economy somewhat easier.

On Grand Island, just south of Niagara Falls, NY, we see examples of the same type of modern industrial economy along the I-190 highway that crosses the island. The same along the I-290 across the northern Buffalo suburb of Tonawanda. In fact, the new industrial economy can be seen all around the suburbs of Buffalo in the satellite imagery on the map link, particularly the Audobon Industrial Park in Amherst, mentioned above. This is what is lacking in Niagara Falls, NY, which cannot break free of this big project mentality.

North Tonawanda, in Niagara County just east of Niagara Falls, also has an industrial heritage. Yet, it has managed to adapt to the new economy. This city does not seem to have a concentrated industrial park, but has small modern industries scattered around the city particularly on Tonawanda Island and in the Wurlitzer area and Erie Avenue.

The first part of the Big Project Syndrome is the thinking. The second part is the geography. It does not make sense to put an industrial park in a prime shopping or tourist area, and that leaves a city like Niagara Falls with nowhere to put one, at least where it would pay taxes to the city. Workers in the new economy want to live near their jobs, but in homes that suit their income level.

One of my most important ecoomic postings is "The Property Order". A primary reason for the tendency over recent decades to move to the southwestern U.S. is not just for the sun, but for a chance to start the property order over.

The City of Buffalo is also struggling economically, although not as badly as Niagara Falls. Ctities usually lack the space for a modern industrial park and tend to try to revitalize old buildings into the new economy and that is what Buffalo has done with the Larkin Buildings, a former soap company that did not survive the economic depression of the 1930s.

The past industrial era, and the generation of electricity, has left Niagara Falls, NY with essentially nowhere to put a modern industrial park such as the city needs. Much of the space formerly occupied by large industries has a certain level of contamination, so-called brownfields. Other seemingly open space has electric power lines overhead from all of the electricity that is generated. A large area along the I-190 highway, that would have been ideal for an industrial park, is occupied by a landfill. Then there is the contaminated area of the Love Canal, formed when William Love's old and abandoned canal was used to bury dangerous chemicals, that surfaced decades later.

With inexpensive electricity and numerous visitors, Niagara Falls, NY did not see the changes coming. Space that was not taken up by the large industry that could not last was taken up by the stores for the visitors to spend money in and is now inavailable for a modern industrial park. But neighboring North Tonawanda has managed to get it's share of the new industry without such a concentrated park either.