S2,E15 - Ben Sio, Dottie Gallagher, Joe Stefko: Part 1

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This is Talk CNY, presented by NBT Bank. I'm Katie Zilcosky, director of communications at CenterState CEO, and your host for Talk CNY. Around 400 communities applied to the Federal Tech Hubs program, a program designed to support tech-based economies in underinvested areas. Of those, only 12 received a tech hub designation and federal dollars to support and implement their strategies. The New York Smart I-Corridor, a coalition of partners from Syracuse, Rochester, Buffalo, and Ithaca is one of those 12 tech hubs. Now building this successful application was no small task and leading the process were three convening organizations, CenterState CEO in Syracuse, OneROC in Rochester, and the Buffalo Niagara Partnership in Buffalo. On this episode of Talk CNY, I'm joined by CenterState CEO's Chief of Staff, Ben Sio, OneROC's President and CEO Joe Stefko and Buffalo Niagara Partnerships CEO and President Dottie Gallagher.

So Ben, thank you for being back here on the podcast. Dottie and Joe, thanks for joining us here today. The CenterState team has had the good fortune of working with both of you for a few months now on tech hubs, but for many of our listeners, this is probably the first time putting a face to a name throughout this whole process. So Dottie, you lead the Buffalo Niagara Partnership, and Joe, you lead OneROC. So before we get into this conversation, could you tell me a little bit about both of yourselves, what you do, who you are? Joe, we'll start with you.

I'm president and CEO at OneROC, which serves as our regional economic alliance here in the nine-county greater Rochester region. I've been in this role for about five and a half years now, and in addition to capacity-building investments in areas like talent attraction and retention and business attraction and expansion and regional branding and marketing, we have had the really good fortune to work on this regional tech hub proposal with our friends in both Syracuse and Buffalo over the last year and a half, almost two years now. And it's just been a super gratifying experience and really excited to share a little more about it.

The easiest way to describe who I am, what I do for this audience is I'm the closest thing Buffalo has to a Rob Simpson. That's my job. And I've been at the Buffalo Niagara Partnership for about 11 years and echo Joe's sentiments about how great this process has been.

Take me back to the early days of this collaboration. How did you all originally connect? What was sort of the start of you all working together?

So I'll start with that. I mean, this really goes back almost maybe two, between two and a half and three years ago, before the Chips and Science Act was a thing before the regional tech hub program was a thing. The tech hub program was actually sitting in committee on Capitol Hill, and as we started to get line of sight on what the opportunity could mean for a region or a corridor like ours, we began to lean into building more connective tissue between Rochester and Buffalo initially. And then our partners from Syracuse joined midstream and really that was about trying to socialize the respective assets we have in our particular metros and begin to lay the groundwork for a joint strategic planning process to go after a regional tech hub designation and implementation award. And of course in mid 2022, the Chips and Science Act passed. In late 2022, the first tranche of federal funding was provided for chips and science and the regional tech hub program. And so this partnership really got down to work in earnest in early 2023 as we assembled and put together our phase one portfolio. But there was really, again, there was a lot of groundwork that was laid to deepen connections, to leverage existing relationships across our EDO's, across our colleges and universities so that by the time the tech hub application window was opened, we were ready to run and compete.

Can you speak a little bit to what assets exactly were they that you wanted to connect with some of those partners that made this collaboration worthwhile and ultimately a winning application for tech hubs?

Well, I think that the partners are reflected, or the assets are really reflected in the partners that make up the New York Smart I-Tech Hub consortium, right? So they're economic development organizations, they're regional convening organizations, they're organized labor, our community college network, R1 and R2 research universities across the corridor, industry partners and frankly not just industry partners that are immediately in or adjacent to the semiconductor or supply chain space, but industry partners across the board who see the benefit that this designation and implementation award can create for the corridor and how transformative this opportunity is for each of our communities in all of upstate New York.

I would just add to what Joe saying that we looked at those partners, but we also really looked at regional assets individually, our individual cities, Buffalo, Rochester, Syracuse, and then really looked at the 10 key technology areas that the federal government defined as important for economic security. And when you looked at the data across the metros, what we were in the top 50 in this and educational assets and so on and so on, it became very clear, just really painted quite literally a picture that showed that these metros together would be an unstoppable force in terms of being competitive around semi. So that really drove a lot of how the partnership came together was really the data that supported that.

Yeah, that's almost a peek behind the curtain a little bit in the sense that I think when all of this became public, when our application was made public and the designation, right, this is a two-phase process designation and then the financial award, but before we even went forward through the designation, we went through what a six-month process to better understand among the key technology focus areas that the federal government outlined. They gave us a menu of options that proved to us which one you're going after that makes the most sense for you. We did almost a blue sky analysis to see what made the most sense for us from a data perspective, from a qualitative perspective that we wanted to build this application on. So I think a lot of people say, oh, of course, it was semiconductors given all the activity happening in Upstate New York. And I can tell you that it wasn't of course semiconductors. It was a let's actually take a look at the numbers, let's understand where we're going as a set of communities, where the opportunity is, and we even tually got to semiconductors, but it did not start just at semiconductors.

No, it didn't. It was really, I think we were all sort of saying, where can we best compete because there are strengths and all 10 key technology areas in our respective communities. And I think that is the story that when you really looked at the data assets, that's where they were strongest across the board and really, as I said before, took the politics out of the decision-making. It was really, really clear that we would really be unstoppable if we went together. And I think that brought together the partners in a way that was really, I think, exciting and an opportunity to win.

Was there a piece of data that really cemented semiconductors for this metro region, for the New York Smart I-Corridor that you guys can think of?

Aside from just this really enviable and powerful array of assets that we have across the corridor? The demand driver is pretty simple and pretty stark that 10 years from now, one in four domestically made semiconductor chips will be produced within 350 miles of where we're sitting right now. So if you think about Micron's investment in Onondaga County, if you think about what Intel is doing in Ohio, if you think about what the broader New York statewide semiconductor ecosystem looks like, our corridor is incredibly well positioned, I would argue uniquely so nationally, to capitalize on the growth of this critical sector, critical to national security, critical to economic security, and to do so in a regional tech hub program, which I've been saying from the very beginning is almost as if it was crafted with a region like ours in mind with this amazing array of assets and a region that has, let's be honest, faced economic challenges over the last generation or more. And so I think that the demand driver is really powerful and that's what the strategy looks to capitalize on.

I want to hit a little bit more on the importance of semiconductor manufacturing to national security. I mean, can you describe a little bit what it means to have the federal government choose this place to lead the growth of such a critically important technology?

Earlier this week, we welcomed a member of Biden's National Economic Council here in Central New York just for roundtable conversation. And Micron was in that meeting as always you would anticipate, but there was a bunch of companies that have nothing to do with semiconductors in the region. Every single one of those companies leaned forward and said, semiconductors are the future of our economy, semiconductors of the future of our community. We need to be making bets in the R and D and in the production of semiconductors in Central New York. And these were companies that are nowhere near the supply chain. These are companies that will not directly benefit from Micron being here. They're not going to supply them, they're not going to hire them, they're not going to sell things to them. They just believe so much in the fact that our community and our country is going to rely on this.

And I think importantly and as when the Chips and Science Act was produced and one of the main impetuses behind it between the nineties and the early aughts, semiconductor manufacturing in the United States really dropped off. It went overseas mostly to Asia, a little bit to Europe, and during the pandemic, when all of the supply chains had the issues that they did, people began to realize that some of these supply chains, yes, are relying on global networks, but many of these supply chains are critical to the economic success of our country and we need to invest in figuring out ways to reshore them and strengthen them and to make them as resilient as possible domestically. And there are a handful of supply chains that are like that. Semiconductors was one. There are others that other tech hubs across the country that one designation and one implementation of the awards have been named as priority supply chains as well.

But semiconductors I think are the top one and primarily because semiconductors are in everything we make or everything we produce in the region, in the country, everything we consume in the country, if you look at a car, a car has thousands of semiconductors in it right now and 20 years ago it didn't. So I think the main impetus for our friends of the federal government to prop this up as such a huge priority was they did not want to rely on partners, global partners, global trade partners that are in some cases, not necessarily the United States ally on some of these economic issues, and they didn't want to also rely on the fact that many of the semiconductors right now, 90% of the world's semiconductors right now are in Taiwan, and there are a lot of geopolitical issues in the South China Sea around the island of Taiwan that if things happen in the future, which they could and that I think people are preparing for in different ways, this is actually one way for our community and our country to prepare for negative things happening in that area. So I think it's an idea to make our economy more resilient, to bring more jobs domestically into the United States, but also better prepare us for an uncertain future, especially in that part of the world.

And I would add to this, and it's not a point to be lost, is this whole effort around tech hubs really was a notion of how do you reinvent America and how do you get innovation beyond the coasts and into sort of the flyover parts of the U.S. and use the talent that's there fundamentally was really an important strategy. But when you look at what's happened and then went through the timeline and the 400 or so communities that applied, 31 that got designated, a dozen that got funding, we are the only community that got funded for semiconductors. And so the federal government is saying, this is the best bet for the country is right here. This is where the innovation cluster can happen, and they're literally putting their money where their mouth is in a way that is so big. I mean, it's hard really to wrap your arms around how important that is.

And all these other companies that Ben mentioned are interested because the economic growth that will be provided by semi will have a spillover effect on higher ed. We'll have a spillover effect on housing. We'll have a spillover effect on talent development and talent attraction for our regions for a lot of other industries and adjacent industries that will benefit the indirect benefit of this. So this is a once-in-a-generation opportunity for a region like New York to be able to really be a part of the future of our country in a way that we'll look back on I think and say, wow, we were a part of that. And it's just really thrilling and exciting. We see it. People still don't really fully understand what does tech hubs mean, and that's our next job is to make them understand how big this really is. It's so far beyond just Micron, but we're grateful to Micron for their investment and certainly their validation in the strategy moving forward.

So the areas that make up the New York Smart I-Corridor haven't always worked together or recently worked together, though geographically close and facing similar challenges economically. So what was it about this opportunity that seemed like the right thing to bring you all back together for this regional collaboration?

Well, I think there's certainly been a history of collaboration across the corridor, but I would characterize that history as more opportunistic collaboration than strategic or sustained collaboration. It's been focused on specific opportunities as I think back again, two and a half to three years ago when we started to pull the communities together and build line of sight for the tech hub opportunity. I think one of the things that we leaned into right off the bat was we have strong preexisting relationships in specific sectors across this corridor. So you think about the work that our research universities have done together around joint ventures, joint research ventures, pursuing federal funding jointly together. You think about the work that our economic development organizations, our EDO's have done. I think about the joint Buffalo, Rochester, Amazon HQ two pitch, I think about where the Buffalo and Rochester metros meet in Genesee County with the stamp mega site and the work that's been done there.

So there's been a history of opportunistic collaboration and really seeing this as an opportunity for us to build on that established foundation, but to actually create something that is more sustained and deeper. I think there was a recognition, Dottie alluded to this in the context of the data analysis. There was a clear recognition as we started to get into the numbers and the asset analysis, the asset mapping that we are for this and other opportunities, frankly much stronger working together than we are working in competition with one another. I think the new paradigm going forward is this shared recognition across the corridor, across the broader ecosystem that this is not Rochester against Syracuse against Buffalo. This is our upstate corridor against regions all over the globe for really highly competitive economic investment that's going to happen in the next 5, 10, 20 years. And I'm a Buffalo native. I've been in Rochester for 15 or 16 years now. So two-thirds of this corridor I can legitimately say is home. And that's why this process has been so personal to me over the last few years and why I've been so invested in it, but also why I'm so gratified to see partner stakeholders come together across the entire corridor to build something that I think is going to have ripple effects far beyond just this tech hub investment.

Joe, I agree with what you're saying, and I would just add to it that we see this tech hub opportunity as a way to work together in the future on many things, not just on tech hubs. And the economic development councils have done a lot of really great work, and it's been great to have some local decision making as a part of that structure, but that structure has set us up to some degree to compete with one another around certain things, and I think unwrapping that a little bit through this process has been really, really positive. So we've got the best of both worlds here. We've got Empire State Development really as a full partner at the table with us helping move this along and all these folks that we work with day to day, a real blue ocean opportunity to create an economy of tomorrow.

So I really think this is a new operating paradigm for us who are in this work. And I would say Joe has this factoid, he shares that as always surprising to people, and it was certainly surprising to me when I heard it the first time that 77,000 people commute between our communities to go to work every day. We have a very provincial nature of our own communities and God love you if you have, but I have, if you ever worked in Dallas, in the Dallas Metroplex, it's two hours from one end of it to the other, and we just have this, I think it's a negative sort of trait of ours, to really think about ourselves in that parochially, I think the corridor is a corridor and it's our opportunity to sort of activate it.

I think that the only thing I would add there is one of, I think the secret sauce of this being successful is I think the organic but very natural comradery and friendship that we all really quickly fell into. These things are not easy to pull together. They're not easy to pull together across three or four metro areas and keep everybody aligned and keep people rolling in the right direction. But the fact that OneROC, that Buffalo and Niagara Partnership and that CenterState CEO all very easily came to the table and realized if we work together, we win on this. And it turned out to be true, and it's led to, I think a fantastic working relationship, some great friendships and a new desire, not just among the nonprofit groups and the businesses that we represent, but of businesses recognizing, Hey, I really should consider other opportunities and partnerships and collaborations in some of these other communities. As Dottie said, they're not far away from each other and it's happening naturally. It's taken to us a little bit to realize the opportunity of that alignment, but I think there's fantastic alignment these days.

And I would say one of the biggest positive feedback that I have had from CEOs in town that are on our board is they are so happy that we are collaborating. I think they're happier that we've won this regionally and in collaboration than if we had gone it alone. So that's also an endorsement of the work and stretching our ability to really do this work in a deeper more meaningful way.

We will have more on tech hubs, but we're going to take a quick break here for our word from our presenting sponsor, NBT Bank.

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Welcome back to Talk CNY, presented by NBT Bank. I'm Katie Zilcosky, director of communications at CenterState CEO, and your host for Talk CNY. On this episode, we are talking about the recent federal tech hubs designation and award. To talk about all this, I am joined today by CenterState CEO's Chief of Staff and Senior Vice President of Strategy, Policy and Planning, Ben Sio, President and CEO of the Buffalo Niagara Partnership Dottie Gallagher, and President and CEO of OneROC Joe Stefko. So before the break, we were talking a little bit about how the Tech Hubs program and the New York Smart I-Corridor all came to be, but for some people who have not been living this every day for the last two years, they might be like, okay, so it's just another federal award or designation, this vague thing. They might not really know what it means. So why should anyone who lives in the area that makes up the New York Smart I-Corridor care that we are a federally designated tech hub?

Well, Katie, I think there are a couple of answers to that. I mean, the first is this federal investment is going to allow us to really supercharge efforts around workforce and university level collaboration and governing the regional corridor here, as well as activating and deepening the semiconductor supply chain, layering those dollars alongside significant commitments from New York State, and again, as we talked about before, the break, building off the demand drivers that Micron and others in the broader ecosystem are creating this whole opportunity that's being created. That's one answer. I think maybe as powerfully as the dollars is the validation that comes with both the Tech Hub designation and the implementation award. The fact that we were, as Dottie mentioned before the break, one of 400, nearly 400 competitors at the outset of this program narrowed down to 31 finalists, narrowed down to a dozen first of the nation implementation awards.

It's validation that this region, our regions collectively can compete with any place in the country, any place in the world. The fact that the Feds selected our corridor and our bid to be their only semiconductor-related regional tech hub investment through the recent phase two award, I think having that validation, the federal government's imper mater, their seal of approval opens a significant number of doors, economic opportunities for our region. I think that validation is at least as powerful as the dollars that we're going to have an opportunity now to invest to supercharge all of the economic development efforts.

In addition, I'd say to what Joe just said is the total federal award is around $40 million, which is fantastic, but we really view that as a down payment in this work, right? We know there'll be more investments made from the private sector. There's going to be more, hopefully more federal investments made along the tech hubs line because if you recall, the Tech Hubs program was created to the tune of multi-billion dollars, but only originally funded it to the tune of $500 million. So technically there is the authorization from Congress to make this a much bigger program. We're anticipating and hoping that the funds are eventually appropriated to do that, and we already have ideas through our initial planning work of where that could be invested. But ideally, the things that the projects that we're investing as part of this work lead to additional learnings and additional success that we can either scale, accelerate, or pivot into a different area of growing the semiconductor industry locally if we need to.

Right. So I think really importantly, this is, yes, a great investment and yes, a great stamp of approval on our work, but also I think most importantly was the federal government saying, hey, we're committed to this region for this industry, and we're committed to it in the long-term, and we're going to continuing to make investments and do other things to support the growth of the industry locally. We know what some of that looks like right now. Obviously, there's support in Chips and Science for Micron and for other partners that are building in the region, but what that looks like two or three years from now still TBD, and I think that's great to have that whole of government partner approach with us along this journey of growing the industry locally.

I mean, the short answer to that question is why should someone care is this is going to be transformational to the economy of Upstate New York, more jobs, more investment, and more economic stability for our region, more taxpayers, more revenue, all of those good things that we were looking for after decades of being worried about our economies getting smaller. That's why you should care.

Dottie just said what I said in 30 seconds.

Just translating you, Ben, that's all.

Thank you, Ben, Joe, Dottie, all for your time today. We're going to wrap the episode here, but we will have much more on tech hubs coming up here on the Talk CNY Podcast. Tune in for Part Two of the Tech Hubs series here on Talk CNY, presented by NBT Bank. We'll get into the details of where exactly all the federal money is going and the projects that you'll see shaping your communities. CenterState CEO's podcast Talk CNY, presented by NBT Bank, is available on clickcny.com and all major podcast platforms. After each episode, you can join us on Click, where we'll continue to talk about this topic and provide additional resources and links. In Click, you can listen to or watch every episode of Talk CNY. Click is CenterState CEO's digital chamber platform where our members connect, learn, and receive support from our staff. For new episode reminders, be sure to subscribe in your favorite podcast listening app. If you're enjoying Talk CNY, consider leaving a quick review or a five-star rating.