Is AMD the next big thing?: Time will tell if a $4.6B bet on a chip fab plant pays off for the Capital Region like the Erie Canal or GE

MALTA, Oct 11, 2008 (Albany Times Union - McClatchy-Tribune Information Services via COMTEX) -- GE | Quote | Chart | News | PowerRating -- Gov. DeWitt Clinton was considered nutty for proposing to spend $7 million in 1817 to build a 363-mile canal from Albany to Buffalo, a public works project mocked as "Clinton's folly."

Thomas Edison's decision to relocate from New Jersey and establish the General Electric Co. in godforsaken Schenectady in 1886 raised eyebrows.

Derided by naysayers and considered ill-advised initially, the Erie Canal and GE proved to be two of the greatest transformative developments in the Capital Region's economic history, solid anchors of the local economy for generations.

History will be the judge whether AMD's plan to build a $4.6 billion chip fab plant in Saratoga County will live up to the hyperbole of boosters who tout it as "an Erie Canal for the 21st century."

Historians and academics are unwilling to declare AMD an epic addition at this point. They seem dubious about declaring it a rising tide that will life the fortunes of all Capital Region residents. There is consensus that it's a major investment, but not a Top 5 transformational project. Yet.

"At this point, nobody can say for sure whether AMD really will be the next big thing, although it will create follow-on businesses and it helps legitimize this area as a high-tech center," said P. Thomas Carroll, executive director of the Hudson Mohawk Industrial Gateway in Troy and an authority on America's 19th-century industrial history.

To add some perspective, the Burden Iron Works in Troy sold out about $1 million worth of horseshoes annually for four decades starting in the mid-1800s, or about $500 million in today's dollars.

Iron manufacturing was a durable local economic engine for more than two generations, while Carroll is not convinced that the here today, gone tomorrow mentality of Silicon Valley will allow AMD to make a lasting mark.

"My concern is that tech boom cities can die out quickly. I think we need to be wary that we're not getting into a Gold Rush mentality where you end up with a ghost town in 10 years," Carroll said.

Iron and railroads and the brawn of the Industrial Revolution muscled their way to the top of the heap in the local economy, but W. Douglas McCombs, curator of history at the Albany Institute of History and Art, finds that subtler, more diffuse developments can be equally transformative.

McCombs pointed to thousands of women employed in the textile industry in the late 19th- and early 20th-century in Troy shirt-collar factories and Cohoes woolen mills. "For the first time, average business people were buying stiff collars to create a show of respectability, which represents the middle class emerging as an economic force," he said.

Severin Carlson, dean of the School of Business at the College of Saint Rose, sees parallels between AMD's plans and a sprawling science-based industrial park developed in Hsinchu, Taiwan in the early 1980s that he visited. The town-sized Hsinchu complex is still going strong two decades later.

"Hsinchu has been so successful because it involved a solid strategic plan and it's a manufacturing facility instead of just R&D," Carlson said. "That kind of model would give AMD much greater potential for growth. Even though people have been skeptical of Tech Valley here, they had a plan and an objective. AMD would not have come to this region without Tech Valley."

"It takes time to realize what's visionary and what's not," said Assemblyman Jack McEneny, D-Albany, a local historian. McEneny feels AMD, added to major nanotechnology investment at the University at Albany and high-tech innovations at RPI and other local college campuses, together with state government funding, could equal a historic development.

"The technology that came out of the Erie Canal made us the Empire State, an empire of commerce and industry through the early 20th-century. That entrepreneurial spirit is back now, but we'll have to wait and see if Hector Ruiz is the next Erastus Corning or Stephen Van Rensselaer for our region."

Paul Grondahl can be reached at 454-5623 or by e-mail at pgrondahl@timesunion.com.

Tom Carroll's top 5 area historic developments

1) Harnessing water power for industry at Burden Iron Works, Troy

2) Erie Canal, Albany to Buffalo

3) Thomas Edison's decision to move General Electric to Schenectady

4) Voyage of Henry Hudson signals European arrival

5) Growth of higher education infra- structure, Union College, Schenectady

To see more of the Albany Times Union, or to subscribe to the newspaper, go to http://www.timesunion.com. Copyright (c) 2008, Albany Times Union, N.Y. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index