Rochester weathers economic storm

Kodak-founder George Eastman's legacy weighs heavily

David Schepp BBC News Online's North America Business Reporter

Rochester, New York, lays claims to being America's first boomtown.

After benefiting economically from the completion of the Erie Canal in 1825, Rochester's economy has continued to weather its fair share of peaks and valleys.

In recent years, challenging times came in the form of massive job cuts at the city's largest employers, Xerox, Eastman Kodak and contact-lens manufacturer Bausch & Lomb, which have their headquarters here.

It's not you build it and they will come, but you must show them opportunity exists

Kevin Kelley, executive director, High Tech Rochester

But Rochester, situated on the Genesee River, just south of Lake Ontario, has dealt with the layoffs with unusual aplomb, and - as local officials are quick to point out - many of those who lost jobs were either "absorbed" by other employers or have struck out on their own and started their own businesses.

A really big plus

"The population, while it hasn't grown, has remained stable in light of the fact that there's been significant downsizing at our larger companies," says Tom Mooney, president of the Greater Rochester Metro Chamber of Commerce.

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"And that - to a lot of us who look at the economy on a regular basis - is really a big plus."

Many of those job cuts were in the manufacturing sector, which plays a far less significant role than it used to in this town of nearly 250,000 people.

In an effort to trim payroll numbers, Xerox and Kodak made many positions redundant and offered their workers early retirement, meaning those jobs are not likely to resurface here.

Turning to high-tech

Some members of the community are pinning their hopes on the thousands of small high-technology businesses that have been formed here in recent years.

Sandra Parker: Rochester is "very resilient"

That is the concern of Kevin Kelley, who heads up High Tech Rochester, a business-development group.

The organisation works together with local colleges, including the University of Rochester and Rochester Institute of Technology, and businesses to spur the economy by harnessing high-tech ideas and turning them into reality.

Mr Kelley eyes the success of cities such as Raleigh-Durham, North Carolina and Austin, Texas, and hopes to emulate that success in Rochester.

"It's not you build it and they will come", he says. "But you must show them opportunity exists."

Challenges ahead

While the city faces challenges in recreating the success of other cities, Mr Kelley says Rochester is in a unique position to grow high-tech businesses thanks to its highly educated workforce, well-funded colleges and inventive spirit.

In the 1990s, for example, Rochester was home to more new patents than any other city in America, having been issued more than 1,200 per 100,000 in population.

"We've always been a community of entrepreneurs," says Sandra Parker, president of the IMC, a local organisation that provides training and other services to employers.

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She says that spirit combined with residents' willingness to weather dips in the economic cycle have helped diversify the local economy.

"In staying here they become much more innovative in terms of new products and services and new ideas for new businesses," Ms Parker told BBC News Online.

Wrenching changes

Despite the efforts of local officials, not all is peaches and cream.

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As in so many American cities, Rochester has lost many high-salary manufacturing jobs to lower-paying service sector jobs, some of which are part-time and do not offer health insurance.

In recent years, drug-use and the number of drug-related crimes in Rochester have risen.

And efforts to revitalise downtown have left some businesses struggling.

Rochester also grapples with trying to hang on to its young. Despite two large universities and a high quality of life, many in their 20s opt to head to more exciting cities, including New York, Atlanta or Dallas.

In Rochester, the focus is more on families.

Affordable housing is abundant and the city prides itself in offering attractions that appeal to families with small children.

American microcosm

Local officials are also concerned the attacks of 11 September will drain sorely needed financial resources away from the Rochester area to New York city to help revitalise that dynamic economic engine.

With New York State's budget still being decided, it is anyone's guess how it will all shake out.

Nevertheless, recent job cuts and the reengineering of the Rochester economy may offer a clue to what awaits the American economy as whole.

The result is a broader-based economy, better able to withstand the boom and bust cycle so closely associated with many American cities.