Wednesday, May 14, 2014

You just can't grow your business here

From Crains:

One Queens-based e-commerce startup is poised to grow aggressively over the next few years, and they have found just the place to do it: Ohio.

Gwynnie Bee, a subscription service for the lease and sale of plus-size women's apparel, reportedly plans to add 400 new positions over the next few years at a new 100,000-square-foot warehouse and distribution facility on the outskirts of Columbus, Ohio. The company's executive and marketing operations will remain in New York City, where Gwynnie Bee will still be officially headquartered, but the 42 warehouse and distribution workers at the company's current Long Island City warehouse will be laid off in July.

"Labor is 30% cheaper there than here," [VP of Operations Robert Escobar] said. "In New York, you pay someone $15 an hour and they struggle to make ends meet. In Ohio, you pay someone $12 an hour and they can have a mortgage."

That dynamic was apparently such a concern for Gwynnie Bee that it never reached out to any city agency for a counter-offer on what Columbus 2020 was offering. To hear Mr. Escobar tell it, that would have been a waste of time for all involved as the idea of relocating its warehousing and distribution was necessary in order for the company to grow.

Gwynnie Bee is not closing the door on returning its logistics to the New York area, but Mr. Escobar said the company would be more likely to do so upstate or in New Jersey.


Anonymous said...

NYC is making it impossible for good stable businesses to open here. They are right, you pay people here 15 /hour and they are still broke, in Ohio you pay 12/hours and they are fine. NYC better be careful or else they will push the tech companies out of the area.

Anonymous said...

"Labor is 30% cheaper there than here," [VP of Operations Robert Escobar] said. "In New York, you pay someone $15 an hour and they struggle to make ends meet. In Ohio, you pay someone $12 an hour and they can have a mortgage."

To some extent that has always been true.

The situation has gotten way out of control in recent years due to the gutting of rent regulations.

For the first time in our history the majority of New York City residents are paying half, or more of their income on housing -mostly rent.

How long can we expect working people to put up with being on a treadmill with no hope of getting ahead?

I don't blame them for leaving.

"Luxury City" -BULLSHIT.

JQ said...

It's funny how they are keeping their logistics dept in NY,because those are the people that can afford to live here and move into the condos that will replace their warehouse.

Its an insult that they remain here.What they could do is give their 42 workers raises,so they afford food and shelter,instead of trying to get sympathy acting like they are being generous for paying people less money because of the cost of living in Ohio.These corporate dicks should just get out.

Anonymous said...

Why doesn't the Blaz press the State legislature to end the 421a exemption already and make a real dent in the housing problem? Not sexy enough for a press release?

Jon Torodash said...

QC, you leave out the best part:

"It is unfortunate that Gwynnie Bee is departing New York City, one of the fashion and technology capitals of the world," said a spokeswoman for the city's Economic Development Corp. "Creating and preserving good jobs is a chief priority for the city, and we continue to work with businesses across all five boroughs to ensure growth and retention within New York City."

The NYCEDC is blind to its major contribution to the problem.

Anonymous said...

Gwynnie Bee is not responsible for New York's comparative disadvantage to Ohio when it comes to jobs that employ people at $12/hour to work in a warehouse.

New York's employment situation is beginning to look like a barbell - where there are jobs for the highly skilled in New York's two remaining private industries: finance and media - and at the other end - low-end service jobs in retail, nail salons, restaurants, and hotels - which can't be relocated to Ohio or Mumbai.

Anonymous said...

JQ - it's actually the logistic unit that is going, only the executive and marketing are staying.

Simple fact, 50% of the population of the US is within 500 miles of Columbus, which is considered the range of overnight shipping via truck.

Add in reduced cost of living, reduced state taxes, no city income tax.

In a business world driven by the Internet it's no longer about being close to your customer base. It's all about keeping costs down.

Anonymous said...

"employment situation is beginning to look like a barbell"

Exactly right.

NYC used to have a thriving middle class. It was based on jobs like dockworkers when the city actually was a port of commerce (now gone to NJ). There were also manufacturing jobs, everything from breweries to aircraft factories. Good jobs at good wages.

Sadly there are few people left in NYC that understand this particularly in government and the media.

Anonymous said...

Before WW2 NYC had half of all SIC codes