What’s a (Big) Apple Without Its Core?

nyc-skyline-home.jpgA look at nearly any manufacturer’s competitiveness agenda will include changes in the U.S. legal system to reduce the soaring costs of litigation as well as ensuring that we have an adequate talent pool of skilled workers to manage and operate technology-driven manufacturing facilities. We also know that smaller companies should be treated differently in some instances, particularly in costly regulatory schemes.

So it was a real eye-opener the other day to see New York Senator Chuck Schumer and Mayor Michael Bloomberg hold a press conference to point out that these competitiveness issues are also of paramount interest to the NYC financial services sector. A report they both commissioned, and conducted by McKinsey & Co., said that if these concerns were not addressed soon, New York will in ten years, “no longer be the financial capital of the world.”

According to the report, a smaller and smaller number of international companies are listing shares on the U.S. stock exchanges and some more sophisticated kinds of trading are growing faster at overseas financial centers. I also heard recently that most IPOs last year were placed abroad, not with U.S. based firms. Like manufacturing, are many U.S. elected officials taking this important sector too much for granted?

The article points out that: “one in nine NY jobs is in financial services, which contributes more than a third of business income tax revenues to NY’s economy. Nationwide, financial services is the third-largest sector of the economy, contributing 8 percent of GDP, behind only manufacturing and real estate.” Here are a few of the recommendations, quoted from the AP story about the Schumer-Bloomberg press conference:

  • The American regulatory framework, particularly Sarbanes-Oxley, is a “thicket of complicated rules, rather than a streamlined set of commonly-understood principles, as is the case in the United Kingdom and elsewhere.”
  • While NY offers a promising talent pool for its financial services work force, “we are at risk of falling behind in attracting qualified American and foreign workers.”
  • The legal environments in other nations “far more effectively discourage frivolous litigation.”
  • Sen. Schumer has helped pass legal reform legislation in Congress recently and it’s very interesting to see the overlap between financial services and manufacturing. We want our country to remain both a financial and industrial leader. Yet both of these pillars of the U.S. economy are under siege by structural costs, many imposed by our own Federal and state governments. What is it about America in the 21st century that too many of our elected leaders seem intent on putting up roadblocks to manufacturing and now financial services?

    Click here for the full Examiner story.