For company and city, the big bubble bursts

Corning, N.Y., staggers after crash of telecoms

August 11, 2002|By Marego Athans | Marego Athans,SUN NATIONAL STAFF

CORNING, N.Y. - Suddenly, they were everywhere: people with doctorates in physics, six-figure salaries and expensive new SUVs casing this tranquil upstate New York river valley for somewhere to live.

Spacious new homes sprang up along the hillside above the new photonics plant that had helped usher Corning Inc. - known for its elegant glass and homey cookware - into the high-flying world of fiber optics and lasers.

Then, just as suddenly, the "For Sale" signs sprang up, and work stopped on partially finished homes.

The telecommunications boom had turned to bust in a stunning about-face that will have put 16,400 Corning employees out of work by year's end - up to 3,500 locally - leaving the newly recruited physicists stranded and this single-industry town reeling from the economic cyclone.

"It was like night and day. Suddenly, there were paper millionaires all over Corning, buying houses, remodeling, adding, buying new cars," said Joe Sorge, a co-owner of Sorge's restaurant downtown. "All of a sudden, bang."

Silicon Valley might be accustomed to the rapid rise and fall of fortunes, but the 35,000 people in the Chemung River Valley have long taken comfort in the solid, steady growth of family-run Corning, which originally gained fame by producing Thomas Edison's first light bulbs in 1879.

"This is something this community has never seen before," said Corning Inc. spokesman Paul Rogoski.

But beyond the telltale signs of huge layoffs - empty storefronts, quieter downtown streets - this fiber-optics train crash has left an unusual sort of wreckage.

Boom and bust

Highly educated, highly paid specialists recruited from across the country, as well as Asia and Europe, are marooned in this remote upstate valley, searching elsewhere for jobs but unable to sell their homes.

York Young, 32, a former research scientist in the photonics division, has four young children - ages 11 months to 8 years. He and his wife, Jane, moved here in February of last year, a time when so many high-tech hot shots were descending on the rural outpost that families had to park in temporary apartments until they could find or build homes.

One restaurant got so busy it took its phone off the hook. The schools were packed.

"It reminded me of The Grapes of Wrath," Jane Young said. "Everyone was migrating here from all different parts of the country hoping to find gold. Everyone left good jobs and homes and converged on this strange part of the country. People were building their dream homes."

Six weeks later, the mood had changed, the stock price was falling, and by June - 16 months after they arrived - Young's division had been dissolved.

In the past six weeks, only three people have come to look at their four-bedroom Cape Cod, which is listed at $219,000, the same price they paid.

York Young, who has a doctorate in physics and is looking at government labs and the defense industry, has promising job leads but fears his family might lose as much as 20 percent on the house.

"Being a family man, I'm not looking at a one-company town again," he said, adding that he feels no bitterness toward Corning. "We just got caught up in a big mess."

It's an unlikely turn of events for the Houghton family, whose conservative management through five generations turned a tiny glass company into a multibillion-dollar corporation.

Patriarch Amory Houghton moved here from Massachusetts in 1868 with 100 glass workers, drawn by cheap Pennsylvania coal, skilled labor, ready transportation on the Chemung River and the Erie Canal, and a $50,000 investment from the town fathers.

A decade later, Edison asked the company to make the bulbs for his lights, and Corning went on to produce cathode ray tubes for televisions, Pyrex custard cups, Steuben crystal decanters and durable cookware.

In 1972, when Hurricane Agnes put the downtown under 8 feet of water and destroyed factories and homes, the company decided to stay and rebuild. It still works hard to maintain Market Street, downtown's main drag, a charming five-block strip of well-kept brick facades accented by street lamps and flower pots.

But in 1989 and throughout the '90s, the company unloaded some of its traditional businesses, such as lighting, medical testing and housewares - even though they were profitable - and jumped into the telecommunications frenzy engulfing the global marketplace.

Companies were scrambling to lay glass threads of fiber-optic cable for the transmission of voice and data at the speed of light. Corning spent wildly on the burgeoning field of photonics - the technology of generating and harnessing light and other forms of radiant energy - buying equipment makers, building plants and expanding old ones. Its work force in the valley expanded to 8,200.

Revenues double

For a while, Corning seemed to have struck gold; revenues jumped from $3.5 billion in 1998 to $7.1 billion in 2000, with 70 percent of its business in telecommunications. Then the telecom bubble burst amid concerns about inflated valuations.

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