I've heard people argue one of the reasons for the Erie's financial weakness was that it served the Southern Tier instead of the Empire Corridor. Too see if this theory held any water, I decided to check a digital edition of the Atlas of the Historical Geography of the United States. This book was published in 1932, decades before industry started migrating to the Sunbelt. On the map labeled Principal Manufacturing Cities, I was able to identify the following industrial centers in New York State and which railroads they were served by.
New York City, NY (NYC)
Yonkers, NY (NYC)
Poughkeepsie, NY (NYC, NH)
Cornwall, NY (NYC, NYO&W)
Albany, NY (NYC, D&H)
Troy, NY (NYC)
Schenectady, NY (NYC, D&H)
Johnstonville, NY (B&M)
Rotterdam, NY (NYC, B&M)
Amsterdam, NY (NYC)
Little Falls, NY (NYC)
Utica, NY (NYC, DL&W, NYO&W)
Syracuse, NY (NYC, DL&W)
Auburn, NY (NYC, LV)
Rochester, NY (NYC, PRR, B&O, LV, ERIE)
Buffalo, NY (NYC, PRR, B&O, LV, DL&W, PM, NKP)
Niagara Falls, NY (NYC, ERIE, LV, CN, CP)
Lackawanna, NY (NYC, B&O, PRR, NKP)
Binghamton, NY (ERIE, DL&W)
Elmira, NY (ERIE, DL&W, PRR)
Jamestown, NY (ERIE)
By far the largest industrial center of all was New York City (which the Erie did not serve via. rail - only the New Haven, Pennsylvania and New York Central had direct connections to New York City), but Buffalo and Rochester were fairly substantial as well. Syracuse was also larger than average. All the other industrial centers listed were fairly small; however, what said industrial centers lacked in size they made up for in density. There's a large cluster of industry concentrated at the crossroads of the Hudson and the Erie Canal, as well as sporadic clusters along the Erie Canal The only industrial centers along the Southern Tier were Binghamton, Elmira and Jamestown, none of which were very large. While the Erie served both Buffalo and Rochester, neither was located on the Erie's main line and both were dominated by the New York Central. By virtue of absorbing the Lackawanna, the Erie would eventually gain access to Syracuse and Utica, but both were accessed via. branchlines and neither was especially large. Again, the New York Central was the dominant railroad in both Utica and Syracuse.
With these facts in mind, I'm going to have to lean towards "poor." The Erie Lackawanna was clearly at a disadvantage when it came to generating traffic along its lines vis-à-vis the New York Central/Penn Central. Even in its heyday, the Erie (and Lackawanna) served fewer people and less industry than the New York Central did.