Economy continues surge

Economy continues surge

Hedbor, Eloise Roberts

Business was good in Franklin County over the past year, and the future looks sunny too. But there are some distant clouds on the horizon. Whether it’s Act 250, electrical restructuring or the Dairy Compact, many critical decisions that may profoundly affect the health of Franklin County’s diversified economy are being made far from its rolling hills and small towns.

A lmost a quarter of all the employment in Franklin County is in the

manufacturing sector. The past year has seen about 150 new jobs

added to that already substantial base, said Tim Soule, executive

director of the Franklin County Industrial Development Corporation

(FCIDC).

Barry Callebaut (a Belgian-owned chocolate manufacturer), Energizer (flashlights and batteries), and Peerless (a Canadian-based clothing manufacturer) added new jobs. So did Superior Technical Ceramics (manufacturer of industrial ceramic Vermont Fasteners Sales Corporation (Canadian owned maker of industrial fasteners) and Mylan Technologies, (a leading manufacturer of transdermal drug delivery systems). No layoffs or downsizing was reported among any major Franklin County manufacturers in the last year.

This diversified manufacturing base is one of Franklin County’s strengths. So too is its proximity to Canada. Not only does Franklin County provide a “wonderful staging area” for Canadian businesses to expand into America, Soule says, but the port of Montreal facilitates easy transport of goods and people between this region and Europe.

“It is the least expensive port along the Atlantic seaboard,” he says of Montreal. “It’s the shortest shipping point to Europe.” Many of the companies here in Franklin County are subsidiaries of or owned by Canadian-based companies and others look north and to Europe for market opportunities.

There are even more new jobs in the pipeline too. Vermont Fasteners Manufacturing in February received approved for $364,000 of tax credits under the Vermont Economic Progress Council tax credit program. In order to actually receive this credit, Vermont Fasteners will be making a capital investment of about $20 million and adding 23 new jobs.

Vermont Precision Tools (maker of precision industrial gauges) in May received approval for $434,000 in credits. Like all these tax credits, this is performance-based and to receive final approval, Vermont Precision Tools will be building a new 65,000 square foot facility in Swanton, consolidating its operations, currently in Swanton and Colorado, under one roof. New floor layout and management systems will be designed to improve productivity, quality and employee satisfaction, and this should help make the company even more competitive. Monica Greene, company president, said the expansion and consolidation could add 20 to 25 new jobs to the local payroll over the next three to five years.

Several other developments in the county point at further

opportunities for growth. In Enosburg Falls, the Enosburg Falls

Development Corporation has received an Act 250 permit for a new

43 acre, eleven lot industrial park. Some creative funding, including a

federal grant of $624,000 and a Vermont Economic Development

Agency loan of $176,000 will help the local development group install

the water and sewer lines and upgrade other municipal utilities serving

the new industrial park.

Val Bonk of the Enosburg Falls Development Corporation said it will be seeking bids on the water and sewer expansion projects and he expects everything to be in place by the end of the year, so that prospective tenants could begin

building as early as next spring.

Already, Bonk said, “we have a tentative client for four of the lots.” The main focus of this park will be agricultural, with the hope of attracting businesses that will complement the all-important dairy industry.

“We have a very active economic development group here,” said Bonk, “that is very interesting and committed to getting things done. We’ve been working on it for five years and all of sudden it happens.

Recent community improvements in the village of Enosburg Falls have given the community a much more prosperous and inviting appearance. The park was completely redone and the old bridge, that had been threatening to fall into the river, was transformed into a major attraction, the “Bridge of Flowers and Lights.” The Enosburg Opera House has undergone a major renovation, with all new wiring, a new heating system, sprinklers and elevators that make every part of it handicapped accessible. The community has also been spending $20,000 a year on sidewalk renewal. All of this has in turn helped encourage more private investment. The village, with a population of less than 600 people, has three banks “and there is talk of a fourth locating here,” said Bonk. “We are a small hub,” serving as the economic center for a number of the surrounding communities, he explained.

“We’re pretty proud of our community and we want to keep making it better so our children and grandchildren can have something to be proud of too,” said Bonk.

LABOR FORCE CHALLENGE

Finding qualified employees continues to be a challenge in most parts of Vermont, especially with the continuing good news about low unemployment, and that situation is also the case in most parts of Franklin County. Soule has for several years warned that one of the crucial factors that will encourage or limit business development in the years to come will be the quality of the workforce.

“In our particular circumstance, we’ve had a difficult time filling our more skilled jobs,” said Catherine Dimitruk, executive director of the Northwest Regional Planning Commission. In some cases, Dimitruk said, it appears that entry level employees are being trained for higher skilled jobs, a process that does help upward mobility for workers.

For example, last fall seven area companies – Vermont Fasteners, Franklin County Cheese, Barry Callebaut, Superior Technical Ceramics, Mylan Technology, Energizer and the Fonda Group – put together a program with the Work Force Investment Board, the Department of Employment and Training, and the Vermont Training Program. The instruction, in the basics of electricity and “programmable logic controllers,” was geared to provide skills the companies needed for existing employees. Half the cost was paid by the state, and half came from the businesses who sent a total of 34 people to the program.

Last fall, the Associated Industries of Vermont commissioned a report by economist Dr. Arthur Woolf on the status of the state’s manufacturing economy. One of the findings of that report was that “what is most different about the manufacturing sector today compared to the past is the quality of worked the manufacturing sector employs. Increasingly, workers in the manufacturing sector cannot earn high wages and benefits unless they have the skills and education that firms require.”

According to that report, “one key element for insuring manufacturing success in Vermont over the next decade and beyond is for workers to have the skills that manufacturing (and other) firms need

in order to succeed.” The Vermont education system needs to produce graduates with the basic skills needed in manufacturing. These skills include basic reading, writing and mathematical concepts, the ability of learn and adapt, and ability to solve problems both individually and as part of a team, and positive workplace habits and attitudes.

Some of these skills should be taught in the K-12 school system. More specialized training can be offered through trade, technical and vocational schools, as well as community colleges, colleges and universities. Still others may be taught on site at particular businesses. But without these skills, workers will not be able to command good wages (indeed, they may become unemployable as the skill levels required of even entry level employees continues to climb), and “Vermont-based firms may become uncompetitive because they have to pay additional training costs,” the report concludes.

For Franklin County with its heavy reliance on manufacturing (about 24 percent of the county’s total payroll employment compared to just 17 percent statewide), this message is particularly important, said Soule. The FCIDC has been actively involved with the Franklin Grand Isle Workforce Investment Board, and has worked on developing the Action Plan for Workforce Development 2000 which seeks to identify gaps and deficiencies in the current workforce training and development, compared to what is needed by local employers.

ELECTRIC RESTRUCTURING

Another critical issue for this region and one that will de decided in Montpelier rather than Franklin County – is electric restructuring. Among the manufacturers in Franklin County, “the price of electricity and electrical services in Vermont is a key competitive disadvantage to doing business in Vermont,” according to Soule. Although there have been several proposals on the table in the last few years, the Legislature has so far resisted efforts to open the electric utility industry to market competition.

The issues-are complex and involve several different factors. There is the ongoing arbitration between Hydro-Quebec and the 12 Vermont utilities that contracted to purchase power from Hydro Quebec. The Vermont utilities would like to void the contract which runs to 2012 and requires them to purchase power at rates that are considerably above today’s market price of electricity. At the heart of the case is the question whether Hydro Quebec’s failure to deliver power for three months after the January 1998 ice storm was “an act of God” or due to the Canadian company’s failure to adequately maintain its transmission system.

Then there is the proposed sale of Vermont Yankee Nuclear Power Corporation to AmerGen, which has become mired in controversy. If not approved by the end of the year, the offer from AmerGen expires, and every day of delay drops of purchase price offered by $90,000. And there is the problem of the high cost of electricity from independent power producers, rates locked in during the 1980s and early 1990s by federal law enacted after the 1970s oil crisis. Now a quarter century later, these independent power producers provide 6 percent of the state’s electricity but represent about a third of the state’s long-term “stranded costs,” costs that will have to be paid by someone if the state finally agrees to move to a competitive market in electricity.

Finally there is the application by Central Vermont Public Service and Green Mountain Power to end their power monopolies and allow customers to choose their own electricity suppliers. Under the terms of that proposal, CVPS and GMP would be distribution utilities only, maintaining poles and wires.

The final decision in this matter, which is before the Public Service Board, will determine how competitive Franklin County – and all Vermont industries will be. Whether it’s manufacturers or dairy farms, high volume users of electricity in Vermont are already at a competitive disadvantage, because the state has some of the highest rates in the nation, and if no changes are made, electricity purchased in Vermont could soon become the most expensive in the country. Richard Cowart, former chairman of the Public Service Board, has estimated it is costing Vermont individuals and businesses between $25 and $50 million for each year of delay in shifting from a monopoly to market system for electricity.

ACT 250

A recent St Albans Messenger editorial was “Act 250: Ambiguous, Costly.” That about sums up way Franklin County views the state land use law. Representative

Albert Perry, D-Richford, served on last summer’s Act 250 legislative study committee and H.847, which incorporated many of the study committee’s recommendations – 80 to 85 percent, according to Perry was passed by the House. But, said Perry, it was never reported out of the Senate Natural Resources and Energy Committee. Perry said he “still supports” the thrust of the changes recommended by that study committee.

“There have been some permitting issues,” said Dimitruk. “They do tend to slow things down.”

Whether it’s permits for housing, new businesses or a new sewer line, Act 250 has caused repeated frustrations in Franklin County. In early August, an application for a new St. Albans Cooperative Creamery Store was put on hold when District Environmental Coordinator, Geoff Greene, ruled that the application required a conceptual master plan for the parcel of land where the new building would sit. Greene has told local media he thought the project was visually attractive and “the kind of design that could aesthetically set the tone for the rest of the development. It is nicely designed architecturally.” He said he regretted that the developers had not come to him “six months ago” and asked for guidance so they could have been sure to submit a complete application.

The proposed project, on the former Smith farm at I-89’s Exit 19, across from the Collins Perley Complex, would include a 20,000 square foot building on five acres, with 4,000 square feet devoted to the co-op’s farm and retail store. Another 4,000 square feet would be used by a Maplefields store, which would also have a self-service gasoline station. The rest of the space, 12,000 square feet, would be warehouse for the co-op. The project has already been approved at the local level and developers had hoped to begin construction by late fall, but now it appears that could be delayed until next spring.

Some earlier efforts to develop land in this area have been opposed by state regulators citing “sprawl” and the aesthetic impact for drivers on 1-89 looking out over St. Albans toward Lake Champlain.

There has been some bitterness in this area about decisions under Act 250 ever since 1994 when the State Environmental Board reversed a ruling of the District Environmental Commission and ruled against allowing Wal-Mart to build a store here.

A couple of years ago the Environmental Board reversed, another District Environmental commission ruling, putting a stop to a 20-plus lot housing development in Fairfax. A 40-acre proposed housing project in Swanton has gotten tangled up in issues concerning “forest agricultural soils.” The project is on the site of a former sugarbush.

In March a proposed extension of a sewer line along Route 7 North was delayed when selectmen were told it would require an Act 250 permit. The project was approved by local voters in January, 304-94, and the town had hoped to construct early this summer, without an Act 250 permit because it was within the town’s designated growth area and did not represent a 10 percent expansion of the system’s capacity.

But the biggest impact, according to local developers and builders, is harder to measure. There are many projects that are never proposed, they claim. And that has particularly exacerbated the already difficult housing crunch. And the cost of a project is unnecessarily not so much by the expense of meeting the Act 250 requirements, but by the delays that often result, especially if there is any controversy that produces appeals.

RETAIL GROWTH

A big retail hole is being filled in Franklin County. Since 1997, when Woolworths abruptly closed all of its 400 stores, there has 52,300 square feet sitting vacant and casting a pall over the entire Highgate Commons shopping center. But in May of this year, the owners of the 25-year-old center announced that not only would that empty space be filled by Staples office supply store (half of the total) and six smaller stores, but that there would be a number of improvements to the shopping center. David Kleger, president of Kellogg Properties which owns the shopping center, told a local media outlet in May that those improvements included air conditioning, new storefronts, updated signage, additional sidewalks and improvements to the store entrances.

In downtown St. Albans, there has been some changeover in stores over the past year, said Dimitruk, “but it looks healthy.”

Around the county that healthy look is the dominant one, whether it’s manufacturing or retail. And there remains a sense of optimism here, as local people figure out how to take their communities into the future while retaining what they value most from the past and present.

Copyright Boutin-McQuiston, Inc. Sep 01, 2000

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