Recent successes in the manufacturing sector should not distract Vermont from continuing to improve its business climate, according to industry spokespersons, executives of successful companies and the Dean administration.
At a time when a sharp drop in corporate taxes has been the main factor in the state's shortfall in anticipated revenues, manufacturing has been doing relatively well. But the picture is complex, all agree, with a multitude of factors playing a part, the only common denominator seeming to be hard work and ingenuity in the companies themselves.
There is some doubt whether what is happening deserves to be called an upswing or just an uptick. "More and better jobs" has been a rallying cry, and in that regard, there has been some degree of progress.
According to Vermont Department of Employment and Training seasonally adjusted figures for last February and the same month in 1995, total nonfarm employment went from 268,500 to 273,100, for an increase of 1.7 percent. Non-durable manufacturing (food processing, textiles and wood products) did slightly better, up from 15,600 to 15,900; or 1.9 percent. But durable goods-makers saw a rise from 44,400 to 46,200, or 52 percent.
"Very spotty. Quirky, almost," said Kerrick Johnson, vice president for environmental affairs at Associated Industries of Vermont (AIV). "It's very hard to make any blanket assessment." In any. sector, some firms are doing very well and some are doing very poorly, he said, with resource-based industries (deriving from forest products, extraction, agriculture) having the hardest time but also displaying shining examples.
William Shouldice IV, the secretary of Development and Community Affairs, said his sense is that the expansion f a statewide phenomenon and not, say, another Chittenden County surge.
"Every county has added jobs," he said, and "I think it's the result of a lot of hard work by a lot of people."
At the Bennington County Industrial Corporation, executive director Lance Matteson had the same impression, particularly for the very manufacturing-oriented community of Bennington. "We have ups and downs and we have examples that can run both ways, but my sense is that things ate in a bit of an uptick for manufacturing in general here," he said.
But no one is celebrating who went to hear Jerry Jasinowski, the president of the National Association of Manufacturers (NAM), at an Association Industries of Vermont (AIV) luncheon In Burlington last summer celebrating the NAM's centennial and AIV's 75th year.
Jasinowski read Vermont the riot act, industrially speaking. "Vermont must get serious about its regulatory burden, high taxes and energy costs, or face being left behind in the global economy," he said.
Those who accepted the paradigm shift view of manufacturing--that we are entering a post-industrial era, driven more by information-oriented business opportunities misled Vermont into promoting tourism and he service sector at the expanse of manufacturing, he said. Jasinowski is the author of "Making It in America: Proven Paths to Success from 50 Top Companies" told his audience.
Ohio, which took a different route, is reaping the benefits, he said. Between 1991 and 1993, that state saw 1,309 new plant openings and expansions, while in the same period Vermont had 14, he said.
"America is now competitively number one in the world, which is something most people don't know," Jasinowski said. Especially with Vermont's entrepreneurial spirit, he said, "It shouldn't be that hard to attract 10,000 new manufacturing jobs; all you have to do is show the business world that you are serious about their needs."
If Jasinowski were to come around again, he would find a somewhat different picture. At the very least, Governor Howard Dean and his appointees have been trying hard to turn things around, though the recession has left Vermont wit a big Catch-22.
As Dean himself noted in a recent interview, Vermont's quality of life (a major selling point for the state, according to many industrialists) depends on services, so reducing the tax burden on individual business is and taxpayers depends on creating new sources of profits and jobs--which existing taxes can hinder.
That's a theoretical obstacle, in a fluid, dynamic and mixed manufacturing climate where universal principles are hard to find. This examination of the situation will first take note of several clearly positive developments that have yet to show their full potential; then will look at some of the factors said to be major obstacles to growth; then will examine smaller companies on a case-by-case basis to point up reasons for success and lessons of the road.
TRYING HARDER
"I don't think anybody seriously thought we could do without manufacturing," said Dean. "Manufacturing continues to be the number one component of our economy; bigger than both tourism and agriculture."
"I make four or five phone calls every week to companies," Dean said, some of which are Vermont-grown and some of which ate thinking of coming here. in the case of the former, he not only asks how the businesses are doing, he asks what can be done better.
Dean appears regularly at ribbon-cuttings, too, and sometimes uses those trips as excuses to visit nearby plants. "But I think the phone calls are more helpful," he said. "The day I took over, you heard my focus was going to be jobs, jobs, jobs."
Shouldice, who as executive director of the Rutland Industrial Development Corporation before entering state officialdom, said, "it's an exciting time to be in government." He characterized the administration's approach, from Dean on down, as "rolling up our sleeves and doing it."
Shouldice ticked off several developments that look promising for the future:
* The state has set up its first world trade office, under Roger Kilbourn. Frank Cioffi, the commissioner of Economic Development, said more is involved than selling to foreign countries. "We've been a lot more strategic in the companies we're trying to recruit into the state of Vermont," he said. "There's a great amount happening with Canadian companies seeking to center in the US and have operations within the US, and we sit here at the gateway."
* Building on the extensive work Vermont has done to help small businesses with such basics as planning, marketing and so on, there is now a manufacturing extension center at Vermont Technical College to assist with the increasingly technical processes at the heart of value-added manufacturing. Shouldice said it will be able to look into very specific questions about why this or that machine isn't doing what it's supposed to do.
* The small business development centers, too, will be trying to do more, particularly for the kinds of individual entrepreneurs who in a few years might employ only 5-10 people, but who also might see business really take off in the long run, Shouldice said. As will be seen in the case histories of successful small manufacturers, this one-to-many scenario is by no means far-fetched.
In a sense, Shouldice agreed, Vermont is putting together elements of what was once termed "an industrial policy" and rejected at the federal level. While not attempting to allocate sectors and micromanage, the effort is also avoiding the extreme of saying, "We want more jobs," handing that over to the private sector, and saying, "Gee, we hope it all works out, because you're on your own," he said.
Cioffi said the last time he was in economic development, in Franklin County, was in 1982-84, "a very, very busy period." Today, he sees the seeds sown then bearing fruit, in the form of growing, prosperous companies.
"We are re-invigorating and recharging that effort today," Cioffi said.
COMPARING COMPENSATIONS
Problem areas, bottlenecks, roadblocks, obstacles--whatever legislators and regulators wants to call them--AIV has a list of them. Johnson said a survey of members in December found four concerns stood out as agenda items for change: worker's compensation; the price of energy; environmental permitting, all given a high priority; and in fourth place, transportation.
The good news on worker's compensation, Johnson said, is that Vermont is doing better than the rest of the Northeast. The average for all 1995 rates, per $100, was $8.02 for Vermont, followed by Massachusetts at $8.78, New York at $9.26, New Hampshire at $10.56, Maine at $11.64, Connecticut at $12.06, and Rhode Island at $12.17.
But Vermont's rates are still just plain high, Johnson said. Sandra Dragon, AIV's president and their worker's compensation specialist, noted that trades with higher accident rates can be impacted heavily: $37.73 for loggers, $14.37 for ski lift operators, $12.09 for carpenters, $10.11 for dairy farmers, versus 54 cents for clerical workers.
"It's a very costly part of doing business," Dragon summed up. Companies often pay $40,000 to 100,000 a year, she said.
