Lamoille County hoping to be into it up to their eyes
In a county where tourism and recreation are by far the most significant sectors of the economy, a strong winter ski season is essential. Ed Stahl at the Stowe Area Association pulls no punches when looking at economic prospects here. “If we had a choice of a soft economy or lots of snow, we'd always take snow.”
The employment numbers for Lamoille County reveal a heavy dependence on tourism with 26 percent of jobs here related to the hospitality industry. Government employment is at 15 percent while manufacturing accounts for just five percent of all jobs here.
Andy Condon at the Vermont Department of Labor agrees, that Lamoille County is “heavily dependent on tourism but very seasonal.”
Average unemployment in 2007, the last figures available was 6.5 percent and “putting them in higher tier of counties for unemployment.”
Influential industries in the county are related to tourism and construction and “they are symbiotic, people work summer in construction and winter in tourism,” said Condon.
Manufacturing in the county is not a significant component of employment as compared to statewide. At five percent of total jobs in the county versus 12 percent statewide this is a weak sector, he explained.
Condon said average wages paid in the county are about 80 percent of what they are statewide and were $29,996 as of 2007. That number goes along with the heavy dependence on leisure and hospitality jobs that tend to pay less.
Art Sanborn at the Lamoille County Economic Development Corp. said the county could weather the economic storm that arose last year and blew into 2009 because, “the economic composition and strength of the county is its diversity.” He does acknowledge that there is “a significant and dominant sector in travel and tourism.” While a quarter of all jobs, hospitality employment accounts for just 19 percent of county income. Manufacturing employs only about 1000 people in a job force of 20,000.
Manufacturing, he categorized as “fairly stable. The companies here tend to be small and focused on a specific industry.”
Sanborn said manufacturing here should remain in good shape because of the specialty markets locals companies focus on. “They are not seeing as much of a fallout as for general goods.” Also in its favor is that the county “isn't real dependent on any single manufacturer.”
The employment picture here, said Condon “is going to really depend on what the downturn in the economy means for the tourist industry in the county. Whether people spend their limited dollars by coming here instead of going out west or stay close to home and skiing close to home.”
Construction is another issue. Currently this sector of the economy is seeing a significant downturn similar to other counties in Vermont, the result cautious spending by businesses and local resorts. It has, in the past, accounted for eight percent of the job base here, higher by two percent than the state average. While Stowe Mountain Resort finishes up its nearly half billion dollar Spruce Peak project, (see sidebar) there is little other construction in the county.
Bob Mulcahey the real estate broker at Smuggler Notch said his company sells timeshares, and resells full ownership condos. This year the company did not build a new building. Currently there are 21 standalone buildings and 683 units at Smugglers.
Mulcahey said all full ownerships here are sold. Currently 11 homes were up for resale. This is a small number, he said, and the company “could use more inventory.” Full ownerships here sell from $109,000 to $495,000.
“The market has slowed down,” he acknowledged. “There are not many sales in full ownership with just one offer pending.”
Mulcahey said it's too early to tell what 2009 will be like. “We've had a good level of interest and it's a buyers market but sellers haven't reduced prices at all.”
Stowe and Morristown are the predominant retail towns in this 10-town county. Morristown is the regional consumer market place for general merchandise and groceries and has become the shopping center for the entire county. Stowe is the specialty and upscale retail town.
“We're going to see some reduction in sales volume due to caution by the consumer,” said Sanborn. As he surveyed retail here he could not identify any businesses in this sector that seemed shaky, and no retailers were closing or relocating from the county.
David Silverman at the Union Bank headquartered in Morrisville sees an economy that “isn't so bad locally.” He points to pockets of good economy including several companies in Morrisville in metal working doing well. He pointed to Sterling Technology, LWI Metalworks, and Custom Metal Fabricators and said this showed “a confluence of people having skills in those areas.”
Access to credit in the county is good and the Union Bank is “an active business lender.” Silverman said the bank's position has not changed regarding providing business credit. “We haven't tightened up qualifications or lending. We didn't participate in the poor underwriting in the past and we keep our risks on the books. “
The bank holds the largest market share among banks in the county.
While the health of the county appears good, Silverman said he “wouldn't characterize the areas as undergoing much growth at the moment,” although he would not call it stagnant.
The local tourism economy, he said, “had a pretty good Christmas season.”
The real estate market “has cooled off but hasn't died,” notes Silverman. However, he points to properties that are fairly priced as selling. Refinancing has picked up due to the recent drop in interest rates and, he said, there is plenty of money available for refinancing.
He, too, sees a heavy hit on the construction trades. “For the past six years that sector was very positive, but now there is a significant slowdown across the board and throughout the county.”
As the recession depends Silverman said “we're just beginning to see a softening in the consumer families and households. It's not horrible.”
Silverman predicts a summer uptick.
“We will see some hopeful signs and the construction trades will pick up. By the summer people who have an interest in the county doing business or living, while temporarily damped, it will come right back.”
Local Manufacturers Having A Reasonably Good Year
Two local manufacturers, Hearthstone stoves, and Concepts 2 rowing both in Morrisville say they are doing reasonably well considering the national economy.
Hearthstone is having what spokesman Dave Kuhfahl called “a good year.” Sales are up about 21 percent and much of this rise he attributed to soaring gas prices last year. He said the peak for orders for stoves was when gas hit $4 a gallon in the third week in July. “That was our best week, normally we are sitting around but we got swamped with orders. We are in the right industry at the right moment.”
So strong were stove orders that the plant ramped up production and also imported some stoves from its parent company the Spain-based Industrias Hergom Industries.
In 2008 Hearthstone sold 14,600 stoves compared to 12,100 in 2007. Eighty-three percent of the stoves sold are wood burning models as opposed to gas burners. Normally the company sells 60 percent wood stoves. Another hot seller was “anything that could go into a fireplace.
Hearthstone currently employs 60, 11 more than a year ago but down from the 70 employees it had on the assembly line this summer.
Payroll for 2009 is expected to reach $2 million.
Kuhfahl was not sure how long sales would be strong. “I feel fuel prices will take another ride due to problems in Ukraine, the Middle East and with OPEC. We're forecasting the same sales as last year.”
Strong sales in 2008 should carry over this year, he said. “With so much demand last year there is not much inventory in the showrooms and we are optimistic this year will be similar to last year.
Hearthstone wood stoves sell for $2800 to $4500 depending on the model.
Gas stoves sell because “there is a real market for contemporary stoves.” The company will introduce a pellet stove in 2009, the first of its kind made in Vermont.
At Concepts 2 co-owner and company founder Dick Dreissigacker said he is hoping to hold his own in a bad economy. “It's not a great situation, the colleges and universities we sell to (there are hundreds around the nation and internationally that have rowing teams) are going on tighter budgets as coaches experience budget cuts.”
The company sells schools specialized oars for racing shells made of carbon fiber material and sculling oars at $400 a pair. Sweep oars cost $300 each.
Dreissigacker said his business was multi-faceted because it also sells rowing machines for health clubs that “are fairly low priced,” and machines for individuals that are “higher end.” Over half of sales are overseas.
“We're down some, but haven't gone critical yet. We are holding our breath,” he said of current sales.
The company has been in business 33 years and currently employs 55. For the fiscal year ending October 31, 2008 sales were up.
Fiscal 2009 is not shaping up as well. “I'm pretty sure our business will be down this coming year,” said Dreissigacker. “That's OK as long as we plan properly and it's not down too much.”
With 55 employees any major job layoff could be troublesome, Dreissigacker admitted. “We could affect the economy if things really go south. But with careful planning things could be under control.”
Concepts 2 is not planning any layoffs at current projections. Assessing the county in general he was cautious. “I don't see anything too different right now it depends on how long the recession lasts.”
Cindy Locke at the Lamoille Valley Chamber of Commerce said the prime focus of her activity is “economic development attracting new business, supporting current business, and workforce development. While layoffs here currently are few, she said “people are cutting back and companies tightening their belt.”
Tourism has been aided this winter by early snowfalls and she saw “a huge amount of traffic increase from two weeks prior to Christmas in Morrisville. Tourists in her observation “are in Stowe, Morrisville, Johnson, Cambridge and Wolcott.” These visitors “are spending money and local stores were packed. It was a really good sign for us.”
The chamber is focusing its efforts on working closely with LCDC and the Stowe Chamber of Commerce. With new directors at each entity in the past 18 months there is a sense that cooperative marketing efforts are needed. As a result the three organizations have put together a legislative breakfast series and established a priority list of issues to give legislators. A regional resource guide and business directory is in the planning stage for mid summer production. It will be funded through sponsorship and private donations.
Another joint effort works to promote buying and spending locally in the Vermont community. “We need to keep spending and smartly and supporting Vermont products,” said Locke.
For his part, Sanborn said the LCDC currently has a recruitment initiative on second home owners, trying to attract them to the county to open their businesses or expand to the county. As he explained, “we have seasonal residents who are decision makers, we are advertising in local magazines that this is a good place to do business. We are concentrating on them to come here full time not just seasonally.”
Recently two companies located here and two others have an interest in being here, said Sanborn. This includes Utility Risk Management Corp, which moved to Stowe. It is an environmental software company, relocating from Pennsylvania that employs 18. It is expected to grow and could double in 2009.
Hawkeye International moved to N. Hyde Park from California. The company makes high quality abrasive resistant tape used in the aviation industry to avoid short circuits in the airline industry. A primary customer is the defense industry. It employs eight.
A major initiative, said Sanborn is with Manufacturing Solutions Inc. a contract manufacturing company LCDC is now under contract with MSI to purchase buy from the state and sell back to MSI the former railroad house in Morristown. The property has $100,000 price tag but needs $250,000 in Brownfield remediation. Sanborn said plans are for a spring start to capping the site. When completed the site will become a manufacturing facility that will then free up space MSI owns in three locations for more manufacturing space in the county.
Currently, the industrial park is fully occupied and the county has no publicly owned industrial space, it is all privately held.
Sanborn pointed to Johnson State College with its 1400 students as an economic boost to Johnson and nearby towns. He also said the new Regional Technology Center the Green Mountain Technology Center in Hyde Park was a brand new state of the art facility. That school has “a significant broad offering of adult education courses and can customize curriculum for an industry or company. With a Community College of Vermont site in Morrisville, the county was well positioned educationally to meet the demands of society, he noted.
Stahl at the Stowe Area Association looked back at this past Christmas season. “Overall for December 2008 we're behind December 2007 but handily ahead of Christmas 2006. We had great snow before Thanksgiving 2007 and this year not all trails were opened. However, “there were huge crowds on the mountain and village during Christmas week.”
Trends in tourism show last minute bookings and day before bookings, which make predictions hard. Also important now is the substantial drive market. “They seem to be driving instead of flying out west, both for financial reasons and due to the harassment factor.”
The previous winter of 2007-2008 Stahl said “was spectacular everyone was up on every category.” Last July was soft due to heavy rain, which affected hotels. Last fall was “very good and ahead of 2007.”
“We're cautiously optimistic and the critical factor is snow, which it is every year,” said Stahl considering this winter. The overall national economic effect on Stowe might not be a heavy blow said Stahl since “skiing is a lifestyle and people tend to give up lifestyle decisions last.” As positive indicator, he said, was last fall's ski shows in Canada and Boston where “we saw substantial equipment sales and thus we expect they will use the equipment.”
Stowe and winter sports is very important to the county's overall economy.
Stowe has 1492 rooms there are 40 eateries and 70 retail establishments in the association. With 860,000 visitors a year, most from out of state there is a strong rooms and meals tax component to consider. The most recent available revenue figures from the state show through September showed that overall for the state the tax rose 3.3 percent, but for Stowe that number was up 6.2 percent. Sales and use revenues from January 2008 to September in Vermont were down 1 percent but in Stowe the number rose 5 percent.
“My guess said Stahl is that October was very good, November is typically slow. December was reasonably good but certainly off of last year 2007 but well ahead of December 2006.”
Ray Saloomey at the Smugglers' Notch Area Chamber of Commerce said the Cambridge-Jeffersonville area is “closely tied to skiing and recreation.” But, “quite a few people work in the Burlington area.”
He sees the overall emotional climate here, due to the economy as “fear.”
Saloomey said his part of the county “has been fairly well insulated from the national economy.” However, the Smugglers Notch resort with much less construction “impacts local employment with locals working there.” The ski mountain is the biggest employer in the area.
Many local residents work at IBM in Essex Jct and, he said, “There is some concern over jobs at that plant based on industry reports.”
While 2008 wasn't a bad year, “it was an average year and we didn't suffer in any regard.” What 2009 brings is unclear, “with a bit of trepidation but it remains to be seen.”
Art Edelstein is a freelance writer from East Calais.
