Rutland Economic Report: Tight labor slows economic transition

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Rutland Economic Report: Tight labor slows economic transition

Fri, 06/15/2018 - 7:42am -- tim

A Hubbardton Forge worker bends a red hot piece of steel for one of the company’s handcrafted lighting products. Hubbardton Forge photo.

by Bruce Edwards Vermont Business Magazine Challenges are nothing new for the state’s second largest county. Over the years the industrial, commercial and retail landscape has changed in Rutland County. Major employers like Tambrands, Metromail, Skyline and the Brandon Training School left, leaving a void that was filled in part by new and existing employers: GE Aviation, Ellison Surface Technologies, Killington Resort, The Vermont Country Store and Hubbardton Forge. 

The county’s downtowns have adapted as well.

In the early 1990s faced with the opening of a new mall on its outskirts, Rutland City countered the threat with a revitalization program that encompassed the downtown shopping center. 

Those improvements continue to this day as the city, property owners and businesses tweak their efforts to meet the challenges of a changing retail environment. 

Rutland City isn’t alone. Town centers in Brandon, Fair Haven, and Poultney are engaged in similar if smaller efforts.

A glance at the county’s March unemployment rate of 3.3 percent (not seasonally adjusted) indicates a problem shared with the rest of the state: not enough bodies to fill the many job openings.

The state’s unemployment rate in March held steady at 2.8 percent (seasonally adjusted).

Rutland could use more high-paying jobs and the workers with the skills to hold those jobs. The county’s median household income of $50,029 is far below the state median of $56,104. 

Marketing

The tight labor market is exacerbated by the county’s declining and aging population.

Vermont is the second oldest state in the country next to Maine. For Rutland the numbers are worse. 

According to the US Census Bureau estimates, between 2010 and last year, Rutland County’s population declined 4.2 percent, from 61,649 to 59,087.

There is renewed interest in the corner of Center and Wales streets as the site of a downtown hotel. Bruce Edwards photo

Over the same period, Vermont’s population declined 0.3 percent to 623,657 while total US population grew 5.5 percent.

Rutland and Vermont aren’t getting any younger either. Residents age 65 and over make up nearly 21 percent of Rutland County’s population and 18.1 percent of the state’s population. The US average is 15.2 percent.

Lyle Jepson, executive director of the Rutland Economic Development Corp, said the region is being proactive to stop the migration out of the county and attract new residents. 

“The Real Rutland campaign is really pretty much a three-legged stool of marketing where the overall goal is to grow our population,” Jepson said.

He said the campaign is highlighting the outdoor, adventure-based recreation, the region’s quality of life and promoting jobs that are “high paying, high skill and in high demand.”

Jepson said REDC’s website lists more than 100 jobs many of which pay a livable wage of $44,000 a year and benefits. He said while many jobs are in health care there are other jobs available as well. 

Another part of the initiative deals with workforce development. 

REDC and the Rutland Region Workforce Investment Board received a $185,000 state grant to launch a pilot project to train high school seniors and recent graduates for local jobs.

“You’re not going to get those jobs if you don’t have a skill,” Jepson said. 

He warned that without a growing population and a trained workforce the region “will be in crisis 10 years from now.”

Part of the recruiting effort includes attracting residents from Puerto Rico, which continues to recover from last year’s devastating hurricanes. Jepson said while it’s not a panacea by any means, it’s one additional opportunity to pursue.

A similar effort was made last year to relocate Syrian refugees to Rutland. However, that effort floundered with the election of Donald Trump whose administration put up immigration barriers targeting Muslim countries. 

To encourage and cultivate new businesses, REDC is a major supporter of
The MINT – a maker space in an industrial park on Quality Lane. The shared space offers entrepreneurs tools, equipment and a collaborative environment to grow their business. 

REDC is undergoing a transition as well.

REDC and Castleton University had forged a partnership with the university paying Jepson’s salary as executive director. Jepson was also the dean of entrepreneurial programs at Castleton. But as part of its restructuring the university eliminated Jepson’s position and with it funding for his REDC salary.

Jepson recently (June 11) joined Vermont Tech’s Office of Continuing Education and Workforce Development (CEWD) as the Director of the Vermont Career and Technical Teacher Education Program. Assistant Director Tyler Richardson has been appointed interim executive director of REDC.

The feedback Mary Cohen of the Rutland Region Chamber of Commerce receives from the business community is largely positive.

Again, the one complaint is a shortage of workers.

Cohen said the goal of the regional marketing initiative is to build the population base. Like Jepson, she said businesses can’t grow without an adequate workforce.

“A 3.2 percent unemployment sounds like such a good thing but it’s really full employment and it’s basically choking our economy,” said Cohen, the chamber’s executive director.

She said the marketing initiative includes a three-prong media campaign aimed selling Rutland to Rutland as an ideal place to live, work and play; selling Rutland to the rest of the state; and out-of-state outreach.

“The first months we focused on Boston and Hartford, Conn.,” Cohen said. She said that’s likely to expand to the New York and New Jersey metro area.

Cohen stressed the Real Rutland campaign to boost the population base is a 10-year effort. 

She said the effort is supported by municipalities and the business community. Last year, funding totaled $180,000 with $175,000 allocated this year.

Rutland is also part of the Department of Tourism and Marketing State-to-State pilot program to attract people from out of state who have shown an interest in relocating to Vermont. 

The employers

After 20 years, there is a change in leadership at the top of Rutland Regional Medical Center.

New RRMC President Claudio Fort (right) chats with Rutland Mayor David Allaire. Fort replaced Thomas Huebner who retired in April after 20 years leading the state’s second largest hospital. Courtesy photo.

President and CEO Thomas Huebner retired in April, replaced by Claudio Fort. Fort is the former CEO of North Country Health Systems in Newport.

Fort takes over as the hospital is completing plans on a $22 million medical office building at the Allen Street campus.

The change is leadership also comes at a time when the hospital is facing a potential shortfall.

“We’ve had some fairly significant volume both on the in-patient and the out-patient side,” said Judi Fox, the hospital’s chief financial officer. “Like most hospitals we were hit fairly hard with the flu epidemic and that had us at full capacity on the in-patient side for most of the months of January and February.”

Because the rate-setting Green Mountain Care Board limits how much revenue a hospital can generate, the surge in patients this winter strained the hospital’s budget, Fox said.

Fox also said the budget has come under pressure because of a nursing shortage. It means the hospital is forced to rely on traveling nurses, who are more expensive to hire.

The result is a projected shortfall halfway through the fiscal year, Fox said. The hospital budgeted a $2.8 million operating margin but to date the operating margin has shrunk to $1.5 million, leaving a shortfall of $1.2 million.

“We will not be able to make this deficit up,” Fox said.

The hospital is addressing the nursing shortage, hiring 42 nurses over the last six months, including 25 recent graduates. 

The largest infrastructure in the pipeline is a $22 million medical office building that is scheduled to break ground later this year.

Fox said the building will house the orthopedic, ENT and physiatry clinics.

“With that project, we are very proud to say that building will be named after Tom Huebner,” Fox said.

In selecting Fort as the new president and CEO, John Casella, who was board chairman at the time, said in a statement that Fort was the right choice.

“Rutland Regional Medical Center’s culture – collaboration, innovation, and community health care excellence – thrives under a unique leadership style and a special type of leader,” Casella said. “We’re confident Claudio is that leader, today and for the future of Rutland Regional.”

For his part, Fort said he’s been “very impressed with the caliber of the staff and their commitment to improve the health of our community and the patients they serve.”

GE

With its airfoil plants in Rutland City and Rutland Town, GE Aviation is the hub of the county’s manufacturing base.

Together the two plants have 1,045 workers and are looking to hire more.

“We are incredibly busy,” said GE plant manager Nate Beach. 

The plants are turning out compressor blades for a variety of commercial and military aircraft including the fuel-efficient GEnx, which powers the Boeing 787 and 747; the LEAP engine, which powers the Boeing 737 Max and Airbus A-320 NEO. Another new engine is the Passport, designed for the Bombardier Global 7000 and 8000 business jets. 

“We’re ramping up pretty dramatically,” Beach said. “We hired around 200 people over the past year.”

He said 80 of those hires replaced retiring workers.

On the military side, one of the newer engines is the GE 38 which powers the Marine Corps CH-53K Sikorsky helicopter.

“In total, we’re talking about over 26 new products in the past five years supporting a variety of engines,” Beach said.

Production at the plant is 60 percent commercial and 40 percent military.

Killington

Killington's famous spring skiing. Courtesy Killington.

Not unlike other areas of the state, tourism is a major economic driver in the county. The county’s tourism engine remains the Killington and Pico ski resorts.

Powdr Corp, the Utah-based parent company, will invest $16 million this summer in upgrades to Killington, including a new chairlift.

Killington spokeswoman Kristel Fillmore said a new, six-person, high-speed, bubble chair will replace the Snowdon quad. The Snowdon quad will then be installed on South Ridge, which replaces the lift that was removed.

“We also are kind of reworking the entire mountain to cater to some better and improved intermediate terrain,” Fillmore said. 

The resort is also replacing its K-1 Express gondola cabins. The cabins will now be stored in an enclosed barn, which will eliminate the need to de-ice prior to the first run in the morning. 

A new RFID ticketing system is being installed at both Killington and Pico. The ticketing system uses radio frequency to scan tickets so skiers can head to the lift through a gate without having their ticket scanned manually.

The resort will also add a new attraction to the Adventure Center this summer. Called the Rectangle, the nine-stage obstacle course has a “ninja warrior feel” to it, Fillmore said.

She said there are other capital projects that will be announced at a later date.

Killington is introducing a new season pass called the Beast 365. For $99 a month, the pass includes skiing, riding, mountain biking, golf and the Adventure Center.

As far as this season goes, skier visits at the resort were off from a more typical season. 

A Killington snow report update in April noted that, “Skier visit volume is below our typical level for this point in the year, due to abnormal weather patterns earlier this season.”

The season got off to a slow start with frigid weather in late December and January followed by warmer temperatures over the Presidents Week holiday.

March on the other hand came to the rescue dropping several feet of snow on the resort.

Michael Coppinger of the Killington Pico Area Association said the early weather made things difficult. But thanks to the March snow storms, business started to pick up, said Coppinger, the KPAA executive director.

He said the Women’s World Cup event in November attracted nice crowds and more importantly gave the area national exposure, he said.

Casella

Joe Fusco likens the solid waste business to the reflection of the economy at large. When the economy is doing well, consumers are buying more stuff and as a result throwing old stuff away and recycling more, said Fusco, a spokesman for Rutland-based Casella Waste Systems.

Right now the economy is doing well, he said.

“We’re a great human indicator of human activity,” Fusco said.

That human activity is reflected in the publicly traded company’s first quarter results. Revenue for the quarter was up 10.2 percent to $147.5 million. 

"Our disciplined solid waste pricing programs continued to add value, with landfill pricing up 4.9 percent and collection pricing up 4.8 percent,” John Casella, chairman and CEO, said in statement announcing the results. “This strong pricing was coupled with 6.6 percent solid waste volume growth, mainly driven by robust disposal volume growth.

Despite that increase, Casella posted a $3.9 million first quarter loss that was largely attributed to a recycling contract settlement of $2.1 million and a landfill closure charge of $1.6 million.

At one time the company was saddled with debt of between $550 million and $600 million. But by the end of the quarter in March the debt had been whittled down to a manageable $515 million, Fusco said. More importantly he said the debt-to-EBITDA ratio has been greatly reduced. 

That improvement is reflected in Casella’s stock price which has more than doubled over the last year to a recent price of $26.97 a share. Fusco also attributed the improvement to the company’s focus on its core assets.

One area of concern is recycling.

“There’s a global disruption of recycling,” Fusco said. 

He said China, a major importer of recycled material, decided to ban recyclables because of contamination issues.

“So the Chinese market closed,” he said.

Fusco said the market is so glutted that some companies pay to get rid of recycled material. In addition, he said shipping costs have doubled. How long the Chinese ban on recyclables continues is unknown, he said.

The Forge

Another of Rutland’s home-grown success stories is Hubbardton Forge.

Started in a garage 40 years ago by two entrepreneurs, the company’s hand-forged, top end, lighting products remain popular with consumers and the hospitality industry.

The Route 30 plant in Castleton has 235 employees, turning out floor, table, ceiling and wall lighting.

Although the privately held company doesn’t release sales figures, Hubbardton Forge spokeswoman Jeanne-Marie Gand said business is “good.”

Last year, the company introduced two new lines – Vermont Modern and Synchronicity.

Vermont Modern has a clean contemporary design that comes in six colors at a price that’s slightly below a traditional Hubbardton Forge product.

“(It’s) very much catering toward a younger professional, more of an urban style,” Gand said.

The Synchronicity line incorporates crystal embraced by forged steel. 

“So this is a very glamorous line,” she said. “Think Audrey Hepburn, not Kim Kardashian.”

For 2018, Gand said the company added new designs to the Vermont Modern and Synchronicity lines and also formed a partnership with Simon Pearce.

Called the Griffin Pendant, the steel fixture incorporates six, hand-blown, glass domes. 

The company sells through retail specialty shops across North America.

Hubbardton Forge also does a healthy business with the hospitality industry, including the Marriott and Ritz-Carleton hotel chains.

Over the years, the company has had to deal with Chinese knock-offs.

Gand said while that continues to be a problem the knock-offs cannot duplicate Hubbardton Forge quality. She said that’s why the company comes out with new designs every year.

Omya

The largest taxpayer in Pittsford is Omya Inc, which operates a calcium carbonate plant in the Florence section of town. The company has 130 employees.

Omya plant manager Wayne Wilmans said 2017 was a good year based on tons produced and shipped. Wilmans said he expects this year to be another good year.

“Orders have been strong and consistent over the last two or three years,” he said.

The local plant makes dry and slurry product for the paper and construction industries. 

Workforce training

With 1,750 employees, Rutland Regional Medical Center is the county’s largest employer. And like many companies around the state has jobs to fill.

Currently, the hospital has between 80 and 100 job openings, said Brian Kerns, the hospital’s vice president of human resources.

“Our number one recruitment need continues to be registered nurses at this point in time,” Kerns said.

He said the nursing shortage is nationwide, the result of growth in the health care industry. 

“There’s just a greater demand for nurses in nursing homes, doctors’ offices, hospitals, urgent care centers,” he said.

Kerns said many nursing hires are graduates of Castleton University. 

Starting pay for a registered nurse at RRMC is $55,000.

Kerns said the hospital is also in need of doctors, lab technicians, respiratory therapists, housekeeping, and food service workers.

With the current labor shortage, Kerns said the hospital is working with the Rutland Economic Development Corp., to explore the possibility of hiring from Puerto Rico, which continues to rebuild after last year’s devastating hurricanes.

Last year, the hospital was among the employers supporting efforts to resettle Syrian refugees. Kerns said the hospital recently hired one refugee to fill a housekeeping position.

To help counter the labor shortage, the hospital maintains a robust training program called Grow Our Own.

The program trains lower level employees to qualify for higher level jobs.

To meet its employment demands, GE Aviation has built up its hiring pool, partnering with local high schools with STEM-type outreach as well as working with the Vermont Technical College apprentice program, said Teri Leichtnam, the plant’s human resource director.

“We have a one-year, manufacturing experience requirement and we’ve been working with a lot of groups on how we can best do that and help folks get that one year,” Leichtnam said.

GE will also accept candidates without experience into the apprentice program, if they have the aptitude, she said.

Casella has 2,000 employees, including 550 in Vermont.

Fusco said despite offering attractive pay the company is having a difficult time finding skilled mechanics and truck drivers.

“Young people are not choosing the trades for career choices,” he said.

Gand of Hubbardton Forge credits the human resources department with finding the right people to keep the company staffed. She also said turnover is limited since many employees have been with the company for many years.

Gand said there have also been major investments in training and equipment.

Downtowns

Not unlike other downtowns in Vermont and across the country, change is a constant: businesses come and go and during the worst of times there are inevitably more empty storefronts. 

Downtown Rutland is no exception. There are several empty stores, the most noticeable is the former Coffee Exchange at the prime location of Merchants Row and Center Street.

But new retail shops have filled other vacancies.

One the major attractions which serves as a magnet for the downtown is the Paramount Theatre. The performing arts venue attracts top artists from rock and country to classical and comedy.

In the works is what city officials hope will be another draw - the redevelopment of the Center Street Alley. Renamed Center Street Marketplace, the $1.2 million project is nearing completion. The space is bordered by Center, Washington and Wales streets and Strongs Avenue.

Juice Amour is one of several new businesses that have opened in recent months in downtown Rutland. Bruce Edwards photo

Designed for outdoor events, the space has been redesigned with grass replacing the stone surface. A sidewalk surrounds the perimeter with lighting and ornamental fencing with gating for security. 

Brennan Duffy of the Rutland Redevelopment Authority said the redesign allows outdoor seating at the rear of Kelvans restaurant.

Another restaurant is also in the works. Duffy said Mark Foley, who owns the old Strand theater building on Wales Street, plans to open a restaurant on the lower level with outdoor seating facing onto the Center Street Marketplace 

The RRA has a bigger project percolating: bringing a downtown hotel to the former Berwick Hotel site at the corner of Center and Wales streets. More recently, the property was home to the Rutland Herald before the paper moved to smaller quarters on Grove Street.

The property was sold at auction last year but the buyer backed out of the deal over the cost of cleaning up contamination at the site.

But Duffy said another developer has expressed interest in the property with the idea of developing a hotel, conference center and restaurant.

“So that would be as far as big, transformative projects in Rutland City, that would probably be one of the bigger things to go forth here in many years,” said Duffy, RRA’s executive director. 

He said a key to the project moving forward is securing New Markets Tax Credits through the Vermont Rural Ventures Group. 

Duffy said the cleanup of the old Berwick site is doable. He said the cost is much less than one estimate, which was thought to be as high as $2 million. 

Brandon

Casella Construction has begun work on a reconfiguration of Route 7 in downtown Brandon. The $30 million project is scheduled for completion next year. Courtesy Casella.

Downtown Brandon is getting a facelift. Or more precisely, a reconfiguration of Route 7 that runs right through the heart of the downtown.

What’s known as Segment 6 is a $30 million, multi-year project that will improve traffic flow through Brandon.

Bernie Carr, who heads the Brandon Chamber of Commerce, said the town and its downtown merchants are well prepared for the disruption and inconvenience that began in earnest this spring.

“This is like our fifth year of construction between … the water district and the town and I think people are pretty well used to what’s going on,” Carr said. “It’s a bigger impact right now than it has been in the past but I have more positive comments from citizens about what’s going on with the construction than I do negative.”

The project includes improving the 90-degree curve in the downtown, burying utility, water and sewer lines, new street lights, sidewalks, green space and adding Brandon’s first traffic lights. 

“It’s just a massive renewal in the middle of our downtown,” Carr said.

The federal share of the project is 80 percent with the state kicking in 15 percent and the town 5 percent.

Casella Construction is the general contractor. 

While the road project has garnered much of the attention, that’s hardly the only news.

Carr said the Smith Block was sold and the new owner plans on renovating the vacant upstairs floor into 14 apartments. 

On the ground floor is Aubuchon Hardware and Brandon House of Pizza.

There’s also a new brew pub set to open next to the town offices replacing the tattoo parlor which moved across the street, he said.

Brandon has several manufacturers, including New England Woodcraft, a maker of institutional furniture for colleges and the military; Thor’s Elegance, a maker of high-end furniture; and Olivia’s Croutons.

Woodchuck Hard Cider of Middlebury has a warehouse in town at the site of the former Brandon Training School.

Pittsford

A few miles south of Brandon, residents of Pittsford are debating a proposed Dollar General store.

The discount chain already has several stores in the county and wants to build one in Pittsford at the corner of Plains Road and Route 7.

Town Manager John Haverstock said several concerns have been voiced about the project.

“I think there’s concern about truck traffic, general volume, but also how a truck would navigate around a relatively small area in the entryway and parking lot,” Haverstock said. “I think there’s also potential adverse effects on the relatively residential character of the neighborhood.”

He said there are also concerns about the impact on local businesses as well as the issue of sustainability “since there are so many Dollar Generals all over the place.”

If the town approves the project, Haverstock said Dollar General would still need to go through the Act 250 permit process.

At the other end of town, the new owners of the former Forest Farm on Elm Street want to make the 22-acre farm available for public use, Haverstock said

“It’s not every day that a nice piece of farmland with nice views in the town center becomes available,” he said. 

Haverstock said Baird and Betsey Morgan want to provide some public use “for any number of purposes which they haven’t yet decided on but one of them will be some outdoor community gardens which are in the works.”

He said the couple have held several brainstorming sessions to solicit input from residents.

Retail

Amazon and other online merchants have changed the face of retailing. The impact has been felt nationwide as bricks and mortar stores have struggled with many closing their doors.

Cohen of the Rutland Chamber said the key to survival is becoming a niche retailer.

Rutland has a Walmart downtown so trying to compete with the mega-retailer is a losing game, she said.

But a “cool bookstore” like Phoenix Books on Center Street and niche clothing stores like Fruition Fineries, Raw Honey Apparel and McNeil & Reedy are doing well, she said.

“It’s going to have to be a unique flavor to retail in order to be successful,” Cohen said.

She said six new businesses have opened downtown in the last six months.

Rutland Town is not only home to GE Aviation’s main plant but also the two largest retail hubs in the county: Green Mountain Plaza and the Diamond Run Mall.

While Green Mountain Plaza is a hub of consumer activity, the same can’t be said for the 24-year-old mall, which lost its three anchor stores: Kmart, Sears and JCPenney. 

Town Select Board Chairman Joshua Terenzini said a number of ideas have been kicked around to repurpose the mall if it’s no longer viable as a retail center. 

“For years, from previous ownership of the mall, it was very difficult to communicate with them and at least the new ownership has shown signs that they’re committed to seeing the mall being successful again,” Terenzini said.

The mall was purchased in 2014 by BAI Rutland LLC, Englewood Cliffs, NJ, from Gemini Real Estate Advisors for $4.3 million.

Gemini purchased the mall in 2007 for $53 million.

On the other end of town, along the Route 4 corridor in Center Rutland, the Flory family is moving to cleanup dilapidated properties, including Flory Plaza.

“The Flory family is motivated to clean up the property, including demolishing all the buildings that exist,” Terenzini said.

He said a contractor has already been hired for the demolition and cleanup.

“We were told by the end of the summer that the goal is to have all the buildings leveled and grass seed put down and make it much more attractive in Center Rutland,” he said.

In terms of future use, Terenzini said it’s up to the Flory family to decide what they want to do with the property.

Solar

Regional commissions around the state and their member towns take on a variety of issues from planning and zoning to water quality and transportation and few more in between.

More recently with the proliferation of renewable energy projects, solar projects have become a priority.

Ed Bove of the Rutland Regional Planning Commission said there are a number of net metering projects up for review.

“We’ve got about five or six solar net-metered projects kind of coming through the pipeline right now in varying stages of the permitting process,” said Bove, the commission’s executive director.

One project is proposed for the Thomas Dairy property in Rutland Town. Bove said one neighboring property owner raised concerns about one of the sites under consideration. 

He said other projects are being proposed for Brandon, Wallingford and Clarendon. Projects in Pawlet and Wells are being proposed at the sites of former quarries, Bove said.

Bruce Edwards is a freelance writer from southern Vermont.