Rutland County Economic Report: Region dealing with everything and now the pandemic

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Rutland County Economic Report: Region dealing with everything and now the pandemic

Sun, 06/21/2020 - 7:45pm -- tim
by Bruce Edwards, Vermont Business Magazine 

Photo: Downtown Rutland’s Center Street was unusually quiet and free of traffic on a recent weekday, typical of downtown’s elsewhere during the pandemic. Bruce Edwards photo.

Natural and man-made disasters happen all the time. But a pandemic? 

Bernie Carr says given what the town of Brandon has been through in the last several years the one disaster no one could have foreseen was a global pandemic that has wreaked havoc with the global economy.

“If you have a checklist, you might say a flood, you might say a tornado, you might say a hurricane, you might say a dramatic fire,” said Carr, a downtown store owner and president of the Brandon Area Chamber of Commerce. “Nobody was going to check off pandemic.”

The town has withstood a lot in recent years.

First there was Tropical Storm Irene which caused significant flood damage to the downtown.

That was followed by three major infrastructure projects including the $29 million Segment Six road project - a reconstruction that upended business in the downtown.

“So five years we’ve been under construction in some way shape or form,” said Carr, who owns Carr’s Gifts in the heart of the downtown. 

During the Segment Six project he estimated downtown businesses lost between 20 and 50 percent of their business. 

“There are just no good things happening right now,” Carr said.

The town was all set to have a coming out party this spring to celebrate the completion  of the project when the COVID-19 pandemic hit.

“It’s just been a hard, hard hit,” he said.

Photo: Bernie Carr of Carr’s Gifts is also president of the Brandon Area Chamber of Commerce. After withstanding several years of nonstop construction in the downtown, the town and the rest of the state had to deal with the economic shock of the Covid-19 pandemic. Bruce Edwards photo.

With Governor Scott’s emergency order in March effectively shutting down businesses across the state, Brandon and other downtowns became ghost towns.

Scott has gradually allowed businesses including, retail, to open back up but with restrictions.

Despite the hardship business owners are going through, Carr gave Scott and his administration high marks. 

“I still feel it’s what needed to be done and I give him a lot of credit for doing what he’s had to do,” he said. “I give the rest of us a lot of credit, on the whole, doing what we can what we can do so it doesn’t kill our friends and neighbors.”

Information please

For Tyler Richardson of the Rutland Economic Development Corp the focus continues to be serving as a clearinghouse to disseminate COVID-19 information.

“Keeping up to date with that information flow was quite frankly pretty intense,” said Richardson, REDC’s executive director. 

The information is two-pronged: how businesses could stay safe and how businesses could access federal and state economic programs, he said.

The initial $2 trillion federal stimulus program came with myriad rules that kept changing.

“We were trying to do a service to our business community by providing them with not only the right information but the right information at the right time,” Richardson said.

REDC with approval from the USDA was able to facilitate disbursing funds from its own loan program with more favorable lending conditions.

Richardson added that with the existing federal money available to businesses the REDC loan program will be there for the longer term if needed.

“It’s a real hard problem to wrap your mind around and put your fingers on because it literally affects just about every facet of the economy,” he said. 

Richardson said initial demand for the Payment Protection Program, or PPP, and other loan programs administered were intense with local financial institutions “slammed.”

“I have to say, if you’ve seen the national numbers, Vermont killed it in that regard,” Richardson said. “I think we’re second or third per capita in terms of getting these resources to our businesses.” 

PPP

Busy would be an understatement.

Like other financial institutions, Heritage Family Credit Union has been assisting its business and retail customers as they navigate through the COVID-19 pandemic.

HFCU President Matt Levandowski said the credit union with its 11 branches in two states has assisted customers with payment relief, short term loans, as well as processing PPP loan applications.

“We’ve had on the consumer side payment relief efforts so people can defer their consumer loans and we’ve done over 1,900 of those payment deferrals, ”Levandowski said. “We’ve also done low interest, short-term loans for consumers.”

For businesses, the credit union initially processed 317 PPP loans totaling $15.6 million, he said.

In addition, there have been 56 payment relief deferrals for businesses totaling about $14 million,” Levandowski said. 

“We’ve been working diligently to make sure that they can keep their businesses afloat during this time period,” he said.

Photo: Handcarved Sandwiches by Ernie is one of a number of downtown eateries that are open for takeout or delivery. Bruce Edwards photo.

For homeowners, HFCU deferred or modified mortgage payments of $15 million.

The credit union has a plan in place to reopen its branch lobbies once Gov. Scott gives the go-ahead. The teller windows and offices will be outfitted with plexiglass, social distancing stickers on the floor and other signage. All employees will wear masks.

With the branch lobbies closed, Levandowski said the drive-up windows have been extremely busy.

He also said there has been an uptick in the use of the credit union’s online and mobile banking platforms.

Financially, Levandowski said the credit union was well prepared to handle a crisis of this magnitude. “We were prepared,” he said. “We have a lot of reserves available and the financials look great. We can weather this storm.”

There is, however, a bill that will come due in three months when members will have to start making payments on their deferred loans.

“Right now all those payments are deferred so members can use their money for other things like groceries and whatnot while they’re not working,” Levandowski said.

HFCU has 175 employees, 11 branches and as of the end of March had $525 million in assets. 

Because of the federal stimulus money paid to customers, the credit union’s assets jumped $40 million in April to $565 million. 

PPP loans are forgivable if the business follows all the rules. 

One word of caution. REDC’s Richardson said with all the financial aid programs available businesses should be cautious about taking on too much debt.

RRA

In addition to REDC, emergency loans are available to city businesses from the Rutland Redevelopment Authority.

RRA Executive Director Brennan Duffy said $5,000 and $10,000 loans are available. 

So far, the RRA has made 19 loans totaling $120,000. 

Duffy said the RRA made available one-year, $5,000 no-interest loans, with a single balloon payment due at the end. A $10,000 loan has a 3 percent interest rate with a balloon payment due the at the end of two years.

He said loan demand has been concentrated in the service sector.

“It’s been a lot of restaurants and bars that have really been hard hit by the business protocols where they can’t be open” Duffy said. 

The emergency loans are funded out of the Business Incentive and Assistance Program (BIAP). That program was created from money the city receives from its solar energy generating stations. 

The city realizes $110,000 from its solar operations with half the money earmarked for the general fund and the remainder toward the RRA’s business incentive program.

Duffy said the city is considering pulling more money from the fund for emergency loans.

He also said the RRA is working with restaurant and bar owners to figure out a way they can operate at what will be reduced occupancy.

“People are concerned even when they are allowed to start serving in-house again they’re going to find they can’t seat everybody they normally would and that’s going to really hurt their revenue,” he said.

For restaurants that will come to rely on more takeout and delivery, Duffy said one idea being kicked around is designating parking spaces in front of a business for that purpose.

Given the breadth of the economic fallout, REDC is deeply concerned about the impact on all businesses not only manufacturers.

Richardson said that’s particularly true of vulnerable businesses “that require a convergence of people” like restaurants, theaters and art galleries.

“I think there’s some real concern that even when the public health restrictions are lifted slowly that the public is going to be trepidatious about frequenting these businesses again,” he said.

If there is a flip side to the crisis, he said Vermont may experience a bump in population as people relocate from densely populated urban areas. 

New normal

As businesses reopen their doors one thing is certain and that is the new normal will mean a different way of doing business, said Mary Cohen, executive director of the Rutland Region Chamber of Commerce.

The Chamber is a conduit of information on the protocols that need to be followed for a business to reopen as well as sources of financial assistance including the PPP and the Economic Injury Disaster Loan (EIDL). 

Photo: `I Love Rutland’ lawn signs like this popped up around Rutland to remind people to remain safe during the pandemic. The signs were made by Awesome Graphics. Bruce Edwards photo.

Cohen said the initial shock of the business shutdown by the governor set people scrambling.

She cited one example of a moving company that was scheduled to move a family following Gov. Scott’s emergency order in March that shut down business operations. “What do you do in those kinds of cases,” Cohen said.

“Supplying a lot of information about the PPP and the EIDL loans and even local resources was very important and continues to be important as people try to figure out when they can reopen and how are they going to do this,” she said.

With tourism such a critical economic driver, Cohen said the immediate concern is the summer which draws the largest number of visitors to the state.

Currently, any non-resident who visits the state and stays must self-quarantine for 14 days. How long that directive remains in effect is unknown.

“At the state level, they’re talking about how our tourist destinations are going to market to Vermonters as opposed to outside the state,” she said. 

 

Downtown

Downtown Rutland is starting to slowly awaken from the shutdown. But Steve Peters of the Downtown Rutland Partnership said that without question shops, restaurants, bars and arts and entertainment venues are likely staring at the biggest challenge they’ll ever face.

“Some of our businesses have adapted, expanded services like takeout or curbside or delivery, online ordering … doing more social media and finding new ways to show people their product and how to purchase from them,” said Peters, DRP’s executive director. 

The DRP website has a list of businesses that are open as well as resources for businesses as they adapt to the changes.

Restaurants and cafes were the first to adapt. Roots the Restaurant offers pickup and delivery. Handcarved by Ernie, the Speakeasy Cafe and Sandwich Shoppe recently reopened with pickup service.

To attract people downtown, the Partnership is working on an interactive app with business listings.

No hotel

On the economic development front, Duffy of the RRA said plans to build a downtown hotel have fallen through. DEW Construction notified the city that the decision to abandon the project “was due in large part to the COVID-19 pandemic,” Duffy said.

The plan was to purchase the former Rutland Herald property at the corner of Wales and Center streets. 

Also in the city, Heritage Family Credit Union is seeking approval to subdivide the former College of Saint Joseph campus.

The credit union as the mortgage holder took possession of the campus when the college went out of business last year.

Levandowski, the HFCU president, said the plan is to subdivide the gym and athletic fields as one parcel with the remainder of the campus and buildings as the other parcel.

He said it was highly unlikely the campus could be sold as one parcel. “We’re not looking to sell it all lock, stock and barrel to one entity,” he said.

CSJ wasn’t the only college to fall victim to declining enrollment. Green Mountain College in Poultney also closed last year. The campus is set to be sold at auction this summer.

CU

No business or nonprofit is immune from the economic fallout brought about by the current crisis including higher education.

Castleton University and the other state colleges will face a financial reckoning in the near future. State College Chancellor Jeb Spaulding went so far as to propose closing the University of Northern Vermont and the Randolph campus of Vermont Technical College. The outcry prompted Spaulding to resign.

The collateral damage extended to Castleton University which prompted President Karen Scolforo to resign.

Jonathan Spiro, who most recently was interim provost, was named interim president.

With a $56 million dollar budget, Castleton University is no small economic driver. The campus is home to 2,500 students and 417 faculty and staff.

The campus shut down in March and the students sent home. There were 400 students in the graduating class.

“The transition to online teaching I think went as smoothly as we could have hoped for,” said James Lambert, associate dean of advancement.

He said the school is tracking toward a solid fall enrollment and “the returning student numbers look like any other year.”

While other colleges have struggled with enrollment, Lambert said Castleton has experienced “an increase in enrollment over the last couple of years.”

“We’ve added two campuses (Bennington and Killington) and we just have a really strong facility and a really strong campus life,” he said.

The Bennington campus offers a degree in nursing while the Killington campus offers a degree in resort and hospitality management.

GE Aviation

With more than 1,200 workers at its plants in Rutland City and Rutland Town, GE Aviation is the second largest employer in the county behind Rutland Regional Medical Center.

But the worldwide pandemic has taken an economic toll on the engine maker resulting in job losses throughout GE Aviation of 25 percent, according to GE spokesman Perry Bradley. 

The workforce reductions include salaried and hourly employees globally, voluntary and involuntary actions, that will take place over several months, the company said.

Bradley said the impact of COVID-19 on the airline industry is acute with global air travel down 80 percent resulting in a projected decline in revenues this year of 55 percent or more than $300 billion.

Two of GE’s biggest customers - Boeing and Airbus - have announced major cutbacks in aircraft production lasting a year, Bradley said in an email. 

“With all that in mind, on May 4, we announced we are reducing our global employment by 25 percent (13,000 out of 52,000 globally),” he said. “The impact of the reductions varies by site – some sites will experience a greater impact, some less – depending on factors like product mix, customer base, and participation in voluntary separation programs.”

The actions taken by GE have a goal of saving the company $1 billion and $2 billion of cash actions.

The announcement of the cost-cutting was made to employees on May 4 by GE President and CEO David Joyce.

“These plans, which we expect will be ready over the coming months, are part of a comprehensive strategy we are developing for resizing the business consistent with the forecast of our commercial market,” Joyce said. “While extremely difficult, I am confident this is the required response to the continued contraction of the industry, and its protracted recovery. I am equally confident that the industry will recover over time and that we will be positioned to win.” 

While the commercial end of the business has taken a significant hit, GE said its military engine business remains strong.

Bradley did not respond to specific questions about the impact on GE’s Rutland workforce.

As far as safety procedures, Bradley said the company regards the health and safety of its workers as its top priority. 

“We moved quickly to implement multiple layers of safety across our global sites to enable our employees to safely continue their essential work,” he said. “We continue to collaborate with public health authorities to actively monitor the outbreak and take all necessary precautions.”

Hubbardton Forge 

After a lull in production during the state’s “Stay Home Stay Safe” order, Hubbardton Forge is recalling workers and ramping up production.

The Castleton maker of hand-forged lighting products is now operating two shifts which allow for greater social distancing at the Castleton plant.

The company has 225 employees.

Photo: Hubbardton Forge has ramped up production as it fills a backlog of lighting orders. Courtesy photo.

“We went about it very methodically to figure out how are we going to be sure everyone respects the guidelines,” said Jeanne-Marie Gand, vice president of marketing. “We had to get enough of the personal protective gear here, which we did, and set up a tent outside to be able to do screenings for temperature before anyone gets in the building.”

The company ramped manufacturing back up operating two shifts with teams of five workers per shift and then 10 workers per shift with more workers now gradually added to each shift, Gand said.

Prior to the pandemic, the plant had operated one shift but two shifts allow more distancing between workers, she said.

During the manufacturing shutdown Hubbardton Forge continued to operate with certain teams working remotely, Gand said.

She said there’s no shortage of work.

“We’re fortunate enough to say that we have a very large backlog,” Gand said.

Lighting and online retailers including Handmade in Vermont in Wallingford and third-party retailers like Wayfair were willing to wait for delivery.

“People understand our product is made by hand,” she said. “It’s not sitting on a shelf.”

New orders slackened during the height of the crisis but as of mid-May were “steadily improving,” Gand said. 

Casella 

One bell weather of the economy is trash. The more trash and recycled material the better the economy is doing. 

As a major waste hauler across several states, Casella Waste Systems has seen a sharp decline in the amount of trash and recycled material.

Casella spokesman Joe Fusco said a preview of April revenues showed an 8 percent decline versus the comparable period a year earlier. (To come up with an apples to apples comparison, the figure does not include Casella’s acquisitions last year which boosted the bottom line. When those acquisitions are included, revenue in April declined just 0.09 percent).

“So you have a significant contraction in the economy and it shows up in the waste and recycling stream,” Fusco said.

Photo: Casella Waste Systems has experienced a drop in trash collection and recycling as the result of the pandemic. The company has 633 employees in Vermont. Courtesy photo.

While there has been a decline in the waste stream, as restaurants and other businesses have shut down, Fusco said there has been a noticeable shift in the amount of waste and recycling away from the commercial to the residential sector. 

Early on Casella took steps to protect its employees and serve its customers implementing safety protocols, including the use of personal protective equipment.

Of the company’s employees, several in the Boston area contracted the virus, which was not work-related but rather a function of where they live, Fusco said.

“You always want to be careful but there’s no real connection between the work they’re doing,” he said. “They’re probably more at danger at home or in the grocery store.”

Casella has 3,000 employees with 633 in Vermont.

 

Home sales 

The pandemic has forced businesses to adapt to a new normal and that includes the way homes are bought and sold.

Realtors and their clients now must follow strict guidelines when showing a home.

Despite those restrictions, homes are in demand and sales are happening, said Laurie Mecier-Brochu regional manager, Greater Vermont Four Seasons Sotheby’s International Realty in Rutland.

Mecier-Brochu said low inventory and low interest rates continue to drive demand.

“Since we’ve been able to get out and show we’ve been very busy,” she said. “Anything under $300,000 in Rutland County tends to go very quickly.”

She said anything under $200,000, which is the first time homebuyer market, goes so quickly that sellers often have “one or multiple offers within a few days.”

Mecier-Brochu said the inventory of homes for sale in the county is down about 23.5 percent from 2019 but homes are coming onto the market.

The average sales price is up about 12 percent to $203,000 from 2019.

The new normal includes a checklist for Realtors: prospective buyers are asked COVID-19 related health questions, only members in the same household can view a home at the same time, lights are turned on, doors and cupboards opened so prospective buyers avoid contact, masks must be worn and surfaces disinfected before and after a showing. Out-of-state buyers must quarantine for 14 days before viewing a property.

“Anything we do we have protocols we have to follow that are very strict,” Mecier-Brochu said.

The pandemic could result in a population shift as people living in urban areas consider moving to rural areas of the country including Vermont are viewed as safe havens.

Mecier-Brochu thinks that’s a real possibility once the state is open to visitors and the 14-day quarantine period is lifted.

Following Governor Scott’s executive order in March shutting down or severely restricting business operations, the real estate industry had to get creative. 

Since showings were off limits, Realtors resorted to virtual tours and face time with prospective buyers. Mecier-Brochu said some sales were made “sight unseen there was so much demand.”

Until Scott loosened restrictions in April, no home inspections were allowed so real estate agents worked with home warranties or set up escrow accounts in lieu of walk throughs, she said.

Title searches also became more difficult, though Mecier-Brochu said town clerks were extremely accommodating.

Bruce Edwards is a freelance writer from Southern Vermont.