Photo: Vail’s purchase of Stowe Mountain Resort two years ago has received positive reviews from business leaders. Photo by Jesse Schloff Photography.
Manufacturing bolsters economy even with a tight labor market
by Bruce Edwards, Vermont Business Magazine There is no underestimating the impact of travel and tourism on the Lamoille County economy.
The county is home to several major resorts including Stowe Mountain Resort, Smugglers’ Notch, Top Notch at Stowe, Trapp Family Lodge and Stoweflake Mountain Resort & Spa.
“In 2019, Stowe fared well overall in terms of occupancy and also business levels that we heard anecdotally from member businesses,” said Sharon Harper, marketing manager at Stowe Area Association.
Harper also said summer occupancy had been historically higher than winter. But now winter and summer visitations are about even, she said, with winter bookings up year over year, she said.
Harper said the town’s taxable receipts have grown from $78 million in fiscal 2009 to $135 million in fiscal 2019, a 73 percent increase in 10 years.
The increase in business is reflected in the numbers:
During peak foliage season, the Go Stowe Visitor Information Center sees an average of 400 visitors a day.
Photo: Stowe is a bustling resort town benefiting from a strong economy anchored by Stowe Mountain Resort and Smugglers’ Notch. Mark Vandenberg photo.
Over the past three years, the number of unique page views on gostowe.com has increased by 80 percent, indicating new visitors are interested in potentially visiting Stowe.
While the majority of users that visit the website come from the United States, there are users from Canada as well as Europe, Central America, Australia, Asia and the Middle East.
Visitors are staying longer. The average length-of-stay increased to above the three-night threshold between winters of 2018 and 2019. With an average of 3-plus nights. It also indicates visitors are staying midweek, which helps fill a quieter time period. Midweek occupancy in Stowe increased 3 percent year-over-year (2018 - 2019).
The average booking window has increased over the past few years, an indication people are booking stays further out. As a four-season destination, Harper said Stowe employs a variety of marketing tools and platforms, including GoStowe.com, Face Book, Twitter, Instagram, email, and blog posts.
Harper said the 250-member Stowe Area Association also partners with a number of community organizations to get the word out about the area.
Workforce
John Mandeville’s biggest concern about an economy that shows no signs of slowing down is a shrinking workforce that has the potential to stymie future expansion.
As head of the Lamoille Economic Development Corp. Mandeville and other economic development officials across the state have spent considerable time addressing the problem.
Recently, the regional economic development corporations held a series of workforce summits.
“We’re all now working to put together an extrapolation of information that came out of those summits which is going to be presented to the Legislature (at the end of January),” Mandeville said.
He said the state’s “workforce issues are not going away and we’ve got to be creative about doing something.”
At the Lamoille workforce summit, the same issues emerged as elsewhere around the state.
Mandeville pointed out the demographic problem of an aging population coupled with young people leaving the state.
He said the state’s low unemployment rate of 2.3 percent in November exacerbates the problem when companies are scrambling to fill vacancies. Vermont has had the lowest rate in the nation through the end of last year.
The unemployment rate in Lamoille County in November was 2.9 percent (not seasonally adjusted), according to the state Department of Labor.
“One of the important parts of this county of course is hospitality, travel and tourism,” Mandeville said. “If I talk to the hospitality properties around, if I talk to the ski resorts that are around, they’re all screaming for people… ,” he said.
Some of the solutions kicked around at the summit have been voiced before, Mandeville said, including either finding a way for the state to forgive student loan debt or figure out a way to pay for students’ education at the state colleges or the University of Vermont.
He said that would allow students to start off their careers debt free rather than “owing tens of thousands or conceivably hundreds of thousands of dollars.”
Addressing the student debt problem would help keep young people in the state. But Mandeville said there are other issues as well.
“We have to do something about creating more affordable housing,” he said. “We have to do something about public transportation, making it more available and more robust than it is now.”
He said all those issues “are constraints upon either keeping or attracting people” to the state.
On the positive side, Mandeville said the county is in a good position when it comes to workforce training with Northern Vermont University in Johnson, Community College of Vermont and Green Mountain Technology and Career Center.
The resorts
Vail Resorts acquisition two years ago of Stowe Mountain Resort continues to elicit a positive response from the community, said Harper of the Stowe Area Association.
“Our organization has seen a positive impact on the community as a whole, she said.
Harper also said Vail Resort’s reputation has only enhanced the Stowe resort’s image, which already was regarded as a premier four-season destination.
“With their Epic (ski) pass product it provides us an opportunity to attract new visitors to Stowe,” she said, referring to the pass that’s good at a number of Vail resorts.
At Stowe Mountain Resort, spokesman Jeff Wise said this season is off to a good start.
“Speaking generally, since we can’t disclose numbers, the season is going well so far and our mountain operations team has done an amazing job providing really good skiing, even with several unfavorable weather events,” Wise said in an email. “We’re also in good shape from a staffing perspective, providing a level of service for our guests better than ever before,” he said.
Smuggs
Like his counterparts in the resort and hospitality business, Bill Stritzler is bullish on the state of the industry and the economy.
“We have strong seasons, summer and winter at Smugglers’, ” said Stritzler, president of Smugglers’ Notch Resort. “We’ve been 25 years I guess building up the summer business and both were good in (20)19.”
The summer business is pretty consistent and “as strong as the winter only a lot shorter,” he said.
Although not blessed with the same amount of snow as last winter, Stritzler said it’s been a good season so far. Snowfall saw a turnaround for the Martin Luther King weekend, however, with skiers greeted with two rounds of fresh snow.
“Our season pass (sales) are up, our occupancy is up over the holidays,” he said. “The feedback from the guests is very positive.”
Smugglers’ attracts most of its visitors from the Northeast primarily the metropolitan New York and Boston areas and Canada.
Billed as America’s Family Resort, it also offers off-mountain entertainment and recreation.
FunZone 2.0 is a 26,000-square-foot indoor complex with a variety of activities for families.
Photo: There’s more to do at Smugglers' Notch than ski. The resort has focused its efforts on non-skiing activities for the family like FunZone 2.0. Provided photo.
“We have implemented and offered to guests who want to enjoy the winter experience but don’t necessarily want to ski and that’s a growing part of our business,” Stritzler said.
Outdoor activities also include ice skating, snowshoeing, tubing and snow mobile tours.
Smugglers’ employs between 1,200 and 1,300 workers during the winter and 800 during the summer.
Hiring is a challenge. Stritzler said the resort is hiring international workers to fill open positions.
Photo: Smugglers’ Notch is enjoying another good ski season with strong bookings and season pass sales. Provided photo.
Stoweflake
Although business was flat last year, Chuck Baraw, president of Stoweflake Mountain Resort & Spa, remains upbeat.
“I feel very good about the economy,” Baraw said. “I think the economy under our present national government is, as everyone knows, is doing very well.”
He said the problem is competition, especially from Stowe Mountain Resort, which has “added between 1,000 and 1,500 rooms” in recent years.
He said the other competing factor is the emergence of short term rentals.
Baraw said Airbnb and VRBO do a healthy business in Stowe, siphoning off business that in the past would have gone to hotels and inns.
Stoweflake has 120 rooms and suites, plus a number of individually owned condos or townhomes.
Baraw said winter accounts for 40 percent of his business, with 60 percent generated during the spring, summer and fall.
When it comes to Stoweflake’s conference and meetings business, Baraw said both are doing well.
“That’s probably close to 45 to 50 percent of our business depending on the season,” he said.
Stoweflake is able to hold its own against Stowe’s conference center. Baraw said unless a certain conference or meeting is looking for skiing as part of the package, his resort has a significant advantage over Stowe.
“We’re in a much better location because we’re right in the center of what they call the heart of Stowe,” said Baraw, who runs the family business started by his parents more than 50 years ago.
Stoweflake’s location in the heart of Stowe allows visitors to walk to the village.
“There are as many shops and stores right here in Mountain Road Village within a very short walk of us, as there are down in the village,” Baraw said.
Like many Stowe residents, Baraw remains positive about Vail’s acquisition of Stowe.
“I think it’s positive because they certainly know how to run a ski area,” he said.
He did say he’d like to see Vail share more information with the public. Baraw said he’d like to know what plans Vail has to make improvements. In particular, he said Stowe could use a new high-speed quad to replace an older lift.
“So far my only complaint with Vail is they … don’t seem to be putting in any significant capital, money into it,” Baraw said.
He also said Stowe might want to consider building a parking garage to alleviate parking problems on the Mount Mansfield side of the resort.
A labor shortage is a problem for many employers throughout the state. But Baraw said that hasn’t been an issue at Stoweflake where workers have the option of working year round.
The resort has between 130 and 150 employees, depending on the season.
On Main Street
Tess Milner has her finger on the pulse of the local economy, especially the retail and hospitality sectors.
“What I’ve been hearing is we do have an economy that’s growing because of the new businesses we’ve had in the last number of years and they seem to be thriving,” said Milner, office manager at the Lamoille Region Chamber of Commerce.
Milner ticked off a list of some of the newer businesses: North Country Cakes in Morrisville, Fork & Gavel restaurant in Hyde Park, Plate restaurant in Stowe.
“So I am seeing some growth,” she said. “I am also seeing a lot of businesses are hiring.”
There’s also a push to buy local which helped over the holiday season.
“I think a lot of people in our area especially like to support local businesses and artists,” Milner said.
A case in point is River Arts that has a shop featuring local artists and artisans, she said.
But Milner also said there are significant challenges when it comes to affordable housing, childcare and transportation.
She said that has a domino effect which creates a challenge attracting workers.
Downtowns or village centers are the lifeblood of a community and extreme weather can wreak havoc as weather events in recent years have shown.
The Lamoille County Planning Commission has been pro-active in that regard. A flood resiliency project spearheaded by the Commission paid off in October during a Halloween storm, said LPC Executive Director Tasha Wallis.
A bridge replacement over the Brewster River prevented flooding in the village of Jeffersonville, Wallis said.
“We also put in a large culvert under Route 15 and those two things keep water out of the village or draw water out of the village,” she said.
Industry
Efforts are in progress to expand the county’s industrial base. But Mandeville of the Lamoille Economic Development Corp. said land for industrial development is in short supply.
He said plans for a 26-acre industrial park in Johnson are moving forward.
“We’re trying to get federal grant money to move forward with getting the basic infrastructure put into the park,” he said.
If funding is secured, he said six to eight lots could be developed.
In North Hyde Park, two lots are available in the industrial park on Route 100.
“That is somewhat problematic because there is no town wastewater disposal available in that particular location,” he said.
Besides the workforce issue, Mandeville said the county’s industrial and travel and tourism sectors are doing well.
MSI
One of the anchors of the county’s manufacturing base is Manufacturing Solutions Inc., better known as MSI.
Business is booming at the Morrisville contract manufacturer.
Keith Koehler, MSI business development manager, said 2019 was the company’s best year on record.
“We met all of our goals and our employment at the end of the year was right around 300 employees which is a record for us,” Koehler said. “We added several new customers and things are looking very good for us.”
He said while there have been reports that manufacturing nationally is soft, MSI’s experience has been just the opposite.
To meet growing demand, the company embarked on a major expansion, a 62,000-square-foot addition that will connect the two existing buildings on Stafford Avenue.
Construction is expected to be completed in April.
Photo: MSI, a contract manufacturer, is building a 62,000-square-foot addition in Morrisville. Provided photo.
The project is being funded in part through a $928,824 Vermont Employment Growth Incentive, which was approved in December 2017.
The VEGI program provides cash payments to businesses provided they meet performance requirements. Payments are based on the revenue return generated to the state by prospective qualifying jobs, payroll creation, and capital investments.
Koehler said the expansion that connects the two buildings will provide more warehouse space for products and components that are now stored off site.
He also said the expansion will make for a more efficient manufacturing process.
Once completed the total footprint on Stafford Avenue will be just shy of 180,000 square feet.
The company also has an additional 220,000 square feet of commercial space that it leases.
“We own approximately 20 buildings in northern Vermont from Williston to Newport to Morrisville,” Koehler said.
Those 20 buildings can serve a variety of needs including warehousing, office space, retail, and production.
“So that’s a big part of our business,” he said.
Photo: Contract manufacturer MSI has increased employment at its Morrisville facility from 175 workers three years ago to 300 today. Provided photo.
MSI also does site work from land clearing and driveways to septic systems and foundations.
Started 24 years ago, MSI not only provides contract manufacturing services but also warehousing, distribution, supply chain management, and fulfillment.
Its clients represent a variety of industries: fitness and recreation, environmental, biomedical and aerospace.
One of MSI’s major and long-term clients is Concept 2, the Morrisville company that makes rowing machines.
Finding workers remains an issue but MSI has instituted what Koehler describes as “a very robust recruiting and employee development program.”
“We are constantly hiring and that’s really why people work with us,” he said. “In many cases … they can’t find good quality manufacturing technicians to assemble and do their processes so they hire us to do it.”
The success is in the numbers. The company has grown from 175 employees three years ago to 300 today.
Koehler also said the company has made significant investments in equipment.
MSI is one of a number of manufacturers in the county.
Several call the Lamoille Industrial Park home including Concept II, Turtle Fur, and Butternut Mountain Farm.
Turtle Fur
Known for its fleece neck warmers and headgear, Turtle Fur remains popular especially among women which accounts for 60 to 70 percent of its business, according to Josh Pombar, director of marketing.
“We are still positioned as one of the leading headwear and accessory manufacturers in the ski and outdoor business,” Pombar said.
He said the company’s biggest seller is its Comfort Shell, totally tubular, multifunctional neck warmer.
He said the company is moving toward the use of more recycled material in its products.
“One the big things that we are doing, as well as the rest of the industry, is how do we make our products and supply chain more sustainable,” Pombar said. “So we’re always looking for new technological improvements in that regard.”
The company has 45 employees at its Morrisville headquarters, including the design team. But nearly all production is done globally, he said.
“We are in the Orient, we are in Nepal,” he said. “We have a very big manufacturing facility in Mexico.”
He said the company went through a “pretty significant rebrand a couple of years ago.”
Pombar said the rebrand consisted of a freshening the company logo, updating the product line – stepping away from older styles while embracing new styles.
The changes also effect Turtle Fur’s corporate offices which are undergoing a facelift.
He said an overhaul is being made in the back office operations as well where Turtle Fur is working with Netsuite to install a new ERP, or enterprise resource planning platform. By definition, an ERP system integrates the management of main business processes in real time.
Pombar said it will help with production and forecasting, customer service, product development and warehouse management.
“It touches every aspect of our company,” Pombar said. “It’s a pretty significant financial and human capital investment into the company we’ve taken on.”
Turtle Fur has also positioned itself with its product line and price point to better withstand an economic downturn.
During those down times, he said while consumers may not be inclined to spend a lot of money on new outdoor gear “but they can refresh their look with new accessories.”
Turtle Fur was started in 1982 by Millie Merrill. Today, the company is owned by Richard Sontag.
Butternut
Maple syrup remains popular and that’s reflected in the growth at Butternut Mountain Farm, a major producer of maple syrup products for retail and industrial customers.
“We expect continued growth,” said Butternut Mountain Farm CEO John Kingston. “We’ve been growing here very consistently.”
He said maple is well positioned in the marketplace.
Kingston said the company’s largest market is the U.S., with some exports as well.
Butternut packages its retail syrup in a variety of sizes and containers. One of the newest packaging innovations is maple syrup in a squeeze bottle.
“It continues to be a great product for us, a differentiator,” he said. “And we’ve worked on some other new products as well.”
The workforce now stands at 122 employees, 22 more than a year ago.
The company’s production facility in Morrisville is 75,000 square feet.
For Butternut, filling job openings hasn’t been difficult.
“The reason is we’ve made a conscious effort to maintain a pay scale that’s very competitive in our region here,” Kingston said. “And we’ve been focused on a livable wage for quite some time so we like to think we’re an employer of choice.”
Butternut buys maple syrup from several hundred sugar makers. The company also taps its own trees on 1,200 acres.
The biggest challenge to grow the business is education in a very competitive market.
“There’s the ongoing challenge of educating the consumer about what is in fact pure maple syrup versus a blend or a corn-based sweetener,” Kingston said.
Butternut Mountain Farm is owned by the Marvin family. It was started by David and Lucy Marvin more than 45 years ago.
Union Bank
An economic bellwether is often a community’s local bank. And from David Silverman’s perspective, the economy is doing just fine.
“This has been a good year for the Union Bank,” said Silverman, the bank’s president. “We haven’t closed the books obviously but the things that we measure, both financial and otherwise, it’s been a good year which is reflected in a good local economy.”
The bank’s residential loan portfolio is anticipated to be up 20 percent ahead of 2018, which Silverman said “was a very solid year.”
“I would attribute that partially to a favorable interest rate environment but I also think we’re gaining in market share across our footprint,” said Silverman, who oversees 20 offices in northern Vermont and New Hampshire.
On the commercial and small business lending side of the ledger, he said it was also a very good year.
For 2020, Silverman is forecasting a flat interest rate environment which should translate into another strong year.
“There seems to be a continued strong demand for housing,” he said. “There’s definitely a problem as far as inventory goes.”
A few years ago there was speculation that the millennial generation wasn’t interested in owning their own home. But Silverman said that hasn’t been the bank’s experience.
“The evidence we have says otherwise, at least the millennials in our market, because 30 to 40 percent of home financings are for folks in that generation,” he said.
Silverman said because of the lack of inventory there is “a ton of new construction,” both single and multifamily.
VEC
Vermont Electric Cooperative, which serves the county, increased its rates in January.
Rebecca Towne, the co-op’s CEO, said the 3.29 percent rate hike was the first rate increase in six years for the c-op’s 34,000 members.
“We’ve been proud of our ability to avoid rate increases as long as possible,” Towne said.
She said the co-op’s rates are in the middle of the pack among the state’s utilities – not the highest and not the lowest.
Towne said the utility remains strong financially. She said VEC was able to balance revenues and expenses while forecasting less usage on the part of customers.
“We did forecast less usage this year (2019) than last year and that has come true,” she said.
Towne said customers are using less electricity due to energy efficiency or people making choices to use less energy overall.
On the innovation front, she said the utility has placed more of a focus on batteries and electric vehicles.
A commercial 1-megawatt battery project in Hinesburg that went online in the summer will help the co-op save on power during peak times, she said.
Towne also said VEC is exploring a program for residential batteries. Towne said homeowners would buy their own battery, whether a Tesla or other brand, with the utility managing the usage during peak times and share the savings with the customer.
VEC has rolled out an incentive for home electric vehicle chargers. In February, the utility will begin a program to manage the usage of EV chargers during times of peak demand.
VEC also has a community solar program.
“Community solar is a way for people to invest in solar farms that are in Vermont,” Towne said.
She said it’s ideal for someone who is not in a position to invest in a home solar array of their own.
The VEC solar farms are in Hinesburg, Alburgh and Grand Isle.
She said customers in effect “sponsor panels” based on their usage. Like net metering, they receive a credit for the solar generation on their bill every month.
Towne said customers can sign up for 10 or 20-year terms.
“It’s been pretty successful,” she said. “A quarter of the panels have been sponsored so we still have some for people who are interested in moving forward in that direction.”
The community solar farms are a partnership between VEC and Encore Renewable Energy.
Bruce Edwards is a freelance writer from Southern Vermont.