Washington County Economic Report: As makers recover, all eyes on hospitality

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Washington County Economic Report: As makers recover, all eyes on hospitality

Thu, 11/26/2020 - 3:12pm -- tim

A view of downtown Barre. Courtesy photo.

Tourism, retail, restaurants, skiing on edgeas winter approaches

by Bruce Edwards, Vermont Business Magazine For Dan Groberg of Montpelier Alive, if there is one word that comes to mind that sums up this year it’s “resiliency”

“I would say businesses are hanging in there and they’re certainly demonstrating resiliency and I credit that to the community really stepping up and supporting local businesses right now,” said Groberg, executive director of the downtown organization.

But Groberg also didn’t sugar coat the difficulties businesses are facing.

“Things have improved a little bit, but at the same time we had a fall tourism season with dramatically fewer visitors than normal,” he said.

Groberg said that’s especially true for restaurants and bars which have been hit hard by the loss of business. 

Although no business has closed its doors exclusively as the result of the pandemic, he said a couple of businesses were on the brink and the pandemic was the proverbial straw that broke the camel’s back.

“This upcoming holiday season is going to be critical for downtown businesses,” Groberg said. “I want to remind people to get off Amazon and start supporting and investing in our downtown.”

To help promote the downtown, Montpelier Alive turned the one evening Moonlight Madness shopping event in October into a three-day event “to spread out shoppers to make it safer for everyone and also to expand the festivities.”

He said 34 businesses participated with giveaways, prizes and entertainment.

For the holidays, Groberg is encouraging people to shop early “because if you wait to the last minute with capacity limits on businesses you may not get in to do your shopping.” He also said there might be supply chain issues that would limit product availability.

He called “October the new December.”

Groberg said a couple of new businesses opened during the pandemic, an Indian-Nepali restaurant and a new kid’s clothing, home decor and toy store also opened.

He said his organization has spent countless hours on the phone, in meetings and holding workshops to help businesses through the crisis.

Taking that effort a step further, Montpelier Alive partnered with the Center for Women in Enterprise to hire a recovery navigator to access technical assistance and support for businesses.

In terms of direct financial help, Groberg said Montpelier businesses took advantage of the state’s economic recovery grants (in addition to the federal PPP grants).

“Even that is a fraction of the losses that some businesses

have experienced,” he said. “One local restaurant has seen their sales decline by about $700,000 this year.”

He said the hospitality businesses in particular saw incredible losses and continue to struggle more than other businesses.

From Kevin Eschelbach’s perspective as head of the Central Vermont Chamber of Commerce, the economy too is a mixed bag.

With people having more time on their hands, Eschelbach said hardware stores are seeing a boost from do-it-yourself home projects. 

He said the same holds true for sporting goods retailers as consumers look to do more activities outdoors.

Eschelbach said you couldn’t buy a bike in central Vermont unless you were willing to spend a small fortune.

“That apparently proved to be a very popular hobby over the summer,” he said.

The flip side is that businesses in the hospitality industry continue to be challenged.

A case in point is the fall foliage season. “There’s not a lot of tourists coming up and restaurants are still feeling the pinch in a major way,” he said.

Eschelbach said while lodging establishments are permitted to book at full capacity, there are travel restrictions for visitors from certain areas outside the state, including Canada.

 

Adapting

Jamie Stewart said the pandemic has shown that companies in the face of unprecedented adversity cannot only adapt, survive but also thrive.

“What’s made it difficult but also interesting is where companies have been able to pivot and in some cases changing their product mix and focus and coming out of it much stronger,” said Stewart, executive director of the Central Vermont Economic Development Corp.

Stewart said Cabot made the pivot producing more retail cheese and butter products to meet the demand of consumers who were spending more time at home.

He said the more difficult issue for Cabot is finding workers. Cabot has a back office operation in Waitsfield with its major production facilities in Cabot and Middlebury.

He said smaller companies like Ceres Greens and Filabot continue to show promise, adapting to changing economic conditions.

Ceres Greens is a vertical growing operation producing leafy greens inside a former Barre granite shed. 

“The vast majority of their business was geared toward institutional sales, restaurants, schools … and again when that all shut down they had to make a major pivot which meant going out and creating packaging for retail,” Stewart said.

Another Barre company is Filabot, which takes recycled plastic and turns it into feedstock for 3D printers.

Stewart said Filabot is looking at a significant expansion.

According to the company’s website, a core value is supporting sustainability: “Respect for our environment is a central consideration in every decision we make, both corporately and individually. In fact, Filabot was conceived with the environment in mind, as our founder sought to develop a machine that could take plastic waste and convert it to 3D filament.” 

 

Ceres Greens

One of the county’s success stories is Ceres Greens. Co-founded by Jake Isham, the company is a grower and wholesale distributor of leafy greens.

What makes the business different is the way produce is grown: vertically, indoors, 365 days a year, relying on solar power and using 85 percent less water.

Located in a former 13,000-square-foot granite shed, Isham said the company produces 500 to 700 pounds a week of leafy greens but is now ramping up production to 5,000 pounds a week with even more production on the horizon.

When Gov. Scott ordered most businesses to shut down in March, Ceres Greens was forced to shut down. Since then, Isham said the company has slowly recovered its institutional customers but has added more than a dozen Vermont stores to its client base.

“The good thing about the quarantine and just COVID overall, it just exposed a lot of inefficiencies in the national supply chain when it came to critical resources, food among them,” Isham said. “For us having a year round available food product really made a lot of sense for a lot of people at the retail establishments.”

Ceres Greens is expanding its availability from the current list of co-ops and independent stores to supermarket chains.

“We’ve been approved for Hannaford and then we’re looking at getting into Shaw’s, Price Chopper later on,” Isham said.

He also said there has been a rebound in business from food service providers and restaurants.

Ceres Greens employs 10 to 12 workers but Isham said he could use another four workers.

An Army veteran, Isham makes a point to hire veterans whenever he can. “I’m a vet, one of the management team members is a vet and we’ve just taken on two folks as our construction specialists who are vets as well,” he said. 

Ceres Greens has launched its second capital campaign with a goal of raising $270,000 from investors. “We’re getting pretty close to finishing that out,” he said. “I’d like to have it totally wrapped up and finished by the end of November.”

 

Darn Tough

It was a tough few weeks for Ric Cabot’s Northfield company when he was forced to shut down in March after Governor Scott issued his Stay Home order for most businesses.

Fast forward six or seven months and Darn Tough has rebounded and is looking to hire.

There was a downtick in sock sales in April and May, which forced layoffs but Cabot said, “business seems to be coming back and coming back strong” and by the end of the year he expects revenue will be ahead of last year.

“Most if not all of our people are back at work and we’re practicing social distancing and temperature checks,” he said. “We have three locations that are running very strong right now.” 

Photo: Darn Tough has rebounded from the early days of the pandemic and is looking to add more workers. Courtesy photo.

He said outdoor, hiking and lifestyle socks remain strong as do military sales. In addition, he said pre-booking on a new line of socks coming out in January is doing better than expected

The Northfield company, which makes a variety of lifetime guaranteed socks for sport, leisure and work, employs 300 people.

Cabot said he’d like to hire another 35 workers over the next three months. 

Cabot said the company took advantage of the federal Paycheck Protection Program and accessed other funds.

Darn Tough has three locations in the state including Waterbury, where the company operates its direct-to-consumer shipping in the former Keurig-Dr Pepper Coffee facility.

The Waterbury location also houses customer service, finance, sales and marketing and some HR functions.

“We do have plans maybe by the end of 2021 to start putting knitting machines in there or at least getting it ready,” Cabot said.

 

Sugarbush 

The pandemic cut the ski season short this year but Sugarbush Resort is on track to open the 2020-21season before Thanksgiving 

John Bleh, public relations and communications manager, said the resort will be selling a fixed number of daily lift tickets as a way to reduce capacity. 

The exception is season ticket holders and IKON pass holders who will be able to ski without having to make a reservation, Bleh said.

However, daily lift tickets will be subject to capacity limits.

“We will be selling a fixed number, depending on our forecast for the day, of lift tickets pre-purchased (online),” he said.

Bleh said the resort will forecast visits for season pass and IKON pass holders, and whatever is left will be sold online on a daily basis.

“We’re trying not to have any non-date specific tickets out there,” he said.

Photo: Sugarbush Resort is gearing up for the ski season but at reduced capacity. Courtesy photo.

For example, he said in the past Sugarbush sold a quad-pack – four tickets to be used anytime during the season.

This year, he said daily skiers need to pick the dates they plan on skiing. 

Bleh said both season pass and IKON pass sales have been strong. The IKON pass is valid at 44 resorts worldwide.

When it comes to the base lodge, he said capacity also will be limited. “We’re really going to focus more on grab-and-go food,” he said.

Restaurants will be open for sit down dining but again at reduced capacity, he said.

Bleh said the resort was investing in more outdoor furniture and space heaters to “encourage people to dine outdoors.”

The resort is also encouraging skiers to boot up in their vehicles instead of the base lodge.

The resort will be offering private ski lessons but not group lessons.

Sugarbush plans on having a full complement of 1,000 to 1,200 workers during the peak season. Bleh said the resort will again hire foreign workers through the J-1 visa program.

Sugarbush is one of 15 resorts owned by Alterra Mountain Company, which is affiliated with Aspen Resorts.

 

National Life

“Well positioned,” is how National Life Group CFO Sarah VanBeck summed up the company’s financial position as it began the year: strong investment portfolio, strong capital position, and a strong liquidity position. 

It meant National Life had a competitive advantage as it faced a global event that wasn’t on anyone’s planning agenda.

“We were well prepared both from a financial and operational standpoint,” VanBeck said.

The company quickly pivoted to fully virtual operations by mid-March, making it easier for its customers and distributors to conduct business, including e-delivery of policies as opposed to the traditional face-to-face transaction between agent and customer, she said.

It meant getting the company’s agents and advisors up to speed on digital platforms like Zoom and Skype.

VanBeck said there is strong demand for life insurance products with the pandemic making people “think about their mortality a little more.”

“Where we have seen a slowdown is annuity products, so more savings products,” she said. “There the challenge is the low interest rates really more so than the pandemic.”

National Life’s annuity products have been popular with teachers. With the pandemic and restrictions on face-to-face group meetings, the company has faced challenges in marketing its annuity products, she said.

The company’s life insurance products are especially strong in what’s called the “middle market,” middle class families with two working professionals. “It’s a huge underserved market,” VanBeck said. “There’s a very large opportunity of folks who need insurance.”

During hard economic times like the current one, policy holders will sometimes cash in their policies or take out a loan. But VanBeck said that hasn’t been the company’s experience.

“Not really as much as we expected,” she said. “There was a little bit of that at the end of March and early April. We saw a little bit of elevated activity there but then it’s really settled back … to prior years.”

National Life has grown its assets and added employees in recent years. But the company made some difficult decisions after the pandemic hit. 

VanBeck said the company reduced its headcount and number of open positions by 200 since the beginning of the year. She said many of those jobs were eliminated through attritions and retirements and the rest through layoffs.

In June, the company laid off 95 workers of which 53 were in Vermont. The company also has an office in Texas. 

“That’s always a difficult thing to do but we just felt like that was the responsible thing,” VanBeck said. “We really needed to adjust our expense footprint to ensure our business could emerge strong and continue to be a major employer here in Vermont.”

National Life continues to hire to fill positions that were lost through attrition. Of National Life’s 1,200 employees, 700 are based in Vermont.

Although this has been a challenging year for the economy, VanBeck said she’s optimistic about the company’s financial performance this year. 

She said both Moody’s and AM Best have continued to maintain a positive outlook for National Life

National Life has $35 billion in assets under management and $2.5 billion in capital.

The company awarded $1.3 million in grants to help with the COVID response with the largest grants awarded to alleviate hunger.

 

Norwich University

Like other colleges, Norwich University has adapted its way of teaching and operating to ensure the safety of students, faculty and staff, and the public.

Daphne Larkin, the university’s director of media relations and community affairs, said under its COVID plan the on-campus residential student capacity has been limited to 70 percent or 1,679 students. She said approximately 200 students who would have been on campus opted to take their courses remotely and another 200 students commute to campus.

There are an additional 1,500 students enrolled in online programs.

Larkin said COVID testing of students, faculty and staff is done on a regular basis with the test results posted daily with 1,200 tests done weekly, which is three times the required number. 

Photo: Norwich University opened this fall with Covid safety precautions in place. The university limited its residence hall capacity to 70 percent. Courtesy photo.

There are 854 faculty and staff, including adjunct professors. 

Larkin said travel restrictions for residential students were put in place and no visitors were allowed on campus.

Norwich offers classes in three learning modalities: in person, virtual in real time, and online at a student’s own pace.

Because Norwich already had in place a robust online curriculum for its graduate students, Larkin said it was easier for the school to make the switch to online teaching in the spring when the school was forced to shut down. 

“We’ve been doing online teaching since 1997,” she said.

Larkin said the school remains strong financially with an endowment of more than $216 million.

Much of the school’s success is credited to former President Richard Schneider who recently retired after 28 years of leading the university. Schneider was succeeded June 1 by Mark Anarumo.

In an email, Anarumo said the school continues to adapt as necessary.

“The challenges presented by COVID have forced us to get creative in many areas. Of course in the delivery of curriculum, but also across the spectrum of university operations, like conferences and event hosting, student life, performing arts, and especially athletics. Through the implementation of some creative solutions we have been pleasantly surprised how the virtual environment is enhancing, and in some ways superior, to in-person experiences.

Anarumo said that new experience was evident during Norwich’s recent homecoming. 

“For example, we just held a virtual homecoming weekend that was phenomenally well attended, and enjoyed by some of our older alums or those who cannot travel for various reasons. An entire population was able to participate and connect with the university in ways they haven’t enjoyed since they left campus many years ago. We will be capturing efficiencies and improvements, and will ensure we continue them as elements of future events even when we are able to return in-person operations.

But he also emphasized that in-person learning and activities will not go away.

“As far as how COVID will affect the number of students we have on campus, we actually expect to grow our residential communities. Norwich University offers an experiential education; we really leverage `doing’ to augment and complement traditional classroom instruction. Our faculty are experts on how to best deliver their subject areas, and the rest of the university system builds additive experiences around that curriculum delivery. So, as we may continue online or hybrid instruction, the uniquely Norwich experience will still rely on personal interaction and a campus-wide community of learning based on a physical experience.”

 

Waterbury

The pandemic hasn’t stopped the town from moving forward with several projects both private and public.

“We were fortunate to have some projects already in the hopper and making progress before COVID so some of those are coming to fruition right now,” said Alyssa Johnson, Waterbury’s economic development director.

Waterbury is wrapping up the second year of a $21 million Main Street reconstruction project. 

She said the most disruptive part of the project is being completed: replacing water, sewer and storm drains.

Johnson said by the end of next year the project will finish with repaving, landscaping, way-finding signage throughout the downtown, and historic lamp posts.

“So it’s going to be an incredibly transformational project for the community,” she said.

The project is 95 percent federally funded. JA McDonald is the general contractor.

Private sector projects include the first indoor shooting range in the state which is now under construction. Henry Parro, who owns Parro’s Gun Shop, is building the range next door to his current location on Route 2.

Johnson said the building will also allow Parro to expand his retail operation as well as offering classes for training.

She also said there’s another new commercial building getting ready to open on Stowe Street. 

Even with the pandemic cloud still hanging over the economy, Johnson said she’s cautiously optimistic about the town’s future. 

She said businesses, especially restaurants, have adapted to the new reality the best they could.

“At this point almost everyone has converted to some combination of online ordering, takeout dining, outdoor dining as well as some folks opened up for indoor dining as well,” Johnson said.

Waterbury is home to the state office complex and like many in the private sector many employees are still working from home.

She said that’s effected the number of people shopping and dining downtown.

Johnson added that local residents have been supportive of local businesses which have helped mitigate the impact.

She said one of her roles is continuing to support businesses as they navigate through these uncertain times.

It’s is not the first time Waterbury has been challenged. 

The town took an economic hit from Tropical Storm Irene, destroying the state office complex which had to be rebuilt. Johnson said the town survived that natural disaster and rebounded.

To boost the regional economy, she said Waterbury has partnered with the Stowe Area Association and Mad River Valley Chamber of Commerce to form a regional marketing group, the Best of Vermont Route 100.

 

Barre

When asked how Barre is faring during the pandemic, Cody Morrison, the new executive director of the Barre Area Development Corp, pointed to its economic diversity: travel and tourism, banking and insurance, food and beverage and state government and “a pretty diversified industrial base.”

“On the industrial side, Wilson Industrial Park has actually been growing during the pandemic,” said Morrison, who came to Barre from Newport, NH, where he was the economic development coordinator.

He said with the help of several grants Vermont Foodbank is expanding as is Vermont Creamery and Bellavance Landscaping.

“So there’s certainly a lot on the industrial side in Barre that’s doing well,” Morrison said.

He said Barre also benefits from its educational system, cultural attractions like the Barre Opera House as well as its proximity to the interstate highway system

“Barre has everything a lot of communities would strive for and would dream of,” said Morrison, who succeeded Joel Schwartz in October. “Barre has a lot going for it. It’s really impressive.”

Schwartz added that the granite industry is doing well in part because of the pandemic’s mortality rate.

On the consumer side of the equation, he said consumers have changed their spending habits.

“We talked to the owner of a bicycle shop (and) he’s doing very well,” Schwartz said. “You can go around and see that people making home improvements and stores that provide those products and services are doing well.”

One of the challenges for Barre and the rest of the state is the demographics – a declining population which in turn has led to a shortage of workers.

“Before the COVID pandemic the combined unemployment rates in Barre City and Barre Town were almost at full employment,” Morrison said.

The October unemployment rate for the Barre-Montpelier Labor Market was a scant and deceptive 1.9 percent (unadjusted), down from 3.3 percent in September but up from October 2019's 1.5 percent.

A steep decline in the statewide Labor Force has led to artificially low jobless numbers. The state rate was 2.4 percent (3.2 percent adjusted, or just one-tenth higher than pre-pandemic).

Schwartz said Morrison brings strengths to the organization that are needed in the digital age including social media and web site management.

“It was a good hire,” said Schwartz whose last day on the job was Oct. 2.

 

Downtown Barre

Tracie Lewis of The Barre Partnership said while businesses have reopened with strict guidelines in place many continue to struggle and cannot operate at 100 percent. 

“None of this, however, has stopped the growth of Barre,” said Lewis, the Partnership’s executive director. “Since April 1, five new businesses have opened here, not to mention major expansions of two well-established Barre businesses.”

Photo: Although many restaurants and retail establishments continue to struggle through the pandemic, The Barre Partnership said five new businesses have opened in downtown Barre since April and two others are expanding. Courtesy photo.

New businesses include: Bob Bartlett, State Farm Insurance, 92 South Main St., Suite 1; The Meltdown, 83 Washington St.; Haircuts on Main, 105 North Main St.; Alimentari Roscini, also known as AR Market, 159 North Main St.; and Kitty Korner Café, 214 North Main St., Suite 1.

Kitty Korner Café is the first cat café to open in the state with a cat lounge and adoptable cats rescued by Central Vermont Humane Society.

In addition, two businesses continued with their expansion plans during the pandemic.

Delicate Decadence outgrew its location on Cottage Street and more than quadrupled its space, moving into the first floor of the Blanchard Block. Also, in the Blanchard Block building, Posh Salon & Spa expanded, adding two studio salons and offering a network for stylists.

 

Housing

If there is one challenge in today’s real estate market, there’s not enough inventory to meet demand.

“Trends are fewer sales this year vs last year, the primary issue being lack of inventory,” said Tim Heney of Heney Realtors.

“Sale prices have increased and time on the market is a bit less than in the previous year.”

Heney said activity is primarily in homes priced in the mid- $200,000 to mid-$300,000 range.

Heney and other agencies have noticed increased interest from potential out-of-state buyers looking to escape COVID hot spots in the Northeast. But Heney said he’s also noticed interest from Colorado and Texas.

He said the strong local market is boosted by out-of-state buyers.

Also driving sales are low interest rates which he doesn’t expect will change anytime soon.

Heney said there are some decent properties available for less than $200,000, especially condos.

He said homes in Montpelier and Waterbury are more expensive because both are within the Burlington drive market. 

Heney provided the following list of residential home sales for the 12-month period ending Oct. 8, 2020. The data compiled from the New England Real Estate Network.

Washington County – 818 sales, 43 median days on market, $250,000 median sale price. Prior year, 1,209 sales, 47 median days on the market, $215,000 median sale price.

Waitsfield, Warren and Fayston – 199 sales, 61 median days on market, $320,000 median sale price. Prior year, 181 sales, 53 median days on market, $255,000. median sale price.

Barre, Montpelier, Berlin, Calais, East Montpelier, Middlesex, Worcester – 238 sales, 31 median days on market, $215,000 median sale price. Prior year, 343 sales, 37 median days on market, $203,000 median sale price.

At 4.1 percent (2018) Vermont’s apartment vacancy rate remains tight, according to the U.S Census Bureau.

In Washington County, the vacancy rate is 2.3 percent.

Of the 24,865 housing units in the county, 7,261 units or 29 percent, are apartments.

The average fair market rent for a two-bedroom apartment in Washington County is $1,090 a month and $828 for a one-bedroom apartment, based on the latest report from the National Low-Income Housing Coalition.

The statewide average rent for a two-bedroom apartment is $1,215 and $969 for a one-bedroom.

To afford a two-bedroom apartment in the county requires a household income of $20.96 an hour or $43,600 a year. For a one-bedroom, the household income needed is $15.92 an hour or $33,120, according to “Out of Reach 2020,” the coalition’s annual housing assessment.

 

Lending

There are fewer home sales than a year ago but mortgage lending remains robust.

“Residential has been busy,” said Northfield Savings Bank President Thomas Leavitt. “I think you’ll hear that from any financial institution in Vermont and probably well beyond Vermont.”

Leavitt said low interest rates remain a driving factor. And while there has been a good number of refinancing activity, he also said “there’s been an equal or greater amount of activity on the purchase and sale front.”

Leavitt said that anecdotally it appears there is more interest from out-of-state homebuyers. 

On the commercial side, he said the bank processed more than 1,000 Paycheck Protection Program applications for businesses.

Bankers have a unique view of the economy based on lending and savings. Leavitt said from his vantage point the economy in the bank’s service territory has proved to be resilient in the face of the pandemic. 

Not to be overlooked is central Vermont’s diversified economy. He said central Vermont is not only home to state government but is also the home to several insurance companies. Add to that he said a number of manufacturers, including the “iconic” granite industry. 

“The lodging, hospitality and food service sectors is the one that is still working hard to recover and has had the longest and most prolonged stress through this pandemic,” Leavitt said.

For borrowers, he said the bank has taken steps to accommodate customers who had difficulty making payments. 

He said loan delinquencies “are tracking at a steady low level.”

NSB has 170 employees and 13 locations.

 

Bruce Edwards is a freelance writer from Southern Vermont.