Photo: The Ladies Historic Fountain, Taylor Park, St. Albans. Photo by Katie Kittell.
Franklin County Economic Report: Challenges persist in staffing, dairy industry
by Michelle Monroe, Vermont Business Magazine The strength of Franklin County’s economy has always been its diversity. The county houses multiple manufacturing operations, government workers, health care and agriculture, along with a touch of tourism and attractive, historic downtowns.
But 2020 was still a challenging year.
Northwestern Medical Center laid off workers, while damage to the building housing US Citizenship and Immigration Service’s Vermont Service Center had workers leaving St Albans City to work in Essex.
Being the largest dairy producing county in New England left the county vulnerable to the ongoing stagnation in dairy prices, particularly as every dollar which comes into the county as payment for milk produced here moves through the county seven times.
There were, however, bright spots.
The county’s manufacturers remained in operation throughout the pandemic. Many of its restaurants and retailers benefited from additional local patronage, as residents rallied around businesses in their communities.
Photo: Diners fill the sidewalk outside of Twiggs on Main Street in St. Albans. Courtesy photo.
Prior to the pandemic, according to a report from the Vermont Agency for Commerce and Community Development, 54 percent of Franklin County residents commuted outside the county for work, the vast majority going to Chittenden County.
When commuting ground to a halt during the pandemic, local businesses benefited, suggested Chip Sawyer, director of planning and development for St Albans City. But there was a flip side to that as well. Local office workers weren’t downtown, including those at the state office building on Federal Street.
Tim Smith, the head of the Franklin County Industrial Development Corporation (FCIDC) and the mayor of St Albans City, said he had heard from some local retailers that they’d had their best Christmas ever.
Local communities used Restart Vermont funds to create gift certificate programs offering residents money they could spend in downtown businesses.
St Albans City put that money into Downtown Dollars, a gift certificate program the city created when large local employers expressed an interest in purchasing downtown gift certificates as a way to thank employees for their efforts during the pandemic.
When the Restart funds came along, the city expanded the program, ultimately distributing $30,000 worth of gift certificates for use in local businesses.
“It’s a real success story,” said Sawyer.
With vaccination and easing of restrictions, restaurants are full every night, as they are elsewhere. St Albans City lost two downtown restaurants, one at the start of the pandemic and one this summer, but in those cases, city manager Dominic Cloud said, “COVID was the last straw, rather than the first straw.”
Retailers, Sawyer said, have been surprised by how busy their summer has been.
“There’s much more disposable income,” said Smith. “Car dealers are doing very well.”
There is one group missing from among those visiting the county’s restaurants and shops – Canadians.
Tourism is a small but growing part of the county’s economy, according to Smith.
Many Canadians have second homes or camps in Franklin County and neighboring Grand Isle County. Others come down by boat and dock at local marinas.
Their loss is being felt, according to Smith.
If the border were open, “I think we’d be doing even better,” said Sawyer. “The day Canadian tourists come back, I think, is going to be a huge day for us.”
If the city can fill its empty storefronts, there may be new businesses for them to visit when they return. Filling those spaces, according to Sawyer, is a priority. “We will talk to any business about what they’d like to do, what the challenges are, what the gaps are,” he said.
The city has a good case to make for opening downtown.
Last fall Community College of Vermont (CCV) relocated to a building on Main Street, directly across from city hall. With classes being taught remotely, students and staff weren’t downtown, but this fall that will change. The same project which brought CCV downtown also included the construction of 60 new apartments, now all full.
Photo: Community College of Vermont (CCV) relocated to a building on Main Street, directly across from city hall. Photo by Katie Kittell.
Grant Butterfield, who owns CCV’s new home, would like to fill the ground floor of the three-story building with a restaurant.
Butterfield said he has been talking with interested restaurateurs, but they’re concerned about the Delta variant and possible future business closures.
The other concern is staffing.
The pandemic has forced a reckoning with just how little people in the restaurant industry have been paid, in Butterfield’s view. “It’s a bit of wake-up call to pay these people more,” he said.
It’s not just restaurants and retail who are struggling with staffing.
“Manufacturing is struggling more than anyone,” said Smith, listing several Franklin County manufacturers with dozens of openings.
Smith said more work needs to be done to let people know about opportunities in manufacturing. He cited Kaytec, a siding manufacturer in Richford, as an example. The company offers a starting wage of $20 an hour to anyone willing to work evenings and weekends. And the job comes with growth potential, he said.
“If you want good employees, you have to pay at least $15 an hour, if not more, and you have to give benefits,” Smith said.
One of the reasons higher wages are needed is to cover the cost of childcare. “When you’re making $13 an hour, it’s hard to justify paying for childcare,” Smith said.
Knowing that, many employers are willing to offer flexible hours to accommodate families. “I think companies have learned they need to be a lot more flexible,” he said.
Investing in the future
FCIDC is planning to enter the childcare business in Enosburgh, at least as a landlord. It is applying for grant funds to purchase a building on Main Street in Enosburg Falls and turn it into a combination of offices, childcare and apartments. The goal is to cover the cost of the building with the apartments and offices, so that the rent for the childcare business can be kept low, with the savings going into improving the salary and benefits of the staff, explained Smith.
FCIDC has already bought furniture for the childcare operation.
Childcare is one barrier to work. Housing is another.
“There’s just not enough apartments,” said Kathy Lavoie of the Northwest Regional Planning Commission and the former head of Franklin County’s Workforce Investment Board. During her time at the WIB, Lavoie identified the “Formidable Four” barriers to work: housing, transportation, childcare and substance abuse.
Those barriers cross “all demographics, all socio-economic levels,” she said.
Even well-paid employees at Northwestern Medical Center struggle with finding housing, according to Lavoie.
In Bakersfield, Lavoie is working with the community on turning the former Brigham Academy into apartments. The 70,000 square foot building has been vacant for decades and could hold 34 apartments. Currently, a market study is being done to determine what type of housing it should hold, with many in the community arguing for senior housing to allow Bakersfield residents to age in their community.
Those kinds of discussions are taking place around the county. For example, Swanton has a committee exploring what would be the best use of a property located next to the Lamoille Valley Rail Trail, which terminates in Swanton. “We know the economic workhorse that LVRT can be,” said Lavoie.
Photo: Lamoille Valley Rail Trail, Sheldon, VT. Photo by Katie Kittell.
Enosburgh has been planning the future of its downtown. Montgomery is focusing on infrastructure including wastewater, traffic improvements and broadband. Georgia, which lacks a village center, is planning to create one.
Perhaps no Franklin County community is better positioned than Highgate, which is home to Franklin County’s airport. The state is in the midst of expanding the airport with a $2 million investment in a longer and wider runway which can handle larger planes.
Also part of the project are 14 new hangers, according to Highgate Town Administrator Heidi Britch-Valenta.
The expansion requires a 7,200-foot extension of water and wastewater services from Swanton to the airport. That extension will also bring water and wastewater to seven lots owned by the Harrison family, which hopes to develop them.
Franklin County Senator Corey Parent, who also works for St Albans Town, called the airport expansion the “biggest economic opportunity Franklin County’s seen in a decade.”
Highgate has also been planning for the revitalization of Highgate Center, which was once home to an inn and multiple retail businesses, just one of which remains. The town’s library has outgrown its current home.
If the town can secure funding for a wastewater system, it hopes to build a combination community center and library on an underutilized two-acre site, with commercial businesses on the remainder of the site. Residents have been adamant about their desire for a restaurant in particular.
“If a bunch of money for infrastructure falls in our lap, we’ll be able to move our library,” said Britch-Valenta.
Parent, wearing his director of operations for St Albans Town hat, said Franklin County’s largest community is also planning for the future.
Having recently adopted a stormwater utility, the town is now well-positioned to invest in the reduction of stormwater flows into Stevens and Rugg brooks. Those stormwater flows are major sources of phosphorus in St Albans Bay, a shallow portion of Lake Champlain prone to cyanobacteria blooms.
“We really want to be a leader in water quality,” said Parent.
The bay was once an economic hub for the region. With a new, privately built marina, and an ongoing series of events in the St Albans Bay Park, the town is hoping to recapture some of that past, having chosen to build a new town hall at the bay rather than in one of its two designated growth centers.
The town added nearly 1,000 new residents in the last 10 years, putting housing on the priority list. Parents said the town’s planning commission is reevaluating zoning laws to determine which places in town would be appropriate for denser housing.
“We want more people here. We want growth,” said Parent. “Growth allows us to continue to invest in the community, but not ask for more from the taxpayer.”
But the town does lack a key ingredient for growth – water and wastewater infrastructure.
Town residents who live close to St Albans City are typically connected to the city’s water and wastewater systems. The town spent a decade fighting about control of the wastewater system with the city, filing three lawsuits over the issue. A fourth was filed by a developer in the town who was also a member of the town selectboard.
The courts all concluded that the city had built the wastewater facility, owned it and could operate it as it wished. That includes an affiliation fee charged to residents and businesses from outside the city limits who use the city’s water and wastewater services.
The city argues development in the town has been made possible by the city’s utilities, but the town receives all of the tax benefit of those developments. The affiliation fee is intended to capture some of those benefits for the city.
The town, understandably, dislikes the fee.
As a consequence, after exploring the cost of building its own wastewater facility, the town is talking with Swanton about connecting to its wastewater facility.
“If we can get water and sewer in some places, we can allow for more dense development,” said Parent.
The town is also exploring the possibility of smaller scale wastewater systems along St Albans Bay, similar to the approach taken by Montgomery, which is building two smaller wastewater treatment systems in its historic villages.
St Albans Town is also focused on meeting residents’ desire for more places to walk and bike safely in a community with very few sidewalks. The town is studying the feasibility of a path connecting the Collins Perley Sports & Fitness Complex with the Missisquoi Valley Rail Trail.
Agriculture and milk prices
While communities are busy planning for and investing in the future, there is one key element in the county’s economy over which they have no control – dairy.
The county’s farmers have been struggling since 2015, when milk prices came crashing down following a peak in prices created by high demand for milk powder in China and a dip in supply.
At that point, milk prices were on a three-year cycle, swinging wildly between highs and lows. High prices would encourage farmers to make more milk. Prices would then fall as the supply increased, forcing some farms out of business, which would in turn lower the supply and cause prices to rise.
In 2015, the cycle broke. Farmers were finally starting to see an uptick in prices in 2020 when the pandemic hit. The closing of schools and restaurants hit dairy hard. Schools are one of the primary outlets for fluid milk, which earns farmers their highest prices. Cheese makers who made cheese in large quantities for restaurants suddenly had no customers and stopped taking milk.
While residential demand increased, switching production to aim for the home market would have involved hefty capital investments by processors.
Some assistance did arrive for farmers in 2020. “The state did come through, finally, with the federal money. That saved the day for most of the farmers,” said Bill Rowell, president of the Vermont Dairy Producers Association and a Franklin County farmer.
But the long term outlook is still grim.
“We’re long on milk because we have an overabundance of cows, and we’re making more milk per cow each year,” Rowell said. Being long on milk means there is an oversupply.
Farms in the western U.S. have grown extremely large, many operating with as many as 20,000 cows. Those farmers are competing with Vermont farmers, Rowell said.
When the Trump Administration renamed and renegotiated the North American Free Trade Agreement (NAFTA), Canada agreed to allow 3.5 percent of the milk used in the country to come from the U.S. The agreement was trumpeted as a breakthrough for dairy, but Rowell disagrees.
The U.S. produces 220 billion pounds of milk per year. “Canada produces 18 billion pounds of milk per year. If we had their entire market, it wouldn’t save us,” Rowell said.
To try and limit the oversupply of milk Dairy Farmers of America, which absorbed the St Albans Cooperative Creamery in 2019, has set quotas for its farmers in an effort to at least bring an end to the dumping of excess milk, according to Rowell.
Photo: Dairy farm in St. Albans, VT. Photo by Katie Kittell.
Yet DFA, followed by Agri-Mark and Booneville Farms Cooperative, requested permission from the milk marketing administrator for the Northeast to dump milk from June 1 to July 10.
That permission was granted.
The request cited a lack of sufficient processing capacity as businesses remained closed in many states and a lack of staffing at some processors limiting production.
In addition, there was a difficulty finding drivers to pick up milk, the cooperatives said.
When farms hurt, other businesses follow. Franklin County has multiple manufacturers, most famously Ben & Jerry’s, which process milk, turning it into other products.
There are also feed and equipment dealers, veterinarians, lending institutions, and local retailers who rely on purchases made by the county’s farmers.
In 2020, Berkshire farmer Amanda St Pierre told legislators feed dealers were owed around $200 million by farmers.
To further complicate matters, Danone, owners of Horizon Organic, recently announced they will no longer be accepting milk from organic farmers in four Northeastern states, Vermont among them, as of August 31, 2022. (Danone, with US headquarters in Colorado, indicated in late August it can get cheaper milk in the Midwest and West, while reducing transportation logistics and carbon emissions).
“We’ve all but destroyed rural America,” said Rowell.
Instructed by the Legislature to perform an analysis of the sustainability of Vermont’s diary sector under current market conditions along with possible solutions to dairy pricing, the Department of Financial Regulation concluded that change to dairy pricing is necessary, with either a transformation of the pricing system, a system for managing supply nationally or a combination of the two needed.
Even with the challenges facing dairy, Vermont produced $476.2 million worth of milk in 2020, according to the National Agricultural Statistical Survey, compared with $52.65 million for maple.
Advocates for the state’s dairy sector have long argued that dairy is responsible for much of the state’s open land, which in turn brings in tourists, and provides the backbone for the state’s agricultural infrastructure on which other forms of agriculture also rely.
Two new programs seek to pay farmers for environmental benefits. The Vermont Pay for Phosphorus Program, which has $7 million in federal funds from a program championed by Senator Patrick Leahy, D-Vermont, is currently being tested on about a dozen farms. The aim of the program is to pay farmers for reducing phosphorus runoff from their farms.
The state is also investigating the possibility of paying farmers for broader environmental benefits such as sequestering carbon in the soil and providing flood mitigation.
Both could bring some needed assistance to farmers.
Despite the challenges, Smith is convinced Franklin County is in a good place economically.
“There’s many counties across the country that would change places with us in a heartbeat,” he said.
Michelle Monroe is a staff writer for The Islander and the former executive editor of the St Albans Messenger.