Commission on the Future of Economic Development

BURLINGTON — There may be nowhere in the state where more owners and managers of businesses gather at the same time than the annual Vermont Business and Industry Expo.

On Wednesday, during the first day of the Vermont Chamber of Commerce's two-day program, many of those executives and entrepreneurs said the economic downturn — perhaps recession — does not seem to have hurt their companies — at least yet.

But many of them noted a sense of hesitation and tentativeness in economic exchanges in Vermont that worries them.

Lee Gustafson of URS, an environmental engineering and alternative energy company with its Vermont office in Rutland, said slowdowns in his work typically lag a year or two behind economic travails.  "We are keeping pretty busy," Gustafson said.

As part of a company involved in the development of wind power he would like to see an easing on regulation of the technology — and more enthusiasm for it from Gov. James Douglas, a skeptic when it comes to large-scale wind turbines.

"I think if he got behind it things would go a lot faster," Gustafson said. "It could change the whole environment."

Douglas has said he is concerned the economic and environmental impact of wind towers on the state's ridgelines would outweigh the benefit of the power they would produce.

But Gustafson said that in one project his company worked on in Massachusetts, a ski area that added a commercial wind turbine found its resort gained business rather than lost it. Some ski areas in Vermont have expressed interest in such turbines, both as a way of becoming "green" and to reduce the cost of the electricity they use, Gustafson said.

While it would seem intuitive that higher gas prices would harm the economy of a state dependent to a large degree on car tourism, Vermont may perversely benefit from fuel costs and a weak dollar.

That is because Canadian and European tourists may look to Vermont to get more for their money, and residents of large American cities may decide a tank of gas to get to Vermont is still cheaper than an airline ticket to somewhere farther away, said Tim Piper, innkeeper at The Inn at the Round Barn Farm in Waitsfield.  "We see this as possibly a very good season," Piper said.

Others said that while work for their companies is holding up — even growing — it is still tough to do business in Vermont.

Bob Carpenter and Jim Johnson of injection molding company Progressive Plastics in Williamstown said they have more work than can be done in their current facility. The company is now trying to figure out if they will expand in Vermont or outside it, they said.

"We are going like gangbusters," Carpenter said. But issues like workers' compensation, unemployment insurance and permitting are all raising the cost of doing business in Vermont, the two men said. "We have an excellent reputation, we have a state of the art facility," Carpenter said.

They also mentioned the new assessment on companies for every employee without health insurance to cover the new Catamount Health program as a concern.

Some employees have insurance through state programs or opt out of the insurance they offer at Progressive Plastics, Carpenter and Johnson said. They can't force employees to take the company's insurance coverage, yet if they don't, the company is on the hook for the Catamount assessment – about $300 a year per worker.

Douglas said Wednesday that although he supports the Catamount program — a compromise worked out with lawmakers — he did not believe the assessment was necessary at the time. Since the assessment on employers has been tweaked to exempt seasonal employees he has not heard as many complaints from business owners, he said.  "I am not sure they are happy about it, but frankly I get fewer complaints than I did," the governor said.

In at least one sector of the economy the state has felt the economic downturn.

Joe Sinagra of the Home Builders and Remodelers Association of Northern Vermont said new home starts in the state are down. Remodeling, often financed with loans, is also somewhat down, although not as much as new construction, Sinagra said.

Part of the problem the state's economy faces is one of perception, said Bob Zider, director of the Vermont Manufacturing Extension Center, a partnership between public and private organizations to help industry in Vermont.  "Vermont is not a bad place to do business, despite the bad rap," Zider said. Unfortunately, he added, "perceptions oftentimes become reality."

For instance, Vermont business owners have an unusual amount of access to top political leaders in the state — and they like that — Zider said.

But more and more, as companies in state get to a certain size and are bought by firms outside the Green Mountains, decisions on whether they stay or not are made by people who are not in Vermont.  "It is by the numbers," he said. "I don't know how you deal with that."

"We need to be encouraging entrepreneurship," Zider said. But the state also has to be aware of the needs of existing employers, he said.