Local economy under the looking glass
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George Malek at the Central Vermont Chamber of Commerce in Berlin. Jeb Wallace-Brodeur/Times Argus |
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By SUSAN ALLEN TIMES ARGUS EDITOR - Published: March 23, 2009
BERLIN - George Malek talks to the owners and employees at hundreds of area businesses - members and non-members of the Central Vermont Chamber of Commerce - on a regular basis.
In an economy that feels like mostly the "bad and the ugly," I asked Malek, the executive vice president of the chamber, if he sees any "good."
"I suspect that good is relative," he responded, seated in the kitchen of the Chamber office in Berlin last week. "If you're still walking in in the morning and there's somebody to say hello to you, you're a step ahead."
If any businesses are doing 'good' in this grim economy, he said, "they're keeping it a secret from me."
Malek said schools and municipalities, which employ a large number of people throughout central Vermont, fared well on Town Meeting Day, essentially because they held their budgets in check to minimize the threat of budget defeats from cash-strapped taxpayers.
In broad terms, he added, businesses that sell affordable items or offer affordable services are faring better than those that provide luxuries. Lavish entertainment, Malek noted, isn't a high spending priority for central Vermonters are this point.
We commiserate briefly about the number of restaurants that have gone under in the area in the past year, including Barre's Sean and Nora's and Montpelier's Thrush Tavern. Dining out has become a luxury that many families are cutting down on to save money.
"The Dollar Menu and I are getting to know each other better," he quipped of the McDonald's low-cost menu offerings.
Interestingly, Malek said he believes the travel industry is doing fairly well.
"In every significant recession, the rooms and meals tax has been the best (performer) of the taxes," he said, although he conceded the severity of this downturn: "This is a little different from what we've seen in the past."
The central Vermont area is somewhat insulated from the economic devastation being felt elsewhere in the country. He said Vermont tends to lag the national trends - both good and bad - noting that central Vermont's real estate market wasn't overheating five years ago when other areas were seeing the huge housing increases. Likewise, while homes are moving more slowly on Vermont's market today, prices haven't crashed here as they have elsewhere.
There is also a committed 'buy local' mentality in central Vermont, he said, that helps support locally-owned businesses, even in hard times.
"I think it's very real and very much appreciated," Malek said.
In addition, businesses in this region tend to be smaller and more diversified. The further out you go from Montpelier and Barre, he noted, to areas like Stowe and Waitsfield, for example, the more dependent local economies are on single industries like skiing. And compared to the "calamity" of Detroit and California, central Vermont businesses are taking cost-saving measures and holding on for now.
"For now." Those are critical words.
"They're scared," he said of central Vermont business owners. "Will Detroit and California ripple back here? There is a major fear that if it gets worse elsewhere, it will unavoidably get worse here."
But, he added, "There is hope it won't hit here."
Of special concern to the central Vermont region, Malek said, are plans by the Douglas administration to eliminate through attrition and layoffs up to 1,000 jobs over two years (including 400 already phased out and up to 600 more that might be included in future budget cuts).
Many of those jobs are located in the state offices in Montpelier and Waterbury, reducing the number of people shopping and dining locally. Losing that consumer base could seriously harm those local economies.
How bad is the economy locally, I asked. How many businesses are laying off?
Malek said it's impossible to know with any accuracy.
"Five here, six there, two there," he said of the layoffs. He said in some cases, business owners are taking over duties they had handed over to employees in the past. "There are a lot of frayed owners doing things they wished they didn't have to do."
He worries about the demographics that not only show more older people living in Vermont, but notes that their retirement funds or trust funds have taken a blow from the current economic crisis. They will have less to spend.
He worries about the costs state government imposes on businesses during this tough time. If the state reduces its Medicaid reimbursement rates to doctors, for example, those costs will invariably be passed along until they hit individual and business insurance rates, he said. Workers' compensation rates are sure to go up, he predicted.
Malek said his advice to business owners wondering how to handle the economic downturn is to continue marketing. Marketing feels optional, Malek said, but in the long run, continuing to promote services and sales is important to maintaining customers and clientele.
I ask how and when any economic turnaround would be felt in this region. Will help-wanted signs begin appearing in storefront windows, or restaurants begin filling with customers once again?
Slowly, he said of any turnaround.
New hires won't happen immediately as business owners test any up-tick to make sure it's real.
But it will come, he said hopefully, adding that the turnaround will be driven in part by consumer faith in the economy once again.
"It will be self-fulfilling," Malek said. "It will take people starting to feel a little better."
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