Industry, real estate support economy as tourism slows

Vermont Business Magazine, Feb 01, 2007 by Kelley, Kevin

Lamoille County can be seen as having two distinct economies within its borders, local development officials say.

In the western part of the county, encompassing the towns of Cambridge and Stowe, the tourism and recreation industry acts as the main economic driver. Stowe Mountain Resort and Smugglers' Notch account directly and indirectly for many of the jobs and much of the sales revenue in this corner of the county. The same area is also becoming a Burlington bedroom community, with more and more residents making their livings in Chittenden County rather than close to home.

"Out Wolcott way, you find more of a rural economy," notes Ray Saloomey, director of the Smugglers Notch Area Chamber of Commerce. Other northern and eastern Lamoille County towns such as Elmore, Eden, Hyde Park and Belvidere have also felt little impact from resort-related business activity and the suburban home market.

Economic conditions in the county as a whole are generally considered positive from a broad-scope perspective but shaky in the near term.

Business has been good in the county's main retail center, the Morrisville Plaza, says owner Peter Murphy who runs a realestate firm in St Johnsbury. While he has not yet received specific figures for the holiday season, Murphy suggests sales were significantly higher than a year earlier, due mainly to the addition of three commercial tenants and the relocation of Kinney Drugs to a new site within the plaza.

The county's industrial sector appears to be sound as well. There are plans to expand the business park in Hyde Park, and 2700 square feet of commercial space was recently renovated in the Cambridge Enterprise Center.

The unemployment rate for the Morristown- Stowe labor market stood at 4 percent in November - slightly higher than the statewide average of 3.6 percent and significantly greater than the 2.8 percent figure reported for Lamoille County's major population center for the same month in 2005.

"It's softer here now than a year ago," says Karen Lynch, director of the Lamoille Economic Development Corp. "There's more flux and a feeling of less confidence." The uncertainty is consistent with the national economic outlook, Lynch adds.

No major business closures have occurred recently in Lamoille County, but layoffs did take place last year at HearthStone, the Morristown maker of wood and gas stoves. The loss of about 10 employees was not due to local factors but rather reflected weakness in the national stove market, according to Lynch.

Lamoille does rank as Vermont's second-fastest-growing county in population, largely because of an influx of homebuyers priced out of the inner ring of Burlington suburbs. "People with jobs in the Burlington area used to move out to Jericho and Underhill," Saloomey says. "Now they're moving to Cambridge and Jeffersonville."

But because it still has fewer than 25,000 residents, Lamoille County remains particularly susceptible to economic trends affecting Vermont, New England and the United States.

Regional economic shifts ripple powerfully through the county due to its dependence on tourism from metropolitan areas in the Northeastern U.S. Local business leaders do see the need to promote economic diversity, says Dave Pelletier, assistant director of the Lamoille County Planning Commission. But not much progress has been made in that regard, adds Bob Mulcahy, president of the Smugglers Notch ski resort.

The lack of snow during the first half of this winter is hurting the entire county's economy. "It trickles down into meals served, jobs available, hours worked," notes Saloomey, who owns Madonna Auto Repair in Jeffersonville. And it's not just businesses catering to skiers or snowmobilers that are being pinched, adds Lynch.

Towing firms are getting fewer calls from stalled or stranded motorists, she notes. The orthopedics unit at Copley Hospital in Morrisville is also experiencing a quieter-than-usual winter. Low occupancy rates in slopeside lodging and lagging liftticket sales translate into fewer sprains and broken bones and therefore less business for Lamoille County's thirdlargest employer, Lynch observes.

The warm weather has also left the logging industry "crippled," Saloomey reports. Skidders and other heavy equipment can't roll through the woods when the ground is mushy, he notes. At least a couple of weeks of consistently sub-freezing temperatures will be needed before tree cutting can begin. "Logging's not a huge industry here, but it's still important," Saloomey says, noting that a couple of lumber mills continue to operate in Lamoille County.

This wimpy winter has proven particularly painful to the county's two big resorts and to the businesses in Stowe and Jeffersonville that thrive or suffer in proportion to the snow depths and trail openings.

Smugglers' Notch usually writes about 1200 paychecks in mid-January, notes resort president Mulcahy. This year, the total stands at 750. Mulcahy estimates a $4 to $5 multiplier effect for the surrounding communities, meaning that every dollar unspent on the mountain itself leaves the nearby private and public sectors with greatly diminished receipts.