August 7, 2011 -- Lisa Ventriss of the Vermont Business Roundtable joins Anson Tebbetts to discuss the business climate and VSB survey.
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good morning. Thanks for joining us on this sunday morning. Today we're going to be talking about business, some of the trends that are happening in the vermont economy, talking about some of the employment trends, some of the trends that may occur when people are making capital expenditures, and joining us with this discussion is lisa ventriss with the vermont business roundtable. Thank you so much for coming by.
Well, thank you for the invitation.
First of all, before we get into some of the trends and where folks may be going in employment and hiring and so forth, talk about the business roundtable and what is your mission and who makes up your group.
Sure. Well, the roundtable is a unique organization on the landscape in vermont. We were created back in 1987, technically, as a civic welfare organization, so that means that the nature of the work that we do focusing on long-range policy issues for the state, is intended to benefit all vermonters and not just the members of the roundtable itself. So it's a very diverse group by industry and located all throughout vermont. Focused on those issues that we think have the greatest impact over time on the welfare of all vermonters.
So you're made up of big companies, small companies, maybe give us an idea of like who might make up your membership.
Sure. Well, we have some of the very iconic vermont companies among our membership, like green mountain coffee roasters and simon pierce, hubbard and forge, for example, but we also have some of the major institutions in vermont, so major financial institutions, hospitals, colleges and universities. So we view them as major employers, not necessarily for-profit or non-profit companies.
So you guys, you get together and you develop policies and you also do a survey and that's one of the things we want to talk about, every once in a while. I guess you do it quarterly?
Yes, that's right.
So this is an employment survey. Let's go to one of the questions that you asked recently. This is the most recent survey and you asked, how do you expect your company's sales to change in the next six months? So you're asking your membership this particular question.
And what kind of responses are you getting from your membership about those employment trends in.
Okay. So this is a forward-looking question. We're asking them to look out for the next six months, so if you think of the calendar, we surveyed them in june and this is really taking us through the rest of calendar year '11. What we found is that over 60% expect that their sales will increase during that time frame. It's down slightly from the previous quarter when we surveyed individuals, but nevertheless, that's a very haelt percentage -- healthy percentage. We also found that there are another 30%, 34% of ceos who expect there to be no change, so it -- when we talk about the sales forecast for our members, we say it still continueses to look opt -- continues to look optimistic, but there's also a trend of people who are expecting just a steady path.
So looking at those numbers, just to repeat them again, the question was, how do you expect your company's sales to change in the next six months? 61% said increase, 34% said no change, and then 5% of your membership said they would decrease.
So it looks like -- are we still? N? In a situation where we're in that world of uncertainty where we've been the last two or four years and before the big downturn we had in the early part of the recession?
Right. I think if you compare the first half of 2011 with what we saw all throughout 2010, we really saw quite an uptick in economic forecast and positive outlook by members. So if you ask them about their sales predictions through last year, it really continued to increase each time that we surveyed them. Beginning in 2011, that started to table off and now it's just declining slightly, so it's -- i think it's about 8% or 8 points below the first quarter survey results for that very same question. So it seems as if all of that type of consumer spending is beginning to slow down a little bit and being reflected in those responses.
And we've had a tremendous amount of debate recently over the future of the country and as far as how we manage federal money with the big discussion about the debt.
And taxes. What are you hearing from your membership about all that particular chatter and what it means to their business?
Well, i think aside from the frustration that everybody is experiencing with that, they have told me that it makes it very hard for them to plan for the future. So we don't know what the federal fiscal situation is going to look like, and leading right up to, you know, august 1st, it was really looking quite tense. That makes business plans and their future spending really a little of concern to them, so they don't want to make those investments, they don't, for example, want to start hiring a number of new people and then have to turn around and lay them off in a, you know, short period of time later.
And i expect we're watching what's happening in europe or watching what's happening in asia and all that debate is happening there, it does have an impact in vermont. I mean, i think it does, but it actually does.
It actually does, indeed. When we think about the marketplace that vermont businesses sell to and engage in, it's not just in vermont, so my members have global marketplaces. Most of our members are multi-state or national companies, so they have a vermont presence, but really, the growth opportunity for them is outside the borders. So when we see that there is a national chilling of the economy or we see what's happening in some of the international markets, that is coming home to us and businesses are feeling that very directly.
Let's go to another question that you recently asked in your survey and this deals with capital expenditures. The question was, how do you expect your company's capital spending to change in the next six months? And the capital spending was about even, increase 46%, no change 44%, and some were going to decrease their capital spending.
So what can you take from that in that particular avenue?
Right. Well, again, if we look back to 2010, what we were seeing was that rather than coming out of this recession and companies starting to invest by going more people -- going more people -- employing more people, they turn first to their physical plant and technology, so whatever growth and increased productivity they had, it was through those means. So now, what we're seeing is, again, companies are just holding steady. They made their investments, they have achieved whatever growth they had, and now they're just going to wait, it seems, until there is some other signs throughout the rest of the broader economy, the national and international picture. Having said that, though, if we look around the state, we can see that there is a variety of companies that are investing in new construction, in commercial real estate, hiring, so we shouldn't think that this is just a one experience that's happening to companies of every stripe and color. So for example, the green mountain coffee roasterses stantion and the dealer.com expansion, king arthur flour over in the upper connecticut river valley, those are examples are companies that are growing and investing again. So it's -- it is episodic in many cases.
Over the years, you know, vermont is always trying to attract the big company to land here, you know, the big employer. Has that trend gone away? Are we looking at a situation where we're happy to find companies that are willing to hire 15, 20 people, 30 people? On friday, there was an announcement of a korean company coming here and hiring 200 people in newport. 200 people in other parts of the country doesn't sound like a big deal, but for vermont, particularly the northeast kingdom, it is a huge deal.
It is a huge deal. Vermont has a lot of attributes that are appealing to many different types of companies and industries, so if the question is do we think we're going to land another giant company that would hire a couple thousand people, that is probably unlikely because we just don't have the type of incentives that other states play with to draw them in. However, we do have a very strong credit rating as a state. People should know that vermont's only one of 15 states with a triple-a bond rating. We have started to chip away at some of our unfunded mandates, our pension reform issues, so when people are looking at the fiscal health of a state that they might want to live in, those things are important to know. Our quality of life is, you know, people say, well, you can compare qualities of life in different states and in different places and everyone thinks theirs is best, but we always hear that vermont is a place people want to return to if they went to college here or they want to raise their children here. So if we can leverage some of those qualities that vermont has, then we would do well as a business location.
The critics are saying that we can't rely on the quality of life anymore, we can't -- i mean, we've gone beyond that now, it's so competitive with other states, and especially with young people where i think -- i don't know, we're number two as far as the age of our population.
Second oldest state in the country.
We've had a real challenge to get people to come back. Can we rely on the quality of life anymore? Because some people say the quality of life is good, but there's nowhere to actually go to work.
Well, that's the other side of the issue is that the job creation environment has been tight for a while, so what we are -- what we are encouraged by, up until the last week or couple weeks, was that we were starting to see, you know, beginning with 2010, this wonderful uptick in activity, so that's just really cooling off right now. Vermont, though, i think, has, again, some important features about it that businesses would look to. We have reputation as being a green environment where there's values placed on certain types of industries and companies and business practices. For some companies, our electric rates are very favorable, so if they're high users of electricity, we have very competitive rates in the region. So, you know, there are some elements that businesses, depending on their particular activity, would fine appealing in vermont.
We're talking about lisa ventriss. She's with the vermont business roundtable and we're going to talk about employment trends and we'll do that right after this short
we're back. This is "you can quote me." we're talking about business and some of the things that could be happening in the future and we're with lisa ventriss with the vermont business roundtable. Before the break, we talk about some of the trends that are happening and a lot of people watching at home may be unemployed, they may be, you know, not being paid as much as they were because they have had fewer hours. What are you seeing as far as the trends and people beginning to hire more people at some of the membership that you have?
So the survey showed us that forecasted employment levels has decline over the first half of this year, so when employees are looking -- or employers are looking to add or maintain their workforces, more of them are holding steady. So they're going to keep the workforce the size that they have. And in conversation with many of these business owners, they sort of turn to me and say, "well, if you as an individual knew that you had some sort of open questions on your horizon, wouldn't you kind of hold on to your money until you had more certainty with what those future costs were going to be?" the same is happening with a number of businesses in that they're reluctant right now to really start growing their workforce again.
Looking at some of the numbers, the question that was asked in the recent survey was, how do you expect your company's employment to change in the next six months? An increase of 36%, no change 53%, and a decrease of 11%, so that indicates that people are still in that -- they are in that holding pattern and not seeing that sort of, you know, robust uptick that we would like to have.
Exactly. So again, as i talk with members of the roundtable, they refer to something as a crisis of confidence right now. There's not a lot of confidence either in the federal fiscal picture or in how those changes might affect state governments and how state governments can afford to deliver the same kinds of services and benefits to its constituencies, so because of that effect, they're just, as the numbers showed, they're really just planning to hold steady.
Lack of confidence, is a lack of confidence in the white house, congress, our laws, state government? Where is the lack of confidence coming from?
Well, i think leadership at large, if we just look at the issue that we've been watching unfold in washington, d.c., now. It used to be that there was more bipartisanship and more cooperation, partnership, it would seem, in coming together on some of these major issues, but both parties were guilty of really being very polarized during this last incident, so i think when we talk about lack of confidence, it's that issue. It's lack of confidence in the market right now. There's just a lot of skittishness and people are just waiting to see what -- how things settle down and begin to resolve themselves.
And towards the end of the week, there was a tremendous -- i mean on thursday, there was a big loss of some 400 points on the stock market.
What does that mean to some of your members and how does that, i guess, trickle down into people in a job?
Well, again, it's one of those indicators that poom look to to -- people look to to try to understand the stability of the economy, of some kind of predictability or certainty in their planning, and if they're going to make investments or buy or hire, those are signs that maybe things are just too unsettled and they just hold off on those decisions.
Does your group have a -- for lack of a better term, a wish list that you would like, i don't know, our government to do or do you say, okay, this is what we want you to do, either make a decision and stick with it and get behind it, or is there something that you would like to see from our elected officials or the public?
Well, if we're referring to sort of the vermont environment and our policy agenda, we do have some priorities that we've been working on for quite a while, and so when we think about economic development strategies, we think about investing in human capital. If you create that type of public priority, beginning with the youngest vermonters, in our case, we look to the zero to 3-year-old age cohort, beginning with investments in those individuals and then continuing through all of their education and into post-education and workforce training, that's where we think the state needs to step up and invest.
That might surprise people from a business perspective. You're already looking at zero to 3-year-olds, so you are trying to grow the best employees, the best minds, the best ceos, and you're focused on that at such an early age.
Well, that's the ultimate outcome, we believe, but really, what we are trying to draw attention to is that as a society, if we invest in programs that will help with the health and development and nurturing and education of those youngest children, by the time they're 3 years of age, 80% of their brain has been formed already, and so if they get a wonderful start with an end rishing environment -- enriching environment, then that there help them prepare to the day that they officially enter formal education, so conversely, if they grow up in an environment where they don't have that type of, of opportunity, and they live in a very stressful environment, then those types of effects are going to stay with that child through their entire life, and in some cases, in many cases, they can't make up for that. So when we think of the burdens then that get placed on an educational system or on a social service network, the correctional system, those just continue to layer on and layer on, and so what we are arguing is that you have to help these kids get the best start they can because that will save the system money eventually, and then you get a child and a worker who has met with success through their lives and has developed a sense of what they want to do as a productive adult, so that's where we focus.
In vermont over the years, and still does, spends a tremendous amount of money on education and is it being spent in the right areas? Does it need to be spent more in the early childhood education? Does that need to be reformed? Are we not putting our dollars into that particular sector and we're maybe spending too much on the back end? I mean, we spend a lot of money on education.
Right. Well, i like to invite people, if you look at a chart and you see the spending pattern of our education dollars today, it looks like a snake that ate an elephant, so it's flat in the 0 to 5 years, beginning with kindergarten through 12, it's a giant bell curve, and then on the higher education level, it's flat again. So when we think about the best allocation of those dollars, we would argue that we could certainly reallocate those funds towards the front end and deal with some of the issues that i described, but at the same time, we have to support our public higher education institutions because we need that graceful transition out of the k-12 system into the right type of post secondary education for people.
So 0 to 3, you're talking child care, you're talking, you know, daycare, you're talking, you know, preschool. That's the area that you think needs some investment and some attention.
And how do you approach that? I mean, is it training of teachers, is it, you know, better facilities? Is it better programs?
It's all of the above. So we have some very dedicated teachers in the early childhood world, but they may not have the adequate level of training or certification to have evidence of -- evidence-based care and education for these young kids, so 0 to 3, it's very -- it's very important to get that right start. So people just need the proper training and preparation for that. And so that's, again, from 0 all the way up to 6 when they start kindergarten and then you've got teachers who are prepared for that, so you have to invest in teacher quality and help them get the right kind of preparation. These are home-based programs, these are private centers around the state, and these are school-based perhaps as well, so it's -- programs as well, so it 's from a diverse offering.
And child care expenses, i mean, a lot of parents are working two jobs, they're wondering about how i'm going to afford child care.
Is there any way to alleviate that burden and -- i mean, do you hear that from some of the people in your group that --
-- you know, they may provide child care and provide a subsidy to them. What do you hear about the burdens of paying for child care?
It's a very real issue, especially for working class vermonters who need to have both parents working. There are state programs and funding now to provide subsidies for certain families so that they can have their child in those settings more hours per week. However, that's an issue the state is going to have to address because in order, again, to help as many children as possible, we need to find a way to support these families, and those conversations are happening. We're delighted that governor shumlin has made this a priority. We feel that we're a very real partner with him on this particular issue. So we're hopeful, again, with legislative leadership as well in the committees of jurisdiction, that we're going to have some real progress.
And on the either end, sort of when you're heading into the employment aspect of it, we hear from time to time from employers that people are just not trained properly, they have a very difficult time despite the tough economy finding qualified workers. Is that still the case?
That is still the case. There is a new report that's just come out from the new england public policy center, i think it's dated april, and it talks about a middle skills gap that exists across all of new england. So in vermont, we do hear that story from our members as well, that when they need to grow, they may be able to find some applicants, but they don't have the type of preparation or skill training that they're looking for. So there are a number of opportunities for people to address that issue. One of the ways the roundtable is addressing that is through a scholarship fund that we manage to provide post-secondary technical education to high school students, so that hopefully they will go out and get that training either in vermont or some place else and hopefully come back and start growing that segment of the workforce again.
We just have a few moments left, lisa, so where are we headed over the next six months? Where do you think this economy is headed and what do you think it will mean to folks watching at home? Where are we headed here?
I think we're just headed for a very cautious time. People, again, are just a little uncertain about, is it go or no good, do we invest, do we not invest. We're heading into the holiday season during that time frame, so some of it is going to depend on how active consumers are during that time frame. We'll also be going out and surveying our members again in september, which would then look into the end of the first quarter of 2012, so that will maybe give us another opportunity to talk about trends, but that's what it seems to look like.
Well, thank you. We'll leave it at that note. Lisa ventriss with the vermont business roundtable. Thank you so much for joining us.
That's going to do it for this edition of "you can quote me." we'll be back next sunday at 11:00 right here on wcax channel 3. Have a great day. Thanks. Captioning provided by caption associates, llc www.captionassociates.com