Paul Frascoia, president and CEO of Fab-Tech, speaks out
By Rob Roper
This is the first in a two part interview. The second will focus on energy policy and Vermont’s overall business climate.
As the details of Green Mountain Care remain in limbo, Vermont’s business community is growing more outspoken about the real and potential problems the single payer plan is causing for Vermont’s job creators.
True North Reports sat down with Paul Frascoia, President and CEO Fab-Tech. The company is based in Colchester with affiliated facilities in Maryland and Arizona as well. The Vermont plant employs approximately 140 full time and temporary workers manufacturing corrosive fume exhaust systems. These are a high-tech, heavy duty ductwork systems that help keep our environment clean by safely transporting exhaust fumes to scrubbers or other pollution abatement devices that get rid of pollutants before they are released into the atmosphere.
It’s the kind of employment Vermonters say they want to keep and grow in our state — good paying, environmentally oriented manufacturing jobs for people who don’t necessarily need a high school degree.
But, while Fab-Tech has been expanding outside Vermont, it has no plans to do so within Vermont. “We’re trying to maintain our head count here in Vermont where it is,” said Frascoia, “but we’re investing in growth in our other factories out of state.”
A big factor in that decision is Green Mountain Care. “Absolutely,” explains Frascoia. “It’s a very, very big concern. We currently pay about 8% of our gross payroll for our healthcare benefits, and I suspect it’s going to cost more than 8% if this plan comes to fruition.” Frascoia is also concerned that the benefits covered by Green Mountain Care will, in addition to costing more, provide inferior benefits for his employees. “We currently provide a robust health plan, and I expect what will be offered under a statewide, universal plan will be a step down from what we currently offer in benefits.”
Moving to a government run system would create potential problems with Fab-Tech’s hourly union workers. “We also have a union for our hourly laborers,” explained Frascoia, “and we do have stipulations [in the union contract] that we will maintain a certain level of benefit, and I’m concerned about that because I think [Green Mountain Care] would probably not meet that standard. So, the union would, therefore, want us to make up the difference with supplemental care, which would be that much more expensive, and we wouldn’t be able to do…. If we’re not able to negotiate with the union to relax the healthcare requirement to the standard that the universal care would be providing, then we have a problem with being able to afford a wrap. The obvious but unfortunate solution would be to reduce or eliminate manufacturing in Vermont if a solution could not be negotiated.
Fab-Tech’s difficulties with Green Mountain Care wouldn’t stop at the Vermont border. “Another problem this creates for us that we currently put our three affiliated factories — one in Maryland, one in Arizona and one in Vermont — we put all those employees into a group so actuarially we get better rates because we have a larger group to insure. So, if Vermont goes down this path, then any remaining Vermont employees cannot be part of that group. That’s going to drive up our costs in Maryland and Arizona as well by reducing the group size.”
Frascoia is forthright about what his business strategy will be in response to Green Mountain Care. “Our Vermont factory already bears higher legislated costs than our other factories. If Green Mountain Care and its anticipated employer payroll tax come to fruition we will probably need to take action in terms of relocating capacity and staffing.” In the mean time, “For us, it’s horrible to go another year and a half with uncertainty of what the cost is going to be. It forces my hand managing these businesses to continue to invest more aggressively in our out of state factories rather than invest in Vermont.”
“This is a huge concern,” concludes Frascoia. “Not only in the uncertainty of what’s going to happen, but, if it does in fact happen, it appears highly likely that it will be a significant step up in expense and make us less competitive with our other factories.”