Vermont’s business climate through the eyes of an employer

Paul Frascoia, president and CEO of Fab-Tech, speaks out  

Paul Frascoia, President and CEO of Fab-Tech

By Rob Roper 

This is the second in a two part interview. Read Part 1 HERE .

Recently, Larry Bell, vice president of business development and marketing at GW Plastics in Bethel stated rather bluntly that the governor’s and legislature’s plans for healthcare policy (single payer) and energy policy (closing Vermont Yankee) “make Vermont a less attractive location to do business to invest over the long term.” As a result, GW Plastics has still not decided whether to build the 40,000 square foot expansion to its Royalton plant, for which it obtained an Act 250 permit last year. (Herald of Randolph, 6/16/11)

Paul Frascoia, president and CEO of Fab-Tech, a Colchester based manufacturer of high-tech, heavy duty ductwork systems for corrosive manufacturing and research applications, has similar concerns.

“One of the big concerns is electricity,” said Frascoia. “Green Mountain Power will say we’re one of the lowest cost rates in the region, well, that is the region, because our Vermont factory’s electricity rate is 30% above our Arizona factory’s. We can pat GMP on the back and say we have great rates, but they’re great versus the Northeast. They’re not great in comparison to the much of rest of the country.”

From that perspective, Frascoia worries what will happen if the governor and the majority in the legislature succeed in closing Vermont Yankee in 2012. “I’m a big supporter of Vermont Yankee. If it’s proven safe, it should operate. Not just for the benefit of the rates, but for the jobs and the tax revenue. If we lose that thing it’s going to create a large gap in our tax revenues. I think its economic suicide to shut it down.”

In addition to the potential loss of Yankee’s cheaper power, Frascoia worries about making other forms of power more expensive. “One of the big problems I have is with the feed in tariffs. I’m a big believer in renewables. I think it does make sense to use renewables where you can. But you can’t be out there guaranteeing rates that are four, five, six times the market. It’s great for the investors [in these renewable companies] but it’s bad for the ratepayers.”

It’s not just in regard to energy where our lawmakers are having a negative impact on bottom lines. “What we can’t continue to have happen is the legislative cost creep on businesses to outpace the cost creep in other state, because we already, as some of these surveys indicate, have a higher cost of doing business than other states. If every year we’re layering on additional costs to the business community, that’s greater than what’s being laid on by the states we compete with (which is basically all of them) then we’re just continuing to make ourselves less competitive. And, we are less competitive, there’s no doubt.”

“Taxes, on many measures, of course, we’re high. Property taxes, obviously, are high. The cost of living here for our employees is high so our wages are relatively high. It’s not worth working if [employees] don’t make a high enough wage…. I can’t think of anything where Vermont is actually less expensive than anywhere else. So, unfortunately, when you line it up and start looking at us, on any cost item where there’s any state impact, we’re high.”

Frascoia stresses the need for workforce development. “It’s really difficult to find capable, competent people to hire…. We hear that a lot that there are people who don’t have jobs or are underemployed, etc, but we still have trouble finding people who are competent – and when I say competent, I mean people who care, are conscientious, willing to put in a full day’s work, and listen and communicate. We want employees who are engaged…. Unless you have a fully automated factory, you’re only as good as the people you have.”

Asked what he would do if he were in the legislature to improve Vermont’s business climate, Frascoia shared some ideas. “It’s so overwhelming to try and repair our cost of doing business here. The first thing is, do no more damage…. We continue to creep our legislative costs onto business faster and higher than other states. We’ve got to reverse that trend and start giving our businesses opportunities to compete… We’ve got to come up with some incentives to attract businesses here, to build here and invest here. And we have to hang on to the employers that we have.”

“The people in the legislature need to start thinking like they’re business people… I don’t think there’s enough business experience down there [in Montpelier], and I think that’s part of our problem.”