Huber+Suhner to close Essex Junction plant, move jobs to N.C. and N.J.

A high-tech manufacturing company is leaving Vermont for better business options in North Carolina and New Jersey. The Swiss-owned firm Huber+Suhner established its North American headquarters in Essex Junction in 1990.

Administrative offices will move to Charlotte, N.C. Assembly work will migrate to the precision manufacturing facilities of Astrolab Inc. in Warren, N.J. Huber+Suhner acquired Astrolab in 2012, two years after establishing a manufacturing plant in Mexico.

Huber+Suhner is leaving Essex for North Carolina. Courtesy photo

Huber+Suhner is leaving Essex for North Carolina. Courtesy photo

Some of the 63 employees working in Essex Junction will be asked to move with the company. President and General Manager Andy Hollywood declined to specify how many people are employed on the manufacturing versus administrative sides of the business.

According to a news release, most Vermont assembly positions will end by the close of 2013, and all separated employees will be offered severance packages and outplacement services. The relocation is expected to be completed by June 2014.

Manufacturing workers at Hubert+Suhner assemble radio frequency cables for communications, transportation and industrial sectors.

Lawrence Miller, secretary of Vermont’s Agency of Commerce and Community Development, said his offices will reach out to the firm’s executives to learn more about their decision to leave.

Hollywood said in an interview that the decision was based on a combination of tax and workforce considerations.

“Obviously, the cost of doing business here and the tax perspective is a significant reason why we’re moving,” Hollywood said. “For the most part, (North Carolina) is a lower overall tax implication to the company.”

A spokesman for the firm, Joe Choquette of the Burlington-based law firm Downs Rachlin Martin, said that lower real estate prices in North Carolina contribute greatly to reduced property tax liabilities.

Hollywood also reflected on growing difficulty filling administrative positions, saying the number of qualified applicants for open positions has declined in the past five years. That’s been particularly true for positions outside of manufacturing, such as human resources, finance, customer service and some engineering positions, he said.

Choquette indicated that a wider workforce in North Carolina would improve hiring options.

With about 775,000 people, Charlotte’s population exceeds that of the entire state of Vermont by nearly 150,000, according to 2012 U.S. Census estimates.

Choquette said that a “competitive salary environment” in North Carolina also made it attractive as a headquarters. He added that North Carolina’s central location on the East Coast and its ocean ports make shipping more convenient, and Charlotte’s major airport will offer more direct access to cities in the U.S.

Miller said the primary initial response of the state is for the Department of Labor to assist any employees who may lose their jobs as a result of the relocation.

“And we’ll take a look at the real estate and help market it, to help somebody else get in, if necessary,” Miller said.

Choquette said manufacturing has become more expensive in the United States over the years — a business expense the company has answered by gradually reducing its domestic production.

Hilary Niles

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  • Jim Barrett

    CHOQUETTE SAID MANUFACTURING IS MORE EXPENSIVE IN THE UNITED STATES AND I WOULD POINT OUT THAT N.C. IS still IN THE U.S. !

  • Jim,

    This was a freudian slip.

    Vermont is so far out of the US mainstream that it is, even by foreigners, considered not to be “in the United States”, but that North Carolina, with more business-friendly tax and investment policies, is mainstream, i.e., “in the United States”.

    Vermont, instead of educating and training its work force and keeping it in Vermont with NC type business policies, has been soooo busy investing/wasting hundreds of millions of dollars in dysfunctional:

    – RE SPEED programs, and
    – junking up Vermont’s ridge lines with noise-making, health-damaging, environment-destroying, property value-lowering, social-discord-producing, 459-ft tall, 3 MW wind turbines Lowell Mountain-type ridge-line programs,

    that produce energy at 3-4 times grid prices, and make already-struggling households and businesses fearful of their economic futures.

    Adding an Efficiency Vermont surcharge on home heating bills is not only regressive, but will further enhance the reach of the dysfunctional energy policies of Vermont, and scare away even more businesses.

    Not to worry, though.

    Stenger’s schmoozing with Shumlin in China to entice foreign multi-millionaires to settle in the US and invest in Vermont’s EB-5 programs will come to the rescue.

    Vermont’s economy will be going down the water slides to nowhere.

    Huber+Suhner, a Swiss high-tech company, voted with its feet.

  • Phyllis North

    This is not good news. And the fact the company is citing high Vermont taxes as one reason for the move suggests we could be in big trouble if Vermont enacts huge tax increases to pay for single payer health care.

    • Jim Barrett

      I agree with you, excellent.

  • Moshe Braner

    But then they wouldn’t be paying health insurance premiums. They’re doing fine with single payer in Switzerland, along with all other industrialized countries other than the country NC is in.

    • Dan McCauliffe

      Moshe, Your statement is incorrect. Most European countries, including Switzerland do not have single payer health care systems. Canada is one of the few single payer systems still in existence as most countries have moved away from single payer. Vermont’s single payer model is very similar to the Canadian single payer system.

      I think most physicians and the general public are ignorant of the weaknesses of the single payer system compared to the superior European health care systems.

      Canada is one of the few remaining single payer health care systems in the world, and this may change as the long waiting times are harmful to patients and creating an impetus to reform the Canadian system to be more like the mixed payer systems of Europe. http://blogs.vancouversun.com/2012/08/01/will-canadas-health-care-system-evolve-into-european-parallel-private-model-charter-of-rights-case-will-decide-it

      We could all learn more by looking at what seems to be working best in other countries that offer universal access to health care. From what I have learned, the better mixed payer systems easily trump single payer systems.

      A 2010 study found Canada dead last in timeliness and quality of health care compared to six other developed countries. It ranked 6th overall, just ahead of the US. http://www.commonwealthfund.org/Publications/Fund-Reports/2010/Jun/Mirror-Mirror-Update.aspx

      In the 2010 Euro-Canada Health Consumer Index, Canada’s single payer health system ranked poorly compared to the many mixed payer systems in Europe. Canada ranked 25th compared to 33 European countries. http://www.fcpp.org/files/1/ECHCI2010%20Final.pdf

      The 2012 Euro Health Consumer Index is available, but didn’t include Canada. However, there is still much to learn from this latest analysis. The results of this latest study show how consumer empowerment, and abandoning the single payer model leads to better health care system results.

      From the full report: http://www.healthpowerhouse.com/files/Report-EHCI-2012.pdf
      The Swedish authors of the latest study state:

      “The Dutch have established a European model to copy – NOT LEAST BY ABOLISHING SINGLE-PAYER SYSTEMS.” (Cap emphasis is mine.)

      “The NL [Netherlands] is characterized by a multitude of health insurance providers acting in competition, and being separate from caregivers/hospitals. Also, the NL probably has the best and most structured arrangement for patient organization participation in healthcare decision and policymaking in Europe.”

      “Here comes the speculation: one important net effect of the NL healthcare system structure would be that healthcare operative decisions are taken, to an unusually high degree, by medical professionals with patient co-participation. Financing agencies and healthcare amateurs such as politicians and bureaucrats seem farther removed from operative healthcare decisions in the NL than in almost any other European country. This could in itself be a major reason behind the NL landslide victory in the EHCI 2012.”

      The highly rated Netherlands’ mixed payer model is clearly not the future of Vermont’s Canadian-style single payer system with bureaucratic top-down control, that disempowers patients and their providers in medical decision making.

      The above study was critical of the single payer systems for good reason: they do poorly compared to other universal health care systems such as the Dutch and Swiss systems. It should also be noted that Canada spends about the same on health care as do the Netherlands and Switzerland.

      We should all be striving for the best health care system for Vermont that provides universal access while preserving high quality, containing costs, and avoiding rationing through long waiting times or other measures that cause patients harm. The single payer system is not the best suited system for achieving these goals.

      • Dan,
        Agree 100%, having lived in the Netherlands for some years and having received care under its healthcare system.

        MUCH better than the US, AND more efficient, less costly.

        The VT system will be a lead stone hanging around the necks of households and businesses.

  • Chet Greenwood

    Although I agree with Dan, I doubt healthcare was the deciding factor. Vermont has other economic factors that will cause businesses to leave or others not even consider moving to VT. I have business associates in NC and know some of the issues attracting industry. Electricity is 50% lower in NC (.14 kWh in VT compared to .089 kWh in NC). If you are in Duke Energy area the rate is less than 6 cents kWh. This is a significant amount for those industries with high energy requirements. The Corporate tax rate in NC is a flat rate of 6.9% compared to VT at 8.5%, again, very significant to larger industries. Property taxes in NC are $902 per capita (#38 in US) compared to VT at $2166 per capita (#6 highest in US). Individual income taxes at 7.75% in NC to 8.95% in VT. and the sales tax in NC is 4.75% compared to VT at 6%. I do not know the situation at H & S but I do know it doesn’t take much of a financial analyst to make relocation decisions. Vermont does have 1 advantage and although our wages tend to be higher than NC (in similar industries), Vermont’s work ethic is superior and more productive.

    • James Mason

      Chet,

      They’re moving manufacturing operations to New Jersey, only the HQ is moving to NC. The electricity prices in NJ were only 62 cents cheaper per kilowatt-hour as of two months ago. (eia.gov)

      Of course, their spokesperson specifically called out property taxes, and that’s a pretty stark difference between here and NC. But while VT was #6, NJ was #1 in the nation in property tax (census.gov). This move seems to be much more about your points re: corporate tax and income taxes. That and of course the “competitive salary environment” outside of New England.

    • Doug Hoffer

      Notwithstanding higher marginal rates, personal income taxes in VT are lower than in NC due to the progressivity of our tax code vs. a flat rate. In the end, it’s the effective rate that matters, not the marginal rates. A 2007 study by the JFO provides a detailed analysis. See pages 5 – 12 for comparisons between VT and NC.

      http://www.leg.state.vt.us/jfo/reports/2007-10%20Vermont%20Tax%20Study%20-%20Volume%202.pdf

      As for wages, according to BLS, they are actually higher in the Charlote, NC metropolitan area than in Burlington for the top administrative occupations (marketing, financial, HR, etc.).

      Re. sales taxes: Unless I’m mistaken, NC taxes food and clothing, while VT does not.

      • Doug,

        If VT’s business climate is not so adverse, according to your quoted statistics, why would Huber+Suhner be leaving the state? There must be other reasons.

        As you know, there are all sorts of ways to write reports, especially if they are paid for by parties looking for particular conclusions.

        Remember, IBM made statements similar to H&S.

        VY closing likely was influenced by the adverse business climate, i.e., not being able to make a profit, even though selling 4,888 GWh/yr at about 5c/ kWh, which is much less than the cost of production from SPEED and LOWELL of 15-20 c/kWh.

        THEIR heavily-subsidized power HAS to be taken by utilities.

      • Doug,

        The study is outdated, was performed by the State of Vermont in 2007. Likely used 2005 or 2006 data.

        A study by an independent, not paid by Vermont, likely would look different.

        Annual state collections of income taxes, real estate taxes, and GMP collections due to higher electric rates, etc, have gone up quite a lot since then, which would be noticed EVERY quarter by any business, whereas the economy has been near stagnant, real household incomes and the incomes of businesses have also been near stagnant since then.

        Most households and businesses are just treading water, while the state government budget increases. At some point the cookie crumbles.

  • Chet,

    Great comment with good facts. My niece lives in Durham, NC, and confirms what you have written.

    I hope you don’t mind,. I have reformatted your comment to be more reader-friendly.

    Although I agree with Dan, I doubt healthcare was the deciding factor. Vermont has other economic factors that will cause businesses to leave or others not even consider moving to VT. I have business associates in NC and know some of the issues attracting industry.

    Electricity is 50% lower in NC (.14 kWh in VT compared to .089 kWh in NC). If you are in Duke Energy area the rate is less than 6 cents kWh. This is a significant amount for those industries with high energy requirements.

    Corporate tax rate in NC is a flat rate of 6.9% compared to VT at 8.5%, again, very significant to larger industries.

    Property taxes in NC are $902 per capita (#38 in US) compared to VT at $2166 per capita (#6 highest in US).

    Individual income taxes at 7.75% in NC to 8.95% in VT. and

    Sales tax in NC is 4.75% compared to VT at 6%.

    I do not know the situation at H & S but I do know it doesn’t take much of a financial analyst to make relocation decisions.

    Vermont does have 1 advantage and although our wages tend to be higher than NC (in similar industries), Vermont’s work ethic is superior and more productive.
    ANY REFERENCE FOR THAT STATEMENT?

    Best Regards,

    Willem

  • Chet Greenwood

    Willem,
    My experience is industry specific but we find that employee turnover in the south is far greater than the North East thus leaving the more experienced employee in the NE creating more productivity. I do believe the lower turnover rate is due to the fewer employment options of the employee.
    My individual observation is that this productivity issue is the ONLY plus when compared to the long list of negative economic factors when one compares NC to VT for industry relocation.

  • Mr. Hoffer’s 2007 study is indeed out of date.

    In fact, just this year, North Carolina under Governor Pat McCrory (R-NC) and Republican majorities in both chambers embarked on a complete overhaul of the North Carolina tax code. The reforms include, among other things, flattening and lowering the individual income tax to 5.75%, reducing the corporate income tax rate to 5% by 2015, 4% by 2016, and 3% by 2017, capping the gasoline tax, capping individuals’ mortgage interest plus property taxes at $20k, and fully repealing the estate tax.

    Think that might have something to do with H&S leaving?

    • Doug Hoffer

      Actually, it was not “Mr. Hoffer’s 2007 study.” It was produced by the Joint Fiscal Office at the request of the legislature. And it was a follow-up to an earlier report requested by then-State Senator Barbara Snelling.

      As for North Carolina’s coming tax changes, some consider them very bad policy that will hurt the state’s economy, shift the tax burden to the middle class, and reduce state revenues needed for investment in infrastructure and schools.

      http://www.ncjustice.org/sites/default/files/BTC%20Brief%20-%20Math%20Doesnt%20Add%20Up.pdf

      • Craig Powers

        That sure is an non-partisan website you cited.

        • Doug Hoffer

          The group is affiliated with (and uses models developed by) the Institute on Taxation and Economic Policy, which is one of the most respected tax policy groups in the country. I would be surprised if you can find fault with their analyses of state and federal tax issues. Read some of their stuff before you judge.

          http://www.itep.org/

      • Well, they’ve got a bunch of Vermont jobs that we don’t have anymore. So far it seems to be working out ok for NC.

        PS. I did not intend to imply that you did the study, Doug. Only that you brought it to this debate.

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