This commentary is by Peter Stromgren, who is a retired business development executive and a Campaign for Vermont partner.
[V]ermonters have seen a reduction in average salaries and a rise in undercompensated opportunities. Our small state has also experienced a continued decline in our overall economy which has driven down our tax revenues, putting a severe strain on our social programs and other state projects. This coupled with a reduction in federal aid has forced the governor to ask state agencies to prepare level funding budgets, after the August cutbacks, for FY 2015 and to also to create a budget 5 percent lower after the August cutbacks. This is not the sign of a healthy economy. We are hanging on in hopes that better times are around the corner with no real plans to create a more vibrant economy.
For many years I watched with frustration as one after the other new business opportunities were squandered in my community because of an unfocused approach by state and local agencies. When I retired a few years ago I decided to look at Vermont’s economic development program to see what if any of my 35 years of business development experience could be useful to that effort. What I found was a dysfunctional approach to growing our industrial base, the source of meaningful compensation for its employees. Based on what I have learned, I suggest a different approach for Vermont to pursue.
The lack of transparency in our state government manifests itself in many unsuspecting ways. A brief website review of the Agency of Commerce and Community Development illustrated an organizational structure designed to deal with a broad array of state needs: affordable housing, tourism, workforce training, small business support, historic preservation, film production, and economic development to name a few. This shotgun approach finds a home for each of these elemental functions, but can only dilute the agency’s depth and focus. Not finding what I sought I asked the agency’s secretary and later the commissioner for an organizational chart and the respective budgets of each element. One would think this basic information would be at their fingertip. I was told this was not and would not be available to me as it would be too costly to provide. So I moved forward with what little I knew and relied on my experience for the rest of my recommendations.
As one looks at the economic health of our state and its workforce, we find a continuing decline in projected revenues, a precipitous drop in job growth spanning three decades and shrinking average wages. To combat these trends requires a focused robust approach to economic development outside the confines of its current home. Creating a separate Agency of Economic Development managed by a full cabinet level secretary with relevant industry experience would underscore that Vermont is serious about developing programs to strengthen our current businesses and creating synergistic relationships inside and outside of Vermont encouraging new enterprises in our state. The new agency’s focus should be three basic industries: manufacturing, IT and distribution. Within these lie the greatest ability to pay livable wages and offer full benefit packages.
Creating a separate Agency of Economic Development managed by a full cabinet level secretary with relevant industry experience would underscore that Vermont is serious about developing programs to strengthen our current businesses and creating synergistic relationships inside and outside of Vermont encouraging new enterprises in our state.
The new agency should focus first on developing an in-depth data base on the businesses currently in Vermont as one doesn’t exist now. The greatest impact on our economic health will first come from these targeted segments. Unlike many other states, Vermont’s lacks academic institutions that have a broad range of academic disciplines in the advanced sciences. What we do have is a world class private/state university that does, the University of Vermont. The new agency must develop a program to work with advanced technologies emitting from UVM to keep them in Vermont as well as bringing development needs from Vermont businesses to UVM for help.
Further having created a profile of our industrial base the agency needs to seek out worldwide companies that would have the potential of establishing new entities within Vermont, either because of a receptive industrial climate or a strong synergy with existing industries.
At the state level these responsibilities streamline decisions and manages a broader picture. Within this new structure are specialists, thus eliminating the current duplicity, with relevant experience working with strategic industries within an assigned geographic area. This assures a pipeline to and from regional opportunities that reacts in a timely manner to the vicissitudes of emerging opportunities. A single portal, if you will, to assure proper support. This new agency will be smaller, highly focused and reactive to opportunities unlike the current disjointed efforts we have seen for the past decades. Supporting this must be a rolling five-year plan that outlines the directions to be taken and a metric system that illustrates true results.
The lack of capital for investment is a major problem for our state. With a population of 626,000, it is almost impossible to development the financial depth to meet deserving industry needs. Therefore the new agency would be charged with creating financial relationships with a broad range of institutions in and outside Vermont to help create an adequate funding pool to support business growth. Businesses applying for financial assistance would be required to meet the agency’s strict business plan protocol. While not without issue, a well-vetted plan by the agency will find a more receptive audience than one that only has seen internal review by the requesting company.
Our current approach is, to put it kindly, lacking. When I testified before the House Committee on Commerce and Community Development on House Bill 751, one member commented at the conclusion of my remarks that the governor hasn’t told us that economic development is a priority.
We can do better and what I have suggested focuses the responsibility on a tightly structured agency concentrating on areas that will have a great impact on the wellbeing of all Vermonters. After all, a sound economic development program is one of the major underpinning supporting a healthy state economy. There are no shortcuts to creating a strong business environment. This first step will be the hardest. But we must take a hard look at what is not working and make all the necessary changes that will create a system that will have the best chance for success.
