North Country in Good Position to Handle Economic Challenges

I was fortunate to have at my table at the 19th annual Strictly Business Forum an interesting and diverse group. The majority of our time was spent discussing the most challenging and important issues facing the North Country business community.

Anne Cutaiar came to the North Country as a child, received her education from local schools and graduated from SUNY Plattsburgh. She has worked in banking for the past 29 years and is currently vice president of Key Bank.

Devi Momot, CEO and president of TwinState/Voice.Data.Video, Inc., is a native of the area. She received her degrees from Excelsior College, MVCC and Golden Gate University. She has been with TwinState for 26 years.

Andrew Wylie, the current district attorney for Clinton County, is also a native of the area. He traveled to the mid-west for college at Marquette University in Milwaukee and earned his law degree at Creighton University School of Law in 1987. He then returned to Plattsburgh and joined his father, the late Robert Wylie, in the practice of law before deciding to run for district attorney in 2005. He also became involved in youth soccer for the first time 12 years ago and has continued to be an active participate in the program as director of Plattsburgh F.C. Soccer Club.

Paul Grasso, executive director of the North Country Workforce Investment Board, came to the North Country about 13 months ago after having spent 33 years in California. His work involves administering federal training programs through the Workforce Investment Board.

Bruce Steadman, CEO of PARC, originally from Corning, NY, has spent most of his adult life in the North Country beginning with his time as a student at SUNY Plattsburgh. He is currently charged with the final transition of the former Air Force Base to non-military use.

Marianne Morrow, owner of the Cabinet Gallery, is another North Country native who has an entrepreneurial spirit. In addition to operating the Cabinet Gallery, she maintains a real estate license.

Tom Hollingsworth, market sales representative for Triangle Electric, grew up in central New York. He came to Plattsburgh in the Air Force and then worked for many years for NYSEG. Since joining Triangle Electric Tom has been instrumental in bringing the company to its current status as one of the largest vendors of solar energy technology.

Jeff Levy, executive vice president of NBT Bank, is a native of Newburgh. He has worked in banking since he graduated from college, making his way north via New York City, Newburgh and Albany. He currently is responsible for the commercial lending division of NBT Bank.

Marianne Morrow started our conversation about how businesses had fared in 2008 by noting that while her business was down slightly for the year, she sees hope for the coming year. She stated her business slowed dramatically about three weeks before the election, but Thanksgiving week brought ten new remodeling projects her way. A change that Morrow noted was that now about 75 percent of her business is remodeling as opposed to new construction. She expects 2009 to at least maintain her 2008 levels and is hopeful that spring will inspire people to give their homes a ‘face lift.’

Devi Momot commented, “With this tumultuous economy, it’s a difficult time to decide where we are and where we are going. Over the last few years, TwinState has done several large installation projects including the City of Plattsburgh, St. Lawrence County, Northern Insuring, Paul Smiths, New Market International and New Hampshire’s Brewster Academy. New York State has proven to be the strongest of the three markets in which Twin State works (Vermont, New Hampshire, and New York). This may change in the upcoming year given the budget challenges in the state and the challenges in New York State. According to Momot, Twin State’s “plan in 2009 will be to create business in New York — creating growth by intelligent acquisitions.”

She continued, “Our father, one of Twin State’s founders, always believed that a declining economy was a good time to expand business. We are fortunate that we are in a good cash position as well as having great banking relationships. That allows us to do some business expansion. We are also putting a lot of effort into increasing product offerings that are meaningful to companies trying to tighten up their expenditures.” Momot noted that TwinState is now offering additional managed services in its IT portfolio to fill needs of companies attempting to streamline their operations, reduce operational costs and be more proactive.

Paul Grasso made note that his programs are federally funded and have been cut severely in the past few years. The population he works with includes 16-24 year olds who have dropped out of high school and whose skills are below the 9th grade level, displaced workers (those laid off with slim chance of returning their previous employment), and those re-entering the workforce. “One difficulty,” he said, “is that many have lost hope and, in these difficult times, changing that attitude is extremely challenging.” Grasso advocated for early intervention for our youth with programs starting before they enter school. He used an analogy about how the youth hockey programs in Plattsburgh have produced such successful high school teams. Work-based learning is another avenue he mentioned that provides experience and training to students. Grasso is currently writing a grant to provide construction skills to students while completing their GED. He commented that math skills deficiencies keep many workers from achieving success. Tom Hollingsworth echoed Grasso’s sentiments.

Another challenge for businesses is training the workforce. Momot stated, “In our business, the skills of the professionals providing services for such things as customer networks and phone systems are incredibly important. With the pace of change in technology, the training and skill set development of our team is ongoing everyday. Customers will only use us when we can do something for them they cannot do for themselves. Our employees make all the difference.”

Hollingsworth noted that Triangle was doing all they could to keep their employees, even taking on some less profitable jobs to keep them busy.

Levy emphasized, “While our community banks have not experienced many of the economic failures of some larger banks, the end result is that we will all be affected.” His statement that we all will be feeling the crunch in the near future was echoed by all at our table.

Speaking about foreclosures, Cutaiar pointed out that many people wait too long before contacting their lending institutions to work out possible solutions. “Banks do not want to own houses,” she said, adding, “Here in the North Country, our institutions have been much more prudent in their lending practices, so are experiencing much less of an impact.”

In addition, it was pointed out that while help is being provided for some, there are many who have been conservative in their purchases, but who are still suffering due to lay-offs or cut-backs and are not receiving help.

Of great concern to everyone at our table was the effect the State’s budget difficulties have on local taxes. The high cost of doing business in New York remains a contributing factor to businesses leaving the State. The group concurred that maintaining as well as growing business in New York is necessary to help in these difficult time.

Cutaiar spoke to the effects on the non-profit organizations in our communities. “The vouchering system is very slow,” she said. “State funding is being sharply reduced or eliminated, which means these agencies will be asked to do more with less. More people will need services as winter approaches. The non-profits will be asked to consolidate services as much as possible.”

Cutaiar’s comment about consolidating services led to a lengthy discussion about the need to encourage consolidation among governmental agencies, including schools. Grasso noted that a major difficulty would be in reducing the number of leadership positions. “For example, if there are six fire districts and six fire chiefs, consolidation would mean there would be only one fire chief,” he said. “It is difficult to consolidate when there are perceived ‘winners and losers’ among those in leadership positions.”

Also discussed was school consolidation, or at least a reduction in administrative staff. Wylie noted that there are 13 towns and villages in Clinton County, each with two judges, along with support staff. His office consists of five assistant district attorneys who travel to cover the local town courts as well as the Plattsburgh City Courts. In addition to his office, the Public Defenders Office has to cover these courts. When asked how we could streamline the judicial system, Wylie suggested that towns and villages be required to consolidate.

Momot noted that the costs related to operating these courts also include benefit packages which add to our tax burdens in the short and long term. “Government,” she said, “has grown and continues to grow at a faster rate than private business. That’s upside down and creates a huge drain on the shrinking tax base in New York.”

Hollingsworth pointed out that each entity in the county does its own purchasing. He spoke of such things as salt for winter roads, parts for vehicles, and other necessary items which could most likely be purchased for much less if consolidation prevailed.

As part of our discussion of New York’s high tax burden, there was general agreement that the area is losing talented people. Levy expressed hope that New York State would do more to support existing businesses. “While it is necessary to attract new business to the State,” he stated, “It is equally important to retain the businesses we have.”

The conversation about consolidation continued, and there appeared to be some consensus that we should all be working toward reducing the cost of government by consolidation not only of our judicial system, but of all governmental entities. A reduction of personal, business and property taxes would do much to attract and retain businesses in the State.

The recession and its long-reaching effects appear to be the single most important issue facing the North Country business community. There was agreement that one of the most pressing issues is the continuing rise in health insurance costs, which continue to increase yearly, sometimes by more than 10 percent which create burdens on both employers and employees.

In discussing the future for business in the coming year, note was taken that these times are bringing challenges we have not yet faced, nor do we know the exact extent of the current crisis. Momot said, “We, as a society, have had a wake-up call and hopefully we will rise as we have in the past to meet these challenges.” She cited the fact that oil consumption was reduced about 20 percent when prices skyrocketed.

The people at our table made several suggestions for needed change. Among them was the creation of a welfare system that focuses on helping those in need prepare for an ever-changing job market.

Our group also expressed its belief that it is important to pressure those in office to make long-term plans and set a direction for the country, not just do things that make us feel good in the short term.

Our group also pondered the choices that have been made, and are yet to be made, with the recent TARP bail-out. Some felt that more stringent criteria should have been placed on companies that receive the aid. One suggestion was that part of the aid should be used to retrain the workers whose jobs will be eliminated.

We also discussed whether the auto makers should have been bailed out and how existing labor contracts make it difficult for them to compete in the global market. A suggestion was made that perhaps reducing the variety of model choices might make the auto industry more competitive in the global market.

As our discussion wound down, it ended on an optimistic note. Most everyone agreed that, while the next year or two will bring new challenges, we in the North Country are perhaps in a better position to handle them. Not only have we survived the closing of Plattsburgh Air Force Base, the area has evolved into a shopping mecca for locals, our Canadian neighbors and, of late (probably due to the addition of Target) many Vermont shoppers. Our business community is growing. Banks continue to process loans and those in our group expect their businesses to at least hold their own, if not to grow, in 2009. I would call the group as a whole “cautiously optimistic.”