By KATHRYN FLAGG
BRANDON — For the third time in 18 months state and local officials are working to see what assistance and enticements they can offer a major local employer to keep the business in the area.
The 90 people who work for furniture manufacturer Vermont Tubbs are waiting to see if the new owner of the plant will keep it in Brandon or move it out of state. Economic development officials say that, as with any employer, they have a range of grants and loans available to BSF Transition LLC, the Whitefield, N.H., company that bought Tubbs for an undisclosed price earlier this month.
What’s available comes from a veritable alphabet soup of programs that, when accepted, sometimes keeps a struggling business in operation and keeps it pumping money into the local economy.
“Our goal … is to help foster business development here in the region,” said Jamie Stewart, the executive director of the Addison County Economic Development Corp. “That sometimes means taking a higher risk than we would normally want to take.”
But that risk — and available public loans, grants and tax incentives — provide no guarantee that the jobs will stay forever.
Tubbs officials stated in a press release at the time of the sale that that they will continue to manufacture in the existing facility on Arnold District Road while Brownstreet assesses future production plans. A published report last week said the company may close shop in Vermont after 168 years of production, but Brownstreet officials did not return calls to confirm.
The threat of the closure of a big employer is not new. In January 2007, Standard Register officials announced they would close their Middlebury printing plant, putting 112 people out of work. Officials at the out-of-state company said their business model had changed and there was nothing economic development officials could offer to keep the 40-year-old business in town.
Eventually, though, they helped identify a buyer for the 20-acre Standard Register property and Connor Homes is now operating a successful, albeit much smaller with around 64 employees, business in the Route 7 plant.
Also that month, Specialty Filaments threatened to throw 175 people out of work when the Middlebury company filed for bankruptcy. A few years earlier, the company was closing its Burlington plant and received $200,000 from the Addison County Revolving Loan Fund to help finance its corporate consolidation. It also secured a $2 million mortgage guarantee from the Vermont Economic Development Authority in 2004 and $769,456 in tax credits from the Vermont Economic Progress Council (VEPC) in 2002, when a company official said it was considering transferring business to China.
Nevertheless, the company did go out of business, but an Illinois company in the same business — bristle manufacturing — bought the plant, focused its operations on overseas customers and currently employs more than 140.
TUBBS STRUGGLES
The question of Vermont Tubbs’s economic viability is not new to local and state officials — and Tubbs’s struggle to turn a profit, as well as the state’s sustained interest in the project, highlight the involvement that state and local funding organizations can take in local business affairs.
“We’re familiar with it on a personal level,” said Mike Quinn, the state commissioner for economic development, of the situation at Tubbs. The company was one of the first he encountered when he began working at the Department of Economic Development in 2003, when Vermont Tubbs was nearly liquidated. “There’s a fond place in my heart for this project.
This past spring, state and local economic organizations extended several offers of financial assistance to Tubbs. According to Quinn, the Department of Economic Development partnered with the Rutland Economic Development Corp. (REDC) to offer the company’s prior owners a $500,000 Vermont Community Development Program (VCDP) grant — the largest grant of its kind to be awarded to Vermont businesses this spring.
The award was designed to be used as operating capital, allowing the company to pay off debt while it worked to turn a profit. In a separate agreement, the town of Brandon agreed to loan the factory $80,000 from its revolving loan fund — bringing total available funding assistance to $580,000.
But the company’s sale interrupted the funding process.
“Unfortunately they never took that funding down and have since sold the company,” Quinn said.
Financial aid from the state is on hold, and the company’s new owners would have to re-apply to receive those funds.
According to ACEDC’s Stewart, businesses looking for local or state funding have a number of options for acquiring funding and assistance:
• The Vermont Economic Development Authority is the state’s lending arm — VEDA steps in to provide loans that are typically offered at a reduced rate. VEDA loans are meant to entice banks to make a deal that otherwise may have been considered too risky, Stewart said.
• Revolving loan funds, which are operated by regional development corporations and primarily use federal funds, are also available for “gap funding,” said Stewart.
• Vermont Employment Growth Incentive (VEGI) awards are specific to businesses that are bringing new jobs into the state, either through a significant expansion or a new business venture.
• Additionally, for the right businesses, Vermont’s venture capital network provides private opportunities for funding assistance.
Determining the type and amount of loan assistance available to businesses is a highly individualized affair, said Stewart — relying not only on a company’s business plan and management structure, but also on the attention and judgment of technical specialists at regional development offices.
“There’s a whole due diligence that’s involved,” said Stewart.
Companies are particularly good candidates for funding assistance when they are expanding.
“When you have a company that is growing quickly, they have financing needs that are stretching the company,” Stewart said. “Those are the companies that are the best candidates.”
But state and regional economic development offices are often willing to take a chance on struggling companies in order to strengthen the economic health of the larger community.
Brandon state Rep. Joe Acinapura said he and Tubbs President Jason McKeighan have agreed to sit down and “see where we can go,” Acinapura said. “I want to save these jobs and the millions of dollars that are pumped into Brandon, not only as a representative, but (because) I live here.”
STATE FUNDING CRITICS
Of course, state-funded assistance to struggling businesses has its critics.
According to Acinapura, some area business owners have questioned the help that Tubbs has received.
“People have said to me, ‘Why, Joe, do you guys fight for loans for some businesses and not others? If they can’t make it, why bail them out?’” Acinapura said. His response, he said, is typically to steer those business owners to the people or agencies who may be able to provide economic help.
According to Quinn, the responsibility ultimately falls to private businesses to take advantage of the funding and state support available.
In the case of Vermont Tubbs, he said, “It’s pretty much in their court at this point.”
When the announcement came this spring of Tubbs’s sale to BSF, Quinn said he drove down to Brandon to be with the former owners for a conference call with the new owners, who were in New Hampshire.
“This is a new ownership and a whole new scenario and we are hopeful that if they choose to go forward, they’ll avail themselves of the programs that we have got,” Quinn said.
Vermont Tubbs currently employs about 90 people in the Brandon area, and, according to Brandon town officials, contributes roughly $6 million to the local economy. Extending financial assistance to the company is, in the eyes of both Acinapura and Quinn, by no means a case of throwing good money after bad.
“The state of Vermont receives a terrific benefit through having the Vermont Tubbs Company continuing to operate,” said Quinn.
Additional reporting contributed by Thatcher Moats and Lee J. Kahrs.