Matt's Statement on the Role of Manufacturing in Vermont

Manufacturing has historically been and must continue to be one of the most important sectors of Vermont’s economy.  We have a manufacturing legacy that spans both the geography of our state and a wide array of products, from scales in St. Johnsbury to machine tool in Springfield, from munitions in Windsor to wool products in Winooski, and from batteries in Bennington to pipe organs in Brattleboro.

Today, our companies are on the cutting edge of advanced manufacturing.  We’re innovating in aviation, injection molding, optical lenses, and LED technology.  Vermont manufacturers even produce servers designed to work on the moon. In my small town, North Hartland Tool has emerged as a $15 million per-year company, providing specialty fixtures and gauges to the whole world.

Manufacturing jobs represent a sustainable and proven pathway to the middle class, providing opportunity to people with a wide variety of skills and education.  Jobs in manufacturing are still some of the best jobs around, especially for the young people our state is struggling to retain and attract. 

Where We’ve Been and Where We Need to Go

To succeed in the future, our state needs to attract and grow companies that export value and import cash.  Manufacturing exists precisely in that sweet spot. But we all know that both the U.S. and Vermont have seen a notable decrease in manufacturing jobs over the past twenty years. 

This trend is something Vermonters have experienced for many years.  I remember the impact on my seventh grade classmates when Cone Blanchard and Goodyear announced that they were downsizing their Vermont operations.  We know that in a global marketplace businesses must be nimble and efficient, and many Vermont manufacturers have succeeded by investing in those efforts. The result has been a Vermont manufacturing sector that produced 70% more in goods and services in 2010 compared to 1997, despite an overall loss in manufacturing jobs over that same period.

Having worked with state economic development offices around the country, I believe that we are not well positioned to harpoon and drag a massive corporate campus into our state.  However, we can support the expansion of our current manufacturers and encourage smaller advanced manufacturing companies to start and grow here.

We already have the ingredients necessary to support new manufacturing entrepreneurs and attract highly skilled workers.  We have the country’s best quality of life.   We’re strategically located between Boston, New York, and Montreal.  We have excellent institutions of higher education and a tradition of innovation. And we have the best beer in the world.

The Biggest Challenges

When I talk to manufacturers, I hear the following concerns: we can’t find qualified workers, working with state government takes too much time, our costs in Vermont are too high, and we don’t have the infrastructure to more efficiently move our products. From my own experience in business, I understand and have experienced these challenges.

While there are many steps the next governor must take to support our economy, let me provide five specific areas on which I would focus. 

Five Approaches

1. Education and closing the skills gap

With the number of young people in our state declining, we need to be sure that every single one is prepared for 21st century jobs and that we address this need at every stage of education. 

This certainly includes investing in educational programs in advanced manufacturing, like those offered by Vermont Technical College, but it also means investing in training resources tailored to employer needs through partnerships with the Workforce Employment Training Fund.

It means rethinking how we deliver K-12 education to provide the skills that businesses will be looking for in the future.  One encouraging example came out of Hartford High School a few years ago.  History teacher Mike Hathorn decided to experiment by teaching his entire class how to use SketchUp, a 3D rendering program.  He then tasked them them with mapping the historic buildings of downtown White River Junction.  The students uploaded their work to Google Earth, and Google was so impressed that they flew the entire class out to California to give a lecture on 3D rendering to Google engineers.  We’ve since scaled this program to the whole state, and with good reason—not only do the students learn history in a hands-on way, but they learn a skill with real value in the business world.  We need to encourage our great Vermont educators to do more of this sort of work.

2. Reduce worker compensation costs

Shrinking the cost of workers’ compensation insurance can be achieved by making reforms in two areas.  First, we need to ensure that reimbursement rates for workers’ comp-related medical care don’t exceed rates for other types of insurance. Second, we need an actual audit division to focus on independently verifying the safety of workplaces and the validity of workers’ comp claims.

3. Reduce the friction with state government

Vermont has traditionally been strong on telling companies where we don’t want growth, but weak on making it easy to grow where we all agree investment should happen. And we’ve focused little on reducing the time it takes for companies to evaluate and implement expansions. 

During my time in the legislature, I focused on policies intended to make expansions and startups easier.  One of my proudest legislative accomplishments focused on incentivizing brownfield redevelopment. But since I’ve been out of the legislature, what has become clear to me is that real change requires leadership in the executive branch. In working with Google to bring billions of dollars in infrastructure investment to cities around the country and the world, I’ve seen a successful model for private-public cooperation and helped to make it work.  It’s past time we bring it to Vermont government. 

First, there should be one online portal that any company can use to fulfill all obligations to the state.  Second, we should dedicate resources to export assistance for new companies or companies looking to enter new markets through shared container programs or financing assistance.  Third, every manufacturer should be assigned a project manager in state government whose job is to minimize the time an expanding business spends navigating the requirements and regulations of state agencies, leaving companies to focus on what they do best: creating jobs.

4. Invest in 21st century infrastructure to support business

We will not attract young people or entrepreneurs unless we have real broadband in our state. The global marketplace requires gigabit connectivity for our businesses and high-speed internet to the home. We also need to make investments in transportation infrastructure to ensure that business travel is smooth.

5. Incentives to encourage investment in new companies

We must do more to encourage investment here.  One tool we can use is a capital gains tax deferral for individuals who use that gain to invest in a Vermont-based enterprise.  As is already the case in real estate, if the gain from the sale of a company or stock was immediately reinvested into a Vermont early stage company, the seller could defer paying taxes on that gain.  

The Right Leadership to Deliver on the Promise of a Stronger Economy

At the end of the day, the question you need to ask is which candidate has the experience to deliver on the promise of a state government that prioritizes and supports building a stronger economy. As governor, I would bring to the job the unique experience of having grown a Vermont-based company that provided enterprise systems to commercial printers to make them more efficient and profitable.  In my decade of service in the House and Senate, I delivered brownfields legislation, tax exemptions on machinery and equipment, and—with Senator Hinda Miller—created the first standing committee in the Senate focused on economic development. As director of AmeriCorps*VISTA, I led a full reorganization of the program, which dramatically increased efficiency, impact, and private sector partnership. Today at Google, the team I lead clears the way for billions of dollars of infrastructure investment and has actually brought high speed internet to communities both urban and rural. 

I have three young children—Judson, Abe, and Cora.  At the end of the day, I’m running for governor because we need a Vermont where they can live, raise a family, and prosper.  For that to become a reality, we need an economy that works for all Vermonters and all of Vermont, including a thriving manufacturing sector. The next governor cannot be a caretaker, and must be ready and able to take strong steps to move our state forward. I look forward to working with all of you to build on the state that we love to create the Vermont of the future.