Major Investments Lead to Continuing Growth
By Clarence Fanto
Berkshire County is poised to emerge not only as a significant player in the global economy but as a powerful force in the state and the Northeast region. The county already is benefiting from a surge in major investments over the past 10 years by area companies, municipalities, educational services, the hospitality and tourism industries as well as medical care and social assistance. Projects already underway or announced for the near future promise a continued spurt forward as the economic recovery in the Berkshires continues its rapid acceleration of recent years. In the past two years alone, 700 new jobs have been created by 24 new business and expansions of existing businesses.
These findings, based on an extensive, unprecedented study conducted by the Berkshire Economic Development Corporation (BEDC) this past summer, point to a healthy job market which has already created the highest employment level ever recorded in the county — 72,500 positions as of this past July, with about 2,000 openings at any given time, half of them paying more than $30,000 a year. This means that for well-qualified, educated and trained job seekers, career prospects have never been brighter.
The arrival of SABIC Innovative Plastics (Saudi Arabian Basic Industries Corp.) following its $11.6 billion purchase of GE Plastics shapes up as a win-win for the region, with the prospect of up to 100 additional jobs, boosting employment at the Pittsfield campus by 20 to 25 percent. At the same time, steady progress is being made on implementing the major recommendations of the Berkshire Blueprint for economic development, unveiled last March.
The BEDC survey, which offers a snapshot of many but not all transactions since some remain private or otherwise undisclosed, shows that nearly $1.4 billion has been invested in capital improvement projects countywide in the past 10 years. The research, based on interviews with business leaders and municipal officials as well as published reports in The Eagle, is preliminary and is being continuously updated.
"Particularly over the past few years, the capital investment that's been made in this county has been astronomical," says Tyler Fairbank, president and CEO of the BEDC. "We're pacing this year to outdo last year, which was greater than the previous three years combined."
Projects included in the total of more than 400 capital investments tracked by the survey range from the largest single commitment — $410 million by Williams College in new buildings and campus improvements — to lower-profile yet still significant ventures involving existing business expansions as well as new arrivals.
In addition to the two cities and larger towns in the county, some smaller communities have also benefited from large-scale investments. In Hancock, for example, Jiminy Peak Resort has spent more than $18 million on improvements, while the Berkley Corp. and Cedant Corp. have spent a combined $28 million for condominium projects adjacent to Jiminy.
Despite this explosion in economic investment, some Berkshirites still seem mired in low morale stemming from earlier, often traumatic setbacks, starting with the dramatic downsizing of GE in the mid-'80s and the departure of other key manufacturers such as Sprague in North Adams.
"In my mind, the challenge that we have and that we're trying to solve is predominantly a confidence issue," Fairbank explains. What needs to be enhanced is "confidence that the people in this community have in the economic and career opportunities that exist here for their families and friends, confidence that business investments will grow and prosper, and therefore that investments will take place. If we had a sense of confidence...then the majority of the challenging problem would be solved.
"But the reality is that there are still those with a lack of confidence, those people who see GE Plastics now going...so they're negative about things and they still think that there are no opportunities for their kids when they get out of college. But we know the data is showing us the exact opposite. The data we're looking at now is so unbelievable. We're seeing job rates, employment rates as high as they've been since the GE heyday. We're seeing real wage rates, adjusted for current dollars, higher than they've never been."
Fairbank describes his organization's mission as a need to "shape the way the community perceives itself and the way the external world sees us to create that confidence." He insists there is no effort being made to "spin" or "distort" the facts.
"We're trying to use the data and the facts to say. 'Guys, here's the myth and here's the reality.' And the reality is something we should all be very excited about, because the trajectory we're on right now is certainly fantastic."
The BEDC study concluded in August examined recent and projected economic growth by community and by employment category. One recent example of Pittsfield's downtown resurgence is the recent $3.2 million investment by privatethat real-estate entrepreneur Adam Hersch (owner of the upscale Brix Wine Bar) to acquire the Central Block building, a linchpin of economic revitalization in the city. The North Street building was a decrepit wasteland turned over to the city for $1 by the J.J. Newberry Co. eight years ago. A public-private partnership, with major grants, tax incentives and low-interest bank loans yielded a $5.3 million renovation project that now houses three law firms, Berkshire Health Systems administrative offices, three restaurants, a clothing store as well as the Berkshire Chamber of Commerce and BEDC. The Berkshire Housing Development Corp., the lead investor in the project, has also spent $5 million on the Capital Square Apartments project on North Street.
Looking at the pace of investment over the past 10 years, relatively limited growth for the first five years has been followed by a 139 percent annual increase over the past three years, while the decade-long average increase has been 77 percent per year. The year 2003 was the only one to reflect a sharp decline, a delayed Berkshire County "lagging" impact following the national economic tailspin that was created by the terrorist attacks of Sept. 11, 2001.
In 2006, the amount of capital investment was a staggering 819 percent increase over the 1997 level. This year's investment is expected to top last year's record amount by 8 percent.
Nearly one-third of the county's total investment over the past 10 years has come in Williamstown, thanks to the massive $410 million spent by Williams College, but Pittsfield has accounted for about 23 percent of the countywide total.
Tracking various industries, educational services are at the top with $628 million, again skewed by the spending spree at Williams. The remaining $218 million comes from growth at MCLA, the recently renamed Bard College at Simon's Rock, Berkshire Community College and various public school departments and districts, notably those in Pittsfield, Great Barrington, Dalton, Lee, Richmond, Becket, Otis and Adams (the Berkshire Arts & Technology Charter School).
Fairbank disputes assertions by some in North County that the BEDC has been heavily focused on the Pittsfield metro area. "The effort, the blueprint, the work-force development, the transactions we pursue, all of that is intended to impact the entire community," he declares. "We've worked very hard to be inclusive of parts of the county. Because the largest population center right now and coincidentally the largest amount of investment that's been made has been in the greater Pittsfield area, there's a natural feeling by people not in that area that it's a Pittsfield-centric thing. It's not by design, focus or effort that we're trying to make it all about Pittsfield. The reality is that the population center is there, the commercial center is there, the investment center has been there, so more of the attention of the media and others seems to be paid to that area."
But, as an example of economic-development efforts elsewhere in the county, Fairbank points to the recent private purchase of the Delftree site in North Adams, which is being redeveloped into a mixed-use facility with retail shops and a brewery.
"We've got companies in Great Barrington and Lee that we've been helping to grow," he adds. "So the focus has not been in one area, the focus is regional. So we're trying to be very welcoming and open-armed, and over time, we will do a better job of doing that."
According to the BEDC study, the powerful hospitality and tourism sector of the Berkshire economy accounts for 20 percent of the total capital investments over the past 10 years, more than $260 million. Divided into two industries — Accommodations/Food Services and Arts/Entertainment/Recreation — this "cluster" is poised for a whopping $140 million of additional spending in the next three years alone.
Other major industries accounting for significant growth are health care/social assistance, manufacturing and utilities, in that order.
While 75 percent of the invest funding, the remaining $336 million was public (municipal, state and Federal).
The pace of economic expansion in the county, with its accompanying growth in employment, has been in overdrive since 2004, and the totals yielded by the BEDC's survey did not include some investments by international companies which are headquartered in the county but maintain confidentiality for competitive reasons.
"If the Berkshires want to be a world-class economic-development player," Fairbank admits, "there are some critical things we need to have in place, and we're working on them." The county's transportation network and infrastructure are part of the challenge, especially since the prospect of a high-speed, northsouth bypass remains only a pipe dream. "We need to continue to focus on trying to make sure the existing artery and network is as smooth and effective as we possibly can," he says.
The $35 million Pittsfield Municipal Airport expansion project, with funding from the Federal, state and municipal governments, is seen as crucial. Mayor James Ruberto has expressed the hope for a start to construction within a few months, with potential completion by the end of 2010.
"We have a community that is screaming for the white knight to come in, the company that's going to make it all better," Fairbank explains. "It's never going to happen. But we're going to get a number of smaller enterprises that are more eclectic in nature, global, regional or national in nature, and build on the strengths we have. If you look at SABIC, KB Toys, Petricca, some of these other players, their world is bigger. They can run their show from here but they need to have that transportation connectivity elsewhere.
"This is a very competitive, fierce game we play in terms of economic development. We've got to leverage our strengths and if we don't have that transportation connectivity to the outside world, all that is for naught. And that airport stands as a huge part of the overall economic development picture because it provides that connectivity. And it provides the access those enterprises need in order to continue to reside here, to employ here and to contribute to this community. So, everybody's quick to demonize the big player for not being here but then is quick to say, 'We don't need that airport, let's not put our dollars there, who needs that airport anyway?' But if you want that big guy, that employer here, you've got to have the tools to play, and that's a big part of it."
Also of paramount importance is the expansion of wireless broadband access to the entire county. Fairbank expresses the view that the $25 million earmarked in a bond bill for tackling the problem is an important step. Gov. Deval Patrick is a strong advocate of the proposal, which is awaiting approval in the state legislature.
Fairbank cites as an example of especially significant investments the long-term commitment made by SABIC in Pittsfield. "They've spent $11.6 billion on a business venture that they are betting the farm is going to yield results. They're going to be making investments, they're going to be growing. So, that's part of that trajectory. That should give people even more confidence" in the prospects for job growth and economic prosperity, Fairbank maintains.
He points out that the projected increase in employment at SABIC from the current 425 to 500-plus in the next year is based upon current models. "With a company like SABIC, the opportunities are endless," he points out. "There are additional business lines, they're going to want to have a U.S. presence in a number of other ways, not just Innovative Plastics. It could be a very, very exciting opportunity for the Berkshires in the next few years."
SABIC's decision to educate and train employees and customers in Pittsfield — something GE Plastics handled in New York — will be a "big-time" injection into the local economy — not only for the hospitality industry (since the visitors will need long-term accomodations and will be dining out and shopping in the community), but also for professional services, IT, support services — a "ripple effect," as Fairbank puts it.
Acknowledging recent setbacks and employment losses in the county's paper industry — with the possibility of more bad news in the next few months — Fairbank emphasizes that "every region across the country has businesses that go through their ups and downs. Some grow, expand and prosper; some shrink and reduce. Some go out of business. I don't mean to diminish the traumatic impact on families and communities when a business goes out."
But he insists that the closings of Rising Mill in Housatonic and Laurel Mill in Lee — putting at least 200 people out of work — as well as the K-B Toys "shrink to grow" strategy should not be viewed as "barometers of the overall economy, which people often do when they go by headlines in the newspaper. They automatically assume that this is the totality of the regional economy."
Of the 24 projects the BEDC has assisted in the past two years, over 700 new jobs have been created, Fairbank reports — half of them in technology or manufacturing. Half of the new jobs are in new businesses, while the others are in existing, growing or expanding firms. Examples listed by Fairbank include Apex and Hi- Tech Mold and Tool in the plastics industry, the incoming Ice River Springs water-bottling business, and — looking to the future — technology and engineering positions created by projects such as the proposed Berkshire Biodiesel $75 million production plant and Berkshire Biomass, a potential Pittsfield facility that would be a $150 million investment by Tamarack Energy.
Again emphasizing that he doesn't intend to be a "perpetual optimist," Fairbank asserts that "we need to face the brutal facts that these unfortunate life-cycle events for some of these companies are going to happen. In some industries like paper, it's happening more and more. Electricity costs are really the driving force. And that just puts the focus on our economic-development activities in a little different place, because we have to continue to grow the community."
Taking the long view, Fairbank sees on the distant horizon "what could be the biggest boon of all" for Berkshire County. Gazing westward from his office window toward New York state, he talks of a "meteor that could hit, right over the hill from us here that could send shock waves over here that could be bigger than anything else we're working on."
The potential meteor is the biggest thing yet to hit "Tech Valley" in upstate New York — a plan by Advanced Micro Devices Inc. (AMD) to build a $3.2 billion semiconductor fabrication plan in Malta, near Saratoga Springs, about 40 air miles from Pittsfield. Although the company has not yet given the final green light to the massive project, a decision is expected by the end of the year on whether the company will break ground in the spring or delay the groundbreaking. The state has offered $1.2 billion in tax and other incentives, but that package expires in July 2009. If all goes according to plan, the 1.2 million square-foot plant at the Luther Forest Technology Campus would employ 1,200 workers and would begin production by 2011 or 2012.
Assuming the plant is built, Fairbank foresees "an absolutely enormous potential" for the Berkshires. He reports that the BEDC is working closely with the Center for Economic Growth in Albany and is hoping that the Massachusetts Executive Office of Economic Development and Housing may fund a study on how the project would impact this county.
The best-case scenario would indicate a "huge opportunity" for the Berkshire business community, Fairbank predicts, expressing a note of caution that he would not want to see the Berkshires become a "bedroom community." Instead, he is seeking positive ripple effects from the largest single economic-development project proposed for nearby New York state in recent memory.
Looking to the more immediate future, with announced investments of about $250 million for at least a dozen local projects in the pipeline between now and 2010, the potential for a significantly heightened economic profile for Berkshire County seems enormous. The announced projects include the Catamount Village condo development in Egremont, Silverleaf Resorts' Snowy Owl condo village on Brodie Mountain in New Ashford, the Hoosac Wind Project in the town of Florida, the renovation of the Mohawk Theatre in North Adams, two Adams-Cheshire Regional School District rebuilds — the Adams Memorial Middle School and the Cheshire Elementary School, and the Big Y expansion in Great Barrington, and at least five others.
The Berkshire Biodiesel and Berkshire Biomass projects, if they come to fruition, would add another $225 million in the years ahead.
A county only recently mired in malaise, self-doubt and lack of confidence following the withdrawals of GE, Sprague and other manufacturing heavy-hitters has plenty of solid evidence to help face the future with optimism and with a well-founded belief in steady growth and increasing opportunity for well-qualified residents and newcomers seeking to enter or soar upward in the expanding job market.
"What's so compelling right now is the trajectory of investment," declares Fairbank, acknowledging that "the '90s were really just a horrible state of economic affairs and then we had kind of a move-along and then 2001 bumped things down a little bit. We are seeing a level of capital investment in this county and a level of job growth and real wage increase right now that are so positive."
