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Report warns of grim consequences to region’s economy

Four economic development organizations from three states release joint post-VY report

BRATTLEBORO—The Donahue Institute at the University of Massachusetts at Amherst, in conjunction with four regional economic development organizations, dropped a large lump of coal on the doorstep of the tri-county area on Christmas Eve.

The coal arrived in the form a report outlining the economic ramifications of losing above-average-wage jobs with the closure of Windham County’s Vermont Yankee nuclear power plant in Vernon.

VY provides approximately 5 percent of the jobs and wages in the county, according to Chris Campany, executive director of the Windham Regional Commission.

After 42 years and with more than a year of warning, the plant stopped producing electricity on Dec. 29.

The report studied the post-VY employment picture in Windham, Cheshire, and Franklin counties.

The study found the three counties would suffer economic losses with the closing of one of the region’s economic engines that at its peak employed more than 600 people and provided an average wage of $105,000.

This was not news.

Many discussions and reports written in recent years have hammered on the various and deep levels of pain the tri-county region will experience in the aftermath of VY closing. The plant provided 0.7 percent of the region’s employment but 1.8 percent of its wages, according to the report.

The report estimated the total 2014 payroll of VY at approximately $58 million.

The Brattleboro Development Credit Corporation and Windham Regional Commission, Franklin Regional Council of Governments in Massachusetts, and the Southwest Region Planning Commission in New Hampshire all commissioned the report as part of a joint effort to mitigate the economic ripple effect of VY’s closure.

“We weren’t trying to prove anything,” said Campany of the study. “We were trying to develop baseline information of what the impacts are likely to be.”

Previous economic studies on Windham County have pointed to sluggish growth, a declining population, and depressed wage growth, said Campany, who noted that the loss of the VY wages is expected to “exacerbate the stagnant economic situation we already have” in the county.

Most of the VY employees tended to spend their high wages locally, he said. This spending helped contribute to more than 1,000 jobs in the county.

Campany characterized many of these jobs as low-wage service jobs often held by people who are already struggling.

The report’s news flash? That the economic decline from the loss of the high-wage jobs would happen quickly, within six to seven years.

Campany said once Entergy, the Louisiana-based owner of Vermont Yankee, released its plans for stepping down employment at the plant, a timeline for the economic pressures could be established.

While VY employees earn an average yearly wage of $105,000, wages for much of the tri-county area average around $40,000, the report found.

“The residency of Vermont Yankee employees is an important piece of this analysis as their buying power is significantly greater than average for the region,” stated the report. “Their spending, whether on homes, restaurants, groceries, or entertainment, reverberates through the Tri-County Region, providing critical support to the regional economy.”

Writers of the Donahue Institute report also estimated that the plant indirectly contributes 1,220 jobs in the region and helped generate an estimated $500 million in associated economic output last year.

In its final days of operation, the plant employed more than 500 people.

But by 2021, however, the number of workers could drop as low as 24.

Six years from now, the indirect jobs that have sprouted from VY employees spending could drop from 1,220 to 35, and the estimated $500 million that was injected into the local economy could dwindle to $5,466,111.

According to the report, VY will continue to employ some of its veteran high-wage employees through the early phases of decommissioning. The payroll through to at least 2020 may remain as high as $13.5 million.

When the spent fuel has moved to dry cask storage by 2021, states the report, comparatively lower-wage jobs will take the place of the highly-trained personnel.

In 2014, 481 of the plant’s 550 employees lived in the tri-county region. Most of VY’s employees lived in Windham County (204), followed by Cheshire County (176), then Franklin County (101).

The loss of a large employer in the tri-county region is worrisome for an area with a narrow job market. According to the report, even before Entergy announced it would close VY, the number of jobs in the three counties declined 3.9 percent.

“The Tri-County Region’s recent jobs performance shows that it is underperforming,” stated the report. “The region did not participate fully in the economic expansion of the 2000s and got hit harder by the 2008-2009 recession.”

“As the nation tentatively enters a new period of economic expansion, the Tri-County Region is not recovering nearly as robustly as the United States, Massachusetts, New Hampshire, and Vermont, overall,” said the report.

Campany said that the four economic development organizations have strategies to counteract the economic changes post-VY. What they don’t have enough of are the resources to implement countermeasures.

Some of the strategies are contained in the comprehensive economic development strategies document (CEDS) produced by SeVEDS (Southeastern Vermont Economic Development Strategies).

Other opportunities Campany pointed to included efforts like expanding the area’s green-building sector.

He said that while the VY site might remain inaccessible for decades during decommissioning or while spent nuclear fuel is stored on site, there is still a treasure trove of human capital in the tri-county region beyond the VY site.

Agencies within the federal government have contacted the four economic development organizations to offer assistance, said Campany, noting that this assistance usually comes with a requirement of matching funds from the local level.

“We need resources we can control here so we can implement these strategies,” he said.

Despite the dour labor market news, Campany sees a silver lining in the Donahue Institute report.

“Sometimes it’s good to know what it’s going to look like,” he said of the report’s results. “Even if we don’t yet have all the details of how we’ll solve the issues.”

He also looks forward to long-term collaborations with peers in New Hampshire and Massachusetts. He described the closing of VY as a catalyst for other joint projects.

“We have a shared economic interest because we share people back and forth [across the state borders] every day,” said Campany.

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Originally published in The Commons issue #287 (Wednesday, January 7, 2015). This story appeared on page A3.

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