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Editorial

A year ago this time, we were writing how the pieces would soon start to fall in place for Springfield and this region as a whole and how there would be the start of a snow-ball effect regarding the city and heightened interest as it as a place to live, work, and invest in.

Well, 12 months later, the snowball is starting to take on some size and move at a pretty good clip, making the outlook for 2019 considerable bright locally, even as the picture nationally is becoming increasingly clouded by question marks (see related stories beginning on page 16).

In a way, there are two stories when it comes to the economy: nationally, there is considerable apprehension regarding a slowdown — what’s happening in Wall Street is a perfect example — even though most economic indicators, everything from unemployment rates to demand loans, remain solid.

It will be up the Fed, as well as investors and other constituencies, to sort things out at an intriguing time, when there is growth and doubt — both in very large quantities.

Meanwhile, locally, the region, and especially Springfield, seem to be on the cusp of something momentous, maybe even historic.

Those quoted in the stories comprising the Economic Outlook 2019 section speak of not merely optimism (there’s been lots of that over the years), but interest and activity. Tourism officials talk of rising occupancy rates and hotel-room rates and interest in developing new hotels. Meanwhile, commercial real-estate brokers and managers talk of interest in this market that they haven’t seen in decades — if ever.

Investors are looking at sites for everything from housing developments to cannabis dispensaries and everything I between.

It’s not as simple as ‘if you build it, they will come,’ but in many ways it is.

And what we’re building is a vibrant, livable, accessible city (and region) that people and businesses want to be part of. We have a long, long way to go, but more of those aforementioned pieces are falling into place, and more should come in the next few years.

MGM Springfield was certainly a big piece. It brought jobs, foot traffic, and interest in Springfield from people who might have had to look at a map or rely on the GPS system in the car to find it.

But there are many other pieces as well: Union Station and enhanced rail service are making it easier to get to the city; renovation of Stearns Square, Riverfront Park, and other facilities will make Springfield more livable; businesses and institutions moving into the downtown and investing there are prompting others to consider following suit; and an improved police presence is contributing to less apprehension about public safety — not to mention the many colleges now populating downtown, the ongoing remaking of Tower Square (White Lion Brewery will soon be moving in), the cannabis industry, and more.

When things like this start to happen, a city becomes more saleable as a place to live, and we’re seeing considerable interest in development of market-rate housing in and around downtown.

And when more people start to make the city their home address, more businesses — more restaurants, more clubs, some cannabis dispensaries, and more service-related ventures — will follow.

And then more people will want to relocate here, and more businesses will follow. That’s the theory, and in practice — and in some cities, like Cambridge, Lowell, and others — it works.

Will it work here? Perhaps. The signs are there. The pieces are falling into place, and the snowball is starting to take on size.

If 2018 was a year to build some momentum, then 2019 will be a year to capitalize on it. Big time.

Autos Sections

Driving Forces

The auto market has been in high gear for the past several years, and area dealers expect that pattern to continue, and for several reasons. These range from a solid economy and abundant consumer confidence to quality vehicles and lingering pent-up demand.

‘Flat.’

In most discussions involving business, that term has a somewhat negative connotation to it. And in many ceases, we can leave out the ‘somewhat.’

But in the case of the auto-sales industry and local dealerships … ‘flat’ has a pretty good sound to it these days. In fact, just about everyone who would use images of George Washington and Abraham Lincoln in their promotions this week, or tie red, white, and blue balloons to the cars in their showroom come July, would be pretty happy with ‘flat.’

Just as they were last year.

Indeed, since the very dark days during and just after the Great Recession, car sales have rebounded nicely, with the high-water mark, if you will, coming in the 2016 sales year, with nearly 17.5 million light vehicles (cars, SUVs, and pickup trucks) sold nationwide.

Last year was off that pace, but only slightly, with more than 17.1 million light vehicles sold. And the projections for 2018 are for pretty much the same, with maybe another slight decrease of 1% or less.

But, again, 1% off what? Even in the super-solid years leading up to the economic nosedive a decade ago (years 2001 to 2006), total sales were under or just slightly above 17 million.

As we said, ‘flat’ has rarely looked so good.

“Yes, last year was off what it was in 2016, but you’re coming off historic highs — and the drop was minuscule,” said Jeb Balise, CEO of Balise Motor Sales, adding (after checking his phone to make sure he had the numbers right) that sales this January were up 1% over a year ago, this despite some bitterly cold days, a few snow days for many adults, and even that dreaded bomb cyclone thing.

Jeb Balise says projections are for another flat year for auto dealers. But ‘flat’ is more than acceptable given the high volume of sales in recent years.

Jeb Balise says projections are for another flat year for auto dealers. But ‘flat’ is more than acceptable given the high volume of sales in recent years.

And the various forecasts he’s seen project sales of between 16.7 million and 16.9 million light vehicles, which would be another outstanding year.

Other dealers we spoke were equally upbeat and happy with ‘flat’ or something approximating it, and said a host of factors are contributing to solid sales and optimism that this trend will continue. A healthy stock market (until quite recently), a sound economy, still-low interest rates (albeit amid concerns that they will rise), low unemployment, large amounts of consumer confidence, well-made products, lots of inventory, attractive incentives from the manufacturers, some lingering pent-up demand, and the basics of supply and demand are all on that list.

“It’s just a good time to be buying a car,” said Don Pion, president of the Chicopee-based dealership started by his father, Bob Pion Buick GMC. “The product is good — the best I’ve seen since I’ve been in the business. They’re good products, they get good fuel economy, maintenance is pretty inexpensive on these new cars today, the manufacturers have been aggressive with their offers, there are good lease offers … it’s all good.”

Michelle Wirth, co-owner of Mercedes-Benz of Springfield, which opened its doors last fall, concurred.

“We have a very optimistic outlook on 2018,” she said. “People are feeling good about the economic outlook, and that allows them the mindset to spend money a little more than they would have in years past.”

Meanwhile, solid sales are not the only trend within the industry on track to continue. Others include the soaring popularity of SUVs and crossovers — Wirth noted that, for the first time last year, Mercedes reported more sales of those types of vehicles than cars — and an ongoing evolution in the role of the dealership.

Indeed, where once that was a place to check out the new models, see what they cost, and explore available options, consumers can now do a lot of that, if not all of that, on the Internet. By the time they come to the dealership, they know what they want, and they know what they expect to pay. Thus, the role for those at that facility is to make the rest of the process as quick and painless as possible.

In response, TommyCar Auto Group, comprised of three dealerships selling Nissan, Hyundai, and Volkswagen, has come up with a new product called Click, Drive, Buy, whereby the consumer can do pretty much the entire buying or leasing process online, and also get a car delivered to their home for a test drive.

“They can fill out a credit application, do the pricing up front, they can go through all the financing options and rebate options and see what they qualify for, all without coming to the dealership,” said Carla Cozenzi, president of the group. “They can even research all of the after-market products like warranties and gap insurance, all of that through our website.

“We’ve evolved because we had to,” she went on, speaking for everyone in the industry. “Customers can literally do it all from their iPhone.”

Fast Times

As he talked about the current market and the forces driving it, Pion referenced one recent vehicle traded in to get some of his points across.

“It had 250,000 miles on it, but it looked like it only had about 50,000 miles on the odometer,” he told BusinessWest. “It was in great shape; you would never know it had a quarter-million miles on it.”

And this was certainly not an isolated incident, he went on, adding that these high-mileage vehicles he’s seeing on a regular basis say a lot about the market today.

They speak to the quality of the cars on the road today and their durability — “you watch the cars drive by every day, and you see a lot of older models,” said Pion — but also to the fact that, eventually, people need, or want, to turn them in.

And this lingering pent-up demand for new models — although there is much less of it than was a few years ago — is just one of many reasons why Pion’s dealership had a 2017 to remember.

Don Pion, seen here with his son, Rob, general manager of the dealership, says the soaring popularity of SUVs and crossovers has helped fuel solid sales for the industry.

Don Pion, seen here with his son, Rob, general manager of the dealership, says the soaring popularity of SUVs and crossovers has helped fuel solid sales for the industry.

Indeed, Buick sales were up 40% over 2016, he said, while GMC sales were up 30%, and used-car sales were up 20%.

Pion attributed these strong numbers to that combination of factors he described above. And while he’s not expecting a repeat, exactly, he’s projecting another very solid year.

“No one’s looking to set a record,” he told BusinessWest. “But I don’t think we’ll see any declines, only more-modest growth, perhaps.”

Consenzi agreed, and told BusinessWest that 2017 was a solid year for all three stores within the group, especially Nissan, and she is expecting improvement on those numbers across the broad in 2018.

Balise was also optimistic, and said that the pent-up demand from several years ago has been replaced by a state of general “equilibrium,” as he called it. Surveying the market now, he sees still-ample demand and considerable inventory, an intriguing mix.

“Business is good, and plenty of cars are being sold,” he explained, “but it’s a little more competitive amongst dealers, which is always good for the consumer.”

As for Wirth, she doesn’t have any numbers from last year to use as the basis for projections, or many of them, anyway.

As noted, the dealership opened its doors in September, and that last quarter or so of 2017 was essentially a time for reintroducing the brand to this region after nearly a decade’s absence, she said, adding that this process is ongoing and has many nuances to it.

Indeed, reminding people that they no longer have to drive to Hartford or Route 128 to buy a Mercedes or get one serviced is just part of the equation, she went on.

Another big part is introducing the region to the people behind that dealership with the huge Mercedes sign in front of it — and they’ve done so in ways ranging from a huge grand opening to a presence on the ice at the MassMutual Center for Thunderbirds games, to various forms of support for several area nonprofits.

Still another is educating people about the brand, how it has evolved in some ways — all those SUVs, for example — and making it clear that, in many cases, and despite popular perception, it is not beyond their reach.

“The brand stands as a symbol of success and the ultimate in luxury, and it’s just a big brand to wear,” Wirth explained. “Mercedes is not just for folks who have made it or are about to retire and end their career; it’s very much for the person who’s still climbing.”

Elaborating, she said the dealership, and Mercedes-Benz in general, are trying to attract people not of a certain age group or income bracket, but people with a certain mindset.

“They’re young at heart, they’re entrepreneurial, they enjoy craftsmanship and brands that stand for something,” said Wirth as she explained this mindset. “As for the brand, they look at it like, ‘this is this best, everyone deserves the best, so reward yourself.’”

Into a Higher Gear

Getting back to the outlook for 2018 and the factors driving those optimistic projections, one of the influencing forces is the quality of the vehicles now parked at dealerships across the region. Indeed, while those cars and SUVs with 100,000 or 200,000 or even 300,000 miles on them are still getting the job done, the products rolling off the assembly line are appealing — enough to prompt some trade-ins.

Michelle Wirth says the role of the dealership continues to evolve, and the focus now is on transparency and making the consumer’s experience as easy and painless as possible.

Michelle Wirth says the role of the dealership continues to evolve, and the focus now is on transparency and making the consumer’s experience as easy and painless as possible.

Especially the crossovers and SUVs. As noted earlier, even brands that have built their heritage on sedans, like Mercedes, are selling more SUVs than cars these days. Buick, known for most of its existence for its sedans, now has a lineup flush with SUVs and crossovers, said Pion, and there’s only one true sedan left — the LaCrosse.

The Balise company counts nearly a dozen makes in its portfolio, including Ford, Chevrolet, Toyota, Honda, Nissan, Lexus, Mazda, Subaru, Kia, and more, and for nearly all them, SUV and crossover sales now exceed those of sedans, said Jeb Balise.

And there are many reasons for this, everything from relatively low gas prices to the additional room in the SUVs and crossovers; from the added height of such vehicles, and the fact that they’re somewhat easier to get in and out of, to their ability to take someone virtually anywhere they want to go.

“People are more active,” said Wirth. “They want to go more places and do more things, and those vehicles present themselves as being more versatile.”

Cosenzi agreed, and noted that most manufacturers, including those she represents, now have SUVs and crossovers in small, medium, large, and even micro sizes, and they are attracting consumers in all age groups. And for most people trading in a car, she said, the SUV they’re getting into will offer comparable mileage.

Even Volkswagen, which has traditionally lagged well behind in SUV and crossover sales, is making great strides with additions like the Tiguan, a smaller SUV, and the Atlas, a much larger model.

“Volkswagen always lacked in that category, but now it’s catching up,” she said. “We’re seeing it across all brands — the demand is really healthy in the SUV/crossover market.”

All that said, compact and mid-sized cars are still a huge segment of the market, said Balise, using one of the more iconic nameplates, the Toyota Camry, and some numbers off the top of his head to get his point across.

“Let’s just say Camry was selling 400,000 units and now they’re selling 315,000; that’s still a lot of momentum for that segment,” he said. “While the phenomenon is happening and it’s material — it impacts business, and we have to figure out what to do — it’s not a total-sum game. Sometimes you look at these reports and it looks like you’re never going to sell a car again, and it’s all going to be trucks — it’s not that dramatic.”

But it is still a sizable movement within the industry, as is the overall ‘dealer experience’ and the changes that have come to it, and the ever-greater emphasis on transparency and all that phrase implies.

As noted earlier, much goes into this equation, but it comes down to making life as easy as possible for the consumer during and after the buying or leasing process.

Putting it another way, Wirth said, while no one realistically expects to enjoy the car-buying process, dealers, and especially hers, are succeeding in making it far less painful that it was years ago.

How? By being up front and transparent with pricing, putting information in consumers’ hands, and adding convenience when possible, such us applying for financing online.

Balise agreed. “When it comes to the customer, their time is extremely important to them, and they don’t want to waste it,” he explained. “So when they come in, you need to be on your game and give them the information in an easy, transparent way; what you’re really doing is being as helpful as you can to help them make a decision.”

Pion echoed those thoughts, noting that a good number of people who come into a dealership ready to buy want to drive off in their new vehicle the next day — or even later that day — and dealers have to respond to such whims with inventory and an ability to get such deals done.

But these efforts to enhance the customer experience don’t end with the sale, as those in this industry like to say. Indeed, service is a huge part of the equation, especially with cars remaining on the road as long as they are, and emphasis on this part of the experience manifests itself in everything from spacious, well-appointed waiting areas to car washes built into the dealerships.

At the Mercedes dealership, said Wirth, the technician will create a video of the vehicle in for service and text it to the customer so he or she can see what the issue is.

“We’re in it for the long haul, and it’s more valuable to us and more important to us that people feel taken care of and understood,” she went on. “It’s more about how we meet people’s needs at that moment in time and have all the information at that moment.”

Full Throttle

The dealers we spoke with said those Presidents Day sales that once dominated the airwaves and turned Washington and Lincoln into pitch-people are still a part of the landscape, just not on the same scale as years ago.

Those sales were needed to propel the industry out of winter doldrums and create a bridge to spring, said Pion and Balise, both industry veterans. Today, car selling is different, and there is more of a even flow of transactions throughout the year — although a boost in February is always welcome.

That’s just part of a changing landscape in this business, where ‘transparency’ is now the watchword, and where ‘flat’ sounds really good.

George O’Brien can be reached at [email protected]

Cover Story Economic Outlook Sections

Experts Don’t Foresee Any Rocking of the Economic Boat

economicoutlookartMore of the same. That’s what the experts are predicting for this region, and the country as a whole, when it comes to the economy. And by more of the same, they mean growth that is steady if unspectacular — even with tax reform — and few if any signs of what could amount to real trouble. “Another boring year,” was how one economist put it. But for many businesses, boring is more than acceptable.

As a student — and a professor — of economics, Bob Nakosteen fully understands that the region and the nation as a whole are, as they say, due for a recession.

Maybe even overdue.

Indeed, eight and a half years is a long time to be in an expansion, if history and especially 20th-century history is any guide, and that’s about the length of the run the country has been on, said Nakosteen, a long-time educator at UMass Amherst who pegged the summer of 2009 as when the Great Recession ended and the upswing — as unspectacular as it has been, for the most part, in this region — began.

But he quickly noted that there’s no actual relationship between how long a country has been in an expansion and when it’s due for a recession. Time isn’t officially one of the factors that determine such things, he noted, adding that none of the issues and indicators that do are — at this moment, at least — pointing toward recession.

Bob Nakosteen

Bob Nakosteen

The issues in the state economy, especially in Western Massachusetts, are not macro-economic nearly as much as they are structurally micro-economic; there are individual sectors that are really struggling.”

“The expansion is old, certainly, but there’s nothing on the horizon to interrupt the expansion,” he told BusinessWest, adding quickly that a host of factors will shape what course a continued expansion takes. “The issues in the state economy, especially in Western Massachusetts, are not macro-economic nearly as much as they are structurally micro-economic; there are individual sectors that are really struggling.”

Karl Petrick, an economics professor at Western New England University, agreed, and summoned another word for what he’s projecting for at least one more year: boring.

Karl Petrick

Karl Petrick

Trickle-down doesn’t really come to fruition the way people say it will. It’s been promised for decades and decades, but it’s never really happened.”

“Unless you were on Twitter, last year was pretty boring,” he said, tongue firmly planted in cheek while focusing his remarks on what was happening in this region economically. And that was essentially the same thing that’s been happening for the past several years — steady if unspectacular growth that amounts to a few percentage points on average and not the kind of boom times that traditionally follow a recession, especially like the one of almost a decade ago now.

“Even with the tax break, the projections are for the U.S. economy to grow at 2.5% in 2018, and in 2019, 2.1%,” he said. “And if we did see a big increase in growth, it’s very likely that that the Fed will raise interest rates to slow down inflation. The forecast is for another boring year — I hope.”

Indeed, for many in business, boring translates into a decent year, and that’s what Tom Senecal, president of Holyoke-based PeoplesBank, said many of his clients — commercial and residential alike — experienced.

He told BusinessWest that the residential real-estate market is enjoying a surge fueled by low inventories, and that many individual sectors are experiencing steady growth. And he expects tax reform to lift most boats still higher.

Tom Senecal

Tom Senecal

Inventory is extremely low in many area communities, and this is having a big impact on prices. We’re going back to seeing sale prices in excess of asking prices, and that hasn’t happened since the late ’80s and early ’90s.”

“With corporate tax rates projected to decrease from 35% to 20%, that will have a significant impact on most businesses,” he went on. “I expect that to be a determining factor in what our local economy will be like in 2018.”

There are other determining factors, obviously, and some areas of concern, both nationally and locally, including persistently stagnant wages.

Despite steady growth in the economy and soaring corporate profits that have fueled a nearly 20% rise on Wall Street this year, wages have remained flat, said Petrick. And he doesn’t believe — despite what leading supporters say — that tax reform will change that equation. And if wages remain stagnant, that might slow the economy down.

“Trickle-down doesn’t really come to fruition the way people say it will,” he explained. “It’s been promised for decades and decades, but it’s never really happened.”

Meanwhile, Nakosteen said the precipitous decline of traditional retail could pose some problems regionally (more on that later), as could a host of other factors ranging from escalating student debt to tighter immigration laws that could keep some foreign students from landing on area college campuses.

But overall, these concerns are not expected to significantly alter the picture or impact those projections for more of what the region has seen over the past several years.

Onward and Upward

“Stable.”

That’s the word Senecal summoned early and often as he talked about the local economy, and it’s another word business owners always like to hear.

He said the region’s economy has historically been fueled by education and healthcare (‘eds and meds’), and that trend continues. And those sectors are, well, stable, to say the least.

“If you think of the spin-off economies in the Western Mass. market, we clearly benefit from those sorts of industries [healthcare and education] that are not recession-proof, but they certainly come through recessionary times much more stable than the rest of the economy,” he said. “And I see this in the numbers from our residential loans and our commercial loans. The stability and continued growth has been there, and we expect it to continue throughout next year.”

Beyond eds and meds, Senecal noted, a number of sectors are doing “pretty well,” as he put it. These include ‘green’ energy businesses, commercial construction (although moreso in the eastern part of the state than this region) and the residential real-estate market, which, as noted earlier, has picked up dramatically over the past few years.

“Inventory is extremely low in many area communities, and this is having a big impact on prices,” he explained. “We’re going back to seeing sale prices in excess of asking prices, and that hasn’t happened since the late ’80s and early ’90s; it’s clearly a seller’s market right now.”

Surveying the scene locally as well as nationally, those we spoke with said there is no indication of anything that will disrupt this stability to any significant degree.

But that doesn’t mean there aren’t some question marks concerning the year ahead. And perhaps the biggest concerns tax reform and what it will mean.

Petrick and Nakosteen said such reforms — usually measures to be administered during a recession, not an expansion — can’t (or shouldn’t) be expected to trigger the wage hikes and subsequent consumer spending predicted by supporters of the legislation, because … well, because history shows this isn’t what happens, they told BusinessWest.

“Tax cuts really have little effect,” said Nakosteen, “especially when the economy is not in recession and is near full employment.”

Also, early and unofficial polling of business leaders indicates that wage increases for their employees are not in their plans.

“Many big corporations have already said that, whatever tax breaks they get, they’ll use them to buy back stock,” Petrick noted. “That will do wonders for the stock market, but there’s no indication they’ll use that tax break to raise wages.”

But Senecal projected that tax reform might, in fact, provide a real boost for the economy in the form of investments made by business owners.

“Tax reform has a significant impact on corporate spending,” he opined. “I think that, right now, a lot of businesses are waiting and seeing on tax reform to determine how aggressive or reserved businesses are going to be come 2018.”

Economic Indicators

As for other factors that might impact the year ahead, to one degree or another, Petrick put wages, and the stagnancy of same, at the top of that list.

“We see growth, but the foundation for continued growth continues to be a little bit shaky, in terms of wages at the national level and the state level,” he told BusinessWest. “They’re just not growing, even as unemployment comes down.

“And that is a bit of conundrum for us at the state level and the federal level, because that puts more pressure of households, especially with uncertainty with what’s going to happen with the individual mandate and how that might impact insurance rates,” he added. “It also impacts state tax revenue, because if wages don’t go up, the state doesn’t collect more.”

There are many reasons why wages are stagnant, he went on, listing everything from soaring health-insurance costs for employers to the decline of labor unions, to the retirement of Baby Boomers and their replacement by younger workers earning lower salaries. But the bottom line is that, generally, flat wages are not good for the economy.

Meanwhile, Nakosteen said the continued decline of traditional retail would further change the local landscape, and it might impact the economy in some ways.

Giant retailers like Sears, Toys R Us, Kmart, and others are closing stores in huge volumes, leaving malls with large boxes to fill (or not, as the case may be) and worries about their very existence. Meanwhile, many smaller retailers are disappearing from the landscape, for reasons ranging from the intrusion of online shopping to a lack of a succession plan.

All this is creating a number of empty storefronts and a lot of commercial real estate for sale and lease, said Nakosteen, adding that the problem is impacting even the most vibrant of downtowns, including Northampton’s, where tenants are asking, ‘why are lease rates so high if so many storefronts are empty?’

“And that’s a very good question,” he said, adding that the higher rates will impact existing retailers and perhaps dissuade others from coming downtown.

But it’s an issue in nearly every area community.

“There are so many empty storefronts,” Nakosteen went on, “and the retail sector is so important to so many downtown areas.”

Meanwhile, workforce issues might also have an impact on the course and strength of the ongoing expansion, he noted, adding that a lack of qualified workers within some sectors might stifle growth.

“The state, as a whole, has issues with the labor force not growing fast enough to accommodate the economy,” he explained. “And Western Mass. is even worse. We have very slow labor growth here; you can’t grow the economy faster than you can hire people to fill the jobs.”

Interest rates could play a role as well, the experts noted, adding that, if the economy does start heating up, the Fed will likely raise rates to keep it from overheating and sending inflation higher.

“Prime rate effects people’s home-equity loans, and it effects commercial borrowers,” Senecal explained. “And if the Fed increases rates two or three times, and that’s clearly their intent, that could have an impact on spending.”

Bottom Line

‘Stable. ‘Boring.’ ‘Steady.’ Those aren’t exactly headline-generating adjectives when we’re talking about the economy and where it might head in the months to come.

But they represent reality, and for many in this region — which, as has been noted countless times in the past, doesn’t enjoy stunning highs and crippling lows like other regions — those words are welcome, and much better than the alternative.

And if tax reform works, as Senecal and others believe it might, the region just might wind up doing better than ‘more of the same.’

 

George O’Brien can be reached at [email protected]

Economic Outlook Sections

On the Bright Side

By Richard Sullivan

Richard Sullivan

Richard Sullivan

The state of the region’s economy is strong, and the economic outlook is bright. That’s a simple statement, but let’s look at the facts that support that optimism.

We all have read of the important investments that MGM and CRRC, the Chinese rail-car manufacturer, are making in Springfield. Less-reported is the some $5.2 billion of economic-development projects that have recently occurred or are currently underway in our region.

In a 2016 study, the Economic Development Council of Western Mass. (EDC) catalogued the growth in each community — from housing developments to manufacturing companies expanding and relocating to the area; from transportation investments to growth in our public and private education systems. That study shows strong and important regional investments, and this trend is continuing.

MGM and CRRC are certainly important regional economic-development projects for the jobs they are creating, the taxes they will pay, and the many public benefits they are required to provide through their host-community agreements. However, the biggest economic impact the projects will have is when they contract with local businesses as part of their operational and supply chains. MGM specifically is using best efforts to annually contract locally for $50 million in goods and services. These dollars will stay local, provide additional economic opportunities, and create more jobs in companies that are part of the fabric of our communities, hiring our neighbors, paying local taxes, and supporting our local charities. It is an opportunity we are capitalizing on, but one that we can’t lose sight of.

Another bright spot within the local economy is tourism. You may think Boston, San Francisco, or New York, but maybe not Western Mass., when it comes to this important sector. However, tourism is the third-largest industry in the region. Approximately 3 million visitors come to the area each year, spending $750 million, producing an estimated $17 million in state and local taxes, and supporting 5000 jobs.

Mary Kay Wydra, president of the Greater Springfield Convention & Visitors Bureau, is bullish on the growth of tourism in Western Mass., with the addition of MGM, the Dr. Seuss Museum, a soon-to-be-refurbished Basketball Hall of Fame, continued investment at Yankee Candle and Six Flags, and more. She is confident that annual visitorship will grow. Tourism is a vital part of our economy and will become even more important beginning in 2018.

Still another source of optimism and good news is the growing amount of entrepreneurial energy in the region.

Indeed, at the recent “State of Entrepreneurship in the Valley,” hosted by Steve Davis and the EDC entrepreneurship committee, the focus was on the growth of a relatively new sector for the region — innovation, startups, and entrepreneurship. In 2015 and 2016 alone, more than 9,000 people attended a Valley Venture Mentors (VVM) event; there are currently 613 part-time and 227 full-time jobs in the startup ecosystem, and just under $27 million of revenue and investment was created in the region. If all the startups were under one roof, they would represent the 11th-largest company in Springfield.

The entrepreneurship ecosystem is growing up and down the Valley. VVM works closely with initiatives in Franklin County and SPARK in Holyoke; our local colleges and universities have all carved out leadership positions; Greentown Labs, based in Somerville, Mass., has opened a manufacturing office at the Scibelli Enterprise Center; and the Grinspoon Entrepreneurship Initiative is a national leader in elevating the importance of entrepreneurship and recognizing entrepreneurial excellence among college students. A new group, Women Innovators & Trailblazers (WIT), is establishing itself in order to ignite a women-led innovation economy in Western Mass. and beyond. This is an exciting and quickly growing sector in the region.

I see additional new sectors growing in the region that can become centers of excellence for Western Mass. This year, UMass Amherst, in cooperation with the EDC, hosted an event highlighting its national leadership position in the field of green technology and the environment. The event was sponsored by the Massachusetts Clean Energy Center and focused on building technologies, water innovation, and clean energy and storage. Companies from across Massachusetts came to discuss the quickly growing green-technology cluster and the partnerships that can be developed between the private sector and the university for research and development, but also talent development.

Bay Path University recently staged its fifth annual Cybersecurity Summit, showcasing the work it is doing in the field of cybersecurity. President Carol Leary, who serves as a member of the Department of Homeland Security’s Academic Advisory Council, said “it is critical for higher education to be a central part of this emerging cyber ecosystem. We are developing the right talent, the diverse talent needed to be a part of the cybersecurity workforce. To the students pursuing a cybersecurity career — you are the future, you are qualified, and we need you more than ever.”

Western Mass., because it is home to a significant number of universities, colleges, community colleges, and technical schools, finds itself in an enviable position because it can supply the workforce of the future.  Still, there is no doubt that the biggest issue facing our existing companies, and the companies of the future, is their ability to find, develop, and retain a high-quality workforce.

We need to coordinate with all the great workforce-development organizations in the region and leverage the high-quality education institutions that call Western Mass. home to meet this demand.

When we do, our future economy will be bright.

Richard Sullivan is president of the Economic Development Council of Western Mass.; [email protected]

Daily News

AGAWAM — With more than 800 members concentrated in Massachusetts, Rhode Island, and Connecticut, the Employers Assoc. of the NorthEast (EANE) unveiled the national and regional findings from the 2017 National Business Trends Survey conducted by the Employer Associations of America. Results were gleaned from 1,528 participating organizations, covering 2,741 employer locations throughout the U.S.

According to the national survey results, businesses continue to have an optimistic outlook for 2018 and are preparing for a positive year ahead, with 62% expecting their 2017 sales/revenue to be slightly or significantly better compared to 2016. Continued optimism prevails, as 73% of executives project slight to significant increases in sales/revenue for 2018. However, that optimism is tempered by several serious challenges to business growth, particularly from the shortage of both skilled labor and professional/technical staff, and the ability to pay competitive wages and benefits.

“The survey data certainly reinforces that finding talent is a concrete problem that cannot be put off until tomorrow; employers have to take stock of and plan for their staffing needs today,” said Mark Adams, director of HR Services at EANE.

Highlights of the findings for the Northeast region include:

• For employees, the grass is looking greener. While an economy remaining on the upswing may bode well for employers in many respects, it is not without some challenges. When asked the primary reasons for their 2018 hiring plans, 84% of the executives said they will be replacing staff due to voluntary turnover, and 78% said their hiring will fill new jobs.

• More employers are seeking to hire in 2018 than in 2017. In the Northeast region, 51% of the executives surveyed plan to increase staff in 2018, representing an increase from 41% in the 2017 report.

• The skilled-labor shortage is becoming a greater concern. Despite the need to hire by many regional employers, the ability to find talent remains a problem as 42.3% of regional respondents identified the skilled labor shortage as a “serious” challenge in the short term (up from 37.8% last year) while 52% of respondents identified it as a “serious” challenge long term (up from 47% last year). These concerns are also reflective of the actual experiences faced by respondents, as 59% said they were unable to find skilled labor (an increase from 52% last year).

• Infrastructure remains a prevalent focus. With the economic outlook remaining positive and employers seeking to hold onto their own talent any way they can, regional employers are committed to expanding their investment in employees, processes, and systems for 2018.

Daily News

FARMINGTON, Conn. — Farmington Bank invites business leaders and media members to a webinar on Wednesday, May 24 from 10 to 11 a.m. titled “What Region Is Doing Well? What Region Isn’t? And Why? A Look Into the Current Economic Conditions of the Hartford and Springfield Regions.”

Don Klepper-Smith will provide insights on the current economic outlook of the Greater Hartford and Springfield regions in a one-hour webinar, including a question-and-answer session. Klepper-Smith is chief economist and director of research at DataCore Partners and economic advisor for Farmington Bank. A professional economist for 30 years, he is frequently quoted by media sources for his perspective on the economy in the region. He specializes in evaluating consumer markets, assessing the generators of consumer wealth, and delivering insight on business conditions as they relate to credit markets and employment growth.

To register, click here.

Agenda Departments

Economic Outlook Luncheon

April 20: The stock market is up, and soon, so might be interest rates. The Trump administration wants to make historic budget cuts, and unemployment rates are at historic lows. While these are much better than the worst of times for local businesses, are they going to turn into the best of times? Business leaders, who do not like uncertainty, will get some insights into the economic future at the PeoplesBank Economic Outlook, a free luncheon featuring James Hartley, professor of Economics at Mount Holyoke College. The luncheon will take place from noon to 1:30 p.m. at Willits-Hallowell Conference Center, Mount Holyoke College, 50 College St., South Hadley. It is open to the public, but space is limited, and registration is required. “The economy is improving, and business owners want to know where it is going,” said David Thibault, first vice president, Cash Management at PeoplesBank, who will introduce Hartley. “At this luncheon, we hope to give them some of the data necessary to help with business planning for this year and next.” Registration information can be found at bit.ly/pb-register.

Planned-giving Seminar

April 20: Berkshire Taconic Community Foundation and the Nonprofit Center of the Berkshires invite nonprofit executive directors, development staff, and board members to attend “Planned Giving Basics: What Every Nonprofit Should Know.” Led by planned-giving consultant Ellen Estes of Estes Associates and attorney Virginia Stanton Smith of Smith Green & Gold, LLP, the workshop will be held from 1 to 4 p.m. at Saint James Place, 352 Main St., Great Barrington, Mass. This training will explore the various elements of planned giving, including how to launch a planned-giving program, identify prospects for planned giving, discuss giving options, and build personal relationships with donors and prospects. This event is part of Berkshire Taconic’s popular annual “Seminars in Nonprofit Excellence” series. Tickets cost $40 per person, and light food and beverages will be provided. To register, visit www.berkshiretaconic.org/pgbasics.

Trump’s First 100 Days

April 21: Glenmeadow will present a panel of political analysts who will lead a discussion about President Trump’s actions in office thus far. The event will take place from 10 a.m. to noon at Sleith Hall’s Wood Auditorium at Western New England University, 1215 Wilbraham Road, Springfield. The election of Trump as the 45th president of the U.S. polarized the country. In Glenmeadow’s program, called “The First 100 Days: Governing Across the Great Divide,” the panel will look at Trump’s first 100 days in office and discuss his performance on topics including domestic and foreign policy, healthcare, immigration, polling, and media coverage. Political analyst Bill Scher, a contributing editor to Politico and the founder of the blog liberaloasis.com, will serve as moderator. Other panelists will include Tim Vercellotti, professor of Political Science at Western New England University and director of the New England Polling Institute; political consultant Tony Cignoli; Ron Chimelis, a columnist for the Republican; and Marie Angelides, an immigration attorney with her own firm and chair of the Longmeadow Select Board. The program is free, but seating is limited, and registration is required. To register, call (413) 567-7800 or e-mail [email protected] Visit glenmeadow.org/learning for more information. Glenmeadow Learning is one of many free programs Glenmeadow offers to members of the wider community. These programs represent one facet of the life-plan community’s mission to serve seniors across the region and to operate as a socially accountable organization.

Real-estate Sales Licensing Course

May 1: Beginning Monday, May 1, the Realtor Assoc. of Pioneer Valley will sponsor a 40-hour, 14-class sales licensing course to help individuals prepare for the Massachusetts real-estate salesperson license exam. The course will be completed on June 1. Tuition is $359 and includes the book and materials. The course curriculum includes property rights, ownership, condos, land use, contracts, deeds, financing, mortgages, real-estate brokerage, appraisal, fair housing, consumer protection, Massachusetts license law, and more. Classes meet Monday, Wednesday, and Thursday evenings from 6 to 9 p.m. at the association office, 221 Industry Ave., Springfield. For an application, contact Joanne Leblond at (413) 785-1328 or [email protected], or visit www.rapv.com.

Forum for Stroke Survivors, Caregivers

May 3: May is National Stroke Awareness Month, and the American Stroke Assoc., a division of the American Heart Assoc., will once again host a forum open to stroke survivors and their caregivers. The 2017 Pioneer Valley Stroke Survivors and Caregivers Forum, “The Future Belongs to Those Who Dream,” will take place at the Log Cabin in Holyoke. Close to 300 people are expected to attend the event, which is designed to bring together stroke survivors and caregivers so they may become better connected with the network of resources available. The event will run from 9 a.m. to 2 p.m., and the day will include exhibitors, local healthcare providers, and stroke survivors who will educate and share information. The forum will once again be hosted by Boston comedian and American Stroke Assoc. supporter Chris Tabb, whose family has been personally touched by stroke. The Pioneer Valley Stroke Forum is open to the public, and admission is $5, which will include a light breakfast and heart-healthy lunch. For tickets, call the American Heart Assoc. local office at (203) 303-3373.

‘Big Data … Your Strategic Advantage’

May 10: As part of the ongoing BusinessWest and HCN Lecture Series, Comcast Business will host an informative program titled “Big Data … Your Strategic Advantage.” The event is part of a series of lectures, panel discussions, and presentations that address timely and important business information. This is an opportunity to meet industry leaders and network with area business professionals. “Big Data … Your Strategic Advantage” will be presented by Dennis Perlot, vice President, Enterprise Architecture at CleanSlate Centers, and former ‘technology evangelist’ at Microsoft and BI specialist master at Deloitte. It will take place at La Quinta Inn & Suites, 100 Congress St., Springfield. Perlot will address how other organizations are using their data to provide them with a competitive advantage. Attendees will learn how data can be analyzed for insights that lead to better decisions and strategic business moves. On-site parking is available. Registration is scheduled for 7:15 to 7:30 a.m., followed by breakfast and Perlot’s presentation from 7:30 to 9 p.m. RSVP by Tuesday, May 2 at businesswest.com/lecture-series.

Run for River Valley

May 20: River Valley Counseling Center (RVCC), an affiliate of Holyoke Medical Center and member of Valley Health Systems, will hold its sixth annual Run for River Valley fund-raiser on Saturday, May 20. Funds raised will support RVCC in providing critical behavioral-health and other supportive services to individuals, families, and groups throughout the Pioneer Valley. The 5K run and 1.5-mile walk will take place at Ashley Reservoir in Holyoke. Registration starts at 8 a.m. at Elks Lodge 902, 250 Whitney Ave., and the race begins at 9:30 a.m. An awards ceremony will be held at the Elks Lodge following the race. The registration fee is $25 ($10 for children 12 and under). Adults who pre-register will save $5, and the first 100 registrants will receive a free race T-shirt. To register online, visit accuspec-racing.com or download a registration form at rvcc-inc.org. The deadline for mail-in registration is Saturday, May 13, with online registration accepted until Wednesday, May 17. Sponsors of the 2017 Run for River Valley include PeoplesBank, Palmer Paving Corp., Holyoke Gas and Electric, Hamel’s Catering, Laurel Pure, and Gallagher Real Estate. For additional information, visit www.rvcc-inc.org or contact Angela Callahan at (413) 841-3546 or [email protected].

40 Under Forty

June 22: The 11th annual 40 Under Forty award program, staged by BusinessWest, will be held at the Log Cabin Banquet & Meeting House in Holyoke, honoring 40 of the region’s rising stars under 40 years old. An independent panel of judges has chosen the winners, and their stories are told in the pages of this issue. The event is sponsored by Northwestern Mutual (presenting sponsor), PeoplesBank (presenting sponsor), Moriarty & Primack, Health New England, the Gaudreau Group, the Isenberg School of Management at UMass Amherst, Six-Point Creative Works, Renew.Calm, and the Young Professional Society of Greater Springfield. Tickets cost $75. A limited number of tables are available, and some individual and standing-room-only tickets are also available, but are expected to sell out quickly. To purchase tickets, call (413) 781-8600 or go HERE.

Daily News

HOLYOKE — The stock market is up, and soon, so might be interest rates. The Trump administration wants to make historic budget cuts, and unemployment rates are at historic lows. While these are much better than the worst of times for local businesses, are they going to turn into the best of times?

Business leaders, who do not like uncertainty, will get some insights into the economic future at the PeoplesBank Economic Outlook, a free luncheon featuring James Hartley, professor of Economics at Mount Holyoke College. The luncheon is slated for Thursday, April 20 from noon to 1:30 p.m. at Willits-Hallowell Conference Center, Mount Holyoke College, 50 College St., South Hadley. It is open to the public, but space is limited, and registration is required.

“The economy is improving, and business owners want to know where it is going,” said David Thibault, first vice president, Cash Management at PeoplesBank, who will introduce Hartley. “At this luncheon, we hope to give them some of the data necessary to help with business planning for this year and next.”

Registration information can be found at bit.ly/pb-register.

Daily News

HOLYOKE — The stock market is up, and soon, so might be interest rates. The Trump administration wants to make historic budget cuts, and unemployment rates are at historic lows. While these are much better than the worst of times for local businesses, are they going to turn into the best of times?

Business leaders, who do not like uncertainty, will get some insights into the economic future at the PeoplesBank Economic Outlook, a free luncheon featuring James Hartley, professor of Economics at Mount Holyoke College. The luncheon is slated for Thursday, April 20 from noon to 1:30 p.m. at Willits-Hallowell Conference Center, Mount Holyoke College, 50 College St., South Hadley. It is open to the public, but space is limited, and registration is required.

“The economy is improving, and business owners want to know where it is going,” said David Thibault, first vice president, Cash Management at PeoplesBank, who will introduce Hartley. “At this luncheon, we hope to give them some of the data necessary to help with business planning for this year and next.”

Registration information can be found at bit.ly/pb-register.

Opinion

Editorial

Over the years, BusinessWest has worn out the ‘question-mark’ key when writing stories and headlines for its Economic Outlook sections each December.

Any why not? No one really knows what lies ahead, especially when it comes to the economy. And over the past 15-20 years, there have been some times — such as the months after 9/11 and the very darkest days of the Great Recession in the fall of 2008 — when trying to speculate what might come next was all but impossible.

This isn’t exactly one of those times, but it’s close, and all because of history. Actually, two kinds of it.

First, that election about a month or so ago, because it ushered in a presidency seemingly defined by unpredictability and speculation — about what will happen domestically and abroad. And second, the nation’s economic track record.

Indeed, not once in the full history of this country has it gone more than 10 years without a recession. Don’t look now, but that means, sad to say, that we’re just about due for one. And if it comes soon — we’ve had almost nine years of mostly unspectacular growth — we’ll likely be entering it without the two most common methods of fighting one: lowering interest rates (because they’re already at historic lows and just can’t get any lower) and tax cuts (especially if President Trump makes good on his pledge to almost immediately lower them after getting sworn in).

But we’re getting ahead of ourselves. Sort of.

While it might be time to talk about that recession seemingly certain to come some time in Trump’s first term, the immediate future seems worthy of something else that gets typed often when writing about the year ahead — that phrase ‘cautious optimism.’

That’s especially true of the Western Mass. region, which, while it continues to lag maddeningly well behind most of the rest of the state in terms of growth and prosperity, is, for the most part, riding on an arrow pointed upward. Here are some reasons for the optimism:

• Springfield’s continuing climb. Last issue, we wrote about cranes and their uplifting abilities, no pun intended. It’s not hyperbole. Cranes do generate optimism and, well, more cranes. But it’s not just those machines at the casino site generating positive energy. It’s everything from new vibrancy downtown to the Thunderbirds; from Union Station to subway-car manufacturing. Springfield still has considerable work to do, but it is in what we believe are the early stages of a renaissance, which means there is more progress to come, and it will likely have a strong ripple effect throughout the region.

• Progress in other communities. As we’re written before, the process of reinventing a city — moving from a manufacturing hub to the proverbial ‘something else’ — is slow and often difficult. But many cities in this region, including Holyoke, Easthampton, Pittsfield, and Westfield, are making substantial progress in that regard, becoming centers for entrepreneurship, the arts, small business, tourism, and combinations of all of the above. This progress bodes well for the region, and it should continue in the year ahead.

• Promoting entrepreneurship. One of the most encouraging developments in this region in recent years, as we’ve noted, has been the efforts to not only promote and encourage entrepreneurship, but to create a population of smarter, more resilient entrepreneurs. Springfield has become the hub of this activity, but it’s happening region-wide. And while the landscape won’t change overnight, certainly, a stronger, more diverse economy will result.

• Eds and meds. Or is it meds and eds? While the region continues to diversify its economy, these two stalwarts continue to grow and become ever-more pivotal forces in overall economic development. Healthcare continues to be an ultra-steady source of jobs, and the region’s higher-ed institutions, led by UMass Amherst, are developing new degree programs and initiatives aimed at providing area businesses with their most important asset — qualified talent. These sectors are not only strong, but getting stronger, and the region will benefit accordingly.

While there are still many question marks regarding the economy and which way it will go in the year ahead, there are seemingly fewer of them. And this is a byproduct of the optimism (OK, guarded optimism) that is growing in intensity and bound to generate more progress in the year to come.

Cover Story Economic Outlook Sections

Balance Statement

Forecast Is Strong for 2017, but Questions Loom on the Horizon

outlookdpartAfter six years of largely uninterrupted economic growth in both Massachusetts and the U.S. as a whole, questions have arisen as to how long the expansion can last, especially coming on the heels of an unusual election season and amid sluggish economic trends internationally. The consensus seems to be that the present course should hold in 2017, but also that recessions are a regular occurrence in the American economy, and it wouldn’t take much to spark a slowdown. For now, though, cautious optimism reigns.

Rarely, economists note, does the U.S. economy grow for a full decade without hitting a recession. So the continuing strength of the economy — reflected most notably in falling unemployment — is a mixed bag of news. In short, while the growth is welcome, some caution is warranted.

“At the state and national level, the recovery has been going on for six years, and while there are no hard-and-fast rules about this, we could expect some moderation after six years of growth,” said Karl Petrick, assistant professor of Economics at Western New England University. “Every year of growth makes it more likely that the downward part of the business cycle is closer.”

Karl Petrick

Karl Petrick

Because of both economic and political reasons, I think the state economy is entering into a period of more uncertainty. Luckily, we are doing so after a period of robust economic growth, so, as a state, we have a good foundation to weather this uncertainty.”

 

 

A year ago, Bob Nakosteen, professor of Economics at the Isenberg School of Management at UMass Amherst, called the economic outlook “fuzzy,” but said last week that 2016 solidified into a positive year on many fronts.

“Growth statewide has been somewhat modest, but continuous; we haven’t seen the unemployment rate this low since 16 years ago, the turn of the century,” said Nakosteen, who is also co-editor of MassBenchmarks, the quarterly publication devoted to analysis of the Bay State’s economy. “I don’t think the economy is going gangbusters, but it’s been steady, moderate growth over a long period of time, with higher employment numbers and the total number of workers higher.”

Slowly and steadily, if not spectacularly, he went on, the economic outlook since the low point of the Great Recession has morphed into a remarkable period of expansion. In Massachusetts, the main drivers include the usual suspects, such as information and communications technology, healthcare, and education. “These are industry sectors that are in high demand both nationally and globally, and we have the good luck, at least in the recent past, to have a heavy dose of those sectors. Any time there’s a big demand in the national economy for the services and industries we specialize in, it’s going to help us, and that’s what’s happening.”

PeoplesBank’s Tom Senecal (left) and Mike Oleksak

PeoplesBank’s Tom Senecal (left) and Mike Oleksak say indicators like rising employment and fewer foreclosures point to a strengthening economy.

Massachusetts, Petrick noted, has outpaced the national rate of growth since 2008.  For example, the state’s economy expanded at an annual rate of 3.7% in the third quarter of this year, while the national annualized rate of growth was 2.9% during that same period.

A similar trend holds in the category of unemployment rate. In October 2016, the last month for which state data is available, the Bay State’s unemployment rate was 2.7%, compared to the U.S. unemployment rate of 4.9%.

But is unemployment falling because more people are finding jobs, he asked, or because people are leaving the labor force and aren’t being counted? Comparing October 2016 to Oct 2015, the labor force grew while the unemployment rate fell (from 4.5% in Oct 2015 to 2.7% in Oct. 2016). While that’s a sign of success, one result is a tightening job market.

“The unemployment rate is falling for the right reasons, but it does also signal that it will be harder to keep up the pace of economic growth that we have been experiencing as the labor market gets tighter,” he told BusinessWest. “Effectively, it will be harder for those who are unemployed to find work.”

Meanwhile, the 2.7% number doesn’t tell the whole story. The official (U3) unemployment rate, the one that gets reported, counts anyone who is either working or willing to work, defined as someone who has looked for a job in the past four weeks, he explained. A broader measure of unemployment is the U6 rate, which includes workers who have given up looking for work but would return to the labor force if jobs were available, as well as people who are employed part-time because they can’t find a full-time job. The average U6 number in Massachusetts is 8.8%.

“The difference between that and the state U-3 rate does indicate that there is potentially more room to grow in Massachuetts,” Petrick said. “That’s a lot of potential workers that are on the sidelines who could return to the labor market if things continue to improve.”

Whether the economy will, indeed, continue to improve is the big question.

East and West

Petrick and Nakosteen both noted that breaking the state down by region results in a much more mixed picture for Western Mass.

Specifically, while Hampden County’s U3 rate fell from 6.0% to 3.6% from October 2015 to October 2016 — and similarly decreased from 8.3% to 5.1% in Springfield and 7.4% to 4.3% in Holyoke — those figures trail other metro areas in Massachusetts, including Boston (2.6% in October 2016) and Worcester (3.3%). In fact, Springfield’s 5.1% rate ranks among the highest city unemployment rates in the state.

“The recovery started sooner in Eastern Mass., and it took a while for the effects to be really felt in the western part of the state,” Petrick said. “Over the past year, we have seen a degree of catching up … after lagging in Western Mass. for a few years, the rate of job growth is now pretty consistent across the state.”

One interesting result over the past year, he noted, has been a rebound in the construction industry in Massachusetts, which saw employment grow by almost 38%. But much of that growth — particularly new construction — has been concentrated in the Greater Boston area.  Still, he went on, as construction was hard-hit by the recession, a rebound in this sector is a positive sign.

Bob Nakosteen

Bob Nakosteen

I don’t think the economy is going gangbusters, but it’s been steady, moderate growth over a long period of time, with higher employment numbers and the total number of workers higher.”

 

“It’s always been the case that the growth in Boston spreads very unevenly, and it dissipates as it gets farther from Boston,” Nakosteen added. “In Western Massachusetts, our employment numbers have increased, but not dramatically.”

One oft-discussed reason has been the decline of the manufacturing base over the past few decades, with no one industry stepping up to replace it. “We have a smattering of everything, and a number of manufacturing companies, but nothing very big.”

Area economic-development leaders hope the emergence of CRRC USA Rail Corp., a subsidiary of the China-based world leader in rail-car manufacturing — which promises to create more than 150 manufacturing jobs in Springfield when its plant on Page Boulevard opens in 2018 — is a harbinger of more good news for the region’s manufacturing sector. At the same time, downtown projects like Union Station and MGM Springfield, coupled with a surge in entrepreneurial activity in the region, bode well for the future.

So do the continued health of the ‘eds and meds’ sectors in the region. Nakosteen noted that people think of Massachusetts’ world-class hospitals when they think of the state’s healthcare prowess, but in addition to that anchor, companies that perform pharmaceutical research and build medical devices are thriving — although, again, mainly in the eastern part of the state.

Still, he went on, “there has been some convergence of the economic prospects of the eastern and western parts of the state, and that’s a good thing.”

Nancy Creed, president of the Springfield Regional Chamber, said her organization’s members are mainly bullish on the year ahead.

“There’s a lot of optimism. I hear it on the streets and in chamber meetings,” she said. “We’re seeing new business come into the city — small businesses, especially, that want to be part of what’s happening here. And the chamber is growing — chamber members are increasing job growth, increasing spending. I think, overall, people are feeling good about the city of Springfield.”

Nancy Creed says businesses expect to grow in 2017

Nancy Creed says businesses expect to grow in 2017, despite caution over what national events and trends represent.

However, “I would say it’s also tempered with what could potentially happen with the new federal administration,” she added. “Who knows what’s going to happen with healthcare and the ACA? So there’s also some caution overall.”

Indeed, Petrick noted, markets don’t like uncertainty, and they tend to be volatile during an election year in the U.S. — particularly one as unpredictable and unusual as the one that gave rise to President-elect Donald Trump and his aggressive rhetoric regarding trade.

“Certainly two of our biggest trade partners at the national level, China and Mexico, have both responded by letting us know that a trade war is a very bad idea for the U.S. as well as for them,” he said. “They have also both let the incoming administration know that there’s not a whole lot of good will there after a series of inflammatory statements regarding both countries during the campaign.

Those relationships need mending, he said, and it’s in the interest of both the U.S. and Massachusetts economies for that to happen. At the national level, he noted, much uncertainty lingers — more than what is typical after an election — and both companies and consumers want to see what the incoming administration will do, particularly after so many statements, many of them contradictory, regarding potential policy.

“So, because of both economic and political reasons, I think the state economy is entering into a period of more uncertainty,” Petrick said. “Luckily, we are doing so after a period of robust economic growth, so, as a state, we have a good foundation to weather this uncertainty.”

In the financial world, indicators reflect general economic health, said Thomas Senecal, president and CEO of PeoplesBank.


List of Business and Economic Development Resources


“Interest rates, obviously, drive most of what we do,” he said, adding that the Fed is expected to raise rates another 25 basis points this week, and he anticipates further jumps in the spring and perhaps the fourth quarter of 2017. “We see it as a moderate increase in rates that won’t have a huge, detrimental effect.”

In fact, he added, the Fed moves should instead translate into positive consumer confidence, which usually brings positive economic impact.

Meanwhile, Senecal added, “unemployment is significantly down in Western Mass., and we see in the banking industry that foreclosures are down, delinquencies are down — these are all positive signs for the economy.”

Broader Trends

Other fundamentals at the national level remain positive, Petrick said. The International Monetary Fund (IMF) estimates that the U.S. economy will grow by 2.2% over the next year. That’s a strong rate of growth, although one part of the IMF forecast — higher energy prices — is better for some states (like Texas and North Dakota) than for Massachusetts. The IMF also estimate that the U.S. dollar will weaken over the coming year, which is good news for exports from Massachusetts, as a strong dollar over the past two years has seen state exports to many top trade partners suffer.

While the national economy is still growing, Nakosteen noted, it’s growing at a slightly slower rate than in previous years, and that’s bound to affect Massachusetts. “We can only be healthy to the extent of a strong national economy.”

Meanwhile, globally, China continues its transformation from an export-led economy to one more consumer-driven, and that could be a painful process. “It’s not clear that transition will be successful or happen any time soon,” he said, “and it’s not clear the politics in that country will be able to sustain it.”

As for Europe, “what they consider good news, we’d call stagnant. We’d be lamenting it here, but they’re happy there. There’s not much in the tea leaves to say that will change any time soon,” Nakosteen said, adding that slowdowns in commodities exports — a problem from Asia to Africa to Canada — are proving to impact economies negatively as well.

“The world isn’t on the brink of anything, but it’s certainly challenged in a number of ways, and certainly just slogging along,” he said. “We’re not disconnected from any of that. Even though we have a really dynamic economy, these trends are bound to suppress growth at some point. We’ve managed to keep modest growth continually for a long time, but there are troubling outside signs.”

Petrick agreed. “A generally sluggish world economy doesn’t help the U.S. or the Massachusetts state economy. The weakened Chinese economy, a sluggish European Union, and the continued fallout from the Brexit vote in the UK all bear watching.”

Michael Oleksak, executive vice president, senior lender, and chief credit officer at PeoplesBank, noted, as many analysts have, that Western Mass. is to some degree more shielded from national trends than, say Boston — never reaching the same heights or plumbing the same depths.

“The last few years, we’ve seen positive trends for both our customers and prospective customers,” he said, adding that he sees some staying power in regional trends like rising household incomes, strong commercial occupancy levels, and an uptick in home purchases in the mortgage realm after several years of refinances dominating that sector. Meanwhile, he sees the casino and other large projects causing a trickle-down effect of renewed investment interest in the region.

“I think the casino and CRRC will have an impact on the Western Mass. market; there will be some economic spilloff from that,” Senecal added. “Any time you see cranes in the sky, it makes you feel good about what’s going on in the immediate area.”

Meanwhile, some sectors are dealing with trends that are more cultural than economic, notably retail, which continue to grapple with Internet sales cutting deeply into their bottom line. Nakosteen said he has talked to store owners who say they hear that things are getting better, but they’re not seeing it themselves. “Retailers across the state and nation are struggling to deal with the Internet world.”

Bottom Line

In summary, Petrick expects Massachusetts’ economic growth to remain positive in 2017 but at a slower rate, closer to the U.S. national rate of growth.

“It’s really hard to continually outpace the national rate of growth after so many years of doing so,” he said. “I suspect, for at least part of the year, we will grow faster than the national average, but the gap will get narrower.”

One advantage the Bay State has is a high percentage of educational attainment, as 41.5% of residents in age 25 or older have a bachelor’s degree or higher; the national rate is 30.6%. “That is one of the reasons that Massachusetts is an attractive place for companies to locate.”

On the other hand, they still grapple with skills gaps, trying to match their needs with the available talent. But one of the more positive stories over the past decade in Western Mass. has been the region’s efforts to attack that problem.

“The skills gap is always going to be a concern, as businesses evolve and have different needs,” Creed said, adding, however, that the city has been fortunate to see robust partnerships emerge between its colleges, technical schools, and workforce-development agencies to prime the pump of talent and keep it in the region. “That’s the nature of the beast — businesses evolve, the skills they need evolve, and we’ve got to keep pace with that.”

Those partnerships don’t happen everywhere and shouldn’t be taken for granted, she added — but they are being noticed by both local companies and those looking for a place to plant new roots.

“I hear it from people at my events — they want to be downtown, they want to be part of the excitement. They want to be part of what’s happening here.”

It’s an optimism being felt across Western Mass. — admittedly, more strongly in some communities than others — as the calendar turns to 2017, and all the economic questions a new year brings.

Joseph Bednar can be reached at [email protected]

Briefcase Departments

Employer Confidence Falls for Third Consecutive Month

Confidence among Massachusetts employers fell for a third consecutive month during August as companies remained uncertain about the vigor and durability of the economic recovery.
The Associated Industries of Massachusetts Business Confidence Index (BCI) declined one point to 54.1 last month, leaving it three full points lower than in August 2015. The confidence reading remained above the 50 mark that denotes an overall positive economic outlook, but optimism dimmed sharply on current economic conditions and employers’ outlook on their own companies. The employer confidence readings are consistent with a recent weakening of consumer confidence in Massachusetts. The Mass Insight Consumer Confidence Index slid 10 points during the third quarter. “The national and state economies continue to improve, but without the kind of momentum we have seen in previous recoveries. So employers remain confident overall, but circumspect,” said Raymond G. Torto, Chair of AIM’s Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design. “One potential red flag is the degree to which employer confidence in their own companies has weakened during the past several months.” The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. The index has remained above 50 since October 2013.

More Than 1,100 Volunteer for Annual Day of Caring

PIONEER VALLEY — On Sept. 9, the United Way of Pioneer Valley launched its annual fund-raising campaign with the Day of Caring, when more than 1,100 volunteers from more than 40 area businesses volunteered across the region to help local nonprofits. Starting with a kickoff breakfast in Court Square in downtown Springfield, participants traveled to towns across the Valley, contributing in myriad ways to support programs and organizations that support the community. Projects included lawn work, painting projects, light construction, gardening, and trash removal. The day was ideal for team building, but it was also a chance for both nonprofits and area businesses to learn more about each other’s work. “I participate in the Day of Caring because I believe that giving back to the community is a central part of promoting unity,” said Sharon Dorsey, an executive assistant from Health New England. “The past few years I participated in the Day of Caring, I loved seeing how appreciative and grateful the beneficiaries were.” This year’s Day of Caring sponsors included Baystate Health, MassMutual, Health New England, Comcast, Excel Dryer, UTC Aerospace Systems, IAMAW Local 743, Harry Grodsky & Co., Mestek Inc., Monson Savings Bank, PeoplesBank, Peoples United Bank, Quabbin Wire & Cable Co., TD Bank, Gulf Stream, the Springfield Community Music School, and Sodexo.

Springfield Regional Chamber Debuts New Dental Benefit

SPRINGFIELD — The Springfield Regional Chamber has teamed up Altus Dental to offer to its chamber members a new employee benefit to enhance their employee-compensation package. Administered through American Benefits Group, dental insurance provided by Altus Dental is now available for companies with as few as one employee. Altus Dental offers the state’s largest preferred-provider (PPO) dental network with more than 6,200 participating locations in Massachusetts, Rhode Island, and Southern New Hampshire, and national access through CONNECTION Dental, with more than 108,000 dentist locations nationwide. Three coverage options are available at competitive rates. Plus Plan 1 is basic coverage available to employers with one or more participating employees. Plus Plan 2 is an enhanced coverage option available to those with 10 or more participating employees, and Plus Plan 3 is an enhanced coverage option for companies with 20 or more participating employees. Each option includes 100% diagnostic and preventative services with no deductible, 80% for basic restorative care with a $50 single or $150 family deductible, and a low benefit maximum per year. Plus Plan 2 and Plus Plan 3 include major restorative care such as crowns and dentures. Plus Plan 3 includes orthodontic services. To be eligible, a business must be a member of the Springfield Regional Chamber and contribute at least 50% of the monthly premium. Coverage is open to active, full-time employees.

ServiceNet Wins Grant to Boost Work with Homeless Individuals

NORTHAMPTON — To further combat the continuing challenge of homelessness in communities across Western Mass., ServiceNet’s Shelter & Housing division has been awarded a three-year grant, totaling $1.2 million, by the Substance Abuse and Mental Health Services Administration (SAMHSA) of the U.S. Department of Health and Human Services. Returning Home, the program funded by this grant, is specifically focused on the needs of chronically homeless individuals and homeless veterans who also have a serious mental illness and/or substance-use disorder. The SAMHSA grant is one of 30 recently awarded nationwide, and it is the only one awarded in Massachusetts. Returning Home has a two-fold goal: to successfully move individuals from homelessness to permanent housing, and to improve their overall health and well-being. It does so through a combination of intensive case-management services and evidence-based clinical care. Increased funding will enable ServiceNet to assist an additional 112 individuals in the three-year period, and to expand its community outreach to meet with people on the streets, in outdoor camps, and elsewhere in the community. Returning Home will accept referrals from service providers throughout Berkshire, Franklin, and Hampshire counties, as well as from ServiceNet’s own network of emergency shelters.  “This award reflects SAMHSA’s trust in the outstanding work our team has done to date in housing individuals who are chronically homeless,” said Jay Sacchetti, ServiceNet’s vice president of Shelter & Housing, Vocational, and Addiction Services. “We are proud of the work they do, and this funding further stabilizes and preserves our Returning Home program.” Sacchetti also cited ServiceNet’s longstanding commitment to applied research as an advantage in securing the national grant. “When we say something works, we have the data to prove it; and when something doesn’t work, we understand why,” he said. “Our research team will continue to track the impact of Returning Home’s expanded services as we move forward.” ServiceNet is partnering with the Hilltown Community Development Corp. — administrator of the federal continuum of care which oversees area initiatives related to homelessness — to serve as steering committee for the grant. “This grant is going to help a lot of people a lot,” said Jack Tulloss, a former Marine and now clinical case manager with ServiceNet’s Shelter and Housing division. Increased case-management efforts will be underway by Oct. 1.

State Awards $2.4 Million in Workforce-training Grants

BOSTON — The Baker-Polito administration awarded more than $2.4 million in workforce-training fund grants to 25 companies to train current or newly hired workers. This round of grant funding will help train 2,162 workers, and is expected to create 263 new jobs. “We have made workforce development a priority for Massachusetts residents to get the skills they need to prosper and for companies to have a talented pool of workers to expand,” said Gov. Charlie Baker. “The training and career-building skills provided by these investments will help bolster economic prosperity and success throughout the Commonwealth.” The Workforce Training Fund assists Massachusetts businesses in becoming more competitive by investing in the skills of their workers. The Workforce Training Fund is also a key resource to thousands of Massachusetts workers who wish to advance their skills to achieve promotional opportunities and higher wages. It also acts as a catalyst for job creation. “The Workforce Training Fund is a vital tool for many companies to upgrade employees’ skills and increase productivity,” Lt. Gov. Karyn Polito said. “The training helps both the workers and the companies compete in a global environment.” The Workforce Training Fund provides grants of up to $250,000 to companies in Massachusetts, to pay for workforce training over a two-year period. Grants are awarded to projects that will upgrade workers’ skills, increase productivity, and enhance the competitiveness of Massachusetts businesses. Grants are matched dollar-for-dollar by the award recipients. The Workforce Training Fund is a program of the Executive Office of Labor and Workforce Development and administered by Commonwealth Corp., a quasi-public state agency that fosters partnerships between industry, education, and workforce organizations to strengthen skills for youth and adults in order to help them thrive in the state’s economy. Locally, Freedom Credit Union in Springfield was awarded $126,175 to train 133 workers. Meanwhile, the Massachusetts Manufacturing Extension Partnership was awarded $151,016 to train 93 workers, with nine additional jobs expected by 2018. This grant was awarded to a consortium of businesses, including Universal Plastics Corp. of Holyoke, Advanced Welding of Springfield, Duval Precision Grinding of Chicopee, Metronic of Chicopee, and Millitech Inc. of Northampton.

Study Details Spending of Consumer-driven Health Plan Enrollees

WASHINGTON, D.C. — People with consumer-driven health plans (CDHPs) had lower total per-capita spending on healthcare, driven in part by using less healthcare overall, than people with traditional non-CDHP commercial health plans, finds a new study from the Health Care Cost Institute (HCCI). At the same time, spending out of pocket by CDHP consumers was 1.5 times higher on average than non-CDHP consumers. For example, people enrolled in consumer-driven health plans paid an annual average $58 more out of pocket on visits to the doctor and $50 more on emergency room visits than their non-CDHP counterparts, while using roughly 8% and 10% fewer visits, respectively. The study, “Consumer Driven Health Plans: A Cost and Utilization Analysis,” examines healthcare use and spending from 2010 to 2014 for people covered by employer-sponsored insurance and under 65 years of age who are enrolled in CDHPs. Enrollment in CDHPs has been steadily increasing within HCCI’s employee-sponsored insurance population; more than one-quarter had a CDHP in 2014, compared to just 15% in 2010. Overall, the study found that that fewer total dollars were spent on healthcare for people with CDHPs, in part because people with CDHPs tended to use fewer healthcare services. However, people with CDHPs had higher spending out of pocket on deductibles, co-pays, and co-insurance (excluding premiums). This higher out-of-pocket spending meant people enrolled in CDHPs were responsible for nearly one-quarter of their medical costs on average, compared to 14% for those enrolled in non-CDHPs. “As the costs of healthcare increase, consumer-driven health plans try to balance lower premiums with higher deductibles and higher limits on out-of-pocket spending,” said HCCI Senior Researcher Amanda Frost. “As these types of plans grow in prevalence, it is important to look beyond premium dollars and also consider dollars spent directly on healthcare services.”

Briefcase Departments

Springfield Wins Grant from
U.S. Department of Justice

SPRINGFIELD — U.S. Rep. Richard Neal and Springfield Mayor Domenic Sarno recently announced that the city of Springfield has received a grant from the U.S. Department of Justice (DOJ) in the amount of $147,456 to expand communications and technology at the Springfield Police Department, and to increase officer safety and efficiency. The funds were awarded through the Edward Byrne Memorial Justice Assistance Grant (JAG) Program, the primary provider of federal criminal justice assistance to state and local governments. The JAG funds support for a range of program areas, including law enforcement, drug treatment, victim and witness initiatives, and technology-improvement programs. “This important crime-prevention assistance for the city is timely and needed,” Neal said. “I have always said the men and women of the Springfield Police Department deserve the appropriate amount of local, state, and federal resources they need to do their jobs effectively. Each day, they put their lives at risk to protect families and keep our community safe. With these additional funds, they will be able to continue to do their vital and courageous work on the streets of Springfield. In my opinion, Mayor Sarno and Commissioner Barbieri deserve great credit for their efforts to secure this highly competitive grant.” Added Sarno, “Police Commissioner John Barbieri is always looking to do cutting-edge innovative technology initiatives which in turn will continue to enhance the public safety of each and every one of our residents in the city of Springfield. These funds will assist with improving the technology needed to make the Springfield Police Department more efficient and effective in serving the residents of our fine city.” According to the DOJ, the Edward Byrne Memorial Justice Assistance Grant Program allows states and units of local government to prevent and control crime based on their own state and local needs and conditions. Grant funds can used for state and local initiatives, technical assistance, training, personnel, equipment, supplies, contractual support, and information systems for criminal justice, including for any one or more of the following areas: law-enforcement programs; prosecution and court programs; prevention and education programs; corrections and community-corrections programs; drug-treatment and enforcement programs; planning, evaluation, and technology-improvement programs; and crime victim and witness programs (other than compensation). The Springfield Police Department will use the award funds to support information-technology upgrades and purchase protective equipment. The use of this federal assistance meets unfunded needs and expands communications and technology capacity and increases officer safety and efficiency.

Employer Confidence Falls
for Second Straight Month

BOSTON — A resurgent U.S. stock market, better-than-expected job growth, and growing labor-force participation failed to make believers of Massachusetts employers during July as business confidence fell for a second consecutive month. The Associated Industries of Massachusetts (AIM) Business Confidence Index declined one point to 55.1 last month, leaving it more than four full points lower than in July 2015. The confidence reading remained above the 50 mark that denotes an overall positive economic outlook, but optimism dimmed across the board on employment, the Massachusetts economy, and employers’ outlook on their own companies. The index has now declined in three of the past four months. Economists suggest that employers may be caught between the expectation of an expanding U.S. economy and concern about anemic growth and instability overseas. It’s a paradox that has resulted in the stock and bond markets, which usually move in opposite directions, rising in tandem this year. “We see a familiar pattern in what is now the fourth-longest economic expansion since World War II — employers remain optimistic about the state of the economy, but it is an optimism marked by fits and starts and reactions to all sorts of political and economic events,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. The AIM Business Confidence Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. It has remained above 50 since October 2013. Most of the sub-indices based on selected questions or categories of employer declined during July. The Massachusetts Index, assessing business conditions within the Commonwealth, dropped 1.3 points during July and 0.3 points over the year to 57.2. The U.S. Index of national business conditions, in contrast, bucked the downward trend of the past year (in which it dropped 3.0 points) by gaining 1.5 points. Even so, employers have been more optimistic about the Massachusetts economy than about the national economy for 75 consecutive months. The Current Index, which assesses overall business conditions at the time of the survey, fell 0.2 points to 55.3, while the Future Index, measuring expectations for six months out, slid 1.8 points to 54.8. “July marked the first time since September 2015 that employers were more positive about current conditions than those six months from now. It’s something to watch, since confidence drives employer decisions on hiring and investment moving forward,” said Elliot Winer, chief economist for Northeast Economic Analysis Group LLC. “It’s also worth noting that employer confidence in their own companies has declined by 5.8 points, albeit from a high level, during the past 12 months.” Indeed, the three sub-indices bearing on survey respondents’ own operations all weakened. The Company Index, reflecting overall business conditions, fell 1.8 points to 55.9, while the Sales Index lost 1.4 points to 55.6, and the Employment Index dropped 2.0 points to 52.5. The AIM survey found that nearly 39% of respondents reported adding staff during the past six months, while 19% reduced employment. Expectations for the next six months were stable, with 37% expecting to hire and only 10% downsizing. “A tightening labor market is finally beginning to put upward pressure on wage growth as employers compete for skilled workers,” said Michael Goodman, executive director of the Public Policy Center (PPC) at UMass Dartmouth. “Wages rose 2.6% for the 12 months ended in June, the fastest annual growth rate since 2009. While this is welcome news for the state’s working families, whose wages have been stagnant for an extended period, it represents a challenge for those employers with limited pricing power who can expect it to be increasingly difficult and expensive to obtain the labor they need to support expected growth in coming months.” Confidence levels in July were higher in Greater Boston (56.8) than in the rest of the Commonwealth (52.2). Non-manufacturing companies enjoyed a significantly brighter outlook at 58.0 than manufacturing employers, who posted an overall confidence level of 52.6. AIM President and CEO Richard Lord, a BEA member, said employers should take encouragement from the moderate approach to business issues taken by state lawmakers during the two-year legislative session that ended Sunday night. Beacon Hill balanced a difficult budget with no tax increases, passed economic-development and energy legislation, and developed a consensus pay-equity measure that balances the needs of employers and workers. “The Legislature and the Baker administration again showed an understanding of the factors that contribute to business growth and job creation,” Lord said.

Pioneer Valley Home Sales
Down 11.3% in July

SPRINGFIELD — The Realtor Assoc. of Pioneer Valley reported that single-family home sales in July were down by 11.3% in the Pioneer Valley, compared to the same time last year. The median price was up 8.2% to $224,000. In Franklin County, sales were down 26%, and the median price was up 24.7%. Hampden County saw a 7.5% sales decrease, with the median price rising 0.1%. In Hampshire County, sales were down down 15.6%, while the median price rose 8.1%.

Daily News

BOSTON — A resurgent U.S. stock market, better-than-expected job growth, and growing labor-force participation failed to make believers of Massachusetts employers during July as business confidence fell for a second consecutive month.

The Associated Industries of Massachusetts (AIM) Business Confidence Index declined one point to 55.1 last month, leaving it more than four full points lower than in July 2015. The confidence reading remained above the 50 mark that denotes an overall positive economic outlook, but optimism dimmed across the board on employment, the Massachusetts economy, and employers’ outlook on their own companies. The index has now declined in three of the past four months.

Economists suggest that employers may be caught between the expectation of an expanding U.S. economy and concern about anemic growth and instability overseas. It’s a paradox that has resulted in the stock and bond markets, which usually move in opposite directions, rising in tandem this year.

“We see a familiar pattern in what is now the fourth-longest economic expansion since World War II — employers remain optimistic about the state of the economy, but it is an optimism marked by fits and starts and reactions to all sorts of political and economic events,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design.

The AIM Business Confidence Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. It has remained above 50 since October 2013.

Most of the sub-indices based on selected questions or categories of employer declined during July. The Massachusetts Index, assessing business conditions within the Commonwealth, dropped 1.3 points during July and 0.3 points over the year to 57.2. The U.S. Index of national business conditions, in contrast, bucked the downward trend of the past year (in which it dropped 3.0 points) by gaining 1.5 points. Even so, employers have been more optimistic about the Massachusetts economy than about the national economy for 75 consecutive months.
The Current Index, which assesses overall business conditions at the time of the survey, fell 0.2 points to 55.3, while the Future Index, measuring expectations for six months out, slid 1.8 points to 54.8.

“July marked the first time since September 2015 that employers were more positive about current conditions than those six months from now. It’s something to watch, since confidence drives employer decisions on hiring and investment moving forward,” said Elliot Winer, chief economist for Northeast Economic Analysis Group LLC. “It’s also worth noting that employer confidence in their own companies has declined by 5.8 points, albeit from a high level, during the past 12 months.”

Indeed, the three sub-indices bearing on survey respondents’ own operations all weakened. The Company Index, reflecting overall business conditions, fell 1.8 points to 55.9, while the Sales Index lost 1.4 points to 55.6, and the Employment Index dropped 2.0 points to 52.5.
The AIM survey found that nearly 39% of respondents reported adding staff during the past six months, while 19% reduced employment. Expectations for the next six months were stable, with 37% expecting to hire and only 10% downsizing.

“A tightening labor market is finally beginning to put upward pressure on wage growth as employers compete for skilled workers,” said Michael Goodman, executive director of the Public Policy Center (PPC) at UMass Dartmouth. “Wages rose 2.6% for the 12 months ended in June, the fastest annual growth rate since 2009. While this is welcome news for the state’s working families, whose wages have been stagnant for an extended period, it represents a challenge for those employers with limited pricing power who can expect it to be increasingly difficult and expensive to obtain the labor they need to support expected growth in coming months.”

Confidence levels in July were higher in Greater Boston (56.8) than in the rest of the Commonwealth (52.2). Non-manufacturing companies enjoyed a significantly brighter outlook at 58.0 than manufacturing employers, who posted an overall confidence level of 52.6.

AIM President and CEO Richard Lord, a BEA member, said employers should take encouragement from the moderate approach to business issues taken by state lawmakers during the two-year legislative session that ended Sunday night. Beacon Hill balanced a difficult budget with no tax increases, passed economic-development and energy legislation, and developed a consensus pay-equity measure that balances the needs of employers and workers.

“The Legislature and the Baker administration again showed an understanding of the factors that contribute to business growth and job creation,” Lord said. “We give particular credit to House Speaker Robert DeLeo, who forged meaningful compromises on pay equity, non-compete agreements, and other key issues.”

Briefcase Departments

PVPC Releases Economic-development Strategy

SPRINGFIELD — The Pioneer Valley Planning Commission (PVPC) recently released its 2016 Comprehensive Economic Development Strategy (CEDS) annual update, as part of its larger Plan for Progress, a 10-year blueprint for economic development in the region. The CEDS features a description of regional economic-development conditions and sets forth goals and objectives for the future, as well as a list of projects seeking the U.S. Department of Commerce’s Economic Development Administration (EDA) public-works funding in the next year. The report highlights the region’s continued decrease in unemployment, an improved workforce-talent pipeline, and increased early-education enrollment and high-school and community-college graduation rates, among others, as metrics illustrating the overall progress being made. The CEDS also lists many major committed projects of regional significance, such as the Center for Hospitality and Culinary Excellence at Holyoke Community College, the Springfield Innovation Center, the CRRC MA subway-car manufacturing plant, and the Aviation Research and Training Center, a collaboration between UMass Amherst and Westover Air Reserve Base. A full digital copy of the 2016 CEDS is available on the PVPC website, www.pvpc.org. Hard copies are also available upon request. The PVPC, which administers this process, has been the EDA-designated regional planning agency for the Pioneer Valley region since 1999, which includes 43 cities and towns in Hampshire and Hampden counties.

Home Sales Rise in Pioneer Valley

SPRINGFIELD — The REALTOR Association of Pioneer Valley reported that single-family home sales in May were up 19.4% compared to the same time last year. The median price was up 2.0% to $205,000. County reports vary. In Franklin County, sales were up 90.3% and prices up 5.6%; in Hampden County, sales were up 16.8% and prices up 1.5%; in Hampshire County, sales were up 10.6% and prices down 3.7%.

Passenger Rail Platform Delayed at Union Station

SPRINGFIELD — Springfield Redevelopment Authority (SRA) Director Christopher Moskal announced recently that required design modifications will delay the opening of a new boarding platform at Springfield Union Station. He said progress at the Union Station Regional Intermodal Transportation Center project continues to advance, and he “expects that the Union Station terminal project itself will open on schedule in January 2017, albeit without the new boarding platform in operation.” He said this “includes the terminal building, the bus terminal, the parking garage, and the passenger tunnel up to the current Amtrak lobby on Lyman Street.” As a separate component of the overall project, MassDOT is committed to delivering a new boarding platform for Amtrak trains. This high-level platform, which will provide ‘level-entry boarding’ for Amtrak passengers, was scheduled to be in operation when Union Station opened. However, in reviewing the new platform’s design, Amtrak indicated that a waiver of two Federal Railroad Administration (FRA) design requirements would be needed. This waiver relating to the width of the new platform was necessitated by the unique configuration of the existing Union Station tracks. The SRA submitted the waiver request on March 10. After discussions between FRA and MassDOT, FRA issued a letter on May 23 requiring full compliance with its design regulations. This FRA decision requires major modifications to the initial design of both the platform and the underground passenger tunnel. Accordingly, the project’s architect has been directed to prepare necessary changes to the project’s plans and specifications. The project team is currently working to finalize a revised schedule and budget. Moskal indicated that MassDOT remains committed to funding related design and construction costs. In the interim, he indicated that Amtrak passengers will access trains from the new terminal by passing through the renovated portion of the tunnel into the current Amtrak lobby and using the existing boarding platform on the Lyman Street side as they do today. After the new boarding platform is completed, the Lyman Street end of the tunnel — the current Amtrak lobby — will be renovated and will reopen. This will result in a fully renovated passenger tunnel between the terminal and Lyman Street.

Ashe Explores Starting Foundation

Hampden County Sheriff Michael J. Ashe Jr., honored by BusinessWest as one of its Difference Makers for 2016, issued a statement to the press recently announcing that he is exploring the possibility of staring a foundation to continue his life’s work. “Like most anyone else facing retirement, I find myself contemplating what I want to do with the rest of my life,” he said. “I know that, despite being in my mid-70s, I still have great intensity and energy. The fire still burns in me for my life’s work of 42 years — assuring that offenders have the best possible likelihood of re-entering the community as law-abiding, productive, positive citizens, giving to, rather than taking from, the lives of others. That life’s work would be hard for me to completely walk away from when I still feel vital and useful and passionate about its value to others. One of the scenarios that I’ve contemplated is to continue that life’s calling in a new framework, to create a local foundation, with myself as its unpaid chief administrator, to enhance our community’s effort to successfully re-enter offenders.” Ashe said he’s far from having an exact blueprint regarding specific ways that such a nonprofit might help, and he’s not yet completely certain that starting and heading up such a philanthropic foundation is where he can be of best service in retirement. But he did say it’s an idea worth exploring. “Although I am not far enough along to have detailed the specifics of the structures of such a possible foundation, I would want any such foundation to be marked by simplicity and integrity,” he explained. “One model that I would use is the local charity Griffin’s Friends, which was founded to bring moments of joy to courageous kids at Baystate Medical Center, and which minimizes administrative costs and maximizes direct service to those it seeks to help.” Ashe said one reason he’s thinking aloud and publicly about this is to put the word out to others who might be likewise interested in founding such a new nonprofit, to let him know of their interest in helping to build what could be “an inspired addition to the edifice that we’ve labored so tirelessly to build during these last 42 years — a community corrections system driven by a vision of social justice, integrity, and public safety.”

Employer Confidence Weakens in June

BOSTON — A month of economic uncertainty punctuated by weak U.S. job growth and the United Kingdom’s impending exit from the European Union drove Massachusetts employer confidence lower during June. The Associated Industries of Massachusetts (AIM) Business Confidence Index fell 1.6 points to 56.1 as employers took an increasingly bearish view of the U.S. economy. At the same time, the confidence reading remained comfortably above the 50 mark that denotes an overall positive economic outlook. Taken quarterly, confidence rose from 55.8 during the first three months of the year to 56.7 during April, May, and June. The June survey of employers overlapped by a few days the landmark vote in Great Britain to leave the European Union, an outcome that caused financial gyrations and concern about U.S. exports in the face of a rising dollar. The confidence readings also came in the wake of the slowest pace of job creation in the U.S. since 2010. “Massachusetts employers are trying to balance a range of economic and political distractions that pull them in different directions month to month,” said Raymond Torto, Chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. “The good news is that employers remain highly confident in the Massachusetts economy and in the prospects for their own companies.” Added AIM President and CEO Richard Lord, a BEA member, “the sustained optimism that Massachusetts employers have shown toward the state economy reflects the ability of the Legislature and several administrations to maintain disciplined fiscal policy while creating an environment that allows employers to grow. We look forward to working with policymakers to continue that record as the two-year legislative session ends next month.” The index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. It has remained above 50 since October 2013.

Daily News

BOSTON — A month of economic uncertainty punctuated by weak U.S. job growth and the United Kingdom’s impending exit from the European Union drove Massachusetts employer confidence lower during June.

The Associated Industries of Massachusetts (AIM) Business Confidence Index fell 1.6 points to 56.1 as employers took an increasingly bearish view of the U.S. economy. At the same time, the confidence reading remained comfortably above the 50 mark that denotes an overall positive economic outlook. Taken quarterly, confidence rose from 55.8 during the first three months of the year to 56.7 during April, May, and June.

The June survey of employers overlapped by a few days the landmark vote in Great Britain to leave the European Union, an outcome that caused financial gyrations and concern about U.S. exports in the face of a rising dollar. The confidence readings also came in the wake of the slowest pace of job creation in the U.S. since 2010.

“Massachusetts employers are trying to balance a range of economic and political distractions that pull them in different directions month to month,” said Raymond Torto, Chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. “The good news is that employers remain highly confident in the Massachusetts economy and in the prospects for their own companies.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. The index has remained above 50 since October 2013.

All the sub-indices based on selected questions or categories of employer declined slightly during June after rising to a 10-month high in May. The Massachusetts Index, assessing business conditions within the Commonwealth, dropped a modest 0.8 points to 58.5, up 1.6 points from the year earlier. The U.S. Index of national business conditions plunged three points to 48.8. Employers have been more optimistic about the Massachusetts economy than about the national economy for 74 consecutive months. Meanwhile, the Current Index, which assesses overall business conditions at the time of the survey, lost 1.9 points to 55.5, while the Future Index, measuring expectations for six months out, declined 1.5 points to 56.6.

The three sub-indices bearing on survey respondents’ own operations all weakened. The Company Index, reflecting overall business conditions, fell 1.5 points to 57.7, while the Sales Index dropped 2.8 points to 57.0 and the Employment Index lost 0.6 points to 54.5.

“Uncertainty of the sort created by the Brexit vote certainly impedes investment decisions, and with few signs of any pickup in the global economy, we’re probably going to see a slower rebound in capital spending,” said Sara Johnson, senior research director of global economics with IHS Global Insight.

The AIM survey found that nearly 39% of respondents reported adding staff during the past six months, while 19% reduced employment. Expectations for the next six months were stable, with 37% hiring and only 10% downsizing.

AIM President and CEO Richard Lord, a BEA member, said the Brexit vote underscores the profound effect that political discourse has on the global economic outlook. It’s a pertinent lesson for Massachusetts as the Baker administration and Beacon Hill lawmakers wrestle with both a billion-dollar budget deficit and critical debates on energy, wage equity, and the use of non-compete agreements.

“The sustained optimism that Massachusetts employers have shown toward the state economy reflects the ability of the Legislature and several administrations to maintain disciplined fiscal policy while creating an environment that allows employers to grow,” Lord said. “We look forward to working with policymakers to continue that record as the two-year legislative session ends next month.”

Briefcase Departments

New AHL Franchise Named Springfield Thunderbirds

SPRINGFIELD — Springfield’s new American Hockey League (AHL) franchise will take the ice for the upcoming 2016-17 season as the Springfield Thunderbirds. With hockey fans and local dignitaries looking on from center-ice seats at the MassMutual Center Arena, team officials announced the new name through a pulsating two-minute video on the arena’s state-of-the-art LED scoreboard. “The Springfield Thunderbirds’ name represents the strength and pride of Western Massachusetts. It is a nod to our hockey past, a tribute to the men and woman of the Air Force who are so vital to this region, and a symbol of the new energy and spirit that is palpable in Springfield,” said Nathan Costa, Thunderbirds executive vice president. Thunderbirds is an allusion to two previous Springfield AHL hockey team names, the Indians and the Falcons. The name refers to the animal of Native American legend that creates thunder and lightning by flapping its massive wings. Like the Falcon, it is also a fierce bird of prey. The name also refers to the famous demonstration planes of the U.S. Air Force and serves as an homage to Barnes Air National Guard Base and Westover Air Reserve Base, in Westfield and Chicopee, respectively. The announcement follows a name-the-team campaign that solicited suggestions from the public in a survey coordinated in partnership with MassLive and the Republican. The survey received more than 2,600 responses. “We would like to thank the thousands of fans who participated in this survey,” Costa said. “We were overwhelmed by the creativity and enthusiasm of those who submitted suggestions. Our fans wanted a name that honored the proud history of AHL hockey in Springfield while at the same time reflecting the new energy and excitement of this franchise. We believe the Thunderbirds captures this spirit.” The logo features a bird’s head in bright blue with a curved beak against a background of red and yellow. The team’s name is picked out in yellow and white. “The City of Springfield has a long and storied relationship with the American Hockey League going back to the days of Eddie Shore,” said U.S. Rep. Richard Neal. “For 80 years, professional hockey has been played in our community, and many fans could not imagine a season without a local franchise playing home games at the MassMutual Center. Next season, the Springfield Thunderbirds will take the ice in pursuit of their first Calder Cup. And we have the ownership group to thank for the efforts to keep a charter member of the AHL in downtown Springfield. I am certain that local fans will welcome this exciting new team to ‘the Nest,’ and that the 2016-17 season will be a successful partnership between the Thunderbirds and the Florida Panthers of the NHL.” In coordination with the announcement, the franchise also launched its new website, www.springfieldthunderbirds.com, where fans can now place deposits for season-ticket memberships. The team’s social-media handles are Springfield Thunderbirds on Facebook, @thunderbirdsahl on Twitter, and thunderbirdsahl on Instagram. “Again, so thankful, but not surprised that these outstanding corporate citizens continue to step up for our city of Springfield,” Mayor Domenic Sarno said. “Their continued belief and investment in our Springfield is deeply appreciated. Now we need to pack the house to help assure that professional hockey is here to stay for many years to come. Drop the puck!” Added Florida Panthers Executive Chairman Peter Luukko, “we are excited to have our AHL players take the ice next season with the Springfield Thunderbirds name and logo on their jerseys. This is the start of a new era for AHL hockey in Western Massachusetts, and we look forward to being a part of it.” Founded in 1936 and now with franchises in 30 cities across North America, the American Hockey League serves as the top development league for the players, coaches, managers, executives, and broadcasters of all 30 National Hockey League teams. More than 88% of today’s NHL players are AHL graduates, and for the 15th year in a row, more than 6 million fans attended AHL games in 2015-16. For more information on the Thunderbirds, go HERE.

Employer Confidence Surges in May

BOSTON — Confidence among Massachusetts employers rose to a 10-month high during May as the state approached full employment and the national economy continued to throw off mixed signals. The Associated Industries of Massachusetts (AIM) Business Confidence Index rose 1.5 points during May to 57.7, the highest level since July 2015. The reading was slightly higher than the 57.3 level posted a year ago and comfortably above the 50 mark that denotes an overall positive economic outlook. The brightening outlook came amid growing evidence that the U.S. economy is regaining its footing after posting a 0.8% growth rate during the first quarter. Recent reports on retail sales, housing starts, and industrial production paint an upbeat picture of the economy in the second quarter. At the same time, the government reported that the U.S. economy created just 38,000 jobs during May, the slowest pace since 2010. “Massachusetts employers appear to have shaken off the uncertainty of the fall and winter and are now feeling optimistic about the remainder of 2016,” said Raymond Torto, chair of AIM’s board of economic advisors and lecturer at Harvard Graduate School of Design. “The most encouraging news is that every constituent measure contained in the Business Confidence Index rose during May, and most were higher than they were a year ago.” The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. It has remained above 50 since October 2013.

UMass Generates $6.2B in Economic Impact

BOSTON — The University of Massachusetts was responsible for $6.2 billion in economic activity in Massachusetts last year — a record high — and helped to support more than 43,000 jobs statewide, President Marty Meehan announced Tuesday. “UMass educates more students than any college or university in the Commonwealth and is one of the state’s three largest research universities, but it also has a profound impact on the Massachusetts economy based on the scope and reach of its operations,” Meehan said. “UMass is a vital economic engine for the Commonwealth, and its impact is felt in every community and by virtually every family across Massachusetts.” Victor Woolridge, chairman of the UMass board of trustees, said the report illustrates that “UMass truly is here for a reason, and that reason is to serve the entire Commonwealth. The importance of generating an economic impact on the scale that we do — and having it distributed in every corner of the state — cannot be overstated.” The economic impact generated by the five-campus UMass system translates to a 10-to-1 return on investment for state government when total state funding for the university is considered, according to a FY 2015 analysis performed by the UMass Donahue Institute, which conducts economic and public-policy research. The major drivers of economic impact are student, faculty, and staff spending; construction projects; and the university’s purchasing the goods and services required for its activities. The study measured that spending and its ripple effect in determining the $6.2 billion impact estimate. According to the Donahue Institute report, each of the five university campuses generated a substantial economic impact for its region and the state. By campus or unit, the figures were: Amherst, $2.069 billion; Boston, $1.085 billion; Dartmouth, $466.1 million; Lowell, $921.9 million; Medical School, $1.584 billion; and Central Administration, $198.4 million.

Board of Higher Education Amends Leave Policies

BOSTON — A committee of the state Board of Higher Education voted Tuesday to amend the leave policies for non-unit professionals (NUPs) at the state’s 15 community colleges and nine state universities in an effort to better align such policies with those governing UMass employees, public higher-education systems in other New England states, and Massachusetts state employees. The vote is subject to a final vote by the full Board of Higher Education on June 14. If approved, the changes would impact approximately 1650 employees. The board’s Fiscal Affairs and Administrative Policy (FAAP) Committee voted to eliminate the current policy allowing employees to convert unused vacation days into sick time. Going forward under the new policy, any vacation days that remain over a 64-day balance would be forfeited by the employee if not used. The 64-day vacation balance would be reduced over the next two and a half years to a maximum of 50 days that can be ‘carried’ by an employee. Additionally, the committee voted to reduce the number of vacation days allotted to higher-education employees to a maximum of 25, a reduction from a previous allocation of 30 days per year for the longest-serving employees; and to standardize the number of personal days allotted to employees across all three segments of the higher-education system. All non-unit professionals employed at the state’s community colleges and state universities will receive a total of five annual personal days, effective Jan. 1, 2017. “These changes will bring our employment policies for non-unit professionals at community colleges and state universities into alignment with those in place at the University of Massachusetts, at public colleges and universities across New England, and for state employees,” said Higher Education Commissioner Carlos Santiago, who ordered an expedited review of the policies in March. “They will allow us to remain competitive with other institutions in our bid to attract top talent, while also making good on our commitment to be effective stewards of state resources.”

State Unemployment Rate Remains at 4.2% in May

BOSTON — The state’s total unemployment rate remained at 4.2% in May, the Executive Office of Labor and Workforce Development announced Thursday. The preliminary May job estimates from the Bureau of Labor Statistics (BLS) indicate that Massachusetts lost 6,400 jobs. Job losses were impacted by a temporary labor dispute in the information sector. In May, leisure and hospitality was the only sector to experience over-the-month job gains. BLS also revised upward the state’s over-the-month job gains in April, reporting that 15,200 jobs were added compared to the 13,900-job gain originally reported. From December 2015 to May 2016, Massachusetts has added 30,500 jobs. At 4.2%, the unemployment rate is down 0.7% over the year, with the state’s seasonally adjusted unemployment rate dropping from 4.9% in May 2015. There were 26,600 fewer unemployed persons and 49,000 more employed persons over the year compared to May 2015. The Commonwealth’s May unemployment rate remains lower than the national rate of 4.7% reported by the Bureau of Labor Statistics. “The labor force continues to grow, with 7,000 more employed residents and 2,000 fewer unemployed residents in May,” Labor and Workforce Development Secretary Ronald Walker II said, adding that the education and healthcare sector and the professional, scientific, and business-services sector continue to generate the most jobs in Massachusetts. The state’s labor-force participation rate — the total number of residents 16 or older who worked or were unemployed and actively sought work in the last four weeks — remained at 65.0%. The labor-force participation rate over the year has decreased 0.2% compared to May 2015. Over the year, the largest private-sector percentage job gains by sector were in construction; professional, scientific, and business services; other services; and leisure and hospitality.

Online Resource Aims to Keep River Users Healthy

GREENFIELD — In time for the summer recreation season, the Connecticut River Watershed Council (CRWC) and 16 partners have launched the 2016 Connecticut River water-sampling program. Water samples are tested for E. coli bacteria as an indicator for all types of other pathogens that could potentially make one sick. River users can visit the “Is It Clean” web page at www.connecticutriver.us to find bacteria test results at more than 147 river-access and recreation sites in Massachusetts, Northern Conn., Vermont, and New Hampshire. Samples are typically collected at each site weekly or bi-weekly, and test results are posted online 24 hours later, through early October. “When weather gets warm, people head to our rivers to cool off and have fun, and they want to know if our rivers are clean. The data tells us that it is a good idea to stay out of the water for 24 to 48 hours after a heavy rain because bacteria levels could be high,” said CRWC Lower River Steward Alicea Charamut. “Heavy rain is often the cause of high bacteria levels. Bacteria can spike after a storm due to combined sewer overflows and polluted stormwater runoff from urban, suburban, and agricultural areas.” Added CRWC Massachusetts River Steward Andrea Donlon, “cities and towns along the river are making significant investments to reduce pollution to our rivers, and this has made a tremendous difference. We want people to be able to explore and enjoy this wonderful resource. Our rivers are certainly much cleaner than they used to be, but it makes sense for river users to pay attention to this information so they know when it’s clean for swimming or boating.” Water sample results are color-coded and map-based to offer guidance about whether the water is clean enough for swimming and boating. Results are a snapshot of river conditions at the moment the sample was taken, but give river users information they can use to make informed decisions and prevent potential illness. The website provides bacteria data for the Connecticut River and more than 20 tributaries, including the Chicopee River, Mill River in Northampton, Mill River/Lake Warner in Hadley, Farmington River in Connecticut, Ottauquechee and Black Rivers in Vermont, and many more.

Daily News

BOSTON — Confidence among Massachusetts employers rose to a 10-month high during May as the state approached full employment and the national economy continued to throw off mixed signals.

The Associated Industries of Massachusetts (AIM) Business Confidence Index rose 1.5 points during May to 57.7, the highest level since July 2015. The reading was slightly higher than the 57.3 level posted a year ago and comfortably above the 50 mark that denotes an overall positive economic outlook.

The brightening outlook came amid growing evidence that the U.S. economy is regaining its footing after posting a 0.8% growth rate during the first quarter. Recent reports on retail sales, housing starts, and industrial production paint an upbeat picture of the economy in the second quarter.

At the same time, the government reported that the U.S. economy created just 38,000 jobs during May, the slowest pace since 2010.

“Massachusetts employers appear to have shaken off the uncertainty of the fall and winter and are now feeling optimistic about the remainder of 2016,” said Raymond Torto, chair of AIM’s board of economic advisors and lecturer at Harvard Graduate School of Design. “The most encouraging news is that every constituent measure contained in the Business Confidence Index rose during May, and most were higher than they were a year ago.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. It has remained above 50 since October 2013.

Briefcase Departments

AHL Hockey Could Return to Springfield

SPRINGFIELD — Less than a month after losing the Falcons to Tucson, Ariz., hockey could be returning to Springfield for the 2016-17 season. According to Portland, Maine-based WCSH, the Portland Pirates, the American Hockey League affiliate of the Florida Panthers, has been sold to a new ownership group that intends to relocate the team in Springfield. According to a statement released yesterday by the team, “the Portland Pirates have announced that a letter of intent has been signed with an outsider buyer to purchase and relocate the AHL franchise to a new city. The details of the agreement were not disclosed, and final sale is pending approval of the AHL board of governors and the Florida Panthers. All previously purchased season tickets for the 2016-17 season will be refunded.” Portland Mayor Ethan Strimling told WCSH that losing the team “will have a terrible impact on the local economy.” The Springfield Falcons were purchased by their National Hockey League affiliate, the Arizona Coyotes, in April. The club intends to move the Falcons to Tucson in time for the 2016-17 season, and will refund all advance tickets sold to Springfield fans for that season. Portland has been the host city to a minor-league hockey team for almost 40 years, dating back to the Maine Mariners, WCSH said. The Mariners left in 1992, and after a one-year gap, the Pirates arrived in 1993.

State’s Economic Growth Improves in First Quarter

HADLEY — Massachusetts real gross domestic product grew at an annual rate of 2.3% in the first quarter of 2016, according to the Current Economic Index released this week by MassBenchmarks, the journal of the Massachusetts economy published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston. In contrast, according to the U.S. Department of Commerce, national real gross domestic product grew at an annual rate of 0.5% during the same period. Recently revised data now reveal that, in 2015, the state’s economy expanded at an annual rate of 1.4% in the fourth quarter (1.4% for the U.S.), 2.0% in the third quarter (2.0%), 4.9% in the second quarter (3.9%), and 2.0% in the first quarter (0.6%). The pace of economic growth in Massachusetts picked up in the first three months of 2016 after slowing in the second half of 2015. Although underlying indicators were mixed, both employment and earnings recorded strong growth, and the unemployment rate fell. Payroll employment grew at a 2.0% annual rate in the first quarter, up from 0.7% in the prior quarter. Wage and salary income, as estimated from state withholding tax revenue, expanded 5.6% in the first quarter, after falling 7.0% in the final three months of last year. The state’s headline unemployment rate — the so-called U-3 measure — stood at 4.4% in March, down from 4.9% in December, and down from 5.1% in March 2015. The U.S. unemployment rate in March was 5.0%, the same as in December, and down from 5.5% in March of last year. The unemployment rate in Massachusetts is now lower than its pre-recession low of 4.6% in 2007. But this overall strong performance continues to mask troubling imbalances in the labor market. The broader U-6 measure of unemployment, which includes those who are working part-time but want full-time work, as well as those who are marginally attached to the labor force, is still significantly above pre-recession levels. It inched down to 9.3% in March from 9.5% in December and 9.8% in March 2015. The U.S. rate in March was 9.8%, down from 9.9% in December and 10.9% in March 2015. Prior to the recession in 2007, the U-6 reached lows of 7.1% in Massachusetts and 8.0% in the U.S. “Spending on items subject to the state regular sales tax declined by 6.3% in the first quarter, in stark contrast to the very strong growth of 9.5% experienced in the fourth quarter of 2015. Year over year, spending is up 3.5%,” noted Alan Clayton-Matthews, MassBenchmarks senior contributing editor and associate professor of Economics and Public Policy at Northeastern University. “Most of the drop this quarter was due to spending on automobiles, which slowed after expanding strongly at the end of 2015, and also to weak spending on other taxable sales items in February.” The Mass. Department of Revenue recorded weaker bonus payouts in February, tied to stock-market performance and corporate profits. Market fear tends to dampen business confidence and investment, and a prolonged market downturn may restrain consumer spending as well. The MassBenchmarks Leading Economic Index suggests the state economy will continue to grow at a moderate pace over the next six months, at a 3.1% rate in the second quarter, and a 2.5% rate in the third quarter of this year. The factors weighing on the state and national economic outlook have changed little from last quarter. One factor is the tightening labor market. As there are fewer unemployed workers and as more Baby Boomers retire, it is becoming more difficult for employers to find the workers they need. This is reflected in historically low levels of initial unemployment claims, a sign that employers are reacting to the tightening labor market by holding on to the workers they have. Another factor is slower worldwide economic growth as China’s rapid pace of economic growth has decelerated, Japan’s economy is stalled, and Europe remains sluggish. A third is turmoil in financial markets. Although volatility in stock markets in reaction to falling commodity prices has calmed, there are remaining downside risk factors related to the fallout of weak global demand on corporate profits.

Sergeant Shower Wins Pitch Competition

HOLYOKE — Jonathan LaFrance, an MBA student from Bay Path University, took first place at last night’s awards ceremony and banquet for the Harold Grinspoon Charitable Foundation’s Entrepreneurship Initiative, pitching Sergeant Shower, a biodegradable, two-sided, single-use, all-in-one shampoo and body-wash cloth mitt. LaFrance convinced a panel of judges from six area banks that his pitch was the best at the event held at the Log Cabin. Jonathan Mendez, a Holyoke Community College student, took second place based on his business concept pitch for Mean Green Detergent Machine, a kiosk in stores allowing people to refill their laundry-detergent bottle. Steven Goldberg, a student at Amherst College, took third place with DineToday, a platform allowing restaurants to post discounts for off-peak reservation times. The live event featured a student representative from each of the 14 participating local colleges: American International College, Amherst College, Bay Path University, Elms College, Greenfield Community College, Hampshire College, Holyoke Community College, Mount Holyoke College, Smith College, Springfield College, Springfield Technical Community College, UMass Amherst, Western New England University, and Westfield State University. First-, second-, and third-place winners received $1000, $750, and $500 respectively. Each student participating received $100. The judges represented Berkshire Bank, Country Bank, First Niagara Bank, PeoplesBank, United Bank, and Westfield Bank. The judges also identified nine winning teams as Best Exhibitors. These were selected from a pool of 56 unique companies during a ‘trade show’ portion of the evening which featured the 2016 Grinspoon Entrepreneurial Spirit Award winners. The three first-place winners (each receiving an additional award of $600) were: Connor Brown and Xavier Reed from Amherst College with Meetum, a platform for students to openly share events and activities with the college community; Misael Ramos from Springfield College with Royaume Expressions, garment decoration; and Joey Baurys and Nicolette LaPierre from Western New England University with Hemoflux, a prenatal genetic testing company. The Entrepreneurship Initiative is one of several local initiatives supported by the philanthropy of Harold Grinspoon. For more information, visit www.hgf.org.

Daily News

HADLEY — Massachusetts real gross domestic product grew at an annual rate of 2.3% in the first quarter of 2016, according to the Current Economic Index released this week by MassBenchmarks, the journal of the Massachusetts economy published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston.

In contrast, according to the U.S. Department of Commerce, national real gross domestic product grew at an annual rate of 0.5% during the same period.

Recently revised data now reveal that, in 2015, the state’s economy expanded at an annual rate of 1.4% in the fourth quarter (1.4% for the U.S.), 2.0% in the third quarter (2.0%), 4.9% in the second quarter (3.9%), and 2.0% in the first quarter (0.6%).

The pace of economic growth in Massachusetts picked up in the first three months of 2016 after slowing in the second half of 2015. Although underlying indicators were mixed, both employment and earnings recorded strong growth, and the unemployment rate fell. Payroll employment grew at a 2.0% annual rate in the first quarter, up from 0.7% in the prior quarter. Wage and salary income, as estimated from state withholding tax revenue, expanded 5.6% in the first quarter, after falling 7.0% in the final three months of last year.

The state’s headline unemployment rate — the so-called U-3 measure — stood at 4.4% in March, down from 4.9% in December, and down from 5.1% in March 2015. The U.S. unemployment rate in March was 5.0%, the same as in December, and down from 5.5% in March of last year. The unemployment rate in Massachusetts is now lower than its pre-recession low of 4.6% in 2007.

But this overall strong performance continues to mask troubling imbalances in the labor market. The broader U-6 measure of unemployment, which includes those who are working part-time but want full-time work, as well as those who are marginally attached to the labor force, is still significantly above pre-recession levels. It inched down to 9.3% in March from 9.5% in December and 9.8% in March 2015. The U.S. rate in March was 9.8%, down from 9.9% in December and 10.9% in March 2015. Prior to the recession in 2007, the U-6 reached lows of 7.1% in Massachusetts and 8.0% in the U.S.

“Spending on items subject to the state regular sales tax declined by 6.3% in the first quarter, in stark contrast to the very strong growth of 9.5% experienced in the fourth quarter of 2015. Year over year, spending is up 3.5%,” noted Alan Clayton-Matthews, MassBenchmarks senior contributing editor and associate professor of Economics and Public Policy at Northeastern University. “Most of the drop this quarter was due to spending on automobiles, which slowed after expanding strongly at the end of 2015, and also to weak spending on other taxable sales items in February.”

The Mass. Department of Revenue recorded weaker bonus payouts in February, tied to stock-market performance and corporate profits. Market fear tends to dampen business confidence and investment, and a prolonged market downturn may restrain consumer spending as well.

The MassBenchmarks Leading Economic Index suggests the state economy will continue to grow at a moderate pace over the next six months, at a 3.1% rate in the second quarter, and a 2.5% rate in the third quarter of this year. The factors weighing on the state and national economic outlook have changed little from last quarter.

One factor is the tightening labor market. As there are fewer unemployed workers and as more Baby Boomers retire, it is becoming more difficult for employers to find the workers they need. This is reflected in historically low levels of initial unemployment claims, a sign that employers are reacting to the tightening labor market by holding on to the workers they have.

Another factor is slower worldwide economic growth as China’s rapid pace of economic growth has decelerated, Japan’s economy is stalled, and Europe remains sluggish. A third is turmoil in financial markets. Although volatility in stock markets in reaction to falling commodity prices has calmed, there are remaining downside risk factors related to the fallout of weak global demand on corporate profits.

Briefcase Departments

Leadership 2016 Lauds 22 Graduates

SPRINGFIELD — Twenty-two business professionals graduated from the Springfield Regional Chamber’s Leadership 2016 in a ceremony on April 14 at the Springfield Sheraton. Sponsored by the MassMutual Financial Group with scholarship support from the Irene E. and George A. Davis Foundation, the program is a collaboration between the Springfield Regional Chamber and Western New England University to teach middle- and upper-level managers the crucial thinking and problem-solving skills needed to prepare participants to be effective leaders in service to the community and their workplaces. This year’s program, “Leadership Skills: For Personal, Organizational, and Community Development,” included an emphasis on strategies and techniques designed to create high-energy and high-involvement leadership, focusing on problem solving, learning to ask the right questions, and implementing creative and innovative solutions for both nonprofit and for-profit organizations. “Notwithstanding the learning component, the Leadership program is unique in that it brings together people from different business backgrounds, providing an opportunity to view the various learning topics from different points of view, giving participants a greater appreciation of the lessons,” said 2016 graduate Youssef Fadel of New England Promotional Marketing. “The setting is casual and friendly, making it conducive to developing an atmosphere where one wants to learn and observe. You get to appreciate many aspects of leadership and come out with a specific plan for your own leadership journey. You can use what you learned in your professional, volunteer, or personal life.” Working alongside Western New England University professors, participants actively explored best practices of leaders; analyzed their own leadership, learning, and problem-solving styles; were challenged to think in new ways and to analyze their own strengths and organizational challenges within a dynamic economy; and explored task and interpersonal focus, negotiation orientation, and emotional intelligence, supplemented by self-diagnostics, experiential activities, and case studies. “The Leadership Institute offers a wonderful refresher on various leadership frameworks such as planning and problem solving. It helps you to stretch your mind to explore ways you can use your influence to help others. If you get the opportunity to participate in the Leadership Institute, I highly recommend it,” said 2016 graduate Gillian Palmer, business development and group sales coordinator with the Eastern States Exposition. Sessions included “Each Person’s Behavior Makes Perfectly Good Sense to Them: We Are All Different,” which explored how individuals differ in the ways they learn, communicate, lead, and follow, and “Leadership Who Get Things Done: The Power of Influence,” which focused on influence skills such as reading other people and adapting the message so it will be better-understood, understanding the six universal forms of influence, and developing political savvy. Since 1982, more than 900 area leaders have graduated from the institute. “TD Bank’s focus on continued development of our rising talent goes hand in hand with the goals of the Leadership program,” said Christine Moran, senior vice president and market commercial credit manager for TD Bank, who has sponsored many of these area leaders. “Year over year, we have seen our employees develop increased confidence and gain negotiation and influential skills to become stronger team members. These accomplishments keep us committed to the program, as we continually grow our next generation of leaders.” Members of this year’s class include: Bill Raimondi and Christopher Savenko, Baystate Health; Sean Nimmons, Big Y Foods Inc.; Gillian Palmer, Eastern States Exposition; Abby Getman, Food Bank of Western Mass.; Mahera Chiarizio, Ryan Howard, Terri Lombardo, Naida Lopez, and Shawn Teece, HCS Headstart Inc.; Waleska Lugo-DeJesus, Healing Racism Institute of the Pioneer Valley; Steven Facchetti and Tina Whitney, MassMutual Financial Group; Melissa Nelson, Medvest LLC (Doctors Express); Youssef Fadel, New England Promotional Marketing; Latora Godbolt, Ormsby Insurance Agency; Vickie Dempesy, Shriners Hospital for Children; Michael Ehmke and Christopher Scott, TD Bank; Julie Fregeau, the Republican; Marlene Johnson, United Personnel; and Mike Murray, Western New England University.

Employer Confidence Strengthens in March

BOSTON — Massachusetts employers grew more confident during March as turbulence in China and other key global markets subsided. At the same time, a significant gap has developed between the bullish outlook of service companies and a less optimistic view among manufacturers that is also reflective of national developments. The Associated Industries of Massachusetts (AIM) Business Confidence Index rose 1.4 points to 56.5 last month, its highest level since November and well above the 50 mark that denotes a positive economic outlook. The index for service companies and other non-manufacturers increased to 61.3, while the manufacturing index fell to 54.8, down 7.1 points from its level in March 2015. The results come a week after the state announced that the unemployment rate dropped to 4.5% during February and that employers added 14,400 jobs during the first two months of the year. “The good news is that the Massachusetts and U.S. economies have proven remarkably resilient in the face of weak growth globally that unsettled financial markets at the beginning of the year,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. “What happens next? Employers here in Massachusetts appear to be generally optimistic about their prospects during the next six months, though the outlook among manufacturers remains muted by global uncertainty, weakening corporate earnings, the strength of the dollar, and rising credit risk.” The AIM Business Confidence Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative.

Law Reduces Barriers for People Convicted of Drug Offenses

BOSTON — Gov. Charlie Baker signed bipartisan legislation passed unanimously by both branches of the Legislature to ease the transition for those convicted of drug offenses to re-enter society, hold employment, and care for their families by repealing the automatic suspension of drivers licenses and a subsequent $500 reinstatement fee for all drug convictions. “As the Commonwealth takes important steps to battle substance abuse and re-examine our criminal-justice system, I am pleased to sign legislation providing opportunities for those convicted of drug offenses and who have served their time to re-enter society, find and keep a job, and support their families,” Baker said. “Removing this significant barrier to re-entry reduces the prospects of recidivism as individuals continue treatment or recovery and gives them a better chance at getting back on their feet.” The legislation provides certain exceptions for drug-trafficking convictions and takes effect immediately. “We are proud to support this legislation that would ensure those who have paid their debts to society for drug offenses have the means to be productive citizens, capable of supporting themselves and their loved ones,” said Lt. Gov. Karyn Polito. “I’m proud of our administration’s efforts and collaboration with the Legislature to counter opioid addiction, and ending the automatic license suspension is a reform that will help put people on a path that keeps them out of our criminal-justice system.”

Meehan Praises Baker, Legislature for Backing UMass Funding

BOSTON — UMass President Marty Meehan praised Gov. Baker and the state Legislature for approving funding to the system. “The support we are receiving from Gov. Charlie Baker and from the House and Senate will help to fuel our progress and success — and will have a real impact on the Commonwealth’s future,” Meehan said. A $158 million supplemental budget approved by the Legislature and signed by the governor includes $10.9 million for UMass. The funding, which relates to labor contracts, will be used for workforce purposes and will also fund $7 million in student scholarships, in addition to aiding the university’s overall pursuit of quality and excellence. Meehan praised Baker, House Speaker Robert DeLeo, and Senate President Stanley Rosenberg, saying, “I am grateful to our state leaders for their commitment to UMass and to the cause of high-quality public higher education — a cause that is so critical to the Commonwealth and its citizens and will remain so for generations to come.” The Legislature’s action comes at a time when UMass is enjoying successes on many fronts, with its endowment, enrollment, and research output reaching record levels. Additionally, UMass has been named the top public university in New England, one of the best 20 public universities in the nation, and among the top 100 in the world, according to the 2015 Times Higher Education World Reputation Rankings.

Springfield Named Among Best Cities for African-Americans

SPRINGFIELD — The City of Springfield has been named one of the “10 Best Cities for African-Americans, 2016” by Livability.com. The cities were selected based on basic indicators of livability including cost of living, healthcare availability, economic equality, commute time, access to parks, and safety. Editors looked for cities with higher-than-average and growing African-American populations, and where they are succeeding in terms of income, academic achievement, and home ownership.
Springfield is cited for its diverse economy and recovery from the financial recession of 2008, as well as ongoing economic development. Also noted are the strong presence of corporate headquarters, which offer employment opportunities and commitments to workforce diversity. Local nonprofit organizations are noted for leveling the educational and economic playing field for African-Americans through after-school programs for children, mentoring, housing, and parenting-skills training.
Livability.com notes that African-Americans are the ethnic group most likely to stress the importance of a college education, and Springfield and the surrounding area is home to more than two dozen colleges and universities.
“In this age of reality TV, where negativity sells with some media outlets, especially in how they depict our urban American cities, it’s nice to know that our Springfield does and will continue to make good lists, too,” Mayor Domenic Sarno said. “We’ve always believed there is plenty of good that our diverse city has to offer.”

Daily News

BOSTON — Massachusetts employers grew more confident during March as turbulence in China and other key global markets subsided. At the same time, a significant gap has developed between the bullish outlook of service companies and a less optimistic view among manufacturers that is also reflective of national developments.

The Associated Industries of Massachusetts (AIM) Business Confidence Index rose 1.4 points to 56.5 last month, its highest level since November and well above the 50 mark that denotes a positive economic outlook.

The index for service companies and other non-manufacturers increased to 61.3, while the manufacturing index fell to 54.8, down 7.1 points from its level in March 2015.

The results come a week after the state announced that the unemployment rate dropped to 4.5% during February and that employers added 14,400 jobs during the first two months of the year.

“The good news is that the Massachusetts and U.S. economies have proven remarkably resilient in the face of weak growth globally that unsettled financial markets at the beginning of the year,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. “What happens next? Employers here in Massachusetts appear to be generally optimistic about their prospects during the next six months, though the outlook among manufacturers remains muted by global uncertainty, weakening corporate earnings, the strength of the dollar, and rising credit risk.”

The AIM Business Confidence Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. The index has remained above 50 since October 2013.

Briefcase Departments

Employer Confidence Weakens in February

BOSTON — Confidence among Massachusetts employers weakened for the fifth time in seven months during February, but businesses remain optimistic overall about the ability of the Massachusetts economy to ride out uncertainty abroad and an increasingly curious election season in the U.S. The Associated Industries of Massachusetts (AIM) Business Confidence Index shed 0.7 points to 55.1 last month, still comfortably above the 50 mark that denotes a positive economic outlook. However, the reading was 4.7 points below its level of a year earlier, weighed down by growing concern about the slowing U.S. economy. That concern was confirmed Friday when the government said U.S. economic growth slowed to 1% during the fourth quarter of 2015. “We’re seeing some ambivalence among employers as they look at the economy, especially the turmoil in some overseas markets, but all within the range of general optimism about 2016,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. “Ambivalence indeed seems to define most views of the U.S. economy, as we saw last week when the annual economic report of the president noted the strong rebound since 2008 while acknowledging that economic forces, including the rapid pace of technological change, are weighing on American industry.” The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. The index has remained above 50 since October 2013.

Governor Signs Landmark Opioid Bill into Law

BOSTON — Last week at the State House, Gov. Charlie Baker signed landmark legislation into law to address the deadly opioid and heroin epidemic plaguing the Commonwealth. He was joined by a group including Health and Human Services Secretary Marylou Sudders, Senate President Stanley Rosenberg, House Speaker Robert DeLeo, Attorney General Maura Healey, Auditor Suzanne Bump, members of the Legislature, law enforcement, healthcare providers, community leaders, individuals in recovery, and others. The bill, titled “An Act Relative to Substance Use, Treatment, Education, and Prevention,” passed with unanimous votes in both legislative chambers and includes numerous recommendations from the Governor’s Opioid Working Group, including prevention education for students and doctors and a seven-day limit on first-time opioid prescriptions. “Today, the Commonwealth stands in solidarity to fight the opioid and heroin epidemic that continues to plague our state and burden countless families and individuals,” Baker said. “I am proud to sign this legislation marking a remarkable statewide effort to strengthen prescribing laws and increase education for students and doctors. While there is still much work to be done, our administration is thankful for the Legislature’s effort to pass this bill and looks forward to working with the attorney general and our mayors to bend the trend and support those who have fallen victim to this horrific public health epidemic.” Added Lt. Gov. Karyn Polito, “today, we take another step forward by passing landmark legislation that will help the individuals and communities affected by the deadly opioid and heroin epidemic. We are grateful for the Legislature’s progress and for the partnership of Attorney General Healey, our mayors, and several others as we continue pursuing aggressive reforms to combat this crisis from the Berkshires to the Cape.” The bill includes the first law in the nation to limit an opioid prescription to a seven-day supply for a first-time adult prescriptions and a seven-day limit on every opiate prescription for minors, with certain exceptions. Other provisions from the governor’s recommendations include a requirement that information on opiate use and misuse be disseminated at annual head-injury safety programs for high-school athletes, requirements for doctors to check the Prescription Monitoring Program (PMP) database before writing a prescription for a Schedule 2 or Schedule 3 narcotic, and continuing-education requirements for prescribers, ranging from training on effective pain management to the risks of abuse and addiction associated with opioid medications. Several measures were passed to empower individuals and update current prevention efforts. Patients will receive access to non-opiate directive forms and the option of partially filling opioid prescriptions in consultation with doctors and pharmacists. Schools must annually conduct verbal substance-misuse screenings in two grade levels and collaborate with the departments of Elementary and Second Education and Public Health (DPH) around effective addiction-education policies. To reduce the prevalence of unused medication, manufacturers of controlled substances in Massachusetts must participate in either a drug stewardship program or an alternative plan as determined by DPH. This bill strengthens access to insurers and the bed-finder tool website; requires that patients receive information on FDA-approved, medication-assisted therapies after being discharged from a substance-use treatment program; and ensures civil-liability protection for individuals who administer Narcan. The opioid epidemic continues to impact every community in Massachusetts. According to the most recent data, it is estimated that there were nearly 1,200 unintentional and undetermined opioid deaths in 2014. The estimated rate of 17.4 deaths per 100,000 residents for 2014 is the highest ever for unintentional opioid overdoses and represents a 228% increase from the rate of 5.3 deaths per 100,000 residents in 2000. And the trend isn’t slowing. Preliminary data estimations show there were over 1,100 opioid deaths between January and September 2015.

United Way Wins Veteran Financial-literacy Grant

SPRINGFIELD — Massachusetts Treasurer Deborah Goldberg announced that the United Way of Pioneer Valley (UWPV) was one of five recipients of a grant that supports financial education to veterans and military families. Known as the Operation Money Wise: Financial Education Opportunity Grant and funded through the Office of Economic Empowerment, these grants aim to increase the scope of financial education for military families by providing them with the tools they need to achieve financial stability. Many of these workshops will include strategy sessions on managing money, planning for college, preparing for retirement, and monetary decision making. “These financial-literacy grants will further empower our military community to make informed financial decisions,” Goldberg said. “I am honored to support organizations that work to bring economic stability to the men, women, and families who help keep our country safe.” With three Thrive financial-literacy centers up and running in Holyoke and Springfield, and the Volunteer Income Tax Assistance (VITA) program flourishing throughout the region, UWPV is already a leader in improving fiscal education and responsibility among those it serve. The Thrive centers have served hundreds of student and seniors, helping them improve their credit ratings and open their first bank accounts. Last year, VITA helped 4,594 working families keep $2,462,549 through the Earned Income Tax Credit.

State Issues $9.3 Million in Workforce Skills Grants

BOSTON — Gov. Charlie Baker and Lt. Gov. Karyn Polito announced $9.3 million in workforce skills equipment grants to 35 high schools, community colleges, and vocational training providers across the Commonwealth for vocational-technical education and training equipment purchases that connect Massachusetts students and residents to economic opportunities in high-demand industries. “Workforce skills education and training plays an enormous role in economic and personal development by helping residents acquire the skills they need to connect with promising careers,” Baker said. “These vocational-technical education equipment grants will help build stronger communities and a more competitive business environment that ensures more residents have the skills they need to succeed in and support the Commonwealth’s economic future.” Added Polito, “these workforce-development grants will build bridges between residents seeking careers to build a future on and the employers who need a skilled workforce to grow the state’s economy. Today, too many good-paying jobs are going unfilled because employers are struggling to find skilled employees. This investment in training equipment will enable high schools and community colleges across the Commonwealth to equip students with the skills they need to secure a bright future.”
The Workforce Skills Capital Grant Program is a new initiative of the Governor’s Workforce Skills Cabinet, which seeks to align education, workforce, and economic-development strategies across the state. Western Mass. recipients of the new round of grants include:
• Berkshire Community College, Pittsfield, $465,119 to upgrade and modernize its manufacturing and engineering program, utilizing new hydraulics, pneumatics, electrical controls, materials testing, CNC, and 3-D printing equipment to train students and adult learners for careers in advanced manufacturing, engineering, and biotechnology;
• Dean Technical High School, Holyoke, $393,156 to transform its existing machine technology shop into an advanced-manufacturing shop that aligns with current industry practices and technologies, in order to connect Holyoke students to career opportunities in the Pioneer Valley’s skilled manufacturing workforce;
• Franklin County Technical School, Montague, $52,500 to revamp its computer programming and web-design programs and expand the programs’ capacity to reach adult learners;
• Lower Pioneer Valley Educational Collaborative, West Springfield, $257,100 to expand the capacity of its recently-founded high school Machine Technology Program, and to extend programming to adult learners, including unemployed and underemployed individuals facing barriers to employment;
• McCann Technical School, North Adams, $121,128 to revamp its welding and metal-fabrication equipment to train students for careers in Berkshire County’s aerospace, defense, commercial, medical-device, and power-generation industries, and enable re-training for unemployed workers;
• Roger L. Putnam Vocational Technical Academy, Springfield, $441,500 to launch a new program to equip students with the skills to enter the construction workforce, including training with heavy equipment; and
• Springfield Technical Community College, $499,785 to enhance training in its Laser Electro-Optics and Advanced Manufacturing Engineering Technology programs by creating an advanced-laser-machining laboratory and a one-year Laser Materials Processing Certificate of Completion, in order to meet the needs of the Commonwealth’s rapidly growing laser-manufacturing industry.

Daily News

BOSTON — Confidence among Massachusetts employers weakened for the fifth time in seven months during February, but businesses remain optimistic overall about the ability of the Massachusetts economy to ride out uncertainty abroad and an increasingly curious election season in the U.S.

The Associated Industries of Massachusetts (AIM) Business Confidence Index shed 0.7 points to 55.1 last month, still comfortably above the 50 mark that denotes a positive economic outlook.

However, the reading was 4.7 points below its level of a year earlier, weighed down by growing concern about the slowing U.S. economy. That concern was confirmed Friday when the government said U.S. economic growth slowed to 1% during the fourth quarter of 2015.

“We’re seeing some ambivalence among employers as they look at the economy, especially the turmoil in some overseas markets, but all within the range of general optimism about 2016,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. “Ambivalence indeed seems to define most views of the U.S. economy, as we saw last week when the annual economic report of the president noted the strong rebound since 2008 while acknowledging that economic forces, including the rapid pace of technological change, are weighing on American industry.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. The index has remained above 50 since October 2013.

Briefcase Departments

Downtown Springfield
to Offer Free Wi-fi

SPRINGFIELD — Mayor Domenic Sarno and Chief Development Officer Kevin Kennedy announced upgrades to Springfield’s downtown technology infrastructure. The initiatives include providing free public wi-fi access beginning in the downtown area this spring, then expanding to other areas of the city, including public parks. Working with city partners, the initiative will also bring high-speed fiber into buildings, which will provide the growing entrepreneurship sector with quicker, cost-effective, easier-to-access technology. “Springfield has a history of innovation,” Sarno said. “These investments will keep us competitive in the market to attract entrepreneurs and to assist those here today in continuing to grow. This will also serve as a matter of convenience for residents and tourists who will be able to access Internet in our parks and public spaces.” The initial investment will range between $50,000 and $100,000 and will ensure free wi-fi access throughout downtown. The investment comes on the heels of the city’s announcement of a National Disaster Resilience Competition (NDRC) award, part of which will dedicate funding to a pair of key innovation projects in the district: DevelopSpringfield’s Springfield Innovation Center and an IT workforce-training program through Tech Foundry. Funding is expected to be $300,000 for each project. All of these activities fall in the city’s Transformative Development Initiative district, a designation the city applied for and was awarded through MassDevelopment, which has since provided staff, an equity investment, and technical and financial assistance as the Worthington Street master plan continues to advance. “This has all been part of a dedicated planning process to establish an innovation district in our downtown,” Kennedy said. “The private and nonprofit sectors have been doing their share in creating a great deal of excitement with programming; these key city infrastructure investments will only help further these efforts. It’s been a great partnership.”

Springfield Regional Chamber Adopts
Energy Position

SPRINGFIELD — The board of directors of the Springfield Regional Chamber voted this week, on behalf of its members, to take a position on energy in the state of Massachusetts and to support a balanced energy portfolio, including the expansion of the supply of natural gas. “Energy is a critical issue for our members. While they acknowledge that regional investment in the transmission infrastructure has increased the reliability of our grid, they see that demand for natural gas continues to rise and the infrastructure is not in place to support such demand,” said chamber President Jeffrey Ciuffreda. “This not only increases their already-high costs of electricity, but causes constraints on the infrastructure and supply. Combined, they tell us it significantly impeded their continued economic development and the economic development of our region.” As a result, Ciuffreda said the Chamber, on their behalf, has adopted the following position: “The Springfield Regional Chamber of Commerce (SRC), through its members, has long identified the high, and increasing, cost of energy as a major issue to address and more recently has identified the constraints on the supply of natural gas as a major deterrent to economic development in the region. Therefore, the chamber supports the expansion of the supply of natural gas, especially to the Western Massachusetts region, as a means to assist in economic-development efforts as well as to reduce the cost of electricity. The chamber acknowledges that two pipeline expansions are in various stages of development, the Spectra project as well as the Kinder Morgan project, and encourages the development of each. The chamber believes that there are sufficient permitting and regulatory rules in place to ensure the safety of these projects and the protection of lands in and around these projects. While endorsing the increased supply of natural gas, the chamber also reiterates its support for the goal set by the state for the development of solar energy and encourages swift action on a comprehensive energy bill that will further bring on line other alternative energies such as wind and hydro. Finally, the chamber is encouraging its members to take advantage of the programs available, many funded through electricity charges, for conservation and efficiencies. There is no better way to lower the cost of electricity than through those efforts. Moving toward this balanced portfolio of energy sources and recognizing the conditions and constraints about being in New England will ensure a better future for all — businesses and residents alike.” Ciuffreda said the chamber will work with local and state officials, utility companies, and developers to continue to advocate on behalf of its members for the programs and capital necessary to lower these escalating costs and improve the region’s infrastructure, and will be an active participant in reviewing any legislation on this issue.

 

State Proposes $83.5M
for Vocational Technical Education Programs

BOSTON — Gov. Charlie Baker, Secretary of Education James Peyser, Secretary of Labor and Workforce Development Ronald Walker II, and Secretary of Housing and Economic Development Jay Ash announced a series of new initiatives to support career vocational technical education, including $83.5 million to be proposed between the governor’s FY 2017 budget recommendation and new capital grant funding to be filed in an economic-development bill this week. “With too many good-paying jobs going unfilled, we are pleased to announce this critical investment in our career and technical schools,” Baker said. “Our proposal will make it possible for more students to explore a pathway to success through stronger partnerships with our schools and local businesses in the Commonwealth.” The funding in the FY 2017 budget will be coupled with a substantial capital-grant program for vocational equipment that further aligns the administration’s investments with local economic- and workforce-development needs and employment partnerships. “Massachusetts has some of the strongest career-technical programs in the country, at both the high-school and college levels, but access and quality are uneven across the Commonwealth, and there’s currently little alignment across education levels,” said Peyser. “Our efforts will significantly expand student access to high-quality career-education programs in STEM fields, manufacturing, and traditional trades, with a focus on underserved populations and communities.” Added Walker, “finding ways to make sure people get the skills and job training they need to get a good-paying job is one of the biggest challenges before us. With these initiatives, we will engage employers as full partners in program design and implementation to help them create a pipeline of workers.” Ash noted that “vocational institutions are an important part of training the workforce to address the skills gap. These additional resources will continue to equip vocational institutions as they train the next generation of skilled workers who will help grow the Commonwealth’s economy.”

 

Employer Confidence Steady to Start 2016

BOSTON — Confidence among Massachusetts employers remained steady during January as optimism about the state economy offset uncertainty about China and turbulent financial markets. The Associated Industries of Massachusetts (AIM) Business Confidence Index rose 0.5 points to 55.8 last month, starting 2016 well above the 50 mark that denotes a positive economic outlook. The increase was driven by a 1.8-point surge in the index measuring employer attitudes about Massachusetts. Confidence remained lower than it was in January 2015, however. “The fact that employer confidence remained solid during a month in which the Standard & Poor’s 500 Index was at one point off 9% and oil dropped below $27 a barrel points to the fundamental, underlying strength of the Massachusetts economy,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. The index ended 2015 down for the year, but remained consistently in optimistic territory for the first 12-month period since the Great Recession. Most of the sub-indices based on selected questions or categories of employer rose a point or two in January, though all remained down year over year. The Massachusetts Index, assessing business conditions within the Commonwealth, jumped 1.8 points to 58.1, starting the year more than a point lower than last January. “The Massachusetts Index has been above its national counterpart for 80 consecutive months, and that perception was bolstered by the decision in January by General Electric to locate its corporate headquarters in Boston,” Torto said. “GE’s decision was important, not only for the 800 jobs it will bring, but because the company cited Massachusetts’ leadership in knowledge industries as its reason for coming.” The U.S. Index of national business conditions slipped to 49.9 on the month, leaving it more than four points lower than a year ago. The Current Index, which assesses overall business conditions at the time of the survey, increased slightly to 54.6, while the Future Index, measuring expectations for six months out, rose almost a full point to 57.0. “Employers clearly do not believe that the correction in financial markets signals an overall economic slowdown,” said Alan Clayton-Matthews, associated professor of Economics and Public Policy at Northeastern University and a BEA member. “Massachusetts employers foresee positive business conditions through at least the first half of 2016, and that comports with economic forecasts that Massachusetts will reach full employment during the year.” The three sub-indices bearing on survey respondents’ own operations were mixed in January. The Company Index, reflecting overall business conditions, was up 0.3 points at 57.0, the Sales Index shed 1.1 points to 57.1, and the Employment Index rose 1.3 points to 55.1. “The increase in the Employment Index is good news for Massachusetts. Our survey found that 39% of respondents reported adding staff during the past six months, while 19% reduced employment,” said Katherine Kiel, professor of Economics at College of the Holy Cross and another BEA member. “Expectations for the next six months are even stronger — 37% hiring and only 10% downsizing.”

 

State Announces $9.2M
in Skills Capital Grants

HOLYOKE — The Baker-Polito administration recently announced the availability of $9.2 million in Skills Capital Grants for vocational-technical equipment investments to improve the quality of education and vocational training, provide career technical training to increase program capacity, and enable students to improve their skills to meet the needs of employers in the Commonwealth. “The skills gap is real across the country, and many companies cannot find the talent they need to fill positions and further develop their local economic impact,” said Gov. Charlie Baker. “By investing in capital equipment at vocational and technical schools that are focused on training, we will ensure more residents get the skills they need to get good-paying jobs in growing industries across the Commonwealth.” State officials announced the availability of the Skills Capital Grants at the future site of Holyoke Community College’s (HCC) Center for Culinary and Hospitality Excellence, located in the heart of the Holyoke Innovation District, which is experiencing significant investment and growth. The center is being funded by a $1.75 million capital grant from the former Manufacturing Training Equipment Grant program, which is being combined with the Vocational Opportunity Challenge Grants to create the new Skills Capital Grant. The Holyoke grant was awarded from a prior funding round. High demand for career training programs like Holyoke’s led to the creation, and expansion in scope, of the Skills Capital Grant program. “We are proud and excited to see the expansion of Holyoke Community College’s Culinary Arts program into a larger center which will provide critical skills to our residents for jobs available that are available now,” said Holyoke Mayor Alex Morse. Added HCC President William Messner, “Holyoke Community College is committed to continuously improving our academic program offerings. We have invested $20 million in such efforts over the past few years in areas directly related to regional employment opportunities, including this culinary center, as well as healthcare, STEM fields, and adult literacy. We are pleased to be able to expand our culinary and hospitality program at a critical time for the region and look forward to increasing the educational opportunities for hundreds of local residents.” The Skills Capital grants will range from $50,000 to $500,000, and while the grants do not require a match, applicants are encouraged to demonstrate cash and/or in-kind matches. Eligible applicants include Massachusetts schools, institutions, and organizations that provide career/vocational technical education programs, including all Chapter 74-approved vocational tech schools, community colleges, and providers of training programs that meet the federal Perkins Act definition of career and technical education. Grant applications must be submitted by Jan. 29.

 

Results From Statewide
Healthcare Quality
Survey Released

WATERTOWN — Massachusetts Health Quality Partners (MHQP) announced the results of an independent statewide patient experience survey, now publicly available at healthcarecompassma.org. The survey encompassed nearly 65,000 patients from more than 500 primary-care practices representing approximately 4,000 physicians across the state, who responded to the question of whether they would recommend their primary-care physician to their family and friends. “The answer to this and other patient-experience questions makes Healthcare Compass MA a tremendous resource for Massachusetts residents who want to find the best care available,” said Barbra Rabson, president and CEO of MHQP. Questions about whether or not providers ask patients about feeling depressed, feeling stressed, or experiencing problems with alcohol, drugs, or a mental or emotional illness were reported for the first time in MHQP’s 2014 survey results. The 2014 statewide behavioral-health mean score of 53.1 indicated that there was substantial room for improvement. The results of the 2015 survey indicate improvement to 56.5 for these behavioral-health measures, with several practices having made truly noteworthy progress. The survey also found that primary-care physicians across the state excel in communicating with their patients. The communication mean score for all practices across the state is 93.5 out of a potential 100 points. “We are fortunate to live in Massachusetts where we have access to MHQP’s statewide public reporting about patient-experience results,” said patient advocate Rosalind Joffe, president of ciCoach and MHQP board member. “MHQP’s commitment to capturing and reporting the patient voice, and focusing on what is important to patients, will continue to make care better in Massachusetts.” Added Dr. Thomas Scornavacca, senior medical director, UMass Memorial Health Care Office of Clinical Integration, “MHQP’s survey provides actionable information that helps bring physicians closer to our goal of delivering patient-centered care. At UMass Memorial Health Care, we evaluate MHQP survey results very carefully as we set healthcare quality-improvement priorities.”

Applicants Sought for
Energy and Environmental
Education Awards

BOSTON — The Executive Office of Energy and Environmental Affairs (EEA) is now accepting nominations for its annual Secretary’s Awards for Excellence in Energy and Environmental Education until March 30. EEA Secretary Matthew Beaton will present awards this spring to Massachusetts teachers and students involved in school-based programs that promote environmental and energy education. “I am proud to recognize the teachers and students leading and inspiring their communities as they tackle critical energy and environmental issues,” Beaton said. “It is important to engage students early in issues like energy, recycling, conservation, and wildlife, and they have so many fresh ideas to offer.” All public and private Massachusetts schools (K-12) that offer energy and environmental education programs are eligible to apply for the awards. In 2015, schools and nonprofit organizations from 22 communities across the state were recognized for their work on issues including recycling, energy conservation, ocean science, wildlife conservation, and alternative fuels. The Secretary’s Advisory Group on Energy and Environmental Education will review applications through mid-April. Qualified entrants will be invited to attend a formal award ceremony with Beaton at the State House this spring.

Daily News

BOSTON — Confidence among Massachusetts employers remained steady during January as optimism about the state economy offset uncertainty about China and turbulent financial markets.

The Associated Industries of Massachusetts (AIM) Business Confidence Index rose 0.5 points to 55.8 last month, starting 2016 well above the 50 mark that denotes a positive economic outlook. The increase was driven by a 1.8-point surge in the index measuring employer attitudes about Massachusetts. Confidence remained lower than it was in January 2015, however.

“The fact that employer confidence remained solid during a month in which the Standard & Poor’s 500 Index was at one point off 9% and oil dropped below $27 a barrel points to the fundamental, underlying strength of the Massachusetts economy,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design.

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The index ended 2015 down for the year, but remained consistently in optimistic territory for the first 12-month period since the Great Recession.

Most of the sub-indices based on selected questions or categories of employer rose a point or two in January, though all remained down year over year.

The Massachusetts Index, assessing business conditions within the Commonwealth, jumped 1.8 points to 58.1, starting the year more than a point lower than last January.

“The Massachusetts Index has been above its national counterpart for 80 consecutive months, and that perception was bolstered by the decision in January by General Electric to locate its corporate headquarters in Boston,” Torto said. “GE’s decision was important, not only for the 800 jobs it will bring, but because the company cited Massachusetts’ leadership in knowledge industries as its reason for coming.”

The U.S. Index of national business conditions slipped to 49.9 on the month, leaving it more than four points lower than a year ago. The Current Index, which assesses overall business conditions at the time of the survey, increased slightly to 54.6, while the Future Index, measuring expectations for six months out, rose almost a full point to 57.0.

“Employers clearly do not believe that the correction in financial markets signals an overall economic slowdown,” said Alan Clayton-Matthews, associated professor of Economics and Public Policy at Northeastern University and a BEA member. “Massachusetts employers foresee positive business conditions through at least the first half of 2016, and that comports with economic forecasts that Massachusetts will reach full employment during the year.”

The three sub-indices bearing on survey respondents’ own operations were mixed in January. The Company Index, reflecting overall business conditions, was up 0.3 points at 57.0, the Sales Index shed 1.1 points to 57.1, and the Employment Index rose 1.3 points to 55.1.

“The increase in the Employment Index is good news for Massachusetts. Our survey found that 39% of respondents reported adding staff during the past six months, while 19% reduced employment,” said Katherine Kiel, professor of Economics at College of the Holy Cross and another BEA member. “Expectations for the next six months are even stronger — 37% hiring and only 10% downsizing.”

Opinion

In the last episode of ‘what we’d like to see in 2016,’ you might recall that we desired to see — and actually expect to see — progress on a number of fronts — everything from efforts to promote entrepreneurship to workforce-development initiatives in light of retiring Baby Boomers; from strategies to bolster the once (and still) proud manufacturing sector to what we called a ‘normalizing of relations with MGM’ after an unnecessarily stormy 2015.

For part 2, we have something else for the wish list — something probably more elusive but in many ways just as important. Let’s call it an attitude shift, or adjustment.

You know what we’re talking about, and it goes by different names in these parts. Some would label it an inferiority complex, while others, those who are slightly more cynical, might describe it as a ‘can’t-do attitude.’

It’s the sentiment that there’s something wrong, or lacking, in this region, and that we can’t ever rise above it and be like Boston or Cambridge, or even Lowell or Worcester. Such sentiments are reinforced every December when BusinessWest presents its annual Economic Outlook. Economists from area colleges and universities and AIM talk about how great the state’s economy is doing, and then present the obligatory caveat — ‘except in Western Mass.’

So there are some good reasons why this attitude prevails, especially when one considers the city of Springfield, the unofficial capital of this region.

Indeed, when people talk about it glowingly (which isn’t that often), it is almost always with the past tense that they get the job done. That’s what’s needed when we talk about everything from vibrancy downtown to the state of the manufacturing sector, to the health and vitality of specific neighborhoods. The good old days were decades ago, and by most accounts, especially from those who fuel the inferiority complex, we’re not likely to see them again, at least anytime soon.

Meanwhile, the skyline of the city — maybe the most telling sign of progress when it comes to a metropolitan area — simply hasn’t changed (unless one counts the MassMutual Center) since Ronald Reagan was in the White House and Mike Dukakis was in the State House. That’s a long time to go without a major new building initiative. In the 30 years prior to that, the downtown changed dramatically.

And this brings us back to our hope for an attitude adjustment. It’s not going to instantly change our fortunes, but it certainly can’t hurt.

We have to accept the fact that this region is not going to Boston, any more than Albany or Troy can be New York City, or Augusta can be Atlanta, or Bethlehem can be Pittsburgh. And in the meantime, there is a lot to be proud of here — a high quality of life, affordability, culture, history, tradition, and some extremely livable communities.

What we don’t have … OK, that’s a long list. We don’t have a large biotech sector or major technology employers or a robust financial-services sector. Perhaps more importantly, we don’t the vibrant nightlife and myriad entertainment options often needed to attract and retain the professionals needed to fuel all of the above.

But people are working on it. Dramatic change won’t come overnight, but it’s very easy to envision a Springfield, and therefore a region, that is more vibrant — and still has all those other qualities listed above.

How easy? Much more easily than any time in the past 30 years.

Will it happen? Maybe. We’ll even offer a ‘probably.’ And an attitude adjustment might just help get it done.

Cover Story Economic Outlook Sections

Questions About Sustainability Cloud the Picture for 2016

Outlook 2016

By most accounts, the state’s economy — and area businesses — had a solid 2015. Performance didn’t match pre-recession levels, but it was an improvement over the previous three or four years. The question looming over 2016 is whether that performance can be sustained, and there are enough doubts, or reservations — created by everything from a stronger dollar to still-falling oil prices to uncertainty about who will win the White House next November — to keep confidence in check.

Dan Flynn calls it “soft confidence.”

That simple, two-word phrase goes a long way toward explaining the current state of the local and national economy and the general attitude concerning it among business owners.

Elaborating, Flynn, executive vice president and chief operating officer of Wholesale Banking for West Springfield-based United Bank, said many of the institution’s commercial clients are doing well — not as well as before the so-called Great Recession that started in 2008, but performance has been solid. Some even recorded their proverbial ‘best year ever’ in 2015, he noted, adding that most saw at least improvement over 2014.

Dan Flynn says many area businesses had a solid 2015

Dan Flynn says many area businesses had a solid 2015, but the question moving forward is whether that performance can be sustained.

But — and this is an important ‘but’ — these business owners are not at all sure that such performance is sustainable given a host of factors that are almost all well beyond their control. These range from global and domestic violence to still-spiraling healthcare insurance costs to extreme uncertainty about who will prevail in the 2016 presidential election — and what he or she might do after getting elected.

Thus, existing confidence is, well, soft.

“For most business owners, their inventory backlog or their job backlog is building, but they don’t have the confidence that this will sustain itself in 2016 or 2017,” Flynn explained. “They think it will, but it’s not like that flat-out ‘we’re confident, we’re going to hire a couple of extra people, we’re going to add a second shift.’ They’re not that confident.”

John Patrick agreed. The CEO of Farmington Bank, which recently made a foray into the Western Mass. market with locations in West Springfield and then East Longmeadow, said there is some optimism about the year ahead, but there are also serious doubts, enough to keep confidence from becoming deep or profound.

“The economy, especially the local economy, is all about confidence,” he noted. “And I wouldn’t say there is strong confidence in the marketplace relative to everything that’s happening around them.”

And by ‘everything,’ he meant factors ranging from terrorism in Paris and California to the ever-rising cost of health insurance.

Bob Nakosteen concurred, summoning another word to describe the current picture and outlook for 2016: ‘fuzzy.’

He would go into much greater detail, obviously, but Nakosteen, professor of Economics at the Isenberg School of Management at UMass Amherst and co-editor of MassBenchmarks, the quarterly publication devoted to analysis of the Bay State economy, said that one word pretty much does the job.

Indeed, the outlook is fuzzy, as in not sharp, not clear, and, for the most part, not predictable.

“The picture is fuzzy, and through the fuzziness, we see a lot of positives, but we also see some risk,” he explained. “There’s a lot of internal strength in the U.S. economy, and it is going to overcome various weaknesses, and that means this state is going to do well. It’s a mixed picture, but the overall trend is positive. But do I have 100% confidence in what I just said? Absolutely not.”

That’s soft confidence personified.

“We’re in the middle of a slowdown … it’s not anywhere near a recession, but we’re definitely seeing some slowing,” Nakosteen went on. “The economy has been growing at 2% or a little less, and that’s not vibrant.”

John Patrick

John Patrick says a number of area manufacturers have seen exports impacted by the weakening of many foreign currencies.

Moving beyond ‘fuzzy,’ Nakosteen, like Flynn and others we spoke with, said there are a number of factors impacting the state and national economy — everything from a weak Canadian dollar, which is hurting exports to that country, to the fact that most Americans are not putting the money they’re saving at the gas pump back into the economy, to impressive job growth in the Commonwealth (if not Greater Springfield). Together, they make predicting what will come next an even more difficult assignment than it generally is.

Most observers are expecting growth to remain right around that 2% level, but it could go higher or lower depending on how matters evolve, especially that critical confidence level among business owners.

Money Matters

As he talked with BusinessWest about 2015 and what will likely happen in the year ahead, Nakosteen said there are certainly plenty of reasons to look at the glass and declare it at least half-full.

“Within the lack of clarity that we’re seeing, there lies a solid core of economic strength,” he explained, adding that the Bay State continues to match or outperform the nation overall, but it is very much dependent on the relative health of this country, as well as international markets, for its success.

As evidence, he cited some recent data showing that Massachusetts is experiencing an economic expansion in many ways reminiscent of the late ’90s, though without the impetus of the tech bubble that drove that cycle, meaning that this one is more well-rounded.

Gross state product is growing robustly, he went on — 7.1% for the second quarter compared to national GDP growth of 3.7% — and employment growth is steady, although limited geographically. The unemployment rate remains low by historical standards, and has been below the national rate since — and even before — the Great Recession.

“The current expansion appears to be on firm footing — the economy in the state has slowed down recently, but it’s still been a really good year,” he said while offering the global view.

“We’re expecting strong growth over the year or so,” he went on, using ‘we’ to mean the editors at MassBenchmarks. “It might be as strong as what we had up to the second quarter of this year, but pretty solid growth. How much of it makes its way out to the western part of the state remains to be seen.”

Flynn agreed.

“Overall, clients performed better over the past 12 months than the previous three to four years,” he said while generalizing the comments of business owners within the bank’s portfolio. “As a whole, they’re not seeing the same rate of return as before the recession, but they’re doing better than they were a year ago.

“And it’s across the board,” he went on. “You can take retail, manufacturing, wholesalers … generally, companies are performing better than they had.”

Given all that, though, the question looming over 2016 is whether that performance — by individual companies and the economy as a whole — can be sustained. And strong doubts about whether it can have led to heavy use of phrases such as ‘soft confidence,’ ‘fuzzy picture,’ ‘mixed signals,’ and the always-popular ‘cautiously optimistic,’ which Flynn said he’s heard repeatedly.

That’s because most all of the factors that will decide the fate of 2016 come complete with ‘ifs,’ ‘buts,’ question marks, and both points and counterpoints.

Take the jobs picture, for example. The nation’s economy added another 211,000 jobs in November after a gain of nearly 300,000 in October, a solid boost by most accounts that exceeded almost all expectations and propelled the stock market to a more than 2% gain the day the figures were released.


Click HERE to download a PDF chart listing the region’s largest employers


But do those numbers and the stated 5% national unemployment rate reflect real progress in what’s happening locally? The short answer is ‘no’ or ‘probably not.’

“I was in New York recently, and I heard a nationally respected economist who said that, if you really take a look at the numbers, unemployment on a normalized basis is closer to 9% when you take into consideration all the people who are unemployed and those working part-time who would prefer to be working full time,” said Patrick.

Like others, he noted that, overall, many employers have not yet reached — and likely won’t reach for some time — that threshold of confidence needed to add back some of those employees trimmed during extensive efforts during and after the recession to become more efficient and rightsize.

“Businesses are a little apprehensive about continuing to make significant investments in people, technology, and franchise, because they’re just unsure about what’s going to happen,” Patrick told BusinessWest. “And there many businesses that, because of the cost of healthcare, don’t want to go over that 50-employee number, and they’re trying to manage their business accordingly.”

Meanwhile, Nakosteen said, despite the start of work on the Springfield casino and a host of other construction projects across Western Mass., the employment needle has “barely budged” in the city of Springfield, meaning the jobless rate is still hovering around 9%, in sharp contrast to what’s happening elsewhere in the Commonwealth.

Bob Nakosteen says the Bay State added jobs at an impressive clip in 2015

Bob Nakosteen says the Bay State added jobs at an impressive clip in 2015, but by and large, those gains did not extend to Western Mass.

“Employment in the state has really grown at an amazingly fast clip over the past year to 18 months, but it’s not the same in Western Mass., as is usually the case,” he explained, adding that the Bay State has added 50,000 to 60,000 jobs over the past year, most of them in technology-related sectors, although healthcare and education remain solid contributors to such growth.

“A different picture emerges out here,” he went on, talking from his office on the UMass Amherst campus. “Springfield has added a few jobs but not many — at least it hasn’t gone down. The picture is better in the larger metropolitan area, but all the construction is in Springfield, so that’s where it should be recorded, but so far we’re not seeing it.”

Dollars and Sense

Another factor that is contributing to uncertainty is the stronger U.S. dollar. It certainly benefits those traveling overseas and has provided a huge boost for airlines and cruise lines, but overall, a strong dollar hurts exporters, including the many precision manufacturers that call the Knowledge Corridor home.

“I think many of the manufacturers in this region got off to a good start in 2015 and had good backlogs,” said Patrick, referring to companies on both sides of the border. “But companies within that corridor are usually producing a product that has export potential, and because of the strong dollar internationally, they’ve seen a lot of the orders slow down and some of them put on hold, with the buyer saying, ‘what we’ll do is wait for the dollar to drive down in value a bit.’”

There was some movement in that direction in early December, he noted, but overall, the dollar remains quite strong against all other currencies, and until a pattern of weakness occurs, exports will continue to suffer.

Nakosteen agreed, and said one country often overlooked when it comes to currency rates is Canada. It is a big trading partner, and at the moment that country’s dollar, also known as the ‘loonie,’ is in a hard spiral fueled by a host of factors, including falling energy prices and questionable monetary policy.

“Canada is our most important trade partner; a year ago, it was about one U.S. dollar to one Canadian dollar; now, a Canadian dollar is worth about 70 cents,” he explained. “What that means is for Candians, U.S. products are much more expensive, and you can see it in the export numbers — they’ve really dropped over the past year.”

As for falling oil prices, which analysts say will remain low for the foreseeable future, they are not producing a surge in consumer spending, as some had predicted, and in the meantime, they are taking a hard toll on the energy industry, which is having a ripple effect, in this country and elsewhere.

“We have not seen the surplus from lower gas prices turn into consumer spending — it’s going into savings or to reduce debt,” Nakosteen said. “It has not created the bump that was expected by everyone, including me.

“From everything I’m reading in the energy industry, low gas prices are here for a while,” he went on. “So it will be interesting to see if, over time, consumers start behaving a little differently and take this surplus and spend it.”

Still another factor is interest rates, which, after that strong November jobs report, are almost certain to rise after roughly seven years of stagnancy. The projected 0.25% increase, though minor, will finally bring some measure of relief to investors who have focused on low-risk options, such as bonds, which have yielded marginal returns. But the hike will also make borrowing more expensive, and this may slow the economy somewhat.

Cliff Noreen, president of Springfield-based Babson Capital, told Bloomberg News Radio recently that he welcomed the U.S. interest rate hike — “I think it’s about time; it’s been seven years, and we’ve been living with manipulated rates for that long, and we should go back to a more normal rate environment.”

“I think the biggest victims today are retirees — they retired with the assumption five or 10 years ago that they would earn a risk-free rate of 4%, 5%, or 6%; now, the risk-free rate is zero,” he told Bloomberg. “So they have to take more risk to make their return to live on, and they’ve been forced to invest in higher-risk assets like high-yield bonds and stocks, and they’ve had to adjust their asset allocation to make up for the zero-percent rate environment we’re in globally.”

CurrenciesChartCommoditiesChartOverall, Noreen said there were several surprises in 2015 — from falling commodities prices to spiraling foreign currencies (see charts) to gasoline prices that could have fallen further than they did — and all signs point to these conditions (and the negative impact and uncertainty they bring) continuing into 2016.

“We expect lower-than-normal investment returns for all asset classes,” he noted, “and slow economic growth globally, although things have been stabilizing, and continued very, very low interest rates that are in the process of rising.”

And there are still other factors to consider looking ahead, said Noreen, listing everything from a slowing of the growth rate in China to slowing corporate-profit growth in this country, and historically low yields on bonds, with many European countries, including Germany, France, Belgium, and the Netherlands, gaining status in what Noreen called the “negative-rate club.”

As for the upcoming presidential election, Nakosteen noted that, while elections themselves typically don’t have an impact on the economy and individual presidents don’t often dictate fiscal policy, elections do generate anxiety, which has its own trickle-down effect.

Bottom Line

Speaking from experience, Patrick agreed, noting that the one commodity business owners dislike the most is uncertainty.

And because there is no lack of it at the moment — not just because of the election but all those other issues mentioned above — there is a corresponding shortage of perhaps the most important element for at least the short-term health of the regional and national economy: confidence.

There is confidence that the progress measured in 2015 can be sustained, but, as Flynn noted, it is soft confidence.

And as long as that condition remains, the picture for 2016 will remain fuzzy.

George O’Brien can be reached at [email protected]

Opinion

Editorial

‘Headwinds.’

That’s the new (or not so new, actually) term the economists like to pull out when they’re talking about the future and what might happen locally, nationally, and globally.

And it’s an effective term, because it works really well. Headwinds slow something down — be it an airplane, a bird, or a golf ball — and you can’t actually see them. And sometimes they come unpredictably and with more force than anticipated.

In recent years, there has been no shortage of potential headwinds when it comes to the economy — everything from debt crises in Europe to gasoline prices (whether they go up or down); from the strength of the U.S. dollar (either growing or declining) to the so-called skills gap and the ability of employers to find good help.

But as we prepare to turn the calendar to 2016, the biggest headwind facing the local and national economy is uncertainty, and it is blowing rather hard. And if there’s one thing business owners hate, it’s uncertainty.

They don’t hate it as much as a long or deep recession, but it’s pretty close. Not knowing what’s going to happen is nearly as unnerving as knowing that something bad is going to happen or continue.

With uncertainty comes a lack of needed confidence, and, as everyone knows, it is confidence, on the part of both consumers and business owners, that dictates the direction the economy will take. And for 2016, there is no shortage of it, and it comes from many directions, such as

• Gasoline prices: They’re low and projected to go lower. That’s good, except that, at some point (and maybe we’re already there), low gas prices begin to be more of a drag on the economy, a headwind, than a benefit;

• Currency rates: The U.S. dollar is as strong as it’s been in a long while. That’s good for travelers but bad for exporters, and that includes many companies in this region;

• Politics: It’s not just a presidential election year, but one where Donald Trump continues to lead the polls and a dozen Republicans are still vying for the job. Almost anything can happen, and it probably will, and, as we said, business owners fear the unknown; and

• Global terrorism: Events such as those of the past month have the tendency to make people pause and wonder what’s going to come next. The current situation is certainly nothing like 9/11, when the entire economy froze and phones stopped ringing in offices across the country, but pauses of any duration are not a good thing.

As we move into 2016, it is our hope that all this uncertainty — all these headwinds — do not lead to an erosion in confidence that can put a damper on a recovery.

As the economists noted in BusinessWest’s annual Economic Outlook (see page 15), the Bay State is on a bit of a roll, and this region, while lagging behind the state as a whole, as always, has put together some solid years and generated real momentum.

It might be difficult for some, but this should be a time to slice through the headwinds, remain confident, and help dictate the course of economic progress rather than wait to see what happens.

But that’s a tall order, because confidence is a fickle emotion, and about the only thing we can be certain of heading into 2016 is continued uncertainty.

Briefcase Departments

State Economy Expands Robustly in Q2, UMass Journal Reports

AMHERST — Massachusetts real gross domestic product grew at an estimated annual rate of 5.4% in the second quarter of 2015 according to the MassBenchmarks Current Economic Index, released today by MassBenchmarks, the journal of the Massachusetts economy published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston. U.S. real gross domestic product grew at an annual rate of 2.3%, according to the advance estimate of the U.S. Bureau of Economic Analysis. Based on the latest available information, it’s estimated that, in the first quarter of 2015, the state economy expanded at a 2.1% annualized rate while the nation grew at a 0.6% annualized rate. In the second quarter, the state’s economy rebounded strongly from the weather-induced slowdown of the first quarter, with robust growth in employment and spending. Massachusetts payroll employment expanded at a 3.1% annual rate in the second quarter, nearly twice as fast as in the first quarter, when employment grew at a 1.7% annualized rate. Nationally, payroll employment grew at a 1.7% annual rate in the second quarter, down from 2.2% in the first quarter. The state’s unemployment rate fell from 4.8% in March to 4.6% in June, while the U.S. unemployment rate fell from 5.5% to 5.3% during the same period. The state’s unemployment rate has reached pre-recession levels. “The rising tide appears to finally be lifting the boats of the long-term unemployed, even though conditions for these workers remain difficult,” noted Dr. Alan Clayton-Matthews, MassBenchmarks senior contributing editor and associate professor of Economics and Public Policy at Northeastern University, who compiles and analyzes the Current and Leading Indexes. The broader U-6 measure of unemployment, which includes part-time workers who want full-time work and those who are unemployed but marginally attached to the labor force, declined significantly in the second quarter. “For the 12-month period ending in June, the Massachusetts U-6 rate fell to 10.4%, a 0.6-percentage-point drop from the 12-month period ending in March,” he noted. “In June, Current Population Survey-based estimates put the Massachusetts U-6 rate at 9.7%. The corresponding U.S. rate in June was 10.5%.” Massachusetts income and spending growth was also very strong in the second quarter. Based on withholding tax revenues, state wage and salary income in the second quarter grew at a 4.8% annual rate, following growth of 4.8% in the first quarter. Consumer and business spending on goods subject to the state’s regular sales and motor-vehicle sales tax increased dramatically in the aftermath of the snowiest winter on record. In the second quarter, spending grew at a whopping 19.3% annual rate, following 1.8% growth in the first quarter. The ability and willingness of households and businesses to spend reflects the underlying strength of the state economy and bodes well for future growth, the report asserts. The MassBenchmarks Leading Economic Index for June is 4.8%, and the three-month average for April through June is 5.0%. The leading index is a forecast of the growth in the current index over the next six months, expressed as an annual rate. Thus, it indicates that the economy is expected to grow at an annualized rate of 4.8% over the next six months (through December 2015), suggesting that the state’s solid economic performance will continue through the rest of the year. It is projecting real state gross-product growth of 5.1% in the third quarter and 4.8% in the fourth quarter. However, while the state economy appears to be in the midst of a solid economic expansion that positions the Commonwealth for solid future growth, risks to the outlook remain. Weak international economic conditions and geopolitical uncertainty continue to weigh heavily on the economic outlook for Massachusetts and the nation. The strong dollar, combined with sluggish growth in Europe and slowing growth in China, has had a significant impact on state and national exports. For the first five months of this year, Massachusetts merchandise exports are down 14.0% as compared to the first five months of 2014, while U.S. merchandise exports are down 5.2% during the same time period.

Markey, Delegation Call for Greater Access to Opioid Overdose Prevention Treatment

WASHINGTON — In a letter sent Wednesday to the Department of Health and Human Services (HHS), U.S. Sen. Edward J. Markey (D-Mass.) and eight members of the Massachusetts Congressional delegation called on the agency to take action to support broader access to the opioid-overdose-prevention treatment naloxone. There has been much documented success preventing fatalities with the use of naloxone by medical professionals and first responders, and there has been a recent movement to expand access to the overdose treatment for use by trained community and family members, who are most likely to be present during an opioid overdose. More than 1,000 people died of an opioid overdose last year in Massachusetts. The Mass. Department of Public Health (MDPH), which collects rescue reports on episodes where non-medical bystanders and community members use naloxone supplied by MDPH, has documented 5,000 rescues, with more than 1,000 of them reported in 2015 so far. Joining Markey on the letter are U.S. Sen. Elizabeth Warren and U.S. Reps. Michael Capuano, Katherine Clark, Jim McGovern, Seth Moulton, William Keating, Joe Kennedy, and Richard Neal. “The routine practice of distributing naloxone or co-prescribing naloxone with prescriptions for opioid painkillers may help to get naloxone into households that may otherwise not have easy access to this life-saving antidote,” write the lawmakers in the letter to HHS Secretary Sylvia Burwell. “Thousands of Americans who are currently taking prescription opioid painkillers, whether legitimately for the treatment of pain or illicitly without doctor supervision, could potentially be saved from accidental overdose by having wider access to naloxone.” In the letter, the lawmakers call on HHS to explore issuing recommendations that could be used to institute best practices for co-prescribing naloxone with opioid painkillers and examine establishing demonstration programs, encouraging federally funded health centers to adopt policies for co-prescribing, and reducing payment barriers for naloxone coverage and reimbursement.

Home Sales Rise in June in Pioneer Valley

SPRINGFIELD — The Realtor Assoc. of Pioneer Valley reported that single-family home sales in June were up 4.9% compared to the same time last year. The median price, meanwhile, dropped 1.5%, from $204,000 last year at this time to $201,000 this year, as first-time buyers continue to come into the market. The association reported that, across the Pioneer Valley, sales in June 2015 totaled 552, compared to 526 a year ago. In Hampden County, sales were up 11.4% over the same month last year (370 in 2015 and 332 in 2014), with the median price down 2.2%. In Hampshire County, meanwhile, sales remained the same (135 both years), with the median price down 4.6%. In Franklin County, though, sales were down 22% (42 in 2015 and 54 in 2014), and median prices were up 8.8%.

Unemployment Rates Rise in Most Areas

BOSTON — The Executive Office of Labor and Workforce Development (EOLWD) reported that seasonally unadjusted unemployment rates went down in two areas during the month of June and increased in 22 areas in the state. According to data from U.S. Department of Labor Bureau of Labor and Statistics, Nantucket and Vineyard Haven were the two areas where unadjusted unemployment rates dropped in June. Eleven of the 15 areas for which job estimates are published recorded seasonal job gains in June, with the largest gains in Boston-Cambridge-Newton, Barnstable, Framingham, Pittsfield, and Lawrence-Methuen, as well as Salem, N.H. Compared to June 2014, unemployment rates are down in all labor markets measured by the Bureau of Labor Statistics. The EOLWD also reported the statewide seasonally adjusted unemployment rate remained at 4.6% for the second consecutive month. The unemployment rate is down 1.1% over the year. The statewide seasonally adjusted jobs estimate showed a 10,500-job gain in June and an over-the-year gain of 72,700 jobs.

Daily News

AMHERST — Massachusetts real gross domestic product grew at an estimated annual rate of 5.4% in the second quarter of 2015 according to the MassBenchmarks Current Economic Index, released today by MassBenchmarks, the journal of the Massachusetts economy published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston.

U.S. real gross domestic product grew at an annual rate of 2.3%, according to the advance estimate of the U.S. Bureau of Economic Analysis. Based on the latest available information, it’s estimated that, in the first quarter of 2015, the state economy expanded at a 2.1% annualized rate while the nation grew at a 0.6% annualized rate.

In the second quarter, the state’s economy rebounded strongly from the weather-induced slowdown of the first quarter, with robust growth in employment and spending. Massachusetts payroll employment expanded at a 3.1% annual rate in the second quarter, nearly twice as fast as in the first quarter, when employment grew at a 1.7% annualized rate. Nationally, payroll employment grew at a 1.7% annual rate in the second quarter, down from 2.2% in the first quarter. The state’s unemployment rate fell from 4.8% in March to 4.6% in June, while the U.S. unemployment rate fell from 5.5% to 5.3% during the same period. The state’s unemployment rate has reached pre-recession levels.

“The rising tide appears to finally be lifting the boats of the long-term unemployed, even though conditions for these workers remain difficult,” noted Dr. Alan Clayton-Matthews, MassBenchmarks senior contributing editor and associate professor of Economics and Public Policy at Northeastern University, who compiles and analyzes the Current and Leading Indexes.

The broader U-6 measure of unemployment, which includes part-time workers who want full-time work and those who are unemployed but marginally attached to the labor force, declined significantly in the second quarter. “For the 12-month period ending in June, the Massachusetts U-6 rate fell to 10.4%, a 0.6-percentage-point drop from the 12-month period ending in March,” he noted. “In June, Current Population Survey-based estimates put the Massachusetts U-6 rate at 9.7%. The corresponding U.S. rate in June was 10.5%.”

Massachusetts income and spending growth was also very strong in the second quarter. Based on withholding tax revenues, state wage and salary income in the second quarter grew at a 4.8% annual rate, following growth of 4.8% in the first quarter. Consumer and business spending on goods subject to the state’s regular sales and motor-vehicle sales tax increased dramatically in the aftermath of the snowiest winter on record. In the second quarter, spending grew at a whopping 19.3% annual rate, following 1.8% growth in the first quarter. The ability and willingness of households and businesses to spend reflects the underlying strength of the state economy and bodes well for future growth, the report asserts.

The MassBenchmarks Leading Economic Index for June is 4.8%, and the three-month average for April through June is 5.0%. The leading index is a forecast of the growth in the current index over the next six months, expressed as an annual rate. Thus, it indicates that the economy is expected to grow at an annualized rate of 4.8% over the next six months (through December 2015), suggesting that the state’s solid economic performance will continue through the rest of the year. It is projecting real state gross-product growth of 5.1% in the third quarter and 4.8% in the fourth quarter.

However, while the state economy appears to be in the midst of a solid economic expansion that positions the Commonwealth for solid future growth, risks to the outlook remain. Weak international economic conditions and geopolitical uncertainty continue to weigh heavily on the economic outlook for Massachusetts and the nation. The strong dollar, combined with sluggish growth in Europe and slowing growth in China, has had a significant impact on state and national exports. For the first five months of this year, Massachusetts merchandise exports are down 14.0% as compared to the first five months of 2014, while U.S. merchandise exports are down 5.2% during the same time period.

Briefcase Departments

Meehan Praises UMass Transparency Measure in New State Budget
BOSTON — The new state budget will allow UMass to bring a key business practice into the national mainstream, and dramatically advances the cause of “straightforwardness and transparency” in billing, UMass President Marty Meehan said Friday. The fiscal year 2016 budget signed into law by Gov. Charlie Baker will allow UMass, as of 2016-2017, to retain the tuition paid by resident undergraduate students, rather than passing those funds along to the state. “I am pleased that the governor signed what the Legislature sent to him and that the reform UMass has sought for more than two decades has become law. This is a victory for students, for UMass and for transparency,” Meehan said. At the same time, Meehan said he was disappointed by a veto that reduced funding for the five-campus UMass system from the $531.8 million approved by a House-Senate conference committee to $526.6 million. “This veto presents challenges that we must now assess as we pursue our overarching goals of building quality, while at the same time protecting the university’s long-term fiscal stability,” Meehan said. In allowing UMass to retain tuition payments, the budget brings Massachusetts in line with virtually every state in the nation. In recent years, UMass was given the authority to retain the tuition paid by out-of-state students, but had been unable to extend the practice to resident undergraduate students until now. The new policy, which will not take effect until next year, is responsive to calls from state and federal officials for greater transparency and accountability in higher education.

Report: Massachusetts Economy on the Upswing
BOSTON — In a number of important respects, the Massachusetts economy is experiencing its strongest expansion since the heady days of the late 1990s, according to the editorial board of MassBenchmarks. As the board anticipated, this year’s severe winter weather had only a transitory, and ultimately minor, impact on economic conditions in the Bay State. Employment and the labor force are growing strongly, and payroll survey shows consistent and strong growth in employment. And gross state product growth, as estimated by the MassBenchmarks Current Economic Index (CEI), continues to outpace that of the nation. Once again, the state’s knowledge-intensive sectors are its primary growth drivers. Industrially, the expansion is being led by the dynamic professional, scientific, and technical services sector, which includes architectural, engineering, and specialized design services; computer services; computer-systems design; consulting services; research services; and other related services. Employment in software development is also growing strongly. These sectors rely heavily upon the Commonwealth’s highly educated work force, which remains in high demand, as reflected by the fact that college-educated workers continue to have the lowest unemployment rate among all socioeconomic groups in the state. While conditions for less well-educated workers have improved, unemployment and underemployment rates in many communities remain troublingly high. Economic growth continues to be disproportionately concentrated in the Greater Boston region and within the Route 495 belt. While there are notable exceptions to this pattern of imbalanced growth, including the cities of Lowell and Worcester, conditions in regions outside of the Greater Boston region are improving, but their economic performance continues to lag. Notwithstanding the solid performance of the Massachusetts economy, there are a number of short- and long-term threats to growth that could serve to slow and in some cases derail the Commonwealth’s expansion. Growth pressures in the immediate Greater Boston region are placing increased stress on the state’s transportation infrastructure, which this past winter’s severe weather revealed to be in serious need of attention and investment. These same growth pressures, along with inadequate housing production, are fueling rapidly rising home prices throughout Eastern Massachusetts. While this is good news for incumbent homeowners, it puts upward pressure on the cost of living, making it more difficult for the Greater Boston region to attract the highly educated workers it needs to meet the needs of growing knowledge-intensive organizations. And the state’s high electricity prices, which have risen in every corner of the state, are beginning to limit economic growth in regions that are sorely in need of more economic opportunities. In Berkshire, Franklin, and Hampshire counties, new natural-gas hookups have been suspended, which is directly constraining business expansions in Western Massachusetts. Additionally, the relatively slow growth of the global economy and considerable economic and geopolitical uncertainty continue to weigh heavily on the economic outlook for the nation and the Commonwealth. Greece and Puerto Rico appear to be headed for sovereign debt defaults, with highly uncertain impacts for Europe and North America. Critically important trading partners in Asia, including China and Japan, continue to face serious economic challenges. And the Middle East and Eastern Europe remain politically volatile. Going forward, while the Commonwealth’s leaders have little control over what happens internationally, it is well within their power to tackle the challenges presented by aging infrastructure and imbalanced growth patterns, MassBenchmark’s board notes. Toward this end, policies that improve the state’s transportation systems, both within Greater Boston and beyond, and extend educational and economic opportunities to more people and regions that have yet to experience the full benefits of the current economic expansion, should be priorities going forward.

REB Receives Grant from PeoplesBank to Support Talk/Read/Succeed Program
SPRINGFIELD — The Regional Employment Board of Hampden County, Inc. (REB) has received a $2,500 grant award from PeoplesBank to support the work of the Talk/Read/ Succeed (TRS) program. Talk/Read/Succeed is a place-based holistic program and currently serves 150 low- to moderate-income families at two Springfield Housing Authority (SHA) developments in Springfield. The goal of TRS is to have all children enter kindergarten ready to learn and go on to read proficiently by 4th grade. The $2,500 grant award is part of PeoplesBank’s Community Care Program and will be used to support parent education programs at the SHA sites that will focus on how to support children in reaching critical developmental milestones, family health and wellness, adult education and career exploration, and financial literacy. In announcing the award, Susan B. Wilson, first vice president of PeoplesBank said, “at PeoplesBank, we welcome the opportunity to help others. As part of your community, we take an active interest in supporting programs that promote academic excellence for our youth.” David M. Cruise, president & CEO of the REB indicated that, “this award from PeoplesBank allows the REB and its partners to strengthen our parenting education and school engagement programming to support parents as active partners in our work to accelerate student achievement.” William H. Abrashkin, Executive Director of the SHA said “Building community support is vital to the success of Talk/Read/Succeed and its families and children. In particular, it is so important that PeoplesBank, a key member of the business community, has chosen to provide its support. We all know that without an educated workforce, businesses cannot grow and create wealth, and the most effective way to create an educated workforce is to reach families when their children are very young to help ensure that the children are brought up with positive values, including a love of reading, learning, and achievement. That is what TRS is all about, making this a win-win for both the business community and the families we serve.”

Briefcase Departments

Baystate Finalizes Noble Hospital Acquisition
WESTFIELD — The trustees of Baystate Health and Noble Hospital announced that Noble and its affiliated entities are now part of Baystate Health. The hospital is now known as Baystate Noble Hospital and will join Baystate’s team of community hospitals in Greenfield, Palmer, and Ware. Ronald Bryant, currently president and CEO of Noble Hospital, will accept the position of president of Baystate Noble Hospital, in accordance with Baystate Health’s structure for its community-hospital leadership. Bryant will report to Dennis Chalke, senior vice president of Community Hospitals for Baystate Health. “We’re proud to welcome Noble and its team members to the Baystate family and to bring their proud tradition of outstanding, compassionate care into our organization,” said Dr. Mark Keroack, president and CEO of Baystate Health. “Now, we’ll move on to the most important part of this change: advancing the quality, access, and value of care provided to the Westfield community.” As president of Baystate Noble, Bryant will continue to provide strategic, executive, and operational leadership for the hospital, which offers a variety of inpatient and outpatient services including medical, surgical, pulmonary rehabilitation, cardiac, and emergency services for more than 100,000 local residents. “For me, this is a new phase and an extension of an already-strong relationship,” said Bryant. “From heart-attack care to neurosciences to obstetrics, the Noble community has a long-standing and thriving relationship with Baystate Health. I’m honored to be able to play a part in this new relationship — and step forward — in service of the Westfield community’s health.” Added Chalke, “Ron has led Noble to success in the most challenging of environments for community hospitals. We’re very pleased to work with him as we continue our efforts to provide as much care as possible close to home, effectively and efficiently, for our communities in Western Massachusetts.” Baystate continues its tradition of upholding the histories of partner organizations that endure in their names, Chalke noted. “We’re very pleased to honor the memory of Reuben Noble and continue to provide the outstanding care that patients have come to expect from Noble.” Bryant earned his undergraduate degree from Assumption College and has a master’s degree in health administration from St. Joseph’s College. He also is a licensed certified public accountant. He is a member of the American College of Healthcare Executives and the Mass. Hospital Assoc. board of trustees. Noble has about 750 employees who will join Baystate Health’s team of 11,500 across Western Mass. Noble Hospital trustees Robert Bacon and Harriet DeVerry will join the Baystate Health board of trustees as representatives of Noble and its community. Baystate Noble will not retain a separate board of trustees. Noble Hospital has served the Greater Westfield community since 1893, when Westfield native Reuben Noble bequeathed a large portion of his estate to establish a local hospital. The original hospital had 20 beds and was staffed by eight physicians. The Nurses’ Training School opened in 1905 and graduated 144 nurses before closing in 1936. In 1958, a new hospital was built featuring updated facilities and equipment. Noble Hospital has seen many changes in its 122 years, including new service lines, state-of-the-art medical enhancements, and facility additions and improvements. The new Baystate Noble Hospital name and logo will be integrated into all signage and materials in the weeks to come. The Noble Visiting Nurse & Hospice logo has also been updated to reflect its connection to Baystate Health.

MGM Springfield Seeks One-year Delay
SPRINGFIELD — The Massachusetts Gaming Commission will consider a formal request by MGM Springfield to delay the opening of its South End resort casino by one year. MGM Springfield President and Chief Operating Officer Michael Mathis appeared before the commission recently to discuss the request. He cited, as the main reason, the rehabilitation of the Interstate 91 viaduct through downtown Springfield — a project expected to last into the summer of 2018. The casino was originally expected to open in late 2017, and Mathis said opening a casino during viaduct construction is not feasible. MGM is asking to open the casino in September 2018, or one month after the completion of viaduct work. The I-91 project is expected to limit the number of lanes in both directions, creating considerable traffic. Initial viaduct work is expected to start this July, with ramp and lane closures beginning in late fall. The Gaming Commission, which must sign off on any change in the casino construction schedule, could make a decision on at its July meeting.

Jobless Rate Unchanged in New England in May
BOSTON — The New England Information Office of the U.S. Bureau of Labor Statistics (BLS) has released New England and state unemployment numbers for May 2015. These data are supplied by the Local Area Unemployment Statistics program, which produces monthly and annual employment, unemployment, and labor-force data for census regions and divisions, states, counties, metropolitan areas, and many cities, by place of residence. Among highlights in the release:
• The New England unemployment rate was essentially unchanged at 4.9% in May. One year ago, the New England jobless rate was higher, at 6.0%.
• Four New England states posted jobless rates that were significantly different from the U.S. rate of 5.5%. Vermont (3.6%), New Hampshire (3.8%), Massachusetts (4.6%), and Maine (4.7%) recorded lower-than-average unemployment rates.
• Over the last year, five New England states recorded statistically significant unemployment rate decreases with declines ranging from 2.0% in Rhode Island to 0.4% in Vermont. In fact, Rhode Island had the largest jobless-rate decline nationwide.

State Lowers Business Rate for Workers’ Compensation
BOSTON — The Baker-Polito administration will reduce the assessment employers pay to the state on workers’ compensation insurance policies by 0.05%, offering companies some tax relief. For fiscal year 2016, employers will pay an assessment on their total insurance premium of 5.75%, which is remitted to the state. The previous rate was 5.8%. The new rate went into effect July 1. The Department of Industrial Accidents (DIA) administers the workers’ compensation insurance system and annually establishes assessment rates. “After reviewing the current assessment rate and the economic outlook for next year, we recommended lowering the rate. This will further support businesses, and anything we can do to support businesses and spur job growth is a very good thing,” said Labor and Workforce Development Secretary Ronald Walker II. The Massachusetts workers’ compensation system is in place to make sure workers are protected by insurance if they are injured on the job or develop a work-related illness. Under this system, all employers in Massachusetts are required by state law to carry workers’ compensation insurance covering their employees, including themselves if they are an employee of their company. The insurance pays for any reasonable and necessary medical treatment for job-related injury or illness, pays compensation for lost wages after the first five calendar days of full or partial disability, and in some cases provides retraining for employees who qualify. DIA is funded through assessments on workers’ compensation policies and self-insurance programs for employers operating in Massachusetts. In addition, DIA collects statutory fines and fees. DIA also acts as a court system responsible for resolving disputed workers’ compensation claims, overseeing and adjudicating about 12,000 disputed cases each year.

Employers Grapple with Earned Sick Leave Law
SPRINGFIELD — Massachusetts Attorney General Maura Healey filed final regulations on June 19 regarding the new Earned Sick Leave Law that took effect this month, leaving employers with only eight business days to make payroll and policy changes to stay in compliance of the law. The final regulations addressed questions about the law’s ambiguities that have been raised throughout the Commonwealth, including several by local employment-law attorney Kimberly Klimczuk, partner at Skoler, Abbott & Presser, P.C. Klimczuk testified before the attorney general during the public hearing in Springfield in May, advocating for employers. “This public-notice and comment period offered by the attorney general was our opportunity to gain clarity on behalf of employers,” said Klimczuk. “Over the last six months, I have presented to almost a dozen groups of human-resource professionals and clients that had questions not clearly answered within the law or previously issued regulations.” Klimczuk brought the questions to the attention of the attorney general so that ambiguities could be addressed within the final regulations. The final regulations clarified several issues, such as whether sick leave can be used concurrently with leave taken pursuant to the Family and Medical Leave Act or other leave laws, whether differential pay would be included in sick pay, and whether policies that condition holiday pay on attendance the day before and the day after the holiday would be acceptable under the non-retaliation provisions of the law. “I was impressed with how responsive the attorney general and her staff were to employer concerns,” she said. “Many of the issues I raised at the public hearing were explicitly addressed in the final regulations, such as the provision about holiday policies, which was a huge relief to many of my clients. While not everything was resolved in exactly the way we had hoped, in many areas, we at least have the information we need to provide a definitive answer to our clients’ questions.” Still, given the short period of time between the issuance of the final regulations and the effective date of the law, many employers have been scrambling to make the policy changes necessary to come into compliance.

Census Pinpoints State’s Oldest, Youngest Counties
WASHINGTON, D.C. — Based on median age, the U.S. Census Bureau recently reported on which counties in Massachusetts had the oldest populations and which had the youngest. The U.S. median age ticked up from 37.6 on July 1, 2013 to 37.7 on July 1, 2014. These estimates examine population changes among groups by age, sex, race, and national origin, as well as in all states and counties, between April 1, 2010, and July 1, 2014. The counties in Massachusetts with the highest median age on July 1, 2014 were Barnstable at 52, Dukes at 46.7, and Berkshire at 46.1. This means that half the population was older than this age, and half younger. The youngest counties — that is, those with the lowest median age — were Suffolk at 32.4, Hampshire at 35.7, and Middlesex at 38.4. As the nation aged, so did most counties in Massachusetts, with the exception of Norfolk, Essex, Nantucket, Hampden, and Middlesex, where the median age remained the same between 2013 and 2014. Nationally, non-Hispanic, single-race whites represented the largest group in 2014, at 197.9 million. Hispanics were next, with a population of 55.4 million, followed by blacks, at 45.7 million, Asians (20.3 million), American Indians and Alaska natives (6.5 million), and native Hawaiians and other Pacific Islanders (1.5 million). In Massachusetts, there were 3,144,704 non-Hispanic single-race whites. Other races, alone or in combination, included 731,206 Hispanics, 639,843 blacks, 475,356 Asians, 69,207 American Indians or Alaska natives, and 14,205 native Hawaiians or other Pacific Islanders. Unless otherwise specified, the statistics refer to the population who reported a race alone or in combination with one or more races. Censuses and surveys permit respondents to select more than one race; consequently, people may be one race or a combination of races. The sum of the populations for the five ‘race alone or in combination’ groups adds to more than the total population because individuals may report more than one race.

Classic Cars Return to Springfield This Summer
SPRINGFIELD — The Duryea Motor Wagon Co., the first American firm to build gasoline automobiles, had its beginnings in Springfield back in 1895. Now classic and antique cars are making their way back to Springfield for Cruise Night, occurring every Monday this summer. The event offers not only classic and antique cars, but also great music and delicious food. “I was thrilled that downtown could play host to Cruise Night,” said Chris Russell, executive director of the Springfield Business Improvement District. “With all the history of the automobile in Springfield, we thought it only made sense to have a car show. If you love the classic automobiles as much as I do, please join us next Monday night. And if you have a classic car of your own, don’t forget to register, too.” Cruise Night at Stearns Square features classic and antique cars that are 20 years or older. Individuals who want to register a car may do so beginning at 5 p.m. Registration is on Worthington Street across from Stearns Square. Registration fees are currently being waived. At the end of each night, trophies will be awarded. For more information, visit springfielddowntown.com/cruise-night.

ACCGS Seeks Super 60 Nominations
SPRINGFIELD — The Affiliated Chambers of Commerce of Greater Springfield (ACCGS) is seeking nominations for its annual Super 60 awards program, sponsored by Berkshire Bank and WWLP-TV 22. Now in its 26th year, the awards program celebrates the success of the fastest-growing privately owned businesses in the region. Each year, the program identifies the top-performing companies in revenue growth and total revenue. Last year, total revenue winners combined for revenues of over $1 billion with an average revenue of more than $35 million. One-third of the winners in the revenue-growth category experienced growth in excess of 50%, with the average growth of all the honorees in that category at more than 49%. To be considered, companies must be based in Hampden or Hampshire county or be a member of the ACCGS, report revenues of at least $1 million in the last fiscal year, be an independent and privately owned company, and have been in business for at least three full years. Companies are selected based on their percentage of revenue growth over a full three-year period or total revenues for the latest fiscal year. Companies may be nominated by financial institutions, attorneys, or accountants, or be self-nominated. Companies must submit a nomination form and provide net-operating-revenue figures for the last three full fiscal years, signed and verified by an independent auditor. All financial information must be reported under generally accepted accounting principles and will be held and considered confidential and not released without prior approval. Nomination forms are available by contacting Kara Cavanaugh at [email protected] or (413) 755-1310. Nominations must be submitted no later than Aug. 14. The Super 60 awards will be presented at the annual luncheon and recognition program on Oct. 23 from 11:30 a.m. to 1:30 p.m. at Chez Josef in Agawam.

Report Outlines State Underemployment Stats
BOSTON — The New England Information Office of the U.S. Bureau of Labor Statistics (BLS) has released “Alternative Measures of Labor Underutilization in Massachusetts 2014,” with data supplied by the Current Population Survey (CPS) program, a monthly survey of households conducted by the Bureau of Census for the BLS. The comprehensive body of data includes labor force, employment, unemployment, persons not in the labor force, hours of work, earnings, and other demographic and labor-force characteristics. Among the highlights from the release:
• In 2014, the broadest measure of labor underutilization, designated U-6 (which includes the unemployed, workers employed part-time for economic reasons, and those marginally attached to the labor force), was 11.5% in Massachusetts, down from 13.2% in 2013. Nationally, the U-6 rate averaged 12.0% in 2014.
• As measured by U-3 (the official concept of unemployment, which includes all jobless persons who are available to take a job and have actively sought work in the past four weeks), the unemployment rate in Massachusetts was 5.8%. By comparison, 6.2% of the labor force was unemployed nationally.
• Massachusetts had 204,800 unemployed residents in 2014 according to the CPS, and another 164,300 were employed part-time for economic reasons (also known as involuntary part-time). These individuals worked part-time because of slack work or business conditions, or because they were unable to find a full-time job. Nationwide, there were 7.2 million individuals working part-time for economic reasons in 2014.
• Discouraged workers, included among the marginally attached, are persons who are not currently looking for work because they believe no jobs are available for them. In 2014, there were 13,500 discouraged workers in Massachusetts.
• In 2014, Massachusetts was among the 23 states where all six measures of underutilization significantly decreased over the year.

Daily News

BOSTON — In a number of important respects, the Massachusetts economy is experiencing its strongest expansion since the heady days of the late 1990s, according to the editorial board of MassBenchmarks.

As the board anticipated, this year’s severe winter weather had only a transitory, and ultimately minor, impact on economic conditions in the Bay State. Employment and the labor force are growing strongly, and payroll survey shows consistent and strong growth in employment. And gross state product growth, as estimated by the MassBenchmarks Current Economic Index, continues to outpace that of the nation. Once again, the state’s knowledge-intensive sectors are its primary growth drivers.

Industrially, the expansion is being led by the dynamic professional, scientific, and technical services sector, which includes architectural, engineering, and specialized design services; computer services; computer-systems design; consulting services; research services; and other related services. Employment in software development is also growing strongly.

These sectors rely heavily upon the Commonwealth’s highly educated work force, which remains in high demand, as reflected by the fact that college-educated workers continue to have the lowest unemployment rate among all socioeconomic groups in the state. While conditions for less well-educated workers have improved, unemployment and underemployment rates in many communities remain troublingly high.

Economic growth continues to be disproportionately concentrated in the Greater Boston region and within the Route 495 belt. While there are notable exceptions to this pattern of imbalanced growth, including the cities of Lowell and Worcester, conditions in regions outside of the Greater Boston region are improving, but their economic performance continues to lag.

Notwithstanding the solid performance of the Massachusetts economy, there are a number of short- and long-term threats to growth that could serve to slow and in some cases derail the Commonwealth’s expansion. Growth pressures in the immediate Greater Boston region are placing increased stress on the state’s transportation infrastructure, which this past winter’s severe weather revealed to be in serious need of attention and investment.

These same growth pressures, along with inadequate housing production, are fueling rapidly rising home prices throughout Eastern Massachusetts. While this is good news for incumbent homeowners, it puts upward pressure on the cost of living, making it more difficult for the Greater Boston region to attract the highly educated workers it needs to meet the needs of growing knowledge-intensive organizations. And the state’s high electricity prices, which have risen in every corner of the state, are beginning to limit economic growth in regions that are sorely in need of more economic opportunities. In Berkshire, Franklin, and Hampshire counties, new natural-gas hookups have been suspended, which is directly constraining business expansions in Western Massachusetts.

Additionally, the relatively slow growth of the global economy and considerable economic and geopolitical uncertainty continue to weigh heavily on the economic outlook for the nation and the Commonwealth. Greece and Puerto Rico appear to be headed for sovereign debt defaults, with highly uncertain impacts for Europe and North America. Critically important trading partners in Asia, including China and Japan, continue to face serious economic challenges. And the Middle East and Eastern Europe remain politically volatile.

Going forward, while the Commonwealth’s leaders have little control over what happens internationally, it is well within their power to tackle the challenges presented by aging infrastructure and imbalanced growth patterns, MassBenchmark’s board notes. Toward this end, policies that improve the state’s transportation systems, both within Greater Boston and beyond, and extend educational and economic opportunities to more people and regions that have yet to experience the full benefits of the current economic expansion, should be priorities going forward.

Daily News

BOSTON — The Baker-Polito administration will reduce the assessment employers pay to the state on workers’ compensation insurance policies by 0.05%, offering companies some tax relief.

For fiscal year 2016, employers will pay an assessment on their total insurance premium of 5.75%, which is remitted to the state. The previous rate was 5.8%. The new rate went into effect July 1.

The Department of Industrial Accidents (DIA) administers the workers’ compensation insurance system and annually establishes assessment rates.

“After reviewing the current assessment rate and the economic outlook for next year, we recommended lowering the rate. This will further support businesses, and anything we can do to support businesses and spur job growth is a very good thing,” said Labor and Workforce Development Secretary Ronald Walker II.

The Massachusetts workers’ compensation system is in place to make sure workers are protected by insurance if they are injured on the job or develop a work-related illness. Under this system, all employers in Massachusetts are required by state law to carry workers’ compensation insurance covering their employees, including themselves if they are an employee of their company.

The insurance pays for any reasonable and necessary medical treatment for job-related injury or illness, pays compensation for lost wages after the first five calendar days of full or partial disability, and in some cases provides retraining for employees who qualify.

DIA is funded through assessments on workers’ compensation policies and self-insurance programs for employers operating in Massachusetts. In addition, DIA collects statutory fines and fees. DIA also acts as a court system responsible for resolving disputed workers’ compensation claims, overseeing and adjudicating about 12,000 disputed cases each year.

Cover Story Economic Outlook Sections
Region’s Economy Gets a Jolt of Vibrancy

EcoOutlookDPartSince the end of the Great Recession in 2009, economic expansion in Western Mass. — and many other parts of the country as well — has been, in a word, limited.

And these limits have resulted from a host of factors that have stood in the way of more profound recovery. They include everything from lackluster hiring trends to high energy prices and their impact on businesses and consumers alike; from economic turmoil abroad, especially in Europe, to political chaos in Washington, as with the so-called fiscal cliff of early 2013; from a floundering housing market to a persistent lack of confidence among business owners.

But as the new year approaches, say experts we spoke with, much of this whitewater seems to be giving way to smoother conditions that are much more conducive to progress. The coast isn’t clear, they imply, but it is much clearer.

Indeed, Bob Nakosteen, a professor of Economics at the Isenberg School of Management at UMass Amherst, told BusinessWest that he sees positive signs almost everywhere he looks, something he hasn’t been able to say for at least the past seven years.

That includes the latest employment statistics for the Bay State, which show unemployment in Springfield at 8.4% (down from 10.6% a year ago), which he considers a bellwether.

“What’s happening now is that the economic recovery is actually permeating Western Massachusetts, something you couldn’t say over the past several years,” he noted, adding that Boston, Cambridge, and other communities have enjoyed a far-more-robust recovery. “If you look at the employment numbers, we’re adding jobs in this part of the state, and that’s a really good development.”

That also includes the gas pump, where the prices for regular are now below $3 a gallon in all but a few of the 50 states and below $2 in a few (Oklahoma, for example). By all indications, they should stay at those levels, or drop even further, in the weeks ahead.

“And this simply puts money in people’s pockets,” Nakosteen explained. “When you pay for gas at the gas station, most if that money leaves the state — some of it stays, but most of it just goes away. Now, that money is staying in people’s pockets, but hopefully not for long; there are some estimates that people will spend at least half of what they save at the pump, and that goes to local businesses.”

The positive trends also include the housing market, the balance sheets of both businesses and families (both are carrying less debt), and consistently rising numbers when it comes to business confidence.

And then, there’s that $800 million casino project in Springfield’s South End. It isn’t officially underway yet — at least in terms of demolition or construction — but it is already generating excitement, movement within the long-stagnant commercial real-estate market, and talk of opportunities in many forms.

“We’ve had two vendor fairs, and they were very well-attended by small and medium-sized businesses who are looking at the possibility of doing business with the casino, and that’s a real positive sign,” said Jeff Ciuffreda, president of the Affiliated Chambers of Commerce of Greater Springfield, noting that there is anticipation with regard to jobs — both construction and permanent — and the casino’s vast potential for bringing more meetings and conventions to the city and region as a whole.

Meanwhile, the announcement that Changchun Railway Co. will be building subway cars in the former Westinghouse site has spurred anticipation of more than 150 well-paying manufacturing jobs as well as hopes for further growth within the region’s once-prominent manufacturing sector.

Despite all this welcome news, there are some points of global economic concern, said Cliff Noreen, president of Springfield-based Babson Capital Management LLC. He cited everything from a slowing growth rate in China to falling bond rates in many European countries to the fact that, while corporate profits are soaring, that wealth is, by and large, not being shared with employees.

The $800 million MGM Springfield

The $800 million MGM Springfield, due to start taking shape in Springfield’s South End, is one of many sources of optimism across the region.

“In the third quarter, U.S. corporate profits were up 9% on revenue growth of 4%,” he explained. “And this results from a very intense focus on managing expenses, which is to the detriment of employees; wages as a percentage of GDP have dropped to 43%, the lowest level in years.”

But, overall, Noreen and others are generally optimistic about the year ahead, so much so that the adverbs ‘guardedly’ and ‘cautiously,’ which have preceded that term since the recession officially ended nearly six years ago, have been generally dropped from most commentary.

“I do think that the mood of small-business owners is positive — I sense a better buzz, a better feel now than I have in the past several years,” said Ciuffreda. “Some of this is downtown-centric, with UMass here, the progress at 1550 Main Street, NPR’s new facilities, new tenants in 1350 Main St. … the feeling is a lot better; the city is more positive than I’ve ever seen it.”

Fueling Speculation

Like Nakosteen, Noreen called falling gas prices a form of economic stimulus, and he offered some eye-opening numbers to get his point across.

“Every penny that gas drops results in $1.3 billion of additional money or funds for consumers and business in the United States — discretionary spending,” he explained. “Gas has dropped approximately 55 cents from the beginning of the year, which should result in a savings of $73 billion, which is effectively stimulus, which comes out to about four-tenths of 1% of GDP.”

Nakosteen cited estimates that the average family will save perhaps $60 a month due to the falling gas prices. “And if you do the arithmetic, take half that and add that up over a whole lot of households, that’s really money being spent in the region,” he said. “And from all I’m reading, this decline in fuel prices is not going to be short-lived; it’s going to last for a while.”

This windfall — unexpected but in some ways not surprising, given the explosion in the production of shale oil in this country — is just one of many reasons, large and small, for rising optimism regarding the economy, even as those numbers are tempered by the damage done to the energy sector when oil falls to below $70 a barrel.

Nakosteen said the improving employment numbers are equally important, if not moreso.

Cliff Noreen

Cliff Noreen says that, despite general optimism about the economy, there are many factors, here and abroad, that could impact the pace of growth.

Elaborating, he noted that, for the most part, whatever recovery this region has enjoyed over the past several years has been generally of the jobless variety. But recent employment reports show that perhaps that scenario is changing.

“It’s been really a slow slog,” Nakosteen said of employment in the four western counties and especially Springfield. “Maybe the recovery is really gaining traction in this part of the state, and recent developments are only going to help.”

With jobs come disposable income and a resulting trickle-down, said Noreen, noting quickly that optimism does need to be kept in check by the fact that many jobs being created, not only in Massachusetts but nationwide, are part-time in nature, and with wages that are not keeping pace with inflation.

“More than 321,000 new jobs were created on a net basis in November,” he said, citing the most recent jobs report. “Our concern, and we’ve been saying this to clients all year, is that the quality of jobs is not what it used to be, and many of these jobs are part-time jobs, they’re in service-type industries that are very low-wage, and many of the jobs are being taken by workers over 55 years old, either because they want to work or they need to work.”

But, overall, the job growth is being seen as a positive sign for the region’s economy, as is the growing confidence among business owners, said PeoplesBank President Doug Bowen, who cited not only the Associated Industries of Massachusetts’ monthly business confidence index and its recent steady improvement, but also trends and activity he’s noticed locally.

“The Massachusetts economy is on track to strengthen, with solid economic growth, and add more jobs in 2015,” he said. “We have a positive outlook for Western Mass. Companies in our portfolio, in general, are doing well and showing moderate growth. Some of these business owners are selectively investing in capital equipment and, to a lesser degree, new facilities.

“But we are seeing growth,” he went on. “We’re seeing some that are adding additional shifts, which always precedes the actual physical construction of new space.”

One of the sectors where he’s seeing such movement is aerospace, or machine shops, which he considers a positive sign because those jobs are generally well-paying. But he’s also witnessing growth in other manufacturing, healthcare, hospitality, and IT.

He said that most of these expansions are resulting not from speculation, but rather from current backlog and existing orders, which leads some to speculate on how long this might continue. However, Bowen noted that he’s seeing generally forward movement and, overall, less hesitation when it comes to additional hiring.

If there are speed bumps down the road for the region’s and nation’s economy, they will likely result from action — or inaction, as the case may be — in other corners of the globe, said those we spoke with.

“Japan is struggling, the Russian ruble has declined substantially, and China is growing at less than people thought,” Noreen explained, adding that these factors and others add up to less demand for U.S. products and commodities such as oil, iron ore, and concrete, which may eventually slow the pace of growth in this country.

“Over the past three years, China used more concrete than the U.S. used in the last 100 years,” said Jay Leonard, a director with Babson Capital Management. “That’s a stunning number, and it helps explain why, with China’s slower rate of growth, oil prices are down, copper prices are down, and steel is getting crushed.”

Meanwhile, Europe continues to be the biggest disappointment on the global economic stage, said Noreen, pointing to bond rates on 10-year government yields (2% in Spain, 1% in France, and 0.77% in Germany) that he called shockingly low.

Industry Terms

As 2015 approaches, those representing several economic sectors anticipate that this will be a year of change, but also challenge and, in many cases, opportunity.

For the long-suffering construction industry, one of the sectors hardest-hit by the recession and the lackluster recovery that followed, change is almost certainly good, said Dave Fontaine, president of Springfield-based Fontaine Brothers.

Doug Bowen

Doug Bowen says confidence among business owners is growing, and many are making investments in their ventures.

He told BusinessWest that, while 2014 has not been a banner year for his company — “we had work, but it was all booked in 2013” — there has been some improvement in several areas within construction, from home building to infrastructure work (roads and bridges). And the consensus is that 2015 will be better because of what he called “pent-up frustration.”

But easily the greatest source of optimism within the industry is the approaching start of work on the casino.

While the general contractor for this massive project will certainly be a firm from well outside the 413 area code, undoubtedly one with several casino projects in its portfolio, Fontaine said, there will be a trickle-down effect, with many area subcontractors and individual tradesmen (all unionized) in line to win much-needed work.

Just how much work remains to be seen, obviously, but Fontaine expects the project to have a deep impact on the sector and its workforce.

“The casino project is going to be good for the general trades, because I know that, for bricklayers, carpenters, and laborers, their hours were down significantly this past year,” he said. “These types of projects certainly employ a lot of people, and they employ them quickly and for a lot of hours, but then they’re done.”

What the sector will have to guard against, to whatever extent possible, is a shortage of manpower for other projects because of the attractiveness of the casino work in terms of hours, wages, and the opportunity for overtime.

“There’s the potential for some manpower shortages, because everyone would want to be down at the casino because they’re getting overtime and six days a week and whatnot,” Fontaine explained. “But our group of tradespeople that work for us, I don’t see them packing up and abandoning us to give their life to the casino for two years.”

Change is also expected in the banking sector, where Bowen believes the recent spate of mergers and acquisitions will give way to a more stable environment.

Indeed, 2014 saw the completion of the merger of equals between United Bank and Connecticut-based Rockville National, and the announced acquisition of Hampden Bank, the last institution based in Springfield, by Pittsfield-based Berkshire Bank.

“To a large extent, it’s pretty much over,” he told BusinessWest. “There may be one or two more organizations that come into play, but the organizations that positioned themselves for merger or acquisition have pretty much achieved their objective.”

These mergers present opportunities in several forms, especially for community banks like PeoplesBank, said Bowen, noting that, whenever such acquisitions take place and management of the acquired bank shifts away from Greater Springfield, commercial and consumer accounts will be moved to small institutions. Meanwhile, such unions generally result in downsizing, which enables banks to recruit talented individuals that already know the local market.

“As an independent, mutually owned bank with no shareholders, we often become the bank of choice for customers who have experienced some disruption in their banking experience,” he said. “This year alone, we’ve increased deposits by more than $100 million; a typical year might by three-quarters that amount.”

Another sector that bears watching in 2015 is healthcare, which is still struggling to cope with the changes brought on the Affordable Care Act (Obamacare) and the ongoing shift from a fee-for-service system to one focused much more on population health.

Such a shift requires providers to make significant investments in equipment, systems, and personnel, said Dennis Chalke, Baystate Health’s chief financial officer, treasurer, and senior vice president of Community Hospitals, adding that these investments come at a time when reimbursements for care are flat or declining and inpatient stays, a major source of revenue, are falling.

Thus, it’s becoming increasingly difficult to make them, especially for stand-alone hospitals, he said, which explains why North Adams Regional Hospital closed in 2014 and why Stewart Health Care System announced that it was shuttering Quincy Medical Center, the largest hospital closing in the state in more than a decade.

“Right now, Medicare is penalizing people if their readmission rates are too high,” he explained. “That means you have to now invest in tools and other things to decrease readmissions, so when patients leave the hospital you have to make sure they follow up with physician office visits and they that they are adhering to their medications and so forth — and that takes investments in things you wouldn’t traditionally invest in.

“That’s a good thing,” he went on. “But we’re not getting paid to do that. We avoid losing dollars when we do that; it’s almost like a negative incentive. And that’s the biggest challenge facing the industry moving forward.”

As for the casino, Ciuffreda said that, overall, apprehension about the gaming facility is diminishing, at least within the business community, and it is generally being replaced with optimism, although some concern remains about its long-term sustainability.

“The mood is very positive — the only slightly gray cloud hanging over the casino is its sustainability 10 years out or so,” he said. “About 95% of the people feel very comfortable about the next five years, and 75% are comfortable about the next 10 years, but some questions start to creep in about what happens after that.”

Money Talks

Challenge and opportunity. Those two words sum up the outlook for each sector and the regional economy as a whole.

But, overall, the emphasis this year seems to be more on opportunity, as it pertains to jobs, growth through additional discretionary spending, expansion, and the many forms of trickledown anticipated from the casino.

As Nakosteen said, it appears that the economic recovery is actually permeating Western Mass.

And it’s about time.

George O’Brien can be reached at [email protected]

Features
Springfield Welcomes a New Industry — and a Brighter Economic Outlook

SubwayPage6DPA few hundred new jobs in Springfield is always cause for celebration. But city leaders are thinking much bigger than that.

For instance, David Cruise recalled his first meetings with representatives of CNR Changchun Railway Vehicles, the Chinese-based rail-car manufacturer that announced a $565 million deal last month to build at least 284 new subway cars for the MBTA, and to base its operations at the former Westinghouse site in Springfield.

“We were very excited about the opportunity to have CNR Changchun here in the area — it’s a very unique opportunity to bring sustaining wages and career opportunities to people of all ages,” said Cruise, president and CEO of the Regional Employment Board of Hampden County (REB). “We believe they’re very, very committed — not only to fulfilling this contract with the MBTA, but using that contract to expand their business in other parts of the country, while keeping their corporate offices and manufacturing facility here in Springfield.”

Kevin Kennedy, Springfield’s chief development officer, said he and Mayor Domenic Sarno have the same idea.

“In our discussions, what really intrigued the mayor and me the most is that they immediately said to us, ‘we want to make this our American manufacturing headquarters,’” Kennedy told BusinessWest. “Their goals went well beyond the MBTA contract, and it says to us that they plan to have prolonged growth, sustained growth, both from a jobs point of view and and from an ecomomic-development point of view … from every point of view we could think of.”

In other words, the world’s largest rail-car maker setting up shop in Springfield could represent far more than the expected initial 100 to 125 construction jobs and 225 to 250 jobs at the plant.

David Cruise

David Cruise says he was impressed with CNR Changchun’s commitment to growing in Springfield.

“They are very serious about getting into the American rail-car market,” Kennedy continued. “After the original contract, they’re looking at other opportunities, and we could see significant job growth. And I think the key right now — the thing everyone in political and private life is talking about — is jobs.”

Sarno agreed. “The impression I get from them is, this is really going to blossom for them,” he said. “Increased jobs are going to come from this — good-paying jobs, hundreds of jobs — and will solidify and strengthen the tax base. But I think this is something even bigger. This will be their North American hub; they’re already looking at secondary projects in the Springfield area.”

In other words, CNR Changchun’s decision to set up shop in Springfield, catalyzed by the MBTA’s decision to award the company the contract to manufacture almost 300 new cars, could lead to many more economic benefits down the road — or the track, as the case may be.

Mass Appeal

The saga that eventually brought CNR Changchun to Springfield began late last year, when the MBTA first announced the project.

“We’re always looking for different opportunities, and when we came across the MBTA advertising for the bid, we contacted them and got the list of bidders who had taken out bid specs, and we contacted all of them to talk about Springfield, how Springfield would be very receptive to them coming here,” Kennedy said. “As it turned out, potential bidders had already looked at Springfield. We ended up with two that already had half a stake down in the ground here, and we met with both over a period of months.”

Those companies were CNR Changchun — which bought the former Westinghouse site from Pinnacle Entertainment — and Hyundai Rotem, which aimed to build a plant on Progress Avenue. Both companies met extensively with city officials and learned about potential workforce-training initiatives involving Springfield Technical Community College, Holyoke Community College, Western New England University, and Roger L. Putnam Vocational Technical Academy, as well as the region’s two one-stop career centers, CareerPoint and Future Works, and entities like the REB and the Economic Development Council.

“One of my first questions for the CNR folks, when they indicated they had taken an option on the property from Pinnacle, was ‘why Springfield?’” Kennedy said. “They said to me, ‘you’ve got a great workforce, a great location, great transportation system. We think this would be a really good place for workforce development and for our employees to work.’”

The city’s appeal would only be heightened, he added, by the MGM Springfield resort casino to be built in the South End if a ballot measure aimed at barring casinos in Massachusetts is defeated this Tuesday. “A number of Millennials are interested in quality-of-life issues, and we’re not talking about gambling; we’re talking about entertainment.”

Meanwhile, the entire Page Boulevard corridor around the Westinghouse site could see a bump in quality of life, Sarno added.

“The restaurants in that area are ecstatic. Now we’re going to get spinoff businesses — people are going to want to eat, get their hair cut, need this, need that,” the mayor said. “We also have great housing stock there. Someone may say, ‘hey, I work here; if I buy a house in the area, I can walk to work.’ There’s tremendous potential there for the long haul.”

Cruise also used that term ‘long haul’ when describing his interactions with CNR Changchun over the past several months.

“We would have been pleased with whomever was selected if they were coming into the area, but we’re particularly pleased by this selection,” he said. “In the discussions we were part of, it was pretty evident to us that this company was committed to being in the area for the long haul — that the MBTA contract to provide rail cars in Boston was critical to them, but they were going to use this as a platform for additional business around the country.”

In addition, “our impression was that they were committed to making certain that local residents were hired for their production and assembly positions, and that was really important to us,” Cruise said. “Their reputation as the largest builder of railway cars in the world certainly wasn’t lost on us. I was impressed by a number of things they had to say. This could be very, very significant.”

Sarno said the company appreciated the way the city seamlessly brought together players from the business, political, and workforce-development realms to craft a vision of what the city and its environs could offer.

“They really liked the red carpet we rolled out for them here in Springfield,” the mayor said. “CNR Changchun is very good with grassroots, with reaching out, and had meetings with Putnam, WNEU, workforce-development people, the media, vendors, the employment base. They really wanted to touch every base they could here in Springfield, and we helped facilitate that.”

Added state Sen. Gale Candaras, at the recent press conference where Gov. Deval Ptrick announced the MBTA deal, “their level of engagement with people here was amazing. Right from the beginning, they wanted to be here; they were committed to this site.”

Engine for Growth

Like Kennedy, the mayor said the city’s greatest appeal to CNR Changchun — which will do business here under the name CNR MA — is its worker pool and, more importantly, the infrastructure already being built to train it for what are expected to be well-paying precision-manufacturing jobs.

For the REB’s part, Cruise explained, it will take a three-pronged approach. It will coordinate with the CareerPoint and Future Works career centers, the Department of Veterans Services, and area vocational high schools to identify existing candidates for jobs; help develop training programs at Putnam, STCC, and WNEU to increase that pool; and work closely with labor unions whose members have the required skills associated with rail-car assembly, as well as the REB’s network of advanced-manufacturing firms to connect CNR MA with area companies that can manufacture required parts and components.

“When trying to build a workforce of this size, you have to have educational outreach programs to make certain the community as a whole is aware of the positions that will be available — primarily production opportunities, but I suspect some in the corporate office in Springfield as well,” Cruise told BusinessWest.

“It’s critical that companies assist CNR in their efforts to get the workforce,” he continued, “but also make certain, as the workforce is selected, that we have an infrastructure in place to continue to provide skills to their incumbent workforce. In my opinion, this area has the educational infrastructure to be able to respond to workforce needs, which is not something you find in too many areas. I suspect one of the reasons CNR chose Springfield as a location for their facility was that they saw the resources available here, and I think that was important to them.”

CNR MA expects to break ground on its new, $60 million plant sometime in 2015, just as planned worker-training programs begin to gear up. The initial project to build 152 Orange Line cars and 132 Red Line cars — replacing vehicles that have been in use for between 35 and 45 years — is set to continue until a planned delivery date of 2021, but by then, the company is hopeful that an expanded workforce will be busy with other projects well into the future.

“This is huge,” Cruise said, “not only for the whole issue of job creation, but also for some of the smaller companies, sheet-metal companies, and the labor unions here in the area, who can be suppliers and partners in this work.

“We think it will have a ripple effect on other companies,” he continued. “Whenever you bring a manufacturing facility of this magnitude in the area, there will be some spinoff for some of the smaller companies that provide goods and services to them. That’s critical.”

Richard Davey, secretary and CEO of the Mass. Department of Transportation, recognized the importance of this project to the people of Springfield.

“The governor has talked about transportation not being about just trains and buses, but lifting communities, about jobs and economic development,” he said.

Added Patrick, “they’ve been thoroughly vetted; they’ve constructed these kinds of cars all over the world, and they’re very well-respected. One condition of this deal is that they do the assembly and manufacturing here in Western Mass., and they have chosen to do that right here in East Springfield.”

Springfield Bound

Sarno suspects that most people didn’t consider his city a front-runner, yet, after CNR Changchun officials visited about 50 sites along the Northeast corridor, it settled on Springfield.

“Even though the region’s manufacturing base has eroded since the old days, dating back to the ’70s, it’s still a hotbed for precision machining,” he told BusinessWest. “And they liked what they saw here. They liked the supports from the city and state, they liked the workforce development we have here, our farm system, and they really loved the property.”

The mayor also believes the rise of a new industry in Springfield could be a catalyst to attract other manufacturing firms of all types. “I think it’s the best advertisement to come to Springfield.”

Kennedy said a manufacturer of this size and reputation locating in Western Mass. is unheard of these days, but in a way, it fits in perfectly with the other positive changes happening in Springfield, from MGM Springfield and Union Station to the area colleges procuring a presence downtown and the development of an innovation district plan.

“All these pieces of the puzzle are coming together — it’s happening,” he said. “There’s certainly enthusiasm happening in the business community, recognizing what’s happening here. What we need now is to translate this into a real marketing effort for Springfield, so the general public can see it.”

And other businesses, of course.

“We really are at a pivotal moment in the city’s history,” Sarno said, citing not just potential new jobs, but planned improvements in public safety and education. “We’re moving in the right direction, though obviously we always want to do more.

“I’m bullish on Springfield,” he concluded, “and I think people are starting to be bullish on Springfield as well.” Including, in CNR Changchun, one more large firm that’s betting big on the City of Homes.

Joseph Bednar can be reached at [email protected]

Community Profile Features
Business, Family Roots Run Deep in South Hadley

CommunityProfilesMAPSoHadleyWhen asked for his thoughts on the fire that recently gutted the Dockside restaurant at Brunelle’s Marina, Michael Sullivan paused for a moment to collect his thoughts.

“The Brunelle family has been a cornerstone of the South Hadley business community for a long time,” the town’s administrator said. “It’s important to the community; people come to South Hadley to cruise on the Lady Bea or access the Connecticut River, and the Brunelles have built quite a reputation — and quite a business — there.”

It was a fitting thought, as several of those words — business, community, reputation, long time — were summoned again and again in discussing the economic character of South Hadley, a town where small, multi-generational family companies dominate a commercial sector that’s relatively tiny compared to neighboring communities like Chicopee, Amherst, and Hadley.

And it’s that deep-seated community identity that has the Brunelles firing up lunch and dinner under an outdoor pavilion while their eatery overlooking the marina is rebuilt.

“They’re resilient,” Sullivan said. “They’ve got all their permits reprinted up, everything is in place, and they’re looking to get back at it in quite an aggressive fashion — and we’re looking to do everything we can to support them.”

Dr. Steven Markow, owner of Village Eye Care and president of the South Hadley & Granby Chamber of Commerce, also expressed sympathy after the fire, noting that the Brunelles have been part of South Hadley’s business picture for a long time, but they’re far from alone.

“Carey’s Flowers has been around here for decades. All Star Dairy is a long-time, long-standing family business. There’s Chapdelaine’s Furniture, Jubinville Insurance, Ryder Funeral Home, and many others … there has been a lot of stability in that way. It’s a generational town in a sense, and the same is true of many businesses.”

That stability extends to residential life in what Markow calls a bedroom community. He said he recently consulted a world atlas from 1960 that listed South Hadley’s population at around 15,000; today, it’s just over 17,500.

Dr. Steven Markow

Dr. Steven Markow says South Hadley is a generational town in many ways, for both families and businesses.

“I’ve been here for 17 years, and I’m just starting my 13th year in business — so, by South Hadley standards, I would be considered a newbie,” he said. “But as president of the chamber, I’d say we have a very diverse membership, and it’s that diversity that helps keep the economy somewhat stable and strong here. Of course, that’s true of the whole region. I think, relative to how things are in other parts of the country, we’re doing fairly well here, although we could do a lot better.”

 

Reversing the Fall

With a thriving town center driven by the bustling Village Commons — with its 100% occupancy rate and mix of retail, restaurant, service, and office tenants — and the more than 2,300 students at Mount Holyoke College, the challenge for South Hadley is to focus on more-challenged areas of town, such as the Falls, just across the Connecticut River from downtown Holyoke.

“We’re moving on with some new tools we think will be advantages for economic development,” Sullivan said, noting that the town recently invited John Fitzgerald, urban development coordinator from the state Department of Housing and Community Development, to talk about the usefulness of a redevelopment authority, which would have the power of eminent domain to seize private property. “We think, particularly in an older community, you need to amalgamate properties to make it viable or attractive to developers to come in and make investments. The redevelopment authority can be a wonderful tool.”

Sullivan said such a move is long overdue. “The Falls is an area that has been unintentionally neglected for a long period of time, and we need to be a little more dutiful and pay attention to it.”

the fire-gutted Dockside

The Brunelle family has kept food service going under an outdoor pavilion while they make plans to rebuild the fire-gutted Dockside.

The Falls will benefit next year from a new, $10 million public library overlooking the Holyoke Dam, and the neighborhood also received a profile boost this summer with the first Falls Fest, a free, all-day music event at the Beachgrounds, the recently renovated park beside the river.

“We got the buzz out, and everyone who was there had a great time,” said Markow, adding that the neighborhood has the potential for more such events. “The idea was, what can be done to revitalize the economy of the Falls? This was a wonderful step in the right direction. The bands who performed there thought it was the best place they had ever performed, because it provided everything one would need for a venue — food vendors, craft vendors, shade for a summer day, kids got to play in the splash park … it’s a great place to come listen to music.”

Sullivan also welcomes a multi-faceted approach to boosting the Falls. “That’s really our focus; we’re trying to revitalize and find adaptive reuses for the area, and we’re looking at having more events there. Some people say that the way cities get rediscovered is through those types of events. People come in and say, ‘wow, I never knew this was here; I want to invest.’”

 

Success Stories

Decades of investment are clearly visible at the Village Commons, across Route 116 from the college, home to six restaurants, Tower Theater, and a host of retail shops and other businesses.

“When I moved here 17 years ago, there were more retail shops in the Village Commons, but retail has gone through some tough times,” said Markow, whose eye-care practice neighbors the complex. “What’s evolved is more food and service, which probably is a microcosm of the whole economy in general. It’s the center of town, and it’s thriving; they’re doing very well there, and a couple of new food places went in recently. People like coming there; it’s a good, central location.”

Mount Holyoke itself provides much of the energy in that neighborhood, he added. “In my opinion, South Hadley is extremely lucky to have Mount Holyoke College in its midst because it’s a world-class higher-education institution, the first all-women college in the country that’s still in operation. It has a world-class art museum, outstanding faculty, and a first-class equestrian center that brings equestrian shows here and helps the economy. The college just brings the town to a higher level.”

Although South Hadley receives just 8% of its tax revenues from businesses, Sullivan noted, “what’s not listed in that statistic is Mount Holyoke College, a nonprofit business. If you put that into the valuation formula, as an economic-development engine, that is quite significant — the jobs it creates, the investments made by the college.”

A prestigious college is just one piece of the community’s education strengths, Markow added, which includes the new public library and plans for a new Plains Elementary School. “It’s this kind of development which helps to attract families to the community. When they see investment in the school system, that’s very important to new families coming into town.

“I try to work with the schools because I think having a high-quality school system is part of the formula that makes a community strong and stable,” he continued. “The new superintendent of schools here, Dr. Nick Young, has been a very willing partner. He wants to cultivate a mutually beneficial relationship with the business community, and he’s really reached out to us.”

Despite the town’s strong points, however, commercial vacancies remain, Markow told BusinessWest, and there’s plenty of room for improvement in the town’s overall economic outlook.

“I don’t know what the answer is. How do you bring in new business when everyone is still holding back?” he pondered. “From the chamber’s perspective, we’re limited by our resources, and we could do more with more resources. My pitch is trying to get more businesses on the chamber; a large group has more clout than a small group. That’s one of our missions, to increase membership, increase resources, and be more effective in improving the quality of life in town and supporting the business environment.

“Personally,” he went on, “my mission as president is to see what we can do to improve quality of life in town because that’s going to attract new people to come live here, help stabilize the property values, and just make it a nicer place to live. What can we do to make it a nicer place to live? That, in turn, will trickle down and make the economy better.”

 

Coming Back

Markow noted that the town’s economic strengths are tempered by losses like the Big Y on Newton Street, which the property owner has no plans to retenant in the near future.

“That was a very disappointing occurrence because it had been a grocery store for quite a long time, and as New Englanders, we’re used to not changing. But what’s really disappointing is keeping the place vacant for a number of years, which I find unhelpful to the economic health of the town.”

On the other hand, Sullivan noted, “Village Commons is in discussion about expansion of their retail and mixed-use development. That’s exciting. So there are a lot of good things happening in a lot of different ways from an economic-development standpoint, but we still have a long ways to go.”

As for the Dockside, he applauds the Brunelles’ efforts to bring the restaurant back to life.

“That’s one of the places people go to recreate and spend money,” he said, including the Ledges and Orchards golf courses, McCray’s Farm, and the college area in that category. “It’s all about destinations in the community.” n

 

Joseph Bednar can be reached at [email protected]

Briefcase Departments

UMass Exploring Creation of Satellite Center in Downtown Springfield

The University of Massachusetts recently issued a request for proposals to lease classroom space in downtown Springfield, where it is considering locating a satellite center that would provide additional access to a high-quality, affordable education to Western Mass. residents and accelerate the university’s growing presence in the city and region. “We very much want to open a satellite center in Springfield because an essential aspect of our mission of service to the Commonwealth is working to build better lives and futures for people and communities, which is what this would represent,” said UMass President Robert Caret. “We know that the demand is there and that the business and political leadership supports it. The questions before us now are whether it is feasible to do this and whether there are sufficient resources available to help us meet this challenge.” He continued, “we view the issuance of the RFP as a critical next step in this process. We’re hopeful that the responses to it will begin to provide us with the clarity we need to move forward.” A study conducted last year by the UMass Donahue Institute, at Caret’s request, identified Springfield as a prime site for a satellite center in part because UMass Amherst, which would take the lead in overseeing it, already has a significant presence there. A number of UMass Amherst faculty and staff are engaged in Springfield in various ways, conducting research, teaching, or working in administrative capacities. They work in a variety of areas, including health, fine arts, creative economy, natural sciences, engineering and green industries, as well as management, sports, and education. UMass Amherst faculty and staff are involved in more than 120 programs in Springfield. UMass Amherst is also in the process of moving its public radio station, WFCR, from Amherst to Springfield. Last month, the Pioneer Valley Life Sciences Institute, a partnership between UMass Amherst and Springfield’s Baystate Medical Center, received a $5.5 million grant from the Massachusetts Life Sciences Center. But UMass officials would like to take the engagement a step further by establishing a base in Springfield that would serve as a general portal to the resources of UMass Amherst and the entire UMass system. The satellite center concept envisions courses being provided by at least several and possibly all five of the UMass campuses. Officials said that the RFP process should reveal whether UMass is able to obtain space in a suitable location at an affordable price, which will help determine whether UMass can move forward with the satellite center project.

 

Melin to Step Down as CDH President

NORTHAMPTON — Matthew Pitoniak, chair of the board of trustees of Cooley Dickinson Hospital, announced on July 29 that, after 25 years of exemplary leadership, Craig Melin will resign as president and CEO. The move will be effective Jan. 31, 2014. Pitoniak said the board is pleased that Melin will stay on for six months to complete initiatives under way that are critical to the transformation of Cooley Dickinson in the face of environmental changes in health care, as well as its recently finalized affiliation with Massachusetts General Hospital. Melin said he chose this time to plan his leave because he believes that Cooley Dickinson faces a five-year transition and that it should be under one leader. As he was not prepared to commit to a 30th anniversary, he told the board and Mass General that he wished to “step down to clear the way for someone who can make the new commitment Cooley Dickinson needs.” Pitoniak said Melin’s decision was unexpected. Dr. Peter Slavin, president of Mass General, said, “I was very surprised to hear about Craig’s decision to leave Cooley Dickinson, to which he has been so passionately committed for 25 years. While I’m not happy about losing him from our team, I am pleased that Craig has agreed to stay on while we search for a new CEO. Our work to realize the benefits of the new relationship between Cooley Dickinson and Mass General will continue uninterrupted. I look forward to working with Craig over the next six months.” Besides the recently completed affiliation with Mass General, CDH and Melin have been deeply engaged in strategic initiatives, such as preparing for population health management, repositioning the organization to meet the budget challenges of the new lower-priced payment system, and improving the organization’s already-intense focus on quality. Melin said, “It has been an honor to lead Cooley Dickinson for the past 25 years. I look forward to working with the trustees, physicians, staff, and Mass General so that Cooley Dickinson continues on the path toward more exceptional care and better health for our community.” Pitoniak said he will form and then chair a committee that will conduct a national search for Melin’s successor. Slavin will be actively involved in the process.

 

Investment in Structures Expands in 2nd Quarter

WASHINGTON, D.C. — Non-residential fixed investment in structures expanded 4.6% on an annualized basis during the second quarter of 2013, according to the July 31 gross domestic product (GDP) report by the U.S. Commerce Department. This increase followed a 4.6% decline in the first quarter of the year. Fixed investment in equipment rose 4.1% in the second quarter, and overall investment in structures expanded 6.8%. Residential fixed investment increased 13.4% following 12.5% expansion in the first quarter. Fixed investment in the nation’s residential sector has been growing at a double-digit clip since the third quarter of 2012. Personal-consumption expenditures expanded 1.8% in the second quarter, with spending on goods rising 3.4%. Expenditures on services, on the other hand, advanced only slightly at 0.9%. Expansion in real private inventories contributed 0.4 percentage points to real GDP growth for the second quarter after adding 0.9% during the first quarter. Federal government expenditures declined 1.5% during the second quarter primarily due to a 3.2% drop in non-defense spending. Meanwhile, national defense spending dropped 0.5%. State and local government spending rebounded mildly, growing only 0.3% during the second quarter following three consecutive quarters of declines. In total, real GDP expanded 1.7% during the second quarter following a revised 1.1% increase in the first quarter of the year. “Overall, consumer spending remains at the heart of the nation’s economic recovery, including in housing-related categories,” said Anirban Basu, chief economist of Associated Builders and Contractors (ABC). “However, today’s GDP report is only modestly reflective of recent increases in mortgage rates, which could soften residential investment growth in the months ahead. ABC continues to forecast roughly 2% growth in the U.S. economy in 2013, though the first half was associated with sub-2% growth. It remains likely that the economy will accelerate a bit during the second half of the year, but there continue to be headwinds such as rising interest rates, sequestration, and a loss in municipal confidence in the aftermath of Detroit’s bankruptcy.

 

Hiring Expected to Remain Stable in 2013

CHICAGO — U.S. workers can expect a stable employment environment over the next six months along with an upswing in temporary jobs. In CareerBuilder’s latest national survey, employers indicated that full-time, permanent hiring in the second half of 2013 will mirror that of 2012, while temporary and contract hiring is expected to increase 10% over last year. The survey, which was conducted online by Harris Interactive on behalf of CareerBuilder from May 14 to June 5, included more than 2,000 hiring managers and human-resource professionals across industries and company sizes. “Companies are adding more employees to keep pace with demand for their products and services, but they’re not rushing into a full-scale expansion of headcount in light of economic headwinds that still linger today,” said Matt Ferguson, CEO of CareerBuilder. “The projected surge in temporary hiring from July to December is evidence of both a growing confidence in the market and a recession-induced hesitation to immediately place more permanent hires on the books. However, the overall pace of permanent hiring is stronger today in various industries and geographies, and will continue on a path of gradual improvement for the remainder of the year.” Looking forward to the next six months, the study conducted by Harris Interactive shows that 44% of employers plan to hire full-time, permanent employees, on par with last year; 25% plan to hire part-time employees, up from 21% last year; and 31% plan to hire temporary or contract workers, up from 21% last year. In addition to recruiting for revenue-related functions such as sales and customer service, employers are placing an emphasis on roles involving newer technologies, big data, social media, and financial services. In the Northeast specifically, 43% of surveyed companies plan to hire full-time, permanent employees, down slightly from 44% in 2012.

 

IMF Forecasts Slow Global Growth

WASHINGTON, D.C. — The International Monetary Fund (IMF) forecasts slower global growth in 2013 and 2014 than it did just three months ago, citing the prospect of a slowdown in key developing countries such as China and Brazil and a protracted recession in Europe. The international lending agency released an update of its World Economic Outlook issued in April, projecting the world economy will grow at 3.1% this year, down from a 3.3% forecast three months ago. The 2014 projection was cut to 3.8% from 4.0%. “The world economy remains in a three-speed mode,” said Olivier Blanchard, IMF director of research, at a news conference. “Emerging markets are still growing rapidly. The U.S. recovery is steady, but much of Europe continues to struggle.” Blanchard said growth almost everywhere is weaker than forecast in April, but downward revisions are particularly noticeable in developing countries. The IMF said the possibility of a more drawn-out slowdown in developing countries is a new risk that has emerged since April. One potential drag on global growth is the possibility that the U.S. will start tapering its extraordinary stimulus program of bond buying. The Fed program — known as quantitative easing — has injected more $2 trillion into financial markets since late 2008 and kept borrowing costs down. With markets already anticipating the tapering, the IMF said some developing countries are already feeling the effects in the form of falling share prices and depreciating currencies. A recession in the 17 countries that use the euro currency is shaping up to be deeper than expected, another factor pulling down the forecast, according to the IMF. The U.S. economy also looks weaker than previously expected, the IMF said, citing tight fiscal and financial conditions. The IMF lowered forecasts for U.S. growth to 1.7% in 2013, down from 1.9% in April, and to 2.7% for 2014, down from 2.9%. One reason cited was the sequester remaining in place until 2014, longer than previously projected.

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Outlook 2013

The Affiliated Chambers of Commerce of Greater Springfield recently staged Outlook 2013, the organization’s annual winter gathering of area business and civic leaders, at the MassMutual Center in Springfield. The event, staged on Feb. 25, drew more than 800 attendees, who had the opportunity to network, receive an update on the chamber’s legislative agenda, and hear from a host of speakers on the state of the economy locally, regionally, and nationally. Clockwise from above left: U.S. Rep. Richard Neal delivers his annual address on the federal economic outlook; keynote speaker Mark Shields, a nationally known columnist and commentator, delivers his talk, titled “How Will History Judge Today’s Headlines?”; Daniel Hodge, director of Economic and Public Policy Research at the University of Massachusetts Donahue Institute, offers his forecast for the regional economy; and the scene in the packed banquet hall at the MassMutual Center.