Editor's Note: This is the fourth in a series of roundtables Business NH Magazine will hold in 2008 and 2009 with business and government leaders to examine the challenges facing various regions of the state. The next roundtable will focus on the Upper Valley.
Awave of prosperity continues to wash across the Seacoast, but that doesn't mean its economic waters aren't choppy. The Seacoast attracts tourists and high-tech companies in droves-two areas the state's economy depends on. However, the economic success of the region presents its own challenges. Housing prices are among the highest in the state, making it more difficult for those tourism and high-tech businesses to attract young workers.
And as the Pease International Tradeport, the region's biggest economic development success story, nears capacity, the question becomes: What will be the next chapter for the Seacoast? Business NH Magazine spoke with a group of area leaders to discuss the economic challenges facing the region and what is being done to address them.
The Power of Pease
While the rest of the country and state bemoan the nose-diving economy, anyone visiting Pease International Tradeport would be hard pressed to find evidence of economic woes. The Tradeport was once Pease Air Force base, a big economic driver for the region until it closed in the early 90s. The Tradeport is now home to more than 200 businesses, including some of the largest employers in the state: Lonza Biologics, which is undergoing a major expansion, Bottomline Technologies, Newmarket International and Seacoast Media Group. There are also many growing small and medium-sized companies like Alpha Flying (see story in the NH Briefs section) Global Relief Technologies and Bid2Win Software.
We don't see a slow down at Pease. We're 90 percent developed, says David Mullen, acting executive director of Pease Development Authority, which oversees the tradeport. We have 656,000 square feet under construction and have projects coming to us that are larger in size than we can accommodate. The companies at Pease generate about 7,000 jobs and a payroll of nearly $500 million, he adds.
Despite its success, Pease does have critics. Mullen says the Tradeport has been criticized as being a job shop without housing but he says it was not designed that way. The tradeport boasts an airport, an impressive array of businesses, and five restaurants. Pease shuts down at 7 p.m., Mullen says, explaining the Tradeport is a place where people work, but don't live. The problem with Pease is it's a superfund site. It's not conducive to residential development, Mullen says. And the environmental protection zone that surrounds it, called the emerald necklace, is not developable. It's been successful, but there are others who think we should have done it differently, Mullen says.
As Pease runs out of land to develop, the debate over what should occupy that land continues to grow. Space isn't the only challenge facing Pease. Keeping its airport competitive has also been an issue. Skybus Airlines started operations at Pease International Airport last year and had been touted as a solution to bringing more passengers through Pease International Airport. But earlier this year the rising cost of fuel forced the budget carrier to file for bankruptcy and leave. It was the latest setback the airport has suffered in trying to attract regular passenger service.
Sky Bus was our biggest disappointment. We're talking with other carriers, Mullen says, adding that as capacity opens at other airports, it's becoming more difficult to compete. The PDA is working with the NH Department of Transportation to fulfill its legislative requirement that Pease take ownership of Skyhaven Airport in Rochester after the city failed to act on its option to do so.
This past summer, Dick Green, who led the Pease Development Authority for two years, resigned, citing differences with the board over future development.
Economic Diversity
While Pease is a huge driver of economic development in the Seacoast, it isn't alone. Portsmouth and the surrounding area has been a lightening rod for high-tech companies, earning the region the moniker, the E-Coast.
The economic success of Portsmouth has now washed over Dover and is spilling into Rochester. The key strength of the Seacoast economy is economic diversity. There's tourism, art and historical places-it brings entrepreneurs here and compliments the high tech industry, says Ross Gittell, the James R. Carter professor at the Whittemore School of Business and Economics at the University of NH in Durham.
Of the top 50 centers of commerce in NH, 11 are in the Seacoast. Health care, financial services and manufacturing are also huge drivers for the area. Among the largest employers in the region are Liberty Mutual Insurance (approximately 3,500 employees between its Dover and Portsmouth locations), Lonza Biologics in Portsmouth (675 employees), FPL Energy/Seabrook Station (653 employees), Thompson Center Arms in Rochester (515 employees), Foss Manufacturing in Hampton (430 employees), Lindt and Sprungli USA in Stratham (423 employees), Osram Sylvania in Exeter (300 employees), and GE Energy in Somersworth (200-plus employees).
The Seacoast also boasts four major hospitals-Exeter Hospital, Portsmouth Regional Hospital, Wentworth-Douglass Hospital in Dover and Frisbie Memorial Hospital in Rochester. Together, they employ more than 6,500 people. And of course the tourism and hospitality industry is the bread and butter of the Seacoast, including a water park, museums, beaches, and hundreds of hotels and restaurants, including the only grand hotel in the state not located in the North Country-Wentworth By the Sea in New Castle.
The Seacoast's diverse economy makes it less vulnerable to economic downturns, Gittell says. There's a lot here and a sense of community. It's the full package. Economic diversity is key to the region's long term strength, he says.
In Rochester and Dover, active Main Street programs attract and retain small businesses downtown. Our strategy is economic gardening-planting the seeds for new entrepreneurs, says Karen Pollard, economic development manager for the City of Rochester. She says the city works to help new businesses start and grow so they will succeed long term. We want them to stay and grow and be part of our community. The Greater Rochester region is one of the highest in the region for investment, she says.
The Greater Portsmouth Chamber of Commerce is promoting the city's tourism market as well as programs to encourage people to buy locally, says Chamber President Doug Bates. We want to find little businesses and help them facilitate action, he says.
While communities have their own marketing efforts, some Seacoast cities and towns have come together to market the region. The Greater Seacoast Economic Development Alliance is a joint effort of the economic development offices of Dover, Pease Development Authority, Portsmouth, Rochester and Somersworth to promote the area to businesses. We are a region. It's against our interest to compete against one another, Pollard says.
John McKenna, vice president of IT strategy and planning for Liberty Mutual Group in Dover and Portsmouth, wants to see more of those kinds of partnerships. There's already a strong sense of collaboration, but there is still great opportunity for us to work together to promote this region as we look at road systems, transportation and telecom systems, he says. And area banks are in a good position to help small businesses grow, says Danny O'Brien, president and CEO of Ocean Bank in Portsmouth. There is money to lend; that's not an issue for New Hampshire's banks. There's a lot of stability in the financial sector here, he says.
Connecting With Younger Workers
One area that concerns area businesses is recruitment of the next generation of workers needed to help businesses grow. On paper, it would seem that would not be a problem. The Seacoast is home to the University of NH and Great Bay Community College, which includes a nationally recognized biotech training center. In Rockingham County, 23 percent of residents over 25 have a four-year college degree, compared to 17 percent of adults nationally. And Rockingham ranks highest in NH in growth in population with a graduate degree, growing more than 25 percent from 2000 to 2006, according to Gittell.
The County continues to attract out-of-staters and has the highest percentage of the state's population born outside of NH (74 percent). Rockingham County also has 20 percent more residents between the ages of 35 and 64 than the U.S. average and 8 percent higher than the statewide average. Almost half-48 percent-of Rockingham County residents are in their primary income earning and spending and work years, 35-to-64, which is higher than the national average, Gittell says.
But attracting young, educated workers requires affordable housing and an attractive social scene- two things participants say the region struggles with. In a topic that dominated the conversation at the roundtable, several business leaders say they are finding it increasingly difficult to recruit younger workers.
Jay McSharry, a restaurateur who owns Jumpin' Jay's Fish Caf in Portsmouth, says affordability is an issue for younger workers, particularly in Portsmouth. He says six to eight years ago, younger workers could find housing in Portsmouth for less money than in Boston. However, he says rents are closer now than before. That carrot is done here, he says. When he talks to his employees about moving to the Seacoast, he points out that the difference in taxes between here and Massachusetts means more in their paycheck. McSharry adds that Portsmouth used to have more of a young scene. I fear that we're going to become a bedroom community, he says. There used to be more people coming out of UNH and staying.
Gittell says UNH is working on creating more connections between students and area businesses so they can see the opportunities that exist, including bringing local professionals into the classroom to speak to students and broadening internship possibilities. They want to do something different or live in a large city or go to work in the global market, and then come back as more experienced professionals, he says of his discussions with students. We can do more to make the Seacoast more attractive to young professionals. We need all different types of housing.
Bates agrees on the need for more housing options, but says it's a challenge. He says communities need to change zoning regulations to attract young families and workers, not repel them, as well as businesses that cater to them. We can't do affordable housing because the perception is it will attract the wrong crowd, Bates says about the movement in some communities towards housing aimed at people 55 and older. He also cites how one brewery planning to open in Portsmouth moved to Hampton instead because of the community opposition it received. It's a travesty, Bates says.
Recruiting new talent, especially new college graduates, is an ongoing challenge at Liberty Mutual, the region's largest employer. In 2007, the Information Services department added 94 recent graduates to its NH workforce and expects to add 100 more by the end of this year. That means drawing from the Greater Boston workforce. For kids coming out of college, the lure of big city life is strong, McKenna says.
We're trying to be flexible, McKenna says, which includes allowing workers to work from home. Once we get them up here, they want to stay, he says of younger workers, but the challenge is getting them in the first place, so the company promotes both NH's lifestyle and its proximity to Boston.
That might be due partly to its image. David Beavens, CFO of Wheelabrator Technologies in Hampton, which operates waste-to-energy facilities, relayed a recent conversation he had with an employee as an example. Someone who has lived in the area her whole life told me its social suicide to be here as a single person, he says.
Bates of the Portsmouth Chamber says Seacoast communities and businesses need to support young professionals groups such as Catapult, which are valuable resources. O'Brien of Ocean Bank agrees, saying, The growth of young professional groups has helped to retain some people.
McSharry says the need to attract young people by offering more night spots is a chicken or egg scenario as places like dance clubs and bars need a customer base to survive. We're losing youth in Portsmouth in the past few years who filled New Hampshire restaurants, bars and coffee shops, he says. Bigger companies need to get involved in sponsoring events that draw younger people. Municipalities need to welcome things that attract young people.
Housing Squeeze
One of the big things the Seacoast can do to attract both young and older workers is develop more affordable housing, said roundtable participants of a topic that dominated the discussion in tandem with attracting young workers.
Rockingham County commands the highest median home prices in the state, $300,000 countywide compared to $252,000 statewide based on NH Housing Finance Authority data. It also has the highest average monthly rent: $1,031 compared to $946 statewide. It's difficult to move people here from other parts of the country. In Rochester, we're trying to have different housing types, but it's still a higher cost region, says Pollard, who notes Rochester has been granting more permits for affordable housing. We would like to see more statewide incentives for housing. If we aren't providing workforce housing, how will we find the workforce? Pollard's question is particularly striking given that Rochester's median home price in 2007 was $210,000 below the state average and well below higher priced Seacoast towns such as Stratham ($389,900) and Portsmouth ($310,000).
In Dover, Wentworth-Douglass Hospital is undergoing a $9.3 million expansion of the cancer center, and recruiting medical professionals nationwide. When we're recruiting people from other parts of the country, especially the Midwest, they are experiencing significant sticker shock, says Ellen Caille, executive vice president of physician services/network development at Wentworth-Douglass Hospital. On top of that, she says the average loan amount for most phyicians coming out of training is $100,000 plus. That's why she says we as leadership need to think how we can meet these challenges. Caille says the lack of income tax and the high quality of life is desirable, but it does not always balance out the overall cost of living.
McSharry says he wants to take on that challenge. If we get affordable rents, we'll get more young people to come here and stay, he says. I want to put another floor on my building and put in workforce housing. I see opportunities. There are buildings in the city not being utilized that could be used for workforce housing.
Housing also concerns O'Brien of Ocean Bank. It's increasingly more difficult to [recruit]. People are commuting further, O'Brien says. He says with gas prices going up, it only adds to that difficulty. It takes a while for people to find the right housing.
Beavens agrees. While higher-level professionals are attracted to the region, he says it's difficult for companies to attract the next tier of workers due to the high cost of living. As such, those employees are having to find housing further away, he says.
Bates explains that the cost of having a wonderful experience in Portsmouth is going up, as businesses have to pay more to attract waiters and waitresses. I'm concerned about the 132 restaurants [in Portsmouth] that require a workforce. There are restaurants up against it, because the cost of living in the area is higher than the wages they can pay, he says.
Green Movement
One part of the Seacoast economy that excited participants is the growing number of businesses offering green products and services as well as the increasing number of companies examining issues of sustainability. The Green Alliance, a cooperative business that supports green businesses in the Seacoast area of NH and Maine, has attracted more than 30 members since launching in April, including Simply Green Biofuels in Stratham. One of the founding members of the group, Simply Green Biofuels provides biodiesel for transportation and bioheat for home heating.
Andrew Kellar, founder of Simply Green Biofuels, says he chose the Seacoast for his new businesses because of its skilled workforce and the variety of services he could leverage, including UNH, which he is working with on a project to grow algae as a biodiesel source. We need more resources to grow alternative fuels, Kellar says. He expects his company will soon grow to 10 employees and he plans on opening alternative refueling stations. What's good for the environment is good for business, he says.
Gittell says UNH can work with other businesses on issues of sustainability. It's an opportunity to support economic development, he says. People care about this issue.
O'Brien says businesses are increasingly interested in finding efficiencies through green methods, including his own bank, which put together an energy efficiency audit last year.
Opportunities Ahead
Roundtable panelists agree that while the region may be facing some challenges, the Seacoast has many positive attributes that will not only allow it to weather the current economic storm, but put it in a position of strength as the economy recovers. We're in pretty good shape. People have passion for the Seacoast, Bates says. Building on the economic gardening metaphor used by Pollard, he adds: We need to garden with that passion. We don't need to replant each year, just see what died and what needs replacement.
The economic slowdown can even be an opportunity for the region, Gittell says. When we had a strong economy, people said we were growing and changing too fast. We can [now] figure out what we want to be in the future, he says.
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