N.H. economy shows signs that it’s bouncing back
For Tender Corp., the Littleton company known for its Ben’s and Natrapel insect repellents, the Great Recession was just another opportunity.
After nearby Montgomery Wire Corp. went under, Tender tripled its space by taking over some of that company’s lease. When Ready4 Kits became available in at the end of 2011, Tender bought the Keene company, then added Genuine First Aid, of Clearwater, Fla., a few months later, augmenting a first-aid product line it had acquired almost a decade earlier.
With that kind of diverse, but related, product line, “we may not have been recession-proof, but we were recession resilient,” said CEO Jason Cartwright.
Dire warnings – whether it be about an economic breakdown or global warming-induced extreme weather – only increased first-aid kit sales, as did low-budget camping vacations, Cartwright said. Even the stagnant swimming pools in the backyards of all those foreclosed-on south Florida and Nevada McMansions helped boost bug spray sales, he added.
The company’s sales last year rose 35 percent (14 percent organically), and the company is expecting double-digit growth this year. It now employs nearly 180 people (all but 30 in New Hampshire) -- about 50 percent more than five years ago.
Not every company has done as well as Tender Corp. over the past five years, but the state’s economy has been off to a good start in 2013. Some of it is because of a general economic improvement, but a lot of it has to do with the strategies and decisions of individual companies.
Yes, the New Hampshire economy has been mired in the muck for a half a decade. But now that it has reached more solid ground, businesses are regaining their footing. Grabbing onto economic niches, diversifying, creatively finding new ways to market products, bootstrapping and borrowing, slowly adding jobs to increase muscle, these companies are finally pulling this reluctant economy away from the recession.
First, let’s look at the numbers, and not just the employment numbers. True, the state lags behind the region in job growth. According to the latest figures in May, unemployment was at 5.3 percent, less than a fifth of a percent drop. The number of jobs added was a minuscule 2,500, or less than half a percent increase. These are not numbers for economists to get excited about.
For instance, said Dennis Delay, an economist with the New Hampshire Center for Public Policy Studies, Massachusetts has recovered all of the jobs that it lost in the recession, but New Hampshire isn’t expected to get them back until next summer. The Granite State, normally the leader, is now the laggard.
And then there are the type of jobs, noted economist Russ Thibeault, president of Applied Economic Research in Laconia.
The state actually lost 400 manufacturing jobs in the last year. The job gain has primarily been in the service industry: retail trade (1,700), business services (2,800), leisure and hospitality (3,200) and education and health services (3,000). While there are some quality jobs in all these fields, “most of the growth is in the lower-paying sectors, not quality, breadwinner jobs,” Thibeault said.
Among those higher-quality service jobs are those in the financial sector, which added 800 employees in the last year, partly due to the expansion of Fidelity Investments, which now employs 5,400 at its Merrimack campus – 400 more than at the beginning of 2012 and with another 100 positions yet to be filled.
But the manufacturing sector has been hit and miss.
“It’s sort of a mixed bag,” said David Worthen, CEO of Worthen Industries, a Nashua company that manufactures adhesives and coatings for a variety of commercial applications. “Our sales are a bit above last year. We’re hiring more employees. We are growing, but not by massive amounts.”
One reason the employment picture has been sluggish is that many employers were reluctant to shrink their workforce to begin with.
Rich Grosky, CEO of Tech NH – a company that creates plastic parts for the medical industry, which has stalled pending the implementation of Obamacare – expects business to take off in the near future, if a couple of key projects come to fruition. But he won’t be hiring anybody back, because he never let anybody go.
“We don’t just adjust the staff to meet the workload. We find something for them to do, even if it is to go outside and weed the flowerbeds,” Grosky said.
Exports were the only thing the state had going for it during the early part of the recession, but they tanked as the rest of the world’s economy fell by the wayside.
While the global economy hasn’t exactly come roaring back, state exports have increased – up 17 percent so far this year. Trade with Canada has more than doubled, making our neighbor to the north the state’s number one trading partner again.
Taylor Little, international trade specialist for the U.S. Department Commerce in New Hampshire, attributes some of that $200 million year-to-date increase in exports to a $300,000 federal grant encouraging companies to look at new markets. The grant reimburses applicants up to $5,000 for such costs as airfare to trade shows and translating their websites.
“It’s not much, but it could make the difference for those who are sitting on the fence to take the leap,” Little said.
It’s hard to come up with numbers on the high-tech sector, which spans everything from business services (which have been up), to manufacturing (down). But Fred Kocher, recently retired president of the New Hampshire High Tech Council, sees pockets of explosive growth -- so explosive, in fact, that the state’s educational system can’t keep up.
Indeed, if job growth is sluggish, it is not due to the lack of openings, but the scarcity of qualified employees to fill them, he said. Kocher said he stepped down from the council post so he could concentrate on this very problem by working on a concerted effort by government and the private sector.
Such collaboration can pay off. Indeed, he credits it with creating and nurturing New Hampshire’s high-tech “infrastructure,” consisting of incubator space, a more collaborative relationship between business and the university system, and various public and private financing efforts.
If you remember, it was the housing slump that led us into this economic muck.
New Hampshire home sales have increased year-to-date by some 11 percent, while the median price has climbed 5 percent. The median price in May – $215,900 – was the highest since 2010, and the total volume of sales was the largest for any May since 2007.
Even more important, not as many people are losing their homes. The 192 foreclosure deeds recorded in April was about 50 percent fewer than April 2012, and year-to-date foreclosures are down 26 percent.
And the backlog of unsold real state is less than 10 months, pointed out Thibeault – and that sets the stage for even more price appreciation. Though there is some concern about historically low interest rates creeping up, “housing is the most affordable relative to income since 1976,” he said.
“This is as active as many of us have seen the market in years,” said 2013 New Hampshire Association of Realtors President Bill Weidacher, a broker at Keller Williams Metropolitan Realty in Bedford and a 30-year veteran of the industry.
The activity isn’t limited to housing. Commercial real estate has also been moving, particularly in the southern part of the state, and particularly in the retail and industrial sectors, according to Chris Norwood of NAI Norwood Group in Bedford.
Empty big-box stores are being filled: a Books-A-Million for a Borders, a Big Lots for a Circuit City, and Dollar Trees dot the landscape. There is “monster” development along Route 101, he said. Indeed, two of Norwood’s clients – unable to find suitable lease space – are exploring building their own buildings.
“This is the first time we even discussed new construction since 2006,” Norwood said.
The construction industry is starting to notice improvement as well, though, as with other indicators, New Hampshire is lagging.
The numbers are somewhat mixed. Total construction contract awards are down year to date – perhaps because the state and federal government have not been spending much on highways – but homebuilding contracts have jumped by nearly 50 percent, and single permits are also up. More importantly, firms are starting to hire more. The state added 1,200 construction jobs this year – a 5.4 percent increase.
Harvey Building Products has noticed the activity, particularly on the southern border, according to Michael Pitre, northern New England regional sales manager.
Orders for windows in new construction, for instance, are up by some 30 percent in southern New Hampshire – even more than northern Massachusetts, though not quite as booming as in the Boston metropolitan area. The windows aren’t just for weatherization and remodeling projects. That market has been stable.
“People are not spending money on their homes,” Pitre said. “They are buying new units instead.”
And that sends another ripple throughout the economy.
“Lumber is starting to move,” reported Jasen Stock, president of the New Hampshire Timberland Owners Association, though much of it is industrial-grade pine that’s exported overseas, but that could be because of mud season. Pine grows on sandier soil while other wood was literally stuck in the muck.
Tourism and retail
That rain also resulted in a “mellow spring,” in the words of Tai Freligh, spokesman for the state Division of Travel & Tourism Development. April rooms and meals revenue, for instance, was down 14 percent. And Bike Week in June was a bit of a washout.
“The spring was soft,” agreed Jason Lyon, CEO of the Common Man Family of Restaurants. “The motorcyclists didn’t come.” The result: “We are only slightly ahead of last year.”
Indeed, year-to-date, the state also is slightly ahead in rooms and meals tax revenue, thanks to the ski industry’s snowy rebound and a 21 percent gain from the prior winter.
But the wild winter had its downside. It may have driven people inside to eat – so overall spending was up – but it also may have put a damper on travel by non-skiers.
Business-related travel, however, was definitely not a mixed bag. Restaurants and event facilities reported that business lunches and corporate meetings have been strong this year.
Businesses aren’t the only ones spending more freely. Consumers are starting to get more confident.
You can see that reflected in new car sales, which have gone up by about 4 percent so far this year, but also in what retailers are seeing when a customer walks in the door.
“They are not buying the cheapest thing. They used to buy what they need. Now they are buying what they want,” said David Souter of the Baron’s Major Brands appliance store chain.
For Major Brands, that means a nicer refrigerator. For Bellman’s Jewelers, it means a more expensive diamond.
“They are opening up their wallets more,” owner David Bellman. “A few years back, they were hesitant and stuck to their budget. Before, he might budget $3,000 and now maybe he’ll go to $4,000.”
M.G. Guruge contributed research to this article.