Governor John E. Baldacci talks about Maine’s business climate, jobs and the future

By Ramona du Houx

November 1st, 2010

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Governor John E. Baldacci recently took a ride on Pan Am Rails to review projects, partially funded by bonds, from Waterville to Portland. One ton of goods can be shipped 500 miles on a gallon of diesel, by truck it would take 83 gallons of diesel. photo by Ramona du Houx
A recent Forbes article ranked Maine last on the list of states for business. Is this a fair assessment?

“We wanted to know what they based their rating on; they didn’t want to disclose their methodology. So, we contacted one of their sources — economy.com. We asked why did they rate New Jersey with a better quality of life? They said that they took the average temperature in Maine versus the average temperature in New Jersey.

“The same magazine last year named our largest city, Portland, as the most livable city in America. In their survey it outpaced Manchester, NH, and Boston, Massachusetts, both in the cost of starting up a business and in the cost of doing business.

“This is more of a subjective analysis by Forbes. I believe it has more to do with the fact that our tax-reform package, after the Wall Street Journal said we were ‘the Maine miracle,’ didn’t pass the voters’ approval. I think Forbes looked at that as a detriment to business. To go from being ranked 41st last year in their magazine to 50th doesn’t make any sense.

“We didn’t raise taxes; states all around us have. In fact our tax burden has actually gone from being number one in the country to number fifteen in the nation, according to a conservative tax foundation.

“They make assumptions on projected job growth using old data. They didn’t incorporate the Maine Power Reliability Project, which will add 2,000 jobs every year over the next four years. They didn’t take into consideration the innovation companies starting up, or our exports. Through the first half of the year, exports were up 44.7 percent. Pulp exports were up 200 percent, and paper exports were up 72 percent, which is critical to rural Maine. And semiconductor exports are up 23 percent.

“Rhode Island’s unemployment rate is at 13 percent, and they ranked better than Maine in Forbes. Today (Oct. 21) the unemployment rate in Maine has declined to 7.7 percent, compared to 9.6 percent nationally. We are aggressive about economic development.”

How successful has your Pine Tree Zone program been?

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In 2006 Morris Yacht received a Pine Tree Zone certification and expanded their operations, which included adding employees. Here, the world renown boat builders celebrate with Gov. Baldacci. photo by Ramona du Houx
“There are pulp and paper people who work in Alabama who tell me that our Pine Tree Zones are the most aggressive economic tool that they have ever seen.

“The Pine Tree Zone designation says to a company, we’re going to give your company the income tax withholding from your employees that would have been going to the State. We are also going to give your company sales, property, and corporate tax breaks, because we want your company to bring good paying jobs and benefits to our people.

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Baldacci established the goal to weatherize all residences and 50 percent of businesses by 2030, which has grown the weatherization industry.
“We have 309 companies in Maine that are designated Pine Tree Zones. They represent a total investment of $873 million, with an annual payroll of $341 million. That represents 8,206 jobs.

“Out of the 309 [companies], 219 are manufacturing companies. We are manufacturing products here, in Maine.

“We have Pine Tree Zone companies in every county. They are a key part of First Park in Oakland, where T-Mobile is located, Athena Health Care, NotifyMD, Kestrel Aircraft, Backyard Farms in Somerset County. In September we celebrated BalanceBPO’s center of operations that will create three to four hundred jobs in Presque Isle.

“Pine Tree Zones level the playing field. We just competed against Texas for National Semi-conductor’s expansion — and won. The quality of our workforce and Pine Tree Zones allows businesses to compete successfully in the global economy.

“Our country has to look more at manufacturing to put people to work. Every manufacturing job helps create and support five in the service sector. Working at my family restaurant, I saw the ripple effect of manufacturing jobs first hand.”

Those are substantial tax incentives aren’t they?

“We are not about tax dollars; we are about good jobs and benefits for our people. Companies have to sign a letter that says, ‘but for the Pine Tree Zone we would not be in Maine.’

“It does not impact our treasury negatively. I actually think it’s positive, because with more people working we will have less going out the back door. With more job opportunities provided by more Pine Tree Zone companies, less people will need government services to help support them. With those tools, the quality of our workforce and the quality of life, we win on all fronts.

“Where we have focused investments in clusters and research and development, we are strong. The University of Maine’s composite center is bringing business to the state, like Kestrel Aircraft and Ocean Energy Power, and they are creating spinoff business, because of their research and development work. Like their “bridge-in-a-backpack” technology, which makes bridges out of composites.” (photo)

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AEWC’s Habib Dagher displays the center’s bridge in a backpack. Interest in the technologies developed at AEWC, and Maine’s industries working in the clean energy sector was so great, after a governor’s Trade mission to Europe, a new office called, Invest in Maine, was set up to bring in more investments. photo by Ramona du Houx


You recently met with Governor Lynch of New Hampshire about the three bridges that join New Hampshire to Maine in Portsmouth, signing an agreement of joint commitment to replace and repair them. A week later Secretary Ray La Hood issued a grant for $20 million for the Memorial Bridge. Are you looking at using composites to help fix the bridges?

“We are having UMaine researchers look into using the technology there. Part of the transportation bond three years ago was to make sure ten percent of the bridges are built with composite materials. Bridges in different areas of the state are using the technology, now.”

The last round of the Maine Technology Asset funding, supported by bonds, went to cutting-edge companies and educational institutes; some of them had received awards during the first round. Do you think it should continue?

“Absolutely. We are creating industry through our research and development at the University of Maine with spinoff companies using our highly capable workforce and the tools available for business. CB Insights said Maine leads the nation in investments in early-stage, innovative companies. In 2008, Maine’s technology companies had a 36 percent growth in revenues. The average wage for a technology sector job is $48,000 dollars, with benefits. These jobs can’t be outsourced.”

How do you think you’ve improved Maine’s educational opportunities, for the jobs of the future?

“It goes back to the thirty-in-a-thousand concept. What gives people better jobs and incomes? It’s about the level of education and the level of research and development (R & D). Those two factors play more in per capita income than any other factors. That’s why we established community colleges when I first became governor. That’s why we are supporting scholarships and other paths to getting kids to college. That’s why we passed Opportunity Maine, so they can live and work here. With Opportunity Maine, if they pay Maine taxes, they can deduct their student loans.

“There are more opportunities here in higher education than ever before. And getting that education is less of a monetary burden than prior to my administration. At the national level, President Obama’s programs have helped even more. Students, adults, non-traditional students, all should look at getting more education and training. The jobs skills of the future will be more technical in all areas, in pulp and paper, yachts, agriculture — you name it.

“That’s why we’ve put more funds into R&D than ever before. In Maine we are developing the technologies of the future in our universities that are educating our future innovative workers.

“The CEO of Old Town Canoe, Helen Johnson-Leopold, said even in a stagnant economy innovation will allow them to be able to have the cutting edge to beat out rivals. Since her visit they have been working with UMaine’s composite labs to develop new, innovative products, which will make them more successful.

“All our businesses should have access to UMaine’s R&D, to give them the latest technologies.

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Governor John Baldacci saved the Lincoln mill (above) from going out of business. The mill is now has cutting edge technologies and is profitable. Other mills across the state have also been saved. photo by Ramona du Houx

“If we continue to bump up training and education levels, invest more in R&D, and provide economic development tools, we will make sure business that decided Maine is the place to be stay here.”

You’ve been fiscally responsible; you’ve cut back spending with consolidation efforts, improved services, and most likely will be able to leave a Rainy Day Fund for your successor. You never raised broad-based taxes and you invested in education, R&D, and protecting the environment. Businesses look at these factors before deciding where to locate, don’t they? After all, they don’t want to see taxes increase?

“Coming from the business world myself, I’m very sensitive to that. I know what it takes to meet a payroll and be successful.

“People ask me, will it stay the same after you leave? You sign ten-year leases with Pine Tree Zone economic development packages. As long as we keep our level playing field, the state will be attractive.

“Currently, there are those out there that are saying things about Maine, which I think are for political purposes. You can’t have the kind of recognition we are getting for Portland, the growth rates in innovative industries, and the unemployment rate going down to 7.7 percent, if we were a bad place to do business.

“The collaboration between the private and public sectors will continue to bring more companies to the state. This is where the center of expertise is. This is where the latest R&D is taking place, and this is where the hardest-working, quality workforce lives.”

Have you addressed major concerns of businesses?

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Henry Adams meets a train that now can travel on new lines laid because of bonds. photo by Ramona du Houx
“The cost of energy and the cost of transportation are the two biggest cost drivers for businesses across Maine. That’s why we have worked so hard to improve rail, bring the Downeaster here, open the Lewiston/Auburn line, and save the Montreal, Maine and Atlantic Railway line. Purchasing the MMA line saved up to 1,000 jobs.

“Federal state and bond money has been spent on rails, to help our Three-Port Strategy. Using the ports of Searsport, Eastport, and Portland helps businesses access the railroad veins of Maine in a cost-effective, timely way. The strategy links rail connections to our cargo ports so they can ship around the world, as well as move cargo across America. It was part of a strategy that was developed with business and technical experts.

“Companies today have longer distances to ship. Rail makes sense; it’s more cost effective, more environmental, and more energy efficient. We’ve also opened up more access for companies to rails with our Industrial Rail Access Program, on a cost-share basis. It helps companies like Clean Harbors to lower their transportation costs.

“Efficiency Maine is helping businesses across the state address energy needs, and our long-term plan to export electrical energy generated by offshore wind and other energy sources will eventually drive down electricity costs.”

You’re a nationally recognized leader in promoting energy efficiency and for laying a foundation for Maine’s clean-energy economy. Will it continue?

“The state has a 50-year clean-energy plan, which my Office of Energy and Independence formulated. It has the State working regionally on alternative-energy coordination and transmission. We’ve established long-term weatherization goals, wind-power goals, and fossil-fuel reduction goals.

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Gov. Baldacci with lumber company workers celebrating their company becoming a Pine Tree Zone in 2004. photo by Ramona du Houx

“I’ve said no to foreign oil, no to dependency. I want Maine to be independent, relying on our natural resources here, using them in a smart, sustainable way. We must continue that fight.

“Energy is becoming more stable in Maine, because we are using less imported foreign oil, more domestic sources, and we are transitioning to more renewable sources, which will add more sustainability. Lower energy costs help businesses compete. Wild fluctuations with fossil fuels have played havoc with our people and business for far too long.”

From day one you’ve been a hands-on governor, saving companies in trouble. You fought for workers when BRAC threatened them, you found new businesses to fill vacated call centers, you saved paper mills across the state, to name some efforts. Why?

“I recently visited the Lincoln mill for their annual picnic, and I was honored to receive a plaque from the town. That mill now employs almost 400 people, and they are using new technologies. When I first saw the workers return to their jobs, tears rolled down their faces, and I said to myself, ‘John this is where you really can make a difference.’ That’s what the job of governor is — to make sure people have good paying jobs and benefits, educational opportunities, and a good quality of life.”