2009: The big gamble | No one's bets were safe in a year marked by high stakes and higher anxiety

If 2009 can be summed up in one word, it has to be uncertainty. More than a year ago, the Maine business community watched in horror as unsecured mortgages ignited a financial meltdown from which we’ve yet to recover. In its wake, lending tightened, the housing market tumbled, wages dropped to pre-2007 levels and state unemployment grew to a staggering 8.5%.

In gambling terms, the stakes — everyone’s financial wellbeing and prosperity — were astronomical. Enter the whale, otherwise known as the federal government, with bank bailouts and a recovery act to juice the table. Who’ll emerge the winner? We don’t know. But like it or not, we’re all in.

Craps

For some, business in 2009 meant a roll of the dice

FairPoint Communications filed for Chapter 11 bankruptcy in October, cashing in its chips on the $2.3 billion wager it made in 2008 for Verizon’s landline and Internet service in northern New England. The filing capped off a year beset by customer service complaints, tussles with the Public Utilities Commission, and accusations that FairPoint misrepresented both its readiness to take over the network and, later, its chances at financial recovery. The North Carolina-based company is expected to file a reorganization plan early next year.

Newspaperman Richard Connor also took a turn at the table, but his purchase of the state’s largest media company from The Seattle Times Co. appears to be paying off so far. MaineToday Media Inc., formerly Blethen Maine Newspapers, became a reality last summer after a year of nail-biting negotiations. Some former executives and other employees of the beleaguered company were lost along the way, but the owner of the Portland Press Herald remains in the game.

While Connor worked to turn the tides, Portland’s Ocean Renewable Power Co. managed to harness them, at least on a small scale. The startup’s refinements in 2009 of its tidal energy turbine will lead to a demonstration project off Eastport by early next year. Its renewable energy brethren enjoyed some paydays too, but their beginner’s luck might be running out. First Wind’s $60 million Stetson Wind project went online this year and approval of its Rollins Mountain project was upheld, though the Massachusetts company may have to abandon a project in Rumford. Meanwhile, Angus King’s Record Hill Wind LLC delayed work on its planned 22-turbine project in Roxbury.

Paying off in a big way is Maine Community College System President John Fitzsimmons’ gamble six years ago to revamp the state’s technical college system. The seven-campus network saw a 12.7% rise in fall semester degree enrollment in 2009, following impressive 63% growth in the previous six years. Northern Maine Community College welcomed its largest class ever this year, in part due to a new wind power technology program that’s the first of its kind in New England. Tuition inched up in 2009 too, though, and $4.2 million in cuts loom for 2011.

The community colleges got a boost in the form of $6 million in stimulus money, however. That was part of more than $750 million in American Recovery and Reinvestment Act funding awarded to businesses, organizations and agencies across the state in 2009 (see details, next page). The Maine transportation and education departments made out with the highest allotments, while companies including Cianbro and Freeport general contractor CPM Constructors neared the top of the list for the private sector. But only about $160 million of the funds have actually been received so far, which makes nailing down the act’s contribution to any economic recovery, well, a bit of a crapshoot.

The roulette wheel

Talk about spin control. These stories just keep going round and round.

The tug-of-water between Poland Spring and commercial extraction opponents continues with mixed results. The company’s plans for a bottling plant in Hollis are moving forward, but failed negotiations with the state and an ordinance against water extraction forced Poland Spring to abandon plans in Shapleigh. And voters in Wells said no to the Nestle-owned company in November. The tap hasn’t run dry on this one.

This year’s tax reform bill — the third such measure in six years — passed, but put the state’s largest chambers on either side of the table pulling for a win. Supporters laud dropping personal income tax and levying more sales tax on tourists, but opponents bet the changes will hurt Maine business owners. Meanwhile, a coalition fighting to put a repeal on next year’s ballot is duking it out in court with the Secretary of State. Could be worth some pay-per-view action.

It was a headline-grabbing scandal that started in March 2008: Bath Iron Works’ largest union was put under trusteeship by its parent organization, its four local officers were suspended and an investigation was launched into a host of allegations. Union leaders denied the claims, but a federal judge ruled against them this summer, and the parent organization barred them from holding office again. But they aren’t going quietly, suing the parent organization in state court. Until the decisions are final, all bets are off.

Since the Downeaster started rolling in 2001, thanks to a hefty federal subsidy, debate has raged over how to permanently fund the train. The service has managed to squeak by on subsidy extensions, but could find competition as more entities work to get a piece of that pie. Transportation officials hope a big chunk of federal stimulus money will fund a planned extension from Portland to Brunswick. Off-track betting, anyone?

A recessionary freeze has paralyzed spending, which, in turn, has wreaked havoc on the state’s financial planners. Both the Economic Forecasting Commission and the state Revenue Forecasting Committee have been driven to distraction by revenue projections that fall short — by a lot. Their GPS-inspired response? Recalculate, recalculate. The best guess going into 2011 is a $400 million shortfall.

What do LNG terminals and casinos have in common? They’ve both been pitched in Maine for years, but neither has ever been built. The state’s two advancing LNG proposals have hit stiff opposition from neighboring New Brunswick, and both sides are refusing to budge. Meanwhile, a proposal for a casino in Oxford County, shot down by voters in 2008, is back on the table, and may be competing with a bid to put a casino in Lewiston. Round and round they go.

Other tables

Poker
Central Maine Power Co. and GridSolar bid each other up over whose plan to improve Maine’s power grid makes the most cents, er, sense. CMP is wagering a $1.5 billion upgrade of the existing transmission system will pay off handsomely for Maine business, while the lion’s share of the costs will be borne by out-of-staters. GridSolar’s green proposal, to install solar panels along the existing grid to boost power supply only when needed, has that renewable energy thing going for it. This one may go all the way to the showdown.

Already cashed out: Bangor Hydro Electric, which in December got the nod from the Maine Public Utilities Commission to build a 42-mile transmission corridor. Of the $68 million price tag, only about $1.8 million is expected to be paid by Maine ratepayers.

Black jack
Westbrook’s Pike Industries and Idexx Laboratories continue to take turns yelling “hit me” as they battle over control of Pike’s asphalt plant plans. Idexx doesn’t want an industrial neighbor while Pike wants to grow its business. Both companies submitted economic impact reports this fall to shore up their bets.

Tells

The raised eyebrow. The bead of sweat on the upper lip. The flicker of surprise. Here are our indicators of what’s in store for 2010.

A plan for Brunswick Naval Air Station takes off: The squadrons have all left and redevelopment officials lead the charge for business attraction and economic development. What will the base become: A campus? A renewable energy center? A conference center? All of the above? It’ll be years before this property is fully transformed, but we’re betting it will beat the spread.

Paper goods: Ten years ago, most of Maine’s paper mills were owned by big multi-national corporations. Now they’re owned mostly by private investment firms. Facing increasing competition from overseas and a flat market, Maine mills are looking to renewable energy products (biofuel, wood pellets) or specialty products to get them over the hump. Despite idled paper machines, layoffs and for-sale signs, we think they’ll survive. What else are we going to do with 17 million acres of forests?

The green light: After a four-year battle for approval, Plum Creek got the go-ahead on its massive development in Greenville. There are still sputters of protests, including insinuations from the Natural Resources Council of Maine of influence peddling, but a coalition of economic development and environmental groups is behind the revised plan to build condos on the shores of Moosehead Lake. We’d start an office pool on the ground-breaking date.

Lots of “sold” signs: The recession, changes in appraisal laws and plummeting property values stymied home sales for much of 2009. But the Maine Real Estate Information System reports more houses selling in the second half of 2009, a five-month trend spurred by the $8,000 federal first-time home buyer credit. Now if we could just raise the average selling price from $165,000.

Stalemate, eh?: The last time the United States and Canada waged war was 1812, but if tensions continue to rise over Canada’s refusal to allow LNG tankers to navigate Head Harbour Passage, there could be a reprisal. Downeast LNG and Calais LNG both hope to begin construction on their respective projects in 2011.

Overdue notices: A $12.1 trillion national debt? State revenues as evasive as a teenager? We’d like to think 2010 is the year we get our financial house in order, but that’s a fool’s bet if there ever was one.

Down to the felt

Despite some remarkable obstacles, these players are still at the table:

The construction industry — down 16%, a loss of 4,000 jobs from September 2008 to 2009

Car and auto part sales – off 8.9% from 2008 through October, despite the Cash for Clunkers program

Tourism – worst year on record, despite “staycation” plea

Grand View doughnut shop – sure, fire gutted this topless enterprise in Vassalboro, but the owner promises to bounce back

Busted

Through November, 50 firms doing business in the state filed for Chapter 11 bankruptcy, according to the U.S. Bankruptcy Court. Here are some of the more notable companies — some based in Maine, some not — that have sought protection.

FairPoint Communications, Charlotte, N.C., Telecommunications

M.W. Sewall & Co., Bath, Energy

Fraser Papers, Toronto, On., Manufacturing

MainePCS LLC, Bucksfield, Telecommunications

Maine Earthmoving Inc., Scarborough, Construction

Ricetta’s Inc., South Portland, Food and beverage

Corinth Hardware Inc., Corinth, Retail

Saunders Mfg. Co. Inc., Readfield, Manufacturing

Corcoran Environmental Services Inc., Kennebunk, Environmental services

The Harris Hotel, Portland, Lodging

Mt. Dora Estates LLC, Boothbay Harbor, Real estate

Panolam Industries International, parent to Pioneer Plastics in Auburn, Manufacturing

Correct Building Products LLC, Biddeford, Building supplies

Thomas Reed House LLC, Portland, Real estate

Cooper Brothers LLC, Turner, Agriculture

Northeast Paper Services, Scarborough, Manufacturing

General Growth Properties, Chicago, Ill., Real estate

Knight-Celotex, Lisbon Falls, Manufacturing

The Freaky Bean Coffee Co., Scarborough, Food and beverage

Wood Structures Inc., Biddeford, Building supplies