December 26, 2005
Hello, Goodbye | The past year as seen through the big stories of 2005 and those you might have missed
By The Mainebiz Editorial Staff
THE SHOW STOPPERS
Brunswick gets BRACed
It's funny how an event that everyone knew was coming and had years to speculate about still managed to surprise us. The two Maine military installations experts said were most vulnerable ˆ Portsmouth Naval Shipyard in Kittery and the Defense Finance and Accounting Service center in Limestone ˆ were not only saved by the Base Realignment and Closure Commission but marked for potential expansion. Instead, the base that appeared to have the most strategic value is now slated for closure. Like the run up to the BRAC process itself, though, the shutdown of Brunswick Naval Air Station is expected to take six years, leaving plenty of time for speculation about whether its absence will hobble the economy of the Bath-Brunswick region or allow a new, private sector economic engine to arise. The only sure thing is that the area will never be quite the same.
Reshuffling the corporate deck
Maine's relative lack of big corporate players makes any changes to that roster that much more noticeable ˆ and this year offered an abundance of blockbuster deals for some of the biggest corporations in Maine. Midcoast residents are wondering if MBNA's dwindling regional presence disappear altogether following Bank of America's June acquisition of the firm. Even more significant, homegrown success story Banknorth Group Inc. merged with Toronto-based TD Bank in a move company executives said would fund continual regional expansion. Meanwhile, another Maine company lost its corporate parent when Cendant Corp. spun off South Portland-based Wright Express in a February initial public offering. Maybe after this year, little ol' Maine has more of Wall Street's attention.
Big proposals, bigger controversies
Plum Creek Timber Co.'s development plan for 400,000 acres near Moosehead Lake was bound to kick off a lively debate ˆ but who would have expected vandalism that included spray painted slogans, broken windows, paint bombs and strewn animal entrails? In Washington County, debate over three proposed liquefied natural gas terminals fortunately hasn't turned violent, but it has featured its share of name-calling. LNG opponents asked Gov. John Baldacci to declare Quoddy Bay LLC president Don Smith "persona non grata"; a minor cross-border tiff developed when New Brunswick Premier Bernard Lord said that Canada could and would take steps to block LNG development in Maine; and protestors accused Portland PR firm Savvy Inc. of "environmental racism" for its work on behalf of Quoddy Bay. Maine needs to scrutinize big proposals like these, but let's hope things cool out in 2006. Otherwise, developers with potentially sound ideas may decide to skip the Pine Tree State in the future, for fear of receiving a bucketful of raccoon guts on arrival.
Dirigo as Rorschach test
January 2005 marked the widespread start of enrollment in the state's DirigoChoice insurance product. From that point on, supporters and opponents of Gov. John Baldacci's health reform plan saw exactly what they expected to see in each subsequent development. Critics who had railed against Dirigo's creation seized what they saw as slow enrollment figures as proof of the program's failure. Supporters touted plan administrator Anthem Blue Cross and Blue Shield's comments that DirigoChoice in fact was one of the most successful launches of a new insurance product ever. With the 2006 election looming, expect the subjective interpretations ˆ and the fighting ˆ to continue.
THE SLEEPER STORIES
Small steps toward a shoe revival
Maine's shoe stitching business is never going to recapture its former glory, but a handful of developments in 2005 show signs of a niche forming. Magnum USA, a division of British footwear manufacturer Hi-Tec Sports PLC, purchased Falcon Shoe in Lewiston and immediately added 14 employees to its staff of 26 to pursue military boot contracts.
Quebec-based Regence Footwear hired 30 workers to make snowmobile boots in Lewiston. And New England Orthotic and Diabetic Shoe Co. launched in the former Bass Shoe facility in Wilton, planning to hire 17. Each company touted what's left of that skilled shoe-making workforce as one reason for locating in Maine. With all due respect to F. Scott Fitzgerald, maybe there are second acts in American lives.
A bumper crop
Potatoes and blueberries may dominate Maine's agriculture industry, but the state's most interesting farming story is happening on a small scale. This year we learned that 25% of Maine's farmers are under age 35, making us the fifth-youngest farming state in the country. Experts credit the youth movement to the popularity of organic farming here. Likewise, 15% of Maine's dairy industry is organic ˆ the largest percentage in the country. With organic fruit and vegetable sales estimated to jump 21% between 2004 and 2008, and organic dairy estimated to grow 15%, economic developers on the lookout for Maine's future high-growth industries might want to chat with that nice hippie farmer down the road.
The air above
Environmental battles are nothing new in Maine, but the last 12 months saw intense public squabbles over issues like the aerial spraying of blueberry crops and pollution controls for paper mills. Even Attorney General Steven Rowe entered the fray, arguing in federal lawsuits that dirty air caused by power plants in midwestern states contributed to Maine's deteriorating air quality. These issues are particularly important in Maine, where the need for economic development often runs headlong into the desire to protect the state's abundant natural resources. But however these arguments shake out, Mainers need to keep the word compromise in their vocabularies.
Keeping up the kooky proposals
Ever since developer John Cacoulidis scrapped his 2001 plan for a towering South Portland hotel and cable cars over Portland Harbor, we've been waiting for someone else to emerge with a similarly bold but offbeat proposal. This year, those kinds of ideas seemed to come from the Legislature, with Rep. Henry Joy's call for Northern Maine to secede and form its own state, and a short-lived plan to shift Maine into the Atlantic Time Zone. Although both ideas were voted down, we're wondering what the private sector could have on tap for next year. The Fryeburg Blimpworks? An Aroostook County supercollider? Machias-to-Calais monorail?
TRENDS WE'D LIKE TO STICK AROUND
Mill work
Not content to watch Maine's manufacturing legacy crumble before their eyes, officials and developers throughout the state reclaimed old mill facilities at a frenetic pace this year. One developer unveiled plans for a multimillion-dollar renovation of the Eastern Fine Paper Co. mill in Brewer that would include artist space alongside housing and retail shops. A number of proposals followed in Lewiston, Augusta, Biddeford and elsewhere. And the proposals weren't just limited to mills: In November, the Passamaquoddy Tribe floated a plan to reuse two concrete grain silos in Rockland for a cultural center and luxury condominiums. Not only is such redevelopment helping revitalize downtowns and prevent further sprawl, it's keeping the state's architects on their toes.
Maine goes global
Talk of international trade in Maine usually means doing business with Canada. No offense to our friendly neighbors to the north, but it's refreshing that in recent months Maine businesses have taken their pitches to a decidedly larger ˆ and farther-flung ˆ audience. Maine firms are expected to bank $5 million in sales from a recent trade mission to France, and some $20 million in deal from a Cuba mission. (Frosty biz people might want to make that one an annual winter junket). Best of all, the global trade door swung both ways: Brazilian firm Para Pigmentos in July flipped the switch on a new $9 million Searsport facility to supply customers like International Paper with its specialized clay product. It's nice to see some Maine companies say, "Hello, world!" and take advantage of an increasingly accessible global marketplace.
Moving and shaking
Geography is destiny, someone once said. For years, that's meant that many travelers and businesses have considered Maine the end of the line. But 2005 saw some big changes in the way goods ˆ and people ˆ are moved into, out of and through the state. Proposals aplenty targeted Portland for such developments as Sprague Energy's new cargo shipping services. Portland also lost the Scotia Prince but gained The Cat high speed ferry to Nova Scotia. What's more, this summer's federal transportation bill earmarked more than $1.1 billion for Maine, meaning four more years of Downeaster funding and $28 million to begin planning a long-called-for east-west highway from Calais to upstate New York. Can't get there from here? Hopefully not for long.
Build a bigger brand
Aiming to prove that there is indeed strength in numbers, 2005 saw a gaggle of small businesses stand together with their industry compatriots in hopes of making a bigger splash outside of Maine. Taking a cue from collectives like Maine WoodNet and Maine Fiberarts, many of the state's boat builders earlier this year formed the Maine Built Boats Organization to spread the word about the state's hundreds of independent crafters. The group's goal: Boosting Maine's boat and boat-related sales from $650 million a year to more than $1 billion within the next 10 years. Gourmands also got into the act through the Taste of Success program, an initiative that will lend smaller food producers a hand breaking into the highly competitive specialty foods market. Maine has always been at the top of the heap in these industries, but it's about time they had the clout to match the quality.
TRENDS WE'D LIKE TO GO AWAY
Padding the employment rolls
The past year saw a number of high-profile announcements from companies setting up shop around Maine. And while we love seeing new additions to the state's economy, we always get a little anxious when those announcements are paired with outsized employment projections. Call it Yankee stoicism or just plain old skepticism, but it's hard to take an unproven company seriously when it's promising hundreds or thousands of new jobs even before its first product rolls off the line. Will Bangor-based Hallowell International really employ 900 at its nascent heat pump plant, and will the Passamaquoddy Tribe truly hire 2,000 workers at its as-yet-unbuilt aviation repair facility in Pleasant Point? We're not saying it won't happen, but we're also not betting the farm.
The pile-on effect
The law of supply and demand is pretty rational: There's always some enterprising person looking to fill demand from a hungry clientele. This year, rationality seems to have flown out the window in some sectors, leading to serious skewing of that fundamental economic tenet. With rashes of condo proposals in Portland and big-box plans metastasizing throughout the state, Maine residents are watching developers hop on the latest trends to a degree that many worry far outstrips demand. There's a fine line between growth and glut, and that line seems to be getting trampled. Does Maine need more than one LNG terminal? If not, wouldn't all the money that's being spent to shore up support for each of the three separate proposals be better used elsewhere?
Shaky venture environment
Portland-based Blue Tarp Financial kicked the year off right with an announcement that it received $14 million in venture capital funding from a handful of New England investors. DECD Commissioner Jack Cashman said the January deal was a sign of Maine's strengthening economy. Well, if that's the case, then Maine's economy stunk during 2005's second quarter: Of the $621.9 million worth of venture investment in New England during the three months through June, not one lousy dollar made its way to Maine. Fortunately, Orono-based Stillwater Scientific broke the state's crummy streak in August, announcing it received $1.15 million in venture financing. Maine isn't likely to ever be hot among the VC luminaries on Sand Hill Road, but that doesn't mean money isn't out there.
Vacationland in jeopardy
Sure, they clog up the turnpike during the summer and make life miserable on Route One. But no matter how much Mainers complain about those danged tourists, the state would be sunk without them and their pocketbooks. So recent data suggesting that Maine is losing market share among the New England tourism industry is scary news. Fortunately, there are some new developments to boost the state's tourism market. Some are just crazy enough to work, like the Maine Office of Tourism's plan to steal tourists away from New Hampshire. But we'd rather cast our lot with places like University of Maine's new tourism research center, CenTRO, the fast-growing ecotourism market and continued inland tourism development. Vacationland doesn't just have to mean beaches and lighthouses. Ice fishing derby, anyone?
Brunswick gets BRACed
It's funny how an event that everyone knew was coming and had years to speculate about still managed to surprise us. The two Maine military installations experts said were most vulnerable ˆ Portsmouth Naval Shipyard in Kittery and the Defense Finance and Accounting Service center in Limestone ˆ were not only saved by the Base Realignment and Closure Commission but marked for potential expansion. Instead, the base that appeared to have the most strategic value is now slated for closure. Like the run up to the BRAC process itself, though, the shutdown of Brunswick Naval Air Station is expected to take six years, leaving plenty of time for speculation about whether its absence will hobble the economy of the Bath-Brunswick region or allow a new, private sector economic engine to arise. The only sure thing is that the area will never be quite the same.
Reshuffling the corporate deck
Maine's relative lack of big corporate players makes any changes to that roster that much more noticeable ˆ and this year offered an abundance of blockbuster deals for some of the biggest corporations in Maine. Midcoast residents are wondering if MBNA's dwindling regional presence disappear altogether following Bank of America's June acquisition of the firm. Even more significant, homegrown success story Banknorth Group Inc. merged with Toronto-based TD Bank in a move company executives said would fund continual regional expansion. Meanwhile, another Maine company lost its corporate parent when Cendant Corp. spun off South Portland-based Wright Express in a February initial public offering. Maybe after this year, little ol' Maine has more of Wall Street's attention.
Big proposals, bigger controversies
Plum Creek Timber Co.'s development plan for 400,000 acres near Moosehead Lake was bound to kick off a lively debate ˆ but who would have expected vandalism that included spray painted slogans, broken windows, paint bombs and strewn animal entrails? In Washington County, debate over three proposed liquefied natural gas terminals fortunately hasn't turned violent, but it has featured its share of name-calling. LNG opponents asked Gov. John Baldacci to declare Quoddy Bay LLC president Don Smith "persona non grata"; a minor cross-border tiff developed when New Brunswick Premier Bernard Lord said that Canada could and would take steps to block LNG development in Maine; and protestors accused Portland PR firm Savvy Inc. of "environmental racism" for its work on behalf of Quoddy Bay. Maine needs to scrutinize big proposals like these, but let's hope things cool out in 2006. Otherwise, developers with potentially sound ideas may decide to skip the Pine Tree State in the future, for fear of receiving a bucketful of raccoon guts on arrival.
Dirigo as Rorschach test
January 2005 marked the widespread start of enrollment in the state's DirigoChoice insurance product. From that point on, supporters and opponents of Gov. John Baldacci's health reform plan saw exactly what they expected to see in each subsequent development. Critics who had railed against Dirigo's creation seized what they saw as slow enrollment figures as proof of the program's failure. Supporters touted plan administrator Anthem Blue Cross and Blue Shield's comments that DirigoChoice in fact was one of the most successful launches of a new insurance product ever. With the 2006 election looming, expect the subjective interpretations ˆ and the fighting ˆ to continue.
THE SLEEPER STORIES
Small steps toward a shoe revival
Maine's shoe stitching business is never going to recapture its former glory, but a handful of developments in 2005 show signs of a niche forming. Magnum USA, a division of British footwear manufacturer Hi-Tec Sports PLC, purchased Falcon Shoe in Lewiston and immediately added 14 employees to its staff of 26 to pursue military boot contracts.
Quebec-based Regence Footwear hired 30 workers to make snowmobile boots in Lewiston. And New England Orthotic and Diabetic Shoe Co. launched in the former Bass Shoe facility in Wilton, planning to hire 17. Each company touted what's left of that skilled shoe-making workforce as one reason for locating in Maine. With all due respect to F. Scott Fitzgerald, maybe there are second acts in American lives.
A bumper crop
Potatoes and blueberries may dominate Maine's agriculture industry, but the state's most interesting farming story is happening on a small scale. This year we learned that 25% of Maine's farmers are under age 35, making us the fifth-youngest farming state in the country. Experts credit the youth movement to the popularity of organic farming here. Likewise, 15% of Maine's dairy industry is organic ˆ the largest percentage in the country. With organic fruit and vegetable sales estimated to jump 21% between 2004 and 2008, and organic dairy estimated to grow 15%, economic developers on the lookout for Maine's future high-growth industries might want to chat with that nice hippie farmer down the road.
The air above
Environmental battles are nothing new in Maine, but the last 12 months saw intense public squabbles over issues like the aerial spraying of blueberry crops and pollution controls for paper mills. Even Attorney General Steven Rowe entered the fray, arguing in federal lawsuits that dirty air caused by power plants in midwestern states contributed to Maine's deteriorating air quality. These issues are particularly important in Maine, where the need for economic development often runs headlong into the desire to protect the state's abundant natural resources. But however these arguments shake out, Mainers need to keep the word compromise in their vocabularies.
Keeping up the kooky proposals
Ever since developer John Cacoulidis scrapped his 2001 plan for a towering South Portland hotel and cable cars over Portland Harbor, we've been waiting for someone else to emerge with a similarly bold but offbeat proposal. This year, those kinds of ideas seemed to come from the Legislature, with Rep. Henry Joy's call for Northern Maine to secede and form its own state, and a short-lived plan to shift Maine into the Atlantic Time Zone. Although both ideas were voted down, we're wondering what the private sector could have on tap for next year. The Fryeburg Blimpworks? An Aroostook County supercollider? Machias-to-Calais monorail?
TRENDS WE'D LIKE TO STICK AROUND
Mill work
Not content to watch Maine's manufacturing legacy crumble before their eyes, officials and developers throughout the state reclaimed old mill facilities at a frenetic pace this year. One developer unveiled plans for a multimillion-dollar renovation of the Eastern Fine Paper Co. mill in Brewer that would include artist space alongside housing and retail shops. A number of proposals followed in Lewiston, Augusta, Biddeford and elsewhere. And the proposals weren't just limited to mills: In November, the Passamaquoddy Tribe floated a plan to reuse two concrete grain silos in Rockland for a cultural center and luxury condominiums. Not only is such redevelopment helping revitalize downtowns and prevent further sprawl, it's keeping the state's architects on their toes.
Maine goes global
Talk of international trade in Maine usually means doing business with Canada. No offense to our friendly neighbors to the north, but it's refreshing that in recent months Maine businesses have taken their pitches to a decidedly larger ˆ and farther-flung ˆ audience. Maine firms are expected to bank $5 million in sales from a recent trade mission to France, and some $20 million in deal from a Cuba mission. (Frosty biz people might want to make that one an annual winter junket). Best of all, the global trade door swung both ways: Brazilian firm Para Pigmentos in July flipped the switch on a new $9 million Searsport facility to supply customers like International Paper with its specialized clay product. It's nice to see some Maine companies say, "Hello, world!" and take advantage of an increasingly accessible global marketplace.
Moving and shaking
Geography is destiny, someone once said. For years, that's meant that many travelers and businesses have considered Maine the end of the line. But 2005 saw some big changes in the way goods ˆ and people ˆ are moved into, out of and through the state. Proposals aplenty targeted Portland for such developments as Sprague Energy's new cargo shipping services. Portland also lost the Scotia Prince but gained The Cat high speed ferry to Nova Scotia. What's more, this summer's federal transportation bill earmarked more than $1.1 billion for Maine, meaning four more years of Downeaster funding and $28 million to begin planning a long-called-for east-west highway from Calais to upstate New York. Can't get there from here? Hopefully not for long.
Build a bigger brand
Aiming to prove that there is indeed strength in numbers, 2005 saw a gaggle of small businesses stand together with their industry compatriots in hopes of making a bigger splash outside of Maine. Taking a cue from collectives like Maine WoodNet and Maine Fiberarts, many of the state's boat builders earlier this year formed the Maine Built Boats Organization to spread the word about the state's hundreds of independent crafters. The group's goal: Boosting Maine's boat and boat-related sales from $650 million a year to more than $1 billion within the next 10 years. Gourmands also got into the act through the Taste of Success program, an initiative that will lend smaller food producers a hand breaking into the highly competitive specialty foods market. Maine has always been at the top of the heap in these industries, but it's about time they had the clout to match the quality.
TRENDS WE'D LIKE TO GO AWAY
Padding the employment rolls
The past year saw a number of high-profile announcements from companies setting up shop around Maine. And while we love seeing new additions to the state's economy, we always get a little anxious when those announcements are paired with outsized employment projections. Call it Yankee stoicism or just plain old skepticism, but it's hard to take an unproven company seriously when it's promising hundreds or thousands of new jobs even before its first product rolls off the line. Will Bangor-based Hallowell International really employ 900 at its nascent heat pump plant, and will the Passamaquoddy Tribe truly hire 2,000 workers at its as-yet-unbuilt aviation repair facility in Pleasant Point? We're not saying it won't happen, but we're also not betting the farm.
The pile-on effect
The law of supply and demand is pretty rational: There's always some enterprising person looking to fill demand from a hungry clientele. This year, rationality seems to have flown out the window in some sectors, leading to serious skewing of that fundamental economic tenet. With rashes of condo proposals in Portland and big-box plans metastasizing throughout the state, Maine residents are watching developers hop on the latest trends to a degree that many worry far outstrips demand. There's a fine line between growth and glut, and that line seems to be getting trampled. Does Maine need more than one LNG terminal? If not, wouldn't all the money that's being spent to shore up support for each of the three separate proposals be better used elsewhere?
Shaky venture environment
Portland-based Blue Tarp Financial kicked the year off right with an announcement that it received $14 million in venture capital funding from a handful of New England investors. DECD Commissioner Jack Cashman said the January deal was a sign of Maine's strengthening economy. Well, if that's the case, then Maine's economy stunk during 2005's second quarter: Of the $621.9 million worth of venture investment in New England during the three months through June, not one lousy dollar made its way to Maine. Fortunately, Orono-based Stillwater Scientific broke the state's crummy streak in August, announcing it received $1.15 million in venture financing. Maine isn't likely to ever be hot among the VC luminaries on Sand Hill Road, but that doesn't mean money isn't out there.
Vacationland in jeopardy
Sure, they clog up the turnpike during the summer and make life miserable on Route One. But no matter how much Mainers complain about those danged tourists, the state would be sunk without them and their pocketbooks. So recent data suggesting that Maine is losing market share among the New England tourism industry is scary news. Fortunately, there are some new developments to boost the state's tourism market. Some are just crazy enough to work, like the Maine Office of Tourism's plan to steal tourists away from New Hampshire. But we'd rather cast our lot with places like University of Maine's new tourism research center, CenTRO, the fast-growing ecotourism market and continued inland tourism development. Vacationland doesn't just have to mean beaches and lighthouses. Ice fishing derby, anyone?
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