January 23, 2006
Tied together | Despite heated landfill contract negotiations, FMC BioPolymer and Rockland say they need
By Taylor Smith
In mid December, Rockland's city council narrowly voted to reject a long-term landfill contract with FMC BioPolymer, which these days is arguably the city's largest and most important corporate citizen. The contract dispute centered on whether FMC should be allowed to continue dumping tens of thousands of cubic yards of seaweed waste ˆ leftovers from the company's main business of extracting carrageenan, a popular food additive, from seaweed ˆ into Rockland's landfill for the next decade. Three of the five city councilors who voted to reject the company's contract extension cited a variety of concerns, ranging from odor problems to potential health issues stemming from the landfill's air quality.
The two sides struck a one-year deal shortly before Christmas, when both the city and FMC compromised on items such as a higher dumping fee and a lower disposal volume. Taken at face value, the recent flap between FMC and the city of Rockland may seem blown out of proportion. After all, such heated negotiations are par for the course in any municipality in Maine and elsewhere. They're also a necessary bump in the business landscape, with both parties looking to talk their way into the best end of the deal.
But for Rockland and FMC, the landfill negotiations hint at the much larger issue of the mutually beneficial relationship between the two. It's a matter of simple economics: For both the city and the company, it makes good financial sense to stay together. For all the hassles of odiferous waste or the prime real estate it occupies on the city's waterfront, FMC is good news for Rockland. And most residents and city officials ˆ including Carol Maines, one of the three city councilors to vote against renewing FMC's landfill contract ˆ want the company to stay in town. They want FMC to continue contributing more than $400,000 in annual taxes to the city's coffers, and more than $8 million in payroll to its 130 employees. They especially value being able to offer Rockland residents an alternative to retail and service sector jobs at the big-box stores and tourist-targeting resorts and hotels that have sprung up in recent years along Route One in the midcoast area. "They're good jobs. They have benefits and they pay quite well," says Maines. "We want an industry like that."
At the same time, FMC's Rockland location ˆ the last remaining carrageenan processing plant in the United States ˆ is good news for its parent company, Philadelphia-based FMC Corp. Unlike some owners of aging industrial facilities in Maine, FMC Corp. has spent millions upgrading and maintaining its facility on Crockett's Point in recent years. What's more, FMC has a highly skilled workforce in Rockland, which Plant Manager Michael Stumbo and others say helps the company offer a higher-quality product than foreign processors. "They've got tens of millions of dollars invested in plumbing alone," says Rockland City Manager Thomas Hall. "They've made big capital investments, and that, coupled with a very good trained labor force, makes them competitive."
Despite this cozy, seemingly symbiotic relationship between FMC and the city of Rockland, the question looms of whether FMC will still be in Rockland five or 10 years down the road. A changing global economy or the increased demand for development along Maine's coast may make it untenable for FMC to remain in Rockland even a few years from now. And the question is one that both Rockland residents and officials need to ponder.
Even though FMC officials ˆ both in Rockland and at the company's Philadelphia headquarters ˆ say they're committed to Rockland for the long term, others aren't willing to bank on the permanence of FMC's Crockett Point facility. "FMC is a big part of our community, but we don't understand that in that larger corporation, it's just a blip," says Alan Hinsey, an economic development specialist with Eastern Maine Development Corp. in Rockland. "There's an accountant in the FMC headquarters that looks at spreadsheets all day. And when the numbers cross a certain line, that might be it for FMC [in Rockland]. Like any big corporation, they're watching the bottom line."
Lab coats and landfills
The landfill issue hovered over the city for much of December, with each new development resulting in a flurry of coverage from local press outlets. Negotiations between the city and the company were "hot and contentious," according to Hall, who adds that FMC was being vilified for some problems that may not have been the company's fault. Some condemned the company for the rotten-egg smell that occasionally trailed through the city from the landfill, while others said the fault lay with the city, which Maines says didn't have the infrastructure in place to properly handle FMC's regular waste dumping.
But others praised FMC as a good corporate citizen and an important resource. "We're concentrating on the stink and not the lab coats," says Hinsey, referring to the science-related, white-collar jobs available at FMC. "The question should be, how do we get more lab coats here?"
If some residents don't see FMC as a high-tech, science-oriented employer, that may be because the waterfront facility where FMC is located has been processing seaweed since the 1930s. In the processing plant's earlier days, seaweed was collected in the Gulf of Maine, from Massachusetts to the Canadian Maritimes. These days, only one percent of the seaweed FMC processes in Rockland is harvested locally ˆ the rest is shipped in from places like the Philippines, Africa, Indonesia and southern Chile. Dennis Seisun, president of IMR International, a consulting firm in San Diego, Calif. that specializes in the market for carrageenan and similar products, estimates the global carrageenan market at around $300 million, and says that although FMC is a leading player, he can't speculate as to how much of the market the company controls. (FMC's Stumbo pegs the market's value at closer to $1 billion, but declined to guess how much of that market's business FMC handles.)
Once the carrageenan processed at FMC's facility is ready for market, Stumbo says more than half of it gets shipped to food companies in Latin America and Asia. While FMC dumped 25,000 cubic yards of waste in Rockland's landfill last year, Plant Manager Michael Stumbo expects to dump just a fraction of that amount this year. Carrageenan is used primarily as a food additive, acting as a thickening agent and emulsifier in products like soy milk and toothpaste, but Stumbo says there are an increasing number of commercial applications in the pharmaceutical market for the extract. (See "Sea change," page 18.) That's helped FMC's Rockland operations, which represent just a fraction of FMC's more than $2 billion in annual sales, to be a well-regarded division in the company. "It's an important part of FMC's specialty chemical business," says Judy Smeltzer, director of state government relations at FMC in Philadelphia.
But for a few weeks in December, it was unclear whether the landfill argument would sink the last remaining seaweed factory in the United States. The landfill problem was solved ˆ at least temporarily ˆ when the city and FMC agreed to a one-year extension of the landfill use contract. That extension, however, came with a few wrinkles: The city upped the per-cubic-yard tipping fee to more than $22 ˆ a significant increase from the $3.50-a-cubic-yard tipping charge the company had been paying. "Their [byproduct] was problematic to us, I'll be honest. But we always tried to work with them," says Hall. "It's really a classic case of wanting to support one of your major taxpayers and major employers."
That cost increase will likely double the $90,000 or so the company paid in dumping fees last year. (But Stumbo estimates the company racked up between $200,000 and $250,000 in total landfill charges last year, thanks to a number of additional charges FMC shouldered. This year, Stumbo says the company will pay a flat fee.) According to Maines, the city council raised the rates to better allow the city to handle issues that have plagued the landfill in recent years, from a skeleton crew of staffers to myriad equipment problems. What's more, the new disposal charge includes roughly six dollars per cubic yard that will be put towards the eventual cost of closing the landfill ˆ a cost that Maines says will be "huge."
But as part of the agreement, FMC revised the amount it expects to dump annually, dropping that amount to roughly one-third of the 25,000 cubic yards it dumped last year. In addition, Stumbo says the company anticipated the landfill agreement with the city would eventually run its course, and has been working for more than three years to come up with an alternative to discarding its seaweed byproduct into the city's landfill. In recent months, Stumbo says, that advance planning has begun to pay off, as the company and a partner have developed a different way of dealing with the processed seaweed. "We've told the city that we'll no longer use the landfill after 2006," he says. "We recognized it would be better to do something else with [our waste]."
Spreading it around
The solution, says Stumbo, involves offering the seaweed byproduct to farmers for use as an agricultural fertilizer. FMC in 2003 launched a pilot program with Resource Management Inc., an Ashland, N.H. firm that consults with companies to recycle their industrial byproducts. FMC and RMI worked to recycle the company's waste seaweed into Algefiber, a combination of processed seaweed and perlite, a volcanic mineral often found in potting soils. In the program's first year, it offered about 2,000 cubic yards of the product to farmers in Knox County. Each cubic yard of Algefiber is enough to cover eight to 12 acres of farmland, according to Shelagh Connelly, RMI's president.
This past year, she says, 40 farmers participated in the project and used nearly 5,000 cubic yards of Algefiber on their fields, and Connolly says those numbers will grow considerably during the next few years. (She also says that FMC and RMI are working in conjunction to bag Algefiber like potting soil and sell it to consumers.) Connelly estimates that it costs FMC ˆ which is subsidizing the trucking, permitting, testing and product quality monitoring for the project ˆ between $25-$30 to recycle one cubic yard of processed seaweed. FMC won't be stuck footing the entire bill for long, she says; Connelly expects FMC's recycling prices to fall considerably as more farmers sign up to spread Algefiber on their fields. "They're a very progressive company," says Connelly. "They were working on this before the landfill issue came up."
City manager Thomas Hall applauds the company's proactive strategy. "They realized they needed to find a long-term solution," he says. "They can't be subject to the whims of a handful of city councilors."
FMC's development of an alternative use for its seaweed certainly helped it dodge an expensive bullet. If using the city's landfill was the company's only option, FMC would have seen its dumping costs rise to more than a half-million dollars a year. As the landfill issue was settled, FMC's status in Rockland seemed to revert to the status quo, with the company and the city again enjoying a reasonably comfortable co-existence. There's certainly no telling whether FMC will face similar negotiations with the Rockland City Council over other issues in the future, but city officials say that the bulk of the city's discontentment with FMC stemmed from those landfill issues.
Whether that peace will last remains unseen. It may be broken on the town's side, through another environmental issue taken up by residents or a rallying cry to find a better use for FMC's waterfront real estate. Or the happy relationship may be shattered if future high-cost permits or other regulations strike fear among FMC Corp.'s accountants.
In pondering the future of FMC in Rockland, though, the relationship between the town and the company may not be at the heart of the matter. Instead, FMC's fate in Rockland may be dictated more by global economics than local relations. FMC is the "big daddy" in the global marketplace, according to Dennis Seisun. But that position as a leading producer in the worldwide carrageenan market also comes with some baggage, he says.
Big food producers like Nestlé and Kraft Foods Inc. increasingly are looking to spend less money on food additives like carrageenan, according to Seisun, which benefits lower-cost producers in places like the Philippines or China. "That's part of the problem FMC's facing. They're developing a lot of innovative products, but the client isn't willing to pay for it," he says. "It's squeezing innovation out of the market."
What's more, FMC is faced with the difficult proposition of manufacturing in a country with strict regulations compared to competitors in other places. Seisun says that it's unlikely carrageenan processors in countries like China and the Philippines face the same kind of regulatory scrutiny as FMC does in Rockland. And playing by the rules in Rockland likely means a higher cost of doing business. "I think they'll face increasing compliance pressures that will make for a more difficult environment," says Seisun.
But Stumbo says that while domestic manufacturing does have its challenges, FMC's strength lies in its ability to stay ahead of the global market. And being able to innovate, he says, means staying put in Rockland, tapping into the collected institutional knowledge of its skilled workers. "We're the last carrageenan plant in the U.S.," says Stumbo. "What allows us to survive is innovation and quality. The people we compete with are trying hard to catch us. And if we stand still, they will."
The two sides struck a one-year deal shortly before Christmas, when both the city and FMC compromised on items such as a higher dumping fee and a lower disposal volume. Taken at face value, the recent flap between FMC and the city of Rockland may seem blown out of proportion. After all, such heated negotiations are par for the course in any municipality in Maine and elsewhere. They're also a necessary bump in the business landscape, with both parties looking to talk their way into the best end of the deal.
But for Rockland and FMC, the landfill negotiations hint at the much larger issue of the mutually beneficial relationship between the two. It's a matter of simple economics: For both the city and the company, it makes good financial sense to stay together. For all the hassles of odiferous waste or the prime real estate it occupies on the city's waterfront, FMC is good news for Rockland. And most residents and city officials ˆ including Carol Maines, one of the three city councilors to vote against renewing FMC's landfill contract ˆ want the company to stay in town. They want FMC to continue contributing more than $400,000 in annual taxes to the city's coffers, and more than $8 million in payroll to its 130 employees. They especially value being able to offer Rockland residents an alternative to retail and service sector jobs at the big-box stores and tourist-targeting resorts and hotels that have sprung up in recent years along Route One in the midcoast area. "They're good jobs. They have benefits and they pay quite well," says Maines. "We want an industry like that."
At the same time, FMC's Rockland location ˆ the last remaining carrageenan processing plant in the United States ˆ is good news for its parent company, Philadelphia-based FMC Corp. Unlike some owners of aging industrial facilities in Maine, FMC Corp. has spent millions upgrading and maintaining its facility on Crockett's Point in recent years. What's more, FMC has a highly skilled workforce in Rockland, which Plant Manager Michael Stumbo and others say helps the company offer a higher-quality product than foreign processors. "They've got tens of millions of dollars invested in plumbing alone," says Rockland City Manager Thomas Hall. "They've made big capital investments, and that, coupled with a very good trained labor force, makes them competitive."
Despite this cozy, seemingly symbiotic relationship between FMC and the city of Rockland, the question looms of whether FMC will still be in Rockland five or 10 years down the road. A changing global economy or the increased demand for development along Maine's coast may make it untenable for FMC to remain in Rockland even a few years from now. And the question is one that both Rockland residents and officials need to ponder.
Even though FMC officials ˆ both in Rockland and at the company's Philadelphia headquarters ˆ say they're committed to Rockland for the long term, others aren't willing to bank on the permanence of FMC's Crockett Point facility. "FMC is a big part of our community, but we don't understand that in that larger corporation, it's just a blip," says Alan Hinsey, an economic development specialist with Eastern Maine Development Corp. in Rockland. "There's an accountant in the FMC headquarters that looks at spreadsheets all day. And when the numbers cross a certain line, that might be it for FMC [in Rockland]. Like any big corporation, they're watching the bottom line."
Lab coats and landfills
The landfill issue hovered over the city for much of December, with each new development resulting in a flurry of coverage from local press outlets. Negotiations between the city and the company were "hot and contentious," according to Hall, who adds that FMC was being vilified for some problems that may not have been the company's fault. Some condemned the company for the rotten-egg smell that occasionally trailed through the city from the landfill, while others said the fault lay with the city, which Maines says didn't have the infrastructure in place to properly handle FMC's regular waste dumping.
But others praised FMC as a good corporate citizen and an important resource. "We're concentrating on the stink and not the lab coats," says Hinsey, referring to the science-related, white-collar jobs available at FMC. "The question should be, how do we get more lab coats here?"
If some residents don't see FMC as a high-tech, science-oriented employer, that may be because the waterfront facility where FMC is located has been processing seaweed since the 1930s. In the processing plant's earlier days, seaweed was collected in the Gulf of Maine, from Massachusetts to the Canadian Maritimes. These days, only one percent of the seaweed FMC processes in Rockland is harvested locally ˆ the rest is shipped in from places like the Philippines, Africa, Indonesia and southern Chile. Dennis Seisun, president of IMR International, a consulting firm in San Diego, Calif. that specializes in the market for carrageenan and similar products, estimates the global carrageenan market at around $300 million, and says that although FMC is a leading player, he can't speculate as to how much of the market the company controls. (FMC's Stumbo pegs the market's value at closer to $1 billion, but declined to guess how much of that market's business FMC handles.)
Once the carrageenan processed at FMC's facility is ready for market, Stumbo says more than half of it gets shipped to food companies in Latin America and Asia. While FMC dumped 25,000 cubic yards of waste in Rockland's landfill last year, Plant Manager Michael Stumbo expects to dump just a fraction of that amount this year. Carrageenan is used primarily as a food additive, acting as a thickening agent and emulsifier in products like soy milk and toothpaste, but Stumbo says there are an increasing number of commercial applications in the pharmaceutical market for the extract. (See "Sea change," page 18.) That's helped FMC's Rockland operations, which represent just a fraction of FMC's more than $2 billion in annual sales, to be a well-regarded division in the company. "It's an important part of FMC's specialty chemical business," says Judy Smeltzer, director of state government relations at FMC in Philadelphia.
But for a few weeks in December, it was unclear whether the landfill argument would sink the last remaining seaweed factory in the United States. The landfill problem was solved ˆ at least temporarily ˆ when the city and FMC agreed to a one-year extension of the landfill use contract. That extension, however, came with a few wrinkles: The city upped the per-cubic-yard tipping fee to more than $22 ˆ a significant increase from the $3.50-a-cubic-yard tipping charge the company had been paying. "Their [byproduct] was problematic to us, I'll be honest. But we always tried to work with them," says Hall. "It's really a classic case of wanting to support one of your major taxpayers and major employers."
That cost increase will likely double the $90,000 or so the company paid in dumping fees last year. (But Stumbo estimates the company racked up between $200,000 and $250,000 in total landfill charges last year, thanks to a number of additional charges FMC shouldered. This year, Stumbo says the company will pay a flat fee.) According to Maines, the city council raised the rates to better allow the city to handle issues that have plagued the landfill in recent years, from a skeleton crew of staffers to myriad equipment problems. What's more, the new disposal charge includes roughly six dollars per cubic yard that will be put towards the eventual cost of closing the landfill ˆ a cost that Maines says will be "huge."
But as part of the agreement, FMC revised the amount it expects to dump annually, dropping that amount to roughly one-third of the 25,000 cubic yards it dumped last year. In addition, Stumbo says the company anticipated the landfill agreement with the city would eventually run its course, and has been working for more than three years to come up with an alternative to discarding its seaweed byproduct into the city's landfill. In recent months, Stumbo says, that advance planning has begun to pay off, as the company and a partner have developed a different way of dealing with the processed seaweed. "We've told the city that we'll no longer use the landfill after 2006," he says. "We recognized it would be better to do something else with [our waste]."
Spreading it around
The solution, says Stumbo, involves offering the seaweed byproduct to farmers for use as an agricultural fertilizer. FMC in 2003 launched a pilot program with Resource Management Inc., an Ashland, N.H. firm that consults with companies to recycle their industrial byproducts. FMC and RMI worked to recycle the company's waste seaweed into Algefiber, a combination of processed seaweed and perlite, a volcanic mineral often found in potting soils. In the program's first year, it offered about 2,000 cubic yards of the product to farmers in Knox County. Each cubic yard of Algefiber is enough to cover eight to 12 acres of farmland, according to Shelagh Connelly, RMI's president.
This past year, she says, 40 farmers participated in the project and used nearly 5,000 cubic yards of Algefiber on their fields, and Connolly says those numbers will grow considerably during the next few years. (She also says that FMC and RMI are working in conjunction to bag Algefiber like potting soil and sell it to consumers.) Connelly estimates that it costs FMC ˆ which is subsidizing the trucking, permitting, testing and product quality monitoring for the project ˆ between $25-$30 to recycle one cubic yard of processed seaweed. FMC won't be stuck footing the entire bill for long, she says; Connelly expects FMC's recycling prices to fall considerably as more farmers sign up to spread Algefiber on their fields. "They're a very progressive company," says Connelly. "They were working on this before the landfill issue came up."
City manager Thomas Hall applauds the company's proactive strategy. "They realized they needed to find a long-term solution," he says. "They can't be subject to the whims of a handful of city councilors."
FMC's development of an alternative use for its seaweed certainly helped it dodge an expensive bullet. If using the city's landfill was the company's only option, FMC would have seen its dumping costs rise to more than a half-million dollars a year. As the landfill issue was settled, FMC's status in Rockland seemed to revert to the status quo, with the company and the city again enjoying a reasonably comfortable co-existence. There's certainly no telling whether FMC will face similar negotiations with the Rockland City Council over other issues in the future, but city officials say that the bulk of the city's discontentment with FMC stemmed from those landfill issues.
Whether that peace will last remains unseen. It may be broken on the town's side, through another environmental issue taken up by residents or a rallying cry to find a better use for FMC's waterfront real estate. Or the happy relationship may be shattered if future high-cost permits or other regulations strike fear among FMC Corp.'s accountants.
In pondering the future of FMC in Rockland, though, the relationship between the town and the company may not be at the heart of the matter. Instead, FMC's fate in Rockland may be dictated more by global economics than local relations. FMC is the "big daddy" in the global marketplace, according to Dennis Seisun. But that position as a leading producer in the worldwide carrageenan market also comes with some baggage, he says.
Big food producers like Nestlé and Kraft Foods Inc. increasingly are looking to spend less money on food additives like carrageenan, according to Seisun, which benefits lower-cost producers in places like the Philippines or China. "That's part of the problem FMC's facing. They're developing a lot of innovative products, but the client isn't willing to pay for it," he says. "It's squeezing innovation out of the market."
What's more, FMC is faced with the difficult proposition of manufacturing in a country with strict regulations compared to competitors in other places. Seisun says that it's unlikely carrageenan processors in countries like China and the Philippines face the same kind of regulatory scrutiny as FMC does in Rockland. And playing by the rules in Rockland likely means a higher cost of doing business. "I think they'll face increasing compliance pressures that will make for a more difficult environment," says Seisun.
But Stumbo says that while domestic manufacturing does have its challenges, FMC's strength lies in its ability to stay ahead of the global market. And being able to innovate, he says, means staying put in Rockland, tapping into the collected institutional knowledge of its skilled workers. "We're the last carrageenan plant in the U.S.," says Stumbo. "What allows us to survive is innovation and quality. The people we compete with are trying hard to catch us. And if we stand still, they will."
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