Now that the political posturing around Kestrel Aircraft Company’s decision to abandon Maine for a sweeter deal in Wisconsin has died down, it’s time for an honest look at economic development in Maine. That’s important, because many have been quick to draw exactly the wrong conclusions about what Maine should do to grow our job base.
Our experience in business attraction has taught us time and again that in the long run, building relationships yields far better results than having a gun put to our heads and caving in to unreasonable demands for financing and incentives.
When Kestrel came to Brunswick in 2010, Maine should have been skeptical. The history of this company, going back to its origins in England, is troubled at best. At the same time, however, the Kestrel opportunity seemed like a good fit. The former Naval Air Station has hangars, runways, and modern infrastructure. And Kestrel’s prospect of manufacturing jobs was certainly seductive.
But from the beginning Kestrel demanded funding. Since the company had not been successful in attracting enough money from the private capital markets, it used the only leverage it had — a promise of 600 jobs. All we had to do was come up with a few tens of millions of dollars that Maine didn’t have.
As it turns out, there also are runways and hangers in Wisconsin and lots of other places, and some other state or country will always have more money to throw at these risky opportunities than we do.
We should learn from this experience. When a company with expansion or growth plans comes along and their first question is about how much money Maine can give them — either in the form of cash or tax incentives — they are most likely not a viable opportunity, and, at the very least, we should proceed with caution, if at all.
The biggest lesson here: There are no shortcuts to job creation. It takes time, hard work and sound public policy. To attract, retain and grow jobs in Maine we need to focus on five key areas:
Costs. Companies evaluate locations based on cost. If Maine costs more, chances are jobs will go somewhere else. Tax policy is important, and those that matter most are personal income, corporate income, business property and capital gains. Similarly, in the manufacturing and production world, energy costs are an important driver in site selection. Minimizing costs as they relate to taxes and energy should be our goal.
Education and work force. Companies need to believe that our education system will produce the talent they need. How can we create a dynamic that keeps a company’s entry-level pipeline full of qualified applicants? Similarly, how can we do a better job of both retaining and attracting skilled workers in the 18–34 demographic? Our economic future depends on our ability to improve the educational attainment and skill level of our work force.
Regulatory speed. Every project we’ve seen at Maine & Company for the last few years has required that regulatory matters be approved or rejected within 10 business days of receiving an application. Before we are even formally presented with an opportunity, we need to have a good idea as to whether we can say yes or no. Once presented, we need to move fast and efficiently.
Incentives. Incentives, grants and loan guarantees are all important tools. However, no amount of incentives will make a bad deal into a good one. Targeted incentives that are competitive with other states will be the “tiebreaker” and will help bring jobs to Maine — provided all the other questions around work force and costs are answered satisfactorily.
Priorities. In a world where resources are limited, establishing priorities is critical. Does it make sense for Maine to direct its limited resources toward risky companies like Kestrel, or to focus our resources on companies with a better track record and that complement our strengths here in Maine? We can’t be all things to all people. We have to prioritize our use of resources.
Let’s use the Kestrel experience to teach the right lessons. We can’t attract jobs by blaming officials when we are losing a bidding war we never could have — nor should have — won. We need to give those on the front lines of business attraction and job creation the right tools to be successful.
And in this case, we should congratulate our economic development officials for not taking the bait from a company who has been making the same hollow promises on two continents for more than a decade.
Peter DelGreco is CEO of Maine & Company, a private, nonprofit organization that provides free and confidential consulting services to businesses looking to relocate to Maine or expand within Maine. Matt Jacobson is the organization’s former CEO, who now serves as Chief Operating Officer at Resilient Tier V Corporation in Brunswick.
Well said on Kestrel. Maine needs companies with a bigger footprint and solid products, hopefully for the long run.
An excellent common sense summary of the key areas that Maine must focus on to attract jobs. Agree or disagree with LePage, these are exactly the areas that he has been focused on. Listen to his speeches and, in particular, to his State of the State message and you will hear him consistently touching on these themes.
It would be good to see a company move here and create several hundred jobs. It also would be helpful if there were handbooks available for anyone envisioning a move here. One where all the hoops that need to be jumped through can be viewed in advance.
What are we doing to cultivate our current businesses? Are the powers that be canvasing them to find out if there is anything that they might suggest for streamlining? Is there something we as a state could do to help them employ more people? I understand that there is a thing called ‘Hire One’ that was the brain child of a Bucks County Pa. businessman. Where instead of giving someone an unemployment check they give it to an employer who will hire you.
If we abolish unions companies will come fast
You abolish Union’s and just watch how fast you have worker’s injures rates start going thru the roof and the sudden increase in Workman’s Comp. injury rate’s start hitting companies bottom line’s when business’s start putting process ahead of both safety and production. Are all Union’s a good thing ? That’s up to the worker’s who have, BY LAW, the right to collectively bargin for wage’s, condition’s and benefit’s. You want to go start that Wisconsin crap up here, fine. Go ahead and see exactly happened there happen here. Maine has too much going on to be distracted with that type of nonsense.
Collective Barginning is both a right, and an eventuality, no matter where you go. It’s been going on since the 1400’s. It’s happening in China, in Russia, in Africa, in fact anywhere you go you are going to find collective barginning of some type happening. Union’s have for year’s been the driving force behind workplace safety, worker training and skill’s improvement, and in many case’s ideas for product improvement and sales. Their action’s both improve bottom line profitability and keep business cost’s in check by providing the much needed ‘3rd eye’ on the business’s process and operation’s. They also provide a serious means of keeping business’s competitive ego in check when it comes time to competition vs cost’s. Cutting employee’s cost’s are not always the way to go in tight times. Sometime’s, if business is smart, business will work with labor to reduce costs and improve productivity. All it takes is asking. And that requires both sides to set aside their respective ego’s and realize just how much they need each other. In Maine’s case, this is long overdue. Now, your next move is ?
Very good and exactly on point. My only, and it’s a ‘tiny’ one, question is one about the work force. Why limit the work force age to a 18 to 34 demographic ? There are any number of us older folks who, using such programs as job-sharing, mutiple part timer’s and the like, would and could re-enter the work force not out of need (thought that is a obvious reason) but out of a want to contribute. Maine has that ‘need to contribute’ so bottled up that the State virtually screams it. It’s also probably the reason that Kestrel came here. But it’s a ‘need’ that needs to VERY carefully balanced against whatever business that is standing in the door is offering or promising. Kestrel was a HUGE learning experience for both the State’s DECD and the Legislature. We all need to learn from it. The price of this ‘educational lesson’ was steep. Let’s not waste it. Use it to clean up the tax incentive process, for a start. But one thing that was done right was Maine’s requirement for FULL DISCLOSURE of Kestrel’s financing. In this one area, Maine and LePage, did it exactly right. And in this age right now that is something we can all be proud of. ‘The System’ actually worked.
After 35 years of Liberal and Democratic rule, there is very little reason for a company to establish a footprint in Maine. Maine is now having to bribe prospective concerns to overcome the obstacles the Democrats and Liberals have deployed to block any new start ups
I think there was mention in one article about some financing deal in Maine falling apart. It didn’t involve the state or federal government. If my memory is correct it was about the time the news broke that they were looking into things elsewhere. Maybe those jobs won’t last long if it’s so risky.