Like all states, Maine faces a multitude of economic problems. However, at least from my perspective, it seems as though issues that plague Maine are mostly due to a lack of cooperation between all our various pieces. Simply put, there are many resources in the state but not enough bridges between them all. Maine should be a finely greased economic machine, but instead it seems to sputter out with sporadic periods of growth that never seem to last.
Mainers have a work ethic of being fiercely independent, resourceful and hardworking. While this sounds great, it really is another one of the large challenges we face. These qualities work very well for the workers of our paper mills, but as these jobs decline we see these unemployed workers struggle to find new work. And most of these unemployed workers lack the proper utilities to create their own work. Actually, the concept of creating our own work at times seems completely foreign, yet people across the country do it everyday.
Essentially the underlying issue here is not our ability to work but rather our sources of employment. The problem is that we have been so dependent upon large companies from outside the state for work that we haven’t thought to ourselves that we could make our own.
Entrepreneurs seem few and far between, and all the horror stories of small-town Maine businesses closing up don’t help the cause. Of course, this is linked back to the dependencies on the mills and other foreign sources of labor. Of course, people bring up the argument that Maine has plenty of home-grown businesses, but what are they based on? Trucking and railroads to move paper, logging to bring wood to the mills and restaurants to fill our mill workers. Essentially you can trace the purpose of most all businesses in Maine to support the paper mills. The only exception to this is the tourist segment of our economy, which does quite well. But this cannot sustain us. We can’t find work for thousands of people selling T-shirts next to the beach and make a comfortable living. So whose responsibility is it to find new jobs? The government?
Our government says it is focused on creating jobs, and I believe this is the wrong approach. Sounds crazy I know, how can focusing on making new jobs be the wrong way to create new jobs? Well, our government should be focused on creating and supporting new businesses. My question is, why are we importing windmill parts when we should be producing them? This is an opportunity to use locally made parts and export them to other parts of the country or the world. Why not try to get a bunch of investors together and make Maine a world leader in manufacturing windmill parts? I notice in all other parts of the country, groups of people with ideas are getting together and figuring out how to make ideas like this come true. So why not in Maine?
Perhaps the government’s role should be to find useful resources for new businesses. Maybe they should use the universities as houses for new businesses to learn how to create business plans, conduct general business and more importantly, survive. I know that at the University of Maine the Knowledge Transfer Alliance, or KTA, provided this exact service, and it worked well. However, funding for this is about to expire. The state needs KTA-like services all across the Maine to incubate new businesses growth. And once these businesses get up and running, the state must be the cheerleader for these new businesses across the country.
What happens when we see ambassadors from Maine go to other parts of the country? We sign a new lobster export contract? Let’s see what other parts of the country are doing and fill in the gap. If they are talking about building pipelines across the country, let’s prepare ourselves to build pipes to export.
We have so many different pieces at work here. The workers, the entrepreneurs, the academics and the government all exist in the same place, but it seems like there is no bridge. How do we bridge all of these people together? How do we all get on the same page for us to work together toward one goal. How?
Charles Hastings is a second-year MBA student at the University of Maine in Orono.
“Why not…make Maine a world leader in manufacturing windmill parts?”
Interesting choice of example. If Maine is looking to become a world leader in manufacturing something, why not make it something for which the demand is not artificially created by government? Windmills are used around the world not because of their incredible usefulness, but because governments have created mandates or other mechanisms that prop them up, just as we have in Maine (often secondary to powerful lobbying by the industry.)
Moreover, other countries are building turbines and parts more cheaply, like so many other things. The industry has spread some manufacturing around the country, mostly small, token operations. I think a good argument could be made that a significant motivation for this is political strategy. When government tries to pull back the taxpayer funded subsidies and mandates – as the U.S. has been trying to do with the wind PTC – the industry can moan about the jobs that will be lost.
Oil prices will not fall. They will continue to go up until your “artificially demanded” products become economically viable. That is the point of government subsidies now to ensure that the knowledge and infrastructure necessarily to create these products exist when they become viable.
Why not get in on the ground floor and invest early?
Ignoring the simple fact that oil will continue to grow in price and start to run out over the next hundred years is stuffing your head in the sand.
Currently, oil prices have little to do with wind turbines. Wind turbines produce electricity and most oil is used for just about everything other than generating electricity. (Less than 1% of New England’s electricity is produced by oil.)
But, the point has a little more validity when talking about natural gas. It’s price will almost certainly rise, but when, we don’t know. When will it get high enough for wind to compete in New England without government supports. Don’t know that either. How long will taxpayers want to continue funding uncompetitive energy sources that aren’t necessarily gaining us any measurable advantage? Another question mark.
Either way, wind power won’t be setting us free from conventional sources of electricity generation anytime soon, no matter what the policy du jour might be. It simply doesn’t have the necessary qualities to provide that large a portion of our energy.
Wind power is a mature industry – it’s been around for decades. (The federal wind production tax credit had its 20th anniversary this year!) There are turbine and turbine component manufacturers all over the world. The ground floor was probably left behind years ago.
It is disconcerting to think that an MBA candidate (with the implication being he is smart) would actually ask the question relating to manufacturing “windmill parts” in Maine. First of all, they are components for wind turbines. Semantics. But secondly, the answer is the same as the answer to the question of why we no longer manufacture shoes, textiles, electronics, etc. here in the USA. As long as it is cheaper to import from China, Germany, Denmark, and Brazil, including the high carbon footprint of polluting freighters, we won’t be manufacturing those components here.
But most worrisome is our smart MBA candidate obviously hasn’t investigated and analyzed the economics related to wind power. Had he done so, he would likely express concern about the high cost of wind power and the effect it will have on Maine businesses when arbitrary mandates force the electric utilities to deliver 20% or more generation from this economically and environmentally costly source.
I would like to see some bright MBA candidate examine the high cost of wind power, as the media and the pandering politicians who promote destructive proliferation of useless wind energy completely ignore its bad economics. The taxpayers and ratepayers need to know.
It’s an example….build a bridge and get over it.
Governor LePage tried to redefine what constitutes a “renewable” energy source last year so that hydropower above 100 megawatts would be included. That would have paved the way for deals with the Canadians for inexpensive hydropower. Vermont recently cut a 20+ year deal for hydropower from Quebec for something like six cents per kilowatt hour. Dramatically reducing energy costs as such would help Maine become more competitive. The same groups that lobbied successfully against the Governor’s reclassification have actively supported high cost alternatives and our participation in RGGI, the Regional Greenhouse Gas Initiative.
RGGI is a regional cap & trade program that elevates electricity rates. Now that national cap and trade has died, those states participating in RGGI have effectively self-inflicted their business climates with the impediment of unnecessarily high electricity costs. When a basic structural obstacle exists, such as uncompetitive electricity costs in a cold state where businesses are already saddled with high heating costs, we have a recipe for economic suffocation.
There are some 135,000 small businesses in the state and most suffer either directly or indirectly from high energy costs. This is costing Maine a tremendous number of jobs. I hope the MBA student will consider this the next time a tiny vocal and organized minority of companies parasitizing wind power subsidies panders to us about “Jobs”. Theirs, all subsidy dependent and thus not sustainable, are a tiny drop in the bucket compared to the very real job suppression caused by self-inflicted high energy prices.
I suspect that the MBA student has not carefully thought through the supposed jobs building potential of wind turbine parts. He may wish to read this week’s news that Mitt Romney has wisely come out against extending the corporate welfare Production Tax Credit to the wind industry. When that absurd 20 year old subsidy for a mature technology dies, new wind development in most of the U.S. and certainly all of Maine will be deader than a door nail.
TruthinMaine,
I appreciate you taking the time to write such a developed response. First I’d like to point out that my example of windmill technology was just that, an example. And I am by no means an expert on windmill technology.
My only interaction with wind power technology has been interacting with the wind technology development currently underway on campus, monitoring the transportation of windmill parts from Colorado to Maine via the NA rail system and seeing a consulting project in Germany for a wind technology power company.
Back to my original point, you can replace ‘windmill parts’ with product x. The point is, we have many useful resources in our state, however we need to find a way to bridge them together towards a common goal to stimulate economic growth in our state. The roles of our elected officials should be considered in this process as well as exactly what and where our resources are.
Here is another example: Hyundai is building a new manufacturing plant in Ontario, Canada. This plant will be served by the Canadian Pacific Railway. By let’s compare, what are the differences between Ontario and Maine? Given the differences in rail infrastructure (And yes, I am aware of these differences) besides that not much. So why wasn’t Maine considered for this plant? Once again, an example. The point is, we could have plants like this the question is how do we let the rest of the world Maine is able and ready.
Lastly, thank you for implying I am smart! =)
The young man has an interesting point. Why doesn’t the State Government allocate tax resources to creating, not new jobs, but new industries?
Well, existing businesses might whisper something (unprintable in a family paper) in the Governor’s ear. Such a use of State resources to create and build new businesses would threaten existing low labor rates and the supply of key skills, would divert resources from current State programs benefiting the existing business community, and would put pressure on current State business subsidies embedded in sales tax and income tax policies.
In some quarters this proposal would be labeled “State Capitalism” or a closely-related appellation. Sometimes names do count.
Now for the hardest part — keeping the benefits local. If the State and its people are not the sole source of capital, outside investors will be required. Their dividend checks will cross the Kittery bridge and not contribute to the Maine economy by being spent here. Looking at a capital raising bond mechanism like that employed by the Maine Turnpike Authority, where Maine buyers get a preferential shot when bonds are issued, has utility in promoting the Maine economy. With the local benefit comes the local risk, however.
“State Capitalism” with the appropriate label and in the hands of well-connected players is alive and well in Maine. If one carefully reads http://www.mainelegislature.org/legis/statutes/23/title23sec4251.html one will see an elegant template for “public private partnerships”. It has nice developer-friendly features such as secrecy and the use of eminent domain. It is not intended for use by amateurs with great ideas as there is a final nod required from the Legislature. (This does look to be a useful tool for building an East-West Highway when the natives object.)
The young man has an interesting point. He should keep on his quest. New mechanisms for creating jobs and wealth in Maine are definitely needed.
“…The only exception to this is the tourist segment of our economy, which does quite well. But this cannot sustain us. We can’t find work for thousands of people selling T-shirts next to the beach and make a comfortable living…”Tourism is Maine’s biggest economic engine and has been since the 1800’s. It isn’t about tshirts on the beach, the trickle down effect is enormous. It’s about dining, lodging, farming and fishing, fuel for heat/vehicles, food, construction, painting, repairs, lawn mowing, sign making, highway tolls…it’s about employing 170,000 Mainers full time, it’s about generating over ten billion dollars annually in sales and 535 million annually in taxes. We need to do a much better job marketing our tourism and stewarding the very things tourists come here to see. We’ve kept billboards off of our highways because they’re unsightly to tourists. We need to keep enormous metal industrial wind towers off of our mountains for the same reason. Our scenic viewsheds and quality of place are our biggest calling cards and we must protect them if tourism is going to sustain us into the next century. Keep Maine beautiful!
Interesting point Penny and I couldn’t agree more. I’ve been working on a marketing project this summer for Western Maine Eco Tourism and there is a trickle down effect. The concept of the multiplier effect is definitely some of the most basic concepts of economics. However, you have to identify the tourist areas in Maine. Essentially, summer is the coasts and winter is the mountains. But can tourism sustain our State? Remember, Maine extends another three and a half hours above Bangor. We have a large geographic area, a lot of spread out resources, and only so many tourist areas. What else can we use to bridge these gaps?
Making wind turbines..which are industrial machines not windmills FYI..would not help Maine whose best commodity is its beauty and wildlife..wind farms are simply a horrible idea all around no matter where the huge monsters are created..they are destructive and the PTC needs to be stopped forever on these things..
Mr. Hastings: Your last paragraph is the quintessential definition of the body politic. Each segment has its own philosophy as to how things should work. Put two of them in the same room and they will agree on some things. Put three in a room and they will agree on a few things. Put all of them in a room and you will be lucky if they agree on anything substantive. When you figure out how to get the state body politic to agree with a super majority on anything you will have the formula to making your bridge.
It’s good to see a young person care enough to write an article about anything these days, and care about his home State to try to make suggestions to improve it for his and its future.
Dammed right ! Keep at it Charlie. Time and effort, and education, do make the difference.
Good points. Maine, and in many ways, America, is too focused on little projects and exploits rather than taking a look at the larger picture. There are so many great facets, industries, products, workers and new businesses unique to Maine–using these to our advantage as a whole would be a worthwhile endeavor. Working to create new jobs out of thin air poses far more risks than supporting existing current business. The latter will help Mainers already working for our benefit, and the business growth from these folks alone will create the new jobs we desire.