Tuesday, January 30, 2007
Ireturned to my native state in 1983 to join Bath Iron Works. At that time BIW was the state's largest private employer, with more than 11,000 employees. A bit more than two decades later, BIW employs 5,600 and forecasts a continued decline.
Following the sale of BIW in the late '80s, I bought a small wood-products company, Paris Manufacturing, out of Chapter 11 bankruptcy. After 2‡ years of struggle, I had to close it down. To stay in Maine, I started my own consulting company.
So in some ways my career since returning to Maine has mirrored the Maine economy. I started with a large manufacturing company, now significantly downsized, moved to a small manufacturing company, now closed, and am now a member of the largest segment of Maine business, the service economy, as an independent strategy consultant.
In that capacity, I work with global and national clients, none of whom are located in Maine. My family and I are able to enjoy the benefits of living in Maine while my work makes me a frequent jetport traveler.
LESSONS OF BROOKINGS
Which brings me to the recent report on the future of Maine's economy done by the Brookings Institution. I believe this work to be the most important study of the state's economy in at least the past 20 years. The principal recommendations of the Brookings Report have been widely reported since its release in October:
The fact that Brookings found something positive to build on in the Maine economy was big news in itself. Remember just a few months earlier, the Boston Federal Reserve Bank reported that Maine was only one of two states to have zero growth in 2005, the other being storm-ravaged Louisiana.
Digging deeper into the Brookings report, it is clear that the state's basis for economic growth is a slim one. We are a rural state with few of the classic strengths that attract business. However, we do have one dramatic advantage; Maine is a wonderful place to live -- beautiful natural settings, good public schools, little crime and little road congestion.
In addition, we are relatively "well-wired" with lots of fiber optic cable, a must for connecting in today's world.
That is why the modest in-migration that we have experienced over the past 10 years has come, for the most part, from professionals who can telecommute or from retirees.
That is also why most of the few significant new businesses that have flourished in Maine have been companies that rely on good telecommunications like MBNA (recently purchased by Bank of America) and Wright Express, or are led by CEOs with strong ties to Maine, like Fairchild Semiconductor and Idexx.
The good news in all of this is that in today's net-centric world, more people are likely to be able to choose where they prefer to live and to bring their "business" with them.
Brookings points out, however, that Maine's position as a wonderful place to live is under threat from creeping suburbanization and its heavy tax burden. Action is needed.
Brookings has perhaps 20 recommendations, but they involve creating two major state-wide commissions, several other study groups and major legislative initiatives.
TWO EQUAL PARTS
Gov. Baldacci has picked up parts of the Brookings recommendations in his latest budget proposals, namely the consolidation of school districts and other state cost-cutting initiatives. He also has appointed a Council on Jobs, Innovation and the Economy to advise him on how to best implement Brookings' recommendations regarding R&D and economic development investment.
We must invest, and we must find significant savings to help fund our investments.
Hitherto, the Legislature has been much more willing to spend than to make the often unpopular decisions needed to reduce expenditures.
As these plans take shape and interest groups decry attempts to consolidate or reduce services, remember Brookings' core message: Both investment and savings are required if Maine is to be successful.
Ron Bancroft is an independent strategy consultant based in Portland. He can be contacted at:
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