‘Pine Tree Zones on steroids’ won’t help small Maine businesses grow

Gov. Paul LePage waves as he leaves the House of Representatives chamber after he delivered his 2014 State of the State address at the State House in Augusta Tuesday evening. Gabor Degre | BDN

Gov. Paul LePage waves as he leaves the House of Representatives chamber after he delivered his 2014 State of the State address at the State House in Augusta Tuesday evening. Gabor Degre | BDN

In case you missed it, Gov. Paul LePage gave his State of the State address Tuesday evening in front of a joint session of the Maine Legislature.

For a full recap of the governor’s speech, I suggest reading this well-done roundup written by my colleague Mario Moretto.

He hit on a number of topics, but what I’d like to address here is a major economic development initiative LePage announced during his address: The creation of so-called “Open for Business Zones,” which he said would attract new companies and thousands of jobs to Maine. 

In theory, the plan sounds attractive. Companies that invest at least $50 million and promise to create 1,500 jobs in the designated areas would be eligible for discounted electricity rates, employment tax benefits, job training and increased access to capital.

In addition, in what is perhaps the most interesting (and controversial) part of the proposal, LePage said these would be right-to-work zones, meaning that contrary to state law employees would have a choice in deciding whether or not to pay service fees, the equivalent of union dues, to support collective bargaining.

A LePage staffer called the initiative “Pine Tree Zones on steroids,” referring to the Pine Tree Development Zone program created by former Gov. John Baldacci, a Democrat, and passed by the Maine Legislature in 2003.

LePage has long made clear his desire to make Maine a right-to-work state. However, the Maine Legislature has defeated right-to-work legislation twice in recent years, including under a Republican-controlled Legislature in 2011, so that aspect of his proposal could mean it’s a non-starter once it hits the floor.

Obviously, given the investment and job-creation thresholds, this initiative is designed to attract very large companies to Maine, something the governor has always wanted to do. To anyone who has heard the governor speak at public events, his story of talking with Allan McArtor, chairman of Airbus Americas, should be a familiar one. When Airbus was looking to build a new manufacturing plant in the United States, LePage approached the company and pitched the former Brunswick Naval Air Station as the perfect spot for an aeronautics manufacturing facility. The two chief questions McArtor asked, according to LePage’s retellings, were: How are Maine’s energy costs? And, is it a right-to-work state?

Airbus eventually chose Alabama. (An observant reader pointed out to me that even if Maine had “Open for Business Zones” when Airbus was shopping around, the company would not have qualified because its manufacturing facility in Alabama only employs 1,000 people.)

In the end, the “Open for Business Zones” plan is an economic development initiative aimed at competing with other states in the south, where most have right-to-work statutes, to attract very large businesses that would immediately employ hundreds, if not thousands, of people.

“He would love to have the tools available to compete with other governors in other states winning contracts because those states are more competitive,” Brent Littlefield, a senior adviser for LePage’s re-election campaign, told me Tuesday evening after the speech. “He’s competitive by nature, so he wants to compete with those other states to win jobs.”

Having a governor with a competitive nature is a good thing, and no one is arguing that Maine wouldn’t welcome a company like Airbus to the state (though I’m sure some people would find a reason to protest if it happened), but focusing economic development efforts on attracting those silver-bullet solutions is not a long-term, sustainable approach.

I was disappointed LePage didn’t take more time to address initiatives that would help build and support Maine’s entrepreneurial community. LePage did praise small business owners — like Nicole Snow at Darn Good Yarn in Sebec, who I’ve written about here — but he didn’t take much time discussing what could be done to support their growth. Maine’s economic future relies on the entrepreneurial community we have, not the slim chance of attracting an Airbus or a Boeing. Case in point: The nearly 13,000 private sector jobs LePage said have been created since he entered office (that data is available here) were created by small businesses.

When it comes to supporting Maine’s entrepreneurial community, LePage has not always come down on the side some in the community would have hoped. For example, many were miffed when the governor last year declined to sign the bill that would fund the Maine Seed Capital Tax Credit program, which provides tax credits to people and venture capital firms that invest in Maine startup companies. The bill will still become law, but because of LePage’s decision the tax credits won’t be available until later this year.

I recently spoke to David Roux, the Silicon Valley tech investor (and Maine native) who has made a significant investment in Portland’s Bristol Seafood. I asked him what Maine needs to do to get noticed by entrepreneurs and investors from outside the state.

Roux has a simple message for the state:

“The best way to attract attention is to have a successful business,” he told me.

He continued: “Silicon Valley didn’t get to be Silicon Valley by creating programs or hosting job fairs or running ads in the Wall Street Journal about what a great place it is to live, work or invest. It got to be successful because a few people started businesses that met important customer needs, grew rapidly, and attracted talent. That talent then came up with other clever ideas. They started other companies and lickety split, 40 or 50 years later it’s a hotbed of innovation. That’s the way the world really works. So the best thing Maine could do to attract more business and investment is to have a few businesses become large and successful.

While I’m not arguing that LePage’s “Open for Business Zones” are necessarily a bad idea (the concept is not a new one), I am arguing that more should be done to foster the growth of our existing entrepreneurs.

After all, it’s the small businesses and startups of today that will grow into the Idexxs and Cianbros of tomorrow.

 

 

 

 

 

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Whit Richardson

About Whit Richardson

Whit Richardson is Business Editor at the Bangor Daily News. He blogs about Maine business, entrepreneurs and the economy.