Tuesday, June 24, 2008

Regional economies are green economies

An article posted on the Boston Globe's, The Green Blog about how a 24-year-old Maine farmer is part of a group seizing an opportunity presented by high fuel prices, reminded me once again how important it is for Maine to make smart choices, in determining future prosperity, or ultimately, face economic deprivation.

The organic food movement, while touting the health benefits of its produce, thought nothing about the environmental cost of trucking lettuce and other vegetables, 3,000 miles to consumers. The case for the“3,000 mile Caesar Salad” is tough to make, with gasoline spiking upwards, towards $5/gallon, not to mention, it doesn’t really smack of “green” business practices.

The world’s largest organic retailer, Whole Foods, is doing what it’s never done before—buying its northeast produce from regional producers. In the past, their justification against this practice went to a variety of reasons, including costly food safety requirements, particularly after the 2006 E. coli scare with spinach.

The cost of energy is changing that dynamic, and making regional options much more viable. Recognizing a market opportunity, a group of 30-something entrepreneurs, along with a $250,000 low-interest loan from Maine’s agriculture department, is fueling the venture.

Locally Known, located in Bowdoinham, Maine along the shore of the Merrymeeting Bay, was started in 2008 by Ben Dobson, David Goldstein and Shimon Horowitz along with equity partners Brook and Noah DeLorme, to address the need for significant access to local and regionally grown produce in the northeast.

Dobson and Goldstein have been farming organically in Maine since 2007; before that, they farmed in Massachusetts for Equinox Farm, a small specialized salad farm.

Regional competitiveness is going to be a defining characteristic over the next decade. Those areas that invest in workforce training, particularly in skills that are in demand, will promote job growth, as well as economic opportunity. Those states that lag behind the curve, will find it more and more difficult to catch up, and arguably, they’ll just languish at the bottom, possibly never to recover.

To read the entire Boston.com article, click here.

Friday, June 20, 2008

Could Maine get out in front on the energy issue?

[from the New York Times, June 19, 2008
article by Martin Fackler and Jad Mouawad]

As President Bush calls for repealing a ban on drilling off most of the U.S. coast, a shortage of ships used for deep-water offshore drilling promises to impede any rapid turnaround in oil exploration and supply.

In recent years, this global shortage of drill ships has created a bottleneck, frustrating energy-company executives and constraining their ability to exploit known reserves or find new ones. Slow growth in oil supplies, at a time of soaring demand, has been a major factor in the spike of oil and gasoline prices.

Mr. Bush called on Congress on Wednesday to end a long-standing federal ban on offshore drilling and open the Arctic National Wildlife Refuge in Alaska for oil exploration, saying the steps were needed to lower gasoline prices that have topped $4 a gallon and to bolster national security.

But as oil trades at more than $135 a barrel — up from $68 a year ago — the world's existing drill ships are booked solid for the next five years. Some oil companies have been forced to postpone exploration while waiting for a drilling rig, executives and analysts said.

Escalating energy costs will have a chilling effect for many Mainers. While I would never call former Governor Angus King an alarmist, he recently offered a pretty sobering scenario for our state, unless we radically change the way we are doing things, and stop settling for the status quo.

While Mainers by-and-large are cautious, and even somewhat conservative, I don't think those characteristics will continue to serve us well.

Fluke, or not, the unemployment rate recently spiked in Maine. That means there are some people that need jobs, preferably ones that pay a living wage.

An educational Marshall Plan, targeted at providing Maine's workforce with skills that could address needs for drilling ships, offshore wind turbines, as well as green manufacturing would be a boon to our state. Rather than continuing to issue four-year degrees in areas that may become obsolete if oil goes much higher, why not arm Maine's future workforce with gold-collar skills that play well in a post-petroleum world?

I know some people in Central/Western Maine that know something about workforce training, and could help the Governor, and anyone else in Augusta that had a grand enough vision to believe that we could tackle this issue. In fact, there are some visionary people in Maine that could help marshall a plan for Maine's future that would blow anything else recently proposed, out of the water. Former Governor King, Peter Vigue, of Cianbro, Les Otten, and many other private sector leaders need to help push our state forward in a direction of pragmatism, practicality, which in my opinion, will lead to future prosperity.

Maine has a history, and heritage of building ships. We also have a memory of manufacturing, and a workforce that can work with its hands. Combine that with a technological orienatation, and a plan that's proactive, and this has Dirigo (as in I [Maine] lead(s)) written all over it.

As Jack Schultz says, "...Vision is the difference between a ghost town and a Boomtown."

Note: From the Petrobras website, a drill ship is a vessel designed to drill subsea wells. Its drilling tower is located midship, where an opening in the hull allows the drill string to pass through. The drill ship positioning system, consisting of acoustic sensors, propellers and computers, cancels out the effects of the wind, waves and currents that tend to move the ship from its position.

Wisely using the state's resources

For nearly two centuries, Maine’s economic well-being has been closely tied to our state’s natural resources. While globalization, environmental standards, and other factors have introduced a noticable shift over the past decade, natural resources still dominate a considerable portion of our dialogue in the Pine Tree State.

While the Governor has recognized Maine’s uniqueness as a state, and has created a council to preserve elements of place, dovetailing with the Brooking’s study that was released last year, there continues to exist tension, tied to the state’s unique resources, and who owns the rights to these. This is very apparent when the subject runs to water.

During the gubernatorial campaign, I thought Pat LaMarche spoke eloquently about some of these issues, and why it was important for Mainers to pay close attention to preserving those things that made us unique as a state. Her point was that because we've been vigilant in protecting our natural environment, and fostering elements of environmental quality, that resources that benefit from Maine's pristine places, like water, are attractive to saavy marketers, eager to exploit elements of our unique place, for their own economic gain.

The Forbes.com website has excerpted a portion of Elizabeth Royte’s book, Bottlemania: How Bottle Water Went on Sale and Why We Bought It, where she touches on this issue, and one of the state’s better known exports, Poland Spring Water.

From the article, Royte writes,

In 2003, operatives for the Earth Liberation Front placed four incendiary devices inside a pump station in Michigan that supplied water to a Nestlé bottling plant. The devices failed to ignite, but ELF made its point: The substation was "stealing water," the group stated in a communique. Clean water, it continued, "is one of the most fundamental necessities, and no one can be allowed to privatize it, commodify it, and try and sell it back to us." Is that what's happening at the Poland Spring plant in the town of Hollis?

I'd come up here to see how the water gets out of the famous Maine woods and into the skinny bottles with the green labels. They are ubiquitous where I live. You can't walk a block in
New York City without seeing a bottle in someone's hand, their baby stroller, or bike cage, spilling from the corner litter baskets or crushed flat and gray, ratlike, in the gutters. Nationwide, we discard 30-40 billion of these containers a year. The bottles, and the trucks that deliver them, are haunting me.

Poland Spring is the best-selling spring water in the nation, even in a city with some of the best tap water in the world. Everyone is drinking the stuff, and other waters like it. In the West, it's Arrowhead and Calistoga; in the South Central region, Ozarka; in the Midwest, Ice Mountain; in the mid-Atlantic, Deer Park; and in the Southeast, Zephyrhills--all owned by Nestlé, a company with estimated profits of $7.46 billion in 2006. Pepsi and Coke are bottling water too, and making billions.

Why this turn against the tap? And how had we gotten to the point where activists are sneaking bombs into pump houses--infrastructure devoted not to oil, but water?

Royte spent time in Fryburg, at Poland Spring’s bottling plant, speaking with representatives about the struggles and opposition they’ve faced, harvesting water for profit in Maine. Royte takes the position that the company’s efforts “contributes nothing to the town's long-term economic welfare.”

Royte details an age-old dilemma for resource-rich states like Maine. While it would be naïve, and even shortsighted to think that companies wouldn’t try to find a way to profit from our resources, it’s important that Mainers drive a hard bargain, and make sure that economic benefits extend to the people of Maine, and their own economic prosperity, rather than the prosperity of those occupying plush leather chairs in corporate suites.

To read the entire post, you can access it here.

You can read a review of Royte’s book here.

Wednesday, June 18, 2008

Thinking about Maine's energy mix

While younger readers may prefer to get their news about Maine, and elsewhere, via their computer screens, I’m old enough to where I still appreciate radio news. Some of my favorite programs are John McDonald’s weekend programs, on WGAN, and MPBN's Monday through Friday, Maine Things Considered segments.

Many recent local broadcasts have been focused on energy issues, as the price of gasoline has approached, and surpassed, the $4/gallon threshold.

It’s interesting how quickly Mainers have gone from not paying any attention to the price of oil, to where it now leads most television news segments on the state’s big three news outlets, WCSH-6, WMTW, and WGME 13.

On Saturday, the Governor spoke about energy, in his weekly radio address. He took note that despite the warmer temperatures outside, with the long-awaited approach of summer that $4.60/gallon oil prices don’t bode well for many of the state’s residents, this coming winter.

He’s convened a pre-emergency task force to ensure that Maine is prepared for the cold days of winter. Rather than wait until there is a statewide emergency, he’s thinking of solutions right now.

He also addressed the important topic of reducing our dependence as a state, on foreign oil. He spoke about alternatives to oil, such as wind power, hydroelectric, as well as tidal, and wood, as the type of mix he wants Maine to move towards.

Later, on Barbara Merrill’s program, on WGAN, he even mentioned nuclear as an option that Maine might need to consider, as it seeks alternatives to petroleum.

I think Governor Baldacci is on to something. He obviously wants any alternative to directly benefit the people of Maine. He also seemed to touch on something that I think we all need to think about—developing our own regional energy options.

The U.S. is too large, and too diverse a nation to have one national solution to weaning ourselves off foreign oil. A strategy focused on the needs of Northern New England is what I hope he has in mind, as we move forward.

Tuesday, June 17, 2008

Where's the leadership?

I’ve been thinking quite a bit about what effective performance means in the workplace. Does it emanate from leadership? What happens if employees lack a leader to guide them? Are they still responsible for performing, and getting things done?

Maybe my recent fascination with leadership stems from my reading books, like David McCullough's biography of John Adams. Maybe it's a result of coming to the realization that the same tools required to be a good coach in athletics, also have relevance in the workplace.

Is work all about production, and getting things done? Yeah, basically, I think it comes down to that. I also think commanding respect with subordinates also goes a long way in the office.

Interestingly, as someone who has made his living on the private side of the fence, at least until this gig, I’m amazed by some of the malaise, as well as lack of urgency coming from some of the so-called leaders (not to mention, lack of clear direction) that I rub elbows with, at some non-profits, agencies, and other organizations.

This article, by Steve Lopez, in the LA Times (linked from a blog post) exemplifies the hubris that far too many public servants possess. In all fairness, many of the former managers I worked for on the private side were also in love with their own dysfunctional management styles, to the detriment of those of us that sat under them, so it's not limited only to the public side of things.

I’m fortunate to be working for someone that models leadership, so I know it’s possible to find it on the public side; I’ve also found numerous examples of men and women exemplifying sound leadership, in guiding their staffs, across Central/Western Maine.

Friday, June 13, 2008

Mainers finding opportunities in oil

[information about Flotation Tech comes from this morning's Portland Press Herald, including staff photo by Jack Milton]

There have been a rash of stories about how escalating energy costs are hurting Mainers. In economics, there are always winners, as well as losers. We might be paying more at the pump, but if you have a 401K, or other investment vehicle, you might be benefitting from oil stocks, if you're invested in that sector.

Biddeford's Flotation Technologies Inc. was recently acquired by Deep Down Inc., a Texas-based company involved in ultra deep, off-shore oil drilling.

Deep Down Inc. has been on an acquisition tear over the past year, acquiring Flotation Tech and two other companies that make products for the ultra-deepwater offshore oil drilling market.

The Biddeford company makes a variety of high-tech flotation devices that can survive the super pressures of the deep sea and provide buoyancy to drilling pipelines and other equipment, relieving stress.

Flotation Tech had revenues of $13 million last year, double the year before. Robert E. Chamberlain Jr., Deep Down’s chairman of the board and chief acquisition officer, said he believes the product lines from each of the three acquisitions – including Flotation Tech – could grow to $100 million in revenue in the next three to five years.

Deep Down has no plans to move the business out of Maine, said Chamberlain.

“We’re going to leave it in Maine, expand it in Maine. We’re quite happy with the way the business is being run, and we believe through our relationships we can significantly increase the level of business there,” said Chamberlain.

For Flotation Tech, its acquisition for $23.3 million in a stock deal was the latest step in a structured plan.

You can read the entire article here.

Thursday, June 12, 2008

Unintended consequences

Too often, legislative action ends up causing more problems, rather than providing a solution. Take for instance this example, highlighted by Jack Schultz, at BoomtownUSA, and the recent passage by Congress, of the new farm bill.

The Law of Unintended Consequences continues to amaze me. Governments pass laws thinking that they are doing something to help those most in need and often exactly the opposite occurs. I’ve seen it happen over and over and think that there should be a committee set up at every governmental body to study what happens in the long term with governmental action.

This past month the U. S. Congress passed a new farm bill. In most of the Congressional press releases on the bill I read that the bill would help to “keep the family farmer going and provide a boost to young farmers.” Of course if you’d read those same press releases 20 or 30 years ago they would have said the same thing. How have we done over the past 30 years?

Every five years Iowa State University does a survey of Iowa Farmland Ownership which looks at who owns that state’s farmland. They just came out with their new study and to me the results are alarming.

Twenty five years ago, in 1982, about 11% of Iowa farmland was owned by those under 35 years of age. Today it is only 2%. During the same time, those over the age of 65 have grown their ownership from 27% to 55%!

Congress has caused some major disruptions in rural America by incentivizing farmers in the wrong ways. Our small towns all across the country have suffered as a result. It is too bad that they don’t learn from their past mistakes and the Law of Unintended Consequences, leaving the market to sort out the winners and losers. America and especially rural America would be much better, if they did.

(From BoomtownUSA)

Just like Congress did with the farm bill, I'm concerned that the recent spike in gasoline, and oil, will prompt our legislative bodies, at both the state and local levels to act too quickly, or out of political motivation, rather than taking the long view.

I hope that isn't the case.

Wednesday, June 11, 2008

The world gets rounder

The recent run up in gas prices has inflicted pain on people living at the margins. It also has made it tough for independent truckers, and others that can’t immediately shuttle these costs off on their customers.

While I don’t occupy an economic development role, my workforce development position puts me in a place to observe, as well as follow, various aspects of development. Each time I’m on the road, not only are gas price hikes cutting into my take home pay like everyone else—I also am observing aspects of America’s economic engine at work, primarily in the form of over-the-road transport. Recently, I’ve been part of a group looking at developing an initiative aimed at transportation, distribution, and logistics, in the Lewiston/Auburn area.

Initial conversations with company representatives occupying the transportation side of this sector have been productive. Interestingly, I keep hearing talk about regional models of transport, and more of a focus on moving goods throughout the region, and less about shipping lettuce 3,000 miles to satisfy some elitist need to ingest organic produce.

Higher energy costs are having a profound impact on trade, so much so that the cost of moving goods, not the cost of tariffs, is causing a realignment of trade. This is countering three decades of trade liberalization, which contributed to globalization.

The driver of globalization was often the huge (but quickly shrinking) labor differential between China, and North American producers. At this point in time, capital-intensive manufacturing is experiencing changes, due to the high ratio of their freight costs to final selling prices.

Take steel, for instance. High freight costs being incurred by Chinese (as well as Asian producers) from oil’s escalation in price, is changing the global cost curve of the product. Since most parts of China, and Asia are short on iron ore, requiring imports from Australia, and Brazil, changes in the global cost curve now provide a competitive advantage to U.S. steel, the first time this has happened in over a decade.

While it’s easy to be reactionary about energy cost price spikes, I think it is important, particularly for anyone in a policy-making role, to take a long view, vs. the typically short-term, politically expedient response that is all too prevalent when constituents yelp.

[Information for this post was pulled from StrategEcon (May 27, 2008), and the article, "Will Soaring Transport Costs Reverse Globalization?", by Jeff Rubin, and Benjamin Tal]

Tuesday, June 10, 2008

Get out and vote!

Voting is a fundamental right in the U.S. Yet, far fewer people exercise this right than they should. Take for instance, today’s primaries. There are primary races being contested for the 1st and 2nd Congressional Districts, as well a numerous local elections. There is also a key bond issue question that could provide needed funding to repair and upgrade the state's crumbling roads, as well as its aging bridges.

According to Secretary of State Matthew Dunlap, turnout is expected to be heavy, with 30 to 35 percent of registered voters going out to vote. This is 50 percent higher than the norm for primary elections. That means that normally, 8 out of 10 Mainers don’t even bother to vote in these important elections. They say that people get the government they deserve. Maybe some of our problems in Augusta, and Washington stem from the overwhelming apathy that plagues much of the country.

Here are some basic Voting 101 factoids for you, to help you get out and vote:

  • RESIDENTS CAN register to vote on today, the day of the primary, and independent voters can join a political party today as well.
  • IN MOST cases, people can sign up at their local polling place today, but state officials recommend checking with local election officials beforehand, to find out if that's where they should go.
  • MAINE DOES NOT have open primaries, in which members of one party can vote in another party's primary. Mainers can only vote in their own party's primary today, although all voters, including independents, can vote on the bond issue that will be on the ballot because that is not a partisan election.
  • UNFORTUNATELY, if you want to switch parties, you’re too late, as the deadline has passed.

Let’s hope Maine’s turnout, which traditionally is higher than other states, is even higher than expected.

Monday, June 9, 2008

MSAD offers local solution to internet access

High-speed internet access in rural areas continues to be an issue in Maine, as well as other similar parts of the country. A local school system, may offer a solution that might be utilized in other parts of the state.

Union 98 (which serves MDI, Long Island, Swan Island, and Cranberry Isles) information technology manager Norman Hill told selectmen this week that a free, unionwide wireless internet access initiative for students and teachers could result in the same access for all Mount Desert Island residents.

This was of interest to Tremont, where Internet Exploratory Committee members said they have seen little interest from internet service providers in providing service to rural areas.“I just don’t think the providers really care,” said Mark Piccurro. Hill said his proposal involves offering free wireless internet access in the homes of all students and teachers who use Maine Learning Technology Initiative laptops. Students in grades 7-12 have MLTI laptops. The bonus side of the project is that, once the wireless transmitters are set up to accommodate student access, other residents will be able to subscribe with the provider for the same wireless service.

Students in Union 98, like those across the state, have laptops, but not all have high-speed internet access in their homes. Some have no internet access at home at all, he said. He estimated that about 40 percent of students have broadband service and the other 60 percent have dial-up or no service. This makes it increasingly difficult, he noted, for many students to get their homework done at home. In the meantime, he said, the schools are becoming more technology-oriented, as teachers assign increasing amounts of work that require internet access.

Two Tremont residents said they have seen students huddled outside of the Bass Harbor library, when the library is closed and even during the coldest winter months, to take advantage of the library’s WiFi access for their homework.

Grant funding for the project could possibly come from Connect Maine, a state initiative designed to bring wireless service to rural areas.

Read the entire Bar Harbor Times' article here.

Friday, June 6, 2008

The importance of soft skills

There have been a series of recent reports that have raised red flags about our current educational models, and preparation for the world of work. This subject is much more complex than can be sorted out in one blog post, but I did want to share information about some trends emerging in public education that are a good thing, in my opinion.

Mere academic strength is no longer enough. Possessing “soft,” or “applied skills"; skills encompassing elements like having the ability to work comfortably with people from other cultures, creative problem-solving skills, writing and speaking well, thinking in a multidisciplinary way, and being able to evaluate information critically. Additionally, students need to be punctual, dependable, and industrious.

High schools, like Sacramento's New Technology High School, are incorporating interpersonal skills, as part of 10 learning outcomes that students must master as they progress through their academic programs.

While programs like WorkReady are necessary, and a key part of ensuring that the labor needs of Maine companies are being met, providing these skills as part of the K-12 experience is even better.

The WorkReady curriculum is being adopted by at least two Maine high schools, and offered to students during their junior, or senior year.

You can read an article about soft skills in school, from Education Week, here.

Tuesday, June 3, 2008

Maine's outdoor retailers set to do battle

Cabela’s opening in Scarborough has been a major news story on several fronts, of late. For the town of Scarborough, this has been trumpeted by members of the economic development community. For Maine’s other homegrown outdoors retailer, Cabela’s is the first significant bricks and mortar competition they’ve faced, as the new Cabela’s is only 25 miles away (and if you are coming from the south, you pass Scarborough, before you get to Freeport).

The Nebraska-based Cabela’s sells hunting, fishing, camping and related outdoor merchandise as well as clothing and footwear, gifts and home furnishings. The company markets its products through catalogs, the Internet and retail stores, like L.L. Bean.

One of my favorite blogs on rural economic development is Boomtown USA. While I continue to plug it to everyone I come in contact with, I’m not sure whether my recommendations are heeded, or not. Jack Schultz was recently in Sydney, Nebraska, the hometown of Cabela’s, and has an informative post about the company’s modest beginnings.

In comparing L.L. Bean’s sales to Cabela’s last year, Cabela's had sales of nearly $1.8 billion last year, while mailing 122 million catalogs. By comparison, L.L. Bean had sales of $1.47 billion and mails about 250 million catalogs annually.