County economy should grow – eventually

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PRESQUE ISLE – The economy of landlocked Aroostook County is like the lighthouses found all along the coast of Maine: It keeps blinking off and on.

With announcements last year of new potato and wood processing plants being built – investments totaling more than a half billion dollars coming into The County – economic spirits were flying high. But a sudden bottoming out of the french fry and lumber markets caused company officials to put their plans on hold indefinitely.

Although the news wasn’t unexpected, the U.S. Census results also didn’t paint an encouraging picture for Aroostook County officials. The population has and will continue to decline.

There are some, however, who aren’t yet counting out northern Maine. Dr. Charlie Colgan, an economist and professor at the University of Southern Maine, has spent most his professional life making predictions about the economy of Maine.

A former state economist, Colgan predicts that The County’s population will begin a steady climb after 2005.

“I don’t think there’s a sense of doom in The County,” Colgan said recently. “I think Aroostook has a lot going for it.”

The economist is working on the study to determine the feasibility of building a north-south highway in The County. Part of that work is to determine how such a roadway would affect the population and business within the region in coming decades.

Colgan believes that the proposed highway is part of the answer to encouraging long-term growth in the region. According to Colgan’s predictions, from 2010 to 2015, population will grow to more than 80,000 people, up from the current 74,000.

That gradual increase will come from people needing more space for business and recreation. Within the next 30 years, people in southern regions, such as Boston and Portland, will be looking for more opportunity for outdoor recreation, Colgan said.

“There’s more influence from outside Aroostook County than inside Aroostook County,” the researcher said. “It’s a matter of pushing into rather than pulling into.”

According to computer-generated projections, the regional population will continue to dip through 2005 to 2010. But in 2015, population is expected to begin climbing to slightly more than 80,000 and to almost 82,000 in 2020.

Figured into making these projections is the natural fluctuation in population, such as birth and death statistics and in-migrations, according to Colgan.

Another factor is that people are living longer and having fewer children, he explained.

Changes in the economy

Other predictions show how the composition of The County’s economy will change.

In 1991, there were 25,064 workers employed in the nonmanufacturing sector of Aroostook County, not including those working at Loring Air Force Base in Limestone.

At the same time, which was a few years before Loring Air Force Base closed, 3,600 people were considered federal military workers and 1,685 were considered federal civilian workers.

This year, those figures have changed. While the number of nonmanufacturing workers has risen to 28,919, there are fewer than 550 people employed as federal military workers and 760 as federal civilian workers.

In about 20 years, the nonmanufacturing sector is expected to grow, with almost 33,000 involved in that line of work. Federal military and civilian employee segments, on the other hand, will grow only minimally, according to the computer projections.

Those figures showing lower government employment are “good to see,” said Robert Clark, executive director of the Northern Maine Planning Commission.

Jobs in the service sector are predicted to grow steadily from 13,271 in 2001 to 16,062 in 2012 and 17,075 in 2020. Manufacturing jobs are expected to hover around the 5,200 to 5,400 mark, with little growth.

What all these numbers appear to indicate is that there is confidence in the local economy, confidence being illustrated in many different forms.

Clark points to the Katahdin Trust Co. as an example. The bank purchased several People’s Heritage Bank branches and plans to build a second operations center in Presque Isle.

“It shows commercial banks in the area are looking for investment,” said Clark.

Two large retailers also see opportunity in Aroostook County, especially in Presque Isle. Marden’s salvage and discount store opened before Christmas on Main Street in the former Ames building.

“They [company officials] looked at the community and what it needed,” said Bryan Seeley, the manager of the Presque Isle store. He said Aroostook County people were shopping frequently at the company’s stores in Brewer and Lincoln.

“Marden’s takes a long look before they put a store in,” said Seeley.

With between 60 to 80 employees, depending on the season, Seeley said the store is doing well, and more expansion within The County may be possible.

The Wal-Mart department store in Presque Isle, built in 1993, recently reopened as a Supercenter that includes everything from a full-service grocery store and automotive service garage to clothing, an optometrist, portrait studio and beauty salon.

The number of employees is scheduled to increase from 230 to 360, with 70 percent of those being full-time, according to Dave Joyner, store manager. The store’s size almost doubled from 93,000 to 178,000 square feet, he said.

Two brothers from New York also saw an opportunity earlier this month when they put up $10 million to purchase the Aroostook Centre Mall in Presque Isle. Ralph and Eddie Sitt said they see a chance to expand and promote business at the shopping center, which serves as the county’s primary place of retail activity.

Clark also pointed to the low unemployment rate in late 2000, although since then there have been some layoffs in certain industries, such as the county’s lumber mills. “Who would ever think you’d see an unemployment rate at 2.9 percent?” he said.

Need for workers and wages

But there’s a larger issue also affecting the region’s economy. The unemployment rate, in addition to the low population, makes attracting workers to Aroostook County difficult.

“You need jobs to keep people, and you need jobs to attract laborers,” said Gary Mongeon of RKG Associates in New Hampshire, which is also working on the highway study.

Aroostook appears to be in a Catch-22 situation in which very few people aren’t working, but the size of the labor force is smaller because of the out migration.

Mongeon said that there is job growth in the Northeast, but not at the same rate as in other parts of the country.

“The reason the employment rate has fallen is that our labor force is not growing as rapidly as other parts of the country,” he explained.

For rural economies, such as those of Maine, northern New Hampshire and Vermont, there’s a real need to look at labor force issues.

“You have to work harder to promote the region to the outside world,” Mongeon said. Although County planners and developers have done that to a certain point, it must continue, he said.

To find the workers to fill the jobs, some regional companies are taking innovative approaches. ATX Forms Inc. in Caribou is using networking techniques to attract computer programmers and offering financial rewards to anyone referring business to company officials.

In southern Aroostook County, some developers have taken a novel approach by using Houlton High School alumni as contacts to reach businesses that may be interested in that area.

Another current trend for Aroostook County companies is offering health insurance to recruit and retain employees, according to Alain Ouellette, NMDC’s director of business development.

In rural areas, where there are seasonable agricultural workers and smaller retailers that provide secondary-type jobs for families, health benefits are not a norm, according to Mongeon. But it is becoming more common in the larger retailing jobs, such as Wal-Mart.

“Health care is a fundamental benefit in a lot of regions, and if you don’t offer it, you’re at a disadvantage,” Mongeon said.

Ouellette said there is a latent labor force waiting to come back. After college graduation, there is a 10-year window when young people can be lured back to the region before they become entrenched in their work and start families.

Wages also have to be competitive with other areas in New England.

“The bar has not been raised sufficiently enough so that the employers here are paying wages that are comparable to other New England wages,” said Brain Hamel, president of the Loring Development Authority, which is overseeing the reuse of the old Loring Air Force base.

Durward Huffman, former president of Northern Maine Technical College, said he has seen many instances in which students will go to school, get a marketable skill and then be recruited for a job outside Aroostook County because the pay is better.

Figures from the Department of Labor for 1998 show that the average weekly gross wage in Aroostook County was $406, the fourth lowest among the state’s 16 counties.

“Only a few employers in the region will pay NMTC two-year graduates a salary in the $30,000 and $40,000 range,” said Huffman. “Some of the local businesses are attempting to compete, but salary differential is a factor, and it becomes an increasing challenge for us.”

Colgan of USM said that although wages are relatively low in the region, he saw the low unemployment rate as being positive. “Even though we’re going through an economic cycle, Aroostook County is still going to be relatively attractive,” said the economist.

The cost of living and housing in Aroostook County is relatively low, Colgan said. Wages should rise as a result of the lower unemployment rate as businesses try to attract and keep employees. “That will make [The County] more attractive,’ he said.

Mongeon agreed. “Despite the slowdown in the national economy, Aroostook County is still stable,” he said.

Developers, economists and other observers also point to the development of Loring as an indication of economic growth in Aroostook County. The massive bomber base closed almost seven years ago, taking with it thousands of military jobs and their associated spending power. About 1,500 people, residents of Aroostook County, also lost their jobs.

With the larger employers on the reconfigured Loring Commerce Centre, such as the Defense Finance and Accounting Service, Sitel and the Maine Army National Guard Refurbishment Center, most of the lost civilian jobs have been replaced.

“It’s a fantastic accomplishment,” said Mongeon, whose firm also helped write the reuse plan guiding the development effort.

Last week, the Maine-based Telford Group announced a large aircraft maintenance facility at Loring, which is expected to initially create about two dozen jobs. The project also is expected to bring added attention from other aviation companies.

This is coupled with the major business developments proposed by Irving Woods Manufacturing, McCain Foods and Lamb Weston, which are on hold.

“Even if only two of these four projects came to fruition, it would still be a huge positive for The County,” Mongeon said.

NEWS reporter Wayne L. Brown contributed to this report.