BANGOR, Maine — Mike Giguere took some time away from working on the cars at his Main Street Garage on Friday morning to wax philosophical about the economy — and the president-elect.
“I think we have to give him a chance,” the business owner and self-proclaimed conservative said of Sen. Barack Obama.
But Giguere is realistic. He sells used cars out of his vintage-themed shop, too, and has seen sales slip about 25 percent this year — though business at the garage is busier than normal.
“People are fixing their cars instead of trading them in,” Giguere said.
As the woes of Wall Street migrate to places like the Main Street Garage, Mainers of many stripes pondered this week what the new administration in Washington might mean for the state’s economy.
The recent financial meltdown played a major role in the presidential election, with exit polls proclaiming that 62 percent of voters named the economy as their No. 1 concern. By contrast, just 10 percent ranked the Iraq war as their top concern.
Giguere is not hopeful about the economy.
“I think we’re going to repeat history and have a severe recession, or even a depression,” he said. “But we’re all going to survive, no matter what.”
Taking the long view
Charlie Colgan is a long-view professional. He is the state’s economic forecaster and a public policy professor at the University of Southern Maine’s Muskie School and has been considering Maine’s future for a long time.
“In general, I don’t have much good news to report to people,” he said. “On the other hand, I do feel that as long as things don’t get any worse, the situation we face is something we have survived before.”
The current recession won’t be as severe as the 1991 recession in New England, Colgan said.
He said he has heard, but doesn’t necessarily subscribe to, a theory that the shift to Democrats and to Obama “might create a psychological lift in consumers, especially around the inauguration.”
When asked how the Democratic Obama administration might affect the state’s economic outlook, Colgan first talked about changes the new president might make to the stimulus package under consideration.
“The Democrats are much more likely to do spending on things like infrastructure, transportation, things like that. That’s likely to be a key part,” Colgan said. “I think the Democrats are also more likely to try to help state and local governments than the Republicans.”
Colgan said he doesn’t expect that the new administration will do much to alter existing trade agreements because of the global recession, although many believe that Maine’s moribund manufacturing sector is in part due to lowered barriers on international trade.
“We’re not going to go raising trade barriers in the current economic crisis,” Colgan said. “We depend on getting back into the export business.”
Colgan does predict that one of Maine’s “clear bright spots” should be the development of wind power projects and power transmission lines. Many of those will be built in late 2009 and 2010, just when Maine should come out of the recession, he said.
“Clearly, both Obama and McCain intended to boost federal support for the development of those kinds of energy industries,” Colgan said.
High hopes for new energy
Gov. John Baldacci has high hopes that a new focus on domestic energy, renewable energy and energy independence will benefit Maine.
“We have over $3 billion in energy projects that deal with wind and transmission lines, and there’s huge opportunities for even more than that in Maine,” Baldacci said in a telephone interview Thursday. “And [Obama’s] willingness to look at universal health care on a federal level will be a huge help to the people of Maine.”
Baldacci does hope that the new president will follow through on his campaign promises not to reward companies that move jobs offshore.
“We need to work on strengthening our country,” the governor said. “It’s going to be helpful in rebuilding Maine in terms of mills, factories and other economic sites.”
The governor, who plans to attend Obama’s inauguration and bring his 17-year-old son, Jack, said the new president has the power to inspire many.
“What I think will make it all happen is his leadership to reach out towards everyone, to inspire us to rebuild America,” Baldacci said.
Edward Gorham, president of the Maine AFL-CIO, agrees that Obama will make the domestic economy a priority — and that this will help the state.
“We need jobs,” he said. “Over the last 10 years we’ve lost 25 [thousand] or 30 thousand manufacturing jobs in the shoe industry, textile, clothing, a fair part of the paper industry. It’s worrisome. You can’t replace manufacturing wages with service wages that are below poverty level.”
Maine’s economy is determined at the national level, Gorham said, and right now he’s feeling hopeful.
“It’s Obama’s commitment to fundamental change that will bring jobs into the U.S. and keep us from losing additional manufacturing jobs,” he said.
One of Maine’s most prominent business leaders says change starts at home — and that government can’t, and shouldn’t, be all things to all people.
Peter Vigue, chairman of the Pittsfield-based Cianbro Cos., has made a career of finding opportunity in hard places.
“I think that Maine has some unique challenges,” Vigue said. “I believe that the future of the state of Maine is well within our control and that it will be up to the people of the state of Maine to work together through these challenges.”
Vigue said his company is a good example of how challenges create opportunities. Ten years ago, 70 percent of Cianbro’s business in Maine came from the pulp and paper industry.
“Today, it’s only 10 percent of our business,” Vigue said. “What we did is to recognize that there was a limited amount of investment taking place in the state of Maine that would allow our company to grow here. We created a strategy that would allow us to export our knowledge and skill.”
Cianbro’s Brewer operation is employing 500 people to make oil refinery modules and ship them to Texas. Earlier this decade, the company built two off-shore oil exploration drill rigs in Portland, employing about 950 people in the state-of-the-art project.
“We just simply need to look at the world differently,” Vigue said. “There is no one to fix our problems for us. We will fix them ourselves. That’s why it’s so important for companies and individuals to not be dependent on the government to fix our problems.”
Scott Moody, an economist who works at the conservative think tank Maine Heritage Policy Center, said he’ll wait to see what the new president’s spending priorities are, but that he thinks that less is more when it comes to government spending.
“Hopefully, [Obama] will be true to his word about reducing taxes. It could do some good,” Moody said. “There’s a lot we’re not really sure of in terms of the banking crisis. As an economist, my biggest worry is with the bailout. With the auto industry now asking for a bailout, where’s it going to stop?”
Moody mentioned a program that would expand health insurance to children and has passed Congress twice. President Bush vetoed the bill both times, but Moody said that under an Obama administration, it almost certainly will pass.
“To a lot of folks who see government as an answer, that will be a good thing for them,” he said. “But it will further crowd out the private sector … and the smaller your private sector gets, the poorer your economy.”
Banks waiting to see
One sector of the state’s economy that could benefit from any increased consumer confidence that might come from the new administration is banking.
“We’re pretty clearly in a challenging economic environment,” said Yellow Light Breen, a senior vice president at Bangor Savings Bank. “We can’t prevent recessions from happening. It’s really a question of whether or not the government can do some things to perhaps cushion the economy. It’s going to take some time to work through this.”
Chris Pinkham, president of the Maine Association of Community Banks, said he hopes the shift of leadership will happen quickly, especially the appointments of a new Treasury secretary and head of the Federal Deposit Insurance Corp.
“There’s many other important positions they need to deal with that all impact this rescue plan,” Pinkham said. “We’re hopeful that there is a lot of focus within the administration to rapidly put together that team.”
Maine’s bankers want to assure would-be borrowers of one thing.
“Frankly, at this point in time, we have money to lend,” Pinkham said. “If people are contemplating some sort of loan or small business, they really should talk to their local lender.”
But the banking expert cautioned the state against any insular or isolationist tendencies. Even though the recession hasn’t — and likely won’t — hit Maine as hard as it has other places, what happens in Washington, D.C., will have a large impact here, too.
“There is much of our economy — the service and tourism economy — that is based on the financial condition of other states,” Pinkham noted. “For example, we can’t make people come to Maine to ski. In many ways, we’re dependent on the national economy.”