Maine remains worst state for business, Forbes says

By Christopher Cousins and Whit Richardson, BDN Staff
Posted Sept. 27, 2013, at 11:06 a.m.

BANGOR, Maine — For the fourth year in a row, Forbes has ranked Maine the worst state in the nation for business.

“Not much has changed,” Forbes said Friday. “It is still burdened with an aging population and a weak economic forecast. Job growth projections are the worst in the U.S and only Vermont is expected to have slower household income growth over the next five years, according to Moody’s Analytics.”

Virginia was the best state for business, according to the annual rankings. Virginia got high marks because of strong business incentives, its handling of legal claims against business and its low union membership.

Maine ranked 49th in growth prospects, behind only Wyoming. The Pine Tree State did better than most states — 24th — for quality of life.

Forbes placed much of the blame for Maine’s worst-in-the-nation standing on “the state’s high corporate tax burden and lousy job and economic growth forecast.”

Gov. Paul LePage made Maine’s poor ranking a big issue during his campaign in 2010 and ever since. On Friday he used a now-familiar argument that decades of Democrat rule before he took office are to blame.

“After four decades of liberal rule that has burdened Maine with high electricity rates, high taxes, overregulation and a hostile business climate, it’s no wonder that Forbes would put our state at the bottom of the list,” said LePage in a written statement. “My administration has been working hard to improve these factors for business.”

Eliot Cutler, who announced this week that he is running for governor as an independent, had this to say on his Facebook page:

“This ranking shows that after three years of Paul LePage as governor, Maine being open for business is nothing more than an empty slogan and a sign on the turnpike,” he said. “We can and we must do better than this.”

House Minority Leader Kenneth Fredette, R-Newport, said that what Maine lacks — aside from what he called the “political will” to make big changes — is a long-term strategy or vision about what it wants to be from an economic development standpoint.

“Where is our competitive advantage?” said Fredette. “It’s no longer the woods industry. What do we want to be? There needs to be a 20-year strategy on what we want to be good at. … Until we have a long-term strategy that the political system buys into, nothing is going to change.”

The lack of a statewide economic development plan is a glaring omission, according to Peter Vigue, chairman and CEO of Cianbro in Pittsfield.

“You can’t run an operation or business without a strategy,” he said.

Vigue didn’t argue with the validity of some of the metrics Forbes uses to come up with its list, but he points to other factors that he thinks offset the negatives.

“It’s very difficult to argue against some of the criteria that Forbes uses to measure doing business in the state. … Compared to a number of other states there are some significant benefits of doing business in the state. I would argue that the resourcefulness of people in this state are significant and far greater than those of many, many other states in this country.”

He also cites the fact Maine has the deepest port on the eastern seaboard in Eastport. He said it needs upgrades, but the asset is there.

“Over time we’re going to fix this,” he said. “I believe it can be fixed and corrected, but it takes tremendous leadership going forward. And more than leadership it takes collaboration, and that means collaboration from everyone, and not just one party or one individual, but all of us.”

Senate President Justin Alfond, D-Portland, said Maine is a “great place” to start or build a company.

“I’ve heard from entrepreneurs and business owners across our state touting their successes,” he said. “Yet at the same time, I’m not surprised by this ranking. For three years, the governor has been telling the world what a terrible place Maine is. That has an effect.”

Glenn Mills, chief economist at the Maine Department of Labor’s Center for Workforce Research and Information, said many of the reasons for Maine’s poor ranking by Forbes can be traced to its aging population, which affects everything from the available labor pool to wages.

“They’re using these measures as a rank for 2013 but they have nothing to do with 2013,” he said. “They have everything to do with what happened in the 1970s, ’80s and ’90s when people stopped having kids.”

These types of rankings, while appearing bad, should be taken “with a grain of salt,” Dana Connors, president of the Maine State Chamber of Commerce, told the Bangor Daily News.

“I don’t want to dismiss them as worthless, but they don’t tell the whole story,” Connors said. “They shouldn’t be conclusive in people’s minds about how Maine should be looked at or considered.”

Many of the factors Forbes considers to create these rankings — such as demographics and energy costs — are not ones that policymakers or the business community can improve in one year, or four, Connors said.

The ranking doesn’t surprise David Stone, the former CEO of CashStar, a successful Portland tech company he left in April.

The tax structure and health care costs “stink here,” and the demographics aren’t great either. And yet, he still chose Portland as a place to build CashStar, a decision he doesn’t regret.

“When I built CashStar, my investors wanted me to start the company or move the company to California. There wasn’t a lot of faith in this state as a place to build a company for a variety of reasons,” he said. “But that said, entrepreneurial success changes everything, and there certainly are some great companies here that are really successful and becoming successful.”

Stone said lawmakers, entrepreneurs and economic development folks need to get together to find solutions to some of the state’s problems.

“It’s not a Democrat or Republican issue. It has nothing to do with parties. It’s just smart government; smart leadership,” he said.

http://bangordailynews.com/2013/09/27/business/maine-remains-worst-state-for-business-forbes-says/ printed on August 29, 2014