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2007 Highlights Hodgdon Yachts Windcrest www.businessinmaine.com 207.624.9800 (cid:2) A Message from Governor Baldacci I am pleased to present the 2007 Highlights Report for the Department of Economic and Community Development (DECD). Maintaining the high quality of life for all Maine residents and expanding economic opportunities for the state are my top priorities. My administration is working closely with DECD Commissioner John Richardson to build a solid foundation for strong economic growth. The Brookings Institution’s report "Charting Maine’s Future" con- tained many insightful recommendations on how to best move Maine forward. With the help of my administration, I will work to invest in protecting Maine’s quality of life, help create better paying jobs and work to foster the development of business clusters within the state. Our goal is to create a productive and competitive business environment and an attractive destination for tourists and businesses alike, rec- ognizing local and regional differences while addressing the competi- tiveness issues that are of the most importance to our business community. In order to draw more businesses to Maine and create quality jobs with competitive wages, Maine needs to invest more in research and development. By investing more heavily in innovation, we can generate better paying jobs and a more skilled work force. We also need to promote a healthy climate for entrepreneurship and small business development as well as invest in efforts to attract businesses to relocate in the state. I am very pleased with the continued success of the Pine Tree Zone (PTZ) program, which has provided Maine with the competitive edge needed to draw many new or expanding businesses to the state. Launched in 2004, more than 130 companies have been PTZ certified, and it is estimated they will create more than 4,100 jobs. In 2006 we also added the Military Redevelopment Zone in order to 1 increase and diversify economic opportunities in Midcoast Maine in preparation for the 2011 closure of the Brunswick Naval Air Station. This will have significant impact as we work to create more jobs in this region. We have worked hard to make Maine attractive to new businesses, as well as a place people will want to live, and it is working. According to a report by the U.S. Census Bureau, Maine now gains more residents than it loses; which is more than any other state in New England. According to the Brookings Institution study, Maine experienced the fifth biggest jump of in-migration in the country. DECD had many accomplishments in 2007 to help move Maine’s economy forward, and we are looking forward to 2008. Our economic progress will help Maine prosper and maintain the quality of life we love and treasure here in Maine. Best wishes, Governor John E. Baldacci 2 A Message from the Commissioner On behalf of everyone at the Department of Economic and Community Development (DECD), I am proud to share our 2007 accomplishments and to promote the services our department and its affiliates provide to the businesses, community organizations and residents of Maine. Since being sworn in as commissioner in January 2007, I have witnessed many reasons to be optimistic about Maine’s economic health. A2006 USAToday analysis shows that Maine’s long-term income growth over the last five years has exceeded the national average. According to the report, Maine’s per capita income grew 6.1 percent from 2000 to 2005, compared to the national average of 2.2 percent. Maine’s income growth ranked 17th overall, and was the third highest in New England. Our efforts to encourage international trade exceeded our expecta- tions. In 2006, Maine set a new state record of $2.63 billion in exports. This was due in large part to an increase in exports to Asia, including Japan, South Korea and China. To capitalize on this growth, DECD worked alongside the Maine International Trade Center to organize a fall trade mission to Japan and South Korea. DECD also sent delegates on a U.S. Department of Commerce-sponsored trade mission to China in the spring of 2007 to learn more about selling to China’s growing population of wealthy consumers, specifically export opportunities for the state’s boat building and marine composites industries. China is now Maine’s third largest foreign market, receiving more than $150 million of Maine goods last year. Maine’s boat building industry is poised for significant growth according to a recent report by Planning Decisions, Inc. Currently, Maine’s boat building industry generates $355 million in annual sales and a total payroll of $95 million. DECD, in collaboration with the North Star 3 Alliance Initiative, supports Maine’s marine industries through workforce development, research & development (R&D) grants and brand marketing, all under the Workforce Innovation Regional Economic Development (WIRED) grant, awarded to Maine in February 2006. The $15 million federal WIRED grant is also designed to create jobs in particular to counteract the closure of the Brunswick Naval Air Station, strengthen the state’s economy, and ensure Maine maintains its competitive edge in the boat building, composite and marine sectors. Lowering costs for Maine businesses is also a priority. DECD helped phase out the business equipment tax which helps to strengthen our business environment. The Maine Economic Growth Council’s Measures of Growth 2007 report shows the cost of doing business in Maine is going down. According to the Milken Institue the state now ranks 19th among the 50 states in terms of tax burden, down from 14th in 2002. Tourism remains one of our strongest industries, with research showing that Maine’s overnight marketable trips increased 12 percent compared to only a two percent increase nationally. DECD’s Office of Tourism has done an excellent job of marketing the state and driving traffic to their Web site, and we expect to see visitor numbers continue to grow. Members of our Maine Products Marketing Program (MPMP) have been receiving national accolades, including Brunswick’s Simply Divine Brownies, which has been featured on The Today Show, Rachael Ray, and in gift bags at the Academy Awards. MPMPbuilds recognition for hundreds of Maine made products and the state’s industries in general through free marketing support. These are just a few of the highlights of what DECD has been working on to help Maine businesses grow and succeed. We look forward to partnering with more Maine companies in the coming year, as well as working with the Governor to implement an economic strategy that continues to move Maine’s economy forward. Sincerely, John Richardson 4 Office of the Commissioner The Office of the Commissioner has numerous functions and is responsible for the day-to-day operations of the entire department. The office coordinates the administration’s economic development legislative activities, oversees the state’s economic development strategy and develops policy in conjunction with the Governor’s Office and the Maine Legislature. The office also represents the administration on various boards, commissions and task forces. Major functions of the office’s programs include the administration of the state’s Tax Increment Financing (TIF) Program, Employment Tax Increment Financing (ETIF), Pine Tree Development Zone Program and other economic development programs. The office also plays a pivotal role in assisting a variety of industry groups. Major Accomplishments For Maine to be competitive, the state needs to strengthen its R&D sector to help existing businesses innovate and DECD shepherded support for the passing of the R&D bond in November 2007. The bond, which will be administered by the Maine Technology Institute, provides $50 million competitively awarded research and development grants for targeted technology sectors. An additional $5 million will go to stimulating Maine’s economy and to creating new jobs through the Finance Authority of Maine and the Maine Rural Development Authority. DECD and its Office of Innovation are working to expand Maine’s R&D sector to $1 billion per year by 2010. R&D supports more than 1,000 jobs in Maine, with more than 500 companies creating more than 600 jobs between 2003 and 2006. 5 Specifically, the results of money spent on R&D investment during the last fiscal year include: (cid:3) More than $3.1 million in new major research equipment. (cid:3) Maine received more than $74 million in new federal R&D awards. (cid:3) Four patents were awarded. (cid:3) Three new spin-off companies were founded. (cid:2) Since the inception of the Governor’s Pine Tree Development Zone Program in 2004, more than 130 companies have been certified to date. The companies project the creation of more than 4,100 jobs and plan to invest more than $429 million dollars. This year an additional 36 companies were certified, creating over 1,000 new planned jobs. (cid:2) In 2007, the Pine Tree Zone Development benefits were extended to help expanding manufacturing companies. Commissioner Richardson presents the Kennebec Lumber Company with a Pine Tree Zone Certificate. (cid:2) The office approved 32 Municipal Tax Increment Financing (TIF) districts in 22 communities, with total planned investment exceed- ing $529 million. (cid:2) The Governor’s Training Initiative (GTI) is a state-funded workforce development program jointly administered by the Maine Department of Labor (MDOL) and DECD. The Governor's Training Initiative program develops and coordinates training for firms intending to expand or locate in Maine, reorganize a workplace to remain competitive, or upgrade worker skills. Eligible businesses 6 may receive reimbursements for on-the-job training, competitive retooling, assessment, job-task analysis, workplace safety and literacy, specialized recruitment, high-performance skills, or customized technical training. (cid:2) The Office of the Commissioner promotes economic opportunities for the creative economy which include a diverse workforce com- prised of artists, artisans, performers, architects, software engineers, entrepreneurs, researchers and financiers. The creative economy also contributes significantly to our economy. Approximately 8.3 percent of Maine’s workforce, or 67,446 people, are employed in the creative economy and earn an average of $48,557, which is 33 percent higher than the state average of $32,661. In 2003, Maine’s arts and cultural sectors generated $1.5 billion in sales. In 2000 to 2004, Maine’s creative workforce added 5,474 jobs to the economy and grew by 9 percent, compared to the state’s overall job growth rate of 7 percent. (cid:2) Avideo shot and produced by DECD during the trade mission to China for the purpose of communicating the experience to people back home won an award for best marketing practices from the North Eastern Economic Developers Associations (NEDA). (cid:2) Tourism, Maine's largest industry, has seen a return of approximately $8 in tax revenues for every dollar invested in the state. 7 Office of Tourism The Office of Tourism (OOT) is responsible for implementing an overall marketing program domestically, in Canada and overseas for the State of Maine, which includes advertising, public relations, and research and analysis. There are three key objectives for the program: (cid:2) Make Maine one of the true “must-see” vacation travel destinations in North America. (cid:2) Bring the economic benefits of tourism to all regions of Maine, in all seasons of the year. (cid:2) Return at least two dollars in tax revenues for every dollar invested in tourism development by the Maine Office of Tourism. Maine’s latest research findings concluded Maine’s overnight marketable trips increased 12 percent over the previous year, compared to a two percent increase nationally. Over the past few years, Maine has seen a return of approximately $8 in tax revenues for every dollar invested in tourism. Major Accomplishments Advertising In 2006, OOT’s advertising strategy was to spotlight Maine’s recogniz- able icons while also highlighting the year-round experiences available to visitors. The objective was to increase market share through tactical ad placements in key markets, including New York, New Jersey, Pennsylvania and Boston. The advertising results summary found that Internet and phone inquiries in 2006 saw a 30 percent increase over 2005, with a double-digit increase in each of the four seasons, a new record for inquiries received. This amounted to approximately 400,000 more consumers interested in traveling to Maine in 2006 than in 2005. 8