Alternative energy is among the industries in Maine that show the most potential for job growth, according to a new, unreleased state report.
The study, commissioned by the Maine Technology Institute, assesses 13 “technology clusters” in Maine – concentrations of similar companies within certain industries whose specialized nature or critical mass give them competitive advantages in their respective markets. Those 13 clusters, which range from boat-building to medical devices, support 84,305 jobs in the state, according to the report.
The findings have the potential to recast the investment strategies of MTI, the state agency that directs seed money and development loans to promising startups. They also are likely to inform conversations about Maine’s high-tech potential in the wake of the Great Recession, especially in the area of wages.
MTI commissioned the study to help it identify fast-growing, technology-intensive industries that could yield significant economic growth with some investment, such as alternative energy and biopharmaceuticals. Conversely, it examined legacy industries, such as textile manufacturing and boat-building, that may have stagnated but still play an important role in the state’s economy, said Robert Martin, the former president of MTI who commissioned the report.
In addition to working in the same industry, clusters also share common supply chains and markets and draw on a similar workforce. Focusing on clusters has been a major tenet of Maine’s economic development efforts for more than a decade.
“The theory was that if you’ve got a part of the economy that’s growing at a fast rate, then you want to do everything you can to stimulate the creation of ventures and technology in that cluster,” Martin said. “Likewise, if there are areas of the economy that may be indigenous to Maine’s economy but are no longer growing at a good rate, the question becomes, what can you do to provide better strategies to help stimulate that part of the economy?”
MTI paid the Battelle Memorial Institute $206,000 to compile the report. Battelle, which is based in Ohio and claims to be the world’s largest nonprofit research and development organization, worked on the report for eight months.
Besides helping MTI gauge its effectiveness and future focus, the report should also help frame the economic development efforts of Maine’s policymakers, lawmakers and university officials, said Martin, who was fired Aug. 7 by Gov. Paul LePage over what Martin described as a difference of opinion in the direction of the organization.
Battelle specifically looked at industries that have the potential to bring new revenue into Maine through exports of products and services, and industries that could replace the products and services that Maine typically imports. Sectors such as tourism, health care and retail, which serve a local population, weren’t included.
When the Maine Legislature created MTI in 1999, the organization was directed to focus on seven broad technology areas:biotechnology, composites and advanced materials, environmental technologies, forest products and agriculture, information technology, marine technology and aquaculture, and precision manufacturing. Calling the categories too broad, the Battelle report identified more specific clusters.
Those clusters are agriculture, aquaculture, fisheries and food production; alternative energy and turbines; biopharmaceuticals; boat-building and related industries; national defense; electronics and semiconductors; engineering and other scientific/technical services’ environmental services; finance and business support services; forestry-related products; information technology services; materials for textiles, apparel, leather and footwear; and medical devices.
The alternative energy and turbine cluster, which currently only supports 948 jobs, is one of the fastest-growing sectors. It posted job gains in Maine of 11.9 percent from 2007 to 2012, and is predicted to grow by 4.7 percent through 2022, beating a forecasted U.S. growth rate for the sector of 2.3 percent. It also has the highest average wages among all 13 technology clusters at $74,091. That compares with Maine’s average private-sector wage of $38,090.
Although often the focus of economic development efforts, Maine’s information technology services sector lost 11.1 percent of its jobs from 2007 to 2012, and offers average wages that are 37 percent less than those in New England overall.
“Information technology is declining overall in employment numbers, but is becoming more specialized in terms of output, which defines a different kind of strength,” Martin said, referring to the report’s productivity metric. “If you look at the data in terms of only jobs, you’re missing some patterns.”
Other sectors that have grown since 2007 include engineering and other scientific services (10.4 percent) and biopharmaceuticals (5.6 percent).
The clusters that have lost the most jobs since 2007 include electronic and semiconductors (23.7 percent) and boat-building (22 percent).
Wages were identified in the report as an area of concern. While 11 of the 13 technology clusters offer higher average wages than the state average, nearly all have average wages that fall well below those in New England and the nation. This partially reflects Maine’s lower cost of living, but it also reflects the lower productivity of Maine’s technology clusters.
As a result, the report said increasing the productivity – measured as a sector’s total revenue divided by the number of workers – should be a priority. Productivity can be increased by using technology to make businesses more efficient.
“Increased productivity increases the wealth and value of the companies in a cluster, and usually results in increased wages, as some of the increased wealth is passed on to employees,” the report reads.
For those clusters that struggle with attracting the necessary capital and talent, the report suggested considering them in a regional context.
“Where Maine is not a regional leader but is rather either a regional player or regional follower, simply trying to grow these technology clusters outside of the regional context will be difficult,” it reads.
The report doesn’t offer specific recommendations for taking next steps, but it should influence policymakers and others working on economic development efforts in the state, said David Clough, Maine’s director of the National Federation of Independent Business, who has seen an early copy of the report.
“It can serve as a road map, but it’s not like a triage analysis where you’ve got to decide where you’re going to place the emphasis and sacrifice everything else,” Clough said. “It’s saying here’s where you can place some emphasis and have good potential to get results. It also says where things are happening, so that you don’t do something that inadvertently diminishes that sector.”
The MTI board is scheduled to discuss the report at its meeting next Monday.