March 25, 2012

Assessing energy costs' effect on the economy

Gov. Paul LePage's says high energy costs have inhibited Maine job creation, but experts and businesses say a skilled work force and location are bigger issues.

By Tux Turkel
Staff Writer

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Gelardi said he's frustrated by energy costs and welcomes state efforts to lower them. To cope, meanwhile, he has developed lighter parts, so he can melt less plastic resin. He's also belatedly signing up with a competitive energy provider, to get a better rate than the state's standard offer.

Using energy more efficiently is the best way for businesses to compensate for higher prices, said Charles Colgan, a University of Southern Maine professor and former state economist. Maine can't attract manufacturers that do routine work that can be done more cheaply overseas, he said. Our best bet is high technology and custom work that requires a skilled work force, he said.

When discussing energy and jobs, LePage sometimes tells a story about meeting South Korea's counsel general last year, and pitching Maine as a good place to build an automobile assembly plant. The official told him that Maine's beautiful, but its energy costs are too high.

"When you drop your energy, we'll put plants here," LePage has said, relating the conversation.

That's an unrealistic expectation, Colgan said. South Korean automaker Hyundai builds cars in Alabama, and at a sister Kia plant in Georgia. Those states do have lower energy and labor costs. But Maine also has additional liabilities, Colgan said, including our distance from suppliers and inadequate port, rail and highway connections.

"You'd never build an auto manufacturing plant in Maine, not because of our energy costs, but because of our location," he said. "Energy costs would be way down on the list of problems."

Staff writer Tux Turkel can be contacted at 791-6462 or


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