The perfect economic storm could be about to hit Maine.

Just how bad things will get depends who is making the predictions. Among a group of local economists meeting last week to talk about the future, forecasts ranged from a short-term slowdown in growth of jobs and income to an economic downturn that could last for 10 years.

All agreed there was a triple whammy possible for the Midcoast: The continued downsizing of Bath Iron Works; the just announced purchase of MBNA, based in Belfast, by Bank of America; and, the removal of planes from the Brunswick Naval Air Station as part of a military base closure plan that also calls for shutting down the Portsmouth Naval Shipyard.

While state officials know very little about Bank of America’s long-term plans – except that 6,000 jobs likely will be cut somewhere – the Maine Department of Labor has rolled out worst-case scenarios for BIW and the Naval Air Station and the numbers are scary.

According to a DOL report, if the Navy moves production of its next line of ships to a competing yard in Mississippi, and BIW closes, “combined with NASB (Air Station) realignment, the region could fall into one of the deepest, most protracted economic slides seen in our nation in decades.” The numbers, presented at a joint economic forecasting meeting at the Statehouse last Thursday, show:

• BIW already has lost 1,100 workers in the last four years – more than half in the last year, with 5,600 workers remaining.

• Workers there earn an average wage of $50,715 as compared to the statewide average of $30,940, and most have skills applicable largely to the shipbuilding or similar industries that don’t exist in Maine.

• The majority of workers at the yard are men over age 45, many with only high-school degrees.

“Combined with a weak job market demanding entirely different skills sets, the path to re-employment for these workers will be long and costly,” the DOL report says.

In the case of the Naval Air Station, 2,300 military workers there will just leave, taking with them more than $69 million in annual earnings and leaving vacant 2,000 housing units – largely in Brunswick and Topsham.

The DOL believes the bulk of military personnel will be out of Brunswick “within a year” of the Base Realignment and Closure Commission announcement of which bases across the nation are closing or being downsized. The announcement is expected in the last week of August.

That kind of exodus, including military personnel, their wives and children, could punch a 4,500 to 5,000 hole in the population of the area, and cause the loss of another 2,000 or more jobs. The Air Station is expected to become home to about 1,000 reservists, who would come to the area for training, but not to live.

“The impact on the local housing market will be extreme,” according to the DOL report, predicated, in part, on the notion that the real estate housing boom in Maine is about to slow way down.

“The prospect of a large number of homes being dumped on the market at a time when demand for both rental and ownership housing was plunging is likely to drive the value of the local housing stock downward,” the report says. “Virtually all home owners in the region will suffer a decline in their overall financial state.”

John Davulis, the chief economist at Central Maine Power, shared the DOL’s pessimism about the future, at least for the next 10 years.

“Maine’s right up there in the states as having a bubble,” in real estate that is likely to burst, said Davulis, who also is predicting a recession within the next five years.

“If you compound the loss of jobs at the military base with the potential for a recession and the housing market going flat….I’m not optimistic,” he said.

Charlie Colgan, a professor at the University of Southern Maine and the author of many studies on the state’s economic future, was less pessimistic.

“Maine could take a big hit if everything comes together in a sort of perfect storm,” Colgan said, but “then the growth projectory returns,” but on a smaller base of employees.

He also predicted that in the two most important economic indicators – job growth and personal income, “You don’t go negative in any of the years” as a result of the BRAC decisions.

Mike Allen, the chief economist for the Maine Revenue Service, disagreed.

“Do you think that’s reasonable that the growth rate would just return?” Allen asked.

Allen was concerned with the redevelopment of the Portsmouth Naval Shipyard, where it is estimated that anywhere from $20 million to $900 million in environmental cleanup will have to be done before the area can be redeveloped.

“This thing’s going to sit there,” Allen said. “There isn’t going to be some company going in there and creating 1,000 jobs,” in the short term.

Brunswick’s future is even murkier since the military says it will keep it partially open to preserve the airstrip there.

“There’s 8,000 acres for 1,000 reservists” and it doesn’t make sense, Colgan said, adding the military ought to keep it fully open or “close it all the way, or close most of it” so the state can redevelop it.


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