The Great White North has been good to Milbridge-based blueberry grower Wyman’s of Maine.

Over the past three years, the company has spent $33 million on expanding its operations in Canada, compared with $8 million in its home state.

Wyman’s President and CEO Ed Flanagan told a group of U.S. and Canadian trade officials Thursday that Canada has several advantages over Maine: drastically lower taxes, free employee health care, desirable land, better access to a seasonal workforce, and more reasonable food regulations.

“Canada really has pulled way ahead of Maine in terms of a place to source your berries,” he said while speaking at a trade symposium at the University of Southern Maine campus in Portland that was designed to promote trade between Maine and Canada.

Flanagan said he occasionally encounters an angry customer who is upset about the fact that Wyman’s, which has a strong reputation as a good corporate citizen, has been expanding its operations north of the border. He noted, however, that an even greater number have expressed unhappiness that Wyman’s sells frozen raspberries grown in Chile.

“No, our mangoes don’t come from Maine, either,” Flanagan said with a smile.

The bottom line, he said, is that expanding into Canada was a smart business decision for the family-owned company.

Maine frequently appears on lists of the worst states in which to do business because of its aging population and stagnant population growth, along with high taxes and heavy regulation. It appeared at No. 48 on the Forbes annual list of best states for business in 2015 and at No. 45 in a similar analysis by CNBC last year.

But Flanagan said he isn’t going around telling business groups about the company’s Canadian strategy because he is “mad” at Maine or the United States. His hope is that explaining the hurdles that Wyman’s faces in Maine, and the benefits it enjoys in Canada, will spur positive change.

“It’s all about urging the United States to do better,” he said.

Take, for example, the difference between corporate tax rates in the U.S. and Canada.

Flanagan said that in Maine, the family members who own the company pay a 39.5 percent federal tax on net income, in addition to a 7.9 percent state tax, 0.9 percent Affordable Care Act tax and 3.8 percent Medicare tax. That’s 52.1 percent of all profits paid out in taxes, he said. Wyman’s is an S corporation, which means all business profits “pass through” to the owners, who report them as income on their personal tax returns.

Flanagan said Wyman’s Canadian subsidiary only has to pay a 15 percent national tax and a 16 percent provincial tax, or roughly 21 percentage points less than in the U.S.

“Every $1 million of profit shifted to Canada saves us $210,000,” he said.

INCENTIVES TO GROWTH IN CANADA

Unlike some large corporations that move money offshore specifically to avoid paying taxes, Wyman’s has a strong justification for its Canadian operations, Flanagan said. Wyman’s Canada owns thousands of acres in New Brunswick and on Prince Edward Island – prime locations for wild blueberries. In 2004, it acquired about 50 acres on Prince Edward Island, followed by another 3,700 acres there and 8,200 acres in New Brunswick.

In 2014, the company opened a new blueberry processing and cold storage facility on Prince Edward Island.

Flanagan called the New Brunswick acreage “the finest piece of land that this blueberry man, at least, will ever find.”

Another advantage to Canada is that the blueberry industry there is growing, he said, thanks to government incentives that have attracted young people to the business. Those incentives don’t exist in Maine.

Still another benefit is seasonal labor, Flanagan said. The harvest season for Wyman’s blueberries only lasts 30 days, in late summer and early fall. Finding skilled pickers willing to travel to northern Maine for one month of work each year is difficult, and he said the inability of federal lawmakers to hash out a stable, long-term policy on migrant labor hasn’t helped. Skilled labor is more readily available in Canada, Flanagan said.

Wyman’s, which was founded in 1874, employed 165 full-time workers year-round in Maine in 2014 and added more than 300 seasonal workers during the harvest, according to its website. It employed about 65 people in Canada that year. Flanagan told the trade group that the company now has 254 employees in Maine and 72 in Canada.

Doing business in both Maine and its largest trade partner also serves as a hedge against shifts in the exchange rate for Canadian and U.S. dollars, he said. Blueberries are a commodity, and changes in the relative value of a country’s currency can dramatically affect their price.

“Being on both sides of the border in a commodity business like ours is a hedge strategy,” Flanagan said.

NO HEALTH INSURANCE BURDEN

One of the greatest cost savings for a company in Canada is that it doesn’t have to subsidize its employees’ health insurance premiums, Flanagan said. In some areas of rural Maine, where health insurance is more expensive, the cost of paying for employee benefits can exceed the cost of paying their wages, he said. But in Canada, there is no need for health insurance, because medical care is free.

Another factor that may surprise some Americans is that Canada’s food regulations are less onerous and more reasonable, Flanagan said, adding that Canadians also are not as litigious as U.S. citizens.

“Government regulations in the U.S. are becoming a lot more illogical and punishing,” he said. “Canada is regulated, but with more common sense.”

Thursday’s business symposium was the first such forum hosted by the University of Maine System’s new Maine Center for Graduate Professional Studies. The center’s CEO, former Maine gubernatorial candidate Eliot Cutler, was the keynote speaker.

J. Craig Anderson can be contacted at 791-6390 or at:

[email protected]

Twitter: jcraiganderson


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