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  • Rail & Post-Indus. Economy in Maine. Return to 19th Cen.?

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Pertaining to all railroading subjects, past and present, in New England

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 #990016  by gokeefe
 
Introduction

As the economy of the State of Maine continues to develop in the 21st century, emerging development patterns are appearing which point towards a return in some ways to previous patterns of development from the 19th century that were largely left behind in the 20th century. One of the broadest trends responsible for this is the de-industrialization of Maine. De-industrialization in Maine is due in large part to competition from foreign trade originating in countries with stable governments and extremely low costs for production, namely China, but also places such as Bangladesh and Vietnam. Although one can be certain that Maine is not returning to being a largely agrarian society, other trends seem to indicate that tourism and aqua/agriculture are re-emerging to play an increasingly important part in Maine's economy.

Case-Study, Winthrop, ME

Winthrop, ME represents an interesting case study in observing these general trends. Winthrop's industrial development peaked sometime shortly after WWII when it was home to at least three or four major industrial enterprises and dozens of smaller businesses that either supported or directly participated in production processes. Winthrop's central business district located between Maranacook and Annabessacook Lake was centered around the former Carlton Woolen Mill, now the Winthrop Commerce Center. Prior to this, in the late 19th century Winthrop, ME, was known as the "Apple Valley" with extensive canning operations of Greening apples that were shipped out and sent to markets on the East Coast and nationally. Additionally, Winthrop also developed a very strong tourist based economy with a number of famous resorts catering to the rusticators including Tallwood Resort, the Martha Washington Inn, the Belvedere Inn, the Elmwood Hotel and the Marancook Hotel.

As the mid-century production peak passed, over the course of the next 40 years, major industry in the area slowly shutdown or relocated leaving some remnant industrial enterprise but in general the industrial-centered economy model in Winthrop was gone, perhaps forever. Given the perspective that comes with watching the 20th century slip further into the rearview the heavily industrialized economic model in Winthrop appears more and more to have been a historical anomaly resulting from exceptional global under-development and unusual geo-political circumstances which made the United States one of the few reliably safe places in which to engage in private enterprise. Winthrop, like many other small American towns benefited deeply from the economic largess often generated by intense industrial activity.

Almost by default the local economy appears to be returning to previous patterns of development which have not been predominant since at least the early 20th century. The two patterns in particular that appear to be making a strong return are centered around tourism and agriculture. These two general trends rest upon an underlying foundation of a strong modern service based economy with a concentration in public administration (State of Maine and local government), healthcare services (Maine General Medical Center satellites) and transportation (Progressive Distributors Inc./Hannaford). These three primary jobs creators then support the broader local economy of small businesses including service providers, and entrepreneurs. Additionally there is also a small, but significant, light industry component (Alternative Manufacturing Inc./AMI) to the local economy.

These two trends (reemergence of agriculture and tourism) seem to be largely supported and driven in part by the renewed availability of a broad labor pool which was previously occupied in high paying industrial occupations, some of which had especially attractive wages and benefits resulting from collective bargaining gains enabled by the Wagner Act of 1935. The wide availability of union wages for industrial work had one very important implication in the 20th century which may have helped diminish the role of agriculture and tourism. High school graduates were afforded opportunities for nearly endless employment with high wages and exceptional benefits including retirement, making the less secure and somewhat seasonal agriculture and tourist economies extremely unattractive to all but the nearly unemployable or in some cases, those with family members or some other close connection to tourism and agriculture.

Rail Transportation & Post-Industrial Trends

In the 19th century rail transportation, both freight and passenger played an extremely important and prominent role in supporting the development and prosperity of the agricultural and tourist economy. Winthrop, ME was no exception to this rule. The Freight Office of the Maine Central Railroad in downtown Winthrop handled countless loads of freight outbound to the nation for decades. Likewise the passenger station (and several flag stops at local resorts) was a well traveled gateway to the area, and is still remembered for its role as a major transit point for young boys and girls attending one of the many youth summer camps in the area.

Unlike the 19th century, locally based rail freight & passenger operations are no longer economical even in moderate volumes. The national interstate highway system and the federal and state highway networks have largely replaced these functions in both the freight and passenger modes. Railroad economies of scale mean that profits are only available to lines operating large long-distance line haul trains or in rare cases local operations for major rail intensive industries, such as the remaining paper mills in Maine. Thus, it would appear that the role of the railroad, in places like Winthrop, which are not major transportation hubs, would be minimal at best and limited to the daily transit of trains operating to and fro between major hubs in Ayer, MA, Portland, ME, and to a lesser extent Waterville, ME or even Lewiston/Danville Junction, ME.

Most analyses of continued growth in local agriculture and tourism would seem to point towards moderate increases in vehicular traffic with seasonal spikes centered on the summer and certain major holiday weekends. In short even with post-industrial reversion to certain aspects of the 19th century economy Winthrop does not appear poised to become a participant in any way shape or form in originating rail freight of passenger traffic ever again. This analysis rests on certain assumptions. First, that the cost of over the road transportation will continue to maintain its relative advantages over rail across short distances. Second, that any changes or innovations to agriculture in the local area will not be of such a nature that they would develop bulk demand for farming materials or bulk supply of agricultural products. Third, that visitors and tourists to the State of Maine will continue to rely on air-car transport to arrive at their final destinations. Fourth (as a near corollary to the first assumption), that passenger rail, in either short distance commuter, long/medium distance intercity or excursion format will remain largely unviable in all areas of Maine outside of the Boston - Portland - Brunswick corridor.

With one important exception at least three of the four assumptions seem largely reasonable and likely to hold. The second assumption, that there will be no innovation nor sufficient growth in the agricultural sector significant enough to demand local rail service seems both statist and a major underestimation of the potential developments in local agriculture or agriculture related industry. One of these potential developments, in Winthrop specifically, would be the creation of a local brewery that in time would grow to sufficient size to create demand for brewing supplies in quantities efficient to railroad economies of scale. It would seem at least possible that eventual production might also be shipped by rail as well but by that point such an operation might no longer be accurately described as "local".

Conclusion

On a very small scale Winthrop's potential for new demand for rail traffic while very limited represents similar opportunities throughout Maine that appear likely to emerge over the course of the next 50 years. At least in part due to high prices for agricultural commodities locally based agriculture can be expected to continue to gain strength in Maine. This in combination with continued growth in forest products traffic means that under certain conditions it may in fact be possible to see a climb in originating freight traffic throughout rail lines in Maine for decades to come with additional small gains in demand for bulk carloads. While this scenario by no means represents any kind of a "boom" in freight rail traffic it does in some small way represent a return to locally oriented freight rail service that was once predominant in the 19th century. Certainly "less than car load" traffic is never expected to return however it does seem possible that there will be an increase of operating sidings here and there producing or demanding rail freight shipments. That in of itself is not by any means a natural outcome for the current state of affairs dictated by the "conventional wisdom".

In the rail passenger domain there is at least the possibility of new services but as mentioned current assumptions regarding viability, even for publicly funded services seem to exclude any new developments likely for quite some time to come.

Discussion

The topic asks whether the end of industry centered economies mean that many towns formerly strongly associated with tourism and agriculture in the 19th century are returning to those economies. Other towns, such as North Conway, NH or Bar Habor, ME developed these patterns over the last 100 years and stayed with them. Winthrop, and others appear to be in the process of returning to them after a century hiatus as industrial centers.

I am very interested in any further discussion on this topic of "past is prologue" and whether or not others see the same general direction taking shape. Namely, that the end of the industrial-centric 20th century economy in Maine (and perhaps Northern New England as a whole) is leading to the return of regionally predominant economic development patterns last seen in the 19th century.

[EDIT: clarity]
 #991354  by Cowford
 
"...tourism and aqua/agriculture are re-emerging to play an increasingly important part in Maine's economy"

First, can you classify tourism as "re-emerging"? Tourism has been part of Maine's economy for well over 100 years. Over time, it continues to evolve and has probably become more prevalant in areas that have lost their eonomic base in other areas (Belfast comes to mind). But it never went away.

Second, agriculture? I've not seen any indication of any positive trend in Maine's agriculture sector, save very small micro-farms to support the small organic, locavore market segment.

Finally, care is needed not to wholly dismiss rail's participation in today's economy. No, you're not going to see 40-ft boxcars of grain being unloaded at Opie's Feed Store, but intermodal transport, rail-truck warehouses and bulk transload terminals assure that rail continues to be a link, albeit in a behind-the-scenes way, in today's modern supply chain.
 #991383  by gokeefe
 
Cowford wrote:
gokeefe wrote:...tourism and aqua/agriculture are re-emerging to play an increasingly important part in Maine's economy"

First, can you classify tourism as "re-emerging"? Tourism has been part of Maine's economy for well over 100 years. Over time, it continues to evolve and has probably become more prevalant in areas that have lost their eonomic base in other areas (Belfast comes to mind). But it never went away.
Yes, 100% correct it never did go away. However as you mentioned it is now more important and more prevalent as part of the economic base than ever before. My impression is that over the sweep of the 20th century tourism in Maine became concentrated in certain areas of town and is now diffusing back into areas which for the last 100 years were focused on industrial activity to the near exclusion of anything else.

In that sense I think its a statewide trend. I would also maintain that in areas dependent on tourism this tendency is becoming even more so as any remnant light industry tucked away in corners unseen largely disappears.

I guess what I'm trying to point to is that tourism, although very important in the 20th century, may be returning to a position of even higher significance (if that's even imaginable) that it has not occupied since the late 19th century.
Cowford wrote:Second, agriculture? I've not seen any indication of any positive trend in Maine's agriculture sector, save very small micro-farms to support the small organic, locavore market segment.
I think the locavores are important however most (99.9%) of them will never become large at all. I do have the impression based on anecdotal evidence from people who work on large farms in Aroostook County that grains are slowly being cultivated again as mid western grain prices continue to rise.

Another small trend that makes me wonder about potential future niche importance for agriculture in Maine (with potential for very light rail use) is the growth of the wine, distillery, and brewery sectors. Many of the new companies are very much still in their infancy, however I think it is likely that one or maybe two of these could emerge as very large operations which someday might use rail shipments for grains or for outbound products.
Cowford wrote:Finally, care is needed not to wholly dismiss rail's participation in today's economy. No, you're not going to see 40-ft boxcars of grain being unloaded at Opie's Feed Store, but intermodal transport, rail-truck warehouses and bulk transload terminals assure that rail continues to be a link, albeit in a behind-the-scenes way, in today's modern supply chain.
Certainly there's no question at all that rail strongly supports the national and regional economies. In Maine this is highly concentrated on support to the paper mills and some small amounts of additional online business. At least for now we're at the very end of the supply chain for rail intermodal shipments (I did in fact see a UMAX container on the road the other day). Perhaps in the future with some line upgrades there could be some potential for bridge traffic but at least for now that seems minimal.

In my mind the question I was trying to answer was, "What role does rail play in a de-industrialized economy?" In the case of Maine there appears to be some very limited potential for some increased agricultural traffic. Future line upgrades may also make rail-based intermodal segment traffic relevant as well. Other than these two growth areas and stable traffic from the paper mills it doesn't seem likely at all that rail will play a significant part in the economic changes that will take place in Maine.

All of this sets aside any potential for passenger traffic, but the conventional wisdom (which generally I think is very reasonable) continues to strongly indicate that passenger service in Maine is unlikely to grow outside the Downeaster corridor.

So if in fact we assume that de-industrialization is in fact underway does that mean that we are in fact returning to an economy that resembles the one we saw in Maine at the end of the 19th Century?
 #991435  by mbhoward
 
The topic asks whether the end of industry centered economies mean that many towns formerly strongly associated with tourism and agriculture in the 19th century are returning to those economies. Other towns, such as North Conway, NH or Bar Habor, ME developed these patterns over the last 100 years and stayed with them. Winthrop, and others appear to be in the process of returning to them after a century hiatus as industrial centers.

I am very interested in any further discussion on this topic of "past is prologue" and whether or not others see the same general direction taking shape. Namely, that the end of the industrial-centric 20th century economy in Maine (and perhaps Northern New England as a whole) is leading to the return of regionally predominant economic development patterns last seen in the 19th century.
I think you are correct. I see these trends as well if for a different reason based on the readings I have made over the years. Two frame of references I would point to (there are many others) are "Rail Time" by Stilgoe and "$20 per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives For the Better" by Steiner. "Rail Time" is written by an unashamed railroad booster and cheerleader. Still, there are many good historical references that clearly show the extent of tourism in Maine history, and the pivotal role railroads played, and in his opinion, will play again. The author has combed through old rail schedules to show how trains were coordinated to bring visitors to northern new england as far away as Washington, DC. The old resort towns will make a comeback as they have the rail infrastructure in place. New construction isn't in the offering so much as revitalization of old lines.

"$20 per Gallon" is more generically written to discuss the impact, nationwide, on increasing energy prices. Unlike other doom & gloom books, as the subtitle suggests, this one is positively written. I personally do not subscribe to the 'last barrel of oil' thesis that says when oil runs out we are all screwed, because I don't think oil will ever run out. Least of all in my lifetime. However, I do believe oil will become more and more expensive, so much so that the last barrel of oil will actually never be pumped out of the ground as it will be so expensive to pump and refine alternative fuels will have displaced oil. But all this is a long way off, beyond my lifetime. In my lifetime, as oil gets more and more expensive, there are going to be significant changes to the way we live out our lives. This book talks to the positive impacts. One of them happens to be the increasing importance of railroads for freight and travel options. In part because rail is so efficient compared to other modes of transportation, and in part because traveling by other means will become so expensive.
Almost by default the local economy appears to be returning to previous patterns of development which have not been predominant since at least the early 20th century. The two patterns in particular that appear to be making a strong return are centered around tourism and agriculture. These two general trends rest upon an underlying foundation of a strong modern service based economy with a concentration in public administration (State of Maine and local government), healthcare services (Maine General Medical Center satellites) and transportation (Progressive Distributors Inc./Hannaford). These three primary jobs creators then support the broader local economy of small businesses including service providers, and entrepreneurs. Additionally there is also a small, but significant, light industry component (Alternative Manufacturing Inc./AMI) to the local economy.
On the whole, I agree the economic tide is to make things more local. This means, in my mind, railroads have a place to come back in a way that involves not only more freight but also includes passenger traffic as well. I see in business and through the SME what are being termed 'on shoring' efforts. Meaning, companies that ran various operations off shore over the last few decades are, for a host of reasons, bringing operations back to local roots. The reasons are not just for the increasing cost of energy that reduces the cost advantage that has existed, but includes improving services, improving time-to-market by reducing the length of the overall supply chain, and insuring intellectual property rights can be safeguarded. This does not mean everything that was shifted overseas will miraculously reappear, but it does mean the rush to move off shore is over and in many cases, companies are reversing earlier moves. Any area that can show a cadre of well educated, motivated employees has a chance at increasing their economic base. Being near or on a rail line is bound to be a serious plus corporate planners will look for in evaluating any community.From an agricultural standpoint, local farms will take on more importance as the distance to market drives up the cost of food imported from far away. We may all become localvores to some extent if only to save money.

In my mind the real argument centers around the rate of all these changes. The tide toward higher energy prices will not change. Our local economy, I could easily say the world, accepts cheap oil as a given and many people have not given any serious thought the way our lives will change when oil becomes expensive. I think we are beginning to see the changes in our communities and rail will play a significant part.
 #991664  by gokeefe
 
mbhoward wrote:The old resort towns will make a comeback as they have the rail infrastructure in place. New construction isn't in the offering so much as revitalization of old lines.
Why do you agree with this point of view or think its the case? Passenger operations of this kind seem to have become impossible to support in all but the highest frequency scenarios.
mbhoward wrote:This book talks to the positive impacts. One of them happens to be the increasing importance of railroads for freight and travel options. In part because rail is so efficient compared to other modes of transportation, and in part because traveling by other means will become so expensive.
Given the upcoming surge in production in both the Middle East and the United States I am having a hard time believing this. One of the things about Iraq that a lot of people simply don't understand is how horribly underdeveloped their oil sector is. They have a lot of cheap oil, close to the surface a lot of which has never even been formally surveyed. Iraq's goal is to reach 7.5 million barrels per day of production by 2020. Just this past month they finally surpassed the pre war peak of 2.5 million bpd and are now producing roughly 2.6 million bpd. Iraq's emergence as a true global oil superpower would place them close to Saudi Arabia, Russia and the United States which each produce about 9 million bpd. Saudi Arabia has an additional 3.5 million bpd in production capacity (for a total of 12.5 million bpd) that they generally withhold from the market in order to maintain their desired price level. Iraq, which is far poorer and more populous has absolutely no incentive whatsoever to withhold production from the market and is highly likely to produce oil as fast as it possibly can in order to raise the capital necessary to rebuild the country and to provide for its people as it sees fit.

The silver lining in all of this for the U.S. is that it means stable and relatively moderate oil prices are likely for the long term (10-20 years). There could also be additional substantial economic growth associated with lower energy prices. This energy model seems to point towards a continuation of over 80 years of consolidation in the U.S. rail industry away from all but bulk cargo customers. In short, less than car load shipping, which in Maine was prevalent well into the 20th century, seems highly unlikely to return as part of the industry model.
 #991728  by mbhoward
 
Why do you agree with this point of view or think its the case? Passenger operations of this kind seem to have become impossible to support in all but the highest frequency scenarios.
Primarily due to the rising cost of other modes of transportation that will over time, make rail travel more of a viable option. The steady deterioration of our roads and bridges will ramp up the cost of driving. The increases in tolls, registration, gas tax and any other user fees to a point where the infrastructure can be rebuilt and maintained will drive people to seek out alternative modes of transportation. I do not see passenger rail getting cheaper, so much as the cost of other modes of transportation getting more and more expensive to a point where rail will be competitive.
Given the upcoming surge in production in both the Middle East and the United States...The silver lining in all of this for the U.S. is that it means stable and relatively moderate oil prices are likely for the long term (10-20 years).
I don't believe a word of this. I see no upcoming surge in production from Iraq or any other country. Least of all enough of a 'surge' to meet the worldwide demand. I do see increased production in Iraq and even in the US thanks to the oil-shale, I'll grant that much, but the numbers OPEC toss around are fantasy and dreams. Cheap oil is running out and while it will be replaced with other oil supplies, these new supplies will not be as cheap as we are used to paying.

Let's take OPEC members as an example. They have not, individually or as a group, released field-by-field production data since 1982. Nor do they release data on proven reserves field-by-field. Individual members release data to the OPEC Secretariat who then summarizes and releases to the general public but the underlying data is self driven with no independent oversight or verification. All members, including Iraq, have many reasons to be less than truthful about production rates, proven reserves and maximum field pumping capacities. They can and do say whatever they want, whatever they think their markets want to hear, and there is no way verify what is being said. We are forced to take them at their word. I do not.

The only sort of independent verification that can be done is arduous work that relies on physically counting tankers as they enter/exit the Gulf; physically inspecting existing oil platforms and poring over Society of Petroleum Engineers technical papers that detail problems Gulf (and other) producers face in extending the life of existing oil fields, and finding new fields. Very few people (I am not one of them) have the skills to perform these kinds of studies, and most simply fall back on OPEC published figures. Those who do these kind of in-depth analysis are almost entirely downbeat and pessimistic.
This analysis rests on certain assumptions. First, that the cost of over the road transportation will continue to maintain its relative advantages over rail across short distances.
The crux of my position in believing the post-industrial position you set out is based on energy increasing in price and the rate of the increase over time. I also see, on a very local level here in Ossipee and points north along Rt #16, scattered things happening that lead me to believe your thesis. The evidence is anecdotal, confined really to friends and discussions we have had and is not backed by any study but the trend to small agriculture and manufacturing seems to be there.
 #991743  by gokeefe
 
I think its very interesting that as always the fundamentals come back to energy. I completely agree that OPEC is "opaque" at best regarding their "proven" reserves.

However, Iraq is a fairly straightforward scenario. Their fields are known to be vast and very likely underestimated in size due to underdevelopment. Adding an additional 5 million bpd from just one source over the next 10 years is in my mind a game changer. The scenario that keeps coming back to mind is the oil price crash in the late '90s which was due in part at least to Iraq pumping oil onto the global market as a result of the Oil for Food program. My take on Iraq is that it has long been "out of the game" either as a result of sanctions (1990-2003/4), war (1980-1989, 2003/4-2010), or internal political instability (1968-1979).

Since 1968 when President Ahmed Hassan al-Bakr (Saddam's predecessor) nationalized Iraq's oil field there has been little or no new investment in the fields. Wrap your mind around the idea that some of the world's largest oil fields have been largely "out of bounds" for 43 years and maybe you'll see what I'm getting at. I know the Iraqi Oil Ministry has been publishing some crazy statistics and updates about what they think the "reserves" are. Regardless I have yet to read any analysis from the private sector that indicates anything other than mammoth potential which is matter-of-factly expected to be validated as the seismic surveys go forward.

Let's assume for the moment that over the next 10 years energy prices moderate or simply keep pace with inflation. In the continuing de-industrializing scenario for Maine I think this points towards two things, stability in the transportation modal balance with continued incremental upside for rail and incremental downside for trucking.

Frankly, I'm fascinated by the fact that no one seems to challenge the idea that Maine is in some part returning to its pre-industrial economic composition. Given that until recently the "service economy" was supposedly going to take over everything I think that's a quantum shift.

Seriously, is "past as prologue" really where things are headed for Maine?

Many thanks to mbhoward & Cowford for taking up the discussion.
 #991835  by mbhoward
 
I think its very interesting we have such opposite views on the future of energy, yet have drawn similar conclusions on regional economic outlooks. What you see happening in ME I see happening in NH. Thanks for the discussion.
 #991855  by NRGeep
 
We may have unlimited world wide supplies of fossil fuels for generations to come, yet if other "alternative" sources of cleaner fuel which have been around infinitely longer than decayed dinosaurs etc like wind, ocean currents and sun power are not exploited to their full potential, Maine's coastal tourism at the very least will be underwater at best and dead and over at worst.
 #991914  by Cowford
 
"Frankly, I'm fascinated by the fact that no one seems to challenge the idea that Maine is in some part returning to its pre-industrial economic composition. Given that until recently the "service economy" was supposedly going to take over everything I think that's a quantum shift."

It seems as if call center employment has peaked and is now is decline, thanks to off-shoring and the internet. As Maine has the oldest population in the nation (a fact that amazes me and hints at young worker emigration from the state), health care will continue to play a big role... but it's not a value creator. The scary thing about tourism is that it creates employment, but not a lot of high-skilled employment or wealth, particularly given the seasonality of it all.

Maybe there's something in all this wood-based energy business, but there is a general anti-industry sentiment in the state. If the wood harvest increased significantly, there is bound to be outcry from environmental activists.
 #991986  by gokeefe
 
Cowford wrote:
gokeefe wrote:Frankly, I'm fascinated by the fact that no one seems to challenge the idea that Maine is in some part returning to its pre-industrial economic composition. Given that until recently the "service economy" was supposedly going to take over everything I think that's a quantum shift.
It seems as if call center employment has peaked and is now is decline, thanks to off-shoring and the internet. As Maine has the oldest population in the nation (a fact that amazes me and hints at young worker emigration from the state), health care will continue to play a big role... but it's not a value creator. The scary thing about tourism is that it creates employment, but not a lot of high-skilled employment or wealth, particularly given the seasonality of it all.
I continue to wonder about the "older" demographic and how it gets there. I think it is exacerbated by two things. Young worker emigration is one. However time and again retiree immigration I think is another. There are all kinds of local organizations with local people who "just moved here in the last five years" and recently retired. Some of them are summer people who decided to live here year round (with vacations to Florida in Jan. or Feb.) while others are "people from away" who simply decided to move up here full time to get away from the City.

This second factor means a couple of things, 1) those who assume that young worker emigration is the only trend are likely overstating it and 2) by corollary this also means Maine's population demographic snapshots do not accurately reflect the apparently more stable population. I would be interested to know/see data that takes these factors into account, as I believe the effects of the second trend are substantial.
Cowford wrote:Maybe there's something in all this wood-based energy business, but there is a general anti-industry sentiment in the state. If the wood harvest increased significantly, there is bound to be outcry from environmental activists.
I would submit that traditional paper-making towns and more rural areas away from the coast tend to be a lot friendlier to industry. At times we are talking about a "shift" in sentiment that results in a near mirror image. (e.g. 80/20 for instead of 80/20 against). Although I agree that the environmental activists would have "issues" with a drastically increased harvest the sustainable forestry management practices currently in place in Maine make it unlikely that such an outcry would be taken too seriously by most voters (or their elected officials).
 #992881  by kilroy
 
Something else to impacting Miane's economic outlook:

"The worst states for business continue to be dominated by those in the northeast including: ... and Maine which lands at No. 50 for a second straight year. "

http://www.msnbc.msn.com/id/45466197/ns ... orbes_com/
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