Wednesday, April 21, 2004

Part III

LEWISTON, Maine — Maddy Levesque worked for Bates Fabrics for 13 years before the clothing and fabric manufacturer, steadily losing business to competitors, laid her off.

“I was a little devastated,” Ms. Levesque, 48, recalls. “I worked for a company that I admired, I enjoyed working with, it was my heritage. It was shocking to me when reality hit.”

Bates, based in a sprawling brick mill along a small canal system in the center of Lewiston, let her go in 1987.

The manufacturer, known for its bedspreads, struggled under different owners and eventually shut down. It abandoned 1.2 million square feet in a dozen buildings, leaving hundreds of employees out of work and punctuating a steady economic decline for Lewiston.

It took Ms. Levesque a year to regroup. With a college education and experience in Bates’ payroll and retail divisions, she soon found a job with People’s Heritage Bank in nearby Portland.

Lewiston as a whole has tried to mirror that recovery. The town long had relied on the textile and shoe mills that dominated the local economy. It now had to look to service-oriented employers that offer jobs in education, health care, finance, logistics and warehousing.

But it is a slow and painful process for Lewiston and other small communities. For this series, The Washington Times examined Lewiston and two other manufacturing towns — Martinsville, Va., and Cortland, N.Y. — that suffered massive layoffs amid wrenching economic changes. Each isat a different stage in retooling by replacing traditional industries with new companies that can make up for lost jobs.

Ms. Levesque returned to Lewiston and a job inside Bates Mill in 2000. But the 19th-century buildings, relinquished to the city due to tax liens in 1992, no longer whir with machinery.

Her bank, now called Banknorth Group, consolidated administrative operations in a refurbished part of the mill. It employs about 500 in the former factory.

“I see a new chapter in Lewiston, I see a light at the end of the tunnel,” says Ms. Levesque, Banknorth’s manager of loan operations. “But I also see a lot of bitter people. It took years to destroy the local economy, and it will take years to rebuild it.”

A long transition

Banknorth Group and other service-related companies anchor the old mill, now about one-third full. Inside the complex, a flooring distributor, a pizza restaurant, a computer-repair shop and other businesses employ about 1,000 people.

That’s far less than the peak of more than 5,000 jobs in the 1960s, but leaders of Lewiston and Androscoggin County see the change as a positive step.

“It took 25 years to make the transition. And there is a lot of transition left to go,” says Chip Morrison, president of the county Chamber of Commerce.

Lewiston and its sister city, Auburn, with a combined population of almost 59,000, no longer depend on factories for their economic base.

About 14 percent of the work force is tied to factory jobs, down from more than 50 percent in the early 1950s, state data show.

Ms. Levesque’s staff replaced factory workers as the town’s typical employees. Now the top occupation around Lewiston and Auburn is in office and administrative support — such as auditing clerks, customer-service representatives and secretaries.

Education, health services and retail trade provide the most jobs, followed by manufacturing, professional and business services, and finance. Top employers include Sisters of Charity Health Systems, Banknorth Group, Bates College, Wal-Mart, L.L. Bean and Procter & Gamble manufacturing subsidiary Tambrands.

Need to diversify

Lewiston and Auburn, hardscrabble towns in steep decline well before the North American Free Trade Agreement and other high-profile trade deals, used the 1980s and 1990s to retool.

Androscoggin County’s population climbed from 91,279 in 1970 to an estimated 104,805 in 2002, according to census data. Employment for county residents rose by more than 7,000 jobs from 1993 to 2003, and the unemployment rate declined to 4.8 percent from 8.6 percent, Maine Department of Labor data show.

And these cities that once attracted French-Canadian immigrants to their mills received a population boost in recent years from Somali refugees, attracted by low crime and affordable housing.

The switch in Lewiston and Auburn to service-sector jobs reflects a national trend. From January 1994 to June 1998, manufacturing employment nationwide rose from 16.7 million to 17.7 million, but since has slipped to a projected 14.3 million for March 2004, according to the Bureau of Labor Statistics.

Other sectors tracked the economy’s ups and downs, but now provide many more jobs than they did a decade ago, the federal figures indicate.

Education and health-service jobs nationwide grew steadily from 12.8 million in 1994 to 16.6 million in 2003. Professional and business services, such as management and administrative-support jobs, rose from 12.2 million to almost 16 million. Government jobs climbed from 19.3 million to 21.6 million; leisure and hospitality from 10 million to 12.1 million; retail sales from 13.5 million to 14.9 million.

For Lewiston and other small cities, the move away from fading industries and into rising sectors can be slow and the results for some workers mixed because new jobs can mean lower wages.

But small towns are left with little choice but to adapt once they are faced with sharp economic decline and dislocation in a rapidly advancing economy.

The changing circumstances can stem from factors outside each city’s control, such as international trade pacts, competitive pushes from developing nations, consumer trends, new technology, currency values and wage rates.

The result, finally, can mean a more stable local economy.

“Our economy is much more diverse,” says Gerard Dennison, senior economic analyst at Maine’s Labor Department office in Lewiston. “We’re no longer dependent on two industries and the cyclical ups and downs that come with that.”

Still, competitive pressure continues, and each new job gained can just as easily be followed by another one lost.

Filling the void

Some local successes are purely domestic, while other service businesses thrive on globalization.

Banknorth acquired about 20 smaller local and regional banks in the past 10 years, spokesman Brian Arsenault says. With each acquisition, jobs in call centers, check processing, loan records and other administrative support are consolidated and moved to Lewiston — about 400 in a decade.

Bates College, a small liberal arts school, employs more than 700 full- and part-time workers, with almost $30 million in salaries. Enrollment climbed by about 200 students in a decade to about 1,750, and staffing levels inched up.

“Bates [College] jobs are secure and are not as likely to be affected by economic fluctuations,” school President Elaine Tuttle Hansen wrote in a letter last year to a state official.

Mid-State College, a two-year school based in the state capital of Portland, lost its academic accreditation last year and closed its Auburn campus. But Portland-based Andover College quickly filled the void and, in March, opened a campus in Lewiston.

The student population is predominantly working adults looking to move from manufacturing to entry-level jobs in service industries, such as paralegals or secretaries, school President Steven Ingram says.

Although Lewiston’s education and health care jobs are relatively insulated from international competition, other successful service-sector companies rely on global markets.

Wal-Mart plans a grocery-distribution center in Lewiston. The facility, with construction set to begin this month, will cover about 485,000 square feet and employ about 400 workers, says Mia Masten, regional manager of community affairs.

Wal-Mart, the nation’s largest retailer, will buy from local producers but also import agricultural products as it distributes to about 25 Supercenters in New England, she says from her Washington office. The company, based in Bentonville, Ark., is the largest U.S. importer of Chinese goods — $15 billion last year.

A bigger picture

St. Lawrence & Atlantic Railroad’s 10-year-old terminal in Auburn relies on imports for a large chunk of its business.

The 35-acre truck-to-rail terminal provides a direct link to Canada and deep-water ports in North America. Inbound containers are filled with consumer goods, including Asian-made clothing headed to L.L. Bean in Freeport, Maine. Outbound traffic includes Maine paper and lumber products and other locally made goods such as Poland Spring bottled water.

The terminal was expanded in 2001 to handle more traffic. Last year, about 15,000 containers, each carrying about 22 tons of products, passed through the port.

“The bigger picture is we are becoming a bigger player for imports,” says Edward Foley, vice president of sales and marketing for the railroad.

Traditional industry in Lewiston and Auburn was built around water power along the Androscoggin River, a rocky waterway dividing the cities and bordered by brick mill buildings.

But the river, once the backbone of the timber and textile industries, now is considered a scenic attraction and recreation destination. No longer is it a byway for felled trees and a dumping ground for dyes and other waste.

Companies had to make major changes to meet rising competition from lower-cost competitors, first in the Southern United States, then Mexico and now China. Those in the textiles and footwear industries specialized and focused on specific markets, left town or folded. Some of those that remain are barely holding on.

In the early 1950s, more than 6,000 people in Lewiston worked in the shoe industry and more than 7,000 worked in textiles. Today, shoe-industry employment is down to 400 and textiles to 700, says Mr. Dennison, the Maine Labor Department analyst. Two more shoe companies closed Lewiston and Auburn operations last year.

Fred Lebel, the former president of Bates Fabrics, in 2002 founded Maine Heritage Weavers, a bedspread producer that uses old Bates equipment and factory space. But instead of employing hundreds, he employs about 12.

“It’s very difficult for anyone that manufactures [because of] high insurance costs, taxes, foreign competition,” Mr. Lebel says. “Personally, I feel if you are in a niche market, you have a chance. But if we’re a large-volume producer, there’s no way we can compete.”

Still a ‘leg’

Although manufacturing has scaled back, it still directly provides jobs to more than 6,000 workers and remains critical to the local economy.

Manufacturing accounts for about one out of every five dollars in Maine’s overall output for the past 20 years, even as jobs decreased. The sector provides the bulk of exports from the state, according to the Institute for a Strong Maine Economy, an affiliate of the state Chamber of Commerce.

“Manufacturing is still one of the important legs of the stool. We need it because of the importance of what those jobs bring to Lewiston and Auburn,” says Gregory Mitchell, Lewiston’s assistant city administrator.

Good wages, spinoff jobs for other manufacturers in the supply chain, contracts for transportation and other service firms, and research and development jobs all rely on maintaining a manufacturing base. But the sector’s future in Lewiston and Auburn is far from certain.

“We shifted all of our production to China,” says David Quinn, president of Acorn Products Co., a Lewiston slipper manufacturer founded in 1976. The company laid off its 150 factory workers from November 1999 to January 2003, leaving 26 white-collar staff in Maine to develop and sell products and service customers.

By using Chinese suppliers, Acorn Products became more competitive as it sold more products and a wider variety of products at lower cost, Mr. Quinn says. The decision also reflected the rising quality of manufactured products from China, he says.

“The leaving, laying off people I have had relationships with for years was extremely difficult,” Mr. Quinn says. “But the decision to go [to China] is the decision to stay in business.”

Hanging on

Other manufacturers refuse to shift production overseas even as they worry about the future.

Auburn Manufacturing started making heat-resistant fabrics — alternatives to asbestos — in Lewiston during the 1970s. The textile, clothing and footwear industries already were pulling out of the old mill town.

But Auburn, which moved down the road to a modern facility in nearby Mechanic Falls in 1979, saw no reason to close up shop. It continued making specialized fabrics used to control fire and heat in products ranging from insulation to firefighting equipment.

“I always felt we would find a way to compete,” says Kathie Leonard, Auburn Manufacturing’s president. “I never felt protectionist — until this point.”

Imports from Asia, especially China, are going head to head with some Auburn Manufacturing products, and many U.S.-based customers have been wiped out as the manufacturing base shrinks, she says.

But her company is doing its best to hold on, keep its 50 employees working and find new customers. In the meantime, Ms. Leonard says, she is deeply concerned that Lewiston and Auburn’s decades-long manufacturing decline is not over yet.

“I just don’t see anything on the horizon to give us hope in U.S. manufacturing,” Ms. Leonard says. “But I refuse to believe we are not going to survive.”

Part I: Virginia city seeks ‘something else’

Part II: City to ‘innovate or die’

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