Tom moser 51 | keeping your nest egg 38 | edward Johnson III 10
maine’s business & executive lifestyle magazine
People & Profit Kristine Avery helps Maine HR pros create value through people power . . . 18
PLUS Inside
White Rock Distilleries . . . 26 october 2011
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Contents
PRIVATE TOUR: White Rock Distilleries 26
>> FEATURES BUSINESS
PODIUM | Cover story
UPFRONT
Up with People Power . . . 18
Fertile at Fidelity . . . 10 Edward “Ned� Johnson III, Maine summer resident, is uncommonly good at cultivating net worth. Including his own. BACKBONE
Going Mobile . . . 16
Illustration: M. scott ricketts
Connect with Bill Broadbent, founder of Mowbi, a new Portland-based company helping businesses ride the mobile commerce wave.
Kristine Avery talks about a tried and true way to up the bottom line: people power. Private tour
Dessert in a Bottle . . . 26 White Rock Distilleries is proof positive that a company can both respond to and initiate new consumer tastes. ROUNDTABLE
Keeping That Nest Egg . . . 38 Two lawyers and two financial planning pros give us sagacious tips on protecting our assets.
roundtable: Keeping That Nest Egg 38 October 2011 Maine Ahead >> 1
Contents cont. worth the trip: Penobscot Marine Museum 48
Photo:s: (top) courtesy of thomas moser; (center) courtesy of penobscot marine museum; illustration: m. Scott Ricketts
vantage point: Tom Moser 51
J. Doe: Cleaning Up Maine’s Mess 64
LIFESTYLE
OPINION
In Every Issue
WORTH THE TRIP
bull pen
BACK THEN
Anchored in History . . . 48
Bonding to Rebuild Infrastructure = Jobs . . . 60
Founded by descendants of sea captains, Penobscot Marine Museum is a good way to “sea” off another tourist season. VANTAGE POINT
Becoming Thos. Moser . . . 51 There are many Thos. Moser wannabees in the fine furniture world, but there’s only one original. chef’s choice
Down by the River . . . 58 Rick Hirsch is cooking up a table full of fresh and savory comfort food at the Damariscotta River Grill. Promotional Content
PROGRESS NOTES
MEREDA . . . 66 Industry insights from Roxane Cole, Keith Luke, Nate Rudy, and Rod McKay.
Orlando Delogu believes the price is right—right now—for borrowing to rebuild Maine’s infirm infrastructure.
Maine’s Unrealized Human Potential . . . 62 Poland-born Felix Zandman rose from a literal grave to live an inspirational American life. What other Zandmans are in our neighborhoods? J. DOE
Change Your Oil? . . . 9 Remember the days when you could stay in the car and trust your gas, glass, and oil to the man with the star? MAINE GOODS
Crooked Little House . . . 12 Wonky lines, wah-hoo colors—Kids Crooked House makes pint-sized playhouses a little tyke can love. STICKY BUSINESS
Exiting Strategically . . . 14 Think you’re ready to retire? Read Peter Plumb’s column before you give up your desk and break out the champagne.
Cleaning Up Maine’s Mess . . . 64
THE WAY WE WORK
Maine state treasurer Bruce Poliquin pauses from his fiscal cleanup duties to explain why and how the LePage administration is tackling the dirty jobs that no one else wants to face.
As a child, Katrina Smedal fell in love with ballet. Here’s a look behind the curtain at the making of—and maintenance required for—a career as a professional ballet dancer.
Always on Her Toes . . . 72
October 2011 Maine Ahead >> 3
meet and greet PUBLISHER
Mark T. Wellman
>> PUBLISHER’S NOTE
EDITOR IN CHIEF
Tori Britton Managing editor
Melanie Brooks
Lessons from a Tough Economy Reading and writing are important, but so is arithmetic. I first went into business for myself in 1987, but I’ve
ART DIRECTOR
Sandy Flewelling BUSINESS EDITORS
Mike Woelflein Henry Garfield
always been interested in earning money. I began learning
CONSULTING EDITOR
the ways of the business world as a paper boy, where I took on
Annaliese Jakimides
a route twice the normal size. If you’re up at 4 a.m., you might
illustrator in chief
as well make it count. Even then, the administrative side of
M. Scott Ricketts
things—collections—was something I’d rather avoid. As an ad agency owner, creating things like jingles and marketing campaigns was easy. Managing balance sheets and people, not so much. So I delegated as much of the financial management as I dared to, hired self-starters, and focused on doing good work. That approach usually worked. If the publishing business and this economy has driven home anything, it’s that a quality product and a great crew aren’t always enough. The numbers have to make sense, too. When I interviewed furniture maker/designer Tom Moser
Photography
Irvin Serrano Shane Leonard Kevin Couture Production designer
Ashley Ray Administrative Team
Melissa Sherman Gibran Vogue Graham InternS
last month, he told me that he didn’t really know how to
Austin Michaud Dakota Paradis
calculate his company’s profitability until 7 years into its
CONTRIBUTING WRITERS
history. Though he admits his passion was always about the
Richard Shaw Orlando E. Delogu Perry B. Newman
furniture, not the books, it took him 13 years to hire an outside GM. A man after my own heart. Recently our company began working with a pro named Jacques Santucci who specializes in helping companies better understand and enhance their financial performance. One of the things I like about Jacques is that he doesn’t look down on me for being a creative rather than a numbers guy. I’ve learned alot. And now that I know that a business revolutionary like Tom Moser also has the same tendencies, I feel almost vindicated. Besides, I did get a hell of an interview, if I do say so myself. Enjoy the issue.
— Mark Wellman, publisher
DIRECTOR of sales & operations
Christine Parker SALES CONSULTANTs
Christie Spearen SUBSCRIPTIONS
10 issues $29.95 online, by phone or mail www.maineahead.com production Office:
One Cumberland Place, Suite 316 Bangor, Maine 04401 207.941.1300 Maine Ahead is published by Webster Atlantic Corp., a Maine-owned company. Newsstand Cover Date: October 2011, published September 20, 2011, Vol. 2, No. 8, Issue 17, copyright 2011. Advertisers and event sponsors or their agents are responsible for copyrights and accuracy of all material they submit. ADDRESS CHANGES: To ensure delivery, subscribers must notify the magazine of address changes one month in advance of cover date. Opinions expressed do not represent editorial positions of Maine Ahead. Nothing in this issue may be copied or reprinted without written permission from the publisher. Maine Ahead is published 10 times annually. To subscribe, call 207-941-1300 or visit www.maineahead.com.
COVER IMAGE: Irvin Serrano
Email Mark Wellman at publisher@maineahead.com.
6 >> Maine Ahead October 2011
>> CONTRIBUTORS
Call 773-8890 today. . .
... work from your Portland office tomorrow.
• quality furnished offices • flexible leases • virtual offices • receptionist service • conference rooms • average plan $800
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Call David Glaser at 207-773-8890, visit www.maineoffices.com or visit the Time & Temperature Blg., 5th floor on 477 Congress St. Tori Britton says: “One of the biggest professional compliments I’ve ever received was from a boss who told me that I made her look like a genius. I feel the same way about the people we cover in Maine Ahead.” Tori Britton (left) was valedictorian of the class of 1980 at Schenck High School in East Millinocket, and she’s been striving to be worthy of the title ever since. The mother of three college-age children and a graduate of Gordon College (BA) and Binghamton University (MA), Britton spent 20 years in the advertising and marketing industry before joining Mark Wellman in a publishing venture in 2005. The latest offspring of that union is Maine Ahead.
Melanie Brooks Melanie Brooks, Maine Ahead’s managing editor, is also the woman in charge of its sister magazines, Bangor Metro and Real Maine Weddings. She is a graduate of Towson University (BA) and New York University (MA). She and Shane Perry, engineering installation team chief at the Maine National Guard, recently got married overlooking a coastal Maine vineyard. Brooks looks forward to attending another wedding this month, Real Maine Weddings’ 2011 Wedding of the Year, at the Harraseeket Inn in Freeport. October 2011 Maine Ahead >> 7
Photo:: courtesy of richard newcomb
back then
>> Check the Oil? ca. 1955, Hampden Service with a smile has gone missing from many Maine gaso-
sweeping canopies and blinding lights.
line stations, most having long ago morphed into convenience
Maine’s few remaining family-owned filling stations are
stores where customers pump their own fuel and proprietors
reminders of a simpler time when workers climbed ladders to
make more reliable profits on snacks, beer, and cigarettes.
change gas prices, and names like Socony, Richfield, and Flying A
In the mid-1950s, proprietors like Raymond Carleton (center)
were household words. Dysart’s in Hermon, famous for its big rigs
kicked the rubber, checked the oil, washed the windshield, and
and truck stop blueberry pie, is one of the few remaining family
filled the tank without his customers even asking. Carleton’s
businesses where fuel is still a headliner. Other reminders of yesterday’s gas stations are found on
Texaco station was a Hampden Highlands haven for motorists who appreciated uniformed attendants, including Raymond’s wife,
vintage postcards sold at antique shops, and in Will Anderson’s
Edna, and his daughter Helen, who proudly wore the Texas Star.
1999 book, You Auto See Maine, which features a ca. 1949 picture of
Carleton also fixed cars as well as filled them; perhaps the 1949
the C. C. Banks Mobilgas station in Liberty, where owner Charles F.
Ford, shown at right, was fresh off the lift.
Chase also sold and serviced Hudsons, a long-extinct automobile. While there’s still time, younger Mainers might want to sit down
Hampden historian Richard Newcomb recalls several gas stations in town during his youth. His great-uncle, Percy E. Sever-
with their grandparents and ask about an era when gas attendants
ance, operated the first filling station by the railroad tracks on
wore uniforms, air and road maps were free, and the biggest fear at
Route 9. Competitor Leon Foss’ Esso station on Route 1A would
the pump was that gas would spike at a dollar a gallon.
be dwarfed by today’s Irving station on the same site, with its
—Richard Shaw
October 2011 Maine Ahead >> 9
upfront
people
| places
| products
| progress
>> mogul of the MONTH Fruitful with Fidelity Edward “Ned” Johnson III is Maine’s richest summer resident. He got that way by growing the world’s most lucrative crop: money. Mount Desert Island, where Nelson Rockefeller was born, is known as a summer playground for some of the wealthiest Americans. According to Forbes magazine, the island’s richest seasonal resident is Edward “Ned” Johnson III, the 81-year-old CEO of Boston-based Fidelity Investments. Johnson has headed Fidelity since taking over from his father three decades ago, the only change in leadership since the company’s founding in 1946. Though he rarely gives interviews, he’s active in both business and play. He still travels the world for Fidelity, attending conferences and meeting with clients. Fidelity Investments manages $1.4 trillion in assets for clients worldwide, and has 37,000 employees. According to published reports, Johnson works out regularly at a gym in Boston, keeps up his tennis game, and skis in the western United States. He also keeps an eye on his finances: Johnson’s net worth is estimated at $7–8 billion. After graduating from Harvard with a bachelor’s degree in 1954, Johnson joined his father’s firm as a research analyst in 1957. He assumed executive control of the company in 1972. At the time, Fidelity had assets under management of a mere $3.9 billion. Johnson quickly established a reputation as an innovator within the financial services industry. He pioneered the direct marketing of mutual funds, and made Fidelity the first company to offer check writing on money market funds. He developed technology-based customer services and introduced innovations such as hourly pricing for sector funds. He has also become a model of succession planning. His daughter Abigail, president of Fidelity since 2001, is No. 22 on the Forbes 400 list, besting her father by 11 notches and $4.2 billion. The fortune doesn’t all stay in the family: Johnson supports many charitable organizations in the Boston area and pursues philanthropic activities as chairman of the Fidelity Foundation and the Edward C. Johnson Foundation.
320
• Number of baseball seasons Alex Rodriguez would have to play at his current salary ($25 million) to amass Edward Johnson III’s wealth.
31 • Number of times 8 billion $1 bills, laid end-to-
end, would circle the earth. 10 >> Maine Ahead
October 2011
5
• Number of people on Forbes magazine’s list of the 400 richest Americans who own property on MDI.
296,012,090 • Assets in dollars in the Edward C. Johnson charitable fund in 2010.
Illustration: m. scott ricketts
NED WORTH
A woman’s health is her capital.
—Harriet Beecher Stowe
MA I NE
W A V ES
BUSINESS PRESS
>> SRO in Camden In Mid-august, tickets to an event in Camden quickly became impossible to come by. The attraction was a lecture by historian and author David McCullough, who mesmerized a standingroom-only crowd at the Camden Public Library. The sonorous sage (movie buffs will remember him as the narrator of Seabiscuit) made sure to sprinkle
Edison Liu MD, an international leader in cancer biology, genomics, human genetics and molecular epidemiology, has been chosen as the new president and CEO of The Jackson Laboratory.
his lecture with plenty of Maine facts—including hat Camden has one of the highest per capita instances of library card ownership in the U.S..
>> Good Stuff, Close By Picture a school fundraising catalog filled
PHOTOS: (top) courtesy of leslie morissette; (center) courtesy of masey kaplan; (bottom) glynnis Jones
with goodies from Maine, featuring merchants like Simply Divine Brownies, Sea Bags, even Angela Adams. To Masey Kaplan (pictured center),
PowerPay’s corporate headquarters, located in the former Portland Public Market, is now the first LEED Gold office building in the state of Maine and its first example of a LEED certified commercial adaptive re-use project.
it seemed not so wild a dream. So in 2010 the mom of two and graphic designer launched Close Buy, and this fall, Close Buy’s second catalog of local goods is in the hands of pint-sized fundraisers from over 40 Maine schools. View the list at www.closebuycatalog.com..
>> Digital Medicine WHEN 8-Year-old GRAHAM Morissette was
Maine Organic Milling (MOM) of Auburn has named Warren C. Cook of Kingfield as its general manager. MOM is a cooperative, owned by 12 Maine farmers, producing about 200 tons per month of mash and pellets.
sick with leukemia, he would use the family’s computer for hours to draw, exchange emails with classmates, and chat online with other sick kids. After he died, his mother Leslie was determined that other seriously ill children like Gabby (pictured) would have computer access. Maine-based Grahamtastic Connection now lends laptops to hospital- or home-bound kids in 40 states. Donate at www.grahamtastic.org.
Goodwill Industries of Northern New England has chosen Anna Eleanor Roosevelt as its new CEO. She will provide strategic guidance for Goodwill’s programs and retail stores in Maine, New Hampshire, and Vermont. October 2011 Maine Ahead >> 11
upfront
people
| places
| products
| progress
>> Maine goods BUSINESS PRESS E.S. Boulos Company recently received special recognition for its outstanding safety record from MEMIC of Portland and Cross Insurance of Bangor. The company surpassed the one million hour mark without a lost-time workplace injury. Bath iron workS was awarded a contract by the. Department of the Navy in September for the amount of $1.8 billion to $2 billion to construct the DDG-1001 and DDG-1002 destroyers.. Glen Halliday builds crooked houses in a straight world.What began as a way to pull his children away from the TV is now an asymmetrical phenomenon. In 2005, Glen Halliday was trying to encourage
the reality TV show John and Kate Plus Eight,
his three kids to entertain themselves with
which was watched by 10.6 million people.
outdoor fun instead of cartoons. No luck.
“Every day there’s a new curveball,” Halliday
was actually built for his cousin’s son, who
says. He’s outgrown his barn and leased produc-
wanted an outdoor playhouse. All the prefabri-
tion space in Portland, where a crew of four fills
cated playhouses Halliday and his cousin looked
orders from around the world.
at bored them, so, Halliday says, the two men
The crooked houses come in three basic
“went home to sulk and watch some children’s
floor plans and start at around $1,500. The
TV with their kids.” They liked the cartoon shows
houses are individually designed and are made
featuring houses with wonky lines, skewed
of Maine wood. The base is treated so that it can
angles, and off-kilter windows. Halliday, an art
sit flat on the ground and withstand the
director for a publishing company, decided to
elements. “They’re built to last,” Halliday says.
try building a 3-D version of a cartoon house.
The houses are shipped in panels; assembly
The first crooked house was built in his barn
requires nothing more than two adults with a
in Windham. When the neighborhood kids saw it,
power screwdriver and takes less than an hour.
they all wanted one, and a business was born.
They’ve proven popular at children’s hospitals,
“I had just enough marketing background to
12 >> Maine Ahead
Since then it’s been a whirlwind education.
Halliday’s first crooked construction project
summer camps, and airports.
be dangerous,” Halliday says, and in 2007, Kids
Halliday still gets excited when he delivers a
Crooked House won a nationwide marketing
new custom-designed crooked house. “You can
contest sponsored by Yahoo. In June 2009,
see the whole family light up,” he says. “It’s the
Halliday and crew built four crooked houses on
greatest thing.”
October 2011
Senator Olympia Snowe has been named honorary co-chair of newly-formed U.S. Senate Oceans Caucus. Its stated mission is to “facilitate congressional conversations about our coasts, estuaries, and open oceans and the policies that govern their management, use and protection.” Medical Care Development, a Maine non-profit headquartered in Augusta, has received a grant award to establish a telehealth resource center for New England and rural New York. The award is $325,000 a year for three years.
Photo: Courtesy of kids crooked house
crooked LIttle house
If so, your son or daughter may be able to attend high school at Washington Academy for FREE Thousands of Maine students are eligible to attend Washington Academy for free. It all starts with seeing if you’re from a “sending town” at www.washingtonacademy.org. Those who apply and are accepted into our Maine Scholars program will have their tuition covered by their hometown, and their room and board paid for by WA. This is an opportunity of a lifetime because Washington Academy is a very special place. As a WA student, your child can take advantage of career opportunities such as WA’s new Maine Guide Ecotourism Program, or its Certified Nurse Assistant, Boat Building and Marine Technologies, Culinary Arts, and Personal Fitness Trainer programs and others— and graduate from high school ready to go to work. Motivated students can take part in WA’s early college program— including 9 Husson University courses taught at WA, as well as UMM classes and 12 AP courses.
Maine sending towns include: Isle au Haut • Saco • Blue Hill • Trenton • Monhegan • Castine • Indian Township • Lubec • Holden • Eddington Poland • Lyman • Arundel • Vassalboro • China • Windsor • Harmony • Allagash • Grand Isle • Dover-Foxcroft • and many, many more.
Do you live in a Maine town with school choice?
All students benefit from WA’s international campus with students from 15 countries. Add to that small class sizes, full athletic and NOW at WA extracurricular offerings, excellent teachers, and a caring • New Arts a nd Music Cen community, and it equals a life-changing education. ter • New Fitness Center For your son, daughter, or grandchild, it may even be free! • New Intern a Call our admissions office at (207)255-8301 x209 Business Protional gram Come visit an for more information. d se for yourself! e
Since 1792 E AST MACHI AS, MAI NE • (207) 255-8301 • WWW.WASHINGTONACADEMY.ORG
upfront
people
| places
| products
| progress
>> sticky business EXITING STRATEGICALLY Q: I am a small business owner nearing retirement. What options are available to set my business up for a smooth transition while also making sure my retirement is secure? A: TO MAKE SURE YOu have a smooth
Train, delegate, and reward. Create and
transition into retirement, consider
groom a strong management team that can
these suggestions for creating a
run the business in your absence. There is
fiscally sound exit:
nothing wrong in being a largely absentee owner if the proper incentives are in place for
Assess your annual income needs
the people doing the work. These include:
carefully before you decide to sell.
equity interests in the company that increase
If you want to sell your business and retire
over time; deferred compensation plans for
outright, remember in most cases your annual
key employees; and/or an “ESOP” plan allowing
income will not be matched by a reasonable
the employees to buy the company over time.
return from a sale. For example, let’s say you receive $150,000
Take care of your staff. Be fair with your
a year in salary and benefits and sell your busi-
employees during what might be a lengthy
ness for $2 million. After payment of taxes of
transition process. Employees who feel they
about 25%, you would have around $1.5 million
are being treated fairly will create a smoother
which at an (optimistic!) 5% annual return is
succession process for you.
$75,000 without invading the principal. Moral: It is better to stay employed!
Don’t let taxes rule your decisions. Taxes are always an important consideration, but should
Selling? Seek payment up front, and ask for
not be the only consideration.
safeguards. If you do decide your best option is to sell, get as much cash up front as you can.
Allow more time than you think it will take.
Many buyers need private financing in addi-
In this economy, some major transactions are
tion to bank financing, so you generally
taking longer, especially if they involve buyer
become an involuntary bank. Negotiate for as
financing. Get the succession process started
much security as you can in the company
now.
assets, including the right to take the company back if you have to. Your objective is to make it
Sticky business questions need answers.
difficult for the buyer not to pay you.
Email yours to editor@maineahead.com.
This month’s expert: Peter Plumb
BUSINESS PRESS University of New England recently honored four outstanding Maine women of achievement at the 50th Annual Deborah Morton Awards Ceremony. The honorees are Kaye Flanagan, Lynn Kraemer Goldfarb, Gail Kelly, and Donna M. Loring. Three finalists for this year’s Maine Lobster Chef of the Year competition, Kristian Burrin, Ryan Campbell, and Tom Regan, will compete for the title in a cook-off before a live audience on October 21. Liam Hughes is the new director for Maine’s Animal Welfare Program. He will be responsible for directing staff, policy development, and program legislation, and overseeing animal cruelty and neglect investigations. Natalie’s Restaurant at the Camden Harbour Inn has been selected by Wine Spectator magazine o receive an Award of Excellence for the third year in a row.
Founding Partner, Murray, Plumb & Murray
Peter Plumb is a cofounder and senior director of Murray, Plumb & Murray, based out of Portland. His practice focuses on giving advice and counsel to small businesses, including business and family real estate succession planning; and to creditors and debtors involved in financing, bankruptcy, and related litigation. In recent years, he has been building a mediation practice focused on his areas of expertise.
14 >> Maine Ahead
October 2011
College of the Atlantic has been awarded $1 million from the Partridge Foundation to expand its work in sustainable agriculture.
MaineAhead_Layout 1 7/12/11 2:19 PM Page 1
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the online catalog • Online bidding from September 19–October 10 • Live auction at the Rockland Elks Lodge on October 14 Sponsored by: Fisher Engineering, Gamage Antiques, Bangor Metro/Maine Ahead, The Coastal Journal, The Free Press, Maine Home + Design/Maine magazine, Mainebiz, The UPS Store and VillageSoup/The Herald Gazette
October 2011 Maine Ahead >> 15
backbone
Going Mobile
Portland-based Mowbi, led by CEO Bill Broadbent, aims to be a major player in the growing fields of mCommerce and custom apps. by Mike Woelflein
16 >> Maine Ahead
October 2011
he menu at Cava 15, the wine bar at Donald Trump’s newest luxury hotel in Panama City, Panama, comes on an iPad—using an app built by Mowbi, in Portland’s Old Port. Many Maine business owners know Mowbi for their subscription-based mCommerce (mobile commerce) tools, such as the area directories used by the Freeport Merchants Association, the Bar Harbor chamber, and the Maine innkeepers and restaurants associations. Those tools, which allow companies to inexpensively build an mCommerce business—a mobile site with myriad features, payment processing, invoicing, and more—are still at the heart of Mowbi, launched in April 2010. “But there’s much more,” says CEO Bill Broadbent, who started t-shirtking.com in the late 1990s and sold it to art.com before moving to Maine in 2008. “Building custom apps can be huge for us—we’re talking to the Trump people about a lot more than Cava—and we’re good at it.” After developing apps for Spurwink Services, a Portland-based nonprofit men-
tal health agency, and with a bank app in the works for a Maine-based client, getting the Trump deal convinced Broadbent that Mowbi, with six full-time employees and six part-time programmers and designers, is beyond the survival struggle of a start-up. Mowbi’s revenues have more than doubled in the last six months. “We always believed we’d make it, but Trump took us from here to there overnight,” Broadbent says, adding that the Trump Hotel Collection has plans to feature in-room iPads in place of hotel information books, allowing guests to order services on the touch screen. “That’s something we could handle and something we would enjoy doing.” The even bigger deal could be mCommerce. Mowbi sells a set of modular tools that offer “everything you need to do business on your mobile phone,” says president Wendy Bouton, formerly of Winter People Image Marketing in Freeport, who joined Mowbi this year, in part to head up sales for the area directories. Freeport merchants saw coupon sales
Business
resources to drive success
Innovative Financial Solutions
FAME is continually developing new programs and services to support Maine companies in their efforts to start up, continue in operation, expand or compete more effectively in the global marketplace. We can help businesses from start-ups to stable. The Mowbi-designed menu app for Cava 15.
double and triple within the first few months. All members get a one-page mobile site and, for a one-time $200 fee, can upgrade to all Mowbi services—tap to email, call, or get directions; plus menus and coupons, videos and photos, a mobile store that accepts credit card payments (including Google Checkout and PayPal), invoicing and reminders services, text marketing tools, and QR (Quick Response) codes, which allow customers to instantly link to content, social media profiles, or even make purchases by scanning the code with their smartphone. The association receives a cut of Mowbi’s revenues from its members. We want to cover everyone,” Broadbent says. “You can now take pictures for a garage sale, publish them, and let people buy stuff on their phone before they even show up. And when they show up, you can accept credit cards. We want to go right to the enterprise level for companies that want their drivers to accept payment on the spot, or for remote sales teams to buy and sell from their phones.” Forrester Research forecasts that the U.S. mCommerce market will grow nearly 40% annually through 2016, to $31 billion, and while there is (or will be) fierce competition that includes the tech giants, Broadbent says their products cost more and need to be purchased one by one. He also believes that if a big company wanted to develop a full suite of technologies, they’d
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“We always believed we’d make it, but Trump took us from here to there overnight.” –Bill Broadbent be more likely to buy a company such as Mowbi—which spent about $250,000 to build theirs—than build their own. “We always joke that we’re waiting for our $100 million buyout,” he says. “I do think [selling the company] is possible, down the road. With or without us, the way people do business is going to change. Using your phone is too convenient for it to not be the future.” Going forward, Mowbi is focusing on growing the directory business in the hospitality industry and pushing beyond Maine’s borders. They’re negotiating with Massachusetts’ restaurant association, with 14,000 members to Maine’s 3,000. The goal, in the next three or four years, is to hit 100,000 members, the softwareas-a-service-industry’s sign that you’re a major player. Mowbi has over 10,000 members now.
Longer term, they hope to build a national and global customer base for subscription services and custom apps, growing to 40 or 50 employees in five or so years. “Portland,” Broadbent says, “is the perfect place to find the HTML programmers and graphic designers we need.” The big challenge is convincing clients of the vital importance of mCommerce. Broadbent’s not worried. In 1998, he took a bet from a colleague who argued that Amazon.com wouldn’t survive, because people wouldn’t use credit cards for online purchases. Potential investors expressed similar concerns about mCommerce, he says, but that’s changing. “Today, Amazon’s market cap dances around $100 billion,” Broadbent says. “And people know mCommerce is getting huge. We’re in a great position to capitalize on that.” October 2011 Maine Ahead >> 17
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Up With
People Power As director of the Society for Human Resource Management Maine State Council, Kristine Avery speaks enthusiastically about the people process. As HR guru at FISC Solutions, she practices what she preaches. by Tori Britton & Mark Wellman • portrait by irvin serrano
ristine Avery’s childhood toy of a Barbie fold-out airplane inspired an early career path in the airline industry. If her employer had not gone bankrupt, she might never have discovered what really fires her jets: human resources. Avery, a recent inductee into the Maine State HR Hall of Fame, is also director of the Maine State Council for SHRM, the Society for Human Resource Management, or “Sherm.” In a time when businesses large and small are looking to technology or a must-have new product or ingenious cost-cutting to save them, SHRM and Avery are here to remind us of the one thing that can make or break an enterprise: people. Avery also is senior vice president of human resources at FISC Solutions in Lewiston, a company that provides invoicing, account statements, and related payment processing services for businesses across Maine. Like most companies, hers is continually changing. The customer mix has gone from the seven banks that founded the company in 1977 to about 150 clients. Less than half of them are now banks or credit unions. Ten years ago, FISC had 216 employees, but advances in technology, such as scanning and transmitting checks at the teller line, and recent legislative changes, including the federal takeover of student loans, have trimmed their staffing needs to 85. As HR director, Avery’s response has been characteristically proactive and creative. Some employees have successfully shifted from customer service positions to more production-oriented jobs within the company. This is possible, she says, because most people “have skills that are more tranferable than they realize.” Among the retraining tools she’s put in place is a special online training portal called “FISC College” and a tuition reimbursement program. It’s not all about work, work, work, though: FISC employees are also encouraged to take time for exercise by participating in the company’s 18 >> Maine Ahead
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Above: Kristine Avery with David Pease, immediate past state director of SHRM Maine State Council, on the cover of HR Times. Right: Avery was named Maine 2010 HR Leader of the Year at a ceremony at the Samoset.
When did you enter the HR profession?
I’ve been in the human resource profession for 25-plus years. I started in the airline industry, in the customer service area for Eastern Express Airlines and worked my way into the personnel office. I actually worked with them until 1988, when the machinists went on strike and Eastern Airlines declared bankruptcy and we all lost our jobs.
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credit unions to do customer service training, supervisory skills training, and product knowledge training. I traveled statewide and loved it. Then I was recruited away by a credit union in Portland—Telco of New England Credit Union, now Infinity. It’s the oldest credit union in the state of Maine. They were originally the credit union for the telephone workers. It was a unionized environment, so when I first went there as the operations manager, there was definitely a “them” and “us” mentality, not a “we” mentality. After two years, the employees went through a union decertification process. When the vote came through, the employees who were looking to decertify won by one vote. That is when the HR office was created and I was appointed the human resource officer of the company.
Is that when you moved to Maine?
Explain a little bit about the difference before and after the union.
Yes. I grew up in Easton, Massachusetts, and would come to Maine every summer for vacation, camping in Bridgton at Long Lake, so coming to Maine was full circle for me. After a short time in Bangor, I was hired here at FISC, working as the director of training from 1988 to 1990. I would travel to different banks and
Before, when we would hire a teller, they would be all at the same rate of pay, whether they were there for two months, two years, or twelve years. Everything was by the contract. So when the HR office was created, we were able to focus on employee development, pay for performance plans, rewards and recognition, tu-
Photo: courtesy of kristine avery
formal walking program or tracking their physical activity level online in partnership with Anthem. Any senior level executive looking for new ways to boost the bottom line might want to follow Kristine Avery around for a day or so. She’ll remind you that higher profits require paying attention both to high performers and balance sheets, and that increased productivity doesn’t always come in a software box.
ition assistance, etc. After the decertification process, employees were very skeptical at first—would it really be different?—and there was a lot of resistance from those who were still pro-union. But over the course of time that all changed, and you could see the level of engagement of the employees increase. I was with that company for 10 years; the decertification happened two years into it, so the last eight years were really focused on employees and people processes, all through the ’90s. It was really a great experience for me. Ten years ago, you came back to FISC as VP of human resources, and also were involved in the Society for Human Resource Management (SHRM). You’re now its state director. What are the biggest issues you and fellow members are dealing with in this tough economy?
With the current job market and high unemployment rate, we are receiving a high volume of resumes and applications that come in for jobs where folks really are not qualified. So just weeding through the high volume of resumes and applications that come in is an issue. Recruiting top talent is also more difficult, because people are reluctant to leave their current position, where they have a number of years of service and have a feeling of job security. They’re more reluctant about making a change and being on the bottom of the totem pole with a new employer. If you look at the economy overall, real estate has also impacted job transfers because of the length of time that it takes to sell a home, due to the number of homes on the market. People are resistant to make that move to a new employer if there’s a relocation that’s involved. Getting around that takes branding, so you become a place where people want to go to. Much of SHRM’s work in Maine is keeping on top of bills being considered by the legislature. What major issues did the organization watch in the last legislative session?
The big one was weapons in the workplace. That was something that we advocated against at the state council level, but the bill was passed. Now employers can no longer have the requirement that an employee not have a weapon in their vehicle on company property; they can have a weapon in their vehicle as long as it’s not visible and as long as they have a permit to carry it. In the long run, that’s okay, because it’s still not within the building of the employer. Can you describe the work SHRM is doing to encourage workforce flexibility?
Workforce flexibility is one that we advocate for so that employers will be more open-minded to things that will accommodate the high demands on employees at a personal level—programs such as flex time, job sharing, and having telecommuting options so employees can work remotely.
“One of the favorite parts of my job is focusing on our high-performing, high-potential employees.” When you think about the number of single parents, the number of employees dealing with young children or aging parents or serious illnesses among family members, and the demands of that, having these types of flexible work options will definitely increase these employees’ level of engagement. We’re working so the focus moves from how much time someone is in their chair at work to their output, to the end result. This is something that the HR profession is advocating for through increased awareness, but ultimately, those of us in the HR function need to be the change champions, the ones who bring this kind of flexibility into our own workplaces. How should an HR director, in your opinion, be spending his or her day on a percentage basis?
I would say 30% on the tactical HR operations such as payroll, safety, compensation and benefits administration, and recruiting, and 70% or more on strategic functions— ”What are we doing to advance this company? What are we doing to impact the bottom line?” In HR, we do that through employee programs. So increasing employee engagement levels, staff development, coaching, wellness programs, and mentoring would all be part of that 70%. Communications is a big focus strategically for HR professionals. This is both keeping people informed and linking the employee’s job to the company’s strategic objectives. That alignment is really a critical part of the strategic function of HR, and it requires ongoing frequent and honest communication. Employees want to know what’s going on and they want to know how their job impacts the end result. You still need to make sure people get paid, you still need to provide competitive benefits. At the same time, to move your company forward through the people process, you really need to think “big picture.” October 2011 Maine Ahead >> 21
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“People who were producing the highest quality results, and who were the most dedicated and dependable employees, were being taken for granted.” And you do that in association with other leaders within the organization?
Absolutely. At FISC, we have the ACE Team; this is a leadership development focus for me. The ACE stands for Aligned, Competent, and Engaged; so they’re the best of our best, they’re the folks that we’re looking at for succession planning. Again, that would fall into the 70% category: performance management, doing talent reviews, and monitoring changes as new people join the organization. One of the favorite parts of my job is focusing on our highperforming, high-potential employees. Do the ACE Team members know who they are?
They know who they are, and other employees know who they are. We meet every other week. You developed something called SHARP, which was featured in HR Times magazine. Can you describe it?
The acronym stands for Smart Hiring and Retaining Performers. When I first arrived at FISC, our turnover rate was 64%, we had 22 open jobs, and we had over 60 injuries that year—repetitive motion type injuries based on the nature of the work we do. Because we had a number of open jobs, people were under pressure, and when you’re working under tight deadlines, you’re tense, which can also create a higher risk of injury and mistakes.
We had a working environment where people did not want to and were afraid to report their injuries; the consequence of that was they would be working longer in discomfort or in pain. When they did report the injury, it had progressed to the point where the treatment would be a longer process and more costly. As you can see, we needed to address both our recruitment efforts and our injury rate. At that time, we also did not focus on our high performers, and had limited rewards and recognitions in place. The people who were producing the highest quality results, and who were the most dedicated and dependable employees, were being taken for granted. The “Retaining Performers” piece of the SHARP strategy required putting rewards and recognition in place. We created pay for performance plans to really reward the top performers. We now have what we call the Players of the Year. We recognize our MVP, Coach (manager) of the Year, Team of the Year, Most Improved Player, and Rookie of the Year. We give gold star service awards that are engraved whenever we have employees who receive positive unsolicited feedback from a customer, and we celebrate milestone achievements when we break a new record. We have a unique award given on the employee’s first day at FISC; it’s a plant, with a message about “growing where you’re planted.” It was my pleasure to deliver this plant to our new CEO last week. Over time, the results have been dramatic. This past year, our annual turnover rate was 4.71%. Our injuries were down to four last year, and we’ve seen significant savings in workers’ compensation insurance premiums.
>> The Avery File Born: May 14, 1962, Brockton, Massachusetts Education: Southeastern Academy, diploma in travel and tourism, 1980; Husson University, human resource management studies, 1993; University of Southern Maine, certificate in human resource management, 1999; SPHR certified, HR Certification Institute, 2007. Career: Several positions, including manager of training at Eastern Express Airlines (1980–
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1988); director of training and marketing, FISC Solutions (1988–1990); vice president of human resources/administration, Infinity Federal Credit Union (1990–2000); senior vice president of human resources, FISC Solutions (2000–present).
present); Society for Human Resource Management (2002–present); SHRM Maine State Council (2008–present), director, 2011; Casco Federal Credit Union board member (2007–present); Windham First Church of the Nazarene board member (2007–2011).
Awards: Maine HR Leader of the Year, 2010; inducted into the Maine HR Hall of Fame in 2011.
Personal: Avery and her husband, Danny, live in Windham on Sebago Lake. They are parents to three adult children, Amanda Charette, Candice Avery, and Shaun Avery, and have two grandbabies, Julia and Olivia.
Affiliations: Human Resource Association of Southern Maine (1992–present; president 2009–2010); American Management Association (2002–
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What tools and tactics are SHRM members using these days to make them better at attracting and hiring the right people?
The best thing to do from a recruiting standpoint is the branding piece. If you can brand yourself as a place where employees want to work, and you can ultimately receive the title of Best Places to Work in Maine, people will want to come to work for you. There are also many technology tools an HR professional can use. For example, there are systems to automate the inbound resume process so you can do searches if you’re looking for a particular skill set. For background screening, there are tools to make sure you are hiring for fit—doing behavioral assessments, personality profiling, criminal background checks, credit background checks, education verification, and employer references. At FISC, we have just converted to one system that does all that for us, and it’s highly efficient. Taking advantage of those technology tools enables HR folks to spend less time on the tactical function and focus more on the strategic aspects of HR. What innovative HR practices have you observed in Maine companies recently?
One of our partners from a staffing service has a new feature using an iPad. They actually do a one- to two-minute video clip of their candidates and send that out with a resume to the employer. So you can click and can see the resume and there’s also a short video clip where you can see the individual. The candidates are basically asked three questions: “Who are you, what’s your specialty?” “Why are you seeking a job?” and “What can you offer to a new employer?” I was really impressed with that whole process. Now, receiving the resumes and video clips, you sort of get to know the person before you even meet them. 24 >> Maine Ahead
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SHRM Maine State Council endorses the Best Places to Work program, and your workplace was selected this year. What in your opinion are the essential qualities of a great place to work?
It’s having frequent, ongoing, and honest communications with the employees so that employees feel informed; they know what’s going on and they have an understanding of how their job impacts the strategic direction of the organization. This can’t be an annual employee meeting, it needs to be frequent. Here, we do monthly meetings, strategic lunch and learn sessions, where we provide lunch and talk to employees about strategic initiatives. We have an intranet service; on a daily basis employees can sign on and see what the latest is in terms of news, FISC performance, and employee performance. So the communications aspect is definitely a “best places” component. The other is, in my opinion, rewarding your top performers and having recognition programs in place so that people feel that sense of belonging and realize that the company values high performance and a high level of dedication. Another “best places” characteristic is embracing the continuous improvement process, not accepting the status quo. There should always be room to improve. That’s why people want to come to work every day—they want to feel like they’re making a difference. Is there a quote or phrase that sums up your philosophy of how to bring out the best in people?
My personal affirmation, something that I’ve adopted over the course of time, is, “Today I will make a difference.” That means that I’ll make a difference to the people I encounter: to support them, give advice to them, mentor them, coach them, listen to them, high five them for a job well done. Whatever I can do to contribute positively, whether it’s how they’re feeling, or talking about the direction they’re going or a problem they’re dealing with, I will make a difference. I’m an instructor of the SPHR/PHR certification preparatory class at USM and I’ve made a difference in several HR professionals’ careers by helping them through that tedious exam process. The first time I took it I failed, so I know the feeling of failure. It’s a tough exam; I took it for granted when I went to take it based on my years in HR; I read through the books and thought, “I’ve got this.” Now I instruct the course; I’ve been doing that for four years, and there are over 50 newly-SPHR/PHR-certified individuals in the state, so in that regard, I’ve definitely made a difference.
Photo: courtesy of kristine avery
Avery practices her people skills with her granddaughter Julia.
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private tour
DESSERT in a BOTTLE People have been enjoying liquor like vodka for hundreds of years. But flavored libations like “whipped cream” and “cotton candy” vodka are new to the spirits scene, thanks to the tasteful innovators at White Rock Distilleries. by Henry Garfield • photos by mark wellman & melanie brooks
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ut behind the bottling line at White Rock Distilleries in Lewiston, five silver storage tanks, completed in September, gleam against the azure autumn sky. Four of them hold 25,000 gallons each, but they are like the moons of Jupiter in orbit around the centerpiece of the expansion: a 100,000-gallon tank filled to the top with high-proof French vodka. Adding that much storage capacity costs money. But it’s cheaper than laying a pipeline across the Atlantic. And considering the phenomenal success of White Rock’s line of Pinnacle flavored vodkas, a pipeline might have been the only alternative. “Our goal is to have up to about two months of raw spirits on hand to meet our demand,” says chief operating officer and chief financial officer John Suczynski. “With a high-growth product like Pinnacle, it’s hard to predict where that demand’s going to come from. When the demand spikes, one thing we can’t do is turn the spigot and say we need some more vodka. It’s a four-week process to call our suppliers in France, have them produce it, get it on the ships 28 >> Maine Ahead
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and get it here. We need supply in-house.” Although White Rock has been in the same Lewiston location since 1937, and under the same ownership since 1971, it was, until recently, one of the least-known business success stories in Maine. That changed, however, with the breakout of Three Olives vodka in the mid-2000s. The company sold it for a large sum in 2007 and turned its attention to creating brands under its Pinnacle label, which now offers vodkas in 31 flavors. “Pinnacle is about two-thirds of our business today,” Suczynski says. One of the latest and most successful brands is a vodka called Pinnacle Whipped that tastes like whipped cream. “We introduced the whipped cream flavor last year, and it has truly taken the industry by storm,” Suczynski says. So much so that by the end of 2011, Pinnacle Whipped is likely to supplant Absolut Citron as the bestselling flavored vodka in the country. Founded in 1937, White Rock was a small distillery on the Androscoggin River and had just three employees when Ray Coulombe bought the company in 1971. His son Paul Coulombe has been chief executive officer since 1995, and splits his time between the sales office in Portland and his
“We have started from zero, from the idea for a product, to putting it
on the market in 90 days.” —Joe Werda White Rock Distilleries operates six bottling lines in two shifts, five days a week.
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Job Descriptions Chief Financial officer John Suczynski (top) is all smiles about the recent success of Pinnacle flavored vodkas. Originally from the Midwest, he’s worked for Kodak, Wayne Laboratories, and DeLorme in Freeport. He came to White Rock four years ago, and says it’s the best job he’s ever had. Laboratory technician Aaron Lewis (center) runs tests on Pinnacle flavors in progress. Sometimes taste and smell enter into the equation as well. With a background in forensics, she can readily determine the difference between drab and delicious. Director of Operations Joe Werda (bottom) is responsible for all aspects of production. He’s worked in the liquor business in the Midwest, California, and Maine. “It’s a fastpaced industry,” he says. “Improvements come along quickly.”
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Caption needed.
winter headquarters in Florida. Paul’s daughter Michelle Coulombe joined the company in 2004 and is now the company’s vice president and director of Florida sales. White Rock employs a workforce of over 200 in its Lewiston plant, 30 to 35 sales representatives across the country, and an 8-person marketing staff in its Portland office. Lest you think that vodka is all they do, a quick visit to White Rock’s website reveals a variety of offerings including flavored and non-flavored rum, gin, whiskey, brandy, cordials and liqueurs. Shipments come not only from France, but also from the Virgin Islands (rum), Mexico (tequila), and other parts of the United States. Despite its name, White Rock Distilleries does not distill liquor. “We are a rectifier,” Suczynski says. If vodka were milk, White Rock would be comparable to a dairy, receiving raw product from distant farms and turning it into drinkable packages, some with chocolate or strawberry flavoring, then shipping them off to consumer outlets. That raw product arrives in 6,100-gallon tanks, taken right off a cargo ship and trucked to Lewiston. The alcohol inside the container is about 190 proof; it will need to be watered down as part of the rectifying process. The Pinnacle flavored vodka on the liquor store shelf and at bars is 70 proof. From the outside, at least from the back, it even looks a
“As soon as Paul tried it, he was very excited. He said, ‘Print the labels. Let’s go.’” —John Suczynski bit like a dairy. One’s first impression is of tanks—White Rock has 38 storage tanks in addition to the new ones coming online in September. Trucks come and go regularly; samples undergo a variety of tests before the cargo is unloaded. More tanks inside the building—78 of them— are for blending and bottling. Joe Werda is White Rock’s director of operations. It’s his responsibility to see that everything runs smoothly, from the arrival of raw spirits to the bottling lines and the warehouse. He’s a mechanical engineer by training, but in midcareer he decided that he wanted to see—or taste—the results of his work. That realization led him into manufacturing, and, eventually, liquor. According to Werda, a smooth operation makes for a smooth product. “You don’t want that alcohol bite. The smoothness, the purity of the product, is what people are looking for. That’s even more important in a flavored vodka, because you want the flavor to be the thing that carries forward.” October 2011 Maine Ahead >> 31
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Pinnacle of Profitability White Rock developed a modestly priced line of flavored vodkas just in time for the recession.
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Sometimes success strikes when you least expect it. “One of our hallmarks is our agility,” says White Rock’s chief operating officer and chief financial officer John Suczynski. “We take risks. We can bring products to market in a matter of months. Bigger companies take much longer to do that. We put a lot of new products out there, and Pinnacle just took off.” In 2007, White Rock sold approximately 250,000 nine-liter cases of Pinnacle vodka. “The liquor industry describes its metric in nine-liter cases,” Suczynski explains. “Bottles come in large and small sizes, but everything gets boiled down to a nine-liter equivalent. We finished last year at 1.4 million, and we believe we’re on track this year for 2.4 million cases of Pinnacle vodka.” Much of the buzz has been generated by wordof-mouth and social media such as Facebook and YouTube. Pinnacle flavored vodkas tend to be favored by college students and young drinkers, especially young women. Occasionally, director of operations Joe Werda conducts his own informal market research. “I try to frequent places that are strong supporters of our brand,” he says. “Certainly, the ladies are a driving force. The guys sort of get dragged in, but once they taste it, they like it.” In 2007, White Rock sold its high-end Three
Olives vodka brand to the Jose Cuervo family in Mexico, known for its tequilas. Suczynski characterizes the sale as “a very good liquidity event for the business” that enabled White Rock to pay off some debt and focus on more moderately priced brands like Pinnacle. The timing couldn’t have been better. “The end of 2007 was when the credit market started to freeze up and the recession really happened,” he says. “We sold a high-margin, high-priced brand, and we had a valuepriced product in our stable that became very attractive to consumers. Pinnacle was really positioned right to take advantage of the moon and the stars as they aligned at that point.” Originally marketed mostly in liquor stores, Pinnacle has found a following at bars frequented by college students. “Typically a brand will be either on-premise or retail,” Suczynski says. “Three Olives was mostly on-premise. Pinnacle initially was more of a retail brand than an on-premise brand. But consumers are asking for it at bars, and we’re seeing a shift to more on-premise business, so we’re devoting more time there.” “This new category of dessert vodka tastes good, and it’s extremely mixable,” Werda says. “There are literally thousands of recipes out there on the social networks. It’s a lot of fun. We’ve hit something at the right time with the right group, and it’s just going crazy.”
What’s involved in getting Pinnacle vodka, or Calico Jack rum, or any of White Rock’s other lines, out the door and into liquor stores and bars? First, you have to assemble all the pieces. That includes glass bottles and cardboard boxes, the metal tubes that will become caps, and labels. As for what goes inside the bottle, the booze itself waits in tanks to be mixed with ingredients from the sweet-smelling flavor room and the sweltering sugar room, which is kept at 105°F year-round. It all comes together on six bottling lines running in two shifts, from 7 to 3:30 and 3:30 to midnight, five days a week. That all sounds simple, but the alchemy of blending the flavors is as much magic as it is science. White Rock works with several “flavor houses,” companies that produce the quintessential chemical concoctions to flavor their products. “There are two ways flavor houses come in contact with us,” Werda says. “Most commonly, our marketing sales group comes up with a concept and we go out to the flavor houses and ask them to develop a flavor for us and work with them to get it the way we desire. On other occasions, flavor houses will come to us with flavors they’ve developed, such as the whipped cream, and we’ll tweak.” With Pinnacle’s whipped cream product, a new flavor house approached the company. “They knocked on our door and asked us to try it,” Suczynski says. “We here at the plant tried it, liked it, and took it to Paul [Coulombe]. I don’t think he was ready for another flavor, but as soon as Paul tried it, he was very excited. He said, ‘Print the labels. Let’s go.’” When a truck pulls into the loading bay at White Rock, it’s met by someone like Jason Lerch, whose job title, rectifier, encompasses several steps in the process. Rectifiers are cross-trained so that they can substitute for one another. Vodka from France comes to Lewiston in the same container in which it crossed the
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ocean, loaded directly from ship to truck. Lerch or another rectifier will open the top of the tank and draw off a sample for a quality control team to test. The proof will be checked by a gas chromatograph, and then the entire load will be filtered through a carbon treatment process to remove any impurities. Each outside tank has its own line coming into the building. They all lead to a manifold bristling with pipes, levers, and
hoses; the hoses can be removed and reattached to direct liquid from one tank into another. “It looks like something out of a submarine, doesn’t it?” Werda says. Flavors arrive at the plant in concentrated liquid form, and White Rock’s water is purified. “The water actually goes through a filter for sediment, a carbon bed, and then reverse osmosis,” Werda says. “Reverse osmosis is nothing more than a series of membranes that have October 2011 Maine Ahead >> 33
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Bottling room workers Chui Kwong, James Coburn, and Irene Warner help package Coconut Jack, a flavored rum.
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October 2011
pores in them that are sized to virtually let nothing but a water molecule through. The pure water comes through and is used; the effluent is washed away. We currently have a system that runs at about 33 gallons a minute.” Next stop is the laboratory, where technician Aaron Lewis tests the product for proof, color, density, and other characteristics. The glassed-in room is filled with scientific equipment such as a mass spectrometer and a laser diffraction particle size analyzer. Lewis and her team take readings and fill in numbers on a series of charts that follow each sample. Lewis has a degree in criminology, and says the testing of liquor isn’t all that different from forensics work. She also has experience with municipal water supplies. “Working with the state at various levels gave me the experience that I needed to work here,” she says. “Going from water to alcohol made my job more exciting.” Three main bottling lines put the liquor into
standard-size bottles, which White Rock must order from three different sources because of demand on the worldwide glass market. (The bottles are designed by White Rock’s marketing team and then ordered from glass manufacturers.) Lines four through six are for different-sized bottles, including the miniatures that you get on airplanes. All six lines aren’t running all the time, but changeovers happen fast, usually in less than an hour. Much of the process is automated. Caps get threaded onto the bottles by one machine; the label is affixed by another. Machines unload empty bottles from incoming boxes and pack full ones into the cases in which they’ll ship. But human beings check every step of the process along the line. Finished cases are stacked in the warehouse, 70 cases on a wrapped pallet. They are placed on painted grids on the floor to await the truck that will take them away. The system is designed so that each truckload moves only once. Space is at a premium; pallets are moved by robots and fork-
lifts that can turn to the side, allowing for narrower aisles. “With the high growth of Pinnacle, we’ve really been tested in our infrastructure and our plant footprint,” Suczynski says. “Space conservation is a big deal with us,” Werda adds. “We try to think vertically as well as horizontally. We don’t build to an inventory; we build to the orders. What you see out here on the floor is about two weeks’ worth of sales.” Operating a fast-growing business in a finite amount of space presents numerous logistical challenges. Inventory must be meticulously tracked and used efficiently; the same is true of energy and its attendant costs. Over the past few years, White Rock has upgraded to more efficient lighting and heating systems. Production manager Paul Arnoldy oversees the whole operation. Along with plant
manager Gregg Snyder, he’s responsible for everything that happens between the deliveries of raw ingredients and the shipping of product. Together, the two men have more than 40 years of experience in the liquor business. “I’ve done everything,” Snyder says, in an accent that betrays his southern Indiana roots. “I’ve worked in every aspect of it, from distilling to aging whiskey in barrels. I went into the industry right out of
college, fell in love with it, and have been in it ever since.” The crew on the floor is young; many employees are in their 20s and entered the workforce right out of high school. “What we look for mostly is good math skills—that and work ethic, of course,” Werda says. “Anybody with good math skills and a good attitude can be trained to do this work.” But many employees have been there 10 October 2011 Maine Ahead >> 35
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Creation details: Began as a small distillery on the bank of the Androscoggin River. Purchased in 1971 by Ray Coulombe; now owned and operated by Ray’s son Paul Coulombe; Paul’s daughter Michelle Coulombe is vice president. Annual revenues: $185 million in 2010; projected 2011 sales of $215–$220 million. Products: Pinnacle flavored vodkas, Captain Jack rum, other specialty liquors.
years or more. Turnover is low; everyone seems to regard White Rock as a good place to work. Indeed, the company received a “Best Places to Work in Maine” award in 2009. “It’s a friendly, easygoing place,” Arnoldy says. He and Snyder meet each afternoon around 2:30 with the leaders of the second shift to ensure smooth continuity of production. He’ll stick around for the first part of the second shift, usually heading home in the evening with full confidence in his crew. Liquor, of course, is highly regulated, and Werda and Suczynski spend a fair amount of time dealing with regulatory issues. Labeling can be a bottleneck. “There are national regulations, and there are certain states that have unique regulations also,” Werda says. “For the most part, it’s the federal regulations that you have to go through to get a product to market. It starts with the formula. You submit a formula for your product to the regulatory agency first. They review that formula. The book of regulations is extremely thick. There are certain things that you can and cannot use; there are things you can only use in certain proportions.” The label has to indicate ingredients
Here’s a tank full of thanks. Positions: Chemists, rectifiers, bottlers, plant supervisors, Portland-based marketing and advertising team, sales agents distributed nationwide. New projects: Construction of added storage facilities; creation of new flavors; social media marketing efforts. Challenges: Labeling restrictions, shipping and distribution, state alcohol regulations. To learn more: www.whiterockdistilleries.com
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like certified food coloring. “Once the labels are submitted along with the formula,” Werda says, “there’s another division within the federal government that checks the regulations for that, and will tell you if your labels pass the requirements or not. If they do, fine, you print them up and you go. If they don’t, you make the corrections and try again.” On a state-by-state basis, Suczynski says different regulations apply in socalled “control” states (like Maine and New Hampshire, where the state is the buyer) and “open” states. And, like any other Maine business whose primary market is the continental United States, White Rock must deal with the challenge of distribution. “This is our only plant that we ship from. It’s a very complex and capital-intensive business. It was started here 40 years ago, and grew to the national company that it is today,” Suczynski says. “I think at some point if Pinnacle continues to grow at the rate it’s growing at, we may have to have another manufacturing facility of some sort, but at present we do it all from here.” And they’re having fun while they’re at it. “I’m a finance guy at heart,” Suczyn-
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ski says. “When I came here, people told me I would love working here. It isn’t any one thing, but it’s everything. We have a great environment, a growing business; we have great benefits. It really resonates with the employees.” “It’s a fast-paced industry, and that’s appealing,” Werda says. “Improvements come along quickly. We have started from zero, from the idea for a product, to putting it on the market in 90 days. More than half of the
good ideas that we’ve come up with come from the people working right out there on the floor. And the way you get that is by having open lines of communication.” “We feel blessed with the opportunity to manage this company, and we’re having a ball,” Suczynski says. “I’m not shy about telling people it’s the best job I’ve ever had, and I’m hoping it will be my last. It’s so much fun I don’t want to go anywhere else.” October 2011 Maine Ahead >> 37
Roundtable
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Keeping that
Nest Egg Making money is one thing. Keeping it is another. Financial planning pros Jessamyn Larrabee Norton and Karen Elise Kilbride and attorneys Jill Checkoway and Patricia Nelson-Reade talk about how they help Maine families mind their assets. by TORI BRITTON • IllustrationS by M. Scott Ricketts
ith Maine’s median age clocking in at 42.7 years these days, it’s safe to say that the majority of the readers of this business magazine are over 40. That means it’s too late for most of us to be convinced to start saving in our 20s by a dazzling presentation of the Law of 72. No, most of us are in the world of growing or maintaining some amount of equity. Some may soon inherit more. Others may be in the process of passing it on. Wherever we are on the net worth continuum, it’s clear we’d be better off today if we had made better decisions along the way. Jessamyn Larrabee Norton, Karen Elise Kilbride, Jill Checkoway, and Patricia Nelson-Reade are all in the business of helping people make better decisions. Norton is an MBA and a CFA, and works with clients of high net worth. Kilbride, a CFP and CPA, concentrates on those in or near retirement. Checkoway, an attorney, focuses on the legal side of preserving and transferring wealth, through estates and trusts. Nelson-Reade, also an attorney, works in a smaller subset called elder law. While much of what Checkoway and Nelson-Reade deal with involves managing assets within the confines of the law, some of what they tackle is generating peace of mind, faciliating a higher quality of life, and preserving familial harmony. Norton and Kilbride would tell you that they deal in such intangibles, too. Reading their informed comments will hopefully inspire us take another look at how we’re handling our family’s nest egg. Just remember, (read fast) all information in this article is furnished “as is,” without warranties of any kind, either expressed or implied, and does not constitute financial or legal advice. October 2011 Maine Ahead >> 39
roundtable Roundtable
P E R S O N AL
F I N A N CE
P A N EL I S T S
Eric Uhl Fisher and Phillips Partner Patricia Nelson-Reade Eric Uhl Founding recently spoke at Attorney the annual Maine Human Nelson-Reade Law Office Resources Convention. an RN, is one of Nelson-Reade,
Jessamyn Larrabee Norton
Karen Elise Kilbride
Jill Checkoway
Chief Investment Officer Spinnaker Trust Prior to coming to Maine, Norton, CFA, MBA, worked for Fidelity Management and Research in Boston.
Founding Principal On Course Financial Kilbride, CFP, CPA , founded On Course Financial in 2004. She is a frequent contributor to The Portland Press Herald on personal financial topics.
Attorney/Director Skelton, Taintor & Abbott Checkoway, named to Best Lawyers in America by industry peers, is a member of the American College of Trust and Estate Counsel.
hat does your firm do? When clients call, what are some of the things that prompted them to seek your counsel? Jessamyn Larrabee Norton: Spinnaker Trust provides investment management for highnet worth individuals and families as well as tax planning and trust and estate administration services. We manage money for about 120 families today. The families we work with have complex situations and issues. They rely on us to work with them and the rest of their professional team on issues such as gifting and other tax reduction strategies, transferring a family business or starting a new one and administering complex trusts and estates, or simply looking to have their money managed in a diverse, tax efficient way. Karen Elise Kilbride: We are a boutique firm whose
focus is retirement and meeting the ongoing needs of retirees. A significant number of our clients are retirees who want ongoing guidance with their financial affairs, although our client base also includes working professionals and preretirees. Typically clients want to gain a global perspective of their financial situation, see how all the pieces fit together, and determine whether they are on track to meet their retirement goals. 40 >> Maine Ahead
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only a few hundred CELAs— certified elder law attorneys—in the country.
Common questions might be: When can we retire and what would it look like? How do we invest our money in retirement and also take withdrawals to meet our cost of living? How can I best manage my personal income tax situation? When should I take my Social Security benefits? What is a safe amount to withdraw from my portfolio each month and over time? Jill Checkoway: Skelton, Taintor and Abbott has served as a general service law firm in central Maine for over 150 years. We represent institutions and corporations of all sizes and individuals with all sorts of legal problems, from business matters to personal injury cases. I personally concentrate in trust and estate practice. Most of my clients are individuals who either need estate planning advice or who need assistance probating a family member’s estate, but I also represent institutions that are either trustees or beneficiaries of trusts. Most clients call because they either finally decide they must work on their estate plan or they need help with an estate. If a family member has died, they need advice on probating the estate and filing any estate tax returns. Many people are relieved to find out the process is not as complex as they feared and that there is often no tax impact. My legal concentration is in the world of those two certainties, “death and taxes,” so
there has not been any significant change in my business during the economic downturn. The lawyers in our firm practice in the area of elder law, settlement planning, and estate planning for all ages. We also assist with guardianships, probate, and trust and estate administration. Although we assist people of all ages and all income levels, we have a particular interest in the legal issues, needs, and challenges that are unique to older individuals, people with disabilities, and their families. Clients meet us to discuss concerns about themselves or loved ones. Sometimes the concern is traditional estate planning, including wills, trusts, and powers of attorney. Sometimes the concerns involve an aging family member’s diminished capacity; how to provide for their disabled child without impacting public benefits; how to protect their family camp; how to protect their assets in the event of nursing home; how to reduce estate taxes; or how to protect an inheritance or settlement that a client is receiving who is relying on public benefits.
Patricia Nelson-Reade:
What are some ways your typical client may be at risk financially without realizing it?
We have a term for this: spillage! Here are several examples of what we call spillage. One is following a
Karen Elise Kilbride:
non-disciplined investment approach and responding emotionally to changing market conditions. This is costly to the investor who typically buys high and sells low. Another is implementing a target asset allocation and not rebalancing on a periodic basis to take advantage of selling asset classes that have appreciated (selling high) and buying into other securities which have declined in value (buying low). Failing to maintain asset allocation parameters over time and to rebalance assets periodically could mean inadvertently allowing additional risk into the portfolio, subjecting the investor to additional potential loss from periods of market decline. This can be devastating, especially if one is close to retirement. Failing to align personal investment accounts for greater income tax efficienciesis another example of spillage, as is being forced to sell long term investment securities in periods of market decline to meet cash withdrawal needs for retirement. The price tag on this technique can be depletion of a retirement investment portfolio early into retirement. One of the biggest risks we see clients take is maintaining an overconcentration of one or two particular stocks in their portfolio. These types of positions are usually inherited or received by gift from a family member and have a very low tax basis. Often, the holding has done quite well for the family, so it is difficult for the client to consider selling it for sentimental reasons. Add to that the
Jessamyn Larrabee Norton:
capital gains taxes due on selling such low basis positions and many clients choose to maintain the large position rather than diversify it. We work very hard to explain to our clients the risk of an undiversified portfolio and try to set a plan for divesting such positions over time. Another common problem for people is not saving enough for retirement or underestimating their cash needs once they do retire. In order to plan effectively for a client, you need to have a very open and honest discussion about the cash needs of the family. Clients can also fall prey to adult family members who expect support or gifts which jeopardize the financial wellbeing of the client. We work with families on all of these issues. We meet quarterly with most of our clients to review their portfolio. This insures that we each have a clear understanding of the asset allocation we have set for the portfolio, and that we are on track to achieve or exceed the client’s goals.
What are some ways your typical client may be at risk legally without realizing it? Jill Checkoway: That falls into generally two categories: Not bothering with a will at all, or exposing their estate to Maine estate taxes that could be avoided. People will try to save attorneys fees by either ignoring that they need a will or deciding to put everything in joint name with one of more of their children and assuming they have
“We often tell our clients that planning today can result in a smoother, safer, more financially secure tomorrow.” —Patricia Nelson-Reade October 2011 Maine Ahead >> 41
roundtable Roundtable
“For younger clients, we’d advise them to ‘stay the course’ and maintain a relatively high equity weighting in their portfolios.” —Jessamyn Larrabee Norton both “avoided probate” and are confident their children will sort matters out amicably. Either approach rarely ends up saving money. Without a will, state statutes control who receives a decedent’s assets and who is appointed personal representative (executor) of the estate. It’s not always what the client would want. For example, I once had a client whose husband had died with no will. They had no children, but his parents were still living. When he died without a will, the Maine statutes provided that his wife received only a portion of his estate and a separate portion had to be paid to his parents. Luckily, the parents declined to take their share, but the widow could have been left in reduced circumstances and would have struggled for the rest of her life because of poor planning. For younger clients, failing to prepare a will can also mean there is no selection of a guardian for their minor children. Parents of younger children also often ignore that without even a simple (read inexpensive) trust, their children could receive a share of their estate as soon as they reach age 18, a frightening thought for many a parent of a teenager. Likewise, many people have heard about the estate tax changes and assume the federal estate tax exemption of $5 million will “cover” them from any possible estate taxes. The problem is that the Maine estate tax exemption for property passing to a non-spouse is still at $1 million, and a married couple’s assets can quickly total $1 million before they know it. For example, life insurance death benefits are fully taxable, and many people don’t have an accurate view of the value of their real estate or retirement accounts. Clients sometimes don’t know that if they’re married, they can protect $2 million in assets from estate taxes passing to their children. Without proper planning before they die, the assets they can pass on estate tax free are reduced. Patricia Nelson-Reade: Clients are sometimes reluctant to create powers of attorney because they feel like this is
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giving up control. Clients also incorrectly assume that they do not need powers of attorney if they are married. When you create a power of attorney, you name trusted person(s) you wish to make financial and/or health care decisions if you cannot make the decisions anymore. You are sharing your rights, and you remain in control unless you become incapacitated. Without powers of attorney, if you become incapacitated, a court process may be necessary, which is much more expensive and intrusive to your personal rights. Rather than you deciding who makes decisions for you, the court must decide.
Maine business owners are older than average, and many are unprepared for retirement. When a business owner near retirement age comes into your office, what kinds of questions do you ask? Karen Elise Kilbride: What does retirement mean for you, what does it look like and when do you see retirement taking place? Do you see yourself transitioning away from the business and if so, how would this occur? Is there a business succession plan in place and if so, what is the plan? We find that many business owners enjoy their work and want to know if they have the flexibility to back away from the business, or if they need to achieve a certain value from the business to retire. Jessamyn Larrabee Norton: We want to know what sort of
plans are already in place. Does the owner have a fair idea of the value of the business? Does the business have much value without the founder/owner involved? Is there a buyout arrangement with other co-owners? Is adequate life insurance in place to provide liquidity to keep the business intact? If there are no co-owners and no plans to keep the business in the family, have potential buyers been identified and/or approached? Has the client been contributing to any SEP IRAs, KEOGH plans, or other retirement vehicles?
Patricia Nelson-Read: First the client has to explore his or her goals, and then the legal and tax planning documents can be drafted. Often, one or more children have been actively involved in the business and a plan has to be established to meet the client’s goals of handing down the business to one or more children in a favorable tax manner, retaining the amount of control the client wishes, and being fair to the other children not involved with the business.
Many business owners have a succession plan in mind, but often they have been so busy building their businesses that they have sometimes not addressed those issues or formalized their plans. I have them work with me and other lawyers in our office who handle corporate matters to come up with a plan that takes into account how long they want to continue to work, what would happen with the business if they died unexpectedly, etc. Other important issues that come up are generally the scope and treatment of their retirement holdings. Often a business owner might not realize that the designation of beneficiaries in retirements plans are insufficient to meet their plans to pass retirement accounts to younger children in trust, and we have to rearrange those terms.
Jill Checkoway:
What are some of the financial or legal issues that you find most married couples have not dealt with? Are there legal advantages or disadvantages to being married?
An important thing in dealing with a couple, whether married or not, is determining the entire financial picture. We want to know what assets are shared and what assets are in the name of each individual. Does
Jessamyn Larrabee Norton:
October 2011 Maine Ahead >> 43
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the couple look at their assets as a shared bundle, or are there certain assets not available for mutual support? Is there a prenuptial or postnuptial agreement in place? All of these things will factor into how we advise the clients. I cannot think of any financial disadvantages to being married, as our tax code
take their social security benefits. Determining whether to elect your own benefit or your spousal benefit (using your spouse’s Social Security benefit record) and the age you elect benefits can make a big difference in total household benefits. For example, electing to take your spousal benefit and allowing your own benefit to
Patricia Nelson-Reade: Married couples frequently believe they do not need to have powers of attorney because they own everything jointly. Although each spouse can access joint bank accounts, if one spouse becomes incapacitated, the healthy spouse cannot access the incapacitated spouse’s IRA and life insurance,
“Electing to take your spousal benefit and allowing your own benefit to continue to grow . . . may result in an overall higher permanent benefit for the family.” —Karen Elise Kilbride and most financial regulations favor those who are married. Partners who are not married face many challenges, as the default rules afforded to married couples do not apply to them. A significant amount of planning needs to be done to insure that assets pass the way they are intended and that the financial security of both partners is protected. Those who are in a second marriage situation, particularly with children from a first marriage, have similar special planning considerations to tackle. We advise clients and work with their estate planning attorney to ensure that their wishes are carried out appropriately. Karen Elise Kilbride: Many married couples
typically have not addressed the issue of long term care costs and the potential financial impact to their retirement. Helping to bring some perspective on what these costs may mean to both spouses places them in a better position to make an informed decision on whether long term care insurance plays a role in their financial plan. One area where clients can take advantage of being married is electing when to 44 >> Maine Ahead
October 2011
continue to grow and earn 8% per year until age 70 may result in an overall higher permanent benefit for the family for the duration of their lives. Jill Checkoway: Perhaps the most common problems for married couples are those relating to estate taxes and the problems related when married couples have children by prior marriages. Couples often want to treat the children by prior marriages equally, and also want to provide for their surviving spouse during the lifetime of that surviving spouse. Careful planning is needed, though, because clients don’t want the surviving spouse to be able to take “their” money and give it only to the surviving spouse’s own children or heaven forbid, another, subsequent spouse. There are ways to protect against this, sometimes by the means of a trust or perhaps even the purchase of life insurance when the couple can afford it. I suggest purchasing life insurance so that when the first spouse dies, his or her children can get an immediate payment rather than waiting for the stepparent to die. This can eliminate legal battles with a surviving stepmother or stepfather.
or jointly held securities. In addition, the healthy spouse cannot obtain a mortgage or sell the home or protect assets for the healthy spouse without either a power of attorney or a court order. In short, powers of attorney are very important and relatively inexpensive documents for married couples, as well as for individuals, to obtain. Other important areas for married couples are creditor protection, avoidance of estate taxes, and long term care planning. Married couples can, in many cases, avoid estate taxes and they can protect many more assets than individuals if either spouse needs long term care. Second marriages raise a number of important legal issues. Premarital agreements for later in life marriages are very important to protect each spouse and their families.
What are some of the types of investments your more conservative clients are interested in right now? Your younger clients? Karen Elise Kilbride: Our clients are looking
for our advice on how to invest relative to
their financial goals more so than interest in specific investment securities. One of our major functions as a wealth manager is to advise clients on the allocation of their investments across different asset classes to diversify risk and align their investments with their goals. Typically, clients who are more conservative may hold a heavier allocation towards individual bonds, mutual funds, cash and cash equivalents with a lighter allocation to stocks. Younger clients have a much longer investment time horizon and can handle a heavy allocation to stocks. Their investment timeline is not just to retirement but through retirement, which can span 50 to 60 years. Jessamyn Larrabee Norton: Given how low today’s yields are on savings accounts, CDs, and government bonds, we are looking to gain more yield through our equity exposure. There are many options within U.S. or International ETFs to earn in excess of a 4% yield. For younger clients, we’d advise them to “stay the course” and maintain a relatively high equity weighting in their portfolios despite the volatility of late. Further, we believe in the opportunity within emerging markets equities over the long term and would encourage younger clients to have a healthy weight in that asset class.
From a legal standpoint, in what ways is managing one’s estate in Maine easier than in other states? More difficult? Patricia Nelson-Reade: Maine has fewer laws than other more populated states and this can have positive and negative consequences. Maine’s probate system is relatively straight forward. Many people believe they need a revocable or living trust to avoid the expensive and time conOctober 2011 Maine Ahead >> 45
roundtable Roundtable
“Planning for death is not the most pleasant thought, but it’s a better choice than leaving once-friendly family members disliking each other. ” —Jill Checkoway suming probate process when someone dies. Although in many states this is correct, Maine’s probate system is efficient and relatively inexpensive. It may cost more to create a living trust than it costs to go through probate. Revocable trusts are very helpful in some circumstances, but not for reducing costs, time, or taxes. In the past few years, Maine has adopted statutes which clarify laws on powers of attorney and trusts. The clarification is helpful to guide people who serve as agent under a power of attorney or trustee of a trust. Jill Checkoway: Maine’s probate system has been streamlined since 1981 and is an extremely simple system. I spend a good deal of my time convincing clients that they don’t need to listen to Suze Orman or the AARP recommendations to “avoid probate at any cost.” In Maine, the probate of a will or estate itself consists of filing the original will along with three relatively short and simple forms with the Probate Court and within about a week, the personal representative of the estate is appointed. Generally, that personal representative can move ahead to administer the estate according to the decedent’s will without any further court intervention. Unlike other states, in Maine there is no public filing of the value of an estate or any accounting information. Only the beneficiaries of the estate receive this kind of detailed financial information. On the other hand, what is more difficult than probating an estate is the appoint-
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ment of a guardian or conservator for an incapacitated person. A conservatorship pleading requires not only a petition to the court, a doctor’s report, but also a “visitor” is appointed to meet with the alleged incapacitated person and family members. All those reports are filed with the court, a full hearing is held and the delay and cost can be substantial, sometimes as much as 6 to 8 weeks and $1,000 to $2,000 in legal fees for a full conservatorship proceeding. A much better alternative is a financial power of attorney by which a person, while competent, can name someone to act on his or her behalf for financial matters.
Are there any books you would recommend, or phrases you use that most closely sum up your approach?
I do not think that there is one book or author that reflects our philosophy. Our approach at Spinnaker is to provide responsible, diversified investment management accompanied with sophisticated planning and administrative services. Our goal is to accumulate and preserve wealth for generations of clients.
Jessamyn Larrabee Norton:
Karen Elise Kilbride: I would recommend Mitch Anthony and his book The New Retirementality. This book helps bring a different perspective and a new meaning for retirement and living life more fully. Our approach as fee-only wealth managers is comprehensive and customized to the individual or couple. It is compre-
hensive because our approach reflects the client’s global financial affairs. It is customized because success is not measured by performance (although performance is a goal) but instead by the client’s success in meeting their life goals. Patricia Nelson-Read: We often tell our cli-
ents that planning today can result in a smoother, safer, more financially secure tomorrow. Jill Checkoway: When I first started practic-
ing, one of my partners taught me an important phrase: “Don’t let the tax tale wag the dog.” There are some clients that get so caught up with saving the maximum amount they can save in estate taxes that they put together an estate plan that doesn’t really accomplish what they want for their family members. It is important that the family’s wishes are followed, even if there is a possibility that might cost a few dollars in additional taxes. Sometimes you can save quite a bit in estate taxes if you are willing to give up all flexibility, but unless clients are at that point in their life when they are willing to forego changing their plans, I usually recommend against taking steps that are irrevocable. I also often remark, “that family will never have Thanksgiving dinner together again” when poor estate planning leaves the family in disarray (and bitter fights) over the distribution of a parent’s assets. Planning for death is usually not the most pleasant thought, but it’s a better choice than leaving once-friendly family members disliking each other.
worth the trip
>> Anchored in History
Getting there: • From Rockland and Camden: Head north on Route 1. The museum is about 6 miles past the city of Belfast, on 40 E. Main St. in the center of Searsport. • From Augusta: Take Route 3 east/north to Belfast. Get on Route 1 north/east. • From Bangor: From I-95, get onto I-395 E, then take Exit 3A to Route 1A south (main road). In Stockton Springs, go west/south on Route 1 to Searsport. • From Mt. Desert: Take Route 3 north to Route 1 west/south. Go through Ellsworth, Bucksport, and Stockton Springs to Searsport. The museum is open through October 23, 2011, and will reopen in late May 2012.
48 >> Maine Ahead
October 2011
he Penobscot Marine Museum has been keeping Maine nautical history in ship shape for 75 years. Located in downtown Searsport, its collection is housed in several historic buildings, giving the chance for plenty of fresh ocean air between exhibits. The Maine watercraft in PMM’s collection is as varied as the weather, with handcrafted gems from the rich and famous as well as the anonymous and humble, including a small sailboat owned by E. B. White (think Stuart Little) and another owned by magazine mogul Thomas Fleming Day. Visitors can also go aboard a dory or lobster boat, step into a sea captain’s home, or see the exotic goods Maine voyagers returned with—or the scrimshaw they created over their long journeys. Touring Maine’s oldest marine museum
makes you understand why there’s a sailor on the Maine seal: You can’t help acquiring an appreciation of Maine’s history of ship building, sardine fishing, and the many other ways our ancestors made their living from the sea. Exhibitions like The Art of the Boat, a juried show featuring the work of 50 contemporary painters, illustrators, sculptors, printmakers, modelers, and photographers, remind us that marine vessels continue to inspire the Maine imagination. While a traditional museum can sometimes be tough for kids to handle, Penobscot Marine Museum has plenty that’s hands-on. Kids can play with ship models, tie knots, steer a ship’s wheel, make believe in a 19th-century schoolroom, or climb on the footropes on a ship’s mast—perfect for kids with plenty of wind in their sails.
photos: Courtesy of penobscot marine museum
The Penobscot Marine Museum is really a historic village full of all things nautical. Get there now before they batten down the hatches.
October 2011 Maine Ahead >> 49
vantage Point
Becoming Thos. Moser Thos. Moser, the brand that makes house-beautiful seekers swoon, is the 39-year-old brainchild of Tom Moser, a former college prof who turned a genius for woodworking into a quality icon. by tori britton & Mark wellman om Moser’s furniture is not for the timid. Even those with the discretionary income to invest in this exquisitely crafted furniture—a dining room set can cost as much as a small car—need a certain amount of self-esteem to own a Thos. Moser. It’s a bit like being married to a head turner; you have to feel worthy of something this beautiful. Tom Moser’s success in the fine furniture world, some of it recorded in his 2002 book, Thos. Moser: Artistry in Wood, is legendary. He’s the Bates College professor-turned-furniture-maker who, instead of cutting corners or manufacturing goods overseas, built a profitable company by creating uncompromisingly high-end handcrafted furniture, building a brand image worthy
of such heirloom-quality products, and charging what it costs to profitably create, market, and deliver them. Moser did it, in part, by constantly learning. Artistry in Wood relates a time early on when he agreed to make a desk for a retired school teacher for $350, all she could afford. Moser whipped together a badly-made eight-drawer desk in five days. When the teacher expressed her disappointment, he took it away and came back a few days later with a simple writing table—something worthy of both his signature and her $350 check. She loved it. He used the first desk at the workshop for holding paint cans, as an object lesson. Thomas Moser the man, unlike the lovingly packed furniture that leaves his company’s October 2011 Maine Ahead >> 51
vantage Point
Auburn facility each day, continues to be a work in progress. With the business now largely handled by others, including three of his four sons, Moser, once the company’s lead furniture designer, has taken up sculpting in recent years, creating realistic, life-size 3-D portraits, often of friends and family. Perhaps they are immortal humans to go with his furniture, which he claims will last at least 100 years. Please tell us a bit about your background, where you grew up.
I was born in Chicago, grew up in suburban Chicago in Northbrook. I am a first-generation American. My father was from Austria and my mother from Germany. She spoke with a very heavy accent, in broken English. My brother and I had what they used to call an Old Country upbringing. Strict, but very nurturing. I was born in ’35, so that makes me 76 today. What kind of a youngster were you? Did you
Top left: Tom Moser’s senior picture at the State University of New York at Geneseo. Top right: Moser and his mom in the mid-1940s. Center left: After earning a PhD, Moser taught English as a second language in Saudia Arabia from 1965–66. While there, he converted an old Volkswagon into a camper and he and his family traveled through much of the MidEast, often navigating by compass. Center right: Moser and his son Andrew working in the New Gloucester grange hall in the mid-1970s. Bottom left: Moser’s 2002 book, Thos. Moser: Artistry in Wood, written with Brad Lemley, is both a visual feast and an enlightening read. Bottom right: Moser poses for a 1977 feature in Country Journal magazine.
52 >> Maine Ahead
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When you turn 50 or so, Social Security sends you an accounting of payments you’ve made over your working lifetime. I started making social security payments when I was 11. By 13, I made $2,000, which was a lot of money back then. I worked shining shoes, washing dishes, caddying, working on the golf course parking cars. I was always hustling. And I loved to make things. Mostly models. I would take wooden orange crates— they were free, you could go get them at the A&P—and whittled them. I made trains, airplanes, made all the World War II fighter planes. Every now and then, I’d get a balsa wood kit, which was really special. As far as heroes go, when I was a little kid, the WPA worked by the house putting in roads, make-work. One of the guys had one arm; we called him one-armed Louie. I’d watch him shovel with one arm and he worked as hard and he shoveled as much
photos: Courtesy of TOM moser
have any heroes?
as any of those two-armed guys. Maybe it subconsciously occurred to me that we can overcome obstacles. You certainly had some obstacles to overcome as a teenager, when both your parents died. How did that affect you?
When I was just 14, my mother died of cancer of the uterus, which is dangerous, painful, and drawn out. My father died, also of cancer, on my 18th birthday. So what happens to a kid when they lose their parents? Often it turns into anger—you know, “Why me?”, a chip on your shoulder— and that’s how it played out for a while. I left high school, one month into my senior year, and took a job in Chicago working at Marshall Fields. Some months later, after my father died, I joined the Air Force. How did you end up as a college professor?
While in the Air Force, it became obvious to me that I wanted some education. So when I got out, I applied to Boston University. They didn’t accept me because I hadn’t finished high school, but the State University of New York at Geneseo did accept me as a vet. Those were the good days: $57 a semester. They had three majors: early elementary ed., library science, and speech education. I did speech education. I admired very much the professors and their way of life and I wanted to emulate that.
we were by the ocean, and felt around for a flat space to put up the tent. The next morning, a shadow came across the flap of the tent. “Hello in they-uh. Anyone in he-yuh? You’re gonna have to move this-here tent, ’cause I’ve got to get to Augusta.” So we crawl out and we’re smack in the middle of
“Keep in mind, Bates would take my kids tuitionfree, so I’m talking about half a million dollars in potential tuition I’d be walking away from.” this old lobsterman’s driveway! He helped us slide the tent over onto his lawn, and we spent five days there, ate dinner with them. So we had this love affair with Maine. A few years later, when we were in Saudi Arabia, I got different job offers at the Hague in Holland, in Bangor in Wales, at the University of Michigan at Marquette, and at UMaine in Orono. Orono was two-thirds the salary of Michigan, but we wanted to come to Maine, so we went to Orono in 1966. The next year, I applied for Brooks Quimby’s job at Bates and got it. I taught there for six years, as a tenured associate professor.
So you went on to get your master’s and PhD at the University of Michigan and Cornell. By then you were married and had a
All this time, you and Mary are also rehabbing and selling
family. When did you first meet your wife, Mary?
old houses, and you were making furniture. Your book
When she was 12 and I was 14. She was my neighbor. Mary was kind of my girlfriend when I was in the service. She sent me a Dear John letter when I was stationed in Greenland and I was miserable. Two years later, I was visiting her mother and I saw her. We went to Ravinia, which is a summer concert place in Illinois, and we kissed on the porch and that was it. We’ve been married 54 years.
Thos. Moser: Artistry in Wood opens with your decision to
How did you two end up in Maine?
When I was a junior in college, a professor said, “You know, you should go to Bar Harbor, Maine, it’s a beautiful place.” So Mary’s doctor—she was pregnant with our second child—said, “You’re going to have two babies in diapers. Why don’t you take my tent and go off for a week before the next one is born?” So when she was eight months pregnant, we were on our way to Bar Harbor, but only got as far as East Boothbay. It was so foggy that you couldn’t see anything—I had to open the door to see the white line—so we stopped the car. We heard ding, ding, ding, so we knew
quit teaching and start a furniture making business. Can you tell that story?
First of all, in 1972, college campuses were very strange places. They had gone through a very abrupt transition, rejecting traditional learning and replacing it with nongraded classes, sensitivity studies, and T-groups; it was not a nice place to be teaching anymore. I was apologizing for teaching people Aristotle and Plato and the Socratic method. It was just a mess. I had a sabbatical leave coming, so I sat down with Hedley Reynolds, the president, and said, “Look, I’d like to leave for a year. Will you hold my job for me and give me until the middle of next April to tell you whether or not I want to come back?” He said, “Sure.” Keep in mind, Bates would take my kids tuition-free, so I’m talking about half a million dollars in potential tuition I’d be walking away from. Usually when you’re on sabbatical, it’s full pay for one semester, half pay for one year. I October 2011 Maine Ahead >> 53
vantage Point
“Once we were in The New Yorker, we had what we called 2-1-2 weekends . . . if they were in a green Volvo station wagon, we knew we had a sale.” took no pay for one year and bought an old grange hall in New Gloucester and started building furniture. We started in 1972, and we lost money. Our total revenue for the first year was $17,000. Second year, we doubled it to $34,000, but still lost money. By the third year, we actually broke even; the fifth year, I made more money than I spent. But we had about $80,000 in debt and it didn’t look like we would ever get out of it. So we sold our house and paid it off. That house had been built in 1782. It had nine fireplaces, two big chimneys, and we’d spent seven years restoring it. God, we loved that place. But we left it. You and Mary, like many couples, built your company together; you also had four young sons. What was her role in the business?
Without Mary, none of this could possibly have happened. She was a traditional mother, raising the kids, running the household. But she also did all the advertising and all the selling and all the accounting for the business, which freed me up to work on the bench. She put together an inhouse ad agency so we could get the 15% discount. She’s the one who started the ad series in The New Yorker. We were in The New Yorker 27 years, one of its longest continuous advertisers. Whenever I give lectures to woodworkers or craftsmen, one of the principles they have to understand is that it takes as much time to sell a product as to make it. It’s not just an aside; selling is fundamental to being successful. You either sell it wholesale and let the guy take the other 50% of it, or you do it yourself, but if you do, you better be prepared to work 80- to 90-hour weeks, because that’s what it takes. Were your four boys part of the business, too?
Absolutely. When they got off the school bus at 3 o’clock, they got off at the shop. My oldest son, Matt, was my best lathe guy; he was a whiz bang on the lathe. And to this day, three of them still work at the business; Matt went off on his own. They all left—one went to the Peace Corps, one 54 >> Maine Ahead
October 2011
went to Denver, another to Boston, and one went to Arlington, Texas—but they all came back to Maine. How did you manage to grow beyond a small operation from New Gloucester, Maine?
New Gloucester, I used to say, is not the crossroads of the western world, kind of off the path, so we had to advertise. Our first ad was in 1973. It was a full-page ad in Down East magazine, featuring a grandfather clock and a little stand. A very good friend of ours and a mentor, Paul Guilmette, who had Guilmette Realty in Auburn, paid for half of that ad as a gift. It was a $350 four-color ad. That, incidentally, was also the moment in time where I cut my academic throat, because Hedley Reynolds and all my colleagues knew I turned my back on academe. At first, we sold furniture to our neighbors and friends. The next orders came from doctors from southern Maine; we advertised in the New England Medical Journal, and that worked pretty well until they said they didn’t want any non-medical ads anymore. Once we were in The New Yorker, we had what we called 2-1-2 weekends, for the area code, especially in the fall of the year. We figured out that 18% of what we sold in those days went to people who drove a Volvo. I mean these weren’t just rich people; these were rich people with taste. If they were in a green Volvo station wagon, we knew we had a sale. Did you have any other mentors or any training back then?
As far as woodworking goes, mentors were mostly the craftsmen I worked with. We were all self-taught. So we learned from one another. There was a man named Bill Geofrian, who ran Heritage Lanterns in Yarmouth. I remember spending a whole Saturday with him talking about cost accounting. I didn’t even know what the term meant. If I had money in the checkbook, I thought I was making money. That was the closest thing I had in terms of an indicator. Bill took me through the steps of materials, labor, overhead, cost of goods sold, and then the multiplier. To this day, I still think in those terms. I think of gross profit, net profit, overhead, contribution to profit. Without that mindset, without having a strong paradigm, you can’t make it. I learned about selling directly from a man named Dean Lieth at Troy-Bilt Rototiller Company. Troy-Bilt sold their products by mail order, direct to the customer. The word is disintermediation, meaning there’s no middleman. Bill End, who was 25 years with L. L. Bean and was the CEO of Lands End, also helped me with direct marketing.
BERNSTEIN, SHUR, SAWYER & NELSON, P.A. Portland, ME | Augusta, ME | Manchester, NH 207 774-1200
The company still sells directly, which makes us highly unusual. We never sell wholesale. Selling direct means higher margins are much higher.
They have to be—52% or 55% even—because we spend 34% to 37% selling.
bernsteinshur.com
what makes Bernstein Shur clients return year after year? To survive in this part of the world, you’ve got to be smart and dedicated—two words Bernstein Shur clients use quite often when
Part of your MO early on was to study overseas operations to help you create the best possible workflow. Where did you go?
I learned about manufacturing in Europe, mostly Denmark. I visited a number of factories and shops there—I don’t speak Danish, but they all speak English—and I learned how to organize serial production from the Scandinavians. I also learned it from northern Italy, in Udina, and Kyoto, Japan, from other companies similar to ours, family companies. Serial manufacturing is really about divisions of labor. So when we set up the building in Auburn, the north half of it was where the machinery was. That was where we made parts, about 17 weeks’ worth. We had the first CNC [computer numerical control] machine used to make wooden furniture parts in America, adapted from making aircraft wings. Now we’ve gone back to the future. Now there’s no queuing, no parts waiting to be used. You shouldn’t have boxes full of legs, you should have enough legs, not just in case, but just in time. We’ve since moved to those lean manufacturing principles.
describing our firm. And since a majority of our clients have retained our services for many, many years, they know a good perch for their legal matters when they see one.
At some point, you also hired an outside administrator to run things. Why?
I knew I didn’t have the horsepower to run the company; I had to hire a professional. In 1985, I hired a guy who had an MBA from Harvard University who had been with Digital Equipment Corporation. His specialty is what we now call ERP, enterprise resource planning. This was all new to me, but in the five years he worked October 2011 Maine Ahead >> 55
vantage Point
“We’ve been offered, many times, the chance to leave and go someplace else, but, no, we’re going to stay put. ” for me, I absorbed from his brain whatever one gets from a Harvard MBA. I learned the language, the way of thinking. We had one manager for 13 years, Harry Fraser, who is now the head of Johnny’s Selected Seeds. God, what he taught me. Thos. Moser now has showrooms on both coasts. How did those come about?
Our house was actually our first showroom. In 1974, we bought an old church vestry for $5, cut it into four pieces, moved it into New Gloucester, and that became our showroom. In the mid ’80s, I bought a building just off 295 in Portland and we moved our office and showroom there. That worked fine for about 15 years. We sold it at a significant loss, the only time I ever lost money selling real estate. Then I said, “Freeport’s the place, because millions of people a year drive slowly through that town.” We rented a building just north of L. L. Bean, and have been there since 1993. Around that time, we had a guy working for us who was getting his MBA from Harvard; he and the professor of retail did a study of where to place our next showroom. So we opened one in Philadelphia, in the inner city. From there we went to Madison Avenue in New York, Washington, D. C., and eventually to San Francisco, Boston, Los Angeles, and Chicago. Now we have six showrooms. We shut the one in Chicago. Even though it’s my hometown, we’ve never been able to get it to work. What was Mary’s role during those years?
Mary worked as my partner for at least 15 to 20 years, and then we came to a juncture in the road. It was, either be my lover and wife or be my business partner; we can’t go on like this. So she stepped out of the operational portion of the business and it worked out well. For years, you designed all the furniture, until your youngest son, David, grew into that role. Three of your four sons still work at Thos. Moser. How did you avoid feelings of jealousy between them?
Well, there’s an assumption there, that I avoided some56 >> Maine Ahead
October 2011
thing. [Laughs.] A family-held business is tough; where it’s the toughest is their interaction with one another, their wives, and their families. And it’s tough between them and the people who manage and run the company, to whom they report. That’s where the rubber hits the road. It’s taken a long time, but I think we’re at a certain comfort level now, where everybody who works in the company respects what the boys do. And they’ve earned that respect. In your experience, is there anything that makes it more challenging to do business in Maine than other places?
Costs. We finally got natural gas in our shop. Before that, we were running propane, which was incredibly expensive. The electricity is incredibly expensive. I don’t know where we are with taxes; they’re talking about 8.5% now or something like that. If you die in Maine, that’s 10% of your estate. So how many people want to die in Maine? That’s why they’re moving to New Hampshire and Florida. There are some endemic issues, but they are balanced off by some positives. I could not do what we have done from New Jersey. I could have done it possibly from Pennsylvania, certainly Oregon or Washington state, but by and large the Maine magic is what made us. We owe a great deal to that whole mystique. We’ve been offered, many times, the chance to leave and go someplace else, but, no, we’re going to stay put. Aristotle once said, “Excellence is not an act but a habit.” Looking back, what kind of habits worked for you as a business owner that you’d encourage others to cultivate?
Be judicious about who you surround yourself with. Hire people, engage people who are smarter than you are, and who are happy in their own skin. Stay away from angry people, people who feel like they’ve been misused. Attitude is far more important than demonstrated skill, because that skill can be taught if there’s a willing attitude. The other thing that goes with that is, give people freedom to make mistakes. Because, ultimately, it’s only through mistakes that we learn. Any last thoughts?
I want to sell furniture. I want people to understand that when they buy something from us, like that chair over there, which is probably 1,200 bucks, they’re going to give that to their grandchildren and, unless it burns, that chair will service at least three to five generations. So it’s worth $1,200.
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chef’s choice
Rick Hirsch >> Damariscotta River Grill Damariscotta RICK HIRSCH, Chef/CO-OWNER of the Damariscotta River Grill (as well as the Anchor Inn Restaurant in Round Pond) has a gift for making even the most ambitious kitchen wizardry seem easy. A frequent guest on TV, radio, and in print, Hirsch is living proof that culinary excellence doesn’t require even a pinch of pretention. Together with his wife and business partner, Jean Kerrigan, Hirsch has created destination restaurants that both celebrate “fresh and local”—the must-haves of modern commercial gastronomy— and specialize in a timeless staple known as “comfort food.” First or early food memory: Family holidays; eating latkes for Hannukah at grandmother’s . Early cooking experiences: Asking mom what was for breakfast and hearing her reply, “Whatever you make,” so I learned to scramble eggs. Family influences on your style and taste: We ate out a lot. Being exposed to lots of styles from different restaurants. Where you studied and/or apprenticed: Johnson and Wales in Providence; Marriott Hotel on Marco Island, Florida. When you realized you really were a chef:
Pivotal career move: Inception of the River Grill. Places that inspire you as a chef: Hawaii, seeing what local chefs were doing with fresh tuna and other ingredients we don’t normally see in Maine. Also Italy and the Caribbean.
58 >> Maine Ahead
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Favorite itemS on the menu: “Duck Confit Risotto for the combination of flavors; Thai Fish Stew is also one of the River Grill’s most popular items.”
Photos: Kevin Couture
After culinary school, at the Anchor Inn.
>> Damariscotta River Grill 155 Main Street • Damariscotta www.damariscottarivergrill.com 207-563-2992
First-timer’s tip:
Hours:
Sample menu item:
Open Daily: 11 am–9 pm Sunday brunch: 10 am–3 pm
Steak and Cakes: beef tenderloin, roasted garlic tarragon aioli, and lobster cakes with sweet corn sauce. Market price.
Specialties: Local Damariscotta River oysters, Sunday brunch, regional comfort food.
Accolades: Rick Hirsch is the 2010 Maine Restaurant Association Chef of the Year. Kudos in The New York Times, Fodor’s, Boston Examiner, Boston magazine, Cape Cod Today, and others.
Ample parking behind the restaurant; take advantage of the lovingly-chosen wine list.
Directions: From the South: Take I-295 north to Exit 28 (US 1, Coastal Route/Brunswick/Bath). Stay on US 1 North for approximately 27 miles to US 1 BR Exit. Stay right on US 1 BR to enter Damariscotta. Damariscotta River Grill is on the right From the North: Take US 1 south to Damariscotta; continue directions as above.
Things that keep you growing
envelope. It’s a fun, busy night and everyone is
professionally:
excited.
Travel, always keeping eyes open to see what other restaurants are doing; and looking
The last time you really impressed yourself
online across categories.
in the kitchen: When we developed our South Pacific Spice
Your favorite restaurant (besides your
Rubbed Grilled Salmon with Ginger Cashew
own):
Butter and Sticky Rice. Impressed myself that I
Mama’s Fish House in Maui.
hit it on the first try.
Other professionals you admire most:
Memory of a great meal you had in Maine:
Roger Fessaguet and Julia Child. Jean and I
Family lobster bake at my parents’ cottage.
once had lunch at Roger’s house with Julia C. Something you’d like to learn or study: Your new favorite ingredient:
I’d like to learn more about sous vide cooking.
Microgreens. Something about you that people would find Longtime favorite ingredient:
surprising:
Fresh local seafood.
I worked as a slimer in Alaskan salmon canneries, processing salmon.
Your least favorite job-related task: Writing the schedule.
What a perfect day off looks like: A day skiing.
Ways you’ve become smarter businesswise:
Pet peeve when visiting other restaurants:
Trial and error! Picking the brains of other
When it’s obvious that items aren’t made
successful businesspeople from all areas.
in-house.
Life experiences. What you’d want your last meal to be: Favorite night at your restaurant:
Lobster. The classic: steamed, drawn butter,
New Year’s Eve, because we get to create an
potato of any kind, and caramel swirl ice cream
entirely new menu from scratch and push the
for dessert. October 2011 Maine Ahead >> 59
THE BULL PEN
Bonding to Rebuild Infrastructure = Jobs Some expenditures cannot wait. Loans and labor are very affordable now. Maine people need jobs, and Maine’s economy needs a boost. Let’s get bonding. By ORLANDO E. Delogu aine needs a state bonding program equal to the needs that stare us in the face—roads, bridges, sewer and water systems, public school and university facilities—all in serious need of expansion and/or renovation. Unemployment realities also stare us in the face—at the national level we’re stuck around 9%; Maine’s unemployment has hovered around 7.7% for almost a year; Portland’s unemployment for this period has been around 6.1%. At the national level, we talk about infrastructure building to reduce unemployment, but we don’t pass the necessary legislation. In Maine, the governor openly disdains “bonding” to build infrastructure in order to create jobs. Portland, almost alone within the state, has maintained a healthy bonding program during this recessionary period—the employment result speaks for itself. The benefits too are real—a new elementary school, an expanded airport, new marine terminal facilities,
Building Maine’s infrastructure is a worthy goal; so is putting Maine people back to work. A robust bonding program will do both. a renovated library, repaired sewer facilities, more energy-efficient public buildings—all built with bond revenues, employing Maine people. Beyond getting jobs and facilities that we need, interest rate costs have seldom been lower. A Press Herald lead story (“Communities Refinance and Taxpayers Save” by Ed Murphy, August 8) indicated that almost a dozen Maine towns have taken 60 >> Maine Ahead
October 2011
advantage of these low rates and saved millions by refinancing past debt; other towns are looking to do the same. The state level of government, with its strong credit rating, needs to be as smart. A further reality staring us in the face is that Maine contractors want the work now. Men and equipment are unemployed or underemployed. Building during a recessionary period is cost efficient. We get more for our tax dollars. Bid prices have not been as low as they are now in years. This benefits private, and certainly public, capital construction projects. Portland’s new school, for example, came in $4 million under bid estimates; partial figures available on Portland Jetport projects show bid prices $6 million below bid estimates; and over the last three years, 19 separate sewer projects with estimated costs of $38.5 million were completed—actual costs were $11.5 million under bid estimates. These are real dollar savings. Early in his administration, Governor LePage characterized his biennial budget as a “jobs bill.” In the name of job growth, the budget significantly reduced spending, cut taxes, fashioned welfare and regulatory reforms, but resisted new debt—despite pleas from Maine business leaders to invest in our state’s crumbling infrastructure. The governor has often called on government to operate more like the private sector—so do it. Corporations often bond to build the capital facilities they need, and CEOs know that the best time to make these investments is when interest rates and bid prices are low. As for job prospects arising out of welfare and regulatory reform—experience suggests that, at best, few jobs will be created, and these arise
only over time. At worst, net job benefits are purchased on the backs of the poor and the most needy in our society, and/ or they give rise to health and safety risks far more dangerous and costly than the benefits created. Few would argue that life in Maine was better before Medicaid, before special needs students were given access to public education, before Head Start, before our environmental laws were put in place, before we began to regulate our fisheries, agriculture, and forestry industries. Our national (and state) experience with austerity budgets is more recent. But the handwriting on the wall seems clear—sharply cutting budgets (particularly in a period of recession or weak recovery) leads to further job losses. That clearly has been the experience in Europe and now England, where economies have stalled. Our own country is flirting with a double-dip recession. It’s absurd to believe Maine’s budget cutting will produce different results. What jobs strategy remains, then, to pull us out of the present recession? Answer—the same one stated in the title to this piece; the same one Portland has used to good effect. Its employment numbers, the social and dollar benefits of building infrastructure, speak loudly. In short, the strategy that Governor LePage has avoided and criticized, building needed infrastructure using bond revenues, creates jobs. Doing more of what has not worked is clearly not the answer. Bottom line—if the governor would rescue his “jobs bill,” he must move in a new direction. Building Maine’s infrastructure is a worthy goal; so is putting Maine people back to work. A robust bonding program will do both. The timing could not be better. The benefits, the employment gains, would be immediate and real. Orlando E. Delogu is an emeritus professor of law at the University of Maine School of Law. October 2011 Maine Ahead >> 61
THE BULL PEN
Maine’s Unrealized Human Potential The story of Felix Zandman ought to inspire Maine businesspeople to look both inside ourselves and outside our borders to find greatness. By Perry B. Newman elix Zandman was born and raised in Grodno, Poland, and likely would have lived a quiet, comfortable life in the family business had the Nazis and their local enablers not exterminated 28,900 of the town’s 29,000 Jewish citizens. But, just a step ahead of their pursuers and sheltered by non-Jewish neighbors, Zandman and three family members surreptitiously dug a hole in the ground—a grave of sorts—in which they lived for more than a year before escaping Poland and surfacing safely in France. Think of it—a year underground—in hiding from certain death. And what did Zandman do with his time? He studied. His uncle, “interred” with him, schooled him in algebra, trigonometry, physics—anything and everything Zandman could absorb. There was little else to do, and Zandman immersed himself as if his life depended on it. By the time he emerged from the grave, he had amassed and internalized an enormous body of knowledge. When he was admitted to the Univer-
There may never be another Felix Zandman, but there are hundreds, even thousands, in our communities with much to give. sity of Nancy in France, he distinguished himself immediately, earning degrees in mechanical engineering and physics, ultimately receiving the award of Student of the Century. He went on to earn a doctorate in physics from the Sorbonne. 62 >> Maine Ahead
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In 1956, Zandman moved to the United States, and within a few years founded a company he called Vishay, after the small town in Lithuania where his grandmother was born. That’s the same Vishay as in Vishay Sprague, the electronics company located in Sanford, Maine, that is part of the multibillion-dollar Vishay conglomerate. Felix Zandman died this past June at the age of 83. Today, Vishay has 22,000 employees and manufacturing facilities in the Americas, Europe, Asia, and Israel. It is hard to imagine a more unlikely or inspiring success story. I’m mentioning Zandman, however, not simply because he recently passed away, nor because the company he founded has operations in Maine. In fact, his life and legacy are far more important than that, far more important even than his contributions to science (scores of patents), and far more important than the jobs he created. Zandman’s life is an example of the incalculable potential of human life, the wondrous creativity within each of us. And it is an example of the staggering loss we suffer when we exclude or extinguish the potential of the strangers among us. What else did the Nazis extinguish when they eviscerated Europe? What scientific, artistic, and economic contributions to humanity might have been made, but will never see the light of day? And now, what contributions to humankind can we make possible, if we but open our doors to those who, but for safe harbor here, would likely perish in yet another holocaust? We must work to see that the strangers among us are welcomed, that the creativity within them is fostered, that educational opportunities are available, and that we in the majority culture reach out
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October 2011 Maine Ahead >> 63
J. Doe
Cleaning Up Maine’s Mess he May issue of Maine Ahead included an article by retired professor Orlando Delogu entitled “Pension Shell Game.” Among other points, he dismissed the gravity of the huge $4.1 billion debt owed by Maine taxpayers for teacher and state employee pension benefits. The emeritus professor taught environmental and land use law at the University of Maine for over 40 years. Professor Delogu stated that the most critical component of Maine’s public debt simply had a “cash flow” problem. For those of us having worked a lifetime in the private sector, we know that the lack of cash flow (money) is an extremely serious issue. Maine state government has a nagging cash flow problem that prevents adequate funding of core programs and services, while still paying off its $4.1 billion pension debt. Anemic cash flow is why Maine’s past administration 64 >> Maine Ahead
October 2011
wasn’t able to balance the state budget for years without gimmicks. To “balance the books,” it used unpaid furlough days and one-time stimulus money from Washington, and failed to pay our hospitals the funds they were owed. The debt crisis in Washington was created by fiscally-reckless career politicians, who spent far more than the country was taking in for many years. Now the feds don’t have enough cash flow to pay the interest on the $14 trillion national debt, while still funding bloated government programs and services. To make Maine’s cash flow problem even worse, Washington cannot solve its spending and debt addiction without reforming Social Security, Medicare, and Medicaid. These behemoth entitlements consume 43% of every federal tax dollar spent, and growing. Reforming them will likely mean less federal money heading to Maine—less cash flow to pay our bills. Fiscal imprudence at the top runs downhill to affect all of us.
Illustration: m. scott ricketts
While academics pontificate and politicians ruminate, the real-world members of the LePage administration continue to do the dirty work of dealing with Maine’s economic mess. by Bruce Poliquin
Professor Delogu’s dismissal of the financial importance of cash flow didn’t help address the monster $4.1 billion pension debt. Real-world financial experience did. Retirement benefit reforms passed by the legislature and signed by Governor LePage eliminated $1.7 billion of this daunting debt. This, in turn, reduces taxpayer spending by roughly $200 million per year for the next 17 years until the debt must be paid off. The state government’s cash flow is now stronger. More money is available to strategically invest elsewhere to help create jobs and keep our kids here. In the July/August issue of Maine Ahead, Professor Delogu authored another article entitled “Less Political Rhetoric, More Straight Talk.” In this piece, he more broadly criticized the debt reduction, spending cuts, tax cuts, regulatory changes, and welfare reforms being implemented by the new leadership team in Augusta. Is the opposite direction being taken by Washington the right course? We know it’s not. And, the Standard and Poor’s credit rating agency and stock investors around the world have come to the same conclusion. There’s no substitute for practical business and economic experience to solve real world fiscal and job problems. That’s what the people of Maine are counting on in state government. Over the past 35 years, our elected officials have created an expensive and complicated state in which to live and operate a company. Our businesses are encumbered with high taxes, stifling regulations, growing public debt, and draining energy and health insurance costs. These impediments discourage entrepreneurs from investing their capital in Maine to start or expand a business, and to create jobs. From 1999 to 2009, a net 56 new private sector jobs were created in Maine. Fiftysix in a decade! In 2010, Forbes magazine listed Maine as having the worst business climate in the country. Fifty—dead last. The median household income just across
the border in New Hampshire is $19,000 per year higher than here in Maine. The 2008 U.S. Census shows that only 10,951 Maine households out of our population of 1.3 million earned more than $200,000. In New Hampshire, a state with essentially the same population, the number is 23,710 households. It’s no wonder why our kids continue to leave for better opportunities elsewhere. Last November, this embarrassing reality ushered in new leaders to fix the mess in Augusta. Not academics who live in theoretical worlds, or career politicians who focus on the next election. Rather, skilled business professionals with years of real-time experience creating jobs. Entrepreneurs who know what it’s like to put their own money on the line, and to be held accountable. Private sector people who understand that performance equals success. Our new leadership team in state government is working nonstop to change the way Maine operates. Our goal is to build a business-friendly climate to attract capital investment and jobs. This will generate more tax revenues to pay for government programs and services. A fiscally disciplined government that spends less, taxes less, regulates less, and borrows less will help us get there. It’s common sense, and it works. This transition to a brighter future in Maine will continue to be painful, but necessary. The cold, hard truth is that there’s no silver bullet to save us. The changes will threaten the status quo. The naysayers will make lots of noise. But we have a generational chance to get this right. We need everyone’s help and support, including that of Professor Delogu. This is going to be tough. We can do this. We’re Mainers. Bruce Poliquin is Maine state treasurer. His comments are as state treasurer, and not as a trustee of the Maine Public Employees Retirement System. October 2011 Maine Ahead >> 65
PROGRESS NOTES
Member Q&A Roxane Cole is a commercial broker with 25 years of experience in real estate sales. She is a former president of the Maine Real Estate & Development Association (MEREDA) and is now taking a new approach in the latest chapter of her career. You work mainly from a virtual office now. What led you to the choice to operate on-the-go versus in a traditional office building? I do have a physical office because it is required by the Maine Real Estate Commission. When I started my company, however, I gave thought to what is important for delivering the best service—basically, what is most effective in furthering the interest of my clients. I concluded that it didn’t make sense to rent an office and never be there. Instead, I felt the best approach was a smarter use of technology, so my office is anywhere that I am. That allows me to be extremely responsive to clients, whether I am in the office of a client or at a property. Do you find that the mindset of “your office being wherever you are” is beneficial? Absolutely. I believe that any time someone steps away to examine how things have always been done, with the intent to innovate, the result is invigorating and beneficial to those you serve. The way I access and use information nowadays allows me the opportunity to do tasks in minutes that used to take someone a week to do. Because of that ability, I choose to work alone. It’s very effective for me, but you have to be comfortable embracing new ways of doing things to market properties and meet the needs of buyers and tenants this way. Quite frankly, you have to be a self-starter, enjoy continually learning new skills, be highly organized, and leave your ego at the door. I am passionate about the business, and this model is fun for me because it expresses the entrepreneur that I am. Founded in 1985, MEREDA is a statewide organization of commercial real estate owners, developers and related service providers, whose mission is to promote an environment for responsible development and ownership of real estate throughout the State of Maine through legislative advocacy, educational programs and professional networking opportunities.
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Can you give me an example of one of those tasks that used to take a week but now can be done in mere minutes? Researching a property. In the old days, you used to have to physically go places like city hall or the registry of deeds. Now I go online and find what I need instantly, any time of the day or night. Broker electronic databases, online mapping and information services, superb software packages, and the Internet allow for instantaneous retrieval of information and extensive
Maine Ahead • SPECIAL PROMOTIONAL SECTION
financial analysis. In minutes, I have data that I filter using my years of transaction experience, to arrive at clear, decisive recommendations for positioning properties or drafting offers for buyer or tenant clients. Tell us a little about your new name and logo. I chose to name the company using my full name because it occurred to me that after 25 years in the business, my name is a brand. Once I made that decision, I decided to augment that brand with a distinctive logo using vivid color. I wanted it to be vibrant with really strong positive energy, to stand out and, frankly, I wanted it to be fun. I have been pleasantly surprised by the number of people who have commented positively about the logo. In the process I have also learned how many men and women really like purple! Another way I differentiate myself is stated in my company slogan, “It starts with a confidential conversation.” One of the insights I determined early on is that by doing the work myself, without staff, I could provide truly confidential circumstances for clients. How is the commercial real estate climate right now? It is very busy in a meaningful way. Closings are happening, leases are being signed, and offers are being made. I’m not just moving papers around while prospects ponder risk/reward. People are way more receptive to making decisions to position themselves and their companies than they were in the depths of the recession. Do you view the economy as getting stronger? I see that there is absolutely a sense of growing optimism. It is not pervasive, not everyone feels it or is experiencing it, but it is popping up in more places. I have clients who are very, very proactive right now. They sense it is their time to make transactions happen. It is a great time to acquire property, or sell and acquire better property, or to secure a better lease situation. People were hesitant in the past couple of years and didn’t want to jump in too soon, but now they don’t want to miss the opportunity.
MEMBER PROFILES
What are the people ready to jump into commercial real estate looking for? I think more and more people are looking ahead five or ten years. Some of them want to purchase and own for less money than they currently pay in rent. Others want to reduce costs by lowering lease rates through extending leases. Many are interested in buying due to low interest rates and lower real estate prices. There are owner/users who want to sell inadequate facilities, and purchase better properties that are favorably priced. Basically, whatever it is that allows someone to reduce the number of years until retirement, or to make more money through savings, or to increase efficiency and productivity for their business. Having gone through the recession, people are paying more attention. They realize there are always positive things
that come from difficult economic times for those who evaluate circumstances and seize opportunities. Other points of interest in commercial real estate include green construction and energy efficiency. Whether occupying a space owned by a developer or building new, green is very important. There are still unknowns about cost versus benefit, but, overwhelmingly, demand is there. The cost benefit analysis clearly encompasses much more than the difference in initial construction costs. I believe the paybacks are there when all things are considered and it is clear that people are very serious about it in this marketplace. Recent legislation extending tax credits is also important. During the recession development spurred by tax credits provided economic activity and construction jobs that
An example of Cole’s new look for her onewoman commercial real estate company. would not have been present without those credits. Looking forward, the recent extension of the tax credits will continue to stimulate that activity.
MEREDA talked with three economic developers—Keith Luke of Westbrook, Nate Rudy of Gardiner and Rod McKay of Bangor—to discuss how recent legislation will effect economic development in the state, their thoughts on the end of the recession, and upcoming town projects. What do you feel is the biggest impact to economic development in your town coming out of this legislative session? This could include the legislation that has not yet been voted into law. Keith Luke, Westbrook: While there was a great deal of concern about wholesale rollbacks of environmental and business regulations being handed down from the executive branch, by the end of the legislative session, what we actually experienced was a healthy review of many bureaucratic processes. LD 86 “An Act to Provide Certainty to Businesses and Development” passed both the Maine House and Senate with strong bipartisan support. Repealing the most onerous elements of the Informed Growth Act (LD 322) also drew bipartisan support. Nate Rudy, Gardiner: There are several bills that will impact economic development in general, including the ongoing revisions to LD 1. I’m also interested in the bills and
related discussions about how to create job growth in the agriculture sector, a proposal to create a Maine Street Economic Development Bank to increase access to capital for businesses and farms, and making capital improvements at the University of Maine that would help grow our science and technology programs for the future economy. DECD Commissioner Gervais’ appointments of Deb Neuman to head up the Governor’s Account Executives Unit within DECD and Denise Garland to direct the Office of Business and Community Development is exciting. The service delivered to Maine’s business community will be even better with the addition of Deb’s dynamic personality and insight and Denise’s help on the LD 1 project. Rod McKay, Bangor: The changes in LD 1 have the potential to be very significant for the economic development environment in Maine. One of our biggest challenges in attracting large value-added projects such as
manufacturing and high-tech investment has been uncertainty in permitting. The inability to resolve critical path issues will cost us projects. The creation of a Business Ombudsman program will also provide improved customer service from the state as we work through development projects. Having an advocate that can help local economic development officials and private parties navigate the state system will facilitate investment. Have you seen any indication either in the housing market, in building permits, etc., that would indicate the recession is coming to an end? If it’s not coming to an end, are people beginning to treat this economic climate as “business as usual”? Have you seen anything that would indicate the end of the economic downturn is happening, or near? KL: While we see many promising signs of recovery in the Westbrook and Greater SPECIAL PROMOTIONAL SECTION • Maine Ahead
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PROFESSIONAL EVENTS
October 5, 2011 Brunswick Landing Bus Tour & Cocktail Hour “Windshield Tour” Update & Social 4:30 to 7:00 PM Brunswick Landing (formerly Brunswick Naval Air Station) 4 Admiral Fitch Avenue, Brunswick October 19, 2011 Bangor-Area Breakfast Seminar The New Vision for Development in the Bangor Region 7:30 to 9:00 AM Hilton Garden Inn 250 Haskell Road, Bangor October 27, 2011 MEREDA’s 2011 ANNUAL Fall Networking Social Another great “meet-and-greet” opportunity, this time on Portland’s Waterfront. This must-attend event sells out every year, so sign up early! 5:00 to 7:00 PM Hilton Garden Inn Portland Downtown Waterfront November 9, 2011 Lewiston/Auburn Area Breakfast Seminar Deep Energy Retrofits 7:30 to 9:00 AM Martindale Country Club 527 Beech Hill Road, Auburn December 8, 2011 Portland-Area Breakfast Seminar Urban Impaired Stream Regulations 7:30 to 9:00 AM Clarion Hotel 1230 Congress Street, Portland January 26, 2012 2012 Annual Real Estate Forecast Conference & Member Showcase MEREDA’S SIGNATURE EVENT Along with the annual economic overview and outlook on Maine’s economy, the conference also provides the popular market overview by property type focusing on both commercial and residential forecasts. MEREDA’s Member Showcase provides an excellent opportunity for exhibitors to network and market their products and services. 9:00 AM to 5:00 PM Holiday Inn By the Bay 88 Spring Street, Portland
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Maine Ahead • SPECIAL PROMOTIONAL SECTION
IDEXX, Westbrook Portland economy, the lengthy process continues to be two steps forward and one step back. Our largest employer, IDEXX, continues to expand, and their prospects for growth remain not only promising, but exciting. While our commercial vacancy rate remains relatively low, the message we hear clearly from small businesses is that they are still struggling. Entrepreneurs who were once able to tap rising home equity to finance new businesses, or grow existing ones, have lost that access to capital. And, really, nothing has emerged to fill that void. The fact remains if someone is underwater on their home mortgage, it is going to be very, very difficult for them to finance a new business venture. I expect we’ll continue to hear about business expansions and—in the very same week—about a small business, retail store, or restaurant closing. I do think that it’s important to point out that even when we look back at “the boom years,” we had retailers and restaurateurs both come and go. There has never been a time when success in the local or regional economy has been guaranteed. NR: Gardiner’s housing market has been stable, and building permit applications are relatively stable compared to last year—new house permits and larger dollar-value permits have been higher than average in the last few months. As for the recession ending, I think that people are hopeful that the economy is stabilizing, particularly entrepreneurs who have been chomping at the bit since the economic downturn to start a new venture. Likewise, some existing businesses seem to be retrenching and making strategic equipment and real estate purchases in preparation for a new product line or campaign. This sentiment is also reflected in several new business starts in Gardiner, questions about Maine’s Pine Tree Development Zone program around the region, and reassurances from local banks that they are eager to lend to qualified applicants with solid business plans. RM: Building permits have picked up a bit in the last few months, but we think we are insulated somewhat by our location—we never hit the extreme downturns, but also don’t hit the peaks of the economic cycles. We have another major hotel going up, a new Christmas Tree Shop location, and other retail and restaurant activity. We would like to see manufacturDates to itchange. ing activity increase at subject the pace was a few years ago, but that is slower to Please visit www.mereda.org for the latest updates. bounce back.
Does your city have any exciting projects in the works? KL: Two projects in Westbrook are especially exciting—IDEXX recently announced that they are moving ahead with a $60 million corporate headquarters that could accommodate 700 new employees in Westbrook. That’s a project that is good not only for our city, but for the state as a whole, as we look to promote opportunities in bioscience and technology. The other project that is exciting is the recent acquisition of the Dana Warp Mill in Westbrook by Sasa Cook and Schoodic Capital. For over a decade the Dana Warp Mill has functioned as one of the region’s leading business incubator sites, offering flexible space at below-market lease prices. The new owner is committed to
improving the 250,000-square-foot former mill building and aggressively marketing the property, which is home to JobsintheUS .com, Common Census, Bakery Photographic Collective, Acorn Studios, and a wide variety of other growing businesses. NR: Gardiner’s new waterfront park and marina continue to draw new visitors to our eclectic mix of businesses and restaurants in the historic downtown district, and we’ve had two excellent fireworks shows and a successful carnival already this season. We’re also excited about new prospects who are exploring the world-class infrastructure and amenities in place for our pre-permitted lots at the Libby Hill Business Park. RM: We are excited about the new Bangor Arena project. It’s a $65 million investment,
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executive Lifestyle
>> Free Ink A complimentary listing of Maine businesses. To get yours listed (first come, first served), go to www.maineahead.com and click on Free Ink. Nlb Stamps & Engraving Lewiston Founded 1990 This small, woman-owned business manufactures custom rubber stamps with next business day service for most stamps. NLB also engraves small plaques and gift items using a CO2 laser. 1026 Sabattus Street • (207) 782-1688 www.nlbstamps.com Wild Oats Bakery & Cafe Brunswick Founded 1991 Offering a variety of fresh breakfast baked goods, hearty soups, hefty sandwiches, deli salads, breads, cakes, pies, pastries, and more. Indoor and outdoor seating with free wi-fi. Open daily. 149 Maine Street • (207) 725-6287 www.wildoatsbakery.com
Custom designed offices for work and home, tailored to your individual needs and budget. Call John at (508) 889-4008 or (207) 645-5375 or visit us at Groverwoodwork.com
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Bar Harbor Tea Company Bar Harbor Founded 2005 A microblender of unique, premium teas, blended in Bar Harbor using 100% organic base teas. Fine teawares and gifts, too. 150 Main Street, Store #2• (207) 288-8322 www.barharbortea.com Sustainable Harvest International Surry Founded 1997 Addressing the tropical deforestation crisis in Central America by facilitating sustainable alternatives to slash-and-burn agriculture. 779 North Bend Road • (207) 669-8254 www.sustainableharvest.org Casey’S Creations Arts & Photography Skowhegan Founded 2008 Affordable, unique photography, including weddings, graduation, maternity, and family photos. 8 Valliere Court • (207) 431-1422 http://caseyscreations.web.officelive.com Windsor Preventive Dental Care Windsor Founded 1984 A comprehensive dental care practice using the latest technology, led by William D. Powell DMD. New patients always welcome. 297 Augusta-Rockland Road • (207) 549-5945 www.windsorpreventivedentalcare.com
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October 2011
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Specialists in retirement plan services Securities and advisory services offered through Commonwealth Financial Network. TPA services by Norton are separate and unrelated to Commonwealth. Member FINRA/SIPC, a Registered Investment Adviser. 275 U.S. Route One, Cumberland Foreside, ME 04110
The Way We work
>> Katrina Smedal Professional Ballet Dancer Kate Smedal discovered her passion for dancing as a little girl. Her parents supported her dreams, in part, by driving her to ballet practice six days a week—an hour’s drive each way. Smedal spent summers at ballet camps, studied at North Carolina School of Arts, and now is back in her home state as part of a talented group of 13 dancers and 6 apprentices called the Portland Ballet Company. She also teaches ballet and Pilates. What inspired you to become a professional dancer? My first teacher, Ivy Forrest, who taught at the Thomas School of Dance in Bangor. She had performed with both the New York City Ballet and the Joffrey Ballet and I idolized her. What about ballet attracted you? I loved the discipline, the music, the elegance, and the focus that it required. I was a shy child, and through ballet, I found that when I was in the studio I didn’t have to be shy. It still is the place I feel the most comfortable, the most at home. How often do you practice? Ballet dancers should take class every day. It’s funny—the same exercises you learn when you are 10, you end up repeating in class every day for the rest of your career. You really have to be willing to do the day-in, day-out work to keep your body in top condition. Portland Ballet offers a company class six days a week. In addition to that, rehearsals can last between 8 and 12 hours a week. Can someone in Maine actually make a living as a professional ballet dancer? It can be difficult to make a living as a dancer in Maine. Most of the dancers have a second job teaching. Others hold positions in fields outside of dance. How long can you remain a professional ballet dancer? Some dancers are able to keep performing into their 40s, while others start to fade around 30. It really depends on how well your body holds up to the demands of classical ballet. You’ve been the product of years of instruction and now teach ballet yourself. What makes a good ballet teacher? A good teacher works slowly with students to develop proper placement and technique. They reinforce hard work with praise, and encourage their students to travel outside of their own studio to see what the world has to offer.
72 >> Maine Ahead October 2011