Program to help small businesses takes root in Maine

This is spud country. And the city of Presque Isle, as seen from an airplane, is little more than a speck in an ocean of rolling potato fields. Unemployment is high in this corner of northern Maine, hovering around 14 percent. But officials here are down right bouyant compared with five months ago.

''We were facing the biggest crisis to hit our industry in a long time,'' says Ed Plissey, between bites of a steaming baked Russet tuber at the Cafe Rouge.

A.K.F. Inc., the county's largest potato processor, had filed for bankruptcy. Presque Isle was looking at the loss of 800 factory jobs and a ripple effect that would hit farmers, retailers, and the electric company.

''It would have impacted 5 percent of the Aroostook County (pop. 91,256) labor market,'' says Mr. Plissey, executive director of the Maine Potato Commission.

City, state, and potato-industry officials scrambled to find a buyer for the aged factory. They contacted five of the nation's biggest potato processors, but each turned their offer down. ''It really looked bleak,'' recalls John Edgecomb, director of community development in Presque Isle.

But with assistance from the Small Business Revitalization program - and much persistance - local officials were able cut a $36 million deal with one company. This fall, when the potato harvest comes in, farmers will deliver their crops to a partly refurbished plant undergoing a five-year modernization by its new owner , the J. R. Simplot Company of Boise, Idaho.

At the heart of this survival story is the Small Business Revitalizaton program administered by the private nonprofit National Development Council (NDC) in Washington.

Since its inception 11/2 years ago, the NDC program has helped 20 states to arrange more than $1 billion in loans and to save or create 50,000 jobs. This year, 10 more states have joined this effort funded by the Small Business Administration (SBA) and the Department of Housing and Urban Development (HUD).

Small businesses accounted for 90 percent of the new nongovernment jobs created during the last 10 years, according to the SBA. But these companies typically have a tough time securing loans.

The NDC's role is to help states agencies learn about the technical aspects of setting up loans and creative financing. ''The goal of the entire program is to make state and local officials proficient enough to carry on by themselves,'' explains Chuck Garon of the Maine State Development office.

In some states this means setting up venture-capital pools and establishing ties to banks, but in Maine the focus has been teaching state and city officials how to gain access to federal Urban Development Block Grants and SBA loans.

''This program has done wonders for us. It allows us to see what's possible, and we've gone a long way towards setting up our own system,'' says Mr. Garon. His only criticism? ''There is a tendency (for states) to depend on NDC, and that should be done away with as soon as possible.''

Last year, 20 loans were arranged in the state under the rubric ''Maine Growth.'' (''Small Business Revitalization'' was too bureaucratic for people here, confides an NDC spokeswoman.) Loans ranged from $250,000 to help fisherman buy and renovate a boat to a $106 million loan package for a clothes-pin manufacturer to upgrade equipment in the face of import competition.

Before the NDC will go into a state, it insists on full support from the state's governor. Maine Gov. Joseph E. Brennan (D) has been keen on the program from its inception; his was the first state to sign up and it has built one of the best financing systems, says the NDC.

Yesterday Governor Brennan flew to Presque Isle to welcome the J. R. Simplot Company and to congratulate officials in the nearby towns of Easton and Washburn. In these two towns, an NDC-negotiated loan package made it possible for McCaine Foods Inc. to expand one processing plant and to reopen another.

The net effect of pumping money into this chronically depressed area is to make the agricultural base more diversified, say local officials. Simplot sells to the fast-food potato market, which requires a different kind of potato from the expanding Easton plant. And the reopened Washburn plant will process peas and maybe broccoli.

But when passing out laurels, the NDC's role shouldn't be overemphasized, says John Edgecomb of Presque Isle. While the NDC was ''absolutely instrumental'' in getting loans for the Simplot deal, notes the city's development director, it was Presque Isle's positive attitude and unity that saved the plant, he says.

From his wood-paneled office, Simplot plant manager John Cancelarich agrees: ''The economics just weren't all there. Simplot came because the city, the growers, the potato industry, and the union gave us the support we needed.''

To many here, just how the plant was saved is not as important as the fact that 600 people eventually will go back to work. Three weeks ago, Harold Fitzsimmons was rehired after a long winter that ''depleted all our savings. And there's still a lot (of laid-off workers) having a rough time of it,'' says the soft-spoken union president, who has spent 16 years repairing plant machinery here.

Farmer Steve Ulman of nearby Fort Fairfield recently signed a contract for russets with Simplot. As he puts it: ''I'm just glad the plant is back - whoever put it there.''

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