Rebuilding Rural Communities As Traditional Industries Decline

By Leah B. Thibault

Last year, quarterly coal production in the U.S. was at its lowest since 1981 -- representing a 23.5 percent fall off over the seven years starting 2008.

The loss of this industry, which has been a way of life for many in places like Appalachia, Wyoming and Montana, has left residents in coal-producing regions without jobs or a clear sense of their future.

This scenario has unfolded before, with a similar loss of a traditional industry. Maine was once a global leader in pulp and paper manufacturing, which seeded boomtown development across the state over the last century. Yet the past five years have seen the closure of five pulp and paper mills -- resulting in the loss of more than 2,300 jobs, or 12 percent of its peak employment figures.

For the rural Maine towns of Bucksport, East Millinocket, Millinocket, Lincoln and Old Town – communities built around the wood products industries -- the effect of declining demand and cheaper imports is not a global problem. For those who have seen an increase in poverty and unemployment at disproportionate rates to the rest of the state and country, it’s a very personal one.

In the words of Lori Christopher, a 35-year employee of the Madison Paper plant at the time of its closure in March 2016: “Everything is going to have a domino effect. It’s going to be kind of a ghost town. It will affect the schools because taxes are going to go up, and they’re going to stop the programs they don’t need.”

Christopher’s prediction was based on the experiences in other mill-towns that went through significant changes. Residents of Jay, an hour down the road, saw their property tax rates increase by 23 percent in 2016, following the layoffs of 300 employees at the local paper mill.

So, in the wake of the disruption of traditional industry, the question becomes: How can we help these communities move forward?

Many of the difficulties these rural areas face stemmed from the reliance on a single industry. So, in helping them to move forward, it makes sense to utilize diverse solutions and to “help communities deepen and diversify their shallow economies into something more sustainable,” as CEI Capital Management CEO Charlie Spies says in describing the company's community economic development practice.

Through the Federal New Markets Tax Credit (NMTC) program, a flexible financing program designed attract private investment to low-income areas, CEI Capital Management has helped secure the futures of the remaining companies within these traditional industries against a changing economic environment, as well as helped support the growth of new industries within the community and support their low-income residents.

In Baileyville, Maine, the program provided much-needed financing for the modernization and vertical integration of a century-old paper mill through the addition of a new tissue production plant and retraining the local workforce to be employable on state-of-the-art machines.

The program helps nonprofits create new job opportunities, too. The Appalachian Mountain Club was able to grow ecotourism in the Maine woods by financing the construction of camps to draw in tourists year-round and support local businesses. The program also supported the construction of low-income homes in partnership with the local Habitat for Humanity in Lewisburg, West Virginia, where 19.6 percent of the population lives below the poverty line.

While each of these examples was specifically tailored to needs of a unique community, they can serve as models for helping other rural communities facing the loss of traditional natural-resource-based economies in similar situations, beyond West Virginia and Maine but to all rural places needing to attract outside investments to help reinvent themselves.

Image credit: Pixabay

Leah B. Thibault is Director of Executive Administration & Special Projects for CEI Capital Management. The firm creates and preserves jobs and improves quality of life in rural, low income communities by providing access to project capital through New Markets Tax Credits. Over 12 years, CEI Capital Management has placed over $924 million in 90 different projects across the U.S. In addition to fiscal soundness, CEI Capital Management evaluates each project according to its benefit to the local community, economic gain and positive impact on the environment. It is a wholly owned subsidiary of Coastal Enterprises, Inc. (CEI), the Maine-based nonprofit community development financial institution that was among the founders of this important federal economic development program. For more information, visit us online at www.ceicapitalmgmt.com.