A privilege to lead.
MBTA’s members and mission make this a good job to have.
By Lauren Corey
Potholes and posted roads.
Continued underfunding is the real culprit – not winter.
By Kathryn Buxton
Transportation at center stage.
Legislature passes three bills with $250 million in new funding.
By Kathryn Buxton
The 51 percent solution.
Looking for a new financing model at the Cumberland County Meeting.
By Kathryn Buxton
No simple proposition. Woodrow Cross built an insurance leader with hard work and common sense.
By Doug Rooks
A privilege to lead
By Lauren Corey, MBTA President
It makes me more than a little sad to say that this is my last column as president. It was a privilege to have been chosen to lead this organization at such an exciting time. I am especially grateful for all of the amazing support that I received from the MBTA board and other members over the past year.
This is a group that is not afraid of hard work and making your opinions known. Those are two characteristics that worked to the MBTA’s advantage this past year as we tackled an ambitious set of goals. And by doing your part so well, you make leading this organization such a pleasure.
When I started my term last year, I said we were going to focus on three items. The first was to follow through on our strategic plan; the second was to increase membership participation as it relates to the goals of our plan; and the third was to better monitor our investments in the educational foundation and the infrastructure fund.
I am pleased to report that with your help, we have improved our efforts in all three areas. In the past year, our Infrastructure Fund balances have grown significantly from $400,000 to $450,000. Our Educational Foundation fund has grown from $260,000 last year to over $300,000 today. And our legislative and outreach efforts have been successful, as well.
I am particularly fortunate to end my term at a time when we had so many legislative successes. Last year we created LD 1790: “An Act to Secure Maine’s Transportation Future.” We were thrilled the governor and the legislature took to heart the goals in 1790 this year when they passed three different funding measures totaling more than $250 million in new funding for bridges, rail and highways. (See “Transportation at center stage,” page 19).
I liken what has happened in the last two years to the challenge of planting a garden in the most adverse conditions, tending it tirelessly, and finally seeing the sun shining on some seedlings. Many thanks to everybody who helped pass these measures, most notably the governor and several members of leadership, along with the Transportation Committee, led by two excellent chairs – Senator Dennis Damon, the lead sponsor and champion of 1790, and Representative Boyd Marley. And I especially want to thank John Melrose and Maria Fuentes for their endless work on both 1790 and the passage of the funding measures. What most would have considered impossible was made possible by them and the collective will of others, some of whom are mentioned above and others who are not, that are too countless to name.
The garden must continue to be tended. Last June we spearheaded the transportation bond campaign that passed convincingly with voters. The bond package has a second component that we will be voting on in June. The June bond includes $10 million for highways and $13 million for ferry services, trails, rail and transit. Please be sure to tell your family, neighbors and friends about this important measure. It is the only bond issue on the ballot and has been combined with smaller bonds for natural resources and agriculture. (See “Transportation bond on the ballot,” page 17). We will need your help in ensuring voters know of this important bond on the June 10 ballot.
As I look back over the year, I think that the public and the legislature are more aware today of the tremendous challenges with our transportation system before us than they were even a year ago. The legislature really stepped up to the plate, and leadership insisted that transportation investment be used as a stimulus package for the state. We are very grateful to them for that, and we thank our partners, most notably AGC Maine who helped shepherd these important initiatives that will result in a strong boost to the economy.
In addition to our policy work, we had some great events in the past year: our summer meetings last year in Eastport and Presque Isle, our golf tournament and convention, and the Transportation Conference we co-sponsored with MaineDOT and ASCE. We take seriously the item in our strategic plan that reminds us to “have fun.”
But what I have enjoyed most is meeting so many new friends through this job, and strengthening some old friendships. The last thing I want to say is thank you: to all the dedicated members and volunteers that make up this association, and to the legislators and partners at Maine Turnpike Authority and MaineDOT and other associations. I also want to thank the board members, who always stepped in whenever we needed them, and our staff: Maria, Kathryn, Joyce and Deanna. As always, they have been great. And I want to thank my employer, Macdonald Page, not only for their support in providing me this opportunity, but for their generous support of the MBTA over the years. Last but not least, I want to thank my husband Brian and son Owen for their support and understanding. They have come to love my friends at MBTA as much as I!
I know I am leaving the MBTA in good hands with Greg Dore at the helm. Greg has been a tireless advocate for transportation and a public servant for many years. In the next issue, you will hear a lot more about him. I wish him the best of luck and know he will do a great job for you. Have a great summer, and I hope to see you at an upcoming event.
Potholes and posted roads
Maine highways took a beating this winter and spring. Potholes and posted roads were the topic at the water cooler and a regular subject for TV news crews, editorial writers and cartoonists. In the midcoast region of the state, the condition of local highways inspired frustrated citizens to threaten a tax revolt. Still, weather is not the only factor to blame. Continued underfunding of the state’s highway program is the real culprit.
By Kathryn Buxton
In the annals of road maintenance, the winter of 2008 is likely to go down as a memorable one. Much of the state recorded snowfall in the triple digits. Road crews struggled to clear snow and cope with a road salt shortage. As the snow began to melt, potholes began to crop up on local highways like dandelions in spring time. Drivers complained about the cost of popped tires and front end alignments. MaineDOT and public works departments launched a cold patch counter attack, investing more than $3.2 million in quick fixes to try and stop potholes from expanding – and forestalling the roads’ further deterioration until warmer weather when permanent repairs could be made.
As if to add insult to injury, MaineDOT and municipalities began posting roads throughout the state in March. Posting is the practice of restricting the weight of vehicles allowed over a road to protect it while the substructure thaws and dries out. Posting is generally used to protect Maine’s backlog of “unbuilt” roads, highways that have not been constructed to modern standards and lack adequate drainage.
Together potholes and posted roads are an expensive combination of budget busters for the state, municipalities, Maine citizens and businesses. Potholes cost the state in added maintenance cost – the labor and materials or “cold patch” necessary to fill them. Potholes cost drivers and businesses significantly in increased vehicle repair costs from new tires to front end alignments. One news channel this spring put that cost at more than $400 per vehicle.
Posted roads present significant hurdles for businesses throughout the state, as well. Many of those businesses are located in
rural areas where state roads have not yet been upgraded to modern design standards. From fish farmers and boat builders downeast to loggers and other agricultural businesses in northern and western Maine, work often comes to a standstill when a highway is posted. Lately, as postings have increased in southern and midcoast Maine, a new group of businesses are experiencing the cost of Maine’s aging highway structures: construction firms and manufacturers are having to curtail work or make costly changes in how they haul their goods to market.
The annual practice of restricting vehicles over 23,000 lbs. on old, unbuilt roads affected approximately 1,640 miles of state highways this year, according to Dave Bernhardt, director of MaineDOT’s Bureau of Maintenance and Operations. (Maine towns and cities also post a significant number of miles of local roads, but there is no accurate accounting of these local postings.) The policy, said Bernhardt, helps protect the highway until the state has funding to rebuild the road – which can cost up to $1 million per mile.
While the majority of posted roads are in rural areas, the posting of Route 112 in heavily populated Cumberland County represents that new trend. This year, there were nearly 20 different routes posted in Cumberland County. In 2002, there were only six. For their part, MaineDOT worked hard to get ahead of the problem, giving plenty of advance warning to businesses and municipalities whenever possible.
“We’ve tried to be very proactive with communities,” said Bernhardt who said he and his staff spend time in the winter alerting businesses and towns where new postings will take place. “For some businesses, it helps to be able to prepare for it.”
Knowing in advance that MaineDOT was likely to post Route 112 hasn’t helped Michael White of White Bros. Inc., a Westbrook-based general contractor. White knows that every day Route 112 stays posted, it costs the family business dearly. The road was posted in March of this year, restricting its use to vehicles under 23,000 lbs. The highway is the only access to one of the pits owned by the company. The state began posting the highway last year, and White’s voice grows noticeably tense as he talks about how a mile-and-a-half of posted highway will this year cost the business thousands of dollars.
“It’s not just an inconvenience, it’s an economic hardship,” said White, a former MBTA board president who said that because of the posting, White Bros. has to buy materials from another contractor.
“We already bought and paid for that material, so our costs increase when we have to purchase material from others or go to another White Bros. pit further away,” said White. Depending on the job’s location and the material needed, it could double the cost at a time when White said the company cannot afford to wait for the state to reopen the highway. March, April and May are critical months in the construction industry. That is when the snow melts, and crews have access to work sites after the long winter. Maine’s construction season is short, so being productive means being able to use every day of the season.
But the added cost from the posting of Route 112 doesn’t end there, according to White. There are the added fuel costs and the extra time it takes to haul every load – the pit where White now has to buy sand, gravel and other material is several miles further from their job sites. It also hurts the company’s productivity. “If each of our trucks runs one or two fewer trips a day, that adds up,” said White who added that the company’s increased fuel costs associated with the posting have been significant this year. “Fuel is getting to be a precious, precious commodity,” said White.
How those costs tally over the posted road season – and over the years – causes businesses like White Bros. to worry about their long-term competitiveness. This is the second year the road has been posted, and that section of highway is not planned for reconstruction in the near future.
For Maine’s forest products industry, the economic challenge resulting from posted roads and potholes presents a more complex picture of hardships. This year, rapidly rising fuel costs have added a new level of concern for industry officials. Pat Sirois of the Maine Forest Products Council said that over the years, as the industry has adopted more “environmentally astute” harvesting practices, the production seasons have shortened, with a long mud season in the spring and another to a lesser degree in the fall. The winter season is the most productive, because the frozen ground allows access to areas otherwise inaccessible.
In March, when roads are typically posted, the ground is still frozen in the forests. Harvesting is still possible but trucking, because of posted roads, is the limiting factor, said Sirois. He said the industry really suffers if there is a February thaw and the roads are posted mid-season. Nevertheless he notes that posting is necessary to protect the condition of roads not built to handle heavy traffic during the spring thaw.
This year, the industry has been hit with a triple whammy: posted roads, high diesel prices and potholes at a time when businesses are particularly vulnerable. “We’re at the front line of things. The price of rice has gone up, but paper and lumber haven’t,” said Sirois – and they aren’t likely to go up, he says because of the slump in the housing industry.
“The roads are terrible right now. I’ve never seen [the potholes] so bad – they’re bad even on the interstate – and that is hard on equipment and trucks,” said Sirois. For truckers carrying a full load of logs, potholes are “a fuel-efficiency issue and a safety problem if you have trucks dodging potholes.” He said that truckers’ fuel costs have increased even more because they have to log extra miles to avoid posted roads and drive in a lower gear to minimize the damage done by potholes.
Greg Dore, MBTA’s newly elected president and director of public works for the town of Skowhegan, said that posted roads and potholes are really two sides of the same funding coin. Skowhegan and Somerset County have their share of both. The MaineDOT web page showing a road map of Somerset County postings this spring resembled a bowl of unruly pasta, but that is nothing new to Dore. He said while the state may call some of them “highways,” they are really just old buggy paths that have been paved over.
“A lot of Maine’s rural roads used to be for horse and buggies. They were dirt and come spring someone would put down gravel to help with drainage. A few years later, maybe someone came out and threw down some tar and then pavement. . . they weren’t built to any standard,” said Dore.
He said that as a municipality, Skowhegan budgets to rebuild approximately one mile of these old roads under its jurisdiction every year. But there has been little money available on the state level to address unbuilt state roads in the region.
The lack of state transportation dollars is having a cumulative effect on other important routes in the region, he said, and that is where the 2008 pothole season comes into play. Dore spoke about US Route 201, a major commercial thoroughfare in the region that was covered in potholes this year. The road is an important commercial route for the region that carries more than 22,000 vehicles per day.
“Now that’s a ‘built’ road, but it hasn’t been overlayed in 12 or 14 years,” said Dore who added that funding shortfalls at the state level have caused the pavement to deteriorate. As a result, the highway suffered badly during the spring thaws and crews were out patching the same potholes repeatedly this spring.
The incoming MBTA president said that he sees this as an issue that will continue to plague all regions of the state as legislators and municipalities struggle with tight budgets. But it is one that the state has to continue to address.
“The shape 201’s in is directly related to age and maintenance, and it is the same all over Maine. The potholes are a budget issue just like our posted roads,” Dore said.
Transportation at center stage
Three bills totalling more than $250 million in new funding make their way through Maine’s State House
By Kathryn Buxton
The second session of the 123rd Maine Legislature took a long time to take up the issue of transportation funding. In fact, it seemed like legislators would never get past the agonizing wrangling over the General Fund budget. Still they did, and in the final two weeks of the session, they took swift action to pass three bills funding rail, highway and bridge improvements.
“We owe a debt of gratitude to the governor, members of the Transportation Committee and legislative leadership,” said MBTA Executive Director Maria Fuentes. “The legislature clearly showed that investment in transportation was a priority and a cornerstone of their legislative agenda.”
The first of those bills to pass was LD 2313: “An Act to Keep Our Bridge Safe.” The bill was introduced by Governor John Baldacci on April 8; it was sponsored by Representative Boyd Marley (D-Portland) and co-sponsored by 29 legislators – an exceptionally broad show of support from both sides of the aisle.
“The Transportation Committee worked long and hard – and in a bipartisan fashion – to address the state’s transportation needs,” said Fuentes. She gave credit for the remarkable sea change to joint chairs Damon and Marley, who worked tirelessly to build consensus in committee, and to committee members who worked with their respective caucuses.
The bill, that provides $160 million for bridge repair and replacement over the next four years, was taken up by the Transportation Committee a day later in a public hearing attended by MBTA members, several of whom offered powerful testimony in support. The most impassioned testimony of the day came from committee member Representative Richard Cebra (R-Naples).
Preventing a ‘heinous tragedy’
Cebra outlined all that the Transportation Committee has attempted in recent years to raise awareness among fellow legislators of the potentially “heinous calamity” that would occur if the state did not step up funding for its transportation infrastructure. He listed a half dozen committee proposals that failed, hindered by a general lack of support from legislators outside of the committee.
“There is a pervasive attitude among our non-transportation committee colleagues in both houses that either transportation is not a priority . . . or that somehow our transportation infrastructure will magically fix itself,” Cebra intoned, adding “I am thrilled that may be changing. This bill is encouraging, to say the least.” (See sidebar for excerpts from his speech).
The committee passed the measure almost unanimously after adding $8 million for paving; Representative Douglas Thomas (R-Ripley) was the lone dissenter. The legislature took up the bill early the following week, with the bill passing handily in both houses on April 15. The governor signed the bill on April 17.
Highways and rail, too
Highways and rail also earned significant funding gains during the session’s final days. On the same day that the governor signed LD 2313, a second bill, LD 2324: “An Act to Expedite the Maintenance and Repair of Maine’s Transportation Network,” was introduced by Transportation Committee Chair Senator Dennis Damon (Hancock). The bill, providing an additional $50 million for highway reconstruction, had been conceived by Senator John Martin (D-Aroostook) and supported by leaders in the Senate and House Democratic caucuses. It was co-sponsored by 17 legislators including Senate President Beth Edmonds (D-Cumberland County), Senate Majority Leader Libby Mitchell (D-Kennebec) and several Republicans. It passed both houses the next day and was signed by the governor within the week.
Like LD 2313, this measure funds the TransCap Fund established by LD 1790, a bill that the MBTA created, and its members, the AGC and many others worked hard to pass last year. Both bills also represent significant new revenues. MaineDOT officials, eager to put the new funding to work, said that they hoped to get several highway reconstruction projects back in the pipeline this summer – projects sidetracked by more than $200 million in cutbacks over the past two years.
A third bill, funding expansion and improvements for passenger rail, took longer to make its way through the session. The bill, sponsored by Transportation Co-Chair Marley, was first introduced in December 2007. The bill was amended in the Transportation Committee and garnered support in both houses when it was expanded to include improvements to Maine’s freight rail network.
“Representative Marley has been the leading rail champion in the House, and this will be an important part of his legacy,” said MBTA’s Fuentes who added that he would not be returning next session because of term limits. She noted that it was Senator Edmonds who “carried the water” for the bill in the Senate. “They both were extremely eloquent and persuasive spokespersons for the future of rail in Maine.”
The bill that passed in the House on April 14 and the Senate on April 18, initially will provide $2.5 million to rebuild tracks from Portland to Yarmouth Junction and Brunswick. That segment of rail will create a vital passenger link, as well as a valuable freight link connecting Maine’s southern ports with markets in Canada and the midwest. Funding from the bill also can benefit other non-highway modes.
At a glance: Three new laws funding transportation in Maine
LD 2313: “An Act to Keep Our Bridges Safe”
- Provides $160 million funding for bridge reconstruction and repair over four years and $8 millon for paving this year.
- Bonds to be issued by the Maine Municipal Bond Bank and known as “TransCap” Revenue Bonds (as provided for in LD 1790: “An Act to Secure Maine’s Transportation Future”).
- Bonds will be repaid with new revenue generated from a $10 increase in non-commercial auto registration, title, and vanity plate fees.
- Introduced April 8, 2008; signed by governor April 17, 2008.
LD 2324: “An Act to Expedite the Maintenance and Repair of Maine’s Transportation Network”
- Provides $50 million for highway reconstruction.
- Bonds to be issued by the Maine Municipal Bond Bank and known as “TransCap” Revenue Bonds (as provided for in LD 1790: “An Act to Secure Maine’s Transportation Future”).
- Revenues to come from a change in the percentage the Highway Fund pays for the Maine State Police (49 percent down from 60 percent) that will free up $5.3 million annually.
- ntroduced April 17, 2008; signed by governor April 23, 2008.
LD 2019: Rail funding initiative
- $3.05 million annually to fund improvements to passenger and freight rail systems beyond Portland and other transit and non-highway projects. $2.5 million to be used for revenue stream for $31 million loan to extend rail beyond Portland. Remainder goes to MaineDOT’s State Transit, Aviation and Rail Account (“STAR” Account).
- Revenues come from existing sources; the bill redirects half of the tax collected on auto rentals to STAR Account.
- Introduced December 21, 2007; signed by governor April 23, 2008.
A fierce advocate speaks out
On April 17, during a public hearing on LD 2313, Representative Richard Cebra (R-Naples) gave a powerfully eloquent speech [excerpted below] on behalf of the bridge bill.
Fellow committee members, how did we get to this critical place? How is it we find ourselves in such a horrendous crisis when it comes to our important bridge infrastructure throughout the state?
First, I would like to say how thrilled I am that our governor has put forward this piece of legislation for our consideration at your requesting. I welcome him into this fight for our future bridge safety, and I am equally thrilled to read through the absolutely non-partisan list of 29 co-sponsors, who have decided to stand with us in the funding gap for the good people of this state.
…I want to outline the efforts that were made in this [committee] to strengthen the financial position of the Highway Fund…First, we attempted to set aside a portion of the sales tax on vehicles and transportation related items (4 percent the first year; 8 percent the second year; 12 percent the third year; 16 percent the fourth year; and 20 percent thereafter). This schedule was offered since it was consistent with the growth in the sales tax within this category, and would have meant that there would not be a loss to the general fund below prior year revenues…
We also attempted to set aside a portion of the motor vehicle excise tax (4 percent first year; 8 percent second year; 12 percent third year; 16 percent fourth year and 20 percent thereafter). This schedule was offered since it was consistent with the growth in the excise tax
and would mean there would not be a loss to municipal general funds below prior year revenues…
We attempted to change the cost-sharing formula for the State Police to conform to the findings of the OPEGA report. The formula today remains at 60 percent Highway Fund and 40 percent General Fund even though the Appropriations Committee continues to control the head count for the State Police… We attempted to pass a motor vehicle fee increase not unlike those now being proposed…We discussed and attempted a proposed restructuring of the State-Aid Highway and URIP programs…
We looked at a study of the feasibility of tolling I-295 for the purpose of funding the modernization of that highway. . .We attempted a proposed conversion of a portion of the motor fuels excise tax to a sales tax…[All of these measures] failed to receive sufficient support for passage.
…there is a pervasive attitude among our non-transportation committee colleagues in both houses that either transportation is not a priority or that somehow our transportation infrastructure will magically fix itself.
…It is time for this committee to stand once again for the people of Maine, for our businesses and for our future and give this bill a strong vote of support out of committee.
This bill is reasonable, it is important for our economic future, it will add greatly needed dollars to a thinly stretched bridge program, the fee increases are minor and keep the fees within New England averages, and it will go a long way towards our goal of keeping our bridges safe – not just for today but for tomorrow. It is the right bill at the right time.
I ask my fellow Transportation Committee members to unanimously support LD 2313.
The 51 percent solution
Looking for a new financing model at Cumberland County Meeting
By Kathryn Buxton
Public-private partnerships have become the cause celèbre of the transportation community. As the well of federal infrastructure financing has dried up in recent years, cash strapped state governments and municipalities are turning increasingly to the private sector to fund major infrastructure repairs and construction.
Still, the politicians, community leaders and the public should be wary about how those partnerships are structured, said Eva Lerner-Lam of the Palisades Consulting Group. Lerner-Lam was the guest speaker at the 2008 MBTA Cumberland County Meeting on March 6 at the Portland Marriott in South Portland. Her talk, titled “Not Business As Usual: A Statewide Transportation Development Corporation for Maine,” focused on the lessons Maine could learn from various public-private financing partnerships in the United States and China.
MBTA President Lauren Corey welcomed more than 130 MBTA members, state legislators and friends to the evening presentation on March 1. She also introduced Senator Damon (D-Hancock), chairman of the Maine Legislature’s Joint Standing Committee for Transportation.
Damon talked about the current realities of transportation funding in Maine during a time of rising fuel costs, inflationary pressures on construction and falling Highway Fund revenues. He was fresh from a series of budget sessions at the state house that ultimately led to $170 million in total cuts to the General Fund. He described the disheartening process of culling through the proposed cuts in services to Maine citizens. “These are dark days and we are making some very tough decisions.”
Yet despite budget pressures, Damon said there was a growing consensus among Maine’s senate and house leadership that the state needs to address the gap between the need to maintain our transportation system and the falling state and federal revenues. “It’s our future and our economy,” said Damon.
In contrast to Senator Damon’s dark portrait of Maine’s current transportation funding crisis, Eva Lerner-Lam offered a glimpse of a new trend in infrastructure financing, the public-private partnership (PPP). She dissected the different PPP models being introduced here in the U.S. She said that, despite their high-minded names, few of the PPP structures – from the “regional mobility authority” in Texas to the new “public benefit corporation” being proposed in New Jersey – is a true PPP that protects the public’s interest as well as it should.
She asserts that many of those PPPs are built on the same financing principles that have failed American public interest in the past, such as Enron and the subprime mortgage market failure. In many cases, the agreements are more about creating a debt that can be repackaged and resold than they are about capital investment in public infrastructure.
In contrast, she offered a look at the “government as shareholder” model that has fueled a two-decade-long infrastructure building boom in China. What makes a PPP successful, asserted Lerner-Lam, is a savvy government entity that retains a controlling stake in any given project and demands corporate transparency, whether the PPP has been formed to finance a new high speed rail line, reconstruct a bridge or expand capacity on a congested highway.
Lerner-Lam presented a quick history of the PPP in China, from the citizen’s protest of government economic policies at Tiananmen Square in 1989 to the present day, where China has rapidly developed a modern and efficient transportation system that includes high speed transit, advanced freight and an interconnected network of highways that have in turn fueled an economic revolution.
Because the Chinese people have little stomach for paying taxes, the government has had to look outside for funding. “I don’t think there is a right wing Republican in the U.S. who hates taxes more than the average Chinese citizen,” said Lerner-Lam.
The solution the Chinese government settled on was a form of PPP that established the state as the majority owner – whatever the venture, the local, regional or national government always retains at least 51 percent ownership. Lerner-Lam demonstrated how the Chinese model would work in Maine.
First, the government forms a shareholder corporation – a Maine transportation development corporation – to build, fix or maintain the state’s transportation infrastructure. Then various parties – local and regional government, tourism enterprises, banks and other private investors – are invited to participate. Each party brings cash, in-kind services, or other resources to the partnership in exchange for an equity stake.
The corporation’s capital is invested in a segment of the statewide transportation plan. The revenue streams are diversified in order to make the venture more robust: for example, fares, tolls, fiber optic leases, sales of e-data and proceeds from real estate transactions. The net income is either reinvested or paid out in the form of dividends to corporate shareholders.
Lerner-Lam said that not all of China’s PPPs have been successful, and when they fail, there is no bailout. The partnership goes into bankruptcy. When one is successful, the corporation goes public, encouraging even more investment that becomes available for maintaining existing highways or bridges or building new infrastructure.
The model works, because “it’s all about making money,” said Lerner-Lam and that “profit motive drives efficiency and productivity.”
Lerner-Lam’s presentation was a continuation of a presentation on China’s infrastructure building boom that she had made at the 2007 Maine Transportation Conference in December. She had won the Max L. Wilder Award for that presentation, and Lauren Corey took the opportunity to formally present Lerner-Lam with the award.
For her part, Lerner-Lam complimented her Maine audience, saying it was “extraordinary” to have a group that was willing to look “outside the box” for solutions to the enormous challenges the state faces. N
2008 Cumberland County Meeting Sponsors
Many thanks to the following companies for sponsoring this MBTA gathering.
The Lane Construction Corporation
T.Y. Lin International
Pike Industries, Inc.
Sebago Technics, Inc.
Wyman & Simpson, Inc.
No simple proposition
Woodrow Cross built an insurance leader with hard work and common sense
By Douglas Rooks
When woodrow cross, chairman of Cross Insurance, comes in every morning at 7 a.m. to open the office, he is maintaining a ritual he’s observed for 54 years since he opened a one-man insurance agency in his home in 1954.
“I couldn’t afford an office back then,” he recalled in a recent interview at the spacious building near the Bangor Mall that Cross Insurance has called home for the past 15 years.
Things have certainly changed since those humble beginnings. Cross Insurance is now the largest independent agency in Northern New England, and one of the largest in the country. It has 350 employees, including 50 at the Bangor home office and 27 offices and affiliates in Maine and New Hampshire.
Cross Insurance has been a member of the Maine Better Transportation Association for many years, reflecting its instrumental role in providing the surety bonds necessary to accomplish major transportation projects.
The company’s growth has been fueled by acquisitions of independent agencies, more than 60 to date. “We expect to close on four more this month,” he said.
Cross, now 91, keeps a low profile. He has a corner office, but it is small, spare and orderly, reflecting his personality and single-mindedness. There are photos of his grandchildren and an honorary degree from Husson College on the stark, white walls. Cross’ presence is keen and composed as he considers questions and speaks in a calm, methodical way.
Asked about the secret of the extraordinary success of his agency, there is a simple answer: “Hard work.”
Cross not only comes in at 7 a.m. every morning, he stays until 5 or 5:30 p.m. in the evening. He used to work evenings and weekends – anything necessary to sustain and improve the business. “I didn’t mind,” he said of the long hours. “I was always prepared to do what was necessary.”
“He usually turns the lights on in the morning, and turns them off in the evening,” said Alice Dyer, vice president of operations, who’s been with the company since 1985.
Cross doesn’t expect employees to match his pace, “but you’re rewarded if you do,” said Melanie Campbell, vice president of commercial lines, a Cross employee since 1979.
The agency is very much a family company and representatives of three generations are actively involved in the business. Two sons are among the officers – Royce, the eldest, is president and CEO, and Brent is executive vice president. Royce’s son, Jonathan, is a vice president and Brent’s son, Woodrow II, plans to join the company full time after he completes his studies at the University of Maine. Jonathan and Woodrow II (“Woody”) represent the third generation to be involved in the family business. Frank Ferland, the COO, joined the company from outside the family in 2001.
The Cross work ethic is strong in all three generations. Even Woody, who works at the agency part-time while in school, puts in long hours. He picks up the mail every morning and helps open the office with his grandfather. He returns at the end of the day after class to make sure the mail is delivered to the post office. Following their father and grandfather’s example, however, is no easy road at Cross Insurance. “They’ve earned their way aboard,” said Sandra Phinney, personal lines vice president. “They had to live up to some high standards.”
Continually investing in the company and its people is a commitment the Cross agency chooses to keep, said Ferland. Since he joined the agency seven years ago, it has more than doubled in size. “There isn’t the pressure of quarterly earnings, so you can invest in the company and its people when you choose to, and it is a great place to work for that reason,” said Ferland.
When Woodrow Cross is asked about how he decided to get into the insurance business, he mentions his wartime experience in the 1940s, when he served in the New Guinea and Philippine campaigns, and then occupation duty in Japan. According to Brent Cross, “We hear about the war and the jungle almost every day.”
But he more often reverts to his early boyhood as an eldest son on a farm in Bradford, the still-small town on “the main road between Bangor and Milo,” now Routes 11 and 221.
Cross grew up after World War I amid the daily chores and patterned life characteristic of a rural Maine farm at the time. There were 10 cows, and he was disappointed when he couldn’t milk them as quickly as the men who were hired hands.
When he was six, his father gave him a pony that he got to ride and play with. “He was kind and gentle,” Cross said, and a good companion for a rural Maine boy. But this was business, too. The pony and a two-wheeled cart were the basis for a business making maple syrup deliveries, an important product for Maine farms.
The delivery route led to a rare misadventure when empty syrup cans began clattering in the cart and spooked the pony. “He took off and the cart wheel hit a rock and came off,” Cross recalls. He and his younger brother were left behind as the pony disappeared into the distance. “We found him back at the barn, waiting for us.”
When he was 12, the family opened a general store, and the hours were even longer. Cross remembers one of the toughest jobs was lifting huge blocks of ice – representing refrigeration, before electricity – onto a ramp leading to a small opening in a wall. The 30-by-18-inch blocks could tax the abilities of a grown man, so Cross and his brother had to maneuver them carefully. “We didn’t always succeed,” and when they crashed to the floor, he said, “we had to start all over again.”
Six hundred chicks
When he was 21, his father died suddenly, leaving the family deep in debt. It was the Great Depression. Stores typically offered credit to many customers, and “my father had a hard time saying no.” By the time of his death, the store shelves were almost bare, as suppliers began refusing to deliver.
Brent Cross said this was a difficult time for the family. His grandmother was devastated by her husband’s death, and it fell to Woodrow and his younger brother, Leon, to keep things going.
“There were lots of bills,” Woodrow Cross said. “The hospital, and the wholesalers and an awful lot of people in town.”
But Woodrow had already shown signs of a knack for business. He bought 600 day-old chicks at a time – “they were cheap then, not even a penny” – and raised them until they could be marketed. He borrowed $100 at a time, and always turned a profit while repaying the loan.
He took the same approach to the general store, negotiating payments with everyone who was owed. “It was sometimes only $5 a month, but they all got their money,” he said. He never considered bankruptcy, or, as he calls it, “going to probate,” but was always careful with his own money, and that of his business.
A friend who wrote insurance talked to him about buying his agency, and Cross at first wasn’t interested. “I knew nothing about the business,” he said. Yet the more he thought about it, the prospect of regular hours and time with his growing family had appeal. The deal fell through – his friend’s wife didn’t favor the sale – but he set up on his own shortly after.
The post-war era was a good time to get into the business, said John Leonard, the veteran Traveler’s executive who became the first, and so far only, president of the Maine Employer’s Mutual Insurance Co., that writes most of the worker’s compensation business in Maine.
“The economy was expanding, the veterans were home, and there were opportunities,” Leonard said. The expansion of the highway system led to more driving, and the need for auto insurance. Meanwhile, the boom in home ownership made property insurance a big item, as well. “What we now know as the modern insurance business was largely created at that time,” he said.
Woodrow Cross was one of the most prominent of those in his generation, Leonard said. “There’s hardly anyone in Maine who’s been able to match his success. It’s an extremely well-run agency that excels in customer service, and that kind of culture doesn’t happen by accident.” He said that Woodrow Cross “is a legend in our business.”
Cross does not favor a lot of fuss. It was only recently that he was named to a business hall of fame, and received the honorary degree from Husson College. He attended back when it was the Maine School of Commerce, and studied with Chesley Husson himself, including mathematics and salesmanship. “I took all the courses I could, and learned all I could,” he said.
One of his first business purchases was a second-hand Royal typewriter that he used to write all his policies – “It was $102, including $2 for sales tax.” Two traveling representatives from The Hartford took an interest in him, and the company is still among many Cross Insurance does business with.
After a few years in insurance he was offered a job in a Bangor agency and was tempted. “It would have been easier, but I wasn’t sure it was the right move.”
He turned down the offer, but it again got him thinking about how to build his business. He bought his first agency in 1963, and housed the growing business in a succession of downtown offices before moving out to the mall area.
Modern risks, modern challenges
Insurance may seem like a simple proposition to some, he said, “But there’s a lot to it. It takes a lot of knowledge, and a lot of experience to do it right.”
Cross is proud that, when asked to write a policy to cover a business temporarily operating in Iraq, they were able to pull it off. “There was coverage for kidnap and ransom payments, and all sorts of things that agencies don’t usually cover,” he said. “We insure multi-million homes, and lots of things in between.”
He knows from experience both ends of the insurance spectrum. “I’ve had a small agency and a large agency, and it’s much better to have a large agency.”
The prospect of retirement doesn’t enter his mind. His wife died in 1992, and it is the business that keeps him going, said Melanie Campbell. “That, and family, are the things he lives for.”
Yet he is far from set in his ways, and it is his ability to adapt that most impresses his employees. Sandra Phinney said, “One of the amazing things about him it that he’s not afraid of change. When we had our last major computer conversion in December, he was the one leading. He knows what it takes to keep going.”
Cross said that running a business, small or large, is always going to be demanding. “It very easy to get discouraged, but I always tried to figure out the problem. I didn’t run from it, and if I needed help, I’d get it. And if I needed to do more work, I did it.”