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Business and Economy

LePage: 'High Probability' Fairchild Will Shutter South Portland Facility; BIW to Bounce Back

AUGUSTA, Maine - Gov. Paul LePage today offered a grim prediction for the roughly 650 employees at the recently purchased Fairchild Semiconductor.

 

The governor told Bangor radio station WVOM that he believes the company's new owner, ON Semiconductor, would shutter the South Portland facility.

 

"The likelihood of them leaving I think is - unfortunate - is a high probability," LePage said. "And unfortunately it falls on deaf ears across the street," LePage says.

 

LePage said Maine's high energy prices would likely force the company to leave. He then blamed the Legislature for not enacting his various energy proposals, although there is strong disagreement among policymakers whether the governor's policies would do anything to help.

 

Also, the Legislature three years ago passed a sweeping energy bill designed to increase natural gas capacity, a move intended to help big energy users like Fairchild control costs.

 

LePage also said that Fairchild was the mystery company that he said would leave the state back in April.

 

The $2.4 billion acquisition of Fairchild by ON has clouded the fate of the employees in South Portland. The merger is expected to provide millions in cost savings for ON Semiconductor, and Keith Jackson, the president of the company, said Monday that the move will translate into an overall cost savings of $160 million in the first 18 months, and $225 million by the end of 2019.

Ian Ing, a semiconductor industry analyst from MKM Partners in Connecticut, said the merger mirrored a trend in the industry.

 

“Companies are, instead of growing organically, growing their existing businesses, and getting revenue and earnings growth, they’re finding that it’s easier, or a better path, to acquire other companies and get some of the scale and synergies that way,” Ing said, adding that the projected cost savings in the ON deal were a positive sign for the South Portland employees.

South Portland Assistant City Manager Joshua Reny was also optimistic about the future of ON Semiconductor in Maine.

 
The governor also weighed in on Bath Iron Works' loss of a $10.5 billion contract to build a new generation of cutters for the Coast Guard. The governor said he was hopeful the setback is temporary, and that the state's fourth largest employer is in a better position for the next bid.

"It's a blow but we must remember that BIW was trying to get into a new market," LePage said. "They're not the primary Coast Guard supplier, not like they are for the Navy."

BIW confirmed last week that it lost the bid to Eastern Shipbuilding in Panama City, Florida. The initial contract is for nine offshore patrol cutters. The Coast Guard will reopen bids for a 10th cutter, but not until 2024.
 
In a memo to employees, BIW President Fred Harris said the company's bid was too high and the shipyard needed to become "flexible and efficient." Harris previously stated that the loss of the contract would result in the loss of up to 1,000 workers.