With quarry expansion, town's oldest, most valuable industry endures

Cement company sees up to 50 more years of operation in its future
By Jordan Bailey | Apr 21, 2016
Photo by: Jordan Bailey Dragon Products Co.'s cement plant, as seen from its tower, has been producing at half its capacity for several years.

Thomaston — The town of Thomaston is built on a wedge of Precambrian rock beginning at the head of the St. George river estuary and tapering to the northeast into parts of Rockport, Rockland and Camden. The limestone this formation contains has supported the lime and cement industries the town has depended on since its founding. The valuable stone has also been a source of worry and uncertainty. How long will the limited, non-renewable resource last? Will fluctuating market conditions allow the industries to remain profitable, or even survive?

The last operation of the town's 300-year-old lime industry to quarry the stone is Dragon Products Co. It burns the limestone, with sand and iron ore, in a rotating kiln to produce cement. The heat changes the limestone to lime, cement's main ingredient.

Ever since the last recession, demand for cement has been low, and so has production at the plant. In 2015 Dragon produced 391,000 tons of its 770,000-ton capacity. This slump has fueled speculation and worry among residents and some officials about the plant's potential closure and the loss of the town's largest taxpayer by far, but the company is optimistic and plans a quarry expansion this year.

Dragon, owned by Spanish company Cementos Valderrivas, has paid an irreplaceable $1.5 million to $1.58 million in property taxes each year since 2007, currently about a quarter of Thomaston’s tax revenue. This has been true for much of the plant’s existence, accounting for as much as 50 percent of the town's tax revenue at times. The next-highest taxpayer in 2015 was Wal-Mart, paying $276,000, or just 4 percent. In the early 1990s Dragon was paying 27 times the amount paid by the second-highest taxpayer.

The cement company also supports many other local businesses, and its closure would send shockwaves throughout the local economy. In 2010, members of a community advisory panel wrote a guest column in this paper pointing out that "Dragon purchases hundreds of thousands of dollars worth of local goods and services including leasing trucks from local contractors and buying 10,000 wood pallets a year, local sand, fuel from Searsport, and electricity from Central Maine Power."

But one community advisory panel member spoke of the company's decline in a phone call with this paper. He said Dragon used to be one of the best places around to work, especially when it was sending barges of cement weekly to Boston to supply the city's Big Dig infrastructure project. But now, he said, it is a “skeleton of its former self” and “a marginal business."

Employment at the plant has decreased over the years, from 250 employees in the 1950s to 200 in the 1970s to 100 now. In early 2009, Dragon laid off 20 percent of its workforce, bringing it down to the current level, and temporarily shut the plant down. It is now 19th among the top Knox County employers, according to the Maine Department of Labor.

Just-in-time modernization

Thomaston Town Manager Val Blastow sees the bright side: that Dragon stayed open after that brief shutdown and kept the 100 jobs it did. He attributes the plant's survival to a $56 million modernization in 2004, shielding its major vulnerability: inefficiency. Cement production is notorious for its high energy consumption, as is lime-burning. The upgrade from a wet process to a dry process allowed the facility to produce 50 percent more using the same amount of energy. The upgrade saved the plant from obsolescence.

“Before that upgrade, it was a dinosaur,” Blastow said. “Twenty years ago when I was here, we talked about either assisting them and helping them modernize or bulldozing the plant and turning the property into an industrial park.”

Though recovery has been slow, cement wholesale prices have recently returned to pre-recession levels. The Portland Cement Association predicts a modest 3.4-percent increase in cement consumption in 2016, with North American growth weighed down slightly by slower global recovery.

With this positive outlook, Dragon is ready to expand. It recently received approval to extend its its active quarry north of Route 1 by 50 acres to the northeast, its first expansion since 1994. This will provide enough limestone of the quality needed for 20 years of cement production at the plant. The company plans to begin the expansion this year.

Plant Manager Ray Degrass projects the plant will continue operating for another 30 to 50 years.

Blastow pointed out that even when Dragon does close, it will leave Thomaston in better standing because of lasting benefits the company has brought to the town.

One of those benefits came from the tax-increment financing agreement with Dragon, negotiated in 2004, which allowed all the development on Route 1 since then. With TIF funds, the town installed a new sewer line from Montpellier (the Knox Museum) to the Rockland city line, connecting that area to Thomaston's wastewater treatment plant. It was previously serviced, for a fee, by Rockland’s wastewater treatment facility, which did not have capacity for any expansion in that area.

"The TIF with Dragon, extending the sewer line to Rockland and putting in our own pump station allowed us to do everything you see over there,” Blastow said. "Lowes, Hampton Inn, Wal-Mart, Applebee's, the whole enchilada."

This project allowed three of the top five taxpayers to come in: Wal-Mart, Lowes and Hampton Inn, though combined they pay only about a third of what Dragon is paying in property taxes.

Previous scares

The effects of swings in cement prices, slumps in the construction market and Canadian competition on Dragon's viability have kept Thomaston officials and residents on edge throughout the plant's existence.

“Every time the market nosedived, the plant would close up and change owner,” Blastow said. “You can go back and see: The town would be talking about closing the fire department. We’d repeat the cycle every time there was a downturn in the market.”

Looking back, there have been many instances where Thomaston has had to confront the possibility of losing some or all of the tax revenue brought in by the cement plant. In 1995, when the town was dealing with a major abatement sought by the company "upset because it is paying about 30 percent of the town's property taxes," The Courier Gazette quoted Select Board Chairman Lee-Ann Upham as saying, "We should be concerned about relying on one company."

Without cuts the requested abatement would have resulted in a tax increase of more than 10-percent to the town's residents and businesses. After several years of bare-bones budgets, the town had enough set aside to pay for the abatement, about half the size the company originally sought.

Earlier, Thomaston’s comprehensive plans warned of the need to prepare for the plant's closure. In the comprehensive plan of 1991, when Dragon paid $800,000 in taxes ($1.4 million in 2016 dollars), officials wrote: “When the plant eventually closes, in addition to the reduction in property taxes, Thomaston will also need replacement jobs.”

After slow recovery from a recession in 1981, then-owner Martin Marietta Corp. did close the plant because of “the continuing poor construction market, increasing competition from Canadian producers in the shrinking New England market and constantly increasing labor, fuel and other operating costs,” as this paper reported from a company statement. One hundred thirty-five workers lost their jobs, town officials began discussing cutting services and raising taxes, and Maine Central Railroad's rail line to Rockland was in jeopardy.  But the plant was purchased by Cianbro and opened 90 days after the closure, restoring most of those jobs and bringing stability back to the local economy.

A shutdown also happened in 1975. That year, the Portland Press Herald reported on a 43-day layoff of 80 workers because of low cement consumption, the high cost of fuel and competition from Canadian producers. Officials of Martin Marietta Corp. began talking then about the need to upgrade to a dry process to save on fuel costs, but this did not happen until three decades later.

And the Great Depression almost put an end to Thomaston's cement business before it began. According to documents at the Thomaston Historical Society, Alfred Black was trying to get the cement plant built on its current site in the 1920s, but he could not get enough investors. Finally, in 1926, he sold the property to William Ackerman, owner of the nation's first Portland cement plant in Pennsylvania, who was able to finance construction of the plant in 1927.

An age-old worry

Concern over the town's heavy dependence on limestone has been a recurring theme for Thomaston, which included Rockland until 1848, since its lime industry began in the early 18th century.

Roger Grindle wrote the story of that industry in his book "Quarry and Kiln," in which he tells of the first limestone being burned on the site of the former Maine State Prison and sold to Boston in 1733. By 1835, he wrote,125 kilns in the town produced 400,000 barrels of lime for export, bringing in $48,000 ($1.26 million today) in profits to the town.

The early kilns used tremendous amounts of firewood. It took 30 cords to burn a single charge of limestone over the course of three or four days, but efficiency improved as new kiln designs were adopted.

“Maine’s first geologist, Charles Jackson, said Thomaston stood pre-eminently above the rest of the U.S. in lime manufacturing in the 1830s,” Grindle wrote, “This lime was carried all along the Atlantic coast to New Orleans and the West Indies in vessels built, captained and manned by Thomaston citizens.”

Jackson estimated that at least $14 million worth of limestone lay within 20 feet of the surface in Thomaston. But the limestone extends much farther than that, to more than 300 feet in places. The Williams Quarry, at 400 feet, was the deepest in the world at the turn of the 20th century.

But this value was easily lost when prices fell because of oversupply or when demand fell during recessions. Grindle quotes a Thomaston Republican editorial of 1839 which said, “The interests of this town are intimately connected with the lime business,” and bemoaned that “lime, the great staple of this community,” was selling at drastically low prices, causing “the lime dealer [to] suffer extensive loss.”

In the 1880s, the Rockland Board of Trade suggested the city was over-dependent on the lime industry and affected by shifts in lime prices, but town investors were reluctant to diversify.

However, Thomaston's lime industry held up through the many storms in its markets, including plunges in prices caused by over-supply, loss of the Southern market during the Civil War, and the depressions of the 1870s and 1890s. During the 1870s depression, Rockland still maintained a monopoly on the New York market, because “New York preferred Rockland lime for its quality and better fitness for use as mortar,” as Grindle quoted from a New York Times article.

The quality and abundance of its limestone could be factors in the industry's survival. Modernizations to improve efficiency, even at the last minute, were another.

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