WATERVILLE — Midstate Berkshire’s plan to consolidate its central Maine operations in Winslow could eventually cost the City of Waterville almost $120,000 in annual property tax revenue.

The precision machining company announced last week it had laid off 70 employees from its Waterville and Winslow locations, about 30 percent of its workforce in the state.

Company officials Tuesday blamed the job cuts on a loss of business because of a slowdown in oil and gas production, increased international competition in the energy production sector and an ongoing decline in work for the defense industry.

The slowdown is expected to be short-term and Midstate Berkshire hopes to be in a position to rehire former workers when market conditions improve, but it is unlikely to reopen its Waterville facility after it closes later this year.

The news of the layoffs came as a surprise in the Waterville area, where the company is a major employer and property taxpayer.

“We don’t have enough manufacturing-type jobs in this area, and to lose 70 of them is quite disappointing,” said City Manager Michael Roy.

Company representatives confirmed Tuesday that it intends to shutter its Waterville location at 877 West River Road by the end of 2015 and transfer equipment and machinery to the larger facility on Verti Drive in Winslow. The move could leave a substantal hole in the Waterville city budget for next year.

Machinery at the Waterville facility is valued at about $4.3 million, which generated $119,148 in taxes this year, according to assessor Paul Castonguay.

While that might seem small when compared to the $10 million Waterville takes in from property taxes, the loss of revenue could have an outsized effect, Roy said.

The revenue could account for about half the city’s $250,000 roadwork budget or two employees at the schools or police department, he said.

“When you look at it in that respect, it’s pretty significant,” Roy said. “Are we going to have to cut two police officers or two teachers to make up the difference?”

The potential revenue loss won’t affect the city budget until next year, he said.

Beyond the loss to city coffers, local officials worry that losing so many jobs will have a wider impact on the region.

Salaries at Midstate Berkshire were high, especially in comparison to other jobs in the area, said Kimberly Lindlof, the interim executive director at the Central Maine Growth Council. Having so many previously well-paid workers going on unemployment at once could create a ripple effect in the local economy, she said.

“We are going to have reverberations from this if we don’t get those men and women gainfully employed again,” Lindlof said.

A Rapid Reaction team from the Maine Department of Labor held a session at the Hampton Inn on Monday to go over topics like unemployment and health insurance and CareerCenter services. Lindlof attended the session to connect former employees with leads on potential jobs in the region.

According to the company, 70 people were laid off out of the 250 employed in Maine. On Tuesday, company spokesperson Debra Breski said the layoffs were across the board.

“Pretty much every department was impacted,” she said.

The decision to reduce the company’s Maine workforce and consolidate its operations was based entirely on market conditions and were not driven by factors such as property taxes, transportation or energy costs, said company CEO Duane Pekar.

There were no layoffs at the company’s Westfield, Mass., plant because it manufactures completely different products than the central Maine facilities and was not impacted by the market downturn, he said.

Overproduction and low prices in the oil and gas industry were a large factor behind the layoffs, Pekar said. A slowdown in onshore drilling in parts of the U.S. left the company with a 30 percent decrease in business from companies in that sector. Increasing competitive pressure on U.S. energy companies from international firms have also led to a lot of “belt-tightening” in that industry, Pekar said.

“You either get your costs in line or you lose your market share,” he noted.

Although it has led to severe cuts, Pekar said the downturn is a “short-term blip” that came after years of growth.

The company expects to recover and hopes to hire back some employees, but it is unlikely it will bring back the entire workforce unless it grows considerably, Pekar said.

He was confident, however, that former employees would be able to find employment by the time the company is in a position to start rehiring.

“These are highly skilled people,” Pekar said. “We’re going to have to fight to get them back.”

Peter McGuire — 861-9239

pmcguire@centralmaine.com

Twitter: @PeteL_McGuire

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