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Rhode Island has made a comeback from a major slump that saw it lose more manufacturing jobs per capita than any other US state over the decade to 2011. Besides offering tax incentives, the local government has worked in close collaboration with business and educational institutions to drive the growth of advanced industries, as Natasha Turak reports

In the late 18th century, a young Englishman named Samuel Slater emigrated to the US, landing in Rhode Island. An apprentice in the textile industry, he brought with him the technical knowhow and design used in the UK’s textile 

factories and modified them for American use, designing the country’s first mills that would eventually fuel much of its economy. The British called him ‘Slater the Traitor’ for replicating British technology; in US history, he is known as the Father of the American Industrial Revolution.

Slater Mill stands to this day, although Rhode Island has seen its share of ups and downs since the boom years of the Industrial Revolution and the US’s post-war manufacturing heyday. For generations, the tiny north-eastern state was a manufacturing hub and a national capital for costume jewellery. However, hard times hit in the early 2000s when the industry faced import competition from China.

“Rhode Island has seen some very tough times,” says state secretary of commerce Stefan Pryor. “From 2001 to 2011, we lost per capita the most manufacturing jobs in the US.”

The comeback kid

True to its pioneering spirit, the Ocean State has proved it can make a comeback. Following the recession, the state with a population of just over 1 million suffered among the highest unemployment rates in the US – now that figure sits at 4.3%, below the national average.

“Rhode Island has restored all of the private sector jobs lost during the recession and ours is a much healthier economy now. The economic development of the past few years has been significant,” says Mr Pryor. Indeed,
in the past 17 months the state has landed 17 business relocation and expansion deals from major multinationals including General Electric, Johnson & Johnson, Virgin, Priceline and Finlays. 

What spurred this turnaround? In 2016, Rhode Island commissioned Washington, DC-based think tank the Brookings Institute
to write an economic report for the state. The report, entitled ‘Rhode Island innovates: A competitive strategy for the Ocean State’, concluded that the state has a number of powerful but underutilised assets. These included sector expertise and world-class universities and colleges.

“The state still has five growing advanced industry competitive advantages,” the institute wrote. “Biomedical innovation, cyber and data analytics, maritime technology and manufacturing, advanced business services, and design and custom manufacturing.

“The state’s strong universities and research facilities – Brown University, the University of Rhode Island [URI], the Rhode Island School of Design [RISD], Johnson & Wales University, the Naval Undersea Warfare Center and others – have also helped by steadily supplying skilled workers and new discoveries that have market potential.”

Old state, new rules

A new set of investment vehicles has moved through the state legislature, according to Mr Pryor. “We offer incentives for job growth, relocation and real estate development which are catalysing the economy and enabling us to pledge back to companies the personal income taxes generated by new jobs they create,” he says.

The Rebuild Rhode Island Tax Credit enables the state to invest up to 20% of a project cost into real estate projects – often resulting in a direct return on investment, he adds. Further incentives include tax credits for manufacturers investing in equipment
and creating jobs.

New and innovative leadership has also proved crucial. Governor Gina Raimondo, a venture capitalist, former state treasurer and the state’s first female governor, has overhauled much of Rhode Island’s old rules for business. The past few years have seen the convergence of key stakeholders from academia, government and business to create support networks and reinvest in key sectors.    

According to the Brookings Institution, Rhode Island institutions conduct more than $320m in research each year, and the 30% growth in research activity is nearly double the national rate of 16%. Brookings also ranks Rhode Island first in New England for advanced industries job growth, and the US Chamber of Commerce puts it second in the country for innovation and entrepreneurship.

Chasing the radar

The challenge now, says Greater Providence Chamber of Commerce president Laurie White, is tackling the lack of awareness that hinders Rhode Island. “It’s just not on the radar screen,” she admits. “Our story is very different than it was a decade ago. We’re an Ivy League city with a great talent base, and we’ve been able to get our universities, colleges, hospitals and technical academies into the discussion to share our innovation story.” 

Thanks to unprecedented state investment, small businesses – especially the state’s legacy manufacturers – are staying competitive. “We’ve created something called Innovation Vouchers, which enables businesses seeking R&D to work with our universities – URI, Brown, RISD. More than 30 matches have been made and the state pays the bill of up to $50,000 each time,” says Mr Pryor.

The governor’s office has also for the first time provided state funding to Polaris Manufacturing Extension Partnership, a public business development entity providing training to small manufacturers. One of these is ChemArt, a proud local manufacturer celebrating its 40th year in business.

“ChemArt has worked with Polaris; it helped us achieve new certifications, gave us training in lean manufacturing,” says David Marquis, president of ChemArt, which uses photochemical machining to create ornaments and metal finishings. “It’s great access to smart people who can come and look at our plant, and they’ve really done a tremendous job rejuvenating the area.”

“Key to the governor’s initiative, career training schools are seeing a bump up in funding,” says Christian Cowan, Polaris director. “We’ve got a close relationship with the Community College of Rhode Island, which is developing new two-year certificate programmes feeding into large and small manufacturers.”

“This state has a lot of small companies with access to many different specialties,” Mr Marquis continues. “It’s the workforce, the people, and we finally have a government that sees the value in that. We’re in a cycle of evolution.”

New neighbours

The decision of major investors to choose Rhode Island over neighbouring Massachusetts or New York for some facilities speaks for itself. Steve Olyha, CEO of British tea producer Finlays Extracts & Ingredients, described his company’s experience moving into the state.

“The Rhode Island Commerce Corporation worked closely with us in promoting our ambition of bringing to market innovative ideas,” he says. “Through a significant financial investment that has been greatly supported by state tax incentives, we will further our global leadership position.”

Virgin Pulse, a workplace health-focused subsidiary of global giant Virgin Group, initially planned to relocate its global headquarters to Boston, but finally decided to instead expand in Providence, in a move that will create 300 jobs. “You’ve got a major metropolitan city that is not as expensive as Boston and a front row seat to hiring from all these great schools,” says CEO David Osborne. “With the millennials in the workforce and all the local universities, Providence will enable us to accomplish the growth we want.”

GE Digital is currently building a new facility in Providence. A spokesperson for the company says: “The city was a top choice because of its tech talent pipeline, its location along the north-east corridor and the quality of life
it allows us to offer our employees.”

And in a recent development, low-cost carrier Norwegian Air has chosen Providence as a base for its transatlantic flights, with direct routes from Providence’s TF Green airport to cities in Ireland and the UK, starting at $69. This will prove especially beneficial for businesses involved in the newly built West Ireland Trade Centre in central Providence, whose manager David Minton describes the city as a perfect location to test north-eastern US markets. 

The brain train

Numerous efforts in Rhode Island are bridging the interests of academia and business. The University of Rhode Island has developed a dual-language and engineering degree involving studying abroad, which is in direct interest to foreign investors such as Toray, a Japanese manufacturer which has invested $4m in URI’s engineering facilities and hires many of its graduates.

“Fifty-five per cent of our engineering grads have stayed in Rhode Island to work,” says URI president David Dooley. “That’s because companies such as Toray, Amgen, General Dynamics Electric Boat, FM Global and now GE and more are anxious to hire engineers, especially from our international engineering programme.”

Another groundbreaking project is a new nursing education centre, which Mr Dooley says when completed will be the most advanced in the world. This took years of negotiation and collaboration from numerous stakeholders, including URI, Brown University, Rhode Island College, state and local government, and a private developer.

“A public-private partnership of this scale had never been done in Rhode Island before, but we knew we could make this an economic engine for the city of Providence and the state,” says Mr Dooley. The private developer was able to access $50m in tax credits, and the shared facility – featuring academic, office and housing space – will open in late 2017.

“It turned out to be catalytic in a major way,” adds Mr Dooley. A recently signed initiative called I-195 will see Wexford Science & Technology turn old highway land into a million-square-foot plus multi-use innovation complex. “There’s no question Wexford would have had no interest in investing in Rhode Island had it not been aware of what we’d done with the nursing education centre. The state, the city, three educational institutions, and we pulled it off,” says Mr Dooley.

“Our point is very simple: here’s a beautiful place you can live – you’re close to the ocean, it’s affordable and extremely safe, yet you’re 45 minutes from Boston and three hours from New York,” he adds.

Additionally, Retail.com and GQ Magazine are among several media outlets to have recently lauded Rhode Island for its food and arts scene. “You can enjoy everything that’s attractive about this part of the US from this location – and the whole north-east is then your oyster. That’s our pitch,” says Mr Dooley.

This article is sourced from fDi Magazine
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