Biz, gov’t have imperatives

FROM MANY, ONE VOICE: Business leaders agreed that education is a needed investment in the state's economic future, while government must do a better job at understanding businesses' needs. Moderating the discussion, from left, WJAR-TV Anchor Frank Coletta and PBN Editor Mark S. Murphy. Seated, from left, Anna Cano Morales, Neil D. Steinberg, Alan H. Litwin, Sandra J. Pattie, Nick Kishfy and Michael E. McKelvy. / PBN PHOTOS/ RUPERT  WHITELEY
FROM MANY, ONE VOICE: Business leaders agreed that education is a needed investment in the state's economic future, while government must do a better job at understanding businesses' needs. Moderating the discussion, from left, WJAR-TV Anchor Frank Coletta and PBN Editor Mark S. Murphy. Seated, from left, Anna Cano Morales, Neil D. Steinberg, Alan H. Litwin, Sandra J. Pattie, Nick Kishfy and Michael E. McKelvy. / PBN PHOTOS/ RUPERT WHITELEY

On the occasion of Providence Business News’ 30th anniversary, six of Rhode Island’s business leaders discussed its economy, where it has been and where it is likely to go from today. The following is an edited transcript of that conversation.

PBN Editor Mark S. Murphy and WJAR-TV NBC 10 Anchor Frank Coletta hosted the six – Nick Kishfy, MojoTech founder and CEO; Alan H. Litwin, managing director of Kahn, Litwin, Renza & Co. Ltd.; Michael E. McKelvy, president and CEO of Gilbane Building Co.; Anna Cano Morales; director of the Latino Policy Institute at Roger Williams University; Sandra J. Pattie, president and CEO of BankNewport; and Neil D. Steinberg, president and CEO of the Rhode Island Foundation.

MURPHY: Thank you all for coming. We want to talk about the economic health of the state of Rhode Island. And first off, we want to talk about economic-development initiatives. What are the kind of things that do work? Do we spend a lot of money attracting big companies here? GTECH as you know was saved from leaving the state by a large public effort. Or in the case of something that is still ongoing – the 38 Studios case? Or do we do smaller things? Do we do historic-preservation tax credits? Do we do tax-stabilization agreements?

Neil, you’ve been on the scene for a long time as a banker, working then for Brown University and now heading the foundation. What do you see?

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STEINBERG: When you look back, you have the benefit of seeing what worked and didn’t work, as you pointed out. But I think you know the real opportunity is to be both plan-ful and opportunistic. So one of the things people will point to is that we really didn’t have an economic plan, a vision for the state of Rhode Island for a long time. Things kind of happened as they happened.

We’ve had companies that have grown over the years kind of organically but we were missing that plan and so now I think there’s an opportunity. The Brookings Institution report that came in, the governor and Commerce RI and the legislature are looking at something that now is plan-ful, and it recognizes that we need to build on our strengths. So building on our strengths can be with incentives as you pointed out … . I think it’s investing, not expense. I think it’s opportunistic. It doesn’t mean that when we have a chance at a large company coming in or a large deal that we don’t look at it. We just look at it balanced with the heritage of small business in this state.

MURPHY: Alan, is this progress?

LITWIN: I think we have an opportunity for progress. A couple of years ago I chaired an economic-development commission for the city of Providence. And I went back and read the Greenhouse Compact from 1983, so a couple of years before PBN was formed. And if you read that compact, that platform that they had identified would work today. I agree with Neil, if we look at targeted industries, if you look and see the industries of the future whether it’s big data, or genomics or cyber or the things that we can do well here. To me that’s much more important than which tools we bring out of the toolbox. I think identifying the industries of the future … gives us the opportunity to be a very vibrant economy in the future.

COLETTA: We had a similar forum like this five years ago and at that time, Mr. McKelvy [and] Paul Choquette from Gilbane said we should never have put the Greenhouse Compact to the voters. It should have been an executive order or an action by the General Assembly to get it done.

MCKELVY: Well Paul Choquette Jr. is all about doing things more simply, and that’s been consistent through the years. [That’s] similar to what’s been said about attracting new business – if you can make it simpler it will pay off and it will work. It may not be incentives. It may just be simplification.

COLETTA: MojoTech is a relatively recent participant on the business scene. Mr. Kishfy, was it a simple process to set up business here?

KISHFY: Well, I mean when I started MojoTech it was really just me on my patio, so it doesn’t get much simpler than filing some basic articles of incorporation and all of that. I think the real challenge is the continued growth, not so much the starting. And for us that’s all about talent.

MURPHY: The premise of economic development and policy planning, there is a certain political aspect to this. You’re picking winners, right? You’re picking industries that win. Is that really what we want to be doing?

MORALES: I think yes, it’s about picking industries that are winners. But it’s also about picking communities that have potential to be winners. It’s about influencing the way small businesses have thrived in Rhode Island in the past and will continue to thrive with the right guidance, the right access to capital, the right access to support. So, yes, it’s the CVSes, yes it’s the Hasbros, it’s about the large fields and industries that are global and international in nature. But it’s also what’s Rhode Island. And the backbone of Rhode Island is small business.

COLETTA: We’ve already gotten Mr. Steinberg’s perspective as a one-time banker. Ms. Pattie is a current banker with BankNewport. What are we doing right and what are we doing wrong?

PATTIE: I think the small-business environment is very strong, even though it can be simplified. And I think we have a lot of successes. The Rhode Island Marine Trade Association is certainly a success story. We have many of the educational components that are now participating, so the industry continues to get stronger and really is a world-class association.

MURPHY: We’ve been talking about public policy, planning, expectations. What is the business community’s responsibility here? Is it enough if you run a business to say, “I need to tend my own garden?

KISHFY: I think that obviously businesses first have a responsibility to themselves and their organization and making that strong and successful. But even as a small business we don’t mind sharing some of the burden for training employees. We can’t expect people to come to us knowing 100 percent of everything they’ll need to know. But at the same time there are some bridges that are just too long for a small company like ours to bridge the gap. And so it can be a challenge when you’re looking for people that can add value to your business in a relatively short time frame.

MURPHY: The skills gap is an interesting topic. Mike, Gilbane spends a lot on education and training of its employees. So where does your responsibility lie?

MCKELVY: That’s a good question, and I think we have to look many, many years into the future. Because the employees of the future that we need now are actually in kindergarten and grade school and they’re not even imagining what their career could be for construction companies like Gilbane. So we have a responsibility not just to take care of our own people and keep them continually trained but to reach out to the community. It’s really a partnership. We can’t just do this individually. As a leader at a larger company like we are, we have to invest in the community, we have to invest in programs supporting the education of the state and working together with the political sector in order to get the training where it needs to be so that we can plant the seeds now that will be productive employees in decades and decades to come.

MURPHY: Are there specific programs right now in Rhode Island?

MCKELVY: We like the ACE Program. We really give high school kids a chance to learn about our business and get that first job and get some training before they graduate from high school. … Giving them some faith that they have a career and that they could have a career here in Rhode Island is extremely important. So the larger companies – all of our companies I think – owe it to the state to continue to invest in that program.

COLETTA: In general, is the education system in Rhode Island going in the right direction? For members of the business community, the concern is that junior high and high school students are not being trained properly for today’s jobs that your companies are creating.

MORALES: I couldn’t agree more with Mr. McKelvy about the partnerships that can exist with companies as well as schools, secondary schools, middle schools. Those kindergartners that are our workforce of tomorrow are also increasing by becoming more and more diverse, and so diversity in our workforce is a reality. Anything that companies can do or small businesses can do to mentor, to be navigators for secondary schools or middle schools or elementary schools to be able to really open the door for career pathways and career ladders for our students is absolutely the step in the right direction.

COLETTA: The complaints I’ve heard include that there’s too much of a push for college, as opposed to pushing people toward very highly paid vocational-type jobs.

STEINBERG: You know one of the things that has changed in our lifetime is that early on you wanted everybody to have access to college and somehow that seems to have morphed into everybody has to go to college, and college is defined as a traditional four-year stint. But you have on the one hand entrepreneurs who have dropped out and started very famous companies. You have people that can go through high school and get a certificate for different aspects, coding or trades.

I also wanted to go back if I could to something that Mark mentioned about the business community. Because I do think we’ve had over the years an erosion of civics and civic responsibility in the state. And I think that the business community is very busy, and everybody is looking out first and foremost for your employees, and your customers and your company. But there has been a void of civic leadership I think in the state over a period of time, as large companies have moved out of state. Other places around the country have a vibrant and real civic-leadership group. And that doesn’t mean just that you run and get elected. It also means support of the arts, support of education, just really getting involved and playing a leadership role.

PATTIE: But I do think that in Rhode Island the businesses that are Rhode Island based have really stepped up to the plate … it not only with sitting on boards, but volunteering within the organizations and also providing financial support. Granted the pool [is small]. So there is more of an emphasis on us having to step up.

MURPHY: Alan, you’re the head of an accountancy that’s very much a knowledge-based part of the economy. So those aren’t two-year degrees. You need a lot of education for that. So, what’s your responsibility?

LITWIN: We’ve actually gone out to the high schools as well as the colleges and shown some of the students what the career path can be, whether it’s in our accounting business, our recruiting business, our technology business and We show them that there are many opportunities in professional services that they can partake in if they follow their education path. But it would have to be through a full four-year degree and most cases through a graduate degree at some point. We’re also on all of the campuses in Rhode Island, as well as eight other schools in New England hiring interns into our company, because what we found is it’s very difficult to find experienced people … so we’re going to grow them ourselves.

LITWIN: [But] we’re not seeing the technical skills, particularly in technology coming out of the universities.

MURPHY: Is that because the technical skills now are more demanding than they used to be or because they’re not being prepared as well?

LITWIN: I think it’s because things are changing so rapidly. … The business we have in the technology group is drastically different than it was three years ago. In fact, all of our products and services are totally different than they were three years ago. So, I think the schools are doing a good job in training the kids but the curriculum needs to move more rapidly.

COLETTA: That’s interesting. In our forum five years ago with a different group of business leaders, they were complaining about how the state just wasn’t catching up. One participant said at the time anyway, RISD doesn’t even have a computer software-design program. And that obviously is a great need.

KISHFY: It definitely is. The last designer that we hired we got on an O-1 Visa from Bulgaria. And you know I always hear about, hey there is RISD next door. But we’re struggling to find people at all in Rhode Island. … We have a similar kind of an apprenticeship program where we’ll hire folks and train them and likewise we’re a good place to work, so not too many people leave. So you can have some confidence that investment will have a return, but it’s still a very long road, and it takes a while to build a large engineering or design team that way.

COLETTA: How do we account for this lack of keeping up?

KISHFY: You know, I’m not really sure in the case of RISD why, but I do know that they’re making an effort to fix that. They’re actually having some folks from RISD’s administration come to our office and talk to us about which types of skills and programs might be valuable for companies like MojoTech. So that’s great. … But I think they’re just traditionally a fine-arts school, so it’s going to take a little while for a different culture to evolve there.

STEINBERG: If you look at some of the new programs under Real Jobs Rhode Island, the focus shifted from the schools that train people and assume they know what the employers want, to going to the employers in whatever industry and determining what the requirements are and then going back to the schools – whether it’s engineering, whether it’s design or whatever – and making that connection.

COLETTA: I’ve heard there’s a labor shortage in the residential home-construction industry. Now from the commercial-construction industry, same problem?

MCKELVY: Yeah, the same problem, Frank. The issue is that during the last five years so many people left the industry. They’ve gone to do other things. So we have a young population that wants to get into our construction world and the engineering world but they don’t have the baby boomer experience, the builder experience that many people have from the past. So we’re struggling across our industry actually, outside of Rhode Island, to find the best talent and bring that talent into the company. So I think it’s going to just get worse over the next few years because the economy is picking up.

MURPHY: Anna, you already talked about the fact that in a generation one quarter of the work force in Rhode Island is going to be Latino. But the gap [in] Latino children’s educational attainment is one of the largest in the country compared with the majority population. Are we really taking this seriously enough?

MORALES: I think we think we’re taking it seriously, but rhetoric definitely needs to be followed up with actionable steps, and there needs to be some accountability on everybody’s part. In many communities Latinos are not a minority, they are the majority. And so how do our policies align with that? How does funding align with that? How do programs that are developed in an office building or in a government center or in a business align with that reality? … We need to inspire, particularly because we have a very high first-generation community in the Latino community here in Rhode Island.

First-generation Pell Grant recipients wanted to definitely go back to their communities and make it a better place. And we need to look at things through an asset lens, not through a deficit lens. Many of our kids are multilingual. How do we create bi-literacy seals or tags on their diploma that they can take to a company or to apply for a scholarship if college is the route that they choose to take?

COLETTA: All right. Three-part question here for you then. Does the Rhode Island business community understand the depth of the concerns you’ve just expressed? Does the governor’s office understand it? Does the General Assembly understand it?

MORALES: I think that the business community probably understands it the most. Because they have a lot to lose [in] productivity. There’s definitely work that comes down the pike that they’re able to compete after or not, depending on whether or not they have the right workforce and the right talent. I think government – we’re not really represented in government. We have woeful numbers in terms of people of color who are actually working in policy-making decisions. And so I think it’s starting to become a priority. In terms of the governor’s office I think the governor has pleasantly surprised particularly small businesses with a portal for Latino businesses, through Commerce RI, which is fully bilingual. … So I think we’re starting to get there but I think we have a long way to go.

COLETTA: Let’s bring in some of the other members or our panel here on this subject.

STEINBERG: I think it’s still check off the box. I think it’s a hot topic, so we’ve done this and we’ve done that. And I don’t think it is fully embraced and fully realized. I don’t think the business community understands enough. It’s not a criticism, I think it’s new. But the other important thing I think that you mentioned is an asset. We should embrace the cultural diversity. It’s not all woe is me, these different populations are growing.

But that gap … I think it needs a quadrupled effort to go after that gap.

MURPHY: You talk about embracing, you know, in two ways. One is embracing diversity but the other is the business community embracing the need to actually change and recognize that. How would you define that?

STEINBERG: I’m not an expert, but I think part of the issue in Rhode Island is representation. So starting in schools, kids want to learn and see other people in the administration that look like them. And so what’s a representative population? But I think the same thing in the business community. I dare say that if you go to a large business gathering, whatever event you go to, you will not see a representative base from the population.

PATTIE: I think the governor’s Making Jobs Happen program is a very good start for the business community. The Rhode Island Bankers Association has been worried for a long time about the next generation of bankers and with the new program it’s introducing some basic banking programs for people who can have an idea of what banking is about. There isn’t a lot of turnover in the banking community. So it’s very difficult to bring in new people and have them understand it’s going to take a number of years for them to grow into a position. And we don’t have a lot of diversity in the banking community. So a program like that that allows people to go in and get a basic understanding of what the business is like will certainly help.

MURPHY: It’s not just about ethnic and racial diversity. It’s also about men and women. Women make up a majority of the workers but they decidedly do not make up a majority or even anywhere close to being a large percentage of the managers and the executives.

PATTIE: Banking is an industry that takes a number of years to reach middle management and especially executive management. And a lot of women in past years would take time off and miss a number of years. Now, with the flexibility of the workplace, people stay engaged … . Half of my senior team is female, and I’m very, very proud of that.

MURPHY: Mike was actually going to jump in there for a second.

MCKELVY: I was going to say something about diversity in general. The more diverse a company is the stronger a company is, and I think many of us realize that. The language gap that was talked about with the growth of the Latino population [is important to recognize]. For example, in our business we have a lot of subcontract labor across the country that if we can’t speak Spanish someone is going to get killed on the job site. So we have to have language training so we can have a good communication and connection with our employees. … With respect to diversity in general, we have to make sure that we understand the more people we get in from a variety of backgrounds actually the better it’s going to be for our business. It’s the right thing to do, but it’s better for business.

COLETTA: Alan Litwin from KLR had some thoughts on the education system in general before we move on.

LITWIN: Just to go back to Mark’s original question about education. The governor has had a lot on her plate … and certainly focusing on jobs and getting the unemployment rate down was critical. But at some point she has got to turn her focus to education. The Rhode Island Public Expenditure Council recently came out with a report that said we’re the ninth-highest spender in the country in education and our results are abysmal.

We’re the lowest in New England, way below the median in a lot of different measurements. So there’s got to be some focus on education. We’re talking about the skills gap and the education gap between the Latino and the remainder of the population. Well the remainder of the population isn’t the benchmark to start with. So we have to bring that benchmark up and we have to bring the Latino gap and narrow that.

MURPHY: In late March we had the issue of a new state slogan for tourism. Within a week the new slogan was gone, as was the chief marketing officer. So the questioning here is not whether we like “Cooler & Warmer,” whether we like the logo, but rather the process itself.

KISHFY: You know, we’re the “Creative Capital.” We’ve got RISD and we can’t get someone to create a logo and a slogan who lives in the state. To me that’s really bizarre. I think not only are there dozens of perfectly capable people who can create that type of work, but just the fact that we didn’t think to prioritize them over someone from New York just sends the wrong message to me entirely to a business community and really to just everyone.

STEINBERG: It’s broader too. You know it’s long been said that the upside for Rhode Island is fighting above our weight. Could we be outsized for our size? And that requires incredibly good execution. And so if you just take this as an example, whatever we do – and it may turn out to be a winner and it may not be a winner – but whatever we do, we need to do really, really well, and this fell apart on the execution.

PATTIE: We may have missed the mark on this particular campaign, but the important thing is that we continue to focus on tourism. I think it’s such a great thing that we now have a cohesive package to start to really showcase what we have here. Tourism creates jobs from construction to culinary, and we can all benefit so much from it.

MCKELVY: You know you need to know what you’re best at. And I’m not sure we know what we’re best at in Rhode Island. We all love the state and it’s a very, very special place which is different than the rest of the country. And so getting the message out whether it’s through a slogan or a logo or something, it needs to be a proactive message and proactive strategy.

COLETTA: You know, on our last forum about five years ago I think it was Jack Partridge, the founding partner for one of the most prominent law firms in Rhode Island, who said that the attitude that we project, or at least projected, then was anti-business.

LITWIN: Laws come down and the business community isn’t generally thought of before the laws are enacted. So, for example we have a great TDI program that expanded last year to include temporary caregivers. The business community was not consulted. What’s the cost, is this good for you, is it bad? Recently some legislation has been introduced for paid sick leave without any input from the business community. Because it’s not just about taxes that attract and retain businesses here, it’s also about the policies.

COLETTA: It’s time for our lightning round in our business roundtable. Mr. Litwin from KLR already gave a recommendation to government: Involve the business community more in the key policies. … Next, Anna Cano Morales from the Latino Policy Institute.

MORALES: Sure. I have two suggestions. One is I think governments need to talk to one another. I mean, oftentimes we see programs rolled out or initiatives or large campaigns, and we have overlapping populations sometimes and overlapping communities and there is no communication. The other one is, I’m going to stick with education. Education is the best economic-development investment that Rhode Island can make for today, for tomorrow and for the future. Especially looking at English-language learners. They’re not a charity case. They have remarkable talents to be able to give back to Rhode Island with the right investment.

COLETTA: Nick Kishfy from MojoTech?

KISHFY: I work with a lot of startups, and I look at Rhode Island in a similar position to how small businesses are when they’re trying to battle large incumbents. Rhode Island is a small state, and we ought to be able to move faster, innovate, take more risks and leverage our size to our advantage. I don’t think that’s something the state does at all right now. I think we’re too often looking to see what Massachusetts does or Connecticut does and then we do some implementation of that but with poorer execution. We need to really try to break away from their patterns and forge our own path.

COLETTA: Sandra Pattie, BankNewport.

PATTIE: We need a good housing policy in the state. It’s unfortunate that so many of the people who are working hard jobs are unable to find decent housing. Right now we understand that you have to have $57,000 of household income in order to afford a decent rental. Housing affects education and affects general health and welfare. So it’s a full package. It just can’t be a business-community effort.

COLETTA: Neil Steinberg.

STEINBERG: I certainly agree with education being a cornerstone. We spend too much time looking at what we didn’t do over the last 30 years, and I think going forward with an increased pace of change, [we] need to take advantage and play to our strengths. We’ve got to be much more proactive. Nick mentioned taking risks. We’ve got to do things.

MURPHY: Both Nick and Neil talked about education. You know we had a very serious change agent at the head of the state’s educational system in Deborah Gist. She was essentially run out of the state. How do you break down resistance if you really want to make change?

STEINBERG: You need to do it through partnership. So you know Deborah had great ideas. She had great energy and force. I think Commissioner Wagner, who just rolled out his new education plan, may be a little more collaborative and working on the ground. But this is where the business community can play a role. If the business community prioritizes education, demands the change for a skilled workforce, it has got a better chance than just letting it go the way it is.

COLETTA: Michael McKelvy from Gilbane.

MCKELVY: It starts at the top. The tone at the top sets the priority for everything. If we work together with the government to really do things in a lean fashion in this state … we are a small state. We should be the easiest state to work in and to develop a business in the United States. So together with government we should be able to come up with a better way to do things here.

COLETTA: Alan Litwin, you started the discussion in our last segment, you want to have the last word on this particular question?

LITWIN: Sure, two things. First on economic development. Everybody looks to the state for economic development, but we actually did a tax analysis for the governor for Stefan Pryor, and we benchmarked Rhode Island against the other New England states and our tax policy at a state level is actually quite attractive. What’s not attractive is local municipal taxes. It’s the local that … makes the state unattractive.

The second thing is change. A couple of my co-panelists have mentioned this. The pace of change in the business world is rapid. The pace of change in government is glacial. Government needs to move much faster and be much more reactive to the realities with the marketplace. •

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