For years, community leaders in Newport have watched as the nearby Naval Undersea Warfare Center has farmed out billions of dollars in contracts to civilian businesses both near and far.
While NUWC’s growth has drawn new high-technology industries to coastal Rhode Island since it was reorganized in 1992, the City by the Sea has been largely a bystander to the economic phenomenon. However, that’s about to change.
More than five years after the concept was first proposed, Innovate Newport is expected to open this winter. Spearheaded by city officials and the Newport County Chamber of Commerce, the project involves converting a former elementary school into a business incubator. The nearly 100-year-old Sheffield School building is being remodeled to house small companies, startups and entrepreneurs looking for a piece of the region’s high-tech economy. Such regional activity, especially in recent years, has come to include more than the defense industry, including business lines ranging from marine and environmental technology to cybersecurity and renewable energy.
“That’s what this is all about,” said Tuni Schartner, Innovate Newport’s director of entrepreneurship and innovation, whose job includes marketing the facility to prospective tenants.
The $7 million-plus incubator – expected to be ready for a soft opening next month and an official opening in March – may be coming at an opportune time. Longtime members of Greater Newport’s business community say the growing number of business ventures and business-support organizations in the area seems to be reaching a critical mass that may lead to a breakthrough for the local economy. Innovate Newport’s goal is to capture some of that business and help it flourish in Newport and on Aquidneck Island in general.
“The interest level we’ve seen at Innovate Newport has surpassed our expectations,” said Newport City Manager Joseph Nicholson.
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ANCHOR TENANT: Inspire Environmental CEO Drew Carey is photographed along the Newport coast. The marine technology firm currently based in Middletown specializes in underwater imaging and will be an anchor tenant at the Innovate Newport incubator.
/ PBN PHOTO/DAVE HANSEN[/caption]
Inspire Environmental, a small Middletown firm specializing in underwater imaging, is emblematic of what planners are trying to achieve at Innovate Newport. In recent years, the company has grown from about five to 20 employees and is looking to take its business to the next level. The company has origins in federal contracting, and its list of clients includes the U.S. Navy, the U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency. It also has clients in the private sector, such as offshore wind-energy developer Deepwater Wind LLC and oil giants Exxon Mobil and British Petroleum.
Inspire Environmental has been using temporary office space at the Aquidneck Business Park in Middletown and plans to move into Innovate Newport when it opens. The firm will occupy much of the incubator’s second floor.
“This will be a really good fit for us,” said Drew Carey, the company’s CEO and a marine scientist from Newport. “We’re a fairly new company in the marine-technology area. We wanted to be in a place where there’s a sharing of resources and a sharing of ideas.”
Inspire plans to capitalize on the anticipated growth of the offshore wind-energy industry, which is taking shape off the coasts of Rhode Island and Massachusetts. Underwater imaging is needed for planning and installing offshore wind turbines, Carey said.
Being at Innovate Newport, Carey said, will allow the company to host business networking events and seminars, in addition to providing more space to display company products.
And because the incubator is a nonprofit, the building has access to the “Oshean” fiber-optic network for its tenants. “For a tech company that deals with large data sets, that’s a big game-changer,” Carey said.
Towerhill Associates, a staff-recruiting firm founded by Jamestown brothers Josh and Jared Furtado, also plans to move into Innovate Newport. The firm employs about 10 people in offices in Middletown and San Francisco. The company focuses on finding professionals for businesses in the “clean-tech, high-tech and life sciences” industries.
“Tracking and supporting innovation in the industries we serve has been one of the founding principles for Towerhill,” said CEO Josh Furtado. “Innovate Newport has the potential to be really disruptive for not just the island but the entire tech/startup ecosystem in Rhode Island.”
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DEFENSE CONTRACTOR: Pictured is an aerial view of the Naval Undersea Warfare Center Division Newport, which provides the U.S. Navy with research, development, engineering, testing, analysis and support for submarines, offensive and defensive underwater weapons systems and other types of underwater systems. In 2017, the center awarded $518.6 million in contracts, including $281.9 million to private contractors in Rhode Island, mostly for engineering services.
/ COURTESY NAVAL UNDERSEA WARFARE CENTER[/caption]
‘THE SILICON COAST’
The incubator is situated on Broadway, Newport’s main thoroughfare, in the city’s North End. The 33,000-square-foot facility will offer cowork space designed for entrepreneurs and startups. It also will offer private suites for small but established companies or corporate teams. In addition, the facility will have a meeting space, a café, a glass atrium and possibly an outdoor terrace.
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SHEFFIELD RENOVATION: Mike Plouffe of Pezzuco Construction, general contractor for the renovation of the former Sheffield School on Broadway in Newport to become the Innovate Newport business incubator, applies fast-drying compound to one of the walls of the building.
/ PBN PHOTO/KATE WHITNEY LUCEY[/caption]
Funding for Innovate Newport comes from a variety of sources. That includes a nearly $1.7 million grant from the federal Economic Development Administration; up to nearly $2.4 million in Rebuild Rhode Island tax credits from the R.I. Commerce Corp., the state’s economic-development agency; and a $537,000 grant from the van Beuren Charitable Foundation Inc. The remainder of the costs were drawn from the city’s Urban Development Action Grant revolving fund and the city’s Property Acquisition Fund.
In addition to the original funding, planners are looking into ongoing sources of financial support for the incubator, but their hope is the facility can become self-supporting someday. “We’re already working on continuing funding,” Schartner said. “Eventually, we’d love to see it become self-financing. That’s our goal.”
Many of those involved in business and civic affairs in coastal Rhode Island have heard about Innovate Newport, including Thomas Carroll, director of defense commercialization at NUWC in Newport. Carroll sees the incubator as one more piece in the puzzle of Greater Newport’s gradual transformation into “the Silicon Coast,” as he put it. Part of his job involves expanding the common ground between the federal government’s contracting needs and the state’s economic-development agenda, which now includes Innovate Newport.
Despite the diversification of coastal Rhode Island’s tech economy in recent years, NUWC remains the anchor of it all. In 2013, federal sequestration triggered automatic funding cuts to defense. However, the situation has improved under President Donald Trump’s administration. In recent years, the Department of Defense has been pouring more federal dollars into NUWC, which is headquartered in Newport with other operations in other states.
For fiscal 2019, for example, more than $1.26 billion was earmarked for new business orders at the center. That was an increase from about $1.24 billion in fiscal 2018 and $1.18 billion in fiscal 2017. Center officials don’t see that trend changing anytime soon, as work on the Navy’s next generation of nuclear submarines is underway at General Dynamics Electric Boat in Rhode Island and Connecticut.
The Undersea Warfare Center’s impact on the area’s economy is well-documented. In 2017 alone, the center awarded $518.6 million in contracts, including $351.9 million to private contractors in Rhode Island, Massachusetts and Connecticut, mostly for engineering services. Much of that ($281.9 million) was in Rhode Island. More than 2,700 civilian jobs in southern New England are attached to the center, including more than 2,200 workers who live in Rhode Island. Most of them are engineers and scientists, followed by professional administrative staff and technical support, according to an economic-impact study from the center.
NUWC has two divisions, one based in Newport and the other in Keyport, Wash.
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BLUEPRINTS: Tom Jackman, a field superintendent from Pezzuco Construction, general contractor of the former Sheffield School renovation into the Innovate Newport business incubator, looks over blueprints in a trailer at the construction site.
/ PBN PHOTO/KATE WHITNEY LUCEY[/caption]
The Newport division’s mission is to provide the Navy with research, development, engineering, testing, analysis and support for submarines, offensive and defensive underwater weapons systems, and other types of underwater systems. Its mission also is to steward existing and new technologies in support of undersea warfare.
In that spirit, the Newport division hosts an annual “technology exercise” as an opportunity for companies and entrepreneurs to showcase their innovations for Navy leadership – dubbed as the future of warfighting in action. Each year, Carroll said, the event at the Navy’s Narragansett Bay test facility in Newport draws more participants to pitch their ideas to the military.
Last year’s August event drew more than 55 participants, who conducted more than 30 exercises over three days, demonstrating their “air, surface and undersea-domain” innovations before more than 800 attendees, according to Jeffrey Prater, the center’s director of public and congressional affairs.
The event was held in collaboration with the Southeastern New England Defense Industry Alliance, a Middletown-based group of more than 100 defense contractors and other business organizations. The alliance formed in 2002 in response to a threat of military-base realignments and closures, and today continues to advocate for its members’ mutual interests.
A related group, the Undersea Technology Consortium, formed in 2016. It’s based out of the same Middletown office as the defense alliance and headed by the same person, Molly Donohue Magee, who serves as executive director for both organizations. The consortium is a coalition of large and small businesses, academia and nonprofit organizations to collaborate with the federal government in developing undersea and maritime technologies. The consortium already has more than 200 members from 31 states.
Magee, a former employee at NUWC, said Innovate Newport will give her organizations a new venue to hold monthly “tech talks” and networking events. And having members of the Defense Industry Alliance and the Undersea Technology Consortium visiting Innovate Newport will give entrepreneurs and startups that use the incubator some exposure and insight into the region’s defense-industry cluster.
“It could be a win-win for both of our organizations,” she said.
Last June, meanwhile, NUWC announced a “landmark” agreement with the consortium to provide “cutting-edge undersea and maritime technologies.” The agreement provides the Navy with “other transaction authority,” allowing it to deliver technologies and prototypes faster than conventional federal acquisition requirements would permit. The agreement is for three years with options that could extend to 10 years. In December, the consortium announced the first three contract awards under the agreement, though none of the recipients are based in Rhode Island or southern New England.
A goal of Innovate Newport is to keep those contract awards local.
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NEW OFFICE: Erin Donovan-Boyle, executive director of the Newport County Chamber of Commerce, said the Chamber’s move from Middletown to Innovate Newport won’t change its focus, but it will reach out more to the types of small tech firms and startups that would visit or do business at the business incubator. Donovan-Boyle stands in front of the former Sheffield School
building, which is being renovated and
will serve as the incubator space.
/ PBN PHOTO/KATE WHITNEY LUCEY[/caption]
KEEPING IT LOCAL
Schartner said the incubator will foster that by exposing businesspeople who use the incubator to information about initiatives, projects and contracts that they might otherwise miss. Already, she added, NUWC and the Defense Industry Alliance are planning events there.
Currently, an entrepreneur or business just starting out can use the cowork space there for a single day “drop-in” fee of $35, or $135 for access five days a month. The fee for full-time cowork space is $275 a month, or $325 a month for cowork space with a dedicated desk. Planners are partnering with WorkBar, which runs cowork facilities in the Boston area, to help with staff training, member services, programming and promotion of Innovate Newport’s cowork space. Lease rates for the office suites can be negotiated separately, though all the suites have been taken.
The Newport County Chamber of Commerce has sold its Middletown office and will be the anchor tenant on the incubator’s first floor. The new location won’t change the Chamber’s focus, but it will shift a bit, said Erin Donovan-Boyle, the Chamber’s executive director. The Chamber plans to reach out more to the types of small tech firms and startups that would visit or do business at the incubator.
“We’re changing the way we do business, and we want to be located in a hub of activity,” she said.
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OVERSEEING TRANSITION: Tuni Schartner, director of entrepreneurship and innovation for Innovate Newport, speaks with Tom Jackman, the field superintendent for Pezzuco Construction, the general contractor for the renovation work to transform a former school building into a business incubator. / PBN PHOTO/KATE WHITNEY LUCEY[/caption]
Another part of Schartner’s job is to form alliances with organizations that could complement, rather than compete with, Innovate Newport. That includes connecting with young talent at the Center for Business Outreach at Salve Regina University in Newport and the University of Rhode Island, which has a program in innovation management and entrepreneurship. URI also has an Equipment Development Laboratory in its Graduate School of Oceanography that helps faculty and students test scientific equipment.
To the east, there’s the Center for Innovation and Entrepreneurship at the University of Massachusetts Dartmouth. It was founded in 2000 and operates its own incubator for technology-driven companies. Philip Adams, the center’s interim director, has heard of Innovate Newport.
He sees a synergy developing among the various players in the region’s marine-tech economy, which stretches from the Woods Hole Oceanographic Institution at the west end of Cape Cod through coastal Rhode Island and into Groton, Conn., where Electric Boat has been the Navy’s primary builder of submarines for decades.
The center at UMass “is different, in that it has graduated office space, plus rapid prototyping capability with our 3D printers and a fully functioning machine shop and wet lab,” Adams said. “Our companies prototype product and have limited-run production here, in addition to incubating their businesses. Our denizens are mainly in life sciences, advanced chemistry, clean energy, marine tech and software.”
To date, he added, more than 50 businesses have cycled through UMass Dartmouth’s innovation center, and many others have taken advantage of training and other services.
Innovate Newport, meanwhile, is being developed by the Cumberland-based Economic Development Foundation of Rhode Island, which has experience in such projects. Scott Gibbs, the foundation’s president, said the incubator can make a difference in Newport’s economy, though it may take a while before results start showing.
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POURING CONCRETE: Construction workers pour concrete in the main entrance of the former Sheffield School building on Broadway in Newport. The former elementary school is being renovated to become the Innovate Newport business incubator.
/ PBN PHOTO/KATE WHITNEY LUCEY[/caption]
AGING WORKFORCE
The local economy could use a boost. Between 1970 and 2010, federal statistics show, Aquidneck Island lost nearly one-quarter of its population. The decline was even steeper in Newport, which lost almost half of its population between 1960 and 2010. Much of the loss came from the Navy pulling its ships and personnel years ago but contracting there remains strong. Major defense companies such as Raytheon Co. have set up shop on the island or nearby. But with the population loss, Newport’s workforce has been aging, so the incubator is being marketed with young entrepreneurs in mind who someday may grow their businesses into significant contributors to the island’s economy.
“By 2020,” Donovan-Boyle lamented, “half the workforce [across the nation] will be millennials and we’re slowly becoming a retirement area.”
The goal is to reverse that trend, Carroll said.
“As people age,” he explained, “You’re going to need that next generation and support system – a strong and healthy replacement – so you need to create an opportunity for people to come back and say, ‘Hey, I can make it here.’ ”
When the local incubator opens, the work will have just begun in some ways.
“Newport is a dynamic community that, over the last several decades, has benefited from a robust tourist industry,” Nicholson said. “But like any community, we also have some very complex challenges.”
Several years ago, the Newport City Council adopted a goal to establish Newport as the most livable and welcoming city in New England. Part of that charge has involved creating an environment that’s attractive for new and established businesses.
“Innovate Newport is a component of that effort,” Nicholson said. “We saw the Sheffield School’s location in the city’s North End as providing a unique opportunity to serve as a catalyst for a broader economic-development strategy aimed at positioning Newport as not just a great place to visit but also to live and work.”
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
Thank you PBN and Scott Blake for a comprehensive article. Given the close proximity of NUWC to City Hall, you’d think that our local state, city, and school leaders would have a strong understanding of NUWC, its many career opportunities for local youth and NUWC’s contribution to our local economy. Across my 25 years in Newport, I’m hard-pressed to recall even one inquisitive comment from a school teacher, principal, superintendent, school committee member, city council member, or city manager. To them, NUWC was just an acronym. Now that NUWC and Electric Boat are challenged by waves of retirements, you’d expect that Newport’s three schools would have a new laser focus on boosting its poor STEM achievement. But, alas, the local civic energy is now focused on funding and building a $180 Million “Taj Mahal” high school that’s as far away from NUWC as one can get in Newport. Around here, “innovation” remains an alien, textbook concept.