Rhode Island’s economy is doing well, but a handful of perennial bugaboos, along with actions at the federal level, have dampened the business community’s optimism for the near term.
Perennial frustrations include lack of readiness by people entering the workforce, lack of investment in the state, shortage of commercial real estate and increasing costs of health insurance, according to panelists at Providence Business News’ Economic Trends Summit, held Feb. 15 at the Providence Marriott Downtown.
Newer sources of unease, they said, include vacillating federal policies on trade and tariffs, a decline this year in tax refunds (and for some an increase in taxes owed) – an effect of Republican-backed 2017 federal tax changes.
Andrew Bostian, director of business valuation and transfer pricing for BlumShapiro, said confidence is down, possibly because people are watching the broader national economy. He also cited declining tax refunds tied to the GOP-backed tax changes that went into effect last year.
Mark K. W. Gim, president and chief operating officer of The Washington Trust Co., agreed. “[This year] is not necessarily going to be stronger on the national level than 2018,” he said. He described the future as a “flashing green light ... the fundamentals are strong but there are still underlying trends that we don’t understand.”
‘Fundamentals are strong but there are still underlying trends that we don’t understand.’
MARK K. W. GIM, The Washington Trust Co. president
Asked about conditions in the commercial real estate market, Peter Hayes, partner of Hayes & Sherry Real Estate Services, said, “People are cautious. There seems to be a lull; they are not pulling the trigger.” Later, Hayes explained that availability of land for commercial real estate is very low, as is the vacancy rate for industrial space.
“Developers in Rhode Island will not build on spec,” Hayes said. “It’s a problem. Say a company needs 50,000 to 100,000 square feet. Now, there is no place to put them. And a company cannot wait three years to have a building built for them.”
Adding to the frustration, Hayes said, is that commercial real estate costs are far higher per square foot in Boston than in Rhode Island. Rhode Island, he says, could welcome businesses discouraged by Boston prices, if there were more commercial space available here.
“Rebuild Rhode Island is a program that incentivizes builders, but it’s not enough,” Hayes said.
Panelists tackled the recurring complaint that the state lacks workers who are job-ready. “We just don’t have qualified employees,” said Dr. Anne S. De Groot, CEO and chief science officer of Epivax Inc. “We need to have investment in education.”
Alyssa Alvarado, program director of Real Jobs RI, run by the state Department of Labor and Training, discussed the purpose of the state’s 3-year-old workforce-preparedness program. Real Jobs works directly with 30 business-sector partners.
The partners “serve as extensions of employers’ HR needs and they bring these needs back to us,” she said, providing “real-time feedback.” Using detailed information about employers’ needs, Real Jobs then works with industry partners to quickly create targeted training programs, she said.
The state is also working to retain accomplished college graduates through R.I. Commerce Corp.’s Wavemaker Fellowship program, which offers qualifying individuals a refundable tax credit certificate worth the value of their annual student-loan burden for up to four years.
John Hazen White Jr., owner and CEO of Cranston-based Taco Comfort Solutions, spoke of the importance of constant retraining of existing staff. In the 1980s, he said, the company was close to moving part of its operation to North Carolina. Instead, he said, “We decided to train the people we had,” and in 1991 it built the Taco Learning Center, which is still going strong.
Panelists praised Gov. Gina M. Raimondo’s administration for its focus on economic initiatives. Hayes said Raimondo “has done a fabulous job of attracting outside companies.”
Bostian mentioned MOO Inc., an online print and design company in Lincoln. He said the state acted wisely to entice MOO by offering a $7,500 credit per employee, adding, “Why can’t we get more MOOs?”
De Groot said the development of land formerly occupied by Interstate 195 and the renaissance of the old Jewelry District “have been a long time coming.” In the area of biotech, she said incubator companies – easily found in Cambridge, Mass., – are “huge job generators.” She said Rhode Island should show up at biotech conferences with big, inviting presentations.
De Groot also complained that her business, EpiVax, was not able to get in-state investors to create a spinoff, Epivax Oncology Inc. “We could not find Rhode Island investors; we had to go to New York,” she said.
Despite concerns about a looming recession, White said Rhode Island has “a pretty robust economy and things tend to correct themselves.
“There is no industry I know of that does not have opportunity for growth through outreach and expansion,” he said.
