Inflation. Supply chain bottlenecks. Worker shortages.
The pandemic-induced fires are spreading fast, and companies are struggling to figure out which ones to put out first.
Local business leaders detailed how these economic challenges have upended operations as a part of Providence Business News’ Economic Trends Summit, held virtually on Feb. 10. The two-hour event, attended by more than 100 online participants, featured a panel discussion with Thomas Tzitzouris, head of fixed income research for Strategas Research Partners, Jeffrey Diehl, CEO and executive director for the Rhode Island Infrastructure Bank; Craig Pickell, CEO and president of Bullard Abrasives Inc.; Elizabeth “Betty” Robson, CEO of J.F. Moran Co., and Thomas Sweeney, Sweeney Real Estate & Appraisal owner.
Whether in the red-hot housing market or inside a booming manufacturing plant, panelists agreed that higher costs for materials and labor were the biggest challenges facing their companies now and, likely, into the year ahead.
Where they disagreed is which of these problems demands the most immediate attention and how the state should best lend its support and windfall of federal COVID-19 aid to solve them.
Pickell pointed to the insufficient workforce training programs as the biggest weak point, leaving staffing at his Lincoln manufacturing plant down about 50% from normal levels. Pickell has turned to machines and automation to take up some of the slack, but he said he would need more workers as business activity continues to rise.
“We are really losing out big-time here in the state,” Pickell said. “We have a lot of people entering the school system who are not prepared to enter the workforce.”
‘The shakeouts keep coming, but we are learning new tricks.’
CRAIG PICKELL, Bullard Abrasives Inc. CEO and president
Indeed, Rhode Island’s aging workforce and other “structural problems’’ systemic to the state mean the nationwide labor crisis is hitting harder and faster in the Ocean State than elsewhere, according to Tzitzouris, who was also the summit’s keynote speaker.
This was not the case for J.F. Moran Co., which has found it easier to hire business and logistics workers in Rhode Island than the five other states in which it has regional offices. Robson credited its connections with R.I. Commerce Corp. and Bryant University’s John H. Chafee Center for International Business.
“Because of the smallness of the state, we can leverage connections, which gives us an advantage,” she said.
The trucking and warehouse arm of the Smithfield company, however, has not enjoyed the same small-state connection benefits. Lack of training programs and a murky career path combined with the time gap between when most high school students graduate and when they are allowed to drive tractor-trailers on interstate highways make critical trucking jobs hard to fill.
And it’s not just J.F. Moran suffering from trucking woes. The entire supply chain depends on trucks to deliver goods to their final destinations, she said.
Yet the problems with the supply chain nationwide also come with opportunities for Rhode Island, given its seaport access, port infrastructure and Rhode Island T.F. Green International Airport.
“If we can move goods from the airport to [the port at] Quonset in an efficient manner, that will allow us to become a leader in this area,” Robson said.
Tzitzouris also suggested highway upgrades to better connect southern Rhode Island, Providence and Quonset Business Park as “low-hanging fruit” with big returns for the state’s economy.
While infrastructure projects have taken center stage nationally and locally thanks to federal aid through the American Rescue Plan Act, U.S. Infrastructure and Jobs Act and potentially the still-pending Build Back Better Act, Rhode Island has yet to spend most of its $1.1 billion in ARPA funds.
“We are almost a year behind other states in getting money out the door,” Diehl said.
Approving a spending plan for the dollars doesn’t mean the projects will materialize overnight, though. Affordable housing – a top focus of Gov. Daniel J. McKee’s proposed ARPA spending plan and fiscal 2023 budget and a much-needed piece to attracting and keeping workers – is a complicated process with many steps of planning, design and construction, Sweeney said.
Sweeney also stressed the need to balance long-term projects such as housing construction with spending in areas that will bring a more immediate impact. Pickell, meanwhile, called for more aid for small businesses, saying what McKee has proposed in his initial tranche of ARPA funding was not enough.
Panelists also differed in what they wanted R.I. Commerce to do. Pickell lauded R.I. Commerce Secretary Stefan Pryor for his efforts, suggesting a bronze statue should be erected in his honor. Sweeney recommended a balance between focusing on big and small businesses, while Tzitzouris cautioned against “crony capitalism” of “sweetheart deals” for big, out-of-state corporations at the expense of small, local businesses.
“There has been just too much focus over the last 30 years on attracting new businesses,” he said. “There needs to be more done to encourage and level the playing field, reduce the barriers to entry.”
The silver lining to the “state of chaos” created by the pandemic and economic fallout is that it has forced companies to overhaul the way they do business, potentially for the better, Pickell said.
“The shakeouts keep coming, but we are learning new tricks,” he said. “We will find a way to get through it.”
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.
