A wave of retiring business owners is about to reshape Rhode Island manufacturing, where 80% are approaching an exit without clear succession plans.
At least, that’s according to data from Polaris MEP, a nonprofit adviser for many of Rhode Island’s manufacturers.
At the center of the concern is a straightforward but high-stakes challenge. Many small and midsize manufacturers – often family-run companies built over decades – remain closely held by founders whose personal retirement plans are directly tied to the future of their companies.
But efforts to address the issue have taken multiple, fragmented forms with state-backed initiatives and industry-led programs emerging in parallel rather than through a single coordinated system.
“It’s a huge economic development issue for the state,” said Josh Daly, co-founder of Local Return, a Rhode Island nonprofit focused on community ownership and business transition planning. “There’s a large group of companies that could successfully transition ownership, but there isn’t a clear starting point for many owners.”
In response, state officials and lawmakers have begun advancing several succession-related initiatives in recent years.
In 2024, R.I. Commerce Corp. received $400,000 in federal funding for manufacturer succession planning, while lawmakers this year proposed creating an employee ownership center aimed at helping businesses remain locally rooted by providing paths for employees to take over businesses.
Yet much of the hands-on work is being led by industry organizations and nonprofit groups, including a new succession-planning pilot from Local Return and Polaris MEP scheduled to launch June 9.
Matt Watson, center director at Polaris MEP, said Rhode Island manufacturers are already beginning to confront the realities of the so-called “silver tsunami,” a reference to many gray-haired, longtime owners near retirement without clear transition plans.
“The silver tsunami is here,” he said. “We’re seeing owners who have spent 30 or 40 years building solid companies and now don’t know what the next step looks like.”
The new pilot program developed by Polaris MEP and Local Return is designed to help manufacturers assess exit readiness, understand business valuation and explore ownership-transition options before retirement pressures become urgent, Watson and Daly said.
Watson pointed to Polaris data showing that roughly 25% of companies fail after an owner retires, a statistic he said highlights the risks of delaying succession planning.
Without clear succession planning, manufacturers risk closure, outside acquisition or restructuring, leaving jobs and long-standing businesses vulnerable when much of a company’s value is tied to the owner, he said.
“You do see venture capitalists coming in and rip apart the company or move it out of state,” Watson said. “That does happen.”
And while R.I. Commerce received the $400,000 federal manufacturing succession grant in 2024, the program remains in development.
R.I. Commerce initially planned to use the funds to conduct a statewide industry analysis before building programming, but it later shifted course to focus more heavily on implementation, said spokesperson Giselle Mahoney.
The agency said it is now developing succession-planning programs for manufacturers, including identifying key subindustries and designing services to support business transitions.
R.I. Commerce is also in the process of hiring staff to lead the effort, with programming expected to launch this winter, Mahoney said.
Meanwhile, questions still remain within the state’s manufacturing community over how succession-planning initiatives should be coordinated and rolled out.
The Rhode Island Manufacturers Association has also emphasized the need for succession-planning pathways that preserve jobs while allowing owners to transition businesses on their own terms.
In a statement, RIMA CEO and President Melissa Travis said employee ownership can be a viable option for some manufacturers, but she warned succession planning should remain voluntary, confidential and guided by experienced professionals in valuation, financing, tax and legal structuring.
Ownership discussions, she said, must be driven by business owners themselves to avoid unintended consequences for companies and workers.
In the meantime, Daly said the Polaris MEP pilot program is moving ahead to help fill the gap.
The program, he said, is designed less as a formal exit-planning service and more as an entry point for owners who may already feel overwhelmed by the succession process.
“They don’t know what they don’t know,” Daly said. “A lot of owners are intimidated by it, or they’ve delayed it because it feels too daunting or too personal to start talking about.”
Watson noted that many owners are reluctant to publicly discuss succession planning out of concern that employees, customers or competitors could interpret a potential ownership change as instability.
“If I heard the owner was starting to think about selling, I would start looking [for another job],” Watson said, describing how workers may react if succession discussions become public.
Daly said the goal of the pilot program is to move succession-planning conversations earlier, before owners are forced into rushed decisions by retirement, illness or financial pressure.
For many manufacturers in Rhode Island – most of which are small businesses – owners also serve as key managers, sales contacts and institutional anchors, making transitions harder to untangle late in the process, he said.
“The earlier people start planning, the more options they have,” Daly said. “Once time starts running short, a lot of those pathways begin to close.”
