Saul Kaplan in ProJo Editorial: Difficult Economic Times Call for Decisive Action
March 10, 2008 | Print this page | Share This | Email this page
By Saul Kaplan
Recent employment data has confirmed what we have known for some time: Rhode Island is facing hard economic times. We are disappointed that our state has taken such a hard hit from the sub-prime mortgage crisis and lost more construction and mortgage finance jobs than expected.
We did not need revised labor statistics to tell us that things are tough right now. Rhode Island’s small business owners and Rhode Island workers have told us they are worried about the economy and are struggling. They know there is no easy fix and they want to know we are addressing the underlying problems that make our economy less competitive.
Rhode Island is at a tipping point and we must work together to manage a difficult state budget, improve our tax competitiveness, and provide businesses with the tools they need to grow. We must become a knowledge economy that produces better jobs for all Rhode Islanders. Recent employment numbers only increase our resolve to accelerate the transition.
Rhode Island has to improve its business and tax climate. Changes to create a flat-tax option, lower capital-gains taxes, cap property-tax increases and phase out the car and inventory tax are good steps. Increasing taxes will only make us less competitive.
The Rhode Island Economic Development Corporation’s 2008 Economic Growth Plan lays out a clear vision and specific action steps for a stronger economy and creating new jobs. The plan’s goal is to increase the percentage of Rhode Island jobs that pay above the national average wage ($42,000) from 40 percent today, to 60 percent over the next 10 years. This transition will create 79,000 jobs, $2.5 billion in state income, and $83 million in income tax revenue in today’s dollars.
This year RIEDC will make 5,000 calls (up from 4,200 in 2007) on Rhode Island companies to help them access the tools they need to grow. The plan identifies target sectors for an aggressive expansion and regional attraction campaign. The plan also outlines steps to improve our business climate, increase the amount of growth capital available to Rhode Island businesses, improve workforce skills, increase office and commercial space, accelerate permitting for high priority projects, and decrease the regulatory burden facing small businesses.
An example of how we are modernizing our economic development tools is the creation of a $20 million Growth Capital Guarantee Program. This program will make it easier for companies to access the capital they need to grow and create new jobs. RIEDC has proposed, and House Majority Leader Gordon Fox and Senator William Walaska have agreed to sponsor, legislation to enact the program. We also announced a partnership with the Business Development Corporation of New England to bring $200 million in new financing programs into the Rhode Island marketplace.
All Rhode Island companies and Rhode Island workers can successfully transition to a new knowledge based economy. Concordia Fibers and GEM Plumbing offer two examples of Rhode Island companies that are reinventing their businesses to become more competitive in a changing global economy.
Founded in 1920 as a manufacturer of silk yarns, Concordia is now applying its textile expertise to the biomedical industry. The company is transforming itself to be competitive in today’s knowledge based economy. Concordia has invested in educating and retraining its employees and the effort is paying off for both employees and the company. Concordia’s goal is for its biomedical business to produce 60 percent of the company's revenue and to better position itself for future growth in Rhode Island.
GEM Plumbing has evolved from a one-man, one-truck operation founded in 1946 into one of the most innovative companies in the United States with more than 300 employees, 160 trucks and $35 million in revenue. GEM harnessed new technology to reinvent its dispatch center, inventory system and fleet maintenance garage, and brought employees in on the effort, counseling them on the importance of working smarter, cleaner and more efficiently. Within a year of launching its efforts to transform the company, GEM tripled its workforce, added new trucks and increased sales by nearly 50 percent. The company has since won several national awards for its innovation, rapid growth and training programs.
These examples demonstrate that no Rhode Island companies or workers need to be left behind as we transition to a new knowledge based economy. Supported by an economic growth plan that provides new growth capital, expedites priority projects, and makes the road a little easier for small businesses, Rhode Island companies can, and will, create good jobs for our citizens.
RIEDC is working with public and private sector partners to implement our Economic Growth Plan. Staying on strategy will require decisive leadership, deep collaboration and the courage to forgo short-term fixes. It will be difficult, but for the sake of our state’s future, we cannot afford to fail.
Editorial originally appeared in the March 9, 2008 edition of the Providence Journal
