RHODE ISLAND MUST FIND
ITS ECONOMIC NICHE
The Providence Journal, Commentary Page, January, 1999
In the Sunday Opinion Page in the December 27 Money & Business section, David Baum
wrote an excellent article detailing the feasibility of Rhode Island having a niche in
engineered products. Engineered products are goods produced with unique features for each
purchaser, which is the basis for their value added. To survive in this market, firms must
be able to quickly translate new or improved designs into products, which requires
substantial expertise in the area economists refer to as "flexible production."
As Mr. Baum notes, Rhode Island has history on its side: inventions and innovations have
been essential to the success of its manufacturing sector throughout Rhode Island's
history. He stated that: " 'Yankee Ingenuity' has evolved from a highly educated work
force, close relationships with customers, and the independent spirit of New England
So much for history. Rhode Island's manufacturing sector finds itself trapped somewhere
between its solid past and the elusive future defined by technology and worker skills that
Mr. Baum alludes to. I have now become convinced that as of 1996, Rhode Island's
manufacturing sector as a whole was non-competitive. What do I base this on? Recently
released data indicate that for 1996, Rhode Island had the third lowest value added per
manufacturing employee in the Unites States. Add to this the fact that in 1996, exports of
manufacturing goods from Rhode Island were in their second consecutive year of decline,
and the basis for my conclusion emerges. The good news, however, is that while this
conclusion might be true for manufacturing as a whole, it not true for a number of our
existing firms. The list of success stories in Rhode Island, manufacturing firms that have
done everything right, is both long and distinguished. It is this dichotomy between the
"haves" and "have nots" that is causing us problems. And, perhaps the
best news of late for Rhode Island is that 1996 has ended.
The greatest problem confronting Rhode Island, which has persisted for over a decade, is
that we have yet to define our economic niche in the information age. Should you ask an
elected official what that niche is, the typically response is little more than we are
doing a little of this, a little of that, etc. The problem is that such responses are
anything but systematic. They reflect what has sadly become the "state of the
art" in fiscal policy here -- piecemeal policy. This failure to tie the various
pieces together has resulted in a number of inconsistencies that limit our ability to
achieve the bright future we all desire.
Perhaps the best example of this concerns the glaring educational deficiencies in Rhode
Island's public educational quality. Manufacturing today requires that workers be adept at
measurement, the use of computers, problem solving, communication, and working in groups.
And, as production technology expands, workers must continually be retrained. This is the
basis for the concept of "lifetime learning." While we want world-class
manufacturing here, our policy makers have continually overlooked the necessary condition
for accomplishing this: quality education that on-the-job training can build upon. Permit
me to engage in a bit of transitivity to explain this: US students lag international
students in terms of educational quality; Rhode Island students badly lag US student
attainment; therefore educational quality in Rhode Island badly lags that of international
students. So much for the large-scale introduction of world-class production here.
What are the implications of these educational deficiencies for our manufacturing sector?
The cost of workers here, in spite of relatively low manufacturing wages, is high. Are
firms indifferent to interviewing three or thirty persons before a suitably qualified
person can be hired? I don't think so. And, since training builds upon the basic skills
workers acquired during their formal education, augmenting this base is more costly the
greater are the educational deficiencies persons bring to the job market. In light of
this, is it really a surprise that manufacturing employment in Rhode Island has declined
every year since 1984? By failing to pursue educational quality improvements in a far less
laid-back manner, we have essentially been punishing manufacturing firms in this state!
This is just one illustration of how expensive piecemeal policy has been for Rhode Island.
Interestingly, though, a substantial number of Rhode Island residents possess the
requisite skills for our manufacturing sector to expand. Sadly, many of these persons
found it necessary to accept jobs in Massachusetts during the last few years. This trend
gives new meaning to the phrase "brain drain."
Until our educational deficiencies have been eliminated, the goal of attaining a stable
manufacturing job base will prove to be illusive. The new manufacturing
"reality," of continual downsizing and the need to incorporate labor-saving
technology into production, will require continual expansion by existing firms or the
emergence of new firms here. Absent the highly trained workforce Mr. Baum alludes to,
recently enacted tax incentives that are touted as evidence of how competitive our
economic climate is will have a limited effect at best in reducing the high cost of doing
This, of course, condemns Mr. Baum's vision for an engineered-products niche here to
nothing more than a fond wish. Any state that "celebrates" the fact that 40
percent of its tenth graders can now read on level is doomed to mediocrity in the
Where's Samuel Slater when we really need him?
by Leonard Lardaro