A benefit of living in a state with the population of a large American city is its accessibility. What in New York or Los Angeles might take forever to make the connections to create a partnership, in Rhode Island it could be as simple as one referral.
In a fast-changing world, this creates more pathways for “synergy” and networking. But how can state government and the private sector respond to the external uncertainties of inflation, interest rate fluctuations and supply chain issues to stay competitive through the business cycles?
Panelists at Providence Business News’ Economic Trends Summit on Jan. 24 offered a few ideas.
“One of the great things about Rhode Island is we all know each other,” said R.I. Commerce Secretary Elizabeth M. Tanner. “Collaboration is really important, which is how we grow. Whether it is partnerships with other businesses or colleges, each business grows and falls that way by having partnerships with the state and other institutions.”
Tanner said a policy shift that first occurred under former Gov. Gina M. Raimondo has accelerated the public-private initiatives that have become increasingly necessary.
“There used to be a mantra of ‘train and then wait and we will see what happens,’ ” she said. “[Rather than having ] the industry come forward and work together collaboratively and say, ‘This is what we need.’ ”
Challenges remain.
Kristen Adamo, president of the Providence Warwick Convention & Visitors Bureau, said the tourism and travel industries have not fully recovered from the COVID-19 pandemic. The 2023 hotel occupancy rate was 60.3%, down from 72% in 2019, attributable to a reduced reliance on corporate and business travel because of technological innovation, societal shifts and company cost-cutting.
To make up for that loss, Adamo said the state should incentivize leisure and business travel, highlighting investments made at Rhode Island T.F. Green International Airport as one example that has paid dividends.
“This is something that is happening in every city in the U.S. looking to fill those gaps,” she said.
Still, since 2019 job growth in the state has been flat, said Marianne Raimondo, dean of the Rhode Island College School of Business.
A factor constraining economic growth is the dwindling labor supply. There continues to be a high number of job vacancies across most industries, even those that are being targeted as pillars of the new economy, Raimondo said.
Public investments in training for emerging technologies such as artificial intelligence, cybersecurity, and the green and blue economies should continue, she said, which will create more opportunities to expand the talent pipeline and increase the job market participation rate.
“Low unemployment is fantastic,” she said. “But that means companies have positions that are not being filled. So that constrains their ability to grow.”
Tanner said her department is hearing more from company executives worried over their “succession plans” when they decide to retire. “We want those companies to stay in Rhode Island,” she said.
Recent housing reforms enacted last year should ease the market, said Thomas Sweeney, principal owner of Sweeney Real Estate & Appraisal, but not for some time.
He said the residential real estate market has been stellar, but rising interest rates have “slowed down some of the deals,” particularly in commercial real estate.
“People are waiting to see what happens,” he said, acknowledging the growing shift to remote or “flexible work” arrangements is going to pressure more businesses to change their models.
State government “is doing what they can,” he said. “The issue becomes that you can’t do it overnight.“
William C. Tsonos, Bank Rhode Island CEO and president, said the bank currently “is not financing growth like we have in previous markets.” Instead, the bank is seeing mostly refinancing activity.
“Our bank has grown significantly over the last two years,” he said. “But it hasn’t [been] financing new machinery for our customers” or helping commercial ventures expand footprints. In addition, “most deals have had an affordable [housing program] component to it,” he said.
But there is only so much that can be accomplished on the state level, he continued, adding that national and international trends are impossible to ignore. Though the pandemic has passed, he said, recent geopolitical conflicts in Ukraine and the Middle East could escalate, for example, creating more headaches for business owners and policymakers.
“It’s always something different that brings us down,” Tsonos said. “The hard part is figuring out what’s next.”