5/10/09

RIEDC in Need of a New Mission

Rhode Island is shaking up its economic development agency – again. An independent panel, in a highly critical report just issued, has recommended overhauling the agency’s board of directors and embarking on a nationwide search to find a new director. With unemployment heading to 11 percent and the state’s economy reeling from the recession, it’s little wonder that the RI Economic Development Corporation, or RIEDC as it’s known, is taking the heat for the mess we find ourselves in. However, while the agency certainly has its problems, to be fair about it there’s a lot of blame to go around.

RIEDC is tasked with marketing and developing the state’s economy. It has responsibility for attracting new businesses to the state as well as tourists. Its job is also to develop and market properties for sale, to provide business financing, and to nurture entrepreneurs and start-up companies. It must answer to the Governor, who oversees its activities as a state agency, and the legislature which created and funds it. It does not write business legislation or tax policy, and so is subject to the business environment the General Assembly ultimately creates, which in this state has been, and remains, less than helpful to most businesses.

During the past twenty years states around the country have vigorously competed against each other for big businesses that promise jobs. They have bent over backward to snag companies looking to relocate, offering land deals, generous tax credits and incentives, state sponsored job training and unique giveaways that stretch all the way up the food chain to personal tax breaks for senior management. Rhode Island has done its full share to compete in this arena, and has landed some significant victories along the way, albeit at some cost – Fidelity in financial services and Amgen in pharmaceuticals.

But while the state has focused on recruiting flashy, name player businesses it has sorely neglected existing businesses, many of whom have withered away in a climate of neglect. Otherwise how can we explain the collapse of manufacturing in our state? When we examine job losses among manufacturing firms in Rhode Island during the past five years or so, what we see are companies with less than 50 employees failing outright or moving out of state to survive. These are precisely the companies that Rhode Island needs to survive economically, but they’ve hardly been on the radar screen for the RIEDC, which under its previous director spun visions of building a wifi infrastructure across the state – a farsighted, high tech goal that, predictably, hardly served the immediate needs of most struggling in-state companies.

RIEDC has historically been hampered by a lack of a coherent long-term vision and competing agendas between the executive and legislative branches of state government. As a glaring example, look at Quonset Point. This is the state’s major business park, port and airport complex, but it has failed to live up to its potential. We’re still debating creating a container port at Quonset, losing years in the process, and we have totally neglected the airfield, which today should be host to a lot more job creating activity than just a few executive jets and the RI Air National Guard. Lack of a sound, rational long term vision for Quonset, which should be the job of the RIEDC (as the Quonset Development Corporation or QDC is an arm of the agency), has left this key economic development location trudging along like a blind tortoise.

To create a more effective and robust RIEDC will require more than just a shakeup at the board and executive director levels. It will require on the part of the legislature greater commitment to its crucial role, and a willingness to provide it with both financial resources and greater autonomy. The agency needs to be protected against partisan differences and competing agendas. It has to develop a renewed core mission that is both long term in its outlook and one better attuned to the needs of existing businesses across the state.