The Ocean State
Rhode Island economy is no longer local. It is affected by the trends of the international marketplace as well as the woes of the national housing crisis and predatory lending of mortgage monies which has trickled down to individual states. Rhode Island is not immune to any of this activity.
At one time, manufacturing was the key to economic strength in this tiny state. Over the years, this changed. Multiple streams of revenue popped up to support the economic health of the Ocean State. Currently, the state generates revenue from five main sources: financial services, manufacturing, hospitality, fishing and agriculture.
Financial services are the number one leading industry in Rhode Island and Providence is the financial center of New England. Some of the leading banking and insurance companies maintain headquarters here. The Department of Business Regulation oversees insurance, banking, securities, real estate, athletics, liquor and racing and a number of other sectors and enterprises.
Ranking second in the service industry are business, community and personal service sectors. Private research, law, computer programming and repair shops are represented here. The wholesaling of automobiles, groceries, jewelry and petroleum products combined with retail stores, dealerships and food rank third in the services portion of the Rhode Island economy.
Large agricultural operations are not a visible part of the Rhode Island landscape. However, there are a few products that generate revenue from this industry: milk, chicken eggs and honey top the list of unusual items. Agriculture contributes some greenhouse and nursery products such as sod, shrubs, ornamental and unique trees, as well as sweet corn, potatoes, apples and hay. As a matter of fact, the Rhode Island Greening Apple is the state fruit.
State Fruit:The Greening Apple
Fishing is an industry that delivers a valuable source of revenue to the Rhode Island coffers. At the top of this list is lobster. Following the #1 lobster is a wide selection of shellfish, mollusks, clams, cod, flounder and numerous other “catches of the day” that contribute to the state’s economic wellness.
Mining represents the smallest sector of the economy. Stone, sand and gravel are mined in the state. There are other sectors of the economy that are showing signs of supporting the revival of the Rhode Island economy. Hospitality, entertainment, gambling and tourism are four of the strongest sectors ripe for development. With all of this activity, it makes one wonder why the state budget is so very lopsided.
It is common for college graduates to spread their wings and go to places far and wide in search of their dream job and fantasy environment. Graduates from Rhode Island colleges and universities are no different. This is an expected occurrence. However, along with this productive group of earners, the state is experiencing a migration of upper management personnel as well as the senior population seeking environments that are more conducive to their needs.
In order to deal with the decline in the population, migration of labor force and drop in revenue that this migration creates, the governor of the state has proposed several changes in spending that are intended to help ease the budget strain. He admitted that, unfortunately, the proposed budget cuts would adversely affect the state’s most vulnerable population.
Rhode Island lawmakers are considering a plan to decrease the outlay of Medicaid funds. This could effectively eliminate health care now available to those in need - especially the elderly and disabled who require nursing home care. Governor Carcieri emphasized that the spiraling costs of this entitlement program is beyond the bounds of the current state budget.
The early 1990s saw a series of banks collapse, but today’s $561 million budget deficit is the worst financial problem that has occurred since that time. Other sectors of the Rhode Island infrastructure have been targeted as potential economic boosters.
At the peak of the list of economic boosters is the tourism industry. At present, tourism is very underdeveloped and presents an area that could be a strong player in the area of economic development. All of the elements needed to support this industry are in place: an international airport, variety of accommodations, several types of dining environments, casinos, beaches, museums, landmarks and so much more that some serious consideration is currently focused here.
Healthcare research and development is finding its “land legs” at present. A recent breakthrough in Alzheimer research may produce a trickle-down effect into the state revenue bucket. Enbrel is used by arthritis sufferers and has now been found to reverse the impact of Alzheimer’s Disease. The drug is manufactured by Amgen.
Enbrel is manufactured in Amgen’s facility located at Columbia Square in West Greenwich, Rhode Island. An existing facility was purchased and adapted to the needs of producing Embrel. While the dual use for Embrel is seen as a potential savior for the faltering Amgen facility, its positive effect on the company will certainly have a similar effect on Rhode Island’s economy. The manufacturing sector may come back into its own in the form of bio-technology and the production of therapies such as Embrel.
Entertainment is usually a great economy booster. The gaming industry is coming to the forefront in Rhode Island. There are two casinos in the Ocean State: Twin River (under the leadership of BLB Investors) and the Newport Grand Slots (operated by Regan Communications). Each of these casinos is presently upgrading and expanding their existing facilities in an effort to offer bigger, better and more consumer-friendly destinations.
Twin River, formerly Lincoln Park, was purchased in 2005 and has since been transformed in the largest casino in Rhode Island. The casino does not sponsor table games, but almost 5,000 slot machines coupled with Greyhound Dog racing should keep visitors very happy.
The owners of Twin River met with the state lottery director in January 2008 to present their proposal to conduct 24-hour / 7 days each week gambling. If the slot parlor were opened all night, it could potentially generate hundreds of thousands of dollars for the state revenue bucket.
In recognition of these potentials, Rhode Island’s Economic Development Corporation was formed to explore opportunities for business growth and development. Their goal is stated that:
“It is the mission at the Rhode Island Economic Development Corporation to strengthen the Rhode Island economy through policies, programs, and projects, which enhance and enrich the business environment for public and private sectors in order to create prosperity for all Rhode Islanders.”
The Rhode Island Labor Force Trends report for February 2008 showed a rate of 5.8% unemployment, an increase over the January figures and a dramatic leap from 4.9% of February 2007. Job creation is at a standstill just waiting for the Rhode Island Economic Development Corporation to be running at full steam.
This littlest state is poised at the brink of a comeback from the strong global economic downturn. All of its economic sectors are in place: education, tourism, manufacturing, hospitality, travel and entertainment. State budget constraints need to be lifted or modified before any of these sectors to blossom and bloom.
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