Missing the boat on exports?

TIGHT GRIP: Dennis Partridge, an assembly supervisor at Gripnail, assembles a machine used to apply insulation to air ducts. /
TIGHT GRIP: Dennis Partridge, an assembly supervisor at Gripnail, assembles a machine used to apply insulation to air ducts. /

Global exports from Rhode Island have been on the rise for more than a year, but what’s being shipped out might not bode well for the state’s economic recovery.
Local economist Gary Ciminero says the Ocean State’s high concentration of waste and scrap exports has done little to jump-start the local economy at a time when global trade plays a crucial role boosting the nation out of the recession.
Unlike past recoveries that were aided by increased consumption and a robust housing sector, Ciminero said exports have accounted for about 45 percent of the increase in the gross domestic product since 2009.
Without increases in exported products from Rhode Island manufacturers, the state – which has been slow to bounce back from previous downturns – may fall further behind, Ciminero said.
Yes, the value of items Rhode Island companies shipped overseas rose 30 percent in 2010 compared with 2009, when the economic downturn was at its worst. But he said more than one quarter of the nearly $2 billion worth of exports last year was waste and scrap. Those commodities have been Rhode Island’s largest export for five years in a row, according to World Institute for Strategic Economic Research export figures.
“Scrap metal doesn’t generate jobs,” Ciminero, owner of Providence-based GLC Financial Economics, told Providence Business News. … “It’s not a sign of strength.”
That may be, but not everyone sees eye to eye with Ciminero.
Local trade officials argued that the situation isn’t as dire as portrayed, noting that Rhode Island’s export growth rate of 30 percent in 2010 eclipsed the nation’s 21 percent rise in the same period.
And they also said that the export statistics don’t take into account component parts that are manufactured in Rhode Island and installed into finished products somewhere in the United States before being shipped overseas. “We’re not saying Rhode Island is doing everything it should do,” said Ray Fogarty, director of the John H. Chafee Center for International Business at Bryant University. “But Rhode Island is a major component-part manufacturer.”
Even scrap metals shipments help keep workers at the Port of Providence on the job, as they transport material to the dock and load it onto ships, officials said.
And some would consider the process of recycling the metal and scrap part of the “new economy” of environmental sustainability, said Edinaldo Tebaldi, assistant economics professor at Bryant.
On the face of it, Rhode Island’s global trade picture appears to have brightened significantly since 2009, when exports sank 24 percent — more than the 18 percent decline for the entire nation.
Government figures show the value of Rhode Island’s exported goods and commodities in 2010 reached $1.95 billion, more than the $1.5 billion posted in 2009 but lower than the $1.97 billion in 2008.
In 2010, Rhode Island companies shipped $223.86 million worth of chemicals, up more than 78 percent from 2009, and $163 million worth of machinery, an increase of nearly 20 percent.
Rhode Island also exported $528.83 million of waste and scrap materials in 2010, 37 percent more than in 2009. Meanwhile, computer and electronic exports dropped 6 percent to $172.76 million.
Spurred by the declining value of the dollar, overall export growth has continued into 2011, with the monthly value of global shipments in March jumping more than 44 percent, year over year, to $225.8 million, according to seasonally adjusted data from e-forecasting.com.
Evangelos Simos, e-forecasting.com’s chief economist, projected that Rhode Island companies would receive higher volumes of export orders this year. Still, Ciminero – a past president of the New England Economic Partnership – said Rhode Island’s trade performance is built on a “shaky foundation.”
Exports accounted for less than 4 percent of the state’s gross product in 2010, Ciminero said, ranking it 43rd among states.
He faulted policymakers who he said have given little attention to the decline of manufacturing, particularly companies that produced low-tech goods.
Officials should have focused on not just attracting leading-edge, high-tech companies, but preserving the factory jobs the state once had.
“Now manufacturing is coming back, but not in Rhode Island,” Ciminero said. “Our attitude was: It’s declining, and we haven’t done anything about it while other states are doing something about it.”
Tebaldi agreed that growing exports is crucial to Rhode Island’s recovery, and said that the state’s location between New York City and Boston, as well as proximity to airports and seaports, make it attractive to businesses that deal in global trade.
“We have to make sure the state’s tax structure and the business regulation are attractive,” he said. “It’s about taking care of the fundamentals.”
Fogarty said state leaders need to understand the importance of global trade to Rhode Island’s economy and of providing export assistance to local businesses.
He said the Center for International Business’ $700,000 budget is financed in part by federal money, in the form of a pass-through grant from the R.I. Economic Development Corporation. There is no appropriation from the state.
Yet, more local businesses are turning to the center for assistance in conducting global trade. “We have a lot of opportunity for growth,” Fogarty said. •

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