R.I. again receives D+ for manufacturing

RHODE ISLAND received a grade of D+ for the second consecutive year in the latest state manufacturing report card from Ball State University’s Center for Business and Economic Research for Conexus Indiana, a private sector-led initiative focused on the advanced manufacturing and logistics sectors. / COURTESY CONEXUS INDIANA
RHODE ISLAND received a grade of D+ for the second consecutive year in the latest state manufacturing report card from Ball State University’s Center for Business and Economic Research for Conexus Indiana, a private sector-led initiative focused on the advanced manufacturing and logistics sectors. / COURTESY CONEXUS INDIANA

PROVIDENCE – For the second year in a row, Rhode Island received a D+ for manufacturing industry health, according to the 2016 Manufacturing and Logistics Report from Ball State University.

The report, prepared by Ball State’s Center for Business and Economic Research for Conexus Indiana, shows how each state ranks among its peers in nine economic areas. Conexus Indiana is a private sector-led initiative focused on the advanced manufacturing and logistics sectors.
Rhode Island generally maintained average or poor grades, and saw its grades fall even lower in four economic areas.
Rhode Island again received Fs in logistics, tax climate and expected fiscal liability gap.
Its best grade was in sector diversification – B-, although it slipped slightly from last year when it received a B in this category. The Ocean State also maintained a C- in human capital, and slipped to D from C- in worker benefit costs.
In global reach, it fell to D- from D, and fell to D+ from C- in productivity and innovation.

The report stated that Rhode Island’s manufacturing industry comprises 5.7 percent of the state economy. It has received D grades since 2009 for its manufacturing industry health.

The D+ grade for manufacturing industry health was based on the share of total income earned by manufacturing employees in Rhode Island, the wage premium paid to manufacturing workers relative to other employees, and the share of manufacturing employment per capita.

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Michael Hicks, CBER director, said Rhode Island has been one of the “perennial bad performers” in the report card, but it shouldn’t be.
“The state is well-located to have a strong manufacturing and logistics sector. However, it is dragged down by the worst levels of educational attainment in New England, and a productivity and innovation score that is also the worst in the region. These huge deficits in the supply of labor would usually suggest the state would have to offset these problems with low taxes and low expected future taxes. Instead, Rhode Island can boast among the worst current and future tax environments in the nation, exceeding even the debt laden, heavily taxed Illinois and California,” Hicks said.

He said states with high tax burdens have to deliver high-quality public services. Places with very low levels of productivity and human capital must offset them with low taxes, he added.

“Rhode Island somehow manages to combine high taxes with poor public services. It is a bad mix that portends a weak future for manufacturing and logistics, and by implication the entire state economy for the immediate future,” Hicks said.

Among the New England states, New Hampshire again received the highest grade at B for its manufacturing industry health.

Connecticut received a C+, slipping from B last year. Maine fell to a C- from a C, and Massachusetts improved to a C from a C-. Vermont maintained a C grade.

Receiving A grades were Indiana, Iowa, Kentucky, Michigan and South Carolina.

Alaska, Hawaii, Montana, Nevada and New Mexico received F grades.

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