Rhode Island’s manufacturing legacy teeters between two historical facts: Rhode Island’s Slater Mill is the ‘birthplace of the Industrial Revolution in America,’ yet over the past 20 years, the number of manufacturing companies in the state has declined from around 2,800 to 1,945, a loss of nearly 30 percent.
As Rhode Island, and the United States as a whole, tries to recover from the largest recession in the last 60 years, the decline of manufacturing takes on new meaning. It is no longer a nostalgic but inevitable fact, a true weakness in the American economy. While manufacturing may never return to its old economic predominance, Rhode Island’s manufacturing sector is at a point of transition, with companies moving toward more advanced manufacturing—focusing on complex products and engineering rather than low production costs and high volumes—that can thrive in a post-industrial New England.
In January 2009, in the height of the recession, Clariant Corp, a manufacturer specializing in chemicals for pigments and dyes, laid off or relocated its 50 administrative workers in Coventry, Rhode Island. The company had over 400 employees in the state 1997, but by 2008, when it moved its in-state manufacturing jobs to Mexico and Germany, there were only 120 plant employees.
In the same month workers at the Colibri Group, one of Rhode Island’s most prominent jewelry manufacturers showed up to the main factory on the Cranston-Providence border to find the doors locked. Clariant’s firing was the final step in a long departure, unlike Colibri, which had closed its doors overnight. With their $100 cigarettes and cufflinks priced at $1500 no longer selling in stores, Colibri had amassed around $30 million dollars in debt in under three years. The unexpected closure meant 280 employees became unemployed overnight.
The rapid demise of Colibri and Clariant’s slow exit highlight some of the main barriers for Rhode Island manufacturing businesses. Colibri crumbled in part because consumers could no longer afford luxury jewelry during the recession, but also because they could not access loans as lenders reacted to the real-estate market collapse. Clariant’s exit does not so much reflect the current credit crunch as it does a longstanding trend of the globalizing economy; the relatively expensive labor and property costs in New England have made it difficult for the state to compete against foreign commodity manufacturers.
Leslie Taito, the director of Rhode Island Manufacturing Extension Services (RIMES), a non-profit that consults small and medium-sized manufacturers in the state, claims, “A lot of commodity manufacturing is going overseas, and quite candidly it is not going to come back.”
For the last thirty years, as Alan Tonelson documented in Harper’s, the political and economic consensus was: while it is tragic that manufacturing is declining in America, it is part of a natural economic progression toward a fully service-based economy. For Ronald Reagan, “The progression of an economy such as America’s from agriculture to manufacturing to services is a natural change,” while Alan Greenspan, the former Federal Reserve Chairman, proclaimed manufacturing to be “something we were terrific at fifty years ago” and “essentially a nineteenth- and twentieth-century technology.”
With the recession, most policy-makers have recognized that the loss of manufacturing is not just a matter of nostalgia but a barrier hindering a resurgent US economy in the 21st century. Reducing imports with American-made goods and expanding exports abroad are both essential steps toward reducing the (expanding) trade deficit. Moreover, increasing manufacturing translates into increasing expenditures in R&D, the innovative lifeblood of the economy, as companies finance 70 percent of the United States’ R&D.
With the US facing the largest economic inequality in generations, policy makers and economists argue that a strong manufacturing sector expands the middle class by providing good paying jobs for workers without college degrees. John Grady, the Executive Director of the Rhode Island Manufacturers Association, notes that manufacturing is no longer a “dark, dirty profession.” Compared to entry-level service professions, Grady said, “Manufacturing probably pays 25 percent higher wages and 90 percent of the time has full benefits. If you are not going to college, and even sometimes when you are going to college, manufacturing is a great industry to get into.”
While Taito’s claim that commodity manufacturing is “not coming back” may seem dire, it does not mean a death sentence for the manufacturing industry as a whole. Instead, Taito says that successful manufacturers are going to focus on making small quantities of “highly engineered” products that involve increasing technical knowhow.
A study by the management consulting firm Deloitte Consulting LLP also sees New England’s future in more advanced manufacturing. In “Re-examining Advanced Manufacturing in a Networked World: Prospects for a Resurgence in New England,” Deloitte tries to “debunk the myth that advanced manufacturing is a dying industry.” It states that 57% of Rhode Island’s manufacturing jobs—5% of total jobs within the state and a total of 28,703 jobs—are already in advanced manufacturing.
Deloitte claims that advanced manufacturing, characterized by “highly-specialized products,” “a highly-skilled, highly-compensated workforce,” and a “network of scientists, researchers, precision machinists and engineers” from various companies, and institutions working together, makes advanced manufacturing less susceptible to outsourcing than manufacturers relying on large quantities and low costs. The study also notes that the “robust network” of advanced manufacturers in New England strengthens the area and individual manufacturers in the region by “enhanc[ing] learning across the entire membership of manufacturers.”
Concordia Manufacturing—a yarn manufacturer and, at one point, the producer of about 75 percent of the yarn in Velcro—has successfully made the transition from simple commodity production to more specialized manufacturing. Randal Spencer, the CEO and President of Concordia, said: “As our big consumer markets were moving offshore—fast,” Concordia transitioned to manufacturing more advanced fabrics for [everything] from “power transmission lines […] to advanced composite materials like carbon fiber.”
Concordia’s success rests in part on its “reputation for being able to do unusual things with fibers that are very difficult to handle,” according to Spencer. The company has even developed a new facility to produce a synthetic medical fabric for burn victims after having been approached by a medical device company that could not figure out how to turn a fiber, i.e. a strand of fabric, into a yarn in a commercial setting.
Still, Spencer says that “in [Concordia’s] heyday, somewhere in the early 90s, we employed 160 people,” whereas the company now employs between 50 and 60 people. Despite the clear decline, Spencer added that many of the current jobs are better paying, in part because they “are much more technical.” Spencer put the company’s development in blunt terms, saying: “The bad news is that we are smaller in terms of employment, the good news is that we are still alive.”
Recently featured in Reuters, BMS, a Pawtucket-based plastics manufacturer, is another manufacturer that has transitioned from basic products to design-intensive, highly technical products. After losing 35 percent of their business when one medical device company relocated the production of a basic product to Mexico—the price difference was two cents per unit compared to eight—BMS transitioned to manufacturing specialty products, often designing collaboratively with the customer.
Instead of producing basic plastic bottles, BMS now makes anything from blood vials for testing the safety of donated blood to plastic bellows that can withstand the pressure of underground aquifers. Many of the products still cost dollars or cents, but BMS now makes its revenue on the design process, in addition to the actual objects.
BMS and Concordia represent the new wave of Rhode Island, and national, manufacturing. Reliant on skilled labor and design, they are also much smaller than many traditional manufacturing companies like Ford, GE, and Raytheon. While BMS and Concordia will never singlehandedly employ a community, like the traditional giants once did, there is a flip side to that equation. If BMS, Concordia, or any singular small manufacturer in the state closes down, a community will not close down with it.
George Warner B’10.5 is manufactured.