Updated February 23 at 11:56am
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5/7/01 12:00AM
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Clusters, not niches, urged for future R.I. development

Future economic development in Rhode Island should focus on industry clusters -- not niches -- according to Rhode Island Economic Policy Council (EPC) Executive Director Christopher L. "Kip" Bergstrom.

Bergstrom said he prefers the broader view: "It's like 'What basket do we want to put all our eggs in?' No -- we want diversity."

After performing an analysis of the economies of both Rhode Island and the Boston Metro area, the EPC has developed a plan to build certain industry clusters in Rhode Island based on the difference between the two areas.

K. Alexa Mavromatis, Staff Writer

Future economic development in Rhode Island should focus on industry clusters -- not niches -- according to Rhode Island Economic Policy Council (EPC) Executive Director Christopher L. "Kip" Bergstrom.

Bergstrom said he prefers the broader view: "It's like 'What basket do we want to put all our eggs in?' No -- we want diversity."

After performing an analysis of the economies of both Rhode Island and the Boston Metro area, the EPC has developed a plan to build certain industry clusters in Rhode Island based on the difference between the two areas.

Both areas have a similar base in manufacturing-related industries -- "still an important part of the economic base," said Bergstrom.

The Boston Metro is much heavier on higher-end, new economy jobs like biotechnology and electronics, making the goal for the Ocean State to "grow the top, hold the middle," according to Bergstrom. "It's not just recruiting, but helping already existing companies sustain their employment."

The theory, according to Bergstrom: "Rhode Island is not a separate economy. We believe that we are a part of the Boston Metro."

Bergstrom said at the heart of development is the dynamic relationship between companies and workers - they attract each other.

"Firms like to be where there are a lot of existing workers and workers like to be where there are a lot of firms," he said. "Every company that comes to Rhode Island makes all firms more attractive to workers. Every worker that comes to Rhode Island makes all workers more attractive to firms."

Brad Waugh, president and chief executive officer of Watch Hill Partners, a Providence consulting company specializing in customer relationship management, echoes Bergstrom's opinion.

"I really believe Rhode Island is becoming a suburb of Boston, like Route 128 was in the 1980s," he said. "That's one of the reasons why we've put ourselves right next to the train station (Watch Hill is located in the One State Street building, adjacent to the station)."

Previously, Waugh founded C.W. Costello & Associates and is a founding member of the Rhode Island Technology Council (RItech). Waugh acted as the organization's second president.

Waugh said that he thinks the Ocean State is prepared for the challenge of further high tech development, and that some of the work has already been done.

"The reality is that some of the infrastructure work is done at companies we already had in the state," said Waugh, who cited Citizens Bank, CVS and GTECH as examples. "Are we ready? Yeah. I think the state has put a lot of foundations in place. People want to stay now."

A recent (April 23) issue of Providence Business News featured an article about the perils of Rhode Island's taxes for small businesses. Some cited taxes as a reason to leave the state altogether.

Bergstrom himself admitted he sees the state's taxes as an obstacle.

"The single biggest reason why we're not doing as well as we should is our tax structure," he said. "It diminishes our attractiveness. That's why the capital gains phase out will be important."

"Obviously, one of our concerns is workforce development," said Rick Kovar, executive director of RItech. "At this point, we cannot fill the jobs we are creating."

Kovar said that workforce development remains of key importance to the high tech industry in the state, and that RItech intends to focus on the K-16 group. Cooperation between local companies and educators to establish new media academies (proposed first for Providence and Newport) will be part of the plan to attract students with an interest in -- and an aptitude for -- math and science.

"If you can get kids an internship, it tends to pique their interest in an industry and encourage them to learn more," Kovar said. "A traditional education and real world experience is ultimately what's going to spark their interest in IT."

To further address the issue of development, the Samuel Slater the Rhode Island General Assembly established Technology Fund in 1997. The Slater Centers (such as the Slater Center for Interactive Technologies, a cooperative with Brown University and The University of Rhode Island, for example) are non-profits, each the with support of one or more of the state's colleges or universities, that assist entrepreneurs and researchers with the process of commercializing technology and launching ventures.

The EPC's cluster strategy is further expanded to include plans for five geographic areas for development, for example Aquidneck Island (which has 2,000 electrical engineers employed there, Bergstrom said) as an electronics cluster and Warwick's Post Road as an airport-related service cluster.

Overall, "we feel that at this point, the industry is not quite aware of itself," said Kovar.

The vision, he said, is for Rhode Island's high tech companies to stick to their core competencies, but partner with each other to expand.

Part of that goal will be met later this year, Kovar hopes, when RItech will release its index of technology companies in the state.

"Companies - when they're coming into the state -- want to know who else is here," he said. "It's not so much the companies, it's attracting workers. Why do companies go to Boston or the Silicon Valley? That's where all the workers are. We're trying to position Rhode Island as the next choice in the region."
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