If there is one thing that rankles Florida’s e-commerce crowd, it is the way Mickey Mouse, golf, beaches and orange groves hoard the economic limelight. For those who would like the Sunshine State to be known first as America’s up-and-coming home for manufacturing, aerospace, defence and high technology, the mass of Disney World tourists wearing Mickey Mouse ears is a deflating sight.
Since the September 11 attacks hit the US economy and left tourism – a Florida mainstay – in the lurch, some in the business community have been agitating for better recognition and more respect. Just recently, Enterprise Florida, a group that promotes business in the state, was given a big budget boost, while state governor Jeb Bush departs in July with a Florida business delegation to the UK (see page 24).
“Governor Bush’s role is to say that while the state produces grapefruits, Mickey Mouse and cruise liners there’s a lot more to it – there are a lot of serious overseas investors,” says one such foreign investor.
Foreign direct investors have played an important role in Florida’s economy; the state attracts international direct investment of some $2bn annually, ranking it first in the south-east of the US, according to the latest figures by Enterprise Florida.
Low FDI flows
But other figures compiled by the Florida Chamber Foundation suggest that FDI, as a percent of the state’s economy, has plenty of room to grow. Florida’s FDI was 7.8% of gross state product in 1997, “well behind the national average”. (FDI figures are based on the tangible assets that a foreign-owned company owns, such as equipment and plants, but does not include capital flows.)
France, Germany and Britain are, respectively, the region’s top FDI investors from Europe, according to US Commerce Department statistics. Canada and Latin America are other important investors. The big-growth industries include information technology; space, aerospace, aviation and defence (Florida is home to Cape Canaveral); biotechnology; simulation and modelling; photonics; plastics and digital entertainment. In the high-tech sector, an area the state is particularly keen to promote, Florida ranks first in the south-east and fifth nationally in high-tech employment, according to Enterprise Florida.
Overall, a sampling of the state’s top corporate foreign direct investors include Germany’s Siemen Information & Communication Networks; the UK’s Burger King; the Netherlands’ Nielsen Media Research; Belgium’s Assurant Group, the insurance agents and brokers; Australia’s CSR America, the concrete and gypsum group, and Norwegian Cruise Line.
Simon Davey, the British general- consulate based in Miami, says UK companies alone have an accumulated investment of some $5bn in the state; he estimates there are between 500 and 550 UK companies statewide. He also concedes that while the business community winces at the mention of Mickey Mouse, tourism is a key magnet for business. Florida is a top international holiday destination for the UK and each year, some 1.3 million Britons travel as tourists to Orlando. This keeps it high on the radar screen for the UK business community.
Tourist traps
It is difficult to separate tourism and business because the leisure industry is still so important in the state. Universal Studios, owned by the French media and utilities giant Vivendi, is one of Florida’s single biggest employers, pumping hundreds of millions of dollars into the economy each year. Florida is also home to two of America’s top-five-ranked beaches. Several of the most beautiful are strung along 35 miles of St Petersburg and Clearwater coastline. Then there is the big business of golf. Orlando is home to dozens of golfing professionals, including Tiger Woods, while Fort Myers and Naples have the fastest-growing golfing turf in the US – with more than 130 courses in a 60-mile stretch along Interstate 75. The National Golf Foundation says the region already has more golf holes per capita than anywhere else in the country.
Business and pleasure
Florida has big appeal for travel-weary businesspeople. “One of the keys to attracting FDI is tourism,” says Gary Springer, professor at the University of South Florida Center for International Business. He is also secretary-general of the Gulf of Mexico States Accord Secretariat, an international co-operative agreement between the six Mexican states and five US states located on the Gulf of Mexico.
Florida’s entrepreneurs, though, are clearly happier talking about the high-tech corridor sprawled along 134 miles of Interstate 4 from the Gulf of Mexico to the Atlantic Ocean. It may have a more synthetic beauty, but it beats the image of Florida as a full-time playground. There are some 7000 high-tech companies spread across 21 counties on this corridor. Yet some say the corridor has not fulfilled its true potential because Florida lacks the particular skill base necessary for big growth, as well as venture capital funds. E. Ray Canterbery, a global macroeconomics professor at Florida State University, suggests: “The high- tech corridor hasn’t got off the ground because there is not really a manufacturing workforce in Florida – we have never been a manufacturing state.”
This is not true, says Mark Vitner, economist and regional specialist at Wachovia Securities in North Carolina. “Florida does not have large technical universities such as Massachusetts Institute of Technology or Georgia Institute of Technology, and that feeds the perception that we don’t have a trade workforce. I think that argument is overdone – Florida attracts workers from all over the country,” he says. Some 300,000 people a year move to the state, he says, and 500,000 people work in manufacturing. Mr Canterbery agrees that the state has plenty of intellectual capital, but not necessarily where it is needed most – in high-tech fields.
Still in service
Much of Florida’s workforce is still employed in the services industry thanks to the tourist trade. The economy is also short of venture capital funds. According to the Florida Chamber of Commerce Foundation, Florida has 4% of the nation’s population but accounted for only 2% of venture capital disbursements in 1999. On the other hand, the think-tank says Florida has the 10th highest business start-up rate in the US in the past decade and the eighth strongest job growth rate in new businesses more than five years old. It also ranks as the country’s fifth biggest cyber state.
Still, overseas funds are trickling into the information sector, even if it is at a slower pace than some would wish. In 1999, FDI for the information sector – print, software publishing, broadcasting and telecommunications among others – accounted for some 16% of total FDI in Florida. Manufacturing, meanwhile, is the biggest draw for overseas funds, accounting for more than a quarter of the total value of FDI stock in Florida. Important sub-sectors include chemicals, food production, metals, computers/electronics and machinery.
Foreign approval
Florida has received the seal of approval in the IT and telecoms sector from companies such as Siemens of Germany and TracFone Wireless, which is owned by Mexico City-based America Movil. Siemens Information and Communications Networks is a leading provider of voice and data networks for enterprises, carriers and service providers. Siemens ICN has annual revenues of approximately $2bn. It is headquartered in Boca Raton and has sales, administrative and development offices throughout the US.
TracFone Wireless is one of the top US providers of prepaid cellular phones, which target cellular customers who typically do not qualify for conventional services. TracFone has 1700 customers and is aiming for two million by the end of the year. Until 2000, it was known as Topp Telecom. In January 1999, TracFone Wireless opened an $11m, 51,000-square-foot call centre in Miami. When TracFone got started, Mr Pollack, CEO at TracFone Wireless, says, pre-paid wireless was almost non-existent. It is now a $3bn industry, expected to grow to $9bn over the next three years. Its biggest competitors are wireless carriers Atlantic ACM, Verizon, Sprint, VoiceStream and AT&T. Virgin Mobile is expected to launch in a couple of months.
But more has to be done, and is being done, to achieve Florida’s high-tech and IT ambitions. “The state has targeted IT, medical technology and other industries, while local economic development organisations are getting more sophisticated,” says Mr Springer. The website of Pinellas County Economic Development, a county that is home to some of the biggest foreign direct investors such as Nielsen Media Research, recently upgraded its site with mapping technology. This latest innovation allows foreign investors to view properties from the sky without leaving home. Even Mickey Mouse cannot do that.
Florida’s main economic indicators
| Gross state product, 2000 ($bn) | 472.11 |
| Population, 2001 (millions) | 16.40 |
| Civilian labour force, 2001 (millions) | 7.67 |
| Unemployment rate, 2001 (%) | 4.8 |
| Total personal income, 2001 ($bn) | 467.19 |
| Per capita personal income, 2001 ($) | 28,493 |
| Per capital disposable income, 2001 ($) | 24,554 |
| Median income for 4-person families, 2000 ($) | 55,351 |
| Total private employment, 2000(millions) | 6.08 |
| Total employment, 2000 (millions) | 7.06 |
| Total private establishments, 2000 | 440,371 |
| Total number of establishments, 2000 | 445,956 |
| Florida-origin exports, 2001 ($m) | 27,185 |
| Total merchandise exports, 2001 ($m) | 34,530 |
| Total merchandise imports, 2001 ($m) | 36,430 |
| Foreign direct investment, 1999 ($m) | 36,632 |
Source: US Department of Commerce, Bureau of Economic Analysis, Survey of Current Business, June 2002
Keeping an ear to the ground
Florida is fortunate to have a very famous ambassador. Governor Jeb Bush, brother of US President George W. Bush, never has to worry about not being heard. But he likes to listen too, he tells fDI editor Brian Caplen.
Unusually for a politician and particularly one so famous, Jeb Bush, governor of Florida state since 1998, lays great emphasis on listening. He once said how much he admired the listening skills of former US president Bill Clinton, and he has sought to develop his own technique.
For FDI investors in Florida state, this philosophy could be crucially important. Mr Bush calls companies every day to see how they are faring. A foreign investor with a problem could take it straight to the top.
“Good intentions are good intentions but they can be implemented poorly,” he says of the regulatory environment. “It is our aim to make it easy and straightforward for people to come to Florida to do business.”
“I call companies every day and ask them how they are doing and what kind of problems they face. I can then react according to what they tell me. For example, one firm wanted to put its corporate headquarters in Florida and had a bad experience with the regulator. I was able to call up the regulator and sort things out.”
Since coming to office, Mr Bush has placed great emphasis on creating conditions that are conducive to growth, especially high-tech growth. These include investing in and improving the education system, bettering links between universities and business, investing in a high-tech infrastructure and giving tax incentives to business.
“Creating a robust education system is the most important thing we can do,” he says. “You can’t teach someone to be a computer operator if they can’t read.”
Mr Bush continues: “There has been a major investment in the high-tech infrastructure in Florida with the Network Access Point of the Americas [a privately funded consortia driven by more than 100 companies that is being built into a state-of-the art facility in Miami]. We are not only a gateway in the real world but also in the virtual world.” “Our tax incentives are geared towards high-tech jobs. We are competitive in terms of tax and incentives with any other US state. We have also put $30m into developing links between university research departments and companies to promote applied research.”
Mr Bush will be leading a business delegation to the UK in July to promote the high-tech side of Florida. Several Florida-based companies will display at the Farnborough Air Show, a major event for the international aviation industry. The state is keen to depict itself in the UK as more than a popular tourist destination.
“I don’t consider it a zero-sum game [between tourism and high-tech]. The more people that want to come to Florida on vacation, the better. That’s not to the detriment of our business climate. And there is not a perception problem about Florida to the people who have already invested here.”
It does, however provide, Mr Bush with one of his greatest policy challenges: promoting growth while protecting the environment crucial for tourism. The Florida Forever programme that he signed into law has committed $3bn over a 10-year period to preserving the state’s environment.
“We have standards of course as the environment is one of our most important assets. But we would not want to be capricious or bureaucratic about them. We make rules and then we try to be transparent. As we move to the new Florida we have to protect the old Florida. We have a commitment to protect the environment.”
Mr Bush says it is important to take a common sense approach to the environment and business. “I don’t think there are many investors who say ‘we are going to X place because we can pollute’. In a modern business world this is not the way things are. The important thing is to have regulations that are fair and transparent. We don’t view [environment and business policies] as an either/or. We see it as a win/win to have companies investing here in a way that doesn’t hurt the environment.”
The governor’s trip to the UK comes at a sensitive time in European-US relations, with the dispute over steel tariffs threatening to escalate. Florida’s orange juice exports could get caught up in any European backlash.
“There is always an ebb and flow in trade relations. It’s important to look long term. I am not a national politician but I can still listen and try to get a better understanding of these issues. It’s my job to try to create and protect Florida jobs but that wouldn’t be done at the expense of national interests. It is my belief that international trade flows are generally for the benefit of everybody.”
Florida is also thinking long term in its relations with Latin America. The state is considered the gateway to the region. “When countries move away from sound economic rules we get flight capital coming to the state in the short term. But we prefer to have the long-term trading relationships that come from solid economic policies in both their countries and ours.”
In promoting Florida overseas, Mr Bush has a big advantage: as a brother of the president and a member of one of America’s most famous families, he gets plenty of attention. “I don’t go out of my way to court publicity but [being famous] does help a little. If it helps to get Florida on the map that’s fine by me.”
