Florida's sunshine economy is spreading industrial roots
Miami — There is a little bit of California cropping up in Florida's economy. After relying on tourism, agriculture, and construction in the 1960s and '70s , Florida is developing an industrial base.
"We are putting the fourth leg on the table," says Sidney Levin, the state's secretary of commerce. Among the industries attracted to the Sunshine State are segments that have kept California's economy booming while the rest of the country was marking time. This includes aerospace, computers, and communications equipment.
And Hollywood last year found that Florida was a good place to put on film. It shot $78 million worth of movies in the state, compared with only $30 million in 1978.
In large measure because of this diversification, Florida's economy outperformed the nation last year. Unemployment in the state was only 5.9 percent, as against 7.1 nationally. International trade increased from $13 billion in 1979 to an estimated $14 billion to $15 billion in 1980, and commercial construction climbed from 7,979 projects to 8,135.
This is not to say the state was immune from the high inflation, high interest rates, and recession that beset the rest of the nation. Residential construction, more closely tied to interest rates, sank by more than 20,000 units and tourism shrank slightly as unemployed workers in the North decided not to take their annual trip to Florida.
At the same time, energy costs rose more quickly in the state, because of its dependence on oil. And it had to cope with a new wave of Cuban and Haitian immigrants, who stretched social services thin.
Still, a recent report by Southeastern Banking Corporation notes that "today there are no short-run cyclical economic influences on the Florida economy which will alter the state's long-run trend of above-average growth." The bank, Florida's largest, adds that the state's ". . . strong secular trend in population in-migration, its broad and rapidly growing retail and service sectors, and its rapid growth in high-technology manufacturing continue to provide the state with a long- term relative economic advantage."
Among the companies that have recently decided to bring developments to Florida are Western Electric, an American Telephone & Telegraph subsidiary, which is building a $500 million manufacturing complex near Orlando; Motorola, which has a large plant near Fort Lauderdale; and IBM, GTE, and the Harris Corporation.
Foreign companies have started operations here, too. Berg Steel of West Germany is making pipeline-quality steel in Panama City, while Rolls-Royce is building its first US plant in the Miami area.
Banking has also burgeoned, in large part because of favorable tax breaks. Miami has become one of the largest international banking centers in the United States, with the second-largest number of Edge Act banks (branches of domestic banks that can only do international business) outside New York. To meet the demand for office space, new office towers worth some $700 million are going up within a seven-square-block area of Miami.
At the same time the state has selected half a dozen types of companies it would like to attack. High on its prospecting list are those involved with high technology, aviation and aviation maintenance, service and equipment, pharmaceuticals, and communications equipment.
This shift toward business is a new tack for the state, which had developed something of an antibusiness reputation. "Our image," Mr. Levin says, "was to turn on the turn off business. For example, we used to delay making decisions, and that's the hardest thing for a business person to take. We had a real image of indecision on environmental permitting."
The state's ambivalence toward the environment and business was caused by concern over the effects of development on the large tracts of swampland questions about degradation of the fresh water supply, for example. And in some areas of the state, such as the southwestern "reitrement belt," a debate continues on how much business growth should be permitted. In a four-county area in the southwest the population has grown 99.9 percent in the last 10 years.
A big change came, however, when the state got blitzed by the recession of 1973-75. Tourism got pummeled as gas shortages spread; high interest rates devastated the construction industry, driving scores of builders into bankruptcy; and a deep freeze damaged the citrus industry. In short, Florida suffered worse than the rest of the nation.
To woo business it began giving tax incentives and streamlining paper work. Whenever businessmen came to the state to vacation, they were hit with advertising promoting the state as a workplace. Trade offices were set up overseas to try to attract foreign business.
In a recent report, Barnett Bank wrote that the Department of Commerce waged a "vigorous campaign" in expanding the state's trade.It noted that "in 1979 alone, the department actively assisted 24 international firms in establishing operations in Florida, resulting in capital investment of $89.5 million and the creation of some 2,100 jobs for Floridians." In the past two years, some 160 domestic and foreign companies have moved to the state, creating 45,000 new jobs.
Companies are coming in for a variety of reasons. The rapid growth of trade, for instance, has by itself encouraged more business. Florida, and Miami in particular, has opened itself up as a "gateway" for business with Latin America. Transportation from Miami International Airport is excellent, and total freight shipments from its cargo bins keep rising. At the same time, communications between Miami and Latin America many Latin American countries themselves. And Florida's ports are jammed with container ships moving goods south of the equator.Labor costs are cheaper than in the North, and taxes are lower.
The population increase in the state has also brought in increase in business. According to a preliminary census report, Florida's population grew from 6,789,443 in 1970 to 9,739,992 in 1980, making it the seventh-largest state in the nation, up from the ninth. According to the Miami Herald, this spurt made it the fastest-growing state in the past decade and the newspaper labeled Florida "superstate."
With this growth, however, have come some significant problems it will have to solve if the blossoming is not to be blighted. Unemployment among black teen-agers, for example, is high -- one element behind last year's riot in the Liberty City area of Miami. And crime in the Miami area is so high that extra state troopers have been brought in to patrol the streets. Furthermore, the prisons are full, prompting a judge to put pressure on the state to relieve the overcrowding.
Mr. Levin notes that the crime problem coudl create difficulties for the No. 1 industry: tourism. "This year will be a real acid test for tourism," he says, "since the out-of- town and international papers are full of stories about crime in the Miami area."
Exactly how the state will solve some of these problems is not clear. But Mr. Levin says that "the federal government has some responsibility here to help train people, especially those who are non-English-speaking." He concludes, "We have had a critical lack of policy commitment here by Washington." For its part, the state says it intends to increase its educational commitment and will try to entice companies into run-down areas with special tax incentives and offers of joint ventures with the state. So far, however, these business gestures have had few takers.