All Abroad!

What a difference a recession makes.

Just a few months back, Barry Connor’s horizon was delineated by Jacksonville, Miami and Tampa Bay. During the go-go years in Florida, the executive vice president of Naples-based Boran Craig Barber and Engel Construction Co. was all about high-rise construction in the Sunshine State, from the One Bal Harbour condo high-rise in Miami Beach to the Ritz-Carlton hotel-condo in Sarasota.

Now, after spending a game-changing three days in April at Expo Build China 2010, Connor’s horizon has expanded to Shanghai, Seoul and Dubai. BCBE’s booth—the only one of a United States general contractor at the bustling trade show—paid off amazingly quickly. BCBE got what Connor calls four “solid” leads, and is in the early negotiating stages of becoming a general contractor for high-rise construction in Shanghai. Says Connor, “In our local Florida climate, contracts are far and few between. But there’s a lot going on in the world; there’s a job to be done for everyone.”

Local companies’ horizon expansion is great news for the Southwest Florida economy, in the doldrums of the worst downturn since the 1930s. According to the U.S. Department of Commerce, companies that export grow 15 percent faster, are 12 to 15 percent more profitable, are much less vulnerable to domestic downturns, are more insulated from domestic competition, and in Florida—according to the Florida Business Roundtable—they pay 18 percent higher wages on average.

“Exports are good for the company, employees and the community,” says Manny Mencia, the head of export promotion for Enterprise Florida.


Right place, right time

Florida companies are perfectly suited to venture out to the world; it just isn’t foremost on Floridians’ minds.

“If you look at Florida, trade is our destiny,” says Mencia, who was born in Cuba. “Communities that get it will be more successful in the long run. Florida is a peninsula, far from the big markets of the United States, and we used to see that as a competitive disadvantage. But juxtapose that with the picture of Florida as an international business center. We’re in a perfect location for north-south trade, we’re also well located for east-west flows. God did well with us. We are close to the Panama Canal, and we have great infrastructure—14 deepwater ports, great international airports. We do have the infrastructure, and we have a large multicultural population.”

Pair the current boom and long-term growth forecasts for developing markets such as China or Brazil with a weak U.S. dollar, and you get the perfect combination for recession-plagued Gulf Coast companies to seek relief.

Exporting to the rest of the world hasn’t escaped impacts of the global recession; Florida exports tanked a painful 18 percent last year. The prospects of trade recovery are complicated by rising protectionism and more limited access to trade financing, according to the International Chamber of Commerce. Even so, the world, particularly developing nations, is re-emerging from the crisis, and so will Florida’s export figures, Mencia believes. He points out that Florida’s export downturn reversed in the last quarter of 2009; exports were up 13.7 percent in January.

“We’re busier than ever this year,” he says about Enterprise Florida. “I bet you’ll see a big recovery” in 2010.


Global reach, local success

Meanwhile, even though economic developers in Lee, Collier, Manatee and Sarasota counties are now preaching Mencia’s gospel, Southwest Florida’s export orientation still is a well-kept secret.

Part of the reason is that much of the attention during the boom years focused on hot “domestic” companies that lived off the real estate bubble, such as Venice-based window manufacturer PGT Industries. But even PGT—Sarasota County’s largest manufacturing employer—is now taking advantage of Enterprise Florida’s and the U.S. Department of Commerce’s export promotion channels (see Logistical Help, p. 31). When construction dried up in the U.S. Southeast—practically PGT’s only market—the company teetered for a few months in late 2008 and much of 2009. That all-eggs-in-one-basket lesson wasn’t lost on management. Over the past two years, the company has participated in Enterprise Florida trade missions to Costa Rica, Panama, Mexico and Saudi Arabia to hook up with regional distributors. Next on the agenda is a trade mission to the Dominican Republic.

“All of this started with the Economic Development Council in Sarasota. They put us in touch with all these trade missions,” says Debbie LaPinska, vice president of sales.

Overall, exports generate 5 percent of the company’s revenue. “We would like to have 10 to 15 percent,” LaPinska says. “That’s going to take us at least three years to build.”

Although Saudi Arabia looks promising, PGT’s focus is on what has long been the biggest magnet for Florida products: Latin America and the Caribbean. According to U.S. Department of Commerce statistics, those regions absorbed 73.1 percent of all merchandise exports from Florida in 2009. When you add Mexico—which tends to fall through the statistical cracks because many of our exports get there by truck or train instead of ports, where merchandise is statistically counted—it’s safe to assume that four-fifths of the Sunshine State’s exports go to Latin America and the Caribbean.

Most of Florida’s export behemoths are located in Miami, Tampa, Orlando and Jacksonville. But quietly, Southwest Florida has emerged as a dynamic player. From 2006 to 2008, the most recent years for local export statistics, Southwest Florida was among the fastest-growing export areas in Florida, surpassing Miami, Tampa, Orlando and Jacksonville’s growth. The Naples-Marco Island metropolitan statistical area grew its merchandise exports by a way-above-average 78.1 percent to $324.4 million in the three-year period. Thanks to this fast growth, Naples took the No. 10 spot in Florida’s export ranking by MSA in 2008, up from the No. 12 spot in 2006. The Fort Myers-Cape Coral MSA grew its merchandise exports 66.2 percent in those three years, for a total volume of $282.2 million. The Sarasota-Bradenton-Venice MSA grew its merchandise exports by 61.2 percent to $740 million a year in the same period, moving up from No. 7 to the No. 6 spot on the Florida list. In comparison, Miami grew its exports 42.2 percent, Tampa 50.1 percent, Orlando 36.9 percent, and Jacksonville 36.5 percent.


Computers, cattle and consulting

What do we export? In Sarasota-Bradenton, Fort Myers and Naples, a lot falls under the category “capital goods.” In the National Association of Manufacturers’ export intensity index (which measures the share of locally manufactured goods that are shipped abroad), Florida’s manufacturers rank third nationwide, behind Washington state and Delaware.

Accordingly, Southwest Florida’s biggest exports are machinery and transportation equipment, followed by computers and electronic equipment. This is complemented by consumer goods, such as appliances and plastic and rubber products.

However, within the little-known exporter community here are Southwest Florida’s agricultural exporters. The region is home to the operations of giants such as Alico Corp. or Barron Collier Cos., much of whose citrus, tomato and bell pepper production ends up abroad, and smaller global players such as Naples-based cattle broker J.P. Wright & Co.

Although Southwest Florida’s agriculture is generally seen as a victim of imports from Mexico or Brazil, it remains an export force. Agricultural products are by far Collier County’s leading export goods. In 2008, the county exported $84.4 million worth of agricultural goods, or 26 percent of its total exports. There are no statistics about where Collier County’s cattle and citrus are sold, but state statistics show that Canada is indisputably Florida farmers’ largest export market, followed by Japan and the European Union.

Even if you factor in agriculture and Mexico, the statistics show only a part of the full export picture. Some of the most dynamic companies along the Gulfshore sell their services abroad, and they don’t appear in any export statistics. Consider Ned Davis Research Group in Venice, a financial markets number cruncher, many of whose clients are abroad, or Asian Medical Inc., a consulting firm with a two-person outfit in Sarasota and two more employees in Singapore and Qatar. Dozens, if not hundreds of similar international consultants call Southwest Florida home. But, as with the stuff rolling on trucks to Mexico, their fees don’t show up in the Florida export statistics.

According to Enterprise Florida’s Mencia, some $28 billion worth of service exports must be added to Florida’s $47 billion in origin merchandise exports to complete the picture. And if you factor in service exports, international trade already is much more prominent in service-heavy Southwest Florida than we believe.


Betting on Brazil

Several local initiatives are helping businesses expand their horizons. For example, last year the Economic Development Council of Collier County participated in a trade mission with Costa Rica and Panama. Plus, the EDC holds workshops and provides counseling for companies interested in exporting. And then there is Port Manatee’s expansion of container facilities and an agreement with Panama.

Even so, Mencia is restless. “We’ve got to do better,” he says. “I think the area has the potential for significantly more.”

Brazil could be key to this. While Naples builder BCBE may soon send its architects, engineers and foremen to Shanghai, Florida companies should also set their sights south. Construction in Brazil, which just upped its GDP growth forecast from 5 to 6 percent, will be hot soon, with the upcoming Soccer World Cup and Olympic Games in Rio.

Says Mencia: “I call Brazil ‘Florida’s China.’ For us, the key market is Brazil. It’s our No. 1 export market by a significant margin, and Brazil will be one of the growth economies in the world in the next decade.”


White spot on the map

Local, state and federal institutions provide an array of services to exporters—unless they want to do business in Cuba. The island of 11 million people next door to Florida, which has the potential of becoming the No. 1 destination of Florida exports, still is subject to a nearly 50-year-old U.S. trade embargo. U.S. law allows for limited food and healthcare exports, but companies that want to participate must fend for themselves; in fact, much of what companies have to overcome before making the first sale in Cuba is red tape in Washington.

Mencia says focusing on Cuba would be a waste of money, given Florida’s limited resources.

“For many people in Florida, Cuba is a mystery, a lure, a legend. You’d think it’s a billion-dollar market the way it figures here,” he says. “Truth is, it’s a small market, with the worst credit rating in the world. The Dominican Republic and Trinidad and Tobago are bigger markets for us. Once Cuba opens up, we will be there.”


Logistical help

There are plenty of “door openers” for your business abroad on local, regional, state and federal levels. The economic attachés in U.S. embassies throughout the world, coordinated by the U.S. Department of Commerce, are waiting for your call to connect you with the right people and companies in their respective countries. The Florida District Export Council—the DOC’s stateside arm—and its Tampa Bay Export Assistance Center will steer you to the right people in Washington.

The most dynamic support for stateside companies, though, comes from Enterprise Florida, whose offices in Tampa and Coral Gables assist Southwest Florida exporters. The public-private institution’s primary export services range from providing trade leads and financing for small companies, to well-focused export sales missions, which can include previously arranged one-on-one meetings for participants, to collective participation in trade shows, to high-level, high-visibility Team Florida missions that are usually led by the governor.

Upcoming Enterprise Florida trade missions to Haiti and Chile, which have been devastated by earthquakes, should be particularly interesting for construction-related companies.

Economic development councils in Southwest Florida usually steer you toward state and federal programs, but they are becoming trade boosters themselves, in cooperation with local ports and airports.

Last but not least are regional organizations, both public and private. Some have a limited focus, such as the Tampa-Panama Business Council. Others, such as the Tampa Bay Partnership, the Gulf Coast Latin Chamber of Commerce, or the World Trade Center Tampa Bay, can provide an array of services.