When people think about South Florida’s economy, what usually come to mind are tourism, retail businesses, housing and construction and international trade.
Manufacturing? Uh, uh. Big companies producing airplanes, trains, autos, jet engines, pharmaceuticals, oil products, steel and processed foods … they’re somewhere else.
In reality, South Florida is home to a wide array of manufacturing operations. Small, family-owned businesses with fewer than 25 employees make up the largest share by far. There are also many mid-sized firms and some large companies with more than a thousand employees, such as Beckman Coulter, Sikorsky and United States Sugar. Manufacturers in the tri-county area produce biomedical products, pharmaceuticals, avionics, machined parts, cosmetics, food products, packaging, aerospace components, boats and helicopters. They include names such as Goya Foods, Coca-Cola Bottling, Badia Spices, Cemex, United Pillow Manufacturing, Noven Pharmaceuticals, Mako Surgical and J.M. Smucker.
For sure, the country’s biggest manufacturing centers are not in the tri-county area, or in the state. And some sizable manufacturers with a presence in South Florida — like Boston Scientific, Pratt & Whitney Rocketdyne and Motorola — have had big layoffs over the years. In Miami-Dade, the sector has lost nearly half its jobs since 2000; Broward shed about 30 percent.
Yet, companies are beginning to expand again.
Japanese-owned Nipro Diagnostics, maker of low-cost blood glucose meters and other devices, has been on a hiring spree, adding 58 jobs in its Fort Lauderdale plant in the past year. GE Aviation recently invested $20 million to expand its electrical power-conversion facility in Pompano Beach. Drinkable Air opened a plant to make atmospheric water generators in Lauderdale Lakes.
Aerospace Technologies, which makes window shades for commercial and corporate aircraft, opened a new headquarters in Boca Raton. Diamante Industries invested in a Miami facility to manufacture single-crystal synthetic diamonds. And Goya Foods last year invested $44 million in a new distribution center near Doral to ship products made in Miami to the Caribbean, Latin America and Africa.
“Manufacturing is a small but important sector for our economy,” said Tom Kennedy, president and CEO of the Fort Lauderdale-based South Florida Manufacturers Association. “It is not a legacy sector like tourism, agriculture or development, but it’s in the next tier, producing economic stability in the state and countering many of the cycles affecting other parts of the economy.”
According to the association’s estimates, there are about 5,000 to 6,000 manufacturers in South Florida, of which 95 percent have 10 employees or fewer. Statewide, it’s estimated that there are more than 300,000 jobs in manufacturing out of a total workforce of about 7.1 million. Enterprise Florida puts the number of manufacturers statewide at 17,000.
In Miami-Dade County, there were about 2,600 manufacturing companies as of the fourth quarter of 2011, said Jaap Donath, vice president of research and strategic planning at the Beacon Council, a Miami-based private-public partnership that promotes economic development in Miami-Dade. These companies had about 35,500 employees as of May 2012, out of a total of around one million, he added.
“Manufacturing in Miami-Dade is important from a couple of angles,” Donath said. “It helps keep our economy diversified and wages in manufacturing are at or above the average wage for Miami. And some specialized jobs are quite a bit higher than the average. Also, the multiplier effect is usually higher for manufacturing jobs,” he added.
Local manufacturers make products for sectors such as life sciences, healthcare, creative design, international trade, food and aviation and contribute to exports, noted James Kohnstamm, the Beacon Council’s assistant vice president for economic development.
“Even though we have lost jobs since the recession began — part of a national trend — the more specialized, value-added manufacturers remain here and continue to grow,” Donath said.
South Florida is strategically positioned to grow its manufacturing sector as companies relocate from Asia, and as the ports expand their infrastructure to handle increased volumes of international trade, said Kennedy, the South Florida Manufacturers Association’s CEO.
But there are some obstacles to attracting new manufacturing investment.
We must improve education to train people for the right kind of jobs and reduce the skills gap, Kennedy noted.
Approvals for U.S. visas take too long. Foreign business executives need 30 to 180 days to arrange a business trip and many deals don’t stay on the table that long.
The country needs immigration reform that will allow valuable professionals to remain here after they complete their undergraduate and graduate studies, rather than obliging them to return to their home countries.
In addition, Florida taxes discourage new capital investment in machinery and equipment and corporate tax rates nationwide should be made competitive with other countries trying to attract new capital.
Some institutions are taking steps to train people for manufacturing. Miami Dade College offers an associate of science degree in advanced manufacturing and college credit certificates in lean manufacturing. Broward College recently launched an associate in science degree, two non-credit certificate programs for professionals in the field and an assessment center.
Victor H. Mendelson, co-president and director of Hollywood-based HEICO Corp., an aerospace, defense and electronics manufacturer with three production facilities and hundreds of employees in South Florida, stressed that real improvements are needed if government wants to promote new investment in manufacturing.
“If a company wants to expand or build a new plant, regulations are cumbersome and time-consuming,” Mendelson said. “The government can streamline that process and make South Florida a more welcoming environment.”
Taxes on buying of industrial equipment “make no sense,” the HEICO executive said. “Why should companies be taxed so they can acquire equipment, employ people, produce more goods and contribute to the economy through wages, purchases of goods and services and paying corporate taxes?”
Mendelson agreed with calls for education focused on creating skilled manufacturing and engineering talent. “Manufacturing tends to pay more than the service industries, and higher wages ensure that workers can afford to spend more money and pay more taxes,” he said.
Despite the obstacles, new companies are coming onto the scene and choosing to keep their manufacturing local.
Green Arrow Nutrition, for instance, was launched last year by dog lovers Josué Molina and his wife, Lisandra Rojas, when the couple didn’t like the nutrition supplements on the market for their golden retriever, Quincy.
The company sells iLive chewable multivitamins and iLive chewable joint health tablets for dogs through greenarrownutrition.com as well as through pet shops and veterinary clinics. It is planning to launch another product line for dogs with digestive problems, said Molina, a chemist who previously helped develop vitamins for humans while working in the pharmaceutical industry.
Green Arrow manufactures its products at Nutriforce Nutrition, a certified organic contract producer of vitamins and nutritional supplements based in Miami Lakes. The young company, which also offers private label branding for pet stores, said it has so far sold 2,500 units.
To be sure, there is plenty of room for the sector to grow.
“Manufacturing in the state accounts for less than 5 percent of GDP,” said Kennedy, of the manufacturing association. “Nationally, the figure is about 12 to 13 percent of GDP.
“It’s important to get the message out. We do make things in South Florida and as we move forward as a state, manufacturing can be a tremendous economic driver.”