Editor’s note: This is the second of three parts of a series examining Gov. Rick Scott’s jobs record. There is an enhanced version of this story available. Read it here.
For nearly three decades, this rural community in north central Florida was home to a bustling mill that was the principal employer for its 1,400 residents.
Then, in November 2011, the recession-induced collapse of the housing market forced Georgia-Pacific to close its plywood plant.
All 400 employees were sent scrambling to find work — weeks before the holidays. And the mill that once produced the sawdust-covered staples of the state’s housing market stood idle, cutting off the lifeblood of the local economy.
“The mill was a boost to the entire town — the schools, churches, local businesses,” said Pastor Joe Williams. “All of a sudden, all that disappeared.”
Now, after two years the mill stands shuttered. Many of its employees have found other jobs but at lower wages, and local community leaders, who had hoped to get help from the state, say they are on their own.
“We’ve tried to sell ourselves to [the state Department of Economic Opportunity],” said Hawthorne Mayor Matthew Surrency, but the effort has yielded little return.
The story of Hawthorne is not one Gov. Rick Scott talks about on his public relations roadshow as the state’s “jobs” governor. It is a tale of the tens of thousands of private sector jobs lost in Florida since Scott took office in January 2011. It is about once robust manufacturing jobs that were replaced by lower-wage service sector employment. And it is about the thousands of companies already here that received little help with tax breaks or other incentives.
The number of jobs that have disappeared on Scott’s watch include:
Gray Swoope, head of Enterprise Florida, the public-private partnership that serves as the state’s chief economic development arm, defends the governor’s record on jobs.
The governor believes the best way to help existing companies is to make sure taxes and regulations are low, he said, and when companies are courted by other states, Florida responds with incentives to keep them here.
“If a company is going to create jobs and put significant investment into it, then we’re going to work with them,’’ Swoope said. “I don’t’ care if they’re new or if they’re expanding.”
Saving existing jobs
Critics, however, question whether Scott’s focus on spending millions to lure companies from out of state, instead of strengthening and sustaining companies that are already here, is misdirected and inefficient.
“Shouldn’t the focus of the incentive money be on the jobs we’re trying to retain in Florida rather than try to bring people in from out of state?” asks Dan Krassner, executive director of the independent watchdog group Integrity Florida.
According Enterprise Florida, the state has worked in the last year to retain 10,868 jobs, mostly in high wage positions of corporate headquarters, research and development and manufacturing. For Krassner and others, those numbers pale in comparison to the thousands of companies estimated to have closed shop or laid off workers in the last three years.
“Floridians that are here and paying taxes to our community should be our first priority,” he said.
Scott ran on the promise of creating 700,000 jobs in seven years, over and above the state’s projected job growth of 1 million. He has maintained a singular focus on his job creation goal, claiming in mailers that “nearly 370,000 private sector jobs [were] created in two and a half years.”
Bringing jobs to Florida
For the governor and his economic development team, the primary focus has been on attracting companies from other states to Florida, and not necessarily on preventing jobs from disappearing from the state.
According to a Miami Herald-Tampa Bay Times analysis, since Scott came to office, the state has offered $275 million in tax breaks and other incentives to create an estimated 47,488 private-sector jobs.
The governor’s calendar is crowded with jobs announcements, big and small, as he criss-crosses the state to highlight the state’s slow but steady gradually rebounding economy.
For the governor, who often talks about his hardscrabble upbringing by working class parents, every job is a good job, no matter the pay.
But more than 5,300 of the lost jobs came from manufacturing industries, a sector economic development officials want to attract because of its job advancement potential, salary growth and ability to provide the economy with wealth creation. The lost jobs come from dozens of manufacturing companies from nearly every corner of the state and reflect a deeper shift that has been underway in Florida for years.
Incentives and layoffs
Even companies that received promises of tax incentive money from the state have had layoffs. Digital Risk, for example, a Boca Raton-based software maker received $2 million from the state’s Quick Action Closing Fund and recently announced 112 layoffs.
Darden restaurants received incentive awards of $175,000 last year to create 75 jobs but in September announced it is laying off 85 employees at its Orlando headquarters.
And Northrop Grumman Corp., the Virginia-based military contractor, on-track to receive nearly $19 million in cash and tax breaks from state and local authorities, said 85 employee at the Cherry Point’s Tactical Training Range in Panama City will lose their jobs.
Jesse Panuccio, secretary of the Florida Department of Economic Opportunity, acknowledges job losses, but says it part of the natural ebb and flow of the economy.
“In a dynamic economy, companies are going to grow and they’re going to contract,’’ he said.
Tom O’Neal, executive director of GrowFL, the University of Central Florida’s economic development institute, believes it is no accident that Scott focuses more attention to outbidding other states for new business than he does helping existing companies.
“When a company is creating its own jobs, you don’t get a lot of podium moments,’’ he said.
GrowFL provides business advice to small to medium-sized companies and offers soup-to-nuts assistance for eligible startups. But it has struggled to get the governor’s support. Scott twice vetoed the program’s so called “economic gardening” program to help small to medium-sized companies with a track record of growth and profitability to expand.
Swoope said the program didn’t show enough return on the taxpayer’s investment.
Meanwhile, Florida companies with 10 to 99 employees represent only 8 percent of total businesses but create 34 percent of jobs, O’Neal said. “For us, it’s exciting when a company hires two people — because when you add them all up, it’s thousands of jobs.”
Scott has also earned a reputation for favoring private sector jobs over public sector employment and being willing to forgo job creation if it involves spending government funds.
One of his first acts as governor was to cancel the $2.4 billion in federal money to finance construction of the high speed rail line on existing highway right-of-way between Tampa and Orlando. The Florida Department of Transportation estimated that the project would create an estimated 49,900 temporary and permanent jobs between 2012 and 2014.
Lost construction jobs
Construction jobs were among those hardest hit during the recession as commercial and residential contractors hit bottom. While demand is starting to return — Florida added 26,000 construction jobs in the last year — the lost jobs are taking a toll, said Peter Dyga, director of the Associated Builders and Contractors of South Florida.
“A lot of people left and they’re not coming back,’’ he said.
That is a loss to the economy in general, he said, because entry level construction jobs are often stepping stones to better employment.
“They can’t be outsourced; it can be hard work — especially when you start out — but it’s still one of those fields where the American Dream is very much alive,” Dyga said.
According to Florida International University’s annual “State of Working Florida 2013” report, Florida lost 33 percent of the manufacturing jobs it had in 2000 by 2012, and 29 percent of the construction jobs.
“The dramatic decline is particularly problematic because employment in these sectors tends to be more secure and better compensated than work in service industries,” the report said.
The thousands of manufacturing and construction jobs lost in Florida have been replaced by service industry growth which pays, on average, 15 percent an hour less, the report said.
A 2012 study of employment in the South by Georgetown University found that the decline in manufacturing output in Florida “is especially damaging to workers with a high school diploma or less, as both contain many of the few remaining jobs that pay a living wage to workers without postsecondary education.”
Panuccio and Swoope say expanding and retaining existing Florida businesses is a top priority, but the agencies keep no data to compare the return on investment of that effort with the investment the state spends recruiting new employment.
In Broward County, which has the lowest unemployment rate for any large metro area in Florida, Bob Swindell, president and CEO of the Greater Fort Lauderdale Alliance says it is more productive to help established “second stage” companies expand than it is to recruit new ones.
“The data is undeniable. If you are going to hedge your bet, the second stage companies with 11 to 99 employees are going to have the most exponential growth if you can help them expand,’’ he said. “They’ll get you the most bang for your buck.”
To help companies grow, the Alliance works closely with local colleges and universities to quickly provide the talent companies need to stay here, he said. Broward Community College, for example, has a manufacturing training program designed to meet company needs and the existence of that program has helped recruit and retain companies.
Too late to help
“One of my frustrations is we, as a state, haven’t figured out how to help organizations like the Alliance by giving them the tools we need to retain companies,’’ Swindell said. Candace Moody, spokeswoman for Jacksonville-based Worksource, a state-supported employment agency, says that while workforce officials want to help companies retain workers, they often are not notified in time.
“Sometimes the company doesn’t advertise their intent and it’s just too late,’’ she said.
Company officials agree that in many cases, there is often little the state can do to prevent the decisions that have been long in the making.
Argon Medical Devices relocated its Gainesville operation to Athens, Texas, displacing 100 Florida workers, but the decision had little to do with the state’s economic climate, said Vice President for Operations Bill Morgan.
"I had enough room in my factory in Texas to accommodate what was being done in Florida,” he said.
Even if the state offered incentive money to keep the steel manufacturing jobs at Quincy Joist in Gadsden County, it would not have helped, said Ron Poppe, vice president of legal and human resources for Canam Steel, which bought Quincy Joist and laid off 53 workers this year. “There has to be an underlying demand for the product.”
But Poppe also raised doubts about the effectiveness of tax incentives over market-based investments.
“More infrastructure financing and development is the most government can do” he said. He noted that his company provided the steel joists for the roof of the Marlins stadium, a project that was possible because of government money.
June Wolfe of the South Florida Manufacturers Association said the state’s manufacturing deficit is in part a result of the state’s lack of skilled talent.
“On any given day in Florida, 4,500 to 5,000 manufacturing jobs go unfilled because of the lack of skill,’’ she said. And many existing companies are being lured away by other states.
“It’s not China that Florida is worried about,’’ she said. “It’s Georgia and the Carolinas.’’
Meanwhile, for communities that lose a major manufacturer, it can be nearly impossible to find a replacement.
In Hawthorne, it’s been two years since the paper mill closed. Rumors abound that the plant will reopen, but Georgia-Pacific says it has no immediate plans to start up operations.
The Ace Hardware in downtown Hawthorne saw its business drop by half, said owner Robert Bristow. Dianne’s Old Time Barbeque laid off half its waitresses and the cashier as the lunchtime crowd virtually disappeared. Local timber companies lost their only customer. And for the laid off employees who found new jobs, most could not replace the wages and benefits offered by Georgia Pacific
“Me and my family, we didn’t cry — we did what we had to do,” said Troy Browning, 32, who sorted plywood at the mill since age 19. He found a job washing buses in Gainesville — and his hourly wage dipped from $14.63 to $8.
Alex McCoy, chief economic developer in Putnam County where the Georgia-Pacific mill was based, said the county has been trying to attract new manufacturing jobs by touting its specialized workforce, electric generating stations, and proximity to rail and the St. Johns River.
“We’ve worked with Enterprise Florida on several projects,” McCoy said. “Unfortunately, while some folks have test driven the car, they haven’t decided to buy it yet.”
Swoope, of Enterprise Florida said he urges patience.
“You cannot have a large employer like that go out of business and then expect somebody to step in in a month,’’ he said. “It’s just not going to happen. We help our communities think about what can they do to develop their assets.”
Surrency, the mayor of Hawthorne, isn’t holding his breath.
Instead of waiting for a new manufacturing outfit to come to town, Hawthorne is pinning its hopes on a large-scale development project being considered for the region.
“We want to be able to train and educate our residents,” he said. “We just don’t know what [the jobs] are going to be yet.”