Road to recovery: more jobs, but not enough; healthy revenue at local companies helped Miami-Dade County lead the state of Florida in job growth for the second half of 2002. Now ifs time for more - Insight 2003

South Florida CEO, Dec, 2002 by Rochelle Broder-Singer

Almost across the board, 2002 turned out to be a healthy year for most Miami-Dade companies in terms of both revenue and profitability. While that didn't always lead to job growth, as efficiency improvements and technology allowed companies to do more with fewer employees, Miami-Dade nonetheless led the state of Florida in job growth for six out of the last seven months. October 2002 ended with 16,000 more jobs than in October 2001 -- accounting for nearly 56 percent of the state's total employment growth.

"Clearly, Miami-Dade County continues to grow, while some other Florida counties or metropolitan regions continue to lose payroll employment," says John Cordrey, vice president of strategic research and planning for the county's economic development agency, The Beacon Council. The county's October unemployment rate of 7.2 percent was well down from October 2001's rate of 8.0 percent, although it still lagged the state's average of 5.1 percent.

For an economy dependent on the visitor industry and international trade, Miami-Dade has weathered the US and Latin American downturns well. The area has, in some cases, benefited from turbulence in Latin America, as capital fled the region for the safe havens of Miami-Dade real estate, timed deposits and business investments. More importantly, local companies have demonstrated the flexibility to deal with economic turbulence. "We have a highly entrepreneurial economy of small businesses that adapts quickly to changing circumstances," says economist J. Atoaio Villamil, CEO of Coral Gables-based Washington Economics Group. "If one specific activity is more in demand, we really see businesses adapting and changing their marketing mix."

Noting the particular resilience of Miami's homegrown businesses, the Beacon Council in the next year will turn more of its energy towards helping them expand. "I think we began with some of the small and emerging businesses, and we realized that we had businesses that had incubated here, and we did not want to see other communities poaching them from South Florida," says Beacon Council chairperson Robin Reiter. MiamiDade County commissioners agreed, recently upping the incentives the county can offer companies who expand their operations, or relocate to Miami-Dade from outside South Florida. The upper limit on tax rebates for new hires, for example, has been raised to $6,000 per employee, from $1,750.

Such incentives are needed, as competition with other regions will remain fierce in the coming year, particularly those with strong transportation links. "The key here is our airport and our seaport," Reiter says. "We're competing with other communities that want to be gateway communities."

In 2002, the Beacon Council assisted 24 new companies with relocation plans to the area, and helped 12 local companies expand. It expects to see some 2,200 new jobs, and $128 million in new investment, coming from those activities. Figures for 2003, however, should reflect more local expansion activity, as the organization's "Local Business Priority Program", launched this past fall, gears up. "Historically, the majority of new jobs created in a community are attributed to local business," says Beacon Council CEO Frank Nero. "But most economic development efforts focus on attracting companies and investors from outside the community."

Part of the need to look inward stems from the slowdown in national and global capital markets, forcing new business to be more inventive when it comes to financing expansion. "In 2002 the window closed for public offerings and IPOs," says Gary Epstein, head of the corporate and securities practice of Miami-based law firm Greenberg Traurig. Businesses were up to the challenge, however, taking advantage of low interest rates with loans. "What we've also seen are opportunistic mergers, and we expect to see more of them in 2003," says Epstein, who finds himself working on more creative financing structures, and tapping GT's extensive network of contacts. "South Florida is unique in that it's a very nimble, adaptive environment" says Epstein.

The county's labor force continued to grow in 2002, although at a slower rate than in 2001. "Miami-Dade's economy continues to attract new job seekers into the labor force," Cordrey says. At times, labor force growth has out-paced job growth. "Our labor force is expanding at over 2 percent, which is very high for a mature county like ours," says Villamil. The industries which are adding the most jobs to the economy in Miami-Dade are those in real estate and housing services, health care services, and knowledge-based services such as law, accounting and education, The new entrants to the labor force, many of them immigrants with low skills and poor English-language mastery, often lack the skills these industries require.

International commerce, in one form or another, will be key to Miami-Dade's future. Villamil says the recent US-Chile free trade agreement, and a US-Central America free trade agreement, currently in the first phase of negotiations, will be a tremendous boost for the area's businesses. Long-term, the Free Trade Area of the Americas secretariat could be an even bigger boon.