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Published in the Boca Raton Tribune

April 26, 2013   

By Carlo Barbieri

 

Part 1 of a 2-part series

International Trade a Major Segment of Florida’s Economy

Florida’s economy is heavily dependent on two revenue generators – tourism and foreign trade.  In previous columns, we have discussed the financial impact of tourism, particularly in the South Florida/Boca Raton area as well as the central part of the state where theme parks and other amusements are familiar draws.

This column will focus on international trade which, again in 2012, proved to be one of the state’s strongest economic sectors, according to a March 2013 report from Enterprise Florida Inc.  Florida-origin exports reached an all-time high of $66.4 billion while total merchandise trade (exports plus imports) hit a record $162.2 billion.

The report says Florida continues to have the highest trade surplus among all U.S. states, a reflection of the state’s role as a global hub in the Western Hemisphere.  International trade and investment accounted for about one-sixth of the state’s economic output last year and supports an estimated one million jobs, further underscoring its importance to the state’s financial coffers.

Also underscored by the report is the fact that trade and foreign investment play a fundamental role in Florida’s economy by fueling growth, supporting jobs and diversifying the economic infrastructure.

The upbeat assessment from Enterprise Florida generally dovetails with a report by the Florida Chamber of Commerce which proclaims the Sunshine State’s total trade activity has grown by some 69 percent since 2007 when the Great Recession struck.

The Florida Chamber says international trade volume is a useful indicator of the state’s overall economic activity. As imports and exports increase, Florida employers may require additional employees to handle the growing level of commerce throughout the state.

Although most economic developers focus on export value, strong imports can indicate improvement in consumer demand and also create transportation and logistics jobs for Floridians. In the months prior to the 2012 holiday season, trade activity suggested retail sales in Florida would increase as imports reached levels unseen since the onset of the Great Recession.

Typically after the “peak season,” total trade activity declines primarily because of a drop-off in imports. However, recent data from the Census Bureau suggest Florida’s trade activity in November held strong — relatively unchanged as the 2.7 percent growth in imports nearly offset the 3 percent decrease in exports.

Trade activity growth in Florida appeared stronger than that of the U.S. as a whole as labor union disputes hindered the nation’s largest seaports. As a right-to-work state, Florida has very little in the way of labor strife.  The strike last year of stagehands at the KravisCenter that delayed the opening of “Jersey Boys” stood out because of the general scarcity of union troubles.

As one would expect with standard seasonal variation experienced in the month of November, U.S. imports and exports declined. The Los Angeles Port strike provides one possible explanation in the sharp decline in imports, as L.A. is the largest port in the U.S.  California Public Radio reported that the one-week strike caused a 16 percent decrease in container volumes in November 2012 when compared to November 2011. However, this fact should not discount the positive activity occurring at Florida ports. Encouraging additional international trade through Florida will be a key driver of the state’s future economy.

Here are a few bullet points about Florida’s economy from EnterpriseFlorida:

  •  International business, including the value of trade in goods and services as well as foreign direct investment, accounts for about one-sixth (18 percent) of Florida’s economy.
  •  International trade in goods and services – along with employment by foreign-owned companies – is estimated to support more than one million jobs in the state. Manufacturers, seaports, airports and logistics providers all employ Floridians and their families.
  •  More than 58,000 Florida companies export, accounting for 20 percent of all U.S. exporters. This is the second largest number of exporters in the U.S. after California.
  • The number of Florida exporters has grown by 48 percent since 2005, rising from 39,482 to more than 58,000 in 2010.
  • More than 96 percent of Florida exporters are small and medium-sized enterprises with 500 or fewer employees.
  • Small and medium-sized companies accounted for 68 percent of Florida exports in 2010. This is the highest figure among the 50 states and is much higher than the U.S. average of 34 percent.
  • According to the Florida Chamber of Commerce’s “Florida Trade and Logistics Study,” jobs in Florida’s trade and logistics industries pay 30 percent higher wages than the state average.
  • The Export-Import Bank of the United States ranks Florida second in the U.S. for Ex-Im Bank small business financing – authorizing $400 million in export credit for Florida small businesses in their last fiscal year.
  •  The U.S. Department of Commerce reports that, on average, companies that export grow 15 percent faster, pay 15 percent higher wages and are 12 percent more profitable than those that do not export.

Next Column: The Trade Connection between Florida and Brazil