International Trade and Manufacturing: Two Sides of a Coin for Florida’s Future EconomyPosted: October 11, 2011
Note from the author: This piece was originally written for publication in Florida’s Bottom Line, a quarterly economic review of Florida’s Chief Financial Officer, Jeff Atwater
Trade has driven economic advancement for centuries, representing the exchange of goods and services that enter and leave an economy. Trade is increasingly recognized as an opportunity for business growth and job creation as perspectives shift from Florida’s characterization as a domestically isolated peninsula to that of a critical and geographically advantageous state from which to facilitate the international exchange of goods and services.
Likewise, Florida’s economic diversification is evolving toward a global model with the tangible effects of this evolution showcased as communities come out of the recession into the stalled recovery. Florida’s metropolitan
areas that are experiencing positive economic growth largely have ties to global markets where international demand outpaces domestic demand for products. Florida’s business community also stands to make tremendous gains related to the growth of international trade because trade is expected to grow faster than the United States’ economy as a whole. Today, the combined value of U.S. imports and exports is equivalent to 24 percent of the U.S. real Gross Domestic Product (GDP), whereas forecasts value U.S. imports and exports as equivalent to 55 percent of GDP in 2035. Existing businesses play a large role in international trade with nearly two-thirds of Florida exports generated by small and medium sized firms.
Further, projections show that 80 percent of worldwide economic growth will occur outside of the United States over the next 50 years. As demonstrated by the Florida Chamber Foundation’s Florida Trade and Logistics Study, the support and subsequent investment in enhancing Florida’s position as a global hub for business investment, manufacturing and domestic and international distribution is essential. Florida currently has two related trade imbalances that must be addressed: the total tonnage of imports exceeds the tonnage of exports via Florida, as well as the overall value of imports exceeds the value of exports via Florida. With Florida’s trade imbalance reaching almost one billion dollars in 2010, strategies to fill that billion dollar gap represents the next opportunity for Florida – manufacturing.
Manufacturing in Florida comprises only four percent of total employment and five percent of Florida’s economic output compared to seven percent of employment and 11 percent of GDP nationally. Exclusive business data on The Florida Scorecard (www.TheFloridaScorecard.com) also points to manufacturing as an area for growth with the industry representing nine percent of high sales volume, high employment growth firms known as second stage firms. This growth potential combined with the fact that an estimated 50 percent all trucks, rail cars, ships and planes that bring goods into Florida leave the state empty presents a compelling case to focus on manufacturing. While Florida’s large consuming population of 18.8 million residents and over 80 million annual visitors is in part responsible for the imbalances in trade, it also highlights Florida’s opportunity to create jobs that produce exportable goods in industries such as manufacturing, technology, mining and agriculture. Growing Florida’s manufacturing base to a greater share of employment and economic output will create jobs that are well above the average annual wage, as well as address the problem of added supply chain costs associated with the empty trucks, rail cars, containers and planes that leave this state.
An economic strategy focused on international trade and manufacturing is also consistent with the statewide goals identified by the Florida Chamber Foundation’s Project 2030 Plan, which include doubling Florida’s exports by 2015 and enhancing our position as a global hub. These goals are attainable if stakeholders work together to increase the amount of export producing manufacturing activities and utilize Florida-based infrastructure of highways, rail, air and seaports to distribute those exports. When we accomplish these objectives, we will put tens of thousands of Floridians back to work while creating diversity and new economic opportunities within our state. Global competitiveness and prosperity for Florida is within our reach, and international trade and manufacturing are two complementary approachestoward achieving this vision.