Florida throws out a lifeline

Posted on Written by Lisa Knapp

State moves on incentives to retain marine businesses

Progress is on the horizon to reverse the hemorrhage of marine businesses defecting from Florida to North and South Carolina. Enterprise Florida Inc. (EFI), the public-private partnership devoted to statewide economic development in high-growth industries, has included budget dollars targeted toward marine business development and retention.

State economic development incentives for the recreational marine industry include $1.4 million from EFI’s general revenue fund. The state budget is expected to be signed July 1 by Gov. Charlie Crist.

“This is the first time the Florida legislature has dedicated budget to the marine industry, which is the major economic engine of the state with an $18 billion dollar economic impact and 220,000 jobs,” said Frank Herhold, executive director of the Marine Industries Association of South Florida (MIASF). “We have never asked for anything before and are trying to maintain our critical mass in an environment with high taxes and hurricanes that add to the cost of doing business.”

Thirty percent of Florida’s boatyards have disappeared in the last five years. South Florida was home to 19 major boatyards in 2000; 13 remain today, according to studies commissioned by the MIASF. The six that were lost were converted for residential development. Nine of the 13 remaining yards have received offers from developers.

“It’s a disturbing trend that we noticed a couple of years ago,” Herhold said, noting that many marine manufacturers and suppliers have relocated to more business-friendly states. “North Carolina has a one-stop service agency to assist in relocating marine businesses with follow-up for permitting and other issues. We need to do more than wave goodbye as these companies leave Florida and start watching the back door (of marine business retention).”

EFI has broken down Florida’s marine industries into segments: ports/seaports, boat manufacturing, recreational boating and marinas, fishing and marine sciences/research. Drawing from a variety of research sources, EFI reported Florida’s 14 deepwater ports and seaports in 2005 handled $62.9 billion worth of trade and directly employed at least 10,619 people.

Recreational boating, which includes boat manufacturing and marina activities, provides a large range of economic benefits, according to the EFI report, and in 2005 generated an estimated $18.4 billion in direct and indirect economic output.

Companies building ships and boats directly employed 13,554 people earning an average wage of $36,678 in 2005.  Boat manufacturers exported more than $595 million of their products in that same year. Florida has the highest number of registered watercraft in the United States, averaging about one registered recreational boat for every 20 Floridians. Commercial fishing and related activities generated at least $1 billion in economic activity in 2004, while recreational saltwater and freshwater fishing generated a total economic impact of $7.5 billion.

At least 12 high-profile marine research labs, several affiliated with state universities, employ hundreds of scientists, and receive federal, state, and private funding.

In 2007, a report by the Office of Program Policy Analysis and Governmental Accountability (OPPAGA) highlighted some economic issues facing the recreational marine industry. It looked at water-access issues for boaters, environmental permitting issues, and the impact rising business costs had on some marine industries.

The report summarized that “While the state has created several programs to enhance public access, these programs may not be able to counteract the economic forces that make it more profitable for marina owners to sell their waterfront property. The Legislature may wish to direct a state agency to monitor and periodically report on trends in public access to coastal waters. Some boat manufacturers have recently left Florida to relocate in another state or expanded their operations outside the state.

“These manufacturers cited factors such as high property taxes; higher in-state costs for insurance, land acquisition, and labor and financial incentives as factors in their decisions to leave Florida or expand in other states. Some of the other states’ incentive programs have less stringent wage requirements than Florida.”

For example, OPPAGA found that employment in Florida’s boat manufacturing industry has declined nearly 5 percent, based on U.S. Census Bureau data, from 11,333 workers in 2000 to 10,775 in 2005. During the same time period, North Carolina experienced a nearly 292 percent increase in marine industry jobs, from 1,000 in 2000 to 3,917 in 2005.

OPPAGA also noted that while Florida’s recreational marine industry appears to be eligible for several existing economic incentive programs, including the state’s Qualified Target Industry (QTI) tax refund, they may not be able to meet some of the criteria for the programs. For example, OPPAGA’s research indicated the average annual wage in 2006 for marine industry workers was $37,800. Since the average state wage was $35,820 in 2006, marine industries would have had to offer an annual average wage of $41,193 to qualify for the QTI tax refund program.

The report offered three options for legislative consideration:
• changing qualifications for existing incentive programs.
• creating a marine industry-specific business incentive.
• requiring EFI to create a special unit that would focus on retaining or recruiting marine industry companies.

Bertram Yachts was active in requesting subsidies to remain in Florida. They were approved for $720,000 from the state and $180,000 from Miami-Dade County as part of the state’s QTI fund.

Bertram is also set to receive $101,953 from the county’s Targeted Jobs Incentive Fund (TJIF). This will allow the company to renovate its 400,000-square-foot plant and add 60,000 square feet for fabrication.

The marine manufacturer would invest $8.9 million in improvements in the next six years, while adding 150 jobs to its 419-employee roster within three years. The new job salaries annualize to $36,101.

In its application for public subsidy, Bertram said, “The incentive award is a key factor is our decision whether to stay and expand at our current location in Miami, Florida, or relocate to another facility in North Carolina … which is willing to significantly support our efforts, if necessary.”

A move to North Carolina was under consideration because of tax relief, relocation/expansion assistance and the current labor pool that is available there. Skilled laborers from the textiles and furniture industries are available after those sectors lost jobs to other countries.

This article originally appeared in the July 2008 issue.

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