Manufacturing plays a significant role in the national economy, accounting for roughly 12 percent of U.S. Gross Domestic Product (GDP). According to the National Association of Manufacturers, manufacturing in Florida accounts for just over 5 percent of the total output in the state (gross state product) and employs just over 4 percent of the workforce. This ranks Florida 45th among the 50 states and District of Columbia in terms of manufacturing’s contribution to the gross state product. This translates to more than $47 billion in economic output (2016) and more than 354,000 manufacturing jobs. These are high-paying jobs as well, with an average annual compensation of more than $67,000 in 2016.
The U.S. Bureau of Economic Analysis ranks Florida 38th among the 50 states in terms of manufacturing competitiveness. The Bureau measures “manufacturing competitiveness” in terms of value-added per employee (productivity). This low ranking is surprising given Florida’s business climate, which is consistently ranked among the best in the U.S. Florida offers manufacturers pro-business tax policies, no personal income tax, affordable land and labor, streamlined permitting processes, and a host of other resources that should serve as a magnet for attracting manufacturing to Florida. But they aren’t.
Florida has two ways to grow its manufacturing sector --- either entice manufacturing companies to relocate to Florida, or grow the current manufacturing industries from within. Convincing manufacturers to relocate to Florida has been made more difficult with the dismantling of economic development incentives that have, until recently, been important tools in Florida’s economic development toolkit. This now places a premium on programs that will permit existing manufacturers to expand and grow their business.
One such program is FloridaMakes, a statewide, industry-led, public-private partnership designed to improve the productivity and technological performance of Florida Manufacturers. FloridaMakes functions as a network of statewide business associations and local providers to help small and medium-sized manufacturers grow their businesses through technology adoption and talent development. FloridaMakes provides business advisors who work with client companies to assess their businesses, benchmark excellence and value, and identify opportunities and challenges for each client.
Through November 2017, 129 manufacturers who had received services through FloridaMakes reported a combined total impact of $248 million. This breaks down into $166 million in increased or retained sales, $25.5 million in cost savings, and $56.6 million in investments. A total of 2,415 jobs were either created or retained as a result of FloridaMakes.
House Bill 2737, sponsored by Representative Jason Fischer, would appropriate $3.5 million in state funding to support FloridaMakes. In the Senate, Senator Keith Perry made a similar request for $3.5 million in state funding. This state funding, coupled with $3.5 million in federal funding and $3.5 million in other (industry) funding, would make available $10.5 million for FloridaMakes operations during Fiscal Year 2018-19.
Regrettably, neither request made it into their respective chamber’s appropriations act. Programs like FloridaMakes play an important role in developing Florida’s economy, generating thousands of high-paying new jobs while growing Florida’s manufacturing sector.
In reducing incentive funding that has historically been used to attract out-of-state companies to Florida, the Legislature has made clear its preference to grow Florida’s economy from within. If growing Florida’s economy from within is going to be the linchpin of our economic development program, then a continued public investment in FloridaMakes would be a wise investment indeed.