Growing Manufacturing: A Regional Approach
Guest Blogger: Steven Birnholz, President
Florida Council of 100 Foundation
Florida has grown over 50% since Enterprise Florida was conceived in 1996, and, out of necessity, the state has steadily blossomed into a conglomerate of unique regional economies. These regions are increasingly capitalizing on their distinct compositions to out-compete not only other states, but other countries, as well. With that in mind, in June, the Florida Council of 100 published, Beyond Sunshine: Advancing Florida’s World Class Economy for the Next Generation, an economic development strategy for the state focused on regional strengths.
This work took a data-driven approach to identifying high opportunity industry clusters in each region and rural Florida based on their job growth, wage level, resiliency to economic downturns, regional specialization, talent base, and investment. These industry clusters were then classified by maturity. “Foundational” clusters were those that are vital to regional economies, even though many of their component sectors might not all generate high-wage jobs (e.g., tourism-related). Clusters were designated as “Best Bets” if they were both especially attractive and drivers of growth in the region. Emerging clusters stood out as providing growing opportunities that, while attractive, had not yet realized their full potential for becoming Best Bets. We then verified the data with both business leaders and the state’s primary regional economic development organizations to ensure alignment with those experts with boots on the ground.
Our look at manufacturing as either a Best Bet or an Emerging cluster took a two-pronged approach. First, based on the data and methodology provided by McKinsey & Company, some manufacturing subsectors were rolled underneath the definitions of several of our other industry clusters, sometimes driving much of the activity in those clusters. For example, the Aerospace Vehicles & Defense cluster included manufacturing subsectors, such as Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing; Aircraft Manufacturing; Aircraft Engine and Engine Parts Manufacturing, etc. Second, we disaggregated the manufacturing subsectors from the major clusters in order to focus on the industry as a separate cluster unto itself.
What quickly became evident was that the regional expression of the impact of the manufacturing industry was very similar to what we know about the industry statewide, which provides more than 421,000 jobs, paying an annual average wage of about $78,000, or nearly $12,000 above the state average. Importantly, we found that manufacturing has an economic multiplier of at least 2.8 (average of the multipliers for jobs, earnings, and sales), meaning that the direct economic output of the manufacturing industry generates even more indirect output for the economy as a whole. Additionally, we discovered that the manufacturing industry is highly tradable and able to capitalize on outside markets rather than be exclusively dependent on local demand, thus making the industry less susceptible to economic downturns. Furthermore, because manufacturing jobs are tradable, they tend to be more productive than those in other sectors—one of the key measures of the health of an economy which can raise the standard of living for all individuals by enabling more goods and services to be consumed for the same amount of work.
With that said, our region-by-region analysis of the manufacturing and advanced manufacturing industries found that:
- As an Emerging cluster in Northwest Florida, manufacturing generated $4.2 billion in GDP, 25,000 direct jobs, and a wage differential compared to the average job of $9,200. Of that, advanced manufacturing generated $2.2 billion in GDP, 10,400 direct jobs, and an average wage of $82,300. The top advanced manufacturing subsectors by GDP were Resin, synthetic rubber, and artificial synthetic fibers and filaments manufacturing in Escambia County; Aerospace product and parts manufacturing in Okaloosa County; and Ship and boat building in Bay County.
- As a Best Bet in Northeast Florida, manufacturing generated $9.7 billion in GDP, 65,900 direct jobs, and a wage differential compared to the average job of $19,700. Of that, advanced manufacturing generated $5.1 billion in GDP, 26,800 direct jobs, and an average wage of $73,400. The top advanced manufacturing subsectors by GDP were Medical equipment and supplies manufacturing in Duval County and Aerospace product and parts manufacturing in Duval and St. Johns counties.
- In Central West Florida, manufacturing generated $14.2 billion in GDP, 90,000 direct jobs, and a wage differential compared to the average job of $22,900. Of that, advanced manufacturing generated $9.5 billion in GDP, 45,900 direct jobs, and an average wage of $82,500. The top advanced manufacturing subsectors by GDP were Pharmaceutical and medicine manufacturing in Hillsborough and Pinellas counties, and Navigational, measuring, electromedical, and control instruments manufacturing in Pinellas County.
- In Southwest Florida, manufacturing generated $2.0 billion in GDP, 16,500 direct jobs, and a wage differential compared to the average job of $19,900. Of that, advanced manufacturing generated $1.4 billion in GDP, 7,100 direct jobs, and an average wage of $67,500. The top advanced manufacturing subsectors by GDP were Medical equipment and supplies manufacturing in Collier County and Paint, coating, and adhesive manufacturing in Lee County.
- In Central/Central East Florida, manufacturing generated $17.8 billion in GDP, 115,000 direct jobs, and a wage differential compared to the average job of $33,300. Of that, advanced manufacturing generated $13.4 billion in GDP, 67,300 direct jobs, and an average wage of $94,000. In this region, Semiconductor manufacturing was specifically named as an Emerging cluster and was currently the largest advanced manufacturing subsector in the region. Aerospace product and parts manufacturing was also prominent in Brevard County and growing in other areas in the region.
- In Southeast Florida, manufacturing generated $14.1 billion in GDP, 123,200 direct jobs, and a wage differential compared to the average job of $15,300. Of that, advanced manufacturing generated $9.8 billion in GDP, 46,500 direct jobs, and an average wage of $81,500. The top advanced manufacturing subsectors by GDP were Pharmaceutical and medicine manufacturing in Broward and Miami-Dade counties and Aerospace product and parts manufacturing in Palm Beach and Miami-Dade counties.
- As a Best Bet in Rural Florida, which depends on the manufacturing industry relatively more than other regions in the state, manufacturing generated $3.2 billion in GDP, 19,200 direct jobs, and a wage differential compared to the average job of $13,300-33,600, depending on the specific Rural Area of Opportunity. Of that, advanced manufacturing generated almost half of the GDP and a third of the direct jobs. The top advanced manufacturing subsectors by GDP were Other chemical product and preparation manufacturing in Wakulla and Gadsden counties, Aerospace product and parts manufacturing in Columbia and Levy counties, and Pesticide, fertilizer, and other agricultural chemical manufacturing in Highlands and Hardee counties.
In short, the Florida Council of 100’s research demonstrates that manufacturing is thriving throughout the state. It is unsurprising, then, that expanding it will continue to be a key component of regions’ economic competitiveness strategies. However, it is vital to recognize that subsector specializations do vary by region, and it will be important to focus on and invest in those specializations in order to expedite growth and maximize economies of scale.
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The Florida Council of 100 is a private, nonprofit, nonpartisan organization of business leaders committed to promoting economic growth and improving the quality of life for the people of our state. First established in 1961 by Governor Farris Bryant, for more than six decades, the Council has been charged with providing advice on key policy issues from the business community’s perspective to Florida’s elected leaders and government officials across the political and ideological spectrum. Today, the Florida Council of 100 represents 150 businesses with over 1.3 million employees.
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