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Brazil's New Prominence
Melbourne-based DBA Systems, a maker of systems used in satellite cameras, started doing business in Brazil in 1992. As of late April, DBA had sold two systems worth more than $1 million to Brazil's national government. DBA's vice president for operations, Dudley Gordon, says the market appears ripe: "We have been very impressed with the facilities and technical capability of the people in Brazil's aerospace industry and in the government's aerospace arm."
DBA's good fortune reflects the state's surge in business with Latin America's most populous country. Florida's trade with Brazil doubled from $2.5 billion in 1990 to $5.0 billion in 1995. Brazil ranked third behind Venezuela and Japan in 1993.
"The sleeping giant has awoken, and Florida is benefiting to a tremendous degree from the natural affinity that exists between Brazil and Florida," says Florida Secretary of Commerce Charles Dusseau, whose department has had a trade and tourism promotion office in Sao Paulo since 1991.
Brazil began stirring in 1990, when it started to phase out many of its high tariffs and other duties and lift its bans on imports of numerous items, including modern generation computers and computer products. The result has been a multibillion-dollar boom for Floridians doing business in Brazil. Florida exports to Brazil (including products made in other states and shipped through Florida) rose to $4.2 billion in 1995, more than triple the $1.3 billion in exports in 1990.
Though it isn't commonly classified as an export, Brazilian tourism in Florida also brings a pile of money into the state. Latest figures from the state Department of Commerce show the number of Brazilian tourists to Florida grew from 207,156 in 1990 to 334,793 in 1994. Among the biggest beneficiaries of the Brazilian tourism surge have been retail stores in Miami and theme parks in the Orlando area.
Not all of Brazilian visitors come for pleasure. Arlington, Texas-based Wet 'n Wild Inc. - which has agreed with franchisees in Brazil to help set up three theme parks there - trains its future Brazilian managers at its Wet 'n Wild theme park in Orlando.
Other big players in Florida's tourism industry are looking to establish operations in Brazil. Last month, the Florida/Brazil Institute, a Gainesville-based research group funded by state and private money, met with Brazil's National Development Bank at a Rio de Janeiro seminar on theme park development; Florida representatives of Sea World and Walt Disney were scheduled to attend.
Carlos Alfredo Teixeira, Brazil's trade director in Miami, says his government plans to approach several Florida-based cruise lines soon about adding service to Brazil. Two major Miami-based cruise lines, Carnival Cruise Lines and Royal Caribbean Cruise Line, say service to ports in Brazil and other South American countries is part of long-range company plans. The two lines already are building brand recognition among Brazilian tourists who take Carnival and Royal Caribbean cruises from the Port of Miami.
Some Brazilians first visit Florida as tourists, then return to take up residence and earn a living here. Elizabeth Lowe, executive director of the Florida/Brazil Institute, says while the state has no official estimate on the number of Brazilian-owned businesses in Florida, her group estimates that about 140,000 Brazilian citizens are Florida residents. The Beacon Council, Dade County's economic development agency, estimates that about 85,000 Brazilians reside in South Florida alone.
Among other Brazilian companies, the Beacon Council has worked with Sadia Concordia, Brazil's largest meat processor, which distributes products in the U.S. from Miami. It also has worked with Manager Communicao, a publisher using its Miami base to distribute Portuguese-language newsletters in Brazil and the U.S.
Home builders are among the state's most active Brazilian entrepreneurs. In Miami, JHS and Edel are among a number of Brazilian firms that are building luxury condos in the Miami area, according to Franc J. Pigna, managing partner for Colliers InterAmerica, the Miami office of Boston-based real estate services firm Colliers International. "They are developing [Miami] projects where financing will often come from Brazilian banks and where many of the sales will be to Brazilians," Pigna says. "We expect to see more of this."
Hal Sumrall, the Economic Development Commission of Mid-Florida's vice president for international development, says Bercon Corp. and other Brazilian companies are building homes in the Orlando area, with the goal of sales to local residents and to Brazilians looking for vacation homes. To create further ties with the Latin giant, Orlando Mayor Glenda Hood this month will lead a trade mission to Brazil, in which her municipal government will sign a sister-city agreement with Curitiba, a major center of Brazilian high-technology companies.
For the foreseeable future, a key factor in business between Florida and Brazil will continue to be the Latin nation's progress in stabilizing its economy. Brazil has used a tight monetary policy to beat back quadruple-digit inflation, an economic nightmare that had its roots in bloated federal and state government payrolls and inefficient government-run companies. In June 1994, Brazil scrapped its cruzeiro for a new currency, the real (pronounced ray-ALL).
Under the national government's monetary reform program, known as the Real Plan, Brazil's annual inflation dropped from 1,173% in 1994 to 23.2% in 1995. Santander Investment, a New York-based securities firm with an office in Sao Paulo, estimates that Brazilian inflation will be 18% this year.
But growth in national economic output has declined, too. Brazil's gross domestic product grew 4.2% in 1995, down from 5.7% in 1994. Santander predicts growth of 2.5% this year.
With 162 million citizens, Brazil has more than half of South America's
population. But with so many Brazilians living in poverty, their patience with economic reform may not last long. Growth in trade between Florida and Brazil may depend most on the Brazilian government's political will to press on with economic reforms in the face of popular opposition.
Florida's Trade Boom Exaggerated?
In March, this column cited a pair of surprising reports showing that the overall growth in trade passing through Florida's ports was only marginally higher than growth for the nation as a whole.
Now, two more reports -- one issued by the state Commerce Department and one by the Beacon Council in Dade County -- confirm that finding.
The Beacon Council, Dade's economic development agency, issued a report in April noting Florida's exports grew by 17% last year, to $29.4 billion, while imports coming into Florida grew by 9%, to $22.7 billion. Those figures sound pretty good, except the overall rate of U.S. export growth was 14% last year, meaning Florida performed a bit above-average, while the rate of U.S. import growth was 12%, putting Florida's growth below the nation's.
Meanwhile, the state Department of Commerce reports that the growth in exports of Florida-origin products -- goods manufactured, harvested or mined in the state -- has lagged national growth this decade.
Commerce reports that in the U.S., exports accounted for 7.09% of gross domestic product in 1990 and 7.6% in 1994. But in Florida, state-produced exports accounted for 6.65% of gross state product in 1990 but only 6.44% during 1994. During this period, Florida's gross state product grew by 30%, while Florida-origin exports grew by 26%.
In a nutshell, Florida's trade boom is something closer to a boomlet. Yes, state trade volume surpassed $52 billion in 1995, a record, and Florida-origin exports were up by 18.1% last year, a nice increase. But for all the talk of Florida's superior geography and close ties to Latin America, the state's trade growth basically tracks national growth.
Food for thought.
