March 28, 2024

Northeast: The Contender

Jane Tanner | 4/1/1996
Northeast Florida hasn't been exactly an economic pace-setter compared with other regions of the state. True, per capita personal income in the region grew by 4.8% in 1995, compared with 2.9% statewide, according to estimates by the University of Florida's Bureau of Economic and Business Research (BEBR). But at $22,389, the region's per capita income still has trailed the state's.

Northeast Florida also is expected to lag the state in job growth, according to BEBR. The four-county region's average monthly employment is estimated to increase 12.5% from 1995 to 2000, compared with 13.7% growth statewide.

Among the disappointments on Northeast Florida's employment front, American Express is shutting its 1,300-job center in Jacksonville and merging it with existing operations throughout the U.S. And a longtime mainstay of Jacksonville's corporate community, Independent Life Insurance, was purchased by American General Corp. and is folding into American General's operations in Nashville, Tennessee.

Nevertheless, economic development officials in Northeast Florida have reasons to be optimistic about the future. For one thing, favorable publicity is helping the region's biggest city polish its image as a place to do business. Money magazine, for example, named Jacksonville the best mid-size city in the nation and third-best among all U.S. cities. And Jacksonville's National Football League expansion franchise, the Jaguars, has created plenty of fanfare, too.

Jacksonville area's growing population has put the oft-overlooked city on the radar scope of more corporate site selectors. BEBR estimates due to be released this month may put the metropolitan area's population over one million for the first time. Says site consultant W. Kurt Foreman of Moran, Stahl & Boyer: "There's access to good talent [in Northeast Florida] for a good price."

Companies continue to move in, such as Vienna, Va.-based America Online, which opened a 1,400-worker customer-service shop in Jacksonville last year. Wyatt Preferred Choice, benefit consultants, also selected Jacksonville for its back-office operation in 1993 and recently decided to expand its work force to about 1,000 over the next five years.

Back-office jobs have become a major source of employment growth in Jacksonville. For example, Prudential Insurance selected Jacksonville to service life insurance policyholders. The customer center could boost Prudential's employment in Jacksonville to 600, according to Jerry Mallot, head of economic development for the city's chamber of commerce.

But Jacksonville has set its employment sights higher than back-office jobs. Not long ago, Jacksonville boosters cheered loudly when big companies like AT&T and Merrill Lynch brought data-processing and customer-service jobs to the city. Nowadays, folks in Jacksonville and the rest of Northeast Florida want not just more jobs but better ones.

For example, a proposal to build a state prison on a 17,000-acre site of Cecil Field Naval Air Station in west Jacksonville, scheduled to close by the end of 1998, met with vocal opposition from nearby residents. Frank Nero, the chief economic development strategist for the city of Jacksonville, says disdain for the prison proposal shows a desire to set higher standards: "Ten years ago if you would have talked about putting a prison on the west side, there wouldn't have been a ripple; they would have been happy."

"Expansion City"
A marketing campaign to enhance Jacksonville's economic development includes full-page ads touting "the Expansion City" in national business publications such as The Wall Street Journal, Forbes and Business Week. The campaign is run by the Jacksonville Chamber of Commerce in cooperation with the city of Jacksonville. The chamber plans to spend about $700,000 on ads and promotions, and $800,000 on staff and operating expenses. The city anted up about $500,000 for the chamber's marketing campaign.

With relatively inexpensive land and labor, the region's most compelling drawing card is its low cost of doing business. By this measure, says Jacksonville University economist John M. Godfrey, Northeast Florida comes out ahead of rival areas for economic development such as Raleigh, N.C.; Charlotte, N.C.; and Greenville, S.C.

Texas-based Sally Beauty Co., attracted by low-cost labor and other lures in Jacksonville, in January opened a beauty-products distribution center. Vice President of Distribution Leon Weatherford says before Sally Beauty came to Jacksonville "we talked to other companies who confirmed there was a large labor pool."

Part of the regional labor force is made up of retired Navy personnel. The Jacksonville area is a popular station of choice among Navy personnel, many of whom stay there after their military careers end. The Navy remains a major employer in Northeast Florida despite military downsizing. Last year, regional leaders feared the potential loss of the Naval Aviation Depot in Jacksonville, which maintains and upgrades military aircraft. Instead, the federal government is expanding the station with jobs transferred from Naval facilities in Pensacola, Norfolk, Va., and Alameda, Calif. The depot's employment is expected to rise as high as 4,500 by Oct. 1, says Navy Capt. Marty Kosiek, compared to 2,750 at the end of 1994. That's especially good news because the depot workers' average annual salary of $41,000 is well above typical wages for back-office employees.

Keeping existing employers such as the Naval Aviation Depot happy is part of Jacksonville's economic development strategy. Mayor John A. Delaney figures that at least 80% of new jobs created here come from existing companies. So, Delaney is out to nurture that kind of growth by making personal visits to plants and operations to see what it will take to keep them comfy, and he's determined to offer locals big-dollar incentive packages similar to those used to seduce new prospects.

For instance, the city government packaged more than $11 million in local, state and federal incentive funds to convince contact lens maker Vistakon to expand its manufacturing and distribution operations in Jacksonville, rather than putting new operations off-shore.

The commercial shipping industry is important to Jacksonville, too, but a lack of funding for the city's port is slowing the industry's growth. As a result, Nero, the chief economic development strategist for the city of Jacksonville, says the port routinely turns away customers because there's a shortage of money for expansion projects. Sensing lack of political support and lack of community awareness, local officials canceled plans to ask voters to approve a half-cent sales tax hike for the port.

City leaders continue to focus on a grand scheme for revitalizing downtown Jacksonville. In addition to rehabilitating the downtown civic auditorium, renovation of a former department store for city government offices is set to start this spring. By moving City Hall off property along the St. Johns River, local leaders hope to make room for riverfront hotels, retail stores, offices and residential developments.

Bedroom Communities
To a large extent, Clay, Nassau and St. Johns counties are bedroom communities to Duval, Northeast Florida's most populous county. The portion of the labor force in each of the three smaller counties that commutes to jobs in Duval ranges from 29% to 53%, according to BEBR. Yet Clay and St. Johns may soon see significant employment growth in their own backyards.

For example, after years of delay, construction of the PGA Tour's touted World Golf Village in St. Johns County, off Interstate 95, is expected to get under way this spring. Once completed, the golf attraction is expected to draw an estimated one million visitors per year. This February, the Florida Supreme Court cleared the way for a controversial county bond issue to finance an $11 million convention center that will be at the heart of the complex. A group of residents had opposed county financing for the private project.

Real estate consultant Raymond Rodriguez says two areas -- St. Johns County land along U.S. Highway 1 leading into St. Augustine and parcels along U.S. 17 in Clay County -- are poised for development. "Those are the next hot areas," he says. "The areas south of Duval are open for growth."

Clay County leaders market the area to manufacturers. "We have 3,000 acres zoned industrial, open for development," says Orien Pass, executive director of the Clay County Development Authority and Committee of 100.

One of Clay's newest corporate citizens is Vector Aeromotive Corp., which built its first flashy prototype automobile last year in a Green Cove Springs industrial park, on the site of a former World War II Navy base. "People like to feel that they are moving to a place that's booming," says D. Peter Rose, president of Vector, which moved from California to Northeast Florida.

Meanwhile in Nassau County, tourism at such resorts as the Amelia Island Plantation and the Ritz-Carlton not only boosts the hospitality industry but also contributes to other types of economic development in the region. Says Nero: "There are a whole lot of folks who would not know about Jacksonville if it were not for Amelia Island."

Shipping and distribution also are important elements of the Nassau County economy. Not long ago, the Port of Fernandina snagged a large Dole shipping contract, and Georgia-Pacific recently opened a distribution center for building products in Yulee.

Yet Nassau County residents still rely on jobs in Jacksonville. According to BEBR, about one-third of the county's labor force commutes to Duval County to work.

Education Concerns
While smaller communities nearby learn new ways to create home-grown jobs, Jacksonville is still trying to resolve controversies swirling around its school system and its impact on the city's business climate.

Nero says Mayor Delaney's chats with existing Jacksonville companies have raised a red flag about the quality of local schools and about an ongoing controversy over school busing to achieve racial integration.

Education clearly is a long-term economic development issue, not just in Northeast Florida but statewide. While some companies are attracted by Northeast Florida's reputation for low-cost labor, others are frustrated by shortages of certain skills in the region.

Larry Rose, plant manager of Maxwell House's Jacksonville coffee manufacturing operation, says his company's hiring experience a few years ago revealed a dismal picture. Of 1,500 candidates who passed an initial screening, 700 were dropped because they didn't fill out Maxwell House's application correctly. The company whittled down the remaining applicants to 400. Among those, 29% failed an eighth-grade level basic knowledge test, and only 34% passed a test of basic mechanical skills. Concludes Rose: "Skilled workers are getting harder and harder to find."

Fast Track
Rural Northeast Florida seems an unlikely setting for production of high-priced cars. But in Green Cove Springs, just south of Jacksonville, Vector Aeromotive Corp., formerly based in California, has started making a flashy automobile with a V-12 engine that retails for $184,000. Company officials say the Vector M 12 is poised to rival Lamborghini and Ferrari. (Incidentally, Lamborghini and Vector are owned by the same Indonesian investors.) Each hand-built Vector M 12 takes about 1,400 man-hours to produce. The company plans to produce 100 of them this year, and to boost production to 500 a year by 2001. By the way, if $184,000 seems too expensive, take heart: Vector President D. Peter Rose says there are plans for a cheaper model priced in the low $100,000s.

Jacksonville Online
America Online (AOL) subscribers who call the company for help often end up talking to someone in Jacksonville. Last summer, Vienna, Va.-based America Online set up one of its four customer-service centers in Jacksonville, where 1,400 employees daily field thousands of technical questions and sales inquiries. Companies like AOL fuel Jacksonville's reputation as a back-office hub. And while city leaders bemoan the city's plethora of low-paying back-office jobs, AOL is a step up: The company's Jacksonville workers generally have greater technical know-how and bigger paychecks than other back-office workers in the city.

Teeing Up
Northeast Florida isn't a major competitor with other Florida destinations for tourism, but a major project planned for an undeveloped stretch of St. Johns County blanketed by pine trees and palm scrub may help change that. An exit sign on Interstate 95 beckons travelers to the World Golf Village, but nary a shovel has moved for the last few years on the proposed development, which would include a golfing hall of fame, a golf course and a convention center. Nevertheless, PGA Tour officials say construction will start this spring. Golfers shouldn't call for tee times yet, however. The project won't be completed until late 1997.

Tags: Florida Small Business, Politics & Law, Business Florida

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