August 20, 2014

Manufacturing

Linda Gibson | 1/1/1996
Miami-based Symbiosis Inc.'s plant, where it makes endoscopic medical instruments,was named one of the top ten in the U.S. by Industry Week magazine. That was 1995; this year, Jim Stitt, president of the company, says he's scrambling for economies to remain competitive. "The whole health-care industry still is going through pricing pressures on suppliers," Stitt says. "We're spending more time and energy looking at how can we do things more efficiently. We view that as a never-ending process." Stitt's outlook for 1996? "In the worst case, we expect to stay even," he says. "We expect to do 5% to 10% better in both sales and profits. Wages will go up about 3% to 4%. Hiring will depend on new products, but will probably increase a little bit."

That may be typical of many Florida manufacturers' forecasts for 1996. Factory payrolls in the state aren't expanding rapidly, in part because of greater plant efficiency through increased automation. But if it continues, the industry's current momentum could produce a small gain in statewide manufacturing employment this year.

Manufacturing employment in Florida has stabilized somewhat after falling 6% from 1985 to 1993. It stood at an estimated 485,100 in October, up 1,000 from a year earlier.

Defense Contractors
That modest increase came despite layoffs in the defense sector of Florida's manufacturing industry. Last year, for example, McDonnell Douglas closed its Titusville missile manufacturing plant, throwing 1,254 people out of work.

Many defense contractors face a leaner market for military products. Systems & Electronics Inc. (SEI), which employs 1,500 people in Florida, makes products for the U.S. military as a subsidiary of St. Louis-based Esco Electronics Inc. Its market has shrunk due to government constraints on defense spending, says Richard Kielmeyer, director of operations for SEI. "We've gone through significant downsizing, the kinds of adjustments most defense contractors have had to make."

But other types of Florida manufacturers, especially smaller technology-driven companies like Symbiosis, are creating jobs or at least not eliminating them.

According to the state labor department, during the 12 months ended in October, employment grew 3.9% in electronic equipment manufacturing, faster than in any other type of Florida manufacturing.

McDonnell Douglas wasn't the only big name in Florida manufacturing that retrenched last year. St. Louis-based beer company Anheuser-Busch decided to close its Tampa brewery by the end of 1995, costing the city 375 jobs. AT&T announced in October plans to lay off 225 employees at its Paradyne business unit in Largo, which AT&T is trying to sell.

But June Wolfe, president of the South Florida Manufacturers Association, says lesser-known companies are likely to grow and attract attention in 1996 and beyond. "I feel the future of manufacturing in Florida is bright, but it's going to take a different turn," says Wolfe. "It's not going to be the large companies we're used to hearing about. It's going to be small companies that grow from nothing. That's where the jobs are going to be."

At Boca Research Inc., President Tony Zalenski expects to lease another 77,000 square feet of space and add up to 50 employees this year. "We're looking to grow 25% to 30% in revenues in '96," he says.

Datamax Corp. in Orlando, maker of bar code printers, also expects better financial results this year following "a very good year" in 1995, says Robert Strandberg, chairman and CEO. "We're in a market that appears to be growing by 20%, and we hope to exceed the market growth."

Printers And Publishers
Printing and publishing, which employ more Florida workers than any other types of manufacturing, are coping with big price hikes for paper. But Gloria Ysasi-Diaz, division director of R.R. Donnelley & Sons in South Daytona, says "1996 should be an excellent year. Traditionally in printing, Olympic years and election years are very, very good." She says her firm's 1996 sales should exceed 1995 sales by about 10%.

Many Florida manufacturers will seek growth in foreign markets in 1996. L.A. Daniels, president of the First Coast Manufacturers Association in Jacksonville, says manufacturers developing Latin American markets have above-average prospects. "The growth of our economy in the domestic market is going to be steady; basically, you've got a mature market," he says. "But in Latin America, the economies are not nearly as well developed; they've got great opportunities for us."

Richard Angulo, chief executive officer of Digital Products Corp. in Pompano Beach, also notices many Florida manufacturers are looking south of the border for sales growth: "We'll see lots of technology companies set up Latin American operations."

Angulo, current president of the Florida chapter of the American Electronics Association, says AEA members in Florida generally expect wages and revenues to hold steady or increase in 1996. "For manufacturing, it will be a good year," he predicts.

Florida companies that contract to manufacture for brand-name companies are among the industry's fastest-growing, according to Angulo. His own company, Digital Products, a seller of electronic monitoring devices for law enforcement, started farming out work to contract manufacturers after years of in-house production. "We maintain the intellectual property and product development, but they take care of building the product and do it more cost-effectively," he says.

Marketing Challenges
The rollout of new products will have a big impact on financial results this year at many manufacturing companies. "We'll be introducing two new product lines we expect to be very successful," says Jeff Tobin, vice president of operations at Coiltronics Inc., a Boca Raton company that makes parts for computers and cellular phones and employs 100 people in Florida. In the past two and a half years, Coiltronics has doubled its salaried staff.

For other manufacturers, marketing may be a bigger challenge than innovation or efficiency. In 1995, "we started to be more aggressive in approaching the retail market directly," says Axel Ruehlmann, president of 20-employee K&R Instruments Inc. in Orlando, a maker of stopwatches and compasses. "Before we'd been using distributors. We'll add a lot more trade shows in 1996. I think success in those shows will determine how much more business we can expect."

Even if existing manufacturers don't grow this year, new arrivals from out of state may give the industry a boost. Low wages and a sunny climate continue to attract companies like K&R, a subsidiary of German company Kasper & Richter. Says Ruehlmann: "We wanted a sunny state. California has earthquakes, so we came here."

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

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