October 31, 2014

Technology

Wayne Harris | 1/1/1996
Many Florida technology companies posted record earnings in 1995, and executives at these companies are hoping for a reprise in 1996.

But don't expect rising profits to translate into a hiring frenzy. The downsizing, "re-engineering" and exportation of jobs to foreign shores, begun during the recession in the early 1990s, have become ingrained management practices, even as companies have returned to profitability. And with few exceptions, the technology companies that are adding workers most rapidly are adding most of them overseas. Even if sales and profits rise as expected, growth in technology jobs in Florida, if it occurs at all, will likely be subdued.

Even a break-even year in employment would be an improvement. The high-wage jobs offered in technology have declined in Florida through most of the '90s. While total state employment grew 7.6% between 1990 and 1994, according to the Florida Department of Labor & Employment Security, employment by machinery manufacturers (including makers of computers and jet engines) declined 6.8%. Manufacturers of electronic equipment and measuring and medical instruments also shed slightly more jobs than they created.

Work Force Cuts
The slight overall decline in technology jobs masked tumultuous crosscurrents in major subsectors. Between 1990 and 1994, Florida manufacturers of semiconductors, electronic components, computers and office machines shed about 11,000 jobs -- 25% of their combined work forces. Makers of search and navigation instruments slashed 4,500 jobs, or a third of their work force.

There were areas of healthy job growth as well, but the raw numbers tended to be less dramatic than in the losing sectors. Communications equipment makers added about 3,000 jobs. Manufacturers of medical instruments and supplies expanded their work force by a quarter, adding about 2,600 jobs.

The attitude of Boca Research, a Boca Raton manufacturer of communications and computer networking equipment, is typical of the prevailing management wariness in the technology industry. Boca reported its fourth straight quarter of record revenues in October, and earnings were up 81%. Since 1993 the company has opened sales offices in Canada, Europe and Singapore, and it is eyeing the Caribbean.

Boca is adding to its manufacturing capacity to meet anticipated international demand. But despite its recent explosive growth -- and mindful of the recent bankruptcy of one of its main competitors, Hayes Microcomputer Products, which it briefly tried to acquire -- Boca is "cautiously optimistic" about 1996, says President and CEO Tony F. Zalenski. "We're not a company that adds people very readily," Zalenski says. "Boca is very sensitive to its cost structure." Boca employs 320, all but a handful in Florida.

IBM's Impact
While Boca Research was cautiously expanding, industry bellwether IBM was closing the book on a major chapter in the history of the technology industry in Florida. In September, Big Blue announced that it was sending 1,000 technical workers in Boca Raton -- basically the entire unit that developed its PC operating-system software, OS/2 -- to Austin, Texas. That marked the final diaspora of the division that gave birth to the original PC 14 years ago. At its peak in the 1980s, the division designed and manufactured PCs at its sprawling Boca campus and employed 10,000 people. The departure of the OS/2 developers brings IBM's employment in the area to about 1,000.

But IBM is still providing manufacturing jobs in Florida, albeit indirectly. Among the chief beneficiaries of IBM's decision to shed manufacturing has been Tampa's Group Technologies Corporation, a former unit of the Honeywell Corp. Eager to diversify away from the flagging defense industry, Group Tech has embraced contract manufacturing, a $35-billion global market that is projected to grow 20% annually well into the next decade.

"IBM is a huge client for us," says Greg Tymn, Group Technology's chief financial officer. "We expect to do $35 million to $40 million with IBM in Brazil in 1996."

But most of the Group Tech jobs are being created where the fastest growing markets are: Latin America. Group Tech bought a factory in Mexico in 1994, which employs 700 workers, and in Brazil the company work force has grown to 200.

Tampa, where Group Tech employs 1,400, is a different story. "We're looking at a flat year in Tampa," Tymn says. In the first three quarters of 1995, Group Tech had a loss of $6.3 million.

Across the bay in St. Petersburg, another beneficiary of outsourcing, Jabil Circuit Inc., which manufactures high-end business computers for Hewlett-Packard among others, reported record profits that made it one of the hottest stocks in Florida last year. Demand for its services were so strong, Jabil told shareholders recently, that the major constraint on its growth last year was a shortage of materials - adding that the shortage appeared to be easing.

Jabil added significantly to its work force in Florida, hiring 400 workers and bringing its work force at the St. Petersburg operation to 1,050. But, like Group Tech, Jabil also is looking overseas. Last year it opened a plant in Malaysia and in 1993 one in Scotland. The company doesn't anticipate another burst of hiring in Florida like last year's.

"We continue to have growth in Florida, but it won't be as dramatic," says Jabil President Thomas Sansone.

In Melbourne, Harris Corp. -- with 8,500 employees in Florida, probably the state's largest technology employer -- also reported record orders, revenues and earnings in 1995. And in the past four years, the company posted a sevenfold increase in earnings.

Semiconductors
"The semiconductor industry is exploding," says Jim Burke, Harris' director of media relations. "Demand is growing at double-digit rates for our complex circuits, which are used in communications, automotive and energy-control applications."

Though Harris has begun hiring for the first time in about four years in its semiconductor division, its net job growth has been muted by continued downsizing in its electronics division, where about 50% of revenues still depend on defense orders. Worldwide, Harris has eliminated 4,000 jobs in the 1990s, reducing its total labor force to 27,000.

"We find increasingly that we're less hardware-driven and more software-driven," Burke says. "We've made 150 to 200 new hires here in Melbourne recently, most of them software engineers. We expect that trend to continue."

A few areas, like medical instrument manufacturing, promise to show both earnings growth and job growth.

"The reason our industry continues to adds jobs is that we are selling more internationally, but we manufacture primarily in the United States," says Mark Fletcher, vice president of sales and marketing at Xomed Surgical Products in Jacksonville. Despite consolidation and uncertainty in the health care industry, particularly for hospitals, Xomed is looking forward to a good year. Xomed, which was spun off from Bristol-Myers Squibb in 1994, added 50 workers in 1995 and will add another 15 this year, Fletcher predicts. The surgical-product maker employs 500.

In Miami, Johnson & Johnson's proposed takeover of Cordis Corp. should prove to be job-friendly. Johnson & Johnson craved Cordis for its fast-growing business in angioplasty devices, the balloons used to open arteries; Johnson & Johnson makes a stent, a small coil that keeps treated arteries from collapsing. Johnson & Johnson has said that it intends to move its stent business to Miami to be managed by Cordis, which would continue to operate under the Cordis name as a separate division.

Computer Distribution
The state's largest wholesale distributor of computer products also is looking forward to a good year. Tech Data of Clearwater stumbled when it switched to a new computer system at the end of 1994 but continued to hire aggressively even as profits tumbled, adding 300 people last year, increasing the company's Florida labor force to 1,800. Now, says Vice President and Treasurer Arthur W. Singleton, the new computer system is working "beautifully" and international sales are rising rapidly.

"We're pretty upbeat and optimistic," Singleton says.

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

Florida Business News

Florida Trend Video Pick -

Colleges Are Tracking When Students Work Out at Rec Centers
Colleges Are Tracking When Students Work Out at Rec Centers

Officials on college campuses are turning to usage data and student feedback to shape fitness programs, hoping it will entice more students to develop healthy habits. 

Earlier Videos | Viewpoints@FloridaTrend

Ballot Box

Do you give - or get - an annual performance review?

  • Yes - and I hate it
  • Yes - and it's OK - there's some value in the exercise
  • Yes - and I find it very valuable
  • No (thank goodness)

See Results

Ballot Box
Subscribe