If Baker moves his business north to Miramar in Broward, as he expects, he'll be in good company -- in the last five years, 106 companies have dumped Miami-Dade for Broward, taking 5,715 jobs with them. Other high-profile employers such as Wackenhut Corp. and NABI Inc. have moved to Palm Beach County.
The corporate exodus helps explain why Miami-Dade's unemployment rate hovers around 7%, two points higher than the Florida average, even as the state and national economies prosper. It gets worse: Welfare reform officials at a recent Tallahassee briefing indicated that the jobless rate in Miami-Dade could reach 10% after welfare recipients (Miami-Dade has about 28% of the state's welfare population) begin running out of benefits. A report suggests that by 2005, the gap between the number of jobs Miami-Dade will have available and the workers needing them could widen to 120,000.
Alex Penelas, the earnest, young Cuban American elected as the county's mayor 18 months ago, knows that Miami-Dade's economic future depends largely on keeping employers like Aviation Sales in the county and bringing in many more like it. The stakes? "If we start doing things right, we can emerge as one of the most progressive, successful business and cultural capitals of the world," he says. If not? "We will settle into mediocrity."
Many of the problems facing Penelas and Miami-Dade (voters renamed the county last November) boil down to demographics. Four decades of steady immigration from Cuba and Latin America have been accompanied by the flight of more than 230,000 non-Hispanic whites, a phenomenon that has shifted Miami-Dade's population from 5.3% Hispanic in 1960 to roughly 60%.
This Latinization of Miami-Dade has been a double-edged sword: A common language and cultural affinities are potent competitive advantages when it comes to trade with Latin America and the Caribbean. The county's import-export business grew by 54% from 1992-96, and an estimated 500 companies in Miami-Dade now do business overseas. A half-dozen headhunter firms have opened outposts in Miami-Dade in the past two years because of the need for senior-level international business executives. "We're very busy," says Michael Bell, of the executive search firm Spencer Stuart's Coral Gables office, which specializes in recruiting senior managers for south Florida-based international operations.
But here's the flip side: Even as international trade generates jobs, the local work force is becoming less qualified to fill them. Compared with earlier immigrants, more recent arrivals have been poorer and less-educated, depressing the quality of the work force. Today, roughly one-third of Miami-Dade's adults haven't graduated from high school, and fewer than 19% have college degrees (compared to 25% in Atlanta, for example). Employers complain they can't find workers with even basic skills. Ed Arriola, vice president for Avanti-Case Hoyt, a catalog-printing firm that employs 500 in Miami-Dade, says he has to recruit professional and technical employees from outside the county, but also has difficulty filling entry-level jobs at his catalog-fulfillment call centers. "Even our jobs that pay $5 to $8 an hour, you still need some computer training and you have to read. You have to have a customer-service attitude.'' The next time his company opens a call center, he says, it won't be in Miami-Dade.
Couple the work force issues with crime, traffic and corruption, and here's what Miami looks like to businesses thinking about relocating, according to Dennis Donovan, principal of a New Jersey-based firm that helps companies move, "Miami is one of the true international cities on the East Coast. The combination of having a relatively low cost structure and accessible global business platform -- it's unique. But here's the rub. Except for companies that have a direct Latin American connection, Miami does not get on the radar screen. Why? There is still an image of Miami as an area you probably wouldn't want to move a business to unless you had to, and you certainly wouldn't want to live there."
The crisis has spawned a massive salvage operation led by Penelas and the Greater Miami Chamber of Commerce. A group called One Community One Goal (OCOG) -- a coalition of chambers of commerce, the Greater Miami Convention and Visitors Bureau, the World Trade Center, the Beacon Council, the public school system and private businesses -- aims to close the employment shortfall with a comprehensive business plan. The group has targeted seven industries it believes can create the most and best jobs over the next 10 years, such as biomedical, international commerce, and film and entertainment.
To help out Miami-Dade's small but successful core of biomedical businesses, for example, OCOG proposes financial incentives, a streamlined permitting process, coordinated efforts of research institutions, increased vocational and community college programs, and marketing efforts to biomedical companies and federal laboratories.
Jay Malina, OCOG's co-chair and primary architect, promises that OCOG's plans won't end up gathering dust on a shelf. Already, as a result of OCOG, nine hospitals involved in the international healthcare task force have ponied up $1.4 million to fund some of the task force's recommendations, he says.
OCOG's continued success, Malina says, depends on whether Miami-Dade's diverse groups of business leaders, politicians and public policy experts stick together behind the same solutions. So far, so good: More than 1,500 people representing a rainbow of ethnicities have served on its various task forces. "To get a community focused on what people believe is the right direction, first you have to get a community to agree on the direction,'' says John Cordrey, vice president of research with the Beacon Council, the county's economic development organization. "That is sometimes the most difficult thing.''
Incentives
Uniting the community is where Penelas comes in. A whiz kid Democrat with a law degree, the 36-year-old Penelas combines the authority of a new "strong'' mayoral structure -- he can fire the county manager and veto the county commission, for example -- with a cross-cultural appeal that has kept him popular in all corners of the county. (See sidebar, page 59.) Business leaders in particular have come to see Penelas as something of a savior who will make Miami-Dade a good place to do business.
Penelas can point to some successes: In the 18 months since he took office and Frank Nero became president of the Beacon Council, Miami-Dade has become noticeably more aggressive about retaining and recruiting companies. In October 1996, while awaiting inauguration, Penelas grabbed an opportunity to send a strong message about the importance of jobs. When he read in a newspaper in October 1996 that New York City was ahead of Miami in the competition for Pan American World Airways' permanent headquarters, he called Martin Shugrue, then president of the airline, and Chairman Chuck Cobb and told them, "'I'm not sure what I can do but I want you all to stay right here.' They said, 'We've been waiting for someone to call.'"
Penelas assigned a committee of business executives and politicians, led by Nero, who worked out a deal to keep Pan Am. And what a deal for the company: nearly $7 million in loans, grants and tax rebates from federal, state and county sources in exchange for an expected 600 jobs over the next decade. Since the Pan Am deal, Penelas and the county have used similar hefty incentive packages to land Cunard Cruise Line's headquarters and an Airbus Industrie high-tech training center. In January, the county approved funds to subsidize the plans of ABC Distributing, a North Miami mail order company, to create up to 1,000 jobs over six years. "Before, the headlines always read, 'such and such company leaves Dade County,''' Penelas says. "We've turned the corner."
Incentives alone won't solve Miami-Dade's problems, however, and Penelas is counting on One Community One Goal, which he co-chairs, to do much of the heavy lifting. But despite Penelas' continuing popularity, even some OCOG board members question the group's approach. For one, is it moving too slowly? The group started meeting in 1996; it will have released five "action plans'' by the end of the year, but won't release the plans for the sixth and seventh targeted industries until 1999. "We're going to take five years to develop a 10-year plan. You've just deferred action for 15 years,'' exclaims lawyer George Knox, a member of OCOG's board and also of the statewide board that's implementing Florida's welfare reform legislation.
Mismatch?
Knox also worries that the emphasis on high-tech, high-skill industries such as biomedical isn't realistic given the county's low-skill work force. "This is another one of those escapist tactics," Knox says. "You focus on something that appears to help your economic condition while ignoring something that really will."
Byron Traynor, a partner with Arthur Andersen and co-chair of OCOG's work force development committee, responds that industries like biomedical have great growth potential, pay higher-than-average salaries and have a high economic impact. "The objective is to create long-term sustainable jobs in industries that are going to grow. It may sound like a very top-down approach but when you're trying to reposition an economy that's what you need to do.''
The more common complaint about OCOG is that it should focus on problems with education and transportation, for example, and leave economic development to the Beacon Council. "You know how you get people to relocate? You offer a better product,'' says Miami Beach developer Craig Robins.
Malina responds that issues like education have to be seen in the context of OCOG's primary goal of developing an "industry policy.'' He points to a task force the group formed on the county's education system, which OCOG itself has identified as the "No. 1 quality of life issue discouraging businesses from relocating'' to Miami. Last year, for example, the average SAT scores of high school seniors in Miami-Dade were 6.8% below those of the average Florida high school senior; 10% fewer students in Miami-Dade passed the High School Competency Test compared to the statewide average. Bill Evans, CFO of food distributor ProSource Inc., explains how poor schools complicated his company's 1996 move to a new headquarters in Coral Gables. Despite a company-sponsored four-day weekend at the posh Biltmore Hotel and personal appeals from school system administrators, fewer than half of the 120 employees the company wanted to move from Chicago and Cleveland agreed to relocate. "The people we did attract, they go to Broward to live and commute unless they can afford private schools and want to," says Evans. "It's not even worth trying to convince them to send kids to a public school."
OCOG's education task force, co-chaired by Traynor and Public Schools Superintendent Roger Cuevas, has suggested raising standards for grades K-12 and beefing up technical training. But the task force also makes softer-focus recommendations like "strengthen partnerships between business and education" and "develop a comprehensive marketing campaign." Interestingly, raising money through tax referenda or bond issues isn't part of the group's "Call to Action.'' Penelas won't go to bat for new money for education. "The political climate the way it is, it's just not worth trying," says Penelas' chief of staff, Brian May. "We couldn't get it passed." Business doesn't think money is the problem, explains banker Leif Gunderson. "We need to make the school system more efficient.''
As that issue shows, Penelas has made it clear that he's willing to forego bold initiatives if it means maintaining consensus behind economic reform. And so he presses on, holding a Mayor's Economic Summit in January that drew 3,000 people to workshops on crime, housing affordability, work force preparation and urban revitalization. He also helped organize a regional meeting of politicians from Monroe through Palm Beach counties whose first task is examining transportation issues. "There's a lot to be done,'' Penelas says, "but we're starting to do the right things.''
He'd better be right, because Miami-Dade doesn't have time to waste. As many as 2,800 welfare recipients stand to lose benefits beginning Oct. 1. Metropolitan areas around the country are competing mightily for the same kinds of companies Miami-Dade wants. Even the county's international commerce isn't immune from the pressure: The Greater Miami Chamber of Commerce reports that the number of multinationals establishing offices in Miami-Dade has shrunk 23% in the last five years, and average multinational company employment is down 67% from 10 years ago. Much of the problem gets back to those same issues troubling other executives -- underachieving local schools and workers. Says Penelas, "We've got to improve. We're only going to get larger, not smaller. We've got a lot of work to do.
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Miami-Dade Communities: Snapshots
Homestead -- Five-and-a-half years after Hurricane Andrew blew through, the South Dade city is still flat on its economic back. Homestead Air Force Base still hasn't been redeveloped (See story, page 16), and the 260-acre Park of Commerce only has two tenants.
Bill Losner, president of First National Bank of Homestead, says his community is so stagnant that his bank has had to put its deposits to work in nationwide lending pools -- no one in the community is borrowing money. More than 29,000 people -- "all of our middle-income people, our blue collar workers, all of our retired military" -- left the region, he says. "The people we're left with are low-income, low, low skill. On the weekend, you drive around the community, it looks like a Third World country."
Elsewhere in Miami-Dade County:
Aventura -- The high quotient of wealthy condominium dwellers and young families has made this small, recently incorporated northeast city a retail mecca.
South Beach -- The candy-colored skyline is chock-full of new construction, and the entertainment business is thriving. Condos in developer Thomas Kramer's Portofino Tower are attracting wealthy South American buyers.
Liberty City -- This mostly black inner-city area north of downtown has a hard time attracting business because lenders fear a repeat of the race-related riots that struck in the 1980s. Unemployment is estimated in the double-digits.
Port of Miami -- Among the busiest cruise and cargo container seaports in the U.S., the port nevertheless is vulnerable to competition from seaports with more modern facilities.
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A "Cuban Bob Graham"?
After speaking to a group of business executives at the Miami Springs Country Club, Alex Penelas stops to answer a TV reporter's questions, in Spanish and English. As Penelas walks to his car, an elderly Cuban motions him over to putt a few golf balls (Penelas admits to being a lousy golfer). Driving to the office, he phones a Miami-Dade police officer shot by a sniper. "We're proud of you," he tells the cop. If it sounds like Penelas is still campaigning more than a year after taking office, it's because he is. Short-term, he's trying to rally a fractured community around initiatives he believes will cure Miami-Dade's woes. He's also shoring up his political base for the future -- probably for another term as Miami-Dade mayor; after that, possibly a run for governor or U.S. senator. Penelas brushes off questions about his ambitions. "If I'm a good mayor, the politics will take care of itself."
Born in Miami, Penelas, 36, is the youngest of three sons. He lives in northwest Miami-Dade County with his wife, Lilliam, and their two sons, William, 3 years old, and Christopher, 10 months. His political career began at age 25, less than two years after graduating from the University of Miami law school, when he was elected to a seat on the Hialeah City Commission. In 1990, he won a seat on the county commission, where one of his biggest accomplishments was writing the plan that created the "strong" mayor form of government. In October 1996, two months shy of his 35th birthday, he won the Miami-Dade mayoral seat he'd helped create. He has since created a small buzz among Democratic party leaders, who've made him a member of the Democratic National Committee.
Penelas' popularity in Miami-Dade is in part a testament to how severe the county's problems are and how much the business community in particular counts on him for leadership. "Forward-looking leaders can exert a lot of influence if they have the vision and the ability to articulate the vision," says Ryder System Vice President Ray Goode. "You're matching the authority and the responsibility of an office of executive mayor with a very talented, bright, energetic incumbent. We haven't had that in 25 or 30 years or so."
Penelas' biggest asset is his broad appeal. He's a Democrat elected primarily by Republicans. His pedigree passes muster among Cuban foreign policy hard-liners -- his father, Luis, was jailed in Cuba for anti-Castro activities -- but his distinctly domestic agenda makes him palatable to non-Hispanics. The elderly treat him like a grandson; younger voters think he speaks for their generation. "The first thing Alex did, he no longer became just the Cuban-American representative," says his former chief of staff, Jorge L. Lopez.
It also doesn't hurt that Penelas has stayed scandal-free in a muck-spattered political environment. A city commissioner is under indictment for bank fraud; a county commissioner faces allegations of bribery. The city of Miami's mayor, Xavier Suarez, who has generated headlines with bizarre behavior, has had his election challenged based on allegations of vote fraud.
Meanwhile, Penelas' cautious, practical style continues to play well cross-county. "He is a Cuban Bob Graham," says veteran publicist David Pearson. "Very political, smart.''
Other comparisons with Graham hold as well. Penelas is pleasant, and while not grim, doesn't show much of a sense of humor. Businesslike, he works out for two hours at the gym every weekday morning, reading his newspapers on the stationary bike.
Penelas, like Graham, puts great emphasis on building consensus. His favorite tactic when confronting a problem is to create a "team" to recommend solutions. There's Team South Dade for that area, a Task Force on Urban Revitalization for the inner city and an Efficiency and Competition Committee looking for ways to streamline government. "I'm not an expert on economic development. I'm not an expert on crime. Like a trial lawyer, you have good people that brief you, and then my job is to provide leadership," says Penelas.
And, like Graham, he has been criticized for letting politics rather than principle guide his actions. Naysayers complain that he avoids dealing with issues that he doesn't think will earn him points with voters. The biting alternative weekly New Times has characterized Penelas' mayoral tenure as "Style: 10, Substance: 0,'' arguing that many of Penelas' initiatives amount to little more than "window-dressing.'' One example: During an uproar after county commissioners removed a film advisory board member for comments about Cuba, Penelas was noticeably absent from the discussion, responding only days later. Says Penelas, "There's nothing wrong with being careful, prudent and thinking things out. I'd be a lot more embarrassed if I had to do a 180."
Still, in Miami-Dade's contentious political arena, there are remarkably few who have bad things to say about him. Which suggests that even if he's not successful at solving Miami-Dade's problems, his political star could rise.
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A Bilingual Work Force That Isn't
International companies that move to Miami-Dade based on its reputation as the "Gateway to the Americas" are encountering an unexpected problem: finding employees who are truly bilingual. Sound ridiculous in a county that's almost 60% Hispanic? Consider: Most children of immigrants, now in their 20s and 30s, were educated in English. While they may speak both Spanish and English, they can't read or write Spanish -- an absolute necessity for most companies that do business overseas.
Rosa Sugrañes, president of Iberia Tiles, a company that regularly works with suppliers in Spain, says she once asked her assistant, a 23-year-old Cuban American with a master's degree, to draft a simple letter in Spanish. It came back all wrong. "Yes, they talk Spanish, but it's kitchen Spanish. They learned it talking to their parents at the kitchen table at dinner," Sugrañes says. "They don't know anything about grammar, and they have never been asked to write a paper in Spanish."
Sugrañes heads a chamber of commerce-led effort to work with educators to beef up bilingual education in Spanish and Portuguese and to persuade more businesses to offer language training to their employees. The biggest obstacle is the emotional baggage of language, whether it's immigrants who feel pressured to learn English or Anglos who view the use of Spanish as a threat to nationalism. That explains why, for example, only 28% of the county's K-12 students were enrolled in Spanish for Spanish Speakers programs when 49% of the students are Hispanic. "It's a touchy issue," admits Sugrañes.
She's developing a video featuring top executives at south Florida-based companies talking about the importance of foreign-language proficiency. The video will be distributed to school principals and Parent-Teacher Associations. Sugrañes also wants the school system to concentrate on boosting the language skills of its Hispanic teachers so that they can actually teach classes in Spanish. "Bilingual programs were started because of the immigrants, now it's a business issue," she says. "The educators are listening very hard now."
If they don't, researchers predict that without a steady flow of Hispanic immigrants, in 15 years Miami-Dade will start losing its Spanish and a good chunk of its competitive advantage -- bad news for a region that's relying heavily on its identity as gateway to Latin America to lift it out of its economic torpor.