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Can Florida's plan to nurture 'industry clusters' revitalize state economy?

Sena Black: A state as big as Florida has to be a player.

Sena Black: A state as big as Florida has to be a player.

As world competition for jobs, especially good-paying jobs, grows more cutthroat, can Florida keep up, much less prosper?

At first glance, Florida seemed on top of the world six years ago — with unemployment below 4 percent and plenty of new arrivals streaming in each day. Then its economy fell off a cliff during the financial crisis and recession. Now Florida's rebound is slower and more painful than the country as a whole. Its housing values continue to droop. Many unemployed who do find scarce work are patchworking together lesser-paying jobs but still see living standards diminished.

All of that and more is why the Sunshine State is so keen to upgrade its economy. Better-paying jobs in significant numbers will not magically materialize in Florida. They must be planned for by state officials, aggressively recruited by smart business leaders, created by the graduates of our universities, nurtured by policymakers and filled by Floridians better trained than today's.

But will it work? Florida economic leaders acknowledge the state has stumbled badly. They also insist this state can compete with anyone once it recovers from its wrenching 12 percent unemployment rate and a dated dependence on real estate construction and low-paying tourism jobs.

"Florida needs not only to catch up with the U.S. average, but to leapfrog ahead, if it is to achieve the goal of being a leading state," concludes a new 2011 progress report on the Florida economy by Enterprise Florida, the state's economic development arm.

That's a tall order for a state that in my 20 years here has yet to bridge the gap between a Floridian's average pay and the national average.

To jump-start a 21st century economy, Florida is betting big on cultivating specific business slices called "industry clusters." That phrase, popularized by Harvard Business School professor Michael Porter in his 1990 book The Competitive Advantage of Nations, underlies Florida's key strategy to raise the bar on jobs that pay more and, in turn, require a better-educated work force with 21st century skills — especially in math, science and technology.

Fortunately, industry clusters are also part of regional and city job strategies in Florida — topics I'll explore in upcoming Sunday columns.

Let's first be clear on what an industry cluster is. Put simply, it's a geographic concentration of interconnected businesses, suppliers and associated institutions in a particular field. Successful clusters boost the productivity and competitiveness of related companies. They get the support and attention of the state via incentives, tax subsidies or other benefits to help ensure they take root and grow.

"Clusters are about geographic linkages, and the more linkages the better," says Sena Black, Enterprise Florida senior vice president of marketing and strategic intelligence. "It is about interrelationships. That's how organic growth happens, so that 2 plus 2 does not equal 4 but equals 16." Adds Black: "It's a multiplier."

Statewide, Enterprise Florida wants to cultivate six distinct industry clusters. They include:

• Clean technology, from solar power and biofuels to smart grids;

• Biotech/life sciences, from pharmaceuticals to medical manufacturing;

• Information technology, from optics to digital media to telecommunications;

• Aviation/aerospace, from manufacturing to space flight;

• Homeland security/defense, from military defense contractors to airport and port security technology;

• Financial/professional services.

Other clusters that Florida is considering: global logistics (efficient movement of goods and services via ports, airports, roads), and the entertainment/digital services/film industry.

Pursuit of better jobs and higher-skilled workers is the Economic Holy Grail for any state. California's long-established Silicon Valley is the nation's best-known and most inspiring tech industry cluster. A successful new energy cluster is emerging in Texas, where electricity is derived from major solar and wind power installations that produce new jobs and diversify energy resources.

In Cleveland, the very challenged city has picked health care to try to leverage a new industry cluster. It's tapping the brand of the well-regarded Cleveland Clinic and transforming the Cleveland Mall park space into a giant exhibit hall for medical manufacturers and services.

Not all cluster efforts will work.

The good news is many other states see the economic potential of industry clusters. Many pursue the same economic rebuilding strategy and even target similar industries as Florida.

The bad news? If other states prove more adept at making their clusters grow, they only make it tougher for Florida to stay competitive.

"Cluster approaches hold out substantial attractions as the nation seeks to rebuild a damaged economy," say the Brookings duo on regional economic development, Mark Muro and Bruce Katz, authors of The New Cluster Moment: How Regional Innovation Clusters Can Foster the New Economy.

Florida's economic development leaders sure talk a good game. They've introduced the industry cluster concept and identified six industries Florida will embrace. What's less clear is how forcefully Florida will stop talking and start walking. How does the state make these clusters take root and grow?

Some say a Florida cluster czar could help add momentum and direction. Some wonder if newly arrived Florida Gov. Rick Scott, so keen to reinvigorate the state economy, could take on that responsibility.

Former Florida Chamber Foundation executive vice president Tony Carvajal worries that Florida's culture is one of follower, not leader. Florida often prefers to put off critical investments that will only cost more later, he says. The latest example? November's rejection by Hillsborough County voters of a penny tax to support Tampa Bay regional mass transit. Eventually, the metro area will have to bite the bullet on a real mass transit system.

The procrastination is troubling, especially during the next critical five years, when many of Florida's fledgling clusters will be most vulnerable to withering without proper investment and support.

"Many people come to Florida feeling they have paid their dues and given their time to the communities already back home," says Carvajal, now director of state policy coordination at the Collins Center for Public Policy. "So when they arrive in Florida, they say, 'Stop hitting me up' to do more.' "

If the state waits too long to build its industry clusters — with the types of higher-wage jobs we wish for our children in Florida — it will have to spend even more money to catch up.

In Florida, the best example of a recent and promising industry cluster is biotech and health care. The cluster got a big push six years ago with the maverick move by then-Gov. Jeb Bush. He staked much of his legacy on building a biotech cluster when he secretly went to California to persuade innovative research giant Scripps Research to open a life science facility in Florida.

The platinum incentive package assembled by Bush to recruit Scripps eventually reached half a billion dollars. But years later, the Scripps presence in Florida earns good marks.

"Before Scripps, we had 13 biotech companies," recalls Black of Enterprise Florida. "Now there are more than 100."

Some areas in Florida will see certain clusters as more relevant than others to the local economy. "Florida is a patchwork, not some cookie cutter," Black says. "We recognize that."

Will this work?

At California's Milken Institute, a think tank on state economies, senior economist and longtime Florida observer Perry Wong says the Sunshine State is still trying to evolve from an older to a newer economy based on a better-educated work force.

Industry cluster goals are good, he says, but four years of economic decline in Florida have dropped the state in the national rankings.

Says Wong: "If Florida's economy can be stabilized, then I think the state has a pretty good shot at achieving its goals."

What happens if the state's cluster strategy does not deliver? Well, even at minimum wage, the Florida sunshine is free.

Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

Industry cluster

A geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. Clusters are supposed to boost the productivity and competitiveness of related companies and attract like businesses. Clusters tend to be supported by federal state and local governments via incentives, tax subsidies or other benefits to help ensure they take root and grow.

About the series

Robert Trigaux explores Florida's strategy to upgrade its economy and create better-paying jobs by building "industry clusters."

Today: Statewide, why Florida thinks six industry clusters can raise the economic bar.

Jan. 23: Regionally, why Tampa Bay's location, weather, quality of life can't deliver a 21st century economy.

Jan. 30: Two cities, St. Petersburg and Tampa, try to brand their distinct clusters.

Can Florida's plan to nurture 'industry clusters' revitalize state economy? 01/15/11 [Last modified: Tuesday, February 1, 2011 10:30am]

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