Wednesday, February 21, 2018
Business

When Brazil sneezes, do Florida and Tampa Bay start to catch a cold?

The economic connections between Florida and Brazil are growing broader and deeper every year. That's great when Brazil is expanding — the Latin nation already is Florida's largest export trading partner.

But lately Brazil has stumbled. And its economic woes are starting to be felt across the Tampa Bay and Florida business community.

It's hard not to run into "Brazil" in daily conversations with Florida businesses citing their own challenges as a result of the Latin American country's recent slowdown.

Consider:

•At Orlando's SeaWorld Entertainment, parent company of the SeaWorld and Busch Gardens theme parks, CEO Joel Manby last week spent considerable time with analysts explaining how Brazilian tourists cut back their visits to SeaWorld Orlando in the wake of the country's economic contraction. Almost a third of that theme park's visitors are international and a large portion of them come from Brazil. Tampa's Busch Gardens has seen a similar drop-off, as well, of Brazilian tourists.

•At Copa Airlines, the Panama airline that has built a direct flight business with Tampa International Airport, CEO Pedro Heilbron last week described the "weak" regional economic environment in Latin America as the primary reason for cutbacks in business. "We're facing significant yield pressure from Brazil, Venezuela and Colombia," he said, with Copa reducing capacity in Brazil and Venezuela in anticipation of slower times ahead.

•Duke Energy, the nation's largest power company and a prominent electricity provider in west-central Florida, last year began complaining about the volatility of its Brazilian business, which consist of hydroelectric assets. "It's certainly been a challenging year in 2015," Duke CEO Lynn Good said last fall. "We've had a combination of drought conditions in Brazil, as well as a weak economy and foreign currency headwinds." In February Duke put its international energy business up for sale and last week said it began marketing those assets with interested parties.

Even St. Petersburg's C1 Bank, which was recently acquired by Arkansas-based Bank of the Ozarks, may have been motivated last year to find a buyer because of Brazil's struggling economy. Three of the four chief stockholders of C1's parent company are Brazilian businessmen, and the bank had made several troubled loans in Brazil.

While scrambling amid criticism to get ready to host this year's Summer Olympics, Brazil is struggling on major fronts.

Its oil industry has been whipsawed by volatile prices and lower demand. Brazil's president, Dilma Rousseff, has recently faced the threats of an impeachment and possible trial tied to a corruption scandal, though the country's legislators this week are again disputing the president's potential fate among themselves. The country's vice president stands ready to step in to run Brazil, if necessary.

And Brazil is ground zero for the mosquito-carrying Zika virus, which is now spreading in Florida and could become an economic issue — conceivably threatening the state's surge of record tourism.

Clearwater's Tech Data Corp., Tampa Bay's largest company by revenue, exited Brazil years ago after deciding it was too hard to figure out the country's murky business rules.

Still, not all Tampa Bay businesses fear Brazil's economic squeeze. Port Tampa Bay CEO Paul Anderson cited Brazil as one of the port's chief trading partners at last Friday's Tampa Bay Export Alliance pro-trade gathering. The port exports fertilizer to Brazil and imports everything from airplane components and steel to orange juice concentrate and some container business in return.

At Bloomin' Brands, Tampa's parent company of such restaurant chains as Outback Steakhouse and Carrabba's Italian Grill, a recent plan to expand in Brazil seems to be working. Bloomin' is adding Outback locations and introduced Carrabba's to Brazil under the name Abbraccio. Another Bloomin' restaurant, the upscale steak and wine chain Fleming's, opened its first franchise in Sao Paulo at the end of the first quarter of this year amid Brazil's double-digit inflation.

As Bloomin's CEO Liz Smith told analysts recently: "There are challenges in the economy of Brazil, and we are closely following the political uncertainties surrounding the president, but our restaurants continue to be resilient and are performing in line with our expectations."

Against the odds, Bloomin' is feeling pretty confident in Brazil. "I think we have such brand strength in Brazil that it's very hard for competitors in this challenging environment to gain traction on us."

Brazil, said Smith, "is just a really hard, tough market."

For now, that's something a lot of businesses here won't argue.

Contact Robert Trigaux at [email protected] Follow @venturetampabay.

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