Economy to stay bad for a while, Florida business execs told

M IAMI – Oct. 17, 2008 – In case they didn’t know it from their own books, a group of Florida business executives heard this message from a pair of economists here Thursday: Business is pretty bad right now.

The state’s economy already was in trouble from the housing market bust when the national financial system meltdown added to our woes, University of Florida economist Dave Denslow told the board of Enterprise Florida, a statewide economic development agency, at its quarterly meeting.

“Florida has been in a recession for about a year now,” Denslow said. “It hasn’t been that severe a recession. Now we get the national recession on top of it.”

Meanwhile, population growth, which helped pull Florida out of past downturns, has slowed drastically. In fact, for the first time since UF researchers began keeping track 40 years ago, the number of electric hookups in the state actually fell slightly in September, Denslow said.

Electric hookups are an important clue that UF’s Bureau of Economic and Business Research uses in estimating population growth.

“Population growth has slowed very dramatically in this state,” Denslow said.

He predicted that the state will remain in recession through the 3rd quarter of next year. Then the economy will likely remain flat until 2011, when a new influx of retired baby boomers could bring back growth.

Tom Cunningham, an economist with the Federal Reserve’s Atlanta branch, gave a similar assessment.

“Consumption, which accounts for two-thirds of the economy, is falling,” he said.

Board member Tony Villamil, an economist and dean of the St. Thomas University business school, agreed with his colleagues’ prognosis, adding that Florida’s business connections with foreign countries – another major shield against past downturns – is weakening.

“The international sector has been a key driver,” he said. “That is starting to slow.”

On a brighter note, board members also heard reports on efforts to improve cooperation between business and educators in the state. Finding skilled labor has always been a concern for Florida’s business community, and the state’s education system has been a major weakness when business recruiters try to bring jobs here.

Board members Susan Story, president of Pensacola-based Gulf Power, and Ron Abbott, executive vice president of Lockheed Martin Missiles and Fire Control in Orlando, described how their companies were working with teachers on training the next generation of skilled workers to run power plants and design high-tech equipment.

Abbott said such initiatives are critical for his firm because 70 percent of his workers are over 40 and enrollment is down in college electrical engineering and computer science programs. He said that even assuming no growth, his company will need to hire 1,400 engineers and scientists between now and 2015.

The good news, Abbott said, is that his company has enjoyed success at a number of programs aimed at interesting kids in technical careers – from mentoring and tutoring programs to coaching “robotics teams” of kids who compete with peers around the country to build real-life droids.

Story, meanwhile, talked about open-ended “Career Academies” at Panhandle schools, which give graduates the choice of going straight into skilled technical jobs or continuing on to college. She said her company hires about one-fifth of the grads immediately, about half go to college, while most of the rest get jobs at other firms.

The board also heard from member Alex Sink, the state government’s chief financial officer, who talked about the capitol’s money problems. But, she said, the state’s employee pension system is in good shape, despite tumbles in the stock market. The system had 106 percent of the money it needed as of Sept. 30, Sink said.

“We have a pretty good cushion,” she said.

Earlier in the meeting, Enterprise Florida president John A. Adams Jr. tried to reassure his board that things aren’t so bad.

“The underpinning of our economy is basically good,” he said. “We are still a growth state. It’s not as fast as it has been, but remember, we’re still a growth state.”

That prompted ridicule from economist Cunningham, who spoke next.

“Evidently, from our last report, everything in Florida is hunky-dory,” he said.

Copyright © 2008 The Miami Herald, Scott Andron. Distributed by McClatchy-Tribune Information Services.

Questions, comments or suggestions on this article? Have a news tip? Send a letter to the editor to: Newseditor@floridarealtors.org.