Laws of Attraction
For most companies, relocating to the region—and bringing along their high-wage jobs—is like a romance.
The initial interest is often due to a special someone, such as a founder, investor or site selection consultant, who believes Sarasota or Manatee counties would be a good fit. Then the company is wooed by suitors, often economic development officials, bestowing gifts. They offer help with permitting, tax breaks or other financial incentives. They introduce the company to the business community, just like meeting the family or close friends. If all goes well, the company decides to make a long-term commitment.
We interviewed executives of three companies to find out what attracted them to Southwest Florida.
Company: United Natural Foods
What it does: The largest publicly traded wholesale distributor to the natural and organic foods industry.
Came here: Opened a facility in September 2007
The attraction: Florida has been a growing market for UNF, which was seeking to open its first distribution facility in the state. It had looked extensively along I-4 between Tampa and Orlando, says Tom Dziki, UNF’s vice president of sustainable development. Then a 397,000-square-foot former Winn-Dixie distribution center in Sarasota piqued his curiosity because it would be quicker to move into the facility than build one. The quick trip from Sarasota to a number of UNF customers—grocery stores, independent natural and health food stores and college campuses in cities such as Tampa, Fort Lauderdale and Miami—added to the location’s value.
Being wooed: Another key factor was assistance from the Economic Development Corporation of Sarasota County, which Dziki says, made the area stand out. “Let’s put it this way,” he says. “We already have a facility in Atlanta and (were) being courted by Georgia. We did end up moving some of this business from Georgia into Florida. It was really the combination of the two—looking at the miles we were driving and the incentives from the state.”
Incentives received: $750,000 from the Qualified Target Industry Tax Refund for UNF’s high-wage job creation, which Dziki notes helps provide consistent year-round employment in the often seasonally focused region. “We look at [incentives in] every location we go to because there’s a lot of incentives out there, and when you’re bringing in as many jobs as we do, obviously that has a huge economic impact on the community,” he says.
Growth track: The Florida facility is one of many for the $2.7 billion company, which also opened a distribution center outside of Portland, Ore., in 2007. Others are located in Washington, California, Colorado, Iowa, Indiana, New Hampshire, Connecticut, Pennsylvania, Georgia, Florida and New Jersey.
Number of employees: 250 locally
Salaries: Average annual pay is $44,000.
Biggest surprise: Being able to fill driver positions. “We have a lot of opportunity to find well-qualified drivers to work for us, which is really not the norm for the rest of the country,” Dziki says. “We were surprised to see we had a strong contingent of drivers to choose from.”
Company: Gyrocam Systems What it does:
What it does:Manufacturer of precision gyroscope-stabilized camera systems and surveillance solutions for military, law enforcement and federal agencies.
Came here: Relocated in late 1999 from Morristown, N.J.
The attraction: Founder Ken Sanborn grew up in Lakeland. He lived most of his life in the Northeast, but often vacationed on Longboat Key. When Gyrocam, founded in 1987, began to grow from a small boutique manufacturing facility into a major defense contractor, space for expansion wasn’t available in his headquarters in Morristown, N.J. So Sanborn began looking for locations near airports in Florida. The Manatee County Economic Development Council, led by Nancy Engel, introduced him to Fredrick Piccolo, director of the Sarasota Bradenton International Airport. “They really shepherded us and helped us to make the decision to come here,” Sanborn says. “Between those two people, their willingness to bend over backwards to do whatever they could to make us feel welcome and to get the building built …within a year, we had our building built and moved into it.”
Being wooed: Sanborn felt that local officials were more aggressive than in other areas in efforts to recruit his high-tech, “kind of sexy business, if you want to use that word,” he says. “It was a very clean, high-profile business. I think the Manatee EDC and the airport recognized that and really pushed to make it easy for us to move down here.” In Morristown, there were so many Fortune 500 companies that “we weren’t treated very well. Here we were treated like we were Donald Trump.”
Incentives received: The SMART (Sarasota Means Action Response Team) program, which offered fast-track permitting. That pushed Gyrocam to the front of the line, Sanborn says. Its 30,000-square-foot building at Sarasota Bradenton International Airport was finished within six to seven months. “It was done very, very rapidly,” he says. “A very painless process.”
Growth track: Gyrocam has generated more than $200 million in revenue in the past 18 months. Its airport facility is home to research, development, marketing, sales and training operations. Last fall, the company was in the process of retrofitting a 28,000-square-foot building in Commerce Park to become its primary manufacturing facility.
Number of employees: 114
Salaries: Annual salaries range from the $40,000s to more than $100,000.
Biggest surprise: Sanborn feels the company is on the radar more in Southwest Florida than in New Jersey. “We’ve been kind of shocked that people are so aware of the company and what we do,” he says. He’s welcomed the publicity, including a visit from President Bush in October 2006. “If we were in New Jersey, I’m not sure the president would have come to visit our facility,” he says.
Company: Rapid Pathogen Screening What it does:
What it does:Develops point-of-care diagnostic devices for ocular diseases.
Came here: May 2007, expanding its main operations from South Williamsport, Pa., where it has a distribution center, to Sarasota
The attraction: One of its founders, Dr. Robert Sambursky, lives in the area, and the company has government contracts in the Tampa area.
Being wooed: For RPS, it was first about the facility. It found a 33,000-square-foot shell in Sarasota for lease, and was able to design the office to its specifications, with space for a state-of-the-art laboratory, says Thomas Orsini, who became CEO in September 2006. Company leaders became aware early on about incentives, he says, through established connections with economic development officials.
Incentives received: The SMART program cut the permitting process to two weeks instead of three months, Orsini says.
Growth track: The company expects to grow from eight employees to 20 in the next year, hiring in research and development, sales and marketing, and administrative support. It also is considering expanding at some point, whether behind its current facility or to buildings nearby. Its corporate headquarters, in South Williamsport, Pa., primarily serves as a distribution center.
Salaries: Average compensation is around $90,000.
Biggest challenges: Finding a qualified workforce. “We haven’t been able to really find anybody with medical device experience in the area. Whenever we look on the technology or marketing side, we’re going to have to do relocations,” he says. That can be a hurdle for a company the size of RPS. “If they move for a large company, they kind of understand or know what the relocation package was. For our start-up company, we basically have to say, ‘Here’s what we can pay you as a relocation offset, and you have to make the decision that it’s good enough.’”
One other surprise: For months, Orsini has been trying to sell his home in Utah while commuting to Sarasota every other week and shopping around for a home. He’s overjoyed with the local prices. “I thought [the prices] were decent nine months ago when I started to look, and now I see that they’re 20 percent lower.”
The Role of Incentives
Quality of life, a qualified labor pool, strong business environment or a specific location are vital in attracting companies to a region.
But incentives such as financial help and quick permitting can play an important role in the negotiations, says Kathy Baylis, president of the Economic Development Corporation of Sarasota County.
“If someone is looking for a location for a corporate headquarters, they don’t start with what area has the best incentive,” she says. “It’s not the first thing that comes out of the mouths of people. Usually they’re looking at other aspects of the community before they ask about incentives. It can be when you get to the end of the negotiations, the deal maker or breaker.”
According to Enterprise Florida, the state’s economic development arm, incentives are used in specific circumstances—to tip the scale in Florida’s favor when the state and another location are equally attractive; or when large research and development projects, for example, would not be economically feasible without them.
Since January 2003, eight companies in Sarasota County and eight in Manatee County have received state incentives, according to Enterprise Florida data. The counties also offer a limited number of incentives, such as those that speed up the permitting process.
One problem, however, is that as companies with out-of-state headquarters face a downturn in business, incentives aren’t typically available to keep them here. The incentives in Florida are primarily designed for new jobs and expansion of existing companies, Baylis says.
Businesses that start here often mature and become targets for buyouts from larger companies, she says, noting Honeywell International’s decision in 2007 to close a Sarasota plant, taking 125 jobs out of the area.
“It becomes our job to try to keep them here by building the relationship now with an entirely different set of people,” she says. “Yet the incentive programs we have are not designed for job retention.”
Often, incentives that a company has received aren’t a deciding factor in staying. Companies often look at factors including workforce satisfaction, their customer base, relationships with local governments and communities at large and their ability to compete profitably from a Florida location, says Stuart W. Doyle, spokesman for Enterprise Florida. Advantages that out-of-state company headquarters consider during economic downturns include no state personal income tax and no state-level property tax.
A study commissioned by the Sarasota EDC in 2007 analyzed the incentives it offers and made recommendations on what incentives are needed to remain competitive. A key finding, according to Baylis: Instead of a one-size-fits-all approach, incentives need to be designed for each type of company the region is seeking to attract. It also identified three types of incentives—workforce, facility and financial—that can meet the needs of industries targeted by economic development officials.
“We’re not in North Carolina or South Carolina, where they’re throwing land and money and tax refunds and abatements,” Baylis says. “We’re Florida. Florida is just simply no longer the low-cost state. So we need to think differently about how we compete for jobs and market share for different types of companies. This is one piece of the competitiveness pie for us.”