Cyber State

Cyber State

Florida scores surprisingly well in a state-by-state report

of U.S. tech exports. The trick will be to keep it up in 2009.

TECH TRENDS by Mark Gordon | Managing Editor

By at least one measure, the Sunshine State is succeeding in its efforts to lay claim to a new title: The Cyber State.

A fall report from the American Electronics Association (AeA), a national technology industry lobbying group, spells that out. Among the data in its survey, Trade in the Cyberstates 2008, Florida is the second largest exporter of photonic and biological and medical lasers in the country, with $529 million in sales in that category in 2007. The state also exported $5.1 billion in computers and peripheral equipment and another $3.3 billion in communications equipment in 2007 - good enough for the third highest total of any state.

With $13.4 billion in high-tech exports in 2007, Florida is now the third-largest tech exporter in the country, according to the AeA. The association also reported that Florida grew its high-tech export output $989 million in 2007, an 8% increase that was the second largest jump in the country behind Virginia, which grew its export totals 39%, from $2.8 billion to $3.9 billion.

Florida is also one of only three states among the top 10 tech exporters to see any kind of increase over the last year. Overall, Florida has grown its high-tech export base 68% since 2003, when it tallied $8 billion.

In the national picture, however, the state remains well behind California and Texas, which had $48.2 billion and $35.9 billion in tech exports last year, respectively. Still, Florida's strong showing might surprise some who look to a certain fruit for the state's export superiority.

"When many people think of Florida exports, they probably think only of citrus fruits," said Maryann Fiala, Executive Director of AeA's Florida Council, based in Orlando. "But nearly a third of all exports from the Sunshine State are high-tech products."

Florida spreads out its export love, Fiala says. Some of the areas hottest areas include Tampa Bay; Miami; Brevard County, with its connection to NASA; and the Panhandle. Four Florida metro areas, including Tampa-St. Petersburg-Clearwater, made AeA's list of the top 60 Cybercities, a ranking based on 2006 employment numbers. "It's the sum of the parts that make Florida so large," Fiala says, "rather than any one area."

The statewide tech export growth comes at time when the country's overall tech export rates have slowed. Indeed, the AeA reported that high-tech exports in the U.S. dropped 3% last year, from $220 billion to $214 billion.

"The big news is that we managed to have growth in exports while the country has shrunk," Fiala says. "That's amazing."

'Mixed bag'

Florida has been able to grow its tech export base by relying on South America; the top five destinations for Florida tech products in 2007 were Brazil, Venezuela, Mexico, Paraguay and Columbia, which represented about $6 billion of the $13.4 billion in total exports.

But as the global economy goes through its current gyrations, the major challenge will be for Florida's tech exporting companies to continue growing their output. The 2008 AeA report reflects 2007 data, a period with a much sunnier economic disposition than the current year.

Fiala says in 2008 she has heard a "mixed bag" of news from the state's technology companies, which include dozens of Gulf Coast businesses, such as St. Petersburg-based electronics manufacturer Jabil Circuit and Sarasota-based Teltronics, which makes phone switches and other electronics components. Some companies report pockets of sales in various spots outside the U.S., Fiala says, while others report scaling down on production levels.

Count E.L. Fox Jr., president of Fort Myers-based Fox Electronics, as one executive who hopes to be in the former category and grow his export output. Fox's company makes oscillators and other components for computers and cell phones - and like every other executive on the Gulf Coast, Fox has been giving a lot of thought lately to how, and when, the U.S. economy will find its way out of its current tailspin.

But on Nov. 6, Fox was thinking globally. That day he spent his morning packing papers, reports and clothes for a sales trip to Munich - he was preparing to join the company's sales and marketing staff at Electronica, one of the largest technology parts trade shows of the year.

And later in the day Fox heard the good news from one his top sales lieutenants: The $30 million company closed a deal to sell 400,000 electron meters to a Mexican manufacturer - a $600,000 deal. "Considering the way the [domestic] market is right now," says Fox, "we are tickled to death."

The export sales follow an almost decade long trend line at Fox Electronics: In 2000, says Fox, about 80% of the company's sales were domestic. This year, the amount of domestic sales has dropped to about 40% of overall sales. Says Fox: "It has been a total flip-flop."

Fox saw the trend happening a few years ago, not only in South America, but in Asia. He hired an American-born marketing executive of Asian descent, who did nothing but pitch Fox products in China and Japan. The company, with about 70 employees in Fort Myers, now has an office in Hong Kong and Fox can envision a day, sooner than later, when the company's non-U.S. employee base rivals the Fort Myers total.

Not surprisingly, challenges abound in working internationally, say Fox and other local executives. There are the basics, such as culture and the costs and time of travel.

Other challenges are more specific to a company and its product. For example, Oldsmar-based Network Liquidators, which refurbishes and then sells used phones and other networking equipment, does about 20% of its $42 million dollar business overseas. But it does very little business in South America and a flat zero in Brazil, Florida's leading export destination, says Barry Shevlin, Network's founder and chief executive officer.

Network Liquidators would love to be in Brazil, Shevlin says, but it has one major roadblock: The country doesn't accept used equipment as exports.

REVIEW SUMMARY

Industry. Technology.

Trend. Florida's technology companies have helped make the state one of the fastest-growing tech exporters in the country.

Key. The challenge will be to maintain growth in the face of global economic turmoil.

Cyberstates

Top 10 States

High-tech exports

State 2007 exports

California $48.2 billion

Texas $35.9 billion

Florida $13.4

New York $8.9 billion

Massachusetts $8.7 billion

Arizona $8.7 billion

Illinois $7.4 billion

Oregon $6.5 billion

Minnesota $5.6 billion

Tennessee $4.8 billion

High-tech exports are comprised of five categories: Communications equipment; electromedical equipment; electronic components; semiconductors; and industrial electronics.

Top 5 states/High-tech export gains, 2006-2007

State Increase

Virginia $1.1 billion

Florida $989 million

Idaho $695 million

New Jersey $357 million

Utah $339 million

Florida's leading

high-tech export

destinations

Country Total

Brazil $1.95 billion

Venezuela $1.32 billion

Mexico $1.04 billion

Paraguay $871 million

Colombia $689 million

Source: American Electronics Association