from staff
The First Coast Manufacturers Association has taken the lead in several arenas lately, including lobbying the JEA to lower electric rates for a steel mill. It is also launching an effort to build public support to invest in the Jacksonville port. As the Panama Canal prepares to open to larger ships in 2014, the port wants to deepen the St. Johns River to accommodate that traffic and attract more trade to Northeast Florida. Another issue is Mile Point, where the river meets the Intracoastal Waterway and limits the time for ships to navigate the harbor. Recently, the association recommended creation of a dedicated funding source for Florida port infrastructure to provide $250 million a year. Association President Lad Daniels met with the Daily Record editorial staff Monday to talk about the issues.
What role does the First Coast Manufacturers Association intend to play in securing funds for the development of the Port of Jacksonville?
The port needs a cheerleader. It needs an advocate. But in addition to being an advocate, it needs an honest broker. We play the role of somewhere between advocate and honest broker. Of greatest concern to us right now is we want to make sure there’s a thorough discussion throughout the community on why we should do anything at the port. Can we make the case that we ought to invest in the port? Are we going to get a return? Is it going to benefit business? Is it going to benefit the total community?
How do you make that case?
We’re just at the beginning of that process. Frankly, the economic case comes first. I think then you have to make the environmental case, because I think the environmental community and environmental concerns are foremost in the minds of a lot of folks. We did a workshop last week. It framed the issue as well as any that I have seen. We did it in absence of the media so that people could talk. We had four presenters. The message I came away with was we’ve got some physical problems with the port that we’re going to have to address. And we’ve been down this road several times before. We started in the 1890s, and the dad-gum thing (river depth) had to get to 10 feet. And now we’re talking about approaching 50 feet. We’ve played this record over and over again, this is just the latest iteration. I’m not sure anybody understands where we stand in the process of getting a permit, or what the process is or how long it may take. Or, what are you looking at when you talk about this process that you go through.
Does the community understand the port?
In many ways, the community just doesn’t understand the port, is not engaged on the port. I cite a survey we did back in June. One of the survey questions was, please rank the economic problems and issues facing this community, and we interviewed three different groups, but the two significant ones were the business community and then super voters. In both those two groups, the port was 1 percent on the radar screen. It’s not an issue in the mind of the people. Eighty percent of those groups said they wanted to deepen the channel, as long as somebody else paid for it. And whatever we were going to do with the port, the mayor had to lead the charge and the port had to take an active role in the other groups. We’re starting with an issue that nobody is engaged in and they haven’t made the connection between job creation and job expansion.
Why is there a lack of connection?
I think the port’s invisible. In spite of the fact that when you drive over the Dames Point Bridge, the doggone thing’s very visible to you, but I don’t think we understand how it impacts you on a day-to-day basis.
What’s next in making that connection?
We’re going to try to engage the business community first, super voters second. We’re a relatively small organization. So we can’t go out and change the world with 300 companies and a staff of five. But we can target significant parts of the community, engage them and hope to leverage what we’re learning and open it up to a broader community discussion. We feel like it is absolutely imperative to engage the total community. We liken this in recent history to the Better Jacksonville Plan (a 2000 voter-approved half-cent sales tax to raise $2.25 billion for community improvements). In our earlier history we really likened it to the movement for Consolidation. It’s that type of significant issue. Because you might well be going to your fellow taxpayers and saying, ‘Are you in or out? Do we engage and buy into this enough to tax ourselves?’ Invest would be a better word.
Do you have a figure or a range for what you think that might be?
There might be two problems. The Mile Point problem is issue No. 1. It’s here and now. You basically have your service station that’s open 24 hours a day but you can’t get to the gas pumps but eight hours a day. That’s not what shippers bargained for, that’s not what we bargained for. I buy gas at the weirdest hours of the day and night, and I suspect shippers call on ports in the same way. We’ve got an incredibly great working relationship between labor, management and the port that says your ship gets here whatever the day or the night, or whatever day of the week, we’ll provide you stevedores to take care of that ship. Great labor relations, but then we’ve got the handicap of getting the ships in. The bigger the ship, the greater the handicap. It’s a $60 million problem.
Let’s step up to the plate, put a stake in the ground, find that $60 million and quite frankly, it’s going to have to come from the City.
With the bigger issue, the opening bid is something like $1 billion at the port, probably more like $1.5 billion, if you want to include in that number all dockside improvements, all rail connections that you’re going to have to have to facilitate freight movement, to put us on a level playing field with a Savannah and a Charleston, particularly Savannah.
It’s a two-part issue. One shows commitment, the other one really shows commitment.
How do you persuade taxpayers that a tax is necessary for this?
It takes a long time, it takes a lot of openness and it takes an awful lot of education. When we approached the Better Jacksonville Plan, I think Mayor (John) Delaney at the time came forward with a list of things that needed to be done in this community. It was his personal engagement and his salesmanship and his enthusiasm that made that plan happen.
The next administration is going to have to have that same kind of fire in the belly to make this happen. I don’t think it can be done by business groups. I don’t think it can be done by the port. None of us individually, or even collectively, can, no matter how good of an education job we do, we cannot do it. You’ve got to have political leadership that really is going to engage.
Does the current political climate hamper the ability to try to persuade taxpayers?
I’m not so sure the current political climate is any worse than when the Better Jacksonville Plan was concerned. Tell me when taxpayers really engaged on taxing themselves. We always want something for nothing.
Will you be engaging the Jacksonville Civic Council, because Chair Peter Rummell at a Jacksonville Community Council Inc. meeting was focusing on education as the major issue to improve the economy?
Yes, we’ve got to engage the civic council. The civic council is your top business leadership group in this city. They’re your executive think tank. They quite frankly can help make the case as well as or better than any group. You’ve got to engage JCCI. You can’t avoid any group. You shouldn’t.
Why are the manufacturers taking this on?
It’s a pocketbook issue for us. Over 50 percent of our members engage in import, export or both. If you wanted to talk to the knowledgeable guys who are the users, talk to our guys, and our guys will very quickly tell you, ‘we love the port of Jacksonville, but Savannah’s where we’re shipping, because if I look at total costs, not just the cost of putting the ship at the dock and getting the freight off of the ship, but how much does it cost to get to my facility? How much does it cost to get stuff out of my facility and into an international trade lane?’ We’re there because it’s money in our pockets.
We also feel like it’s something the community needs to do. The economy of Florida is shifting. We feel like political leadership, we feel like the average guy or gal on the street, is looking for something to replace this loss of economic thrust that we’ve had from real estate and thousands of people a day moving in. We almost feel like manufacturing is becoming the white knight by default.
But we don’t care whether we’re there because people love us or whether we’re there by default. We’ve got an opportunity to have greater impact in the community than any time in the past.
We’ve been sort of shuttled off to the side. Florida’s the 13th largest manufacturing state in the country. The United States is still the dominant player in manufacturing on the worldwide scene. We’re larger by 50 percent than China. People don’t understand that.
The average guy that you talk to will say every job we’ve had has gone offshore. That’s not really true.
I keep telling our guys that the worst thing that we can do is focus on manufacturing employment because it doesn’t tell the story we need to tell. We need to be like agriculture. With agriculture, we feed the world, certainly all our people and a good bit of the world, with 2 percent of our working population. You know manufacturing is down to 5 percent of total employment. If we get down to 4, 3, 2 percent, we’re still (impactful).
But doesn’t the capital investment remain the same?
Capital investment is very very high. That’s the only way the United States remains competitive. We just have to have the capital investment.
What are some of the items manufactured in Jacksonville that your average consumer, your average voter, your average citizen, doesn’t realize?
From the Florida-Georgia weekend, you start to realize that Anheuser-Busch is here. Probably the next morning you realize that Maxwell House Coffee is here. We have within Jacksonville the last steel mill in the state of Florida, the last glass manufacturer in the state of Florida. We have a heavy concentration of aviation here that people don’t realize. A strong growing population in health care. You already have a pretty strong medical base, a device manufacturing base. Vistakon, with contact lenses, Medtronic with medical implements. Those offer us a real great opportunity.
When and how did the First Coast Manufacturers start?
In 1989, so it’s over 21 years old. It started with 11 companies. We regard CSX as being the founder of this organization. JaxPort was a founding member of this organization, so we’ve been wired in with the transportation sector from the beginning. But 11 companies came together as a result, as much as anything else, of two things.
One, Tommy Hazouri ran for mayor and had two planks in his platform: Get rid of tolls and get rid of the odor, and he attributed the odor quite rightly to the chemical and paper industry here. About a year or two after he gets elected, tolls are gone and the odor’s gone. He did a wonderful job. I wish he’d get a little more recognition.
The fact (is) these (association members) guys had been working on the odor problem for 20 or 30 years, even before the Clean Air Act in the ‘70s. But Tommy probably led to the formation because we said if there’s a mayor that doesn’t understand the importance of the economic benefits of this sector of the economy, golly, we’d better go do something to tell our story better.
What role did Maxwell House play in forming the association?
That was the second part. The ‘Keep Max in Jax’ campaign. If you’re competing with Hoboken ... Hoboken? Hoboken? I mean, holy cow, can they really be a legitimate competitor? Here was a major economic force right Downtown that we’d really taken for granted up to the point when we were in competition to lose it.
And now you have 300 members?
We’ve got 300 members, and a little over half are manufacturers as you and I would define manufacturers, and the others are guys that support manufacturing. We probably represent something over 80 percent of the large manufacturers in this area.
In the next five or 10 years, do you see the association growing?
I see it growing, but frankly, I don’t see it growing dramatically. We’ve got about an 80 percent penetration into the large companies, so there’s not much more we can do there. We’ve got about 10 percent penetration in small companies of less than 25 people. You’ve got some growth possibilities there but that’s going to be driven by the economy. The opportunity for us is the logistics area, the shipping industry. We couldn’t find a group like ours that was representing the logistics side of the equation. We’re joined at the hip with those guys, so it makes sense for us to do things.
How vital will the next executive director of the Jacksonville Port Authority be toward port development?
The next guy is going to have to hit the ground running to a greater extent than anybody else that’s come in in recent years because of the timing of the Panama Canal. He’s really going to have to come up to speed very quickly, which I think makes the role of the board even more significant, and the role of the port staff.
You are a former member and president of Jacksonville City Council. What is the relationship between the First Coast Manufacturers Association and council?
We’ve got a very strong relationship. One of the things that we’ve emphasized as an association is government relations and involvement in the political process. We get involved locally and in the six counties in Northeast Florida. We get involved statewide. I’d say our relationship has been awfully good with the city council, and with mayors, and with the county commissioners. We’ve tried to spend a good bit of time educating those guys as to what we do. We give money to candidates, we interview candidates. Our role with elected officials is one of education first, advocacy second.
Manufacturers, typically because of the significant capital investment that they have to make, tend to think in years, and sometimes even decades. One of the advantages we bring to the political process is positioning issues today that may not develop for several years. We’ve been worried about the port for several years. We’ve been worried about water issues, the river, since the early ‘90s, so we’ve been engaged for a long time with some of these issues facing the community.
What’s the time line moving forward?
We formed a group some time ago to start looking at the port. The group that we formed initially was to look at the port on the environmental side. We felt that enough people were looking at the economic issues, but no one was looking at the environmental considerations. That group, as they got involved in it, said, you know, this thing is getting bigger. So they said, let’s do this workshop. Let’s try to understand the ramifications of everything we’re looking at. I think that group will stay together, maybe even have another part of the group look at the economic issues.
You mentioned at the beginning that you wanted to be the honest broker. What do you mean by that?
The only way we can make our case is to be truly objective and let the cards fall where they may. It’s not only incumbent on any organization to be truly objective if they want to advance their cause, I think it’s more incumbent on manufacturing to be objective. You have business leadership in the community that will tell you, ‘We don’t need manufacturing. It’s gone. Let it go.’
But the capital investment involved is very high and manufacturing can’t easily pick up and move, correct?
I think we’ve gotten enamored in our nation, and certainly in this state, that we’re going to become a service-oriented society. I don’t know how you create value in a service society. Everybody would like to be president or vice president of a company, in a white shirt and a tie, and move paper from the left side of the desk to the right side. I don’t see how you create value.
I guess I’m an old-school proponent that says you’ve got to mine it, grow it or make it to create value. The United States is still a significant manufacturer in the world. We’re high on the list of growing stuff. We’ve just got to do a better job of making our case. If you’re going to play in the international trade arena, you’d better figure out some way to ship stuff out and bring stuff in. You look at the ratio of empty containers going out of here vs. coming in. It’s a huge imbalance, which to me spells an incredible opportunity for us.
You’ve heard me tell the story about going to China, and going up the Yangtze River. And the Yangtze River is a drainage basin for 10 percent of the world’s population. Not one sewer treatment plant. Not one. Now you say, OK, how can we compete against those guys, when they don’t have the environmental concerns that we do? I would say the world’s going to make them increase their environmental stewardship, and we ought to be first in line sitting there with the technology to sell to the Chinese.
So I think there’s incredible opportunity.
What’s the latest on the JEA issue?
It’s a problem. It’s a state issue, not just a JEA one. We have lost business because of the uncompetitiveness of the commercial JEA rates. JEA’s not an isolated case. I think JEA wants to do something to correct that, to help in that issue, meaning that they need to be more engaged in economic development. We want to be a magnet for production, and when I see company after company shifting production out of Jacksonville. ... We’ve got to do a better job.
What else is the association working on?
The biggest thing I’m working on is my retirement (at the) end of next year, at the latest. It went from the end of this year to the end of next year because of (the illness and death of his wife, Carol, in June). They said I needed something to do, and I agreed with them. But I have to leave when the eyes start glazing over when I talk to people like you all. If you all fall out of this chair asleep, I need to be leaving.
How long have you been president?
Since 1992. I took a break from real estate, and never got back to real estate, thank God. But you ask about issues, I’d say the issues that we address, and we try not to be all things to all people, but let me give you the ones that are high on our list. The port. JEA rates. Water. To some extent, air, because we think federal mandates are going to come down and hurt this community. So, the water issue as it relates to the river, and it’s both a quality issue and a quantity issue. The water’s not going to be a free resource going forward. We just can’t afford it.
And the fourth issue is tax policy, both local and state. Tax and incentive policy in this state is driven by one thing: Direct job creation. It has no use for capital investment. That penalizes guys like those I represent because a manufacturer will go in and say, ‘I’m willing to spend about $2 million.’ ‘How many jobs will that create?’ ‘None. But I’m going to create a lot of indirect jobs.’ ‘Well, we can’t measure those.’
We’ve got to do a better job on tax policy and incentive policy, and business attitude, which all wraps into the same thing.
There are two kinds of people in the world, deal makers and deal breakers, and Florida has been consumed with deal breakers. Part of that is because we’ve been spoiled. A thousand people coming in a day, trying to absorb that huge increase in population. The tendency is to say, time out, let’s slow this thing down. We can’t accommodate all this growth. Now that ground is shifting. When you’ve got more moving trucks taking people out of here than bringing them in, you know it’s a new day. How fast can the bureaucracy change? How fast can they recognize the major shift that’s happening?
Did you endorse a candidate for governor?
We did not endorse a gubernatorial candidate. That’s not unusual for us. In fact I’d say it’s more normal for us not to get in the gubernatorial races. We do in the Legislature. We do in our delegation.
Rick Scott has two things going for him that are important to me. One, I think, apportionment or redistricting, I’d like to see that stay in the hands of the Republicans, and I know that’s more Legislature than governor, but the governor will have some influence. The second thing is, he’s so naive about governmental issues, that, why not take a risk with somebody, let him go tilt at windmills? (The new governor is) going to have to work very, very closely with the Legislature. I think (State Sen.) John Thrasher becomes an absolute key to success for the governor and certainly for Northeast Florida.
What’re you going to do after retirement?
Beats the heck of out me. That’s why I keep putting it off.
I’ve still got the (Faces of Jacksonville) camp that Carol and I started, and I’d like to see that continue. Carol and I started this camp because we felt like, if we could start with young people, and have them understand that we are much more alike than different, that good things could come out in the next generation. That’s my hope.