BUILT FOR SUCCESS: MANUFACTURING’S ROLE IN FLORIDA’S ECONOMY
Advancing Florida’s standing on the global stage requires a state economy conducive to innovation, capable of withstanding disruptions, and constantly cultivating talent. A robust manufacturing sector stands at the crossroads of these priorities and, as the COVID-19 pandemic demonstrated, the sector’s importance cannot be understated. From medical devices and electronics to aviation and aerospace, high-value manufacturing is integral to both industry and consumers. As the world economy continues to transform, there is a defining opportunity for Florida’s manufacturing sector to sow the seeds of economic success and deliver recurring taxpayer value; however, capturing the opportunity will require collaborative action and strategic investment.
Florida’s manufacturing ecosystem is large and diverse, home to more than 22,000 establishments stretching across urban and rural areas, producing a variety of goods, such as computers, pharmaceuticals, batteries, medical devices, and semiconductors. More than 80 percent of manufacturing companies in the state employ 20 or fewer workers, showcasing the enormous benefit the sector has to small and local businesses.
As of April 2022, statewide manufacturing employment numbered 405,000 workers—roughly 4.4 percent of the state’s entire nonagricultural employment. The April 2022 job figure represents a 16,300 job increase compared to the February 2020 employment level leading up to the pandemic. More than just providing ample employment growth, Florida’s manufacturing sector delivers a substantial boost through higher wages and economic activity. Jobs in the manufacturing sector pay about 116 percent of average annual wages in Florida. Manufacturing also has a notable “multiplier effect,” meaning economic activity in other industries, such as trade and logistics, rises in tandem with more Florida-based production. On a macro-level, every $1 in manufactured goods produces $3.60 across all other sectors. As discussed in last month’s Florida TaxWatch economic commentary, among other benefits, manufacturing forms the basis for Florida’s international trade, which totaled $55.6 billion in exports in 2021
Accounting for all the production and value-added to Florida’s economy, manufacturing contributed $56.1 billion in direct economic output in 2021 after adjusting for inflation. Of this total, durable goods (e.g., electronics, vehicles, furniture) constituted 64 percent and nondurable goods (e.g., food, apparel, chemicals) accounted for 36 percent of statewide output.
Florida’s manufacturing sector was directly responsible for 5.6 percent of the state’s total economic output in 2021. More important than just the economic output of a given sector—in this case, manufacturing—productivity growth is a powerful indicator for long-term economic prosperity and competitiveness. Achieving a higher, nationally-leading productivity rate is imperative for the state of Florida to propel even larger economic output through manufacturing. Capitalizing on productivity growth can also help the state develop a competitive advantage over other states and attract relocating manufacturers who often pay close attention to productivity potential in a given area.
Building Florida’s future success will undoubtedly require a collaborative approach involving government, the business community, and education partners. Beyond just physical capital (e.g., machines), developing human capital must be prioritized for a well-equipped talent pipeline capable of meeting future technological needs. Furthermore, reauthorizing performance-based programs in targeted industries can aid in the state’s diversification, resilience, and ability to recruit advanced manufacturers.
A looming factor ahead will be ongoing developments in international trade and global supply chains. Last month’s Florida TaxWatch economic commentary on international trade underlines how manufacturing can serve a decisive role in reinforcing Florida’s trade over the long-term. Although Florida’s manufacturing sector has experienced considerable progress in recent years, there is much room to grow, especially in the area of productivity growth. Yet with steady leadership and smart investments, Florida can continue strengthening as an economic powerhouse in a post-pandemic world, built on manufacturing.