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Bay area business still on the kiddy ride

By ROBERT TRIGAUX, Times Business Columnist

© St. Petersburg Times, published June 2, 2002


Memo

Memo

To: Tampa Bay area's economic development leaders

From: Times 50 analysis unit

Re: Adoption of new local corporate jingle.

Please be advised that after reviewing the puny size and/or dubious financial condition of most of our region's local companies, all economic development meetings will start with a rousing round of the following song and lyrics:

It's a small world, after all.

It's a small world, after all.

It's a small world, after all.

It's a small, small world.

* * *

Don't you just love that tune? Better get used to it.

I first heard its haunting melody at the 1964 World's Fair in New York City in a boat cruising through Pepsi-Cola's saccharine water ride called "It's a Small World -- A Salute to UNICEF."

Developed by Walt Disney, the original version of the tunnel-of-love-styled ride that's long been a staple at Disney World featured cutesy scenes such as France's Eiffel Tower, a Dutch windmill, India's Taj Mahal and even Iraq's Baghdad. All along the way, animated figures danced and sang, in various languages, It's a Small World.

I still get nightmares of drowning in sugar when I hear that ditty.

Yet the song seems a perfect fit to reflect the diminutive stature of the companies based in the Tampa Bay area. The St. Petersburg Times' annual analysis of the area's top publicly traded companies, dubbed the Times 50, once again reinforces the unfortunate results.

When it comes to choosing the best performing corporations in our greater metropolitan area, it's becoming a smaller world, after all.

So here we are. A top metro area in one of the nation's top four states in population, economic growth and job creation. And very little to show for it when we look at our stable of local public corporations.

That's a big reason Florida's economy rings more hollow than it should. The state -- by history, by habit and by public policy -- remains a chronic economic importer. It imports people, who are then followed by companies wanting their business. But Florida has a poor track record for nurturing its own business base.

It's a small corporate world, after all.

How small is small? Let's count the ways.

When this newspaper first began an annual Times 50 review, we looked at the top 50 performers in the area. By the late 1990s, that list began to get embarrassingly thin. By the time we finished ranking the top 30 or 40 companies, the remaining corporate choices available to round out the list of 50 were: (a) so flimsy you could see through them; (b) candidates for a Code Blue scene on ER; or (c) six feet under.

That's one reason the newspaper decided in 2000 to revise the Times 50 by ranking only 30 of the better performing, locally headquartered companies, plus 20 prominent companies headquartered elsewhere that employed at least 1,000 in this area. That shift helped eliminate the weakest local companies from the bottom of the list. Adding companies based elsewhere also offered readers a better snapshot of those businesses that played a prominent role in the Tampa Bay area economy, wherever they happened to be headquartered.

That worked for awhile. But the sad truth is we're starting to look rather lean again on the local company front.

After looking over this year's Times 50, here's a safe prediction. It won't be long before the Times 50 (now 30 local, 20 nonlocal) is again split. Perhaps 25 local and 25 nonlocal. Or even 20 local and 30 nonlocal.

See the trend? Locally, it's a small world. And getting smaller. As in tiny. Little. Petite. As in: Don't breathe too hard or they might blow away.

Consider the 30 top local companies ranked in the Times 50 list on pages 8H-9H:

--Combined clout: Add up the market values (as of April 30) of the 30 local companies. Together, they're worth just over $25-billion. That's one-tenth the market value of Wal-Mart (ranked No. 7 on our list of companies headquartered elsewhere), one-quarter the value of hardware giant Home Depot (ranked No. 9 of the "elsewhere" list), and just about equal to Household International (ranked No. 3 of the out-of-town companies), a lender to mid- and lower-income households.

The point? Compared to the value of just one big national company, Tampa Bay's base of local public companies is anemic.

--Local heavyweight: This area's biggest company, with a market value of just over $4-billion, is St. Petersburg's contract electronics manufacturer, Jabil Circuit. The company used to rank at or near the top of the Times 50 in the 1990s. Now it ranks 20th, thanks to a battered stock (a negative 42 percent return in the past two years) that whittled its value by several billion dollars.

--Local lightweight: There's plenty of competition for this title. But the winner, with a market value of just $2.6-million, is Cumberland Technologies of Tampa, an insurance products provider that's downright Lilliputian. And it's shrinking. Income fell 94 percent last year, while its two-year stock return declined 74 percent.

A reminder: At least Cumberland made the local cut for the Times 50. Some larger local companies performed too poorly to be ranked at all.

To be fair, a handful of local companies are reasonably prosperous, growing and possess brand names and multibillion-dollar market values big enough to be known entities.

Brown & Brown, No. 1 on this year's Times 50 list of locals, is growing rapidly via acquisitions. But it's still modest in size. And it's too early to measure the insurance agency's staying power.

While TECO Energy is well-respected in the power business, it competes in an industry of giants. TECO remains a likely candidate to be gobbled up by another player in the coming years.

Likewise, Raymond James Financial has a strong reputation as a regional investment company. But it could be absorbed easily by one of a few dozen giant brokerage or banking firms. Distributor Tech Data Corp. has survived well (while others have not) in a technology-sensitive business of superthin margins. Still, even this company, normally accustomed to quantum annual leaps in sales, saw its revenues shrink 16 percent in 2001.

Lincare Holdings possesses a strong grasp on the No. 2 spot in the nation's niche business of home delivery of oxygen services. Catalina Marketing excels in the electronic coupon world. Jabil Circuit operates manufacturing plants around the world and has earned the respect of Wall Street in the most cutthroat of competitive businesses. Outback Steakhouse has prospered as a beef chain but is still trying to get a good grip on several other franchise concepts it needs to keep growing (from Carrabba's Italian Grill and the more upscale Fleming's Prime Steakhouse & Wine Bar to the newer Bonefish Grill).

By local standards, all eight of these companies are impressive players. But can any of them break through into the big leagues?

I hope so. Yet the odds are still against them.

It's an ever bigger world out there. But in the Tampa Bay area, (all together now) it's a small world, after all.

* * *

- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

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