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Storms factor into business plans

By ROBERT TRIGAUX
Published April 17, 2005


Ladies and gentlemen: In this corner, weighing in at Category 3 and 4, are hurricanes Charley, Frances, Ivan and Jeanne.

In the opposing corner, representing heavyweight corporations expanding in Florida, are Citigroup, Fidelity National Financial, Scripps Research Institute and Depository Trust & Clearing Corp.

In the wake of four major storms that caused $20-billion in damage to this state in six short weeks, it comes as no surprise that many companies - big and small - privately gave pause and reconsidered their past and future plans to expand to or relocate in Florida.

As they should. It's smart business for corporate risk assessment teams, boards of directors, CEOs and site selection experts to analyze the financial exposure and basic safety concerns from four hurricanes whose reach stretched from Key West to Pensacola.

The consensus so far? There still are some worries out there. The cost and availability of business and property insurance in Florida has become a concern again, as it did after Hurricane Andrew in 1992. Energy costs are rising to pay for the enormous cleanup of four storms by the electric utilities. Wood and concrete costs have soared. And time-critical industries that rely on uninterrupted airplane flights - and in the case of Interstate 10, passable interstates - may have second thoughts about setting up shop here.

Will business reconsider Florida? "It's the $64 question we are asking ourselves at this point," acknowledged Bill Habermeyer, CEO of Progress Energy Florida - Central Florida's dominant power provider - and the former vice chairman of Enterprise Florida, the state government's public-private economic development organization.

Habermeyer likened Florida's post-hurricane trauma to New York City after the attack of Sept. 11, 2001. "People thought that maybe New York would no longer be a business center, that people would move to Cedar Rapids," he said. "In truth, New York bounced back."

So will Florida, Habermeyer said, because people and businesses are resilient. And Florida's chief economic attributes - low-cost and plentiful labor, location and a friendly business climate - remain largely unaffected by hurricanes.

Citigroup, whose CitiFinancial customer service center near Pensacola was battered by Hurricane Ivan, responded quickly and announced plans in late September to stay and rebuild its 400-employee facility (a bit farther from the coast). Fidelity National is staying in Jacksonville, regardless of the weather, after relocating its headquarters two years ago from California. Southern California's Scripps Research Institute said hurricanes have not changed its mind to build a major biotech facility in Palm Beach County.

And Depository Trust & Clearing Corp., a giant processor of Wall Street securities transactions, in March officially opened its New Tampa business center well aware of, but unconcerned, about possible storms. DTCC's area building was designed to handle most hurricanes. Besides, this is a company based within blocks of the former World Trade Center complex in lower Manhattan. It is only too happy to diversify its risks.

The bad news is that four hurricane blasts in quick succession, and the intense international media attention, undoubtedly planted some small sense of doubt in the U.S. business community.

Surveys in late 2004 of U.S. business executives by Enterprise Florida and of the tourist sector by Visit Florida noted some hesitancy on the part of businesses to hold meetings in Florida in August and September, when hurricanes are more common. Florida offers meeting planners supplemental insurance for such meetings to help pay a portion of any reschedulings in the event a named hurricane interferes with the event.

Any doubts are not deep enough to halt a healthy business migration to Florida. But they might become so if the intense 2004 hurricane season becomes a destructive template, as some weather experts hint, in the years ahead.

For now, the site selection industry - the people who recommend best expansion and relocation sites to companies - seems unimpressed by Florida's hurricane season.

"I do not see the recent hurricanes in Florida factoring into future site selection decisions in any meaningful way," said Mark Arend, editor of the influential Site Selection magazine, in an interview last fall.

Does he feel any different nearly six months later?

"My view has not changed since we were last in touch," Arend said in late March. "The possibility of severe weather does not normally make a site selector's list of location criteria."

Former Tampa resident Bill King, who is chief editor in Kansas City, Kan., of Expansion Management magazine, said everybody in the country is "glued to the Weather Channel and watching Florida's hurricanes" while they are happening. But most concerns are soon forgotten.

King doubts hurricanes will be a big concern - unless Florida suffers a succession of bad hurricane seasons. "If it happens this year and the year after, then I would change my story," King said.

But not now. Central Florida is on the rise, King said. "It has all the important attributes that businesses are looking for."

At the Tampa Bay Partnership, which markets this region to businesses, four hurricanes made for plenty of water cooler chatter but no real change in the organization's mission.

"Before (Hurricane) Jeanne, we met with and spoke to quite a few relocation consultants and nobody thought (the impact of three storms) was going to affect our pipeline of leads in any long-term or substantial manner," said Partnership marketing chief Chris Steinocher. "What makes Florida attractive for business - low costs and attractive labor - had not changed in their minds."

Fortunately, most site selection experts still view Florida hurricanes as they might consider blizzards up North, said Sena Black, Enterprise Florida's senior vice president of marketing and information.

Just to be sure U.S. businesses were not getting skittish, Enterprise Florida surveyed about 300 executives nationwide during October.

The results? Of 306 business executives surveyed, 43 percent had a negative feeling about Florida in the immediate aftermath of four hurricanes.

"The hurricanes dented our business reputation," Enterprise Florida marketing chief Sena Black said. One hurricane would have been ignored. But four in quick succession made site selection experts and CEOs squirm and start asking questions about unanticipated costs.

Business leads fell significantly and are reviving slowly.

In response, Enterprise Florida launched a plan called Protecting Florida's Future to help rebuild business confidence about Florida. The economic development agency has pitched U.S. industries with hard data about the resilience of Florida's economy and promoted Enterprise Florida's marketing message: "Florida, Innovation Hub of the Americas."

On the tourism side, the state agency Visit Florida for the first time is spending money on spot TV advertising. The "Color of Florida" TV campaign began in March and will appear in 10 metro areas: New York; Philadelphia; Chicago; Atlanta; Birmingham, Ala.; Montgomery, Ala.; New Orleans; Charlotte, N.C.; Nashville; and Memphis.

Four hurricanes in just a month and a half still feels like somebody played a cruel and expensive joke on Florida.

"We recognize the frequency is unusual," Black said. "Hopefully, it won't happen again."

Mother Nature, are you listening?

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

[Last modified April 14, 2005, 10:55:32]


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