Industry Diversification

7/29/2019 Industry Diversification

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Palm Beach County Navigator

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Manufacturing was the largest industry sector in Palm Beach County to lose jobsbetween 1994 and 2004. With the loss of 7,000 jobs, manufacturing’s share of the County’s employment fell from 6.9 percent in 1994 to 3.6 percent in 2004.The retail trade industry added about 15,000 jobs in Palm Beach County but itsgrowth rate, 26 percent, was less than two-thirds the County average, resulting ina loss of employment share.

Figure 3.1 Employment Shares by Major Industry

0

5

10

15

20

25

Constructionand Mining

Manufacturing

WholesaleTrade

Retail Trade

Transportationand Utilities

Information

Financial Activities

Professionaland Business

Services

Educationaland Health Services

Leisureand Hospitality

Agriculture

Share of Total Employment (in Percent)

1994

2004

Source: Bureau of Labor Statistics.

After a decade of fast growth, professional and business services accounted for 20.4 percent of Palm Beach County jobs in 2004, up from 13.8 percent in 1994.Industries catering to the needs of a fast-growing population, includingconstruction, education, and health services, also accounted for a larger share of the County’s jobs in 2004 than they had 10 years earlier.

Most major sectors of the U.S., Florida, and Palm Beach County economies, withthe exceptions of manufacturing and agriculture, experienced employment gainsbetween 1994 and 2004. Palm Beach County outpaced U.S. jobs performancein every major industrial sector posting positive growth.

Growing by almost 110 percent (58,000 jobs), professional and business

services dominated jobs growth in Palm Beach County between 1994 and 2004.The industry accounted for over 36 percent of the County’s net job growth.Construction also posted fast growth to meet the demand for homes, commercialand institutional buildings, and infrastructure associated with Palm BeachCounty’s steep rise in population and employment. Jobs in the wholesale tradesector grew very rapidly (67 percent) and it now accounts for 3.9 percent of PalmBeach County jobs.

PBC OUTPACED

U.S. JOB

PERFORMANCE

IN EVERY

GROWTH

SECTOR




23

Table 3.1 Palm Beach County Employment Growth Forecastby Industry

Jobs (in Thousands) Change in Jobs, 2005-2015Major Sector 2005 2015 Net Change Percent Change

Construction 49.2 58.2 9.0 18.3%

Manufacturing 22.9 23.2 0.4 1.7%

Wholesale Trade 22.4 22.6 0.2 0.8%

Retail Trade 79.0 84.5 5.5 7.0%

Transportation and Utilities 15.0 17.1 2.1 13.9%

Information Services 13.1 14.4 1.4 10.7%

Financial Activities 85.9 97.3 11.4 13.3%

Professional and Business Services 128.4 161.2 32.8 25.5%

Educational and Health Services 88.8 118.8 30.1 33.9%

Leisure and Hospitality 71.3 81.0 9.7 13.6%

Agriculture 6.2 5.5 -0.7 -11.8%

Total Employment 707.1 826.3 119.2 16.9%

Source: South Florida Regional Planning Council and Regional Economic Models, Inc.

The sectors that led jobs growth in Palm Beach County between 1994 and 2004,including professional and business services, educational and health services, andconstruction are forecast to continue leading growth in the County through 2015(see Table 3.1). With the exception of agriculture, all sectors are expected to postgrowth in Palm Beach County, including manufacturing – an industry that isprojected to experience losses in jobs throughout much of the country due to global

competition and rising productivity levels. Overall, the Palm Beach County jobforecast points to continued long-term growth in the County, and further underscores the importance of services-related industries as the foundation of thelocal economy.

Table 3.2 shows employment shares by major industry for Palm Beach County,Florida, the United States and nine comparison areas. As shown in the table, therelative importance of “service providing” industries is a shared trait between PalmBeach County and most of the comparison areas. Santa Clara County, with itsstrengths in computer and microelectronics manufacturers is the exception, and isthe only area with a high job concentration in the “goods producing” industries (acombination of manufacturing, construction, and mining). Like Palm Beach

County, most of the comparison areas also are fast-growing and have jobconcentrations in the construction industry to support that growth.

SANTA CLAR

COUNTY HAS

HIGHER SHARE

MANUFACTURI

DUE TO

STRENGTHS

COMPUTER &

MICRO-

ELECTRONIC




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Table 3.2 Industry Mix

G o o d s P r o d u c i n g

S e r v i c e P r o v i d i n g

C o n s t r u c t i o n &

M i n i n g

M a n u f a c t u r i n g

W h o l e s a l e T r a d e

R e t a i l T r a d e

T r a n s p o r t a t i o n &

U t i l i t i e s

I n f o r m a t i o n

F i n a n c i a l A c t i v i t i e s

P r o f e s s i o n a l &

B u s i n e s s S e r v i c e s

E d u c a t i o n a l & H e a l t h

S e r v i c e s

L e i s u r e & H o s p i t a l i t y

G o v e r n m e n t

United States 16.6% 83.4% 5.7% 10.9% 4.3% 11.4% 3.7% 2.4% 6.1% 12.5% 12.9% 9.5% 16.4%Florida 11.8% 88.2% 6.6% 5.2% 4.3% 12.6% 3.1% 2.2% 6.7% 17.2% 12.2% 11.4% 14.2%

PALM BEACH COUNTY 10.4% 89.6% 6.8% 3.6% 3.9% 12.8% 1.7% 2.0% 7.1% 20.4% 13.7% 11.9% 11.7%

Fort Myers-Naples 16.0% 84.0% 13.2% 2.8% 2.9% 15.8% 1.6% 1.9% 5.8% 14.6% 9.9% 13.9% 13.4%

Sarasota-Bradenton 13.3% 86.7% 7.3% 6.0% 2.5% 12.8% 1.2% 1.4% 4.9% 28.8% 12.6% 9.7% 8.9%

Fairfax County 9.2% 90.8% 7.0% 2.2% 2.9% 10.8% 3.1% 4.8% 5.5% 25.0% 8.7% 8.9% 16.2%

King County 16.7% 83.3% 5.8% 10.9% 5.2% 10.6% 3.7% 5.4% 6.7% 13.6% 10.4% 9.2% 14.9%

Maricopa County 16.3% 83.7% 8.5% 7.8% 4.7% 12.0% 3.6% 2.1% 8.2% 16.2% 10.3% 9.6% 13.2%

Montgomery County 11.2% 88.8% 7.2% 3.9% 2.8% 10.7% 1.3% 3.1% 7.7% 20.5% 12.3% 8.4% 16.7%

Raleigh-Durham 15.9% 84.1% 5.9% 10.0% 3.8% 10.6% 2.0% 2.9% 4.9% 14.5% 12.3% 8.2% 19.2%

San Diego County 15.3% 84.7% 7.0% 8.3% 3.3% 11.5% 2.2% 2.9% 6.5% 16.3% 9.6% 11.5% 17.1%

Santa Clara County 24.6% 75.3% 4.9% 19.8% 4.0% 9.5% 1.6% 3.8% 4.1% 19.3% 11.0% 8.1% 11.0%

LOW JOB CONCENTRATION

SIMILAR TO U.S.HIGH JOB CONCENTRATION


Palm Beach County and most of the comparison areas in Florida shareconcentrations in the retail trade and the leisure and hospitality industries – areflection of tourism’s importance to Florida and its regions. San Diego, also apopular destination for tourists and retirees, has a similar concentration in theleisure and hospitality industry.

Nearly all of the comparison areas have a high-employment concentration in theprofessional and business services sector. This sector includes architects,engineering, legal, industrial design, scientific research, and advertisingindustries, among others that congregate in urbanized areas to be close tocustomers, air service, and a skilled labor pool. This component of services is afast growing sector of the economy nationally and in the Southeast Floridaregion, providing higher than average wages.

Several of the comparison areas have particular concentrations reflective of their distinct economic strengths. King County, Santa Clara County, and FairfaxCounty, leaders in software and Internet development, have concentrations in theinformation sector. King County, home of a major port, has a large wholesaletrade sector while Raleigh-Durham, North Carolina’s state capital, has aconcentration in government.

• Palm Beach County’s traditional economic strengths (agriculture and

tourism) and industries associated with accommodating fast populationgrowth (construction and real estate) are more concentrated in the Countythan the nation.

• The agriculture, forestry, fishing, and hunting industry is nearly twice asconcentrated in Palm Beach County as it is in the United States, largely dueto vegetables and nursery/horticultural crops. With farm sales of $760

PBC IS MORE

CONCENTRATED

THAN THE U.S. IN

CONSTRUCTION,

REAL ESTATE

AND OTHER

GROWTH

INDUSTRIES




25

million, Palm Beach County accounted for 12.2 percent of Florida’s totalagricultural production in 2002.2

• Industries that are closely tied to tourism – arts and recreation, accommodationand food services, and retail trade – are all more concentrated in Palm BeachCounty than the nation.

• Business and professional services-related industries are among the fastest

growing in Palm Beach County and are more concentrated in the County thanthe national average. These industries include administrative services(temporary help, security, travel arrangement, call centers, landscaping, etc.),management services (management of companies and offices of bankholdings), and professional and technical services (engineering, architecture,accounting/bookkeeping, legal, advertising, marketing, interior design, etc.).

Manufacturing, a crucial sector to the U.S. economy, is significantly lessconcentrated in Palm Beach County than the national average. Although PalmBeach County’s manufacturing sector is small relative to other sectors and isdeclining in employment levels, it should not be assumed that manufacturing doesnot offer future niche growth opportunities. In particular, manufacturing associated

with the expanding biosciences industry (pharmaceuticals and medical devices)tends to be high-paying and demand high-skill levels. In 2002, the value added bymanufacturers in Palm Beach County reached $1.7 billion and average wages inmanufacturing were $54,415 in 2004, much higher than the Countywide averagefor all industries.

Florida is the top destination for overseas visitors to the United States and the

second ranking destination for U.S. travelers.3

Palm Beach County serves as animportant component of the Florida tourism industry and ranks among the leadingdestinations in the State. In 2003, the County drew 3.1 million visitors, more thanthe two in-state (but less populous) comparison regions.

Figure 3.2 shows changes in visitor spending over the past decade in three regionsas a share of total Florida visitor spending.

Sales related to tourist-spending reached $4.1 billion in Palm Beach County in2004, a 66 percent increase over 1994. By comparison, tourist spending in Floridaclimbed by 55 percent over the same period. As such, Palm Beach County’sshare of visitor spending in Florida increased from 7.3 percent in 1994 to 7.8percent in 2004. Orlando is the largest single tourism market in Florida, accountingfor $12.1 billion in spending. Miami-Dade ($6.1 billion) and Broward ($4.9 billion )counties are also large visitor destinations. Fort Myers-Naples, among the fastestgrowing parts of Florida in terms of population and employment, experienced asimilarly large jump in tourism-related sales. Reflecting its traditional role as a keycontributor to the Palm Beach County economy, tourism-related sales accounted

for 19 percent of total taxable sales in the County in 2004.

2U.S. Census of Agriculture, 2002.

3According to the U.S. Department of Commerce, Florida ties with New York as the leading U.S. destinationfor overseas travelers (2003). The Travel Industry Association of America indicates that Florida followsCalifornia as a destination for domestic travelers (2003).

EMERGING

BIOSCIENCE

INDUSTRY

OFFERS NEW

MANUFACTURI

OPPORTUNITI




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Figure 3.2 Visitor Spending in Florida

2

3

4

5

6

7

8

Palm Beach County Ft. Myers-Naples Sarasota-Bradenton

Share of Florida Tourism Sales

1994

2004

Source: Florida Office of Economic and Demographic Research,“Tourism-Related Taxable Sales”.

Location quotients, used to illustrate employment concentrations in Palm BeachCounty, were calculated by measuring the relative size of industry employment

compared to the United States average. Industries that are more concentrated inPalm Beach County than the nation have “location quotients” greater than 1.0while those that are not as concentrated have location quotients below 1.0.Table 3.3 shows industries in Palm Beach County divided into four categories bylocation quotient, together with number of jobs, and local wages compared tonational averages.

Table 3.3 Industry Concentrations and Average Wages

Location Quotient Wages

Industry EmploymentAnnualAverage

Percent of U.S. Industry Average

Over 2.00 Crop production 5,985 $27,370 130.5%

1.50 to 2.00

Real estate 11,058 $38,352 98.1%

Internet publishing and broadcasting 220 $66,150 92.6%

Securities, commodity contracts, investments 5,734 $121,542 76.9%

Amusements, gambling, and recreation 11,948 $25,195 133.5%

Administration of environmental programs 2,271 $47,677 102.8%

Administrative and support services 50,524 $27,123 102.4%

Scenic and sightseeing transportation 184 $31,671 134.3%

Agriculture and forestry support activities 1,929 $21,583 107.7%

Lessors of nonfinancial intangible assets 158 $65,937 85.7%

1.25 to 1.50

Construction of buildings 9,670 $47,055 106.2%

Clothing and clothing accessories stores 8,118 $22,133 117.2%Broadcasting, except Internet 1,915 $47,850 83.3%

Accommodation 10,726 $27,741 122.2%

Ambulatory heal th care services 28,867 $50,426 109.1%

Food and beverage stores 15,949 $19,123 94.6%

Furniture and home furnishings stores 3,097 $30,492 105.9%

Membership associations and organizations 7,041 $28,238 99.7%

Personal and laundry services 6,733 $23,124 113.1%

Health and personal care stores 4,947 $29,322 101.4%

Executive, legislative and general government 15,981 $46,463 120.5%

Performing arts and spectator sports 2,033 $31,030 50.8%

Specialty trade contractors 22,158 $34,340 91.2%




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Table 3.3 Industry Concentrations and Average Wages (continued)

Location Quotient Wages

Industry EmploymentAnnualAverage

Percent of U.S. Industry Average

1.00 to 1.25

Management of companies and enterprises 8,111 $98,163 122.6%

Professional and technical services 32,259 $60,411 96.6%

Food services and drinking places 39,250 $15,479 118.1%Building material and garden supply stores 5,462 $29,242 102.2%

General merchandise stores 12,417 $21,555 114.2%

Motor vehicle and parts dealers 7,854 $44,723 115.5%

Heavy and civil engineering construction 4,477 $48,588 107.1%

Miscellaneous store retailers 3,754 $22,974 109.2%

Private households 2,046 $29,046 189.0%

Electronics and appliance stores 2,119 $41,990 118.8%

Source: South Florida Regional Planning Council, Florida Agency for Workforce Innovation.

Relative to the United States, the majority of the industries with relativeconcentrations in Palm Beach County actually offer higher wages than the nationalaverage for these same industries (even though the County has a relatively small

share of jobs in high-wage industries). Wages in tourism and hospitality-relatedindustries in Palm Beach County are particularly high compared to nationalaverages (for example, a worker in the Palm Beach County amusement, gambling,and recreation industry is paid 33 percent more than his or her average counterpartworking in the same industry elsewhere in the country). Industries that supportrapidly growing population also are concentrated in Palm Beach County and offer higher-wage levels than prevailing national averages. On the other hand, high-endservices (e.g., securities, commodity contracts, investments), though concentratedin Palm Beach County, provide lower wages than similar jobs elsewhere in theUnited States.

Research on Targeted Industries

In 1998, Palm Beach County commissioned a target industry study that identifiedsix industries in which the County was well situated to capitalize on existing or emerging growth opportunities: 1) medical/pharmaceutical;2) communications/information technology; 3) business and financial services;4) aerospace/engineering; 5) agribusiness; and 6) tourism, recreation, andentertainment. According to 2004 data, the County has relative concentrations inthree of these industries – agribusiness, tourism and recreation, and business,finance, and professional services. Communication/ information technologies andaerospace are slightly less concentrated in Palm Beach County than the nation.Life sciences and film and television remain relatively small in Palm Beach Countyby national standards, but both are showing increased growth and opportunity.

4

A recent study demonstrates strong growth in television and movie productionactivity in the County as the industry is now five times larger than it was in 1991with $112 million spent by the industry in 2003.

5The agribusiness industry is very

strong in producing raw products and has a relative concentration above 2.0, butthe overall industry concentration is lowered due to a relatively small amount of food processing manufacturing in the County. Another recent target industry in

4Palm Beach County’s Comprehensive Plan emphasizes the growing importance of the maritime,film/television, equestrian, and life sciences industries.

5Palm Beach County Film and Television Commission, “Production History, 1991-2003.”

MOST INDUSTR

CONCENTRATE

PBC HAVE

RELATIVELY H

AVERAGE

INDUSTRY WAG

COMPARED T

OTHER AREA

EXCEPT FOR

PROFESSIONA

AND TECHICA

SERVICES




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Palm Beach County is the marine-related industry where its businesses areestimated to provide over 18,000 jobs, a 300 percent increase since 1999.

6

Finally, the equestrian industry’s contribution to the County is estimated at morethan $500 million annually (Agribusiness, Equestrian, and Food subcommittee of the 2005 Palm Beach Economic Summit) from boarding over 11,000 horses andhosting polo events, the National Horse Show and the Winter EquestrianFestival.

A 2005 study commissioned by the Workforce Alliance of Palm Beach analyzedthe current local economic strength of biotechnology and life sciences, andprojected the occupational and skills demands of this sector. The study reportedthat the growth of this industry in Southeast Florida between 1998 and 2002 – at41 percent – exceeded national growth of 14 percent by a factor of almost three,but that Palm Beach County was lagging the region (11 percent), and currentlyhas less concentrated life science activity, at about 70 percent of the nationalaverage. Nevertheless, most observers and industry analysts agree that TheScripps Research Institute and related industries are likely to propel Palm BeachCounty’s life sciences industry to national or international stature. Projections of potential workforce demand are addressed in the next section of this report.

Figure 3.3 plots Palm Beach County’s major industrial sectors based on their size relative to the U.S. average (left, vertical axis), forecast U.S. job growth for 2005-2015 (bottom, horizontal axis; the average rate of growth for all industries,11 percent is indicated by the dashed vertical line), and industry size in terms of total number of jobs in Palm Beach County (indicated by graduated circle sizes).

The quadrants in Figure 3.3 represent the following:

• Strengths – Industry is concentrated in Palm Beach County andfaster than average growth in jobs is forecast through 2015.

• Weaknesses – Industry is not concentrated in Palm Beach

County and lower than average growth in jobs is forecastthrough 2015.

• Opportunities – Industry is not concentrated in Palm BeachCounty but higher than average growth in jobs is forecastthrough 2015.

• Threats – Industry is concentrated in Palm Beach County andlower than average growth in jobs is forecast through 2015.

6“The Economic Impacts of Marine Industries in Palm Beach County,” by the Marine Industries Association of Palm Beach County, Inc. (March 2005).




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Figure 3.3 Industry Strengths, Weaknesses, Opportunities, and Threats

Source: South Florida Regional Planning Council ES-202 data and REMI U.S. employment forecast.

ConstructionRetailTrade

Financeand

Insurance

U.S. Forecast Jobs Growth, 2005-2015 (in Percent)

AdministrativeServices

Arts andRecreationReal

Estate

-15 -10 -5 0 5 10 15 20 25 30 35 40

0.0

0.5

2.0

1.0

1.5

THREATS STRENGTHS

WEAKNESSES OPPORTUNITIES

Location Quotient

Forestry and Agriculture

WholesaleTrade

Manufacturing

Educational Services

HealthCare

ServicesManagement Services

Utilities

Transportationand Warehousing

Informationand Film/TV

Accommodationand FoodServices

Other Services

Professional andTechnicalServices

Palm Beach County is well poised for further jobs growth over the next 10 years.Several of the County’s key industries, including administrative services,healthcare, construction, and arts and recreation are anticipating growth levels wellabove the U.S. average for all industries. Many other important industries for theCounty, including retail trade and real estate, also are expected to grow, but at a

slower pace than the U.S. average for all industries. Industries expecting declinesin employment nationally – forestry and agriculture, manufacturing, and wholesaletrade – should not be overlooked as productivity improvements may provideeconomic opportunities for Palm Beach County even if accompanied by little or noemployment growth. The life sciences industry is within the professional andtechnical services and manufacturing industry categories and would be includedwithin the opportunity quadrant given its current lack of concentration but highfuture growth forecast.

Table 3.4 shows Palm Beach County’s strongest industries in terms of employment concentration relative to the United States.

PALM BEACH

COUNTY HAS H

CONCENTRATIOIN 5 TOP U.S

GROWTH

INDUSTRIES




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Table 3.4 Top Three-Digit Industry Concentrations Jobs Forecast

Palm Beach County 2005-2015Employment LQ U.S. Jobs Forecast

Crop Production 5,985 2.67 -3.8%

Real Estate 11,058 1.88 6.8%

Internet Publishing and Broadcasting 220 1.87 8.0%

Securities, Commodity Contracts, Investments 5,734 1.86 6.6%

Amusements, Gambling, and Recreation 11,948 1.82 18.6%

Administration of Environmental Programs 2,271 1.72 N/A

Administrative and Support Services 50,524 1.66 25.0%

Scenic and Sightseeing Transportation 184 1.62 16.5%

Agriculture and Forestry Support Activities 1,929 1.56 N/A

Lessors of Nonfinancial Intangible Assets 158 1.51 N/A

Construction of Buildings 9,670 1.48 11.7%

Clothing and Clothing Accessories Stores 8,118 1.47 3.7%

Broadcasting, except Internet 1,915 1.46 0.6%

Accommodation 10,726 1.46 7.4%

Ambulatory Health Care Services 28,867 1.42 40.3%

Source: South Florida Regional Planning Council ES-202 data and REMI U.S. forecast.N/A Data not presented for particular industry.

The majority of these industries are expected to show moderate to strong growthover the next 10 years. Should these projections transpire, they will support thecontinued economic expansion of the County.

Industry DiversificationPerformance Targets

Three target indicators have been established to gauge Palm Beach County’slong-term performance in diversifying its economy:

1. Average wage earnings per job;

2. The share of jobs in high-technology, high-skill occupations; and

3. The share of jobs in life sciences industries.

These three measures are interrelated as the expansion of the life sciencesindustry will increase the number of high-skill occupations in Palm Beach County.

As the share of jobs in high-skill-level occupations increases, the average wagein the County will rise.

Diversifying Palm Beach County’s economy to include a larger share of activity inresearch, production, transportation, and professional/technical services in theindustries targeted by Palm Beach County will provide higher-paying, globallycompetitive jobs for a growing population. A more diversified economy willaccomplish the over-riding goal of increasing average wages.




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12%Washington, D.C.

7%Target

San Diego

4.5%Palm Beach


N

Average Wage Earnings

Palm Beach County’s average wages are $36,570 per job, $3,500 higher than the state average. Although theCounty performs well compared to Florida, this is wellbelow the national comparison areas. Santa ClaraCounty in California, home to much of Silicon Valleycurrently has the highest average wages at $65,000.

A more reasonable and approachable target for PalmBeach County would be to increase average wages to$48,000, a level that would bring the County close toSeattle, the median of average wages for thecomparison areas. Achieving this target would imply anearly 25 percent increase in relative wages.

Share of Jobs in High-Technology Occupations

The percent of jobs in high-technologyoccupations currently is a little under f ivepercent in Palm Beach County. Thetarget is to increase this share to sevenpercent, similar to that found in SanDiego. This would require Palm BeachCounty to have 13,500 more jobs in high-technology occupations than it has today.

Job Concentration in Life Sciences Industry(Location Quotients)

Today, Palm Beach County’s industry concentration(as measured by location quotients) in life sciences isrelatively low. The pace of growth and development of life sciences are expected to increase significantly as theScripps Research Institute and its related services andspin-offs gain momentum. Today, the location quotientfor life sciences in Palm Beach County is just over 0.7

(anything over 1.0 indicates a higher than averageconcentration of activity). The target is a locationquotient of 1.4 which would ratchet the County to asimilar level as Seattle, one of the country’s larger biotechnology centers. Raleigh-Durham is now reapingthe benefits following decades of efforts to nourish high-technology industries, andhad a location quotient of 3.7 in life sciences in 2003, the highest concentration of any major metropolitan area in the country. Achieving the Seattle target, anemployment concentration (1.4) in life sciences that is twice as high as Palm BeachCounty’s, will require about 4,000 additional life sciences jobs in the County.

$65,000Santa Clara

$36,570Palm Beach

$48,000SeattleTarget

Source: Bureau of Economic Analysis.

N

3.7Raleigh-Durham

0.7Palm Beach

1.4SeattleTarget

N

Source: Milken Institute, “The Greater Philadelphia Life Sci ences Cluster,”June 2005; and Florida Workforce Commission ES-202employment data series.

Note: The Milken Study’s data are for 2003 and the data for Palm BeachCounty are for 2004.

Industry Diversification

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