WorldCity Business Magazine

Open for Business

by mary Dempsey & Claudio Mendonca

Workers are remodeling the penthouse floor of the Miami Beach building that houses China Grill restaurant. The reason? They are putting the finishing touches on Nike’s new South Florida office. The sports shoe colossus, which will use the Miami Beach office to oversee U.S. Hispanic market operations, joins an impressive roster of multinational companies that have joined the bandwagon and are saying “yes” to South Florida.

Within the next few months, Zurich Financial Services Group, a Swiss insurance conglomerate with 55,000 employees around the world, will move its Latin American regional headquarters from Santiago, Chile, to Miami. Finnish cell phone behemoth Nokia already took that step, relocating its Texas-based Latin American unit to South Florida in September. Pharmaceutical powerhouse Merck is looking around the area as it considers whether to shift its Latin American operations from New Jersey. And Japanese printing press manufacturer Komori Corp. transferred its Latin American headquarters to Fort Lauderdale in 2006. “Komori was running their Latin American business out of Japan and they chose South Florida,” said Jim Tarlton, president and CEO of the Broward Alliance, the county’s economic development agency. The company’s presses are used to print currency and passports for governments in Brazil, Colombia, Peru, Venezuela and some Caribbean islands. Meanwhile, one of the world’s top windengineering firms Canadian company Rowan Williams Davies & Irwin is building a wind tunnel in Miramar to test the hurricane-resistance of new construction projects. LEB, a well-known plastics manufacturer in Uruguay, invested $2.5 million to open a South Florida plastics factory. Korean Air Cargo has begun operations in South Florida, an indicator of increased trade with Asia. And Authentium, a tech company providing network security software to banks and portal operators around the world, inaugurated its world headquarters in Palm Beach Gardens in 2006. South Florida has made headlines with news stories about disillusioned residents packing up and leaving because of rising hurricane insurance costs, property taxes and housing prices. But those stories ignore traffic moving in the other direction: global companies that are setting up operations in Miami-Dade, Broward and Palm Beach counties.

“The choice of Miami follows a thorough review, which identified the city as a strategic location that hosts the Latin American headquarters of many financial services companies, reinsurers and major brokerage partners,” said Martin South, CEO of Zurich’s International Businesses Division. “A central and convenient location, the city also offers the chance to use existing infrastructure, making it an ideal hub location.” When measured in premiums, Latin America is the largest segment of Zurich’s International Businesses Division. In 2005, it registered more than $1 billion in gross written premiums and policy fees in Argentina, Bolivia, Brazil, Chile, Mexico and Venezuela. At Nokia, meanwhile, Latin American chief Maurizio Angelone said South Florida’s multicultural makeup played no small role in his unit’s decision to relocate, although several other factors were weighed. “Miami’s proximity to Latin American countries and its position as a regional transportation and communications hub make it the perfect location from which to better serve the needs of our customers in Latin America ,” said Angelone, senior vice president of customer and market operations for Nokia Latin America. South Florida’s multinational metamorphosis started years ago when Latin American companies began opening U.S. offices in Miami and Fort Lauderdale. That has continued, with South Florida benefiting from down periods in the region. Since 2000, for example, Miami and Fort Lauderdale have seen a burst of companies with roots in Argentina, Ecuador and Venezuela countries that have seen homegrown companies go packing because of economic tailspins or political upheaval.

Changing landscape

WORLDCITY’S Who’s Here database contains more than 1,200 multinationals with a presence in South Florida. A significant chunk of them have located here specifically to oversee operations in Latin America and the Caribbean. For nearly three years, Wal-Mart has monitored its Latin American and Canadian operations from an office in Doral. Citigroup, the world’s largest company according to Forbes Global 2000 list in 2006, runs its Latin American Division from Miami. AIG’s office in Miami oversees the region for the insurance conglomerate. Prepared food company Kraft also has a South Florida operation focused on Latin America. Merck’s decision whether to open a South Florida office certainly will not be hurt by another Florida development involving the company. In December, Governor Jeb Bush announced that Merck and H. Lee Moffitt Cancer Center and Research Institute would form a for-profit cancer-research subsidiary, M2GEN, in Tampa in 2007. While Miami and Fort Lauderdale have leveraged their appeal as Latin American hubs, there has been evidence of yet another trend in recent years. Increasingly, companies in Europe, Canada and even Asia are now choosing South Florida for their U.S. headquarters, bypassing New York, Los Angeles and bigger cities. Although local residents may moan about prices, the cost of doing business in South Florida is still competitive. Wages, for example, are lower than other parts of the country. A group of Italian business executives on a recent trade mission to South Florida said they found commercial real estate prices appealing when compared with New York (see Luring lira on p. 12).

“Prices are increasing and it is certainly more challenging,” said Tarlton at the Broward Alliance. “However, prices for industrial space are still competitive in comparison to Barcelona and Tokyo.” At the Beacon Council, Miami- Dade County’s economic development agency, officials said global companies especially those with operations in Latin America are also attracted by the area’s multilingual work force. “And by being located in Miami, executives cut their trip to Latin America by a half-day,” said Jaap Donath, the Beacon Council’s vice president of research and strategic planning.

“Law firms in Miami are familiar with legal systems in the United States and in Latin America,” he added. That expertise has helped turn Miami into one of the world’s fastest-growing centers for international arbitration. The latest companies using South Florida as a foothold to the United States include Italian ceramic tile manufacturer Trend USA. Another newcomer, Italian door designer Lualdi, uses its Coral Gables showroom for marketing in the United States, Canada and Latin America. “By serving both U.S. and Latin American markets, companies can hedge any economic changes,” said Donath at the Beacon Council.

Mixing it up

If anything, South Florida’s corporate newcomers in 2006 were more diverse than in past years both in terms of their countries of origin and the industries they represented. The roster ran the range from an air-conditioning and refrigeration supplier from Wales to a Canadian logistics firm to a Chinese distributor of two-way radios. The financial services sector saw a burst of activity. A Honduran bank, Banco Ficohsa, unveiled a Coral Gables office in response to growing trade between South Florida and Central America. Spain’s Caixa Galicia is offering services to both local and international customers through its new Coral Gables outlet. Spanish insurance and investment services company Mapfre USA, meanwhile, opened its U.S. headquarters in Fort Lauderdale, consolidating from an office it had in Puerto Rico. European investors had South Florida on their map, with companies arriving from Spain, Italy, the United Kingdom and Germany. When it cameto Asia, Japan and Taiwan showed the biggest interest. Spain, in fact, appeared to be the home country of the greatest numbers of new multinationals entering WorldCity’s Who’s Here database in 2006. But Italy made a strong showing and last year’s addition of a trade commissioner at the Consulate General of Italy in Coral Cables has boosted ties between the Miami Customs District and its 15th most important trade partner. Malaysia also added a trade office in Miami, only its third in the United States after New York and Los Angeles. The office’s trade director, Islahuddin Hassan, said exporters in his country want to use Miami as a shipment point for sales of wood, rubber and food products to Latin America and the Caribbean. At the same time, Miami will be a U.S. gateway for Malaysian electronics. The influx of business does not negate the need to address what local business boosters diplomatically refer to as South Florida’s “challenges.” They include traffic congestion, a struggling school system, poor public transportation, overdevelopment, diminishing green spaces, exorbitant hurricane insurance, chaotic interna-tional airports and rising housing prices. The opening of the Carnival Center for Performing Arts quelled some longstanding criticisms of the range of South Florida’s cultural offerings. At the Beacon Council, Donath characterized Miami’s shortfalls as “the same problems as any other big city.” While quality-of-life issues remain a hot conversation topic, they apparently haven’t dimmed business activity. The Beacon Council predicted that two more trade offices will open in South Florida this year, ncluding one from among the countries covered by the Dominican Republic-Central America Free Trade Agreement. Dave Woodward, executive director of the Florida-China Association, said a China trade office in Miami-Dade County is a strong ossibility. Tradebetween China and the Miami Customs District rose at a quick clip in 2006.

Through October, two-way business between the Asian powerhouse and South Florida totaled $3.3 billion, up 18 percent from the previous year. “There has been ongoing interest from Chinese delegations in opening a trade office sooner or later,” he said.

The multinational influx is also expected to continue. According to Carolina Rendeiro, president of Business Centers International, a company that leases office space for multinationals, companies considering a Miami-area move include Arkinet Digital Solutions from Chile, European financial services provider Wall Street Italia and MultiVoice VoIP Solutions. MultiVoice, based in New York, wants to use Miami as a springboard to Latin America. “We have approximately 270 inquiries per month from companies from all over the world with about 60 percent seriously looking for space,” Rendeiro said.
WC