WorldCity Business Magazine

CEO Roundtable

by WC

At WorldCity’s monthly CEO Roundtable, top executives from CB Richard Ellis, FTI Consulting, Medtronic, Seitlin Insurance and Watson Wyatt Worldwide spoke on issues such as branding, education and connectivity and how they may define Miamis future.

South Florida must do better in education if it is to improve its international standing but should be realistic by focusing and turn a C-grade into a B-grade.

So think five powerbrokers who attended our April CEO Roundtable breakfast, at Le Palme DOr restaurant at The Biltmore Hotel in Coral Gables.

The handful of participants agreed that South Floridians, who could number 15 million by 2015 from 7.5 million today, could not expect what they call home to rank among the top world cities in the short-term but should aim for second-tier status.

“London, New York, Tokyo and Hong Kong all have relevance that draws business to those markets,” said Tom Cornish, CEO of Seitlin Insurance, reflecting what a study from Loughborough University in the U.K. identified as alpha cities. “If you’re not relevant, you can’t attract the dollars. We need to attract the wages. You are not going to see a lot of people with a lot of money here, unless there is something here to generate the demand.”

This is becoming ever more pressing as housing has made the Greater Miami area so unaffordable. Cornish observed that 10 years ago, the average property was worth three and a half times the average annual wage. The factor is now eight.

“This is the No. 1 least affordable city in the country,” agreed Frank Holder, managing director of FTI Consulting, before explaining that 69 percent of this population spends more than 30 percent of its income on housing.

“It’s the third poorest metropolitan city in the United States,” Holder added, “with more than 30 percent of the population living below the federal poverty line. When you compare that with the Bentleys and the $25 million homes on Tahiti Beach, it makes for a severe distribution of wealth problem which mirrors the region from which we source our diversity.”

Holder was, of course, referencing Latin America a region with which Miami more closely identifies than the rest of the United States. That includes its tri-county neighbors, presenting another problem.

The disconnect among Miami-Dade, Broward and Palm Beach counties makes for unique challenges to a region intent on gaining world city status, the panel agreed.

Miami-Dade County, after Dubai, has the world’s most diverse population, according to The Economist magazine, with 60 percent of the population born abroad. Most of that diversity is drawn from Latin America, but Broward is catching up with 50 percent of its population Hispanic, although Palm Beach remains more English- speaking.

The executives agreed that branding was critical to elevating Miami’s status.

“I met a guy in Caracas,” shared Cornish, “whose company had a U.S. subsidiary here. He told me that the office was in Miami, just across from Sawgrass Mills. Obviously, that is in Sunrise in Broward County, but there is a difference in how we are seen and how we see ourselves. We remain three counties with different identities and we are still competing with each other on some levels. There is no five-year strategic plan for the development of the economy of South Florida.”

“The counties are different entities,” said Holder. “We’re talking about two English-speakers and one Spanish-speaker in Miami-Dade.”

Spain, a country marked by similar regional differences in areas including Andalusia, the Basque country and Catalua, has undergone a re-branding effort over the past 10 years something the attendees agreed could influence strategy here.

“They did it all without the approval of the smaller communities,” said Joaquin Azpilicueta, the regional director for Medtronic Latin America and a Spanish native who relocated to South Florida two years ago. He hinted at resistance to regionalism within the region. “It all comes down to a question of identity. It mirrors the British approach to being fully integrated into European Union. They are staunchly resisting it.”

While that happens, there is the risk that Miami could be caught napping by Latin neighbors intent on becoming the center of the region.

The biggest risk for Miami is what, at this time, is its largest benefit, warned Cornish, and that is the development of Latin America. As the cities evolve, there will be more competition for the status as world city of the region.

“Panama is already doing it,” advised Jorge Hurtado, the director for Latin America and the Caribbean for real estate firm CB Richard Ellis. “The country is well located and has good connectivity. It also boasts the City of Knowledge, a converted military base in Panama City which houses offices for the information technology giants such as Microsoft.”

“There are still problems such as yellow fever,” said Holder. “Not everyone wants to have the inoculations and if you have stopovers then there isn’t the airline connectivity of Miami. Nevertheless, it is a good Central American and Caribbean hub.”

Other cities are vying for that kind of status.

“Miami may be better connected, but Sao Paulo and Mexico City are more relevant to the region,” said Holder. “Miami remains a second-tier city for the region alongside Buenos Aires.”

That aside, the city remains a pull for companies and individuals, another regionalist shared.

“It is still more appealing to be here than in Sao Paulo or Mexico City,” said Peter Mills, regional manager of Latin America for Watson Wyatt Worldwide.

That sentiment could explain why Miami remains a magnet for South Americans though it could prove less alluring to Europeans, said Azpilicueta.

“We struggle to attract talent, although Latin Americans would come here in a heartbeat,” he said.

“Recently, I was bringing a German Swiss man. He was married to a Cuban so it didn’t prove so problematic. There isn’t the appeal in coming here. Take (Florida Power &Lights) overhead cables which are primitive and the level of taxes. Car insurance is huge, as is health insurance and windstorm insurance. Aside from insurance, the quality of the public schools is deficient and the price of private schools very high.”

His comments reflected another concern among the panelists about the quality of education at all levels.

“We should focus on what we can control,” said Mills. “The housing prices let the market solve it. The weather, we have no control over. Long-term we can address two things: infrastructure, in particular transportation mass transit being a case in point; and education.” WC