Southwest Florida Attracts Manufacturers, not Just Retirees
During my recent trip to southwest Florida as the guest of the Lee County Economic Development agency, I learned that in recent years, there has been an increasing number of business owners who, having regularly vacationed in the area, have decided to either move their business or set up a business where they like to play.
Lee County is on the Gulf of Mexico side of Florida about 125 miles south of Tampa and about 50 miles north of the Everglades National Park. There are five incorporated cities in the county: Cape Coral, Ft. Myers, Bonita Springs, Ft. Myers Beach, and Sanibel. The county population grew 63% from 1994 to 2014, but 55% live in the unincorporated area.
My tour host, Shane Farnsworth, manager of Business Development for the Lee County EDO, told me that Cape Coral was a planned "bedroom" community, but many people never built homes on the lots. So, Cape Coral offers the greatest area of growth for industrial development through the purchase and combining of these parcels into industrial sites. Ft. Myers is the oldest of the five cities, so there is very little undeveloped land and new industrial sites will occur through redevelopment. During my visit, I met with executives of several manufacturing companies in three of the five cities and the city of Naples to the south in Collier County.
My first interview was with Bill Daubmann, founder and senior vice president of KDD, Inc. dba My Shower Door and a member of D3 Glass LLC. Daubmann had established a closet organization business in Springfield, Mass., in 1986 and obtained a license agreement with Mr. Shower Door in 1989. After visiting the Lee County region for several years on vacation, he decided to move to Naples in 2001 and opened a showroom in 2003. His son, Doug, moved also and joined the company.
Daubmann said, "It was a tough struggle from 2008 – 2010 due to the Great Recession, as southwest Florida was ‘ground zero’ for the decline in the new home building market. We survived by mostly doing home remodeling."
In 2011, they were informed that their Mr. Shower Door license would not be renewed for 2012, so they explored setting up their own manufacturing plant to make the tempered and glazed glass needed for shower doors. After analyzing how much glass they were buying out of the state and the problems they had with breakage and defective glass, they set up D3 Glass LLC in 2012 when new home building started coming back. Daubmann's oldest son, Keith, became president of KDD, Inc. Daubmann said the ovens for tempering the glass cost $1 million and everything else cost another $1 million. They had to buy two custom-outfitted trucks to deliver the glass to their showrooms and customers.
Since Florida requires a license for the glass and glazing business, Daubmann and his sons took the test and got their licenses. Daubmann said, “We hired a consultant to do a ‘SWOT’ analysis for our shower door business to make sure that our business model worked in all parts of the country. We wrote a business plan and did a beta test site. We are now selling our business model to others and running an academy on how to run a shower door business. We have four affiliate stores: Oklahoma City, Okla., Grand Rapids, Mich., St. Paul, Minn., and York, Pa. We also sell the specialized hardware for shower doors to our affiliates and other shower door companies.”
In the last two years, they expanded from just doing shower doors into other markets for tempered glass and recently finished providing all of the tempered glass for the new Hertz headquarters building that will open next month. Daubmann said, “We went from 22 to 50 employees in 18 months and are now up to 64 employees. We just made the Inc. magazine list of 5,000 companies at #2,085 and will be going to the big event next month.”
After I told him that I am part of the Reshoring Initiative to promote bringing back manufacturing to America, he said, "We were buying aluminum extrusions from China, but just switched to a vendor in the United States."
Asked about the advantages of being located in the region, he responded, “It is easy to deal with the people in the local government agencies, there is good transportation available on I-75 and Rt. 41, the new airport has flights going to our markets, and there are good local colleges for preparing the future workers we will need.”
Smart Moves at Storm Smart
My second interview was with Brian Rist, president and CEO of Smart Companies, of which Storm Smart is the largest subsidiary. Storm Smart is Florida’s largest manufacturer & installer of hurricane protection products and is the ninth largest manufacturer across all industries in Lee County. Rist is the inventor of the innovative Storm Catcher Wind Abatement Screens. He also moved from the northeast to southwest Florida to run his business.
"I started out with a couple of partners in a general contracting business and wound up as the sole owner,” Rist said. “The first three years were a struggle to find a niche. The building codes were changing and I became the expert in the new codes, even teaching architects. After Hurricane Ambrose came in 1994, I tried to find a fabric that would replace plywood for covering windows. We talked with people in energy management and got everyone's opinion. I founded Storm Smart in 1996 to manufacture fabric window protection. We became known as who to talk to about window protection. If you fail to plan, then you plan to fail. We did a CD on what businesses could do for emergency planning because 83% of businesses that have a disaster never recover.”
Rist explained that the building codes changed in Florida for developing sites in 1997, requiring window protection to be part of building a home. In 2001 new codes came out and insurance regulations changed also. Everyone has to have separate hurricane insurance. Insurance companies offered special rates for homes that had protection, and the state of Florida offered a rebate program.
“We started making polypropylene window protection by hand cutting the material, but we needed to ramp up to higher production. Getting a sales tax credit helped us to be able to buy a laser cutting machine in 2013, and it eliminated the bottleneck in our business and helped us develop new products.”
They work with the biggest companies in the world that use fabric for hurricane protection. While their products protect homes from hurricanes, they also reduce energy costs. Rist said, “You can build a business based on a known market of saving energy and not just protection from hurricanes. Impact-rated windows are a fast growing part of our business. Most new homes come with impact-rated windows.”
He added, "The building codes changed again and they are much more about retaining heat rather than saving heat. International codes are also changing. We watch what percentage of our business is with builders. We went to Cancun and set up a small operation during the recession in Mexico. We are currently doing work in Los Cabos, Mexico also. We sell to Caribbean countries like Bermuda, Jamaica, and wherever else there are resorts.
“We have experienced fast growth and have been picked by Inc. magazine four times as one of the 5,000 fastest growing companies. We went from 26 employees to 100 employees after Hurricane Charlie. We went from five to six jobs per month to about 100 jobs per month.
“We looked at all of their jobs and decided to really go back into the customer service business to be a sustainable business. We started to invest in our people and getting to know who they were. We had to make sure they were doing things right. We have to 'walk the talk.'”
After we discussed some of the articles I have written on developing and recruiting the next generation of manufacturing workers and my involvement with the Coalition for a Prosperous America, he added, "'Walking the talk" also involves working with students and getting involved with the Southwest Regional Manufacturers Association [for which he is in the current vice president].
“We won the manufacturer of the year for the local region last year,” he said. “We work with five different academies related to construction. Only about 20% of kids go to college and only about 20% of them graduate from college. We had a tour of our plant during Manufacturing Day and had about 13-14 students come on the tour. Florida is too reliant on tourism and construction. Manufacturing creates more different opportunities for good-paying jobs. Our governor was at our plant three weeks ago, and he understands manufacturing. By partnering with government and education, we can be more effective in growing manufacturing in Florida. In order to grow, we have to develop the next generation of manufacturing workers. Team building, time management and ethics are the same regardless of the industry."
In answer to my inquiry about lean training, he said, "We have been very involved with lean manufacturing and are working with the Florida Manufacturing Program. We are going through a program for an ERP system in order to continue to grow. We have a plan to develop the company over the next three years. Part of it will involve having licensed dealers."
Positive Outlook for Lee County
The outlook for business in Lee County is very good according to the “Lee County Business Climate Survey Report, Third Quarter, 2015” prepared by the Regional Economic Research Institute, Lutgert College of Business, Florida Gulf Coast University, released in August 2015. The key findings were:
- 74% of executives stated that the current economic conditions have improved over last year
- 66% of the executives stated that the current economic conditions for their industry have improved over last year
- 67% of executives expect economic conditions for their industry to improve over the next year
- 68% of companies expect to increase investment next year and none expect to reduce investment levels
- 61% of executives reported increasing employment over the last year, while 4% reported reducing employment
- 57% of executives expect to increase employment at their companies during the next year
While manufacturing represents only 2% of the economy of Lee County today, the staff of the Lee County Development agency is working with the economic development offices of the five cities and members of the Southwest Regional Manufacturers Association to grow the manufacturing industry and expand that percentage. Their work will be aided by the fact that Florida ranks 5th in the 2015 State Business Tax Climate Index with a score of 6.91. The corporate income tax rate is only 5.5% for C corporations. There is no inventory tax for businesses, and there is no personal income tax. There are nine universities and colleges, and the two largest, Florida South Western State College and Florida Gulf Coast University, have a combined enrollment of over 30,000 students. There is good technical training at the two-year community college level as well as at the Fort Myers Institute of Technology, Cape Coral Institute of Technology, and the ITT Technical Institute. The Ft. Myers airport (RSW) is served by 15 air carriers offering nonstop flights to 46 destinations, most of which are east of the Mississippi.
The stories of these two companies are good examples of innovation to develop new products, becoming a lean company, creating a new business model, and expanding into new markets. These are some of the recommendations I made in the chapter "What manufacturers can do to save themselves" in my book, Can American Manufacturing be Saved? Why we should and how we can.
Having no corporate and personal income taxes and providing a friendly business climate are ideas I discuss in the chapter on what government can do to save manufacturing in my book. My next article will tell the stories of other companies I visited in Florida.
