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  • 1 month later...

“...300,000 jobs in tourism, eclipsing the number in finance and almost double the number in the tech sector.”

Orlando? Nope, it’s New York City. We’re not alone in the conundrum of bringing back an industry:

https://www.nytimes.com/2020/04/20/nyregion/new-york-economy-coronavirus.html?referringSource=articleShare

From The New York Times

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Back when Orlando’s tourism industry was pretty much limited to Gatorland and the Tupperware Jubilee, NASA’s manned space program was the tech industry that made Central Florida famous (after all, it WAS rocket science).

For those who don’t believe it’s all about the region, remember that aerospace firms like Martin & GE were not only in Brevard but also Orange, Volusia, Seminole and Indian River.

After much too long, today that industry is officially back. But it’s not locked in the 1960’s paradigm. Today the industry has leaders not only in government but also entrepreneurs like Elon Musk, Jeff Bezos and others. 

For those who constantly preach doom and gloom about our perceived shortcomings, let’s just say we got our mojo back.

May I also add that the tall gantries and the VAB at the Cape are the most awe-inspiring vertical structures I’ll ever see. And there are precious few places in the world that have them, but we do. It’s just one more thing that makes us unique.

https://www.businessinsider.com/spacex-launches-historic-rocket-mission-nasa-astronauts-demo-2-2020-5

From Business Insider 

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Did you know LA’s biggest convention center (not to mention its largest tourist attraction) is in.... Anaheim. Which, btw, is a totally different county. I suppose LA must be a failure as a city since it has been declared here that we’re somehow lacking  because our convention center isn’t downtown. Despite what you may hear, especially in the Sun Belt, regions often matter more than cities.

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Did you know LA’s biggest stadium is the Rose Bowl, which is 10 miles from downtown LA in Pasadena? How can this be? Everyone knows successful cities have to have their stadiums downtown so. I guess LA, like Boston (the Patriots’ play 30 miles from downtown) , must be failures. Gosh, maybe regions matter.

Good heavens, another failed city must be Atlanta because the Braves play baseball out by the Perimeter 13.5 miles from downtown. Guess no one in Atlanta cares about the Braves.

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One of the things that launched a resurgence of Nashville as one of Anerica’s fastest-growing cities in the 1980’s and 1990’s was the automobile industry. But plants like Nissan, Ford Glass (now Carlex), Saturn (now Chevy) and Bridgestone (the plant) were not only not downtown, they are often in different counties. How can this be? I guess regions matter.

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One of the challenges I’ve always had with those like Reality and, somewhat more charitably, Scott Maxwell at the Sentinel who bemoan the overreliance on our tourism industry is: how exactly does one go back in time to 1965 and say, “never mind”, and just pretend the local industry, which has become one of the largest in the world, never existed? 

As we’ve seen with COVID-19, when the teacups stop spinning, our economy begins to spin out of control. 
 

And not just the tourism industry is affected. Construction, real estate sales, professional services (yes, Virginia, an awful lot of the accountants, bankers, lawyers, surveyors and engineers in those precious downtown towers would find it hard to exist without the hospitality industry). There’s also a tendency to use a wide brush and paint even really good people like Harris Rosen as evil, which is absurd.

But, over the long term, this simply isn’t sustainable for the region. It’s also not that attempts haven’t been made to get off this carousel before; our high-tech businesses are doing better than ever and growing apace. It’s just that, especially since Harry Potter arrived and Universal finally got deep pockets backing to compete on the same level as #1 player Disney, the attractions business has grown even faster.

What we’ll look at is how this started, how it spun out of control, who the good and bad players are and how a Central Florida that doesn’t have quite the addiction to a low-paying business model might move forward without killing the goose that laid (too many) golden eggs.

Stay tuned.

 

 

 

Edited by spenser1058
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The first place to start is to recognize that an overarching tourism industry is not exactly what the locals thought they were signing up for when Walt Disney announced the “Florida Project” in 1965.

The theme park (one) was almost secondary, as the cash cow for the experimental city he wanted to build.

There were certainly those who believed they could profit off the Florida version of Disneyland, just as the scores of motel owners whose low-budget properties Walt loathed and was simultaneously envious of (because he didn’t have the money in 1955 to do more than the park) back in Anaheim.

But, for our long-range thinkers, what Walt was proposing with EPCOT (the city, not the 1982 theme park) was going to be a showcase of American industry and the future that jived nicely with the aerospace firm, Martin, they had just brought to town in 1967.

The eventual scale was also beyond anyone’s imagination, even Walt’s. He initially believed he would spend $100 million in the area. As it turned out, by opening day six years later,  just the one theme park and the adjoining infrastructure had added up to $400 million.

Next: The founder dies and what now?

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Walt Disney died in 1966 before ground was broken on the Florida Project. What had always been a very creative company went into a crouch as they tried to find a way forward.

It’s important to recognize that Wall Street may allow a long leash for entrepreneurial founders, but once that person departs the scene, that leash is pulled tight.

A more recent example of this is Apple. Tim Cook will never have the freedom to think outside the box as Steve Jobs did. Apple may continue and thrive but it will unlikely ever be the game changer it once was (heck, in the case of Apple, we saw that the first time Steve left, not just after he died).

So, in that frame of reference, Disney’s Florida ambitions changed in the years following Walt’s death. Although they paid lip service to the idea of EPCOT, it would never be realized. Instead, it would become a more traditional theme park.

While that worked fine in California, there were downsides in Florida with its much smaller population base.

Next, we’ll look at how the need for more guests from outside Florida made Walt Disney World quite different from Disneyland and how external shocks have even more of an impact.

 

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A little break from our narrative to point out how unintended consequences can set things in political economy off on a totally different course.

The Founding Fathers have been chastised lately for their tolerance of slavery in the Constitution. More than a few, however, thought they could outsmart the “peculiar institution”.

By the late 1700’s, cash crops were fading, even in much of the South. Tobacco, cotton and sugar (except in Louisiana) were hard on the soil. Cotton especially was difficult to harvest.

However, the invention of the cotton gin changed all that. Suddenly (along with the use of steam to power spinning machinery and steamboats to transport it), what became known as “King Cotton” exploded beyond the existing slave states to a total of 15 as the US was now growing 2/3 the world’s supply.

All of a sudden, the need for workers to process the burgeoning crop in slow-growth areas increased dramatically. The size of plantations grew with them often becoming vastly more impersonal and treatment of the slaves brutal.

This wasn’t what anyone expected.

https://www.archives.gov/education/lessons/cotton-gin-patent
 

A similarly unexpected change in the fortunes of the local tourism industry changed everything.

In the early part of the century, growth in the theme park business shifted from domestic to international parks as that seemed to have the best opportunities for growth.

After the completion of Disney’s Animal Kingdom in 1998, the Mouse slowed announcements of further park additions. Most new growth came in the form of DVC lodging which aimed to leverage existing infrastructure.

Universal, which had been through a series of owners, changed that mindset entirely. As GE decided to invest in the Harry Potter franchise (after beating out Disney for the rights earlier) to pump up the parks for an eventual sale, it turned out that a local industry being viewed as a “cash cow” to generate funds for overseas, all of a sudden took off like a rocket from nearby Cape Canaveral.

Add to that the sale of Universal to a cable company with deep pockets and you have the recipe for a changed business. Not only had Comcast the money to invest but it had become personal as the company had been rebuffed in its efforts to buy The Walt Disney Co. It also gave Universal the stability it had never had to grow and prosper.

All of a sudden, for the first time in years, the Central Florida leader was in an arms race to stay ahead of a rising #2.

Meanwhile, local leaders, who had believed with the slow growth of the parks they could switch their emphasis to the tech sector on the north and east sides of the region, found themselves outrun by the perennial leader of our economy. It’s been that way ever since until most recently COVID shut down the industry.

Just as the Founding Fathers thought the slavery problem would slowly wither away after 1808, our local leaders thought tourism locally was slowing to a manageable pace they could grow beyond in other fields.

In both cases, that thinking proved to be wrong. Just as it took a Civil War to end slavery, a catastrophic pandemic is changing the dynamics of the local theme parks. But as a politician once said, “never waste a good crisis”. While it’s important to bring back the existing parks and resorts as quickly as possible, it’s also the time to tell the players whose balance sheets require a pause that there are too many externalities in the community unmet to expand further. As in Las Vegas and Anaheim, it’s time to recognize an economy built on low wages is unsustainable at this level. It will be up to our elected leaders to decide how to recruit firms that can move us upward from 50 of 50 in wages at long last.

Edited by spenser1058
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  • 3 weeks later...

Unsurprisingly, the unemployment rate in tourism-heavy Osceola and Orange counties remained significantly above both the Florida and national levels in July.

Osceoka was 20.2; Orange was 16.1%.

Although we have more roller coasters than just about any place in the country, do we want to subject our economy to even more ups and downs every time there’s a downturn by doubling down on tourism infrastructure. This is one ride that needs a warning sign up front.
 

 

Edited by spenser1058
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  • 2 weeks later...

Lockheed Martin and Northrop Grumman are teaming up on a $164 million helicopter contract that will be built in Orlando.

Martin employs 8,000 locally in SW and East Orange. Northrop has 4,000 local employees, mostly in Melbourne.

This is the kind of work for which Orlando has the skill set and the high wages from it are what we should be investing in rather than unnecessary additions to a convention center that will rarely if ever see full use and which perpetuates our status as 50 out of 50 in wages.

https://www.bizjournals.com/orlando/news/2020/09/04/lockheed-martin-and-northrop-grumman-venture-lands.html

From OBJ

 

Edited by spenser1058
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A county can be added to our MSA if 25% of folks regularly work in the central county (still trying to see if this includes college students) or if the 25% from the central county are commuting into the outlying county.

Thanks to Deltona, DeBary and Orange City, Volusia has supposedly come close to inclusion in the Orlando MSA but never quite made it. Volusia is included in our larger CSA.

Brevard has been more of a stretch due to the traditional desire to halt OC development east of the Econlockhatchee River. Over time, that barrier has been passed and development now extends to the Bithlo Cutoff (FL 520). 

As  OC boomed thanks to the coming of Disney and Brevard languished because of the vicissitudes of the various space programs, regular commuting between the two slowed.

Now, with the growth and what seems like the increased stability of the private space industry (with a reduced dependence on political decisions regarding NASA budgets each year), what was once a robust movement between the areas may resume.

As UCF grows and improves its standing in the STEM programs vital to the space industry, Brevard residents may also desire closer ties with OC.

Conversely, as OC desires to reduce its dependence on low-paying tourism jobs, it may wish for closer ties with Brevard.

Whether or not the counties officially link according to the census definition, there should be increased efforts among the ECFRPC, OEP and others to tie the two counties economically. It’s interesting that one of the few “it” factors that compare with our theme parks is the space program. Better yet, it seems to be taken more seriously by those who make decision regarding investments in local economies. We should no longer neglect this prime opportunity.

https://en.wikipedia.org/wiki/Metropolitan_statistical_area
 

From Wiki

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7 hours ago, spenser1058 said:

A county can be added to our MSA if 25% of folks regularly work in the central county (still trying to see if this includes college students) or if the 25% from the central county are commuting into the outlying county.

Thanks to Deltona, DeBary and Orange City, Volusia has supposedly come close to inclusion in the Orlando MSA but never quite made it. Volusia is included in our larger CSA.

Brevard has been more of a stretch due to the traditional desire to halt OC development east of the Econlockhatchee River. Over time, that barrier has been passed and development now extends to the Bithlo Cutoff (FL 520). 

As  OC boomed thanks to the coming of Disney and Brevard languished because of the vicissitudes of the various space programs, regular commuting between the two slowed.

Now, with the growth and what seems like the increased stability of the private space industry (with a reduced dependence on political decisions regarding NASA budgets each year), what was once a robust movement between the areas may resume.

As UCF grows and improves its standing in the STEM programs vital to the space industry, Brevard residents may also desire closer ties with OC.

Conversely, as OC desires to reduce its dependence on low-paying tourism jobs, it may wish for closer ties with Brevard.

Whether or not the counties officially link according to the census definition, there should be increased efforts among the ECFRPC, OEP and others to tie the two counties economically. It’s interesting that one of the few “it” factors that compare with our theme parks is the space program. Better yet, it seems to be taken more seriously by those who make decisions regarding investments in local economies. We should no longer neglect this prime opportunity.

https://en.wikipedia.org/wiki/Metropolitan_statistical_area
 

From Wiki

 

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South Lake County, particularly around Clermont, is bursting out all over with warehouse/industrial projects including 300k sf just south of FL 50. Kroger’s 375,000sf building is well underway with several projects springing up all around it (we’ll pause here so @HankStrong can sing, “Let’s Go Krogering”).

https://www.bizjournals.com/orlando/news/2020/09/08/new-industrial-construction-proposed-in-clermont.html
 

From OBJ

 

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Even though Vegas is more tourism-dependent than Orlando, its wage scales tend to run higher than ours.

One of the chief reasons for that is unionization.

Some of the questionable moves by theme park employers like Sea World (who began advertising for new employees even as they neglected to first call back furloughed workers) are leading to increased calls in the region to follow Vegas’ lead.

As ownership at places like Sea World increasingly become entangled in private equity funds that regard cutting staff as mere collateral damage, we’ll probably see more of this. That will especially be the case if Central Florida refuses to diversify its economy and we become more dependent on the hospitality industry.

Unionizing in Florida is tough because it’s a right to work state and the controlling political party for the past 22 years actively works to pass anti-union legislation composed by ALEC.

Nevertheless, the local industry is becoming so large and unwieldy that, before the pandemic, it was perpetually short of workers willing to work for subsistence wages with few benefits offered by most companies other than Disney and Universal.

Stay tuned.

https://www.orlandoweekly.com/Blogs/archives/2020/09/08/seaworlds-latest-round-of-layoffs-fuel-rumors-and-talks-of-unionizing

From Orlando Weekly and UP’er Ken Storey 

 

Edited by spenser1058
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