Report on the Microelectronics Industry in Florida's I-4 Corridor by ekf16301

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									 Florida I-4 High Technology Corridor Initiative




 Report on the Microelectronics
Industry in Florida’s I-4 Corridor
             Region


                     March 1998
              Third Printing August 1998




        Office of Economic Development
         13301 Bruce B. Downs Boulevard, MHH338
                  Tampa, FL 33612-3899

  Richard B. Streeter                  Guy Hagen
  Executive Director               Research Coordinator
    813.974.5458                      813. 974.7346
                                  Table of Contents


EXECUTIVE SUMMARY                                      1

I. INTRODUCTION AND RESEARCH DESIGN                    3

 Goals and Priorities                                  3

 Company Selection                                     3

 Phase One                                             4

 Phase Two                                             4

II. RESULTS                                            6

 Database                                              6

 Phase One and Phase One Followup                     15

 Phase Two                                            20

 Correlations                                         25

III. CONCLUSIONS AND RECOMMENDATIONS                  27

 Organizational Recommendations                       27

 Tax Recommendations                                  28

 Training Recommendations                             28

 Transportation Recommendations                       29

 Future Research Recommendations                      29

 Summary                                              29

IV. CONTRIBUTORS                                      30

V. APPENDICES
                                             Florida I-4 High Technology Corridor Initiative
                                              Report on the Microelectronics Industry 6/98


                                                            Index of Figures
Figure 1. I-4 Corridor Breakdown: Microelectronics Manufacturers by County (n=641).......................................6
Figure 2. I-4 Corridor Breakdown: Microelectronics Manufacturers by Revenue (n=641).....................................6
Figure 3. Microelectronics Manufacturer Sales Revenue by County (n=641)........................................................7
Figure 4. Cumulative Revenue by County (n=641)..................................................................................................8
Figure 5. Cumulative Revenue by County and Revenue Category (n=641)............................................................9
Figure 6. Microelectronics Manufacturers by SICC Code, All I-4 Corridor Counties..............................................10
Figure 7. Microelectronics Manufacturer Sales Revenue by SIC Code (n=641)...................................................10
Figure 8. Microelectronics Manufacturers by SICC Code, Brevard County (n=97)...............................................11
Figure 9. Microelectronics Manufacturers by SICC Code, Orange County (n=123)..............................................11
Figure 10. Microelectronics Manufacturers by SICC Code, Pinellas County (n=150)............................................11
Figure 11. Microelectronics Manufacturers by SICC Code, Hillsborough County (n=80)......................................12
Figure 12. Microelectronics Manufacturers by SICC Code, Remaining East Coast Counties (n=108)..................12
Figure 13. Microelectronics Manufacturers by SICC Code, Remaining West Coast Counties (n=83)...................12
Figure 14. Company Turnover By County Category..............................................................................................14
Figure 15. Company Turnover By SICC Category.................................................................................................14
Figure 16. Company Turnover By Annual Income Level.......................................................................................15
Figure 17. Year 1997-98 Microelectronics Manufacturing Job Categories...........................................................18
Figure 18. Year 2000 Microelectronics Manufacturing Job Categories................................................................18
Figure 19. Microelectronics Manufacturing Jobs by Company Size......................................................................19
Figure 20. Ranking of Critical Microelectronics Issues..........................................................................................21
Figure 21. Ranking of Appropriate Assistance Methods.......................................................................................21
Figure 22. Ranking of Criteria for Assistance.......................................................................................................22
Figure 23. Ranking of Critical Workforce Skill Shortages......................................................................................22
Figure 24. Ranking of Critical Training Needs........................................................................................................23
Figure 25. Ranking of Critical Service Needs........................................................................................................24




                                                            Index Of Tables
Table 1. I-4 Corridor Microelectronics Research Priorities......................................................................................3
Table 2. Participating I-4 Corridor Counties...............................................................................................................3
Table 3. Microelectronics SICC Categories...............................................................................................................4
Table 4. SICC Category - by - County Distribution of Companies.............................................................................9
Table 5. SICC Category Distribution Between Counties: Deviation From Average...............................................13
Table 6. Participating Phase One Microelectronics Manufacturers.......................................................................15

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                                      Executive Summary

Between June, 1997 and March, 1998, the University of South Florida executed a survey of
microelectronics manufacturing companies located in the I-4 Corridor region. This research was
one of a series of industry research reports undertaken by USF to study technology sectors under
the USF-UCF I-4 High Technology Corridor Initiative for purposes of planning and economic
development. This report was coordinated by the USF Office of Economic Development under
funding by the State of Florida and the direction of the I-4 Corridor Research Committee, and in
cooperation with Enterprise Florida’s Manufacturing Technology Centers.

This study is intended to build upon a 1997 study commissioned by the Tampa Bay Partnership
entitled “The Tampa Bay Area Opportunity in Information Technology and Microelectronics”
(Concurrent Technology Enterprises). The general goal of the research was to characterize the
infrastructure of the I-4 Corridor microelectronics industry, and identify areas for future action and
assistance. More specifically, the goals were
(a)     to identify the number and type of microelectronics companies throughout the Corridor;
(b)     to identify areas for cooperation and training with area universities and training
        institutions;
(c)     to identify potential links between the University of South Florida, the University of Central
        Florida, and key manufacturers; and
(d)     to identify key areas for state-level legislative attention.

With these purposes, a database of 641 microelectronics companies was generated from two
nationally recognized 1997 corporate databases. Two questionnaires were designed: a Phase
One extended survey and an abbreviated Phase Two questionnaire based on results from Phase
One. The Phase One questionnaire was delivered to the 30 highest-profile companies by agents
of the Florida Manufacturing Technology Center network, and the Phase Two questionnaire was
mailed to the remaining companies in the database. Results were compiled from 10 completed
Phase One questionnaires and followup meetings with 3 Phase One companies, and 63
completed Phase Two questionnaires.

Based upon the database and survey analysis, this report suggests the following results:
(a)  by count, microelectronics companies and types of microelectronics manufacturers are
     evenly distributed on both coasts of the Corridor;
(b)  over 530 of Florida’s 730 microelectronics manufacturers reside in the I-4 Corridor
     region (in comparison with Enterprise Florida figures);
(c)  there is a high rate of annual turnover (17%) and growth (30%) in this industry, suggesting
     a high potential for growth if key issues can be addressed;
(d)  there is a critical workforce shortage in at all levels but particularly in engineering and
     assembly;
(e)  Few microelectronics manufacturers qualify for the Enterprise Florida Quick Response
     Training credit, as manufacturers with less than $100 million in annual sales tend to have
     many relatively low-paying assembly jobs;
(f)  constant high equipment investment costs create an unusually high tax burden for this
     industry; and


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                           Florida I-4 High Technology Corridor Initiative
                            Report on the Microelectronics Industry 6/98

(g)   there is a critical marketing and exposure problem. Furthermore, workforce and exposure
      issues cannot be solved by any single company, but may require coordination and
      partnership with universities.

Several recommendations can be drawn from this material:
(a) In cooperation with industry, training institutions (including universities, community
     colleges and technical schools) should develop common training programs, facilities and
     specifications, especially programs that are accessible off-campus and focus on
     technical and engineering topics. University-led consortia may be the most effective
     forum for such cooperation.
(b) The State of Florida should consider revising corporate tax practices to encourage
     continued investment in state-of-the-art equipment.




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                            I. Introduction and Research Design

The microelectronics research was designed as a tiered, multi-phase survey, with the following
stages: (1) Questionnaire design and priority identification, (2) Identification and selection of
companies, (3) Phase One interview of top-revenue companies and refinement of the
questionnaire, (4) Phase Two mailout and followup of the condensed questionnaire to the next
level of companies, (5) In-person followup and consensus building among Phase One companies,
and (6) Analysis and reporting.


Goals and Priorities

The priorities for this research, including initial questionnaire design, were established by the USF
Office of Economic Development in conjunction with members of the I-4 Corridor Research
Committee between July and September, 1997. The following priorities were selected:
                    Table 1. I-4 Corridor Microelectronics Research Priorities
   1. Political: To potentially demonstrate what has been accomplished with the FY1997 I-4 Legislative
      appropriation.
   2. Strategic: To “target” opportunities for assistance and investment, to create the right type of key
      manufacturers with the right type of capabilities in the I-4 corridor.
   3. Networking: To provide a list of suppliers to prospective companies for relocation, and provide supply
      opportunities for existing I-4 Corridor manufacturers.
   4. Educational: To identify areas of critical need for curriculum and training development, as well as
      research goals.
   5. Organizational: To identify key manufacturers to provide ongoing feedback and cooperation to the I-4
      Corridor Council, universities, community colleges, economic development groups and government.

The initial research plan included participation by the Florida Manufacturing Technology Centers
(MTCs) and a minimum research budget of $25K. Final research was handled by the Florida
MTC’s, participating economic development organizations, and the USF Office of Economic
Development with a final budget of $10,686.


Company Selection

The following thirteen counties were identified for inclusion in the I-4 Corridor High-Technology
Council’s microelectronics study:

                             Table 2. Participating I-4 Corridor Counties
                     Orange                 Volusia                Manatee
                     Lake                   Hillsborough           Polk
                     Seminole               Pinellas               Hernando
                     Osceola                Sarasota
                     Brevard                Pasco

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Based upon the report “The Tampa Bay Area Opportunity in Information Technology and
Microelectronics” prepared by Jon Cornell and Charles Nuese for the Tampa Bay Partnership (May
1997) and feedback from the USF College of Engineering, the following Standard Industry
Classification Code (SICC) categories were identified for the Florida microelectronics
manufacturing industry (See Appendix 1 for full listing):

                                Table 3. Microelectronics SICC Categories
    357_ Computers and Office Equipment                   382_   Industrial Electronics
    365_ Consumer Electronics                             38__   Photonics
    366_ Communications Equipment                         381_   Defense Electronics
    367_ Electronic Components and                        385_   Opthalmic Goods - Manufacturers
         Accessories
    384_ Electro-Medical Equipment                        387_ Clocks and Watches - Manufacturers

The 1997 American Manufacturer’s Directory and the 1997-1998 Florida Business Directory
(American Business Directories, Omaha NE 68127) were used to select companies with the above
listed primary and secondary SICC codes in participating I-4 Corridor counties. 641 companies
were identified using this criteria, which constitutes the base microelectronics database for this
research1.


Phase One

Thirty-two (32) companies with highest revenue ($50 Million annually or higher) were selected from
the database to represent each county. These companies were contacted by outreach agents of
Enterprise Florida’s Manufacturing Technology Centers and the USF Office with the intent of
collecting 10-20 interviews and completed questionnaires. Upon contact, the Phase One
questionnaire (Appendix 2) was distributed to each company, discussed with the MTC outreach
agent, and returned to the USF Office for compilation, followup and analysis. A total of ten (10)
companies participated in this survey phase. Operations and / or CEO-level executives were
targeted for response under this phase2.


Phase Two

Based upon issues identified in Phase One, a condensed Phase Two questionnaire was
constructed for bulk mailing to all remaining 641 I-4 Corridor microelectronics manufacturers. This
questionnaire was limited to one page and was designed to be easily and rapidly completed, thus
maximizing response from company executives. The initial survey was addressed to the corporate
operations executives and CEOs of every company, and was mailed on January 15, 1998.
Beginning February 9, each company that did not respond was then contacted by phone, with the

1
  Enterprise Florida’s “Milestone 97” report lists only 730 “Electronic and Other Electric Equipment” manufacturers
for the entire state (page 39). Please refer to Chapter 2 concerning “turnover” for a more detailed comparison.
2
  The Phase One questionnaire has been commended by industry representatives, and may be used by Enterprise
Florida to obtain data on other industries throughout the State of Florida.
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                              Report on the Microelectronics Industry 6/98

questionnaire resent by facsimile; this round of surveys was addressed to human resource
executives (cover letter, Phase Two questionnaire, and facsimile cover sheet included in Appendix
3). By March 1, 1998, 63 Phase Two responses (total) have been received.

The Phase Two questionnaire was organized into two parts. Part one was based on priority
ranking of issues, forms of assistance, criteria, and areas of skill shortages, with respondents
required to select the two most important responses for each question. Part two encouraged
respondents to select as many categories as pertained to their training and service needs, in order
to provide more information for outreach and followup assistance. All responses for the Phase
Two questionnaire were designed to be ranked to determine priority of corridor-wide issues and
needs.




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                             Florida I-4 High Technology Corridor Initiative
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                                               II. Results

The results of the research were analyzed in the following sections: descriptive statistical analysis
of the database, qualitative analysis of Phase One surveys and Phase One followup meetings,
statistical ranking of Phase Two survey results, and ‘profiling’ of Phase Two surveys using
affiliation analysis.


Database

The distribution of the 641 microelectronics companies in the database provides considerable
information about the makeup of individual counties and groups of counties. In particular, the
number of microelectronics companies (by count) are distributed roughly evenly between East and
West halves of the I-4 Corridor region (with Polk being arbitrarily included with West coast
counties).
     Figure 1. I-4 Corridor Breakdown: Microelectronics Manufacturers by County (n=641)

                           Hillsborough                            Orange
                                12%                                 19%




           I-4                                                                            I-4
           Corridor          Pinellas                             Brevard                 Corridor
           West Coast          24%                                 15%                    East Coast


                         Sarasota, Pasco,
                                                               Lake, Seminole,
                          Manatee, Polk,
                                                               Osceola, Volusia
                             Hernando
                                                                    17%
                               13%


As demonstrated by Figure 2, the bulk of all I-4 Corridor microelectronics manufacturers have
annual revenues of less than $1 million (approximately 61%). Only 20% of manufacturers have
annual revenues between $2.5 million and $1 billion.
    Figure 2. I-4 Corridor Breakdown: Microelectronics Manufacturers by Revenue (n=641)



                                        25%

                                                      40%               $.5 M to $1 M: 40%
                                                                        $1 M to $2.5 M: 23%
                                                                        $2.5 M to $5 M: 12%
                                                                        > $5 M: 25%
                                   12%



                                              23%




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                                            Florida I-4 High Technology Corridor Initiative
                                             Report on the Microelectronics Industry 6/98

 This chart is further broken down in Figure 3, which presents the number of companies in each
annual revenue category within each county. This chart in particular demonstrates the overall
activity level in microelectronics in Pinellas and Orange counties.

            Figure 3. Microelectronics Manufacturer Sales Revenue by County (n=641)




                                                                                                                                                                                            35


                                                                                                                                                                                           30


                                                                                                                                                                                           25


                                                                                                                                                                                       20
                                                                                                                                                                                                Number of Companies
                                                                                                                                                                                      15

          Not Available
               $500,000                                                                                                                                                               10
      $500,000 - $1,000,000
              $1 - $2,500,000                                                                                                                                                     5

              $2.5 - $5,000,000
                                                                                                                                                                                  0
                 $5 - $10,000,000
                                                                                                                                                                       PINELLAS




                  $10 - $20,000,000
                                                                                                                                                              ORANGE
                                                                                                                                                    BREVARD




                 $100 - $500,000,000
                                                                                                                                     HILLSBOROUGH
                                                                                                                          SEMINOLE




                      $20 - $50,000,000
                                                                                                               SARASOTA
                                                                                                     VOLUSIA
                                                                                              POLK




                       $50 - $100,000,000
                                                                                      PASCO
                                                                            MANATEE




                      $500 - $1,000,000,000
                                                                     LAKE
                                                           OSCEOLA
                                                HERNANDO




It is worth noting the irregular distribution in many counties (most notably Hernando), and
especially the three counties with exceptionally high revenue (indicated by bottom-right revenue
categories) companies. Counties with exceptional performers, such as Orange, Brevard and
Volusia, contribute disproportionately to cumulative I-4 corridor microelectronics revenue (see
Figures 4 and 5).


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                                    Report on the Microelectronics Industry 6/98

Figure 4 shows the contribution of each county to the I-4 Corridor’s cumulative revenue in
microelectronics manufacturing. This table was calculated by totaling every company’s annual
revenue in each county 3. The top four counties as listed in Figure 1 are represented here; despite
being the third largest county in terms of number of microelectronics manufacturers, however,
Brevard county is the largest in terms of total microelectronics manufacturing revenue.

                             Figure 4. Cumulative Revenue by County (n=641)




                                     $2,500

                                     $2,000

                                     $1,500
                       $ Million
                                     $1,000

                                       $500

                                         $0




                                                                                                          OTHER WEST
                                                          ORANGE




                                                                              OTHER EAST


                                                                                           HILLSBOROUGH
                                                                   PINELLAS
                                                BREVARD




                                                                   County



Using the same method, Figure 5 is further broken down to demonstrate the cumulative
contribution companies in each revenue category and each county to overall I-4 microelectronics
manufacturing revenue. Confirming observations in the 1997 “Florida I-4 High Tech Corridor
Corporate Opinion Leader Research” report by the Decision Strategies Group and the “Tampa Bay
Area Opportunity in Information Technology and Microelectronics” report by Concurrent Technology
Enterprises, the cumulative revenues in Figure 5 demonstrate that large-scale manufacturing
facilities (specifically “wafer fabrication” facilities) result in an inordinately large economic impact.
Specifically, the few largest companies in Brevard and Orange counties constitute the vast majority
of revenue generated by this industry (especially in those counties) and companies with revenues
greater than $300 million make the largest overall impact4. In other words, a single “wafer
fabrication” plant or similar facility probably contributes the equivalent of several hundred smaller
companies. It is interesting to note, however, the significant impact generated by companies with
revenues of approximately $35 million, and that Pinellas county appears to have the best
representation in all revenue categories for overall impact (which may have relevance for business
growth potential).




3
  For each county, the number of companies in each revenue category was multiplied by the category’s minimum
revenue. The total estimated annual revenue based on this conservative, baseline method is over $5.7 billion for
the entire I-4 Corridor.
4
  While it is intuitive that the largest companies will make the largest impact, it is not necessarily true that smaller
companies will not have a larger cumulative impact in other industries.
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                                  Florida I-4 High Technology Corridor Initiative
                                   Report on the Microelectronics Industry 6/98

               Figure 5. Cumulative Revenue by County and Revenue Category (n=641)




                                                                                                            $3,000


                                                                                                            $2,500


                                                                                                         $2,000


                                                                                                         $1,500
                                                                                                                      $Million
                                                                                                                     Cumulative
                                                                                                        $1,000


                                                                                                        $500

                    BREVARD
                      ORANGE                                                                           $0
                        PINELLAS




                                                                                                 750
                                                                                           300
                      OTHER EAST



                                                                                      75
                                                                                 35
                                                                           15
                     HILLSBOROUGH
           County
                                                                     7.5
                                                              3.75




                         OTHER WEST
                                                     1.25
                                              0.75
                                       <0.5




                                                                     $Million Revenue



The breakdown of the number of companies between SICC (standard industry category code)
category and county is listed in Table 4 below, broken into the largest five categories each:

                      Table 4. SICC Category - by - County Distribution of Companies
County /        384X Electro-    367X Electronic              382 /6X           357X Computers         All other SICC       Subtotal   %
SICC              Medical         Components                 Industrial            and Office               Codes
                                                            Electronics            Equipment
Pinellas                    35                 44                          25                 18                       28       150    23.4
Hillsborough                19                 11                          18                 16                       16        80    12.5
Sarasota                     7                  5                           8                  2                        9        35     5.5
Pasco                        4                  4                           3                  0                        5        16     2.5
Manatee                      3                  2                           3                  0                        3        11     1.7
Polk                         6                  3                           5                  1                        2        17     2.7
Hernando                     1                  2                           1                  0                        0         4     6.9
Orange                      26                 35                          14                 13                       35       123    19.2
Brevard                      7                 35                          12                 12                       30        97    15.1
Lake                         3                  1                           0                  0                        6        10     1.6
Seminole                    20                 26                           5                 10                       11        72    11.2
Osceola                      1                  4                           0                  0                        1         6     0.9
Volusia                      3                  6                           1                  4                        6        20     3.1
Subtotal                   135                179                          95                 76                      156       641     100


Shown in Figure 6, the database indicates that microelectronics manufacturers are fairly evenly
distributed, by count, between major SICC categories, with a slight majority towards industrial-
related products (367X, 382X).

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                                                      Florida I-4 High Technology Corridor Initiative
                                                       Report on the Microelectronics Industry 6/98

       Figure 6. Microelectronics Manufacturers by SICC Code, All I-4 Corridor Counties

                                                                             384X Electro-
                                                                               medical
                                            All other SIC Codes                  21%
                                                    24%

                                     357X Computers and
                                      Office Equipment
                                            12%
                                                                               367X Electronic
                                            382/6X Industrial
                                              Electronics &                      Components
                                                Photonics                           28%
                                                  15%


Figure 7, which breaks down each SICC category by sales revenue category, demonstrates
relatively consistent distribution between SICC categories, and a resulting predominant economic
impact demonstrated by the 367X category (due to high frequency of companies in this category).
          Figure 7. Microelectronics Manufacturer Sales Revenue by SIC Code (n=641)




                                                                                                             50



                                                                                                             45



                                                                                                             40



                                                                                                             35



                                                                                                             30



                                                                                                         25 Number of Companies



                                                                                                         20

                  $500,000
        $500,000 - $1,000,000                                                                            15
                $1 - $2,500,000
                 $2.5 - $5,000,000

                    $5 - $10,000,000                                                                     10
                      $10 - $20,000,000

                         $20 - $50,000,000

                             $50 - $100,000,000                                                          5

                                $100 - $500,000,000

                                 $500 - $1,000,000,000                                                   0
                                             Not Available                                       other
                                                                                        382/6
                                                                                384
                                                                       367
                                                               357




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                              Report on the Microelectronics Industry 6/98

County-by-County Breakdown: In the following figures, the number of manufacturers in each SICC
category is presented for the top six county clusters (as presented in Figure 1).

        Figure 8. Microelectronics Manufacturers by SICC Code, Brevard County (n=97)


                        All other SIC                            384X Electro-
                            Codes                                  medical
                             31%                                     7%

                                                                      367X
                                                                   Electronic
                                                                  Components
                                                                      38%
                           357X
                                                                    382/6X
                       Computers and
                                                                   Industrial
                           Office
                                                                 Electronics &
                         Equipment
                                                                   Photonics
                           12%
                                                                      12%




       Figure 9. Microelectronics Manufacturers by SICC Code, Orange County (n=123)

                       All other SIC
                           Codes                             384X Electro-
                            28%                                medical
                                                                 21%
                          357X
                      Computers and
                          Office
                        Equipment
                          11%

                          382/6X                                 367X
                         Industrial                           Electronic
                       Electronics &                         Components
                         Photonics                               29%
                            11%




      Figure 10. Microelectronics Manufacturers by SICC Code, Pinellas County (n=150)

                      All other SIC
                                                             384X Electro-
                          Codes
                                                               medical
                           19%
                                                                 23%
                         357X
                     Computers and
                         Office
                       Equipment
                         12%

                         382/6X
                                                                   367X
                        Industrial
                                                                Electronic
                      Electronics &
                                                               Components
                        Photonics
                                                                   29%
                           17%


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                           Florida I-4 High Technology Corridor Initiative
                            Report on the Microelectronics Industry 6/98

  Figure 11. Microelectronics Manufacturers by SICC Code, Hillsborough County (n=80)

                   All other SIC                              384X Electro-
                       Codes:                                   medical:
                        20%                                       23%


                                                                  367X
                                                               Electronic
                                                              Components:
                                                                  14%

                      357X                                       382/6X
                  Computers and                                 Industrial
                      Office                                  Electronics &
                    Equipment:                                  Photonics:
                       20%                                         23%


Figure 12. Microelectronics Manufacturers by SICC Code, Remaining East Coast Counties
                                        (n=108)

                  All other SIC                              384X Electro-
                      Codes                                    medical
                       22%                                       25%
                     357X
                 Computers and
                     Office
                   Equipment
                     13%

                    382/6X
                   Industrial                                     367X
                 Electronics &                                 Electronic
                   Photonics                                  Components
                      6%                                          34%




Figure 13. Microelectronics Manufacturers by SICC Code, Remaining West Coast Counties
                                        (n=83)

                 All other SIC                               384X Electro-
                     Codes                                     medical
                      28%                                        25%

                    357X
                Computers and
                    Office
                  Equipment
                     4%

                    382/6X                                         367X
                   Industrial                                   Electronic
                 Electronics &                                 Components
                   Photonics                                       19%
                      24%




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                                 Florida I-4 High Technology Corridor Initiative
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Intercounty Variation. The information presented in the previous figures can be further presented
in terms of intercounty variation, to quantify if one county leads another in number of a particular
type of microelectronics manufacturer. In other words, the following table lists SICC category
variation. The average distribution of SICC categories within the top five county categories
(indicated in the following table) to demonstrate SICC categories clustered by geography.

          Table 5. SICC Category Distribution Between Counties: Deviation From Average
SICC / County     Average    Standard      Pinellas   Hillsborough   Orange     Brevard    Remaining     Remaining
                             Deviation     County        County      County     County     East Coast    West Coast
                                                                                            Counties      Counties
384X Electro-          .21          ±.06       +.38           +.44       +.03      -2.18          +.64          +.69
  Medical
367X Electronic        .27          ±.08       +.28          -1.63       +.17      +1.24          +.89          +.95
  Components
382 /6X                .15          ±.06       +.19          +1.10       -.63       +.47        +1.53          +1.34
  Industrial
  Electronics
357X                   .12          ±.05       +.02          +1.69       -.28       +.09          +.22         -1.74
  Computers
  and Office
  Equipment
All other SICC         .25          ±.05      -1.31          -1.02       +.83      +1.36          -.53          +.66
  Codes


The table shows little overall deviation from the average between counties (standard deviation), but
in general suggests the following distinctions between I-4 Counties:
(a)   Pinellas county industry is more focused in the four main SICC categories than most
      counties,
(b)   Brevard county has more Electronics components manufacturers and considerably
      fewer (on average) electromedical manufacturers;
(c)   Hillsborough is skewed in most categories;
(d)   the remaining East Coast counties have an abundance of Industrial Electronics
      manufacturers (consider this in conjunction with Orange county), and
(e)   the remaining West coast counties have an above average percentage of Industrial
      Electronics producers and below average percentage of Computers and Electronics
      Equipment producers.

Corporate Turnover. Based on canceled business addresses and disconnected phone numbers,
111 companies were indicated as no longer in business, acquired by a non-responding company,
or relocated without a forwarding address. This represents a total turnover of 17.3% in the space of
one year (more than one in six companies). In the following figure, overall company turnover in the
I-4 Corridor region is broken down into major county categories, and compared to the total number
of companies in each county category in the database. As demonstrated by the following bar
graph, the number of “turnover” companies is roughly proportional to the total number of
companies in each category, with West-coast counties having a slightly higher retention level than
East-coast counties (smaller counties in particular; as shown by the “Other East” and “Other West”
categories)




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                           Figure 14. Company Turnover By County Category




                                     30%

                       Percentage    20%

                                      10%

                                       0%
                                            Other West                                                    Turnover

                                                         Other East

                                                                      Brevard
                                                                                                    All Companies


                                                                                Orange

                                                                                         Pinellas




In the next figure, company turnover is broken down into major microelectronics SICC categories.
As in the county by county breakdown, company turnover does not appear to be disproportionately
high for any SICC category.

                                    Figure 15. Company Turnover By SICC Category




                                     30%
                       Percentage




                                     20%

                                      10%

                                       0%
                                                                                                          Turnover
                                            Other

                                                         357X




                                                                                                    All Companies
                                                                      382/6X

                                                                                367X

                                                                                         384X




Finally, all company turnover is broken down by level of annual sales (as listed at completion of FY
1996). As might be expected, the highest turnover rate occurs in the lowest sales brackets, with a
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full 61% of turnovers occurring in companies with annual sales of less than $1 million, and 80% of
turnovers in companies with annual sales of less than $2.5 million (Figure 16). These turnover
figures must be interpreted in conjunction with average success rates for startup businesses (less
than 1 in 4) and high annual growth rates for this industry (discussed in following Sections). In this
capital-intensive industry, these figures may suggest high overall entrepreneurial activity, and a very
strong potential for sector growth if key turnover issues can be addressed.

                         Figure 16. Company Turnover By Annual Income Level



                                           >$2.5 M
                                            20%


                                                                    <$500K
                                                                     44%
                                       $1 M - $
                                        2.5 M
                                         19%


                                                     $.5 M - $1
                                                         M
                                                        17%




Phase One and Phase One Followup

Phase One results were compiled from two sources: completed surveys from participating
companies, and followup meetings with select participants to further qualify and explain Phase
One issues. The following manufacturers participated in this phase of the research:

                    Table 6. Participating Phase One Microelectronics Manufacturers
Company                               Product                                County         1996 Revenue
K-Byte / Reptron                      Printed & Etched Circuits              Hillsborough   $20-50M
Lockheed Martin Electronics and       Electronic Equipment and Supplies      Orange         $500 M+ (Parent)
Missiles
Coleman Research                      Aerospace                              Orange         $50-100 M
Jabil Circuit                         Circuit Boards                         Pinellas       $600 M
Dovatron                              Circuit Board Assembly / Repairs       Pinellas       $20 - 50 M
Honeywell Avionics                    Search Detection / Navigation          Pinellas       $100 - 500 M
                                      Systems
Hi Stat Manufacturing                 Electronic Equipment and               Manatee        $100 - 500 M
                                      Supplies
Pro Tek Electronics                   Electronic Equipment and               Sarasota       $10 - 20 M
                                      Supplies
Piezo Electronics                     Electronic Equipment and               Orange         $20 - 50 M
                                      Supplies
Cirent Semiconductor                  Semiconductors and Related             Orange         $500 M +
                                      Devices



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Some of the participating Phase One companies responded that they were interested in immediate
discussions with university and economic development organizations to address issues raised by
questionnaires and outreach agents. The USF Office of Economic Development coordinated “rapid
response” team meetings (with representatives from organizations in each county) to address
these companies’ immediate concerns, build consensus, and increase communication between
participants.

As of the date of this report, meetings coordinated by USF have been held on-location at three of
the Phase One companies; Jabil Circuits, Reptron / K-Byte, and Dovatron (all of Hillsborough and
Pinellas counties). For each of these meetings, a representative from each of the following
organizations was invited to attend: county economic development offices, city economic
development offices, county community college / technical schools, USF College of Engineering
and School of Continuing Education, and the USF Manufacturing, Training and Education Center.
Using the companies’ Phase One responses as an agenda, participants discussed company
needs and interests and developed a list of action items to be immediately addressed. As a result
of these meetings, companies have been linked with requested information, specialized training
programs, manufacturing services, and referral /hiring services and sources. Assistance and
cooperation with these companies is ongoing, and initial feedback has been very positive.

The issues and results compiled from the Phase One surveys and followup meetings are listed
below:

1. Microelectronics manufacturing companies have a growth rate projected to be near 30%
   annually until almost 2010, with a resulting workforce growth requirement as between 30% to
   50% in many companies5. This has created a need for trained employees in all categories and
   skill levels, from entry level through executive. As a result of this workforce shortfall,
   microelectronics companies need to be directly involved with training future employees at all
   education levels (unskilled through graduate). In particular, companies are interested in
   investing and cooperating to meet these needs, if an appropriate collaborative structure can be
   created.

2. As a state, Florida offers several advantages including climate, access to international markets,
   and reasonable public utilities. These advantages help to offset low professional wages (a
   disincentive for attracting professional employees) and to encourage on-site visits from
   prospective clients. However, Florida has a significant disadvantage in that it is not perceived
   as a ‘high-technology’ area, and primary / secondary education is commonly believed to be
   inferior to other states (specifically states from which employees and clients are most often
   recruited). Many companies claim that Florida has a very poor cultural infrastructure (such as
   parks, arts and entertainment), which is also a factor in attracting companies, clients, and
   employees.

3. Location in Florida generates moderate problems for manufacturers in terms of transportation.
   Due to the geography in the I-4 Corridor region, manufacturers must deal with high-congestion

5
  Enterprise Florida’s “Milestone 97” listed 1992-1995 annual employment growth rate for “Misc. Electrical
Equipment and Supplies” manufacturers as 6.23%, and “Electronics Components and Accessories” manufacturers
as -3.74% (page 44). This growth rate may be limited by employee availability, and not necessarily industry
demand or growth rate of the industry as a whole. This includes annual employee turnover as high as 25% in
companies with high percentages of assembly workers.
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    commuting, poor road infrastructure, and minimal public transportation (a particularly sensitive
    point due to the makeup of the manufacturing workforce). Furthermore, several manufacturers
    have commented that there are insufficient air carriers and regular direct flights to metropolitan
    areas with which they do the most business.

4. Florida has good access to international markets, but microelectronics manufacturing is a low-
   margin industry, with a majority of profit driven by materials--many of which are imported.
   Therefore, microelectronics manufacturers are very sensitive to import and export issues. This
   further creates a need for continuous improvement in terms of materials procurement, quoting,
   and waste/efficiency. For many companies, this generates a need for external services and
   assistance in these areas.

5. Manufacturers have stated that Florida’s environmental regulations are strict, but reasonable.
   Large manufacturers are very sensitive to environmental issues, and seek to market
   themselves as “environmentally friendly” or “clean” companies.

6. Certain manufacturers have claimed that there is a lack of local vendors for microelectronics
   supplies, electronic component preparation, inventory maintenance, electronics repairs,
   cleanroom laundry services, quartz blanks manufacturers, and printed circuit board assembly.

7. Microelectronics companies must invest in updated manufacturing lines on a regular basis,
   which may cost upwards of $1 million each. Florida’s sales tax and income tax laws for such
   investments, which may actually be disincentives for maximizing growth, hit these companies
   particularly hard. Several other states offer tax / credit programs that would probably be more
   effective for encouraging the growth of Florida microelectronics manufacturers.

8. Florida microelectronics companies are constant targets of relocation pressures from other
   communities and states, and would benefit from more pro-active communication from public
   institutions and agencies. Phase One Followup meetings and others showed that companies
   were generally unaware of many of the resources currently available to them, and were
   impressed by attention to their needs demonstrated by the participating organizations.

9. The makeup of the workforce between microelectronics manufacturing companies is not as
   homogenous as initially assumed. According to Phase One participants, most jobs at these
   companies reside in engineering, technical, and assembly positions (74%) as listed in Figure
   17. Compiled company estimates predict an overall 25.8% increase in jobs through year
   20006, with a dramatic increase in assembly positions (Figure 18).




6
 Note that actual projected workforce increases were slightly more conservative than discussed in Item #1 of this
section.
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             Figure 17. Year 1997-98 Microelectronics Manufacturing Job Categories

                                                                   Administration and
                                           7%     9%               Management: 9%
                                                                   Engineering: 28%

                                   33%                  28%        Technical /
                                                                   Professional: 23%
                                                                   Assembly and
                                                                   Solder: 33%
                                                23%                Other (Operators /
                                                                   Materials): 7%


               Figure 18. Year 2000 Microelectronics Manufacturing Job Categories

                                                                      Administration and
                                         11%     5%                   Management: 5%
                                                                      Engineering: 29%
                                                       29%
                                                                      Technical /
                                                                      Professional: 13%
                                    42%                               Assembly and
                                                                      Solder: 42%
                                                      13%
                                                                      Other (Operators /
                                                                      Materials): 11%



Furthermore, microelectronics manufacturing companies vary considerably as to workforce
makeup. Larger (annual revenue greater than $100 million) companies 7 support a relatively
higher-trained (and consequently higher-paid) overall workforce than medium- and small-sized
manufacturers8. Medium- and small-sized manufacturers (typified by contract manufacturers and
assembly operators) require a much larger base of assembly and operator-level employees. In
the following figure, Phase One participants are broken into two groups (divided by revenue), with
Honeywell, Lockheed Martin Electronics and Missiles, and Cirent listed as Group 2 and all
remaining manufacturers listed as Group 1. As Figure 19 demonstrates, assembly-level positions
can constitute nearly 50% of all employees for all but the largest manufacturers.




7
  Although annual sales level adequately divides companies into two workforce profiles, actual criteria for
workforce makeup is probably dependent upon factors such as specific company markets, government/commercial
product mix, product complexity, and other variables not contained in industry codes or other database variables.
8
  Please note that considerable and ongoing training is required for almost all microelectronics manufacturing
jobs.
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                                     Florida I-4 High Technology Corridor Initiative
                                      Report on the Microelectronics Industry 6/98

                   Figure 19. Microelectronics Manufacturing Jobs by Company Size


                               70%
                               60%
                               50%
                                40%
                                30%
                                20%
                                10%
                                 0%    Administration and


                                                            Engineering
                                                                                                                                Group 2
                                         Management




                                                                          Professional
                                                                           Technical /


                                                                                         Assembly and
                                                                                                                             Group 1




                                                                                                        Other (Operators /
                                                                                            Solder


                                                                                                           Materials)

10.       One of the most critical shared concerns, after workforce and training issues, is marketing
          and exposure of the microelectronics industry in Florida. There is a need to expand national
          awareness of Florida as a high-technology area that has competent suppliers and high
          standards of living. However, there is also a very distinct need to make the general public
          aware of the availability and desirability of jobs in the manufacturing sector.

11.       Many companies are not satisfied with the current structure of Enterprise Florida’s “Quick
          Response Training” program; either the companies are not fully informed of methods of
          taking advantage of these credits, or the companies simply are not able to qualify due to
          large numbers of low-wage jobs (see Figure 19 above). Currently, the QRT program
          requires average company salaries to exceed 115% of the average for their county to qualify;
          however, average salaries for the manufacturing positions are usually considerably lower
          than the average for an entire county. As shown in Appendix 5, the average manufacturing
          wage for Pinellas County in 1996 was $7.67 per hour, yet the overall average wage for
          Pinellas County for the same period was $11.439.

12.       Manufacturers have identified the greatest shortage of skilled employees in the fields of
          electrical engineering, industrial engineering, information science management, materials
          management, software and systems technicians, and general manufacturing assembly. In
          general, there is a need for the entire spectrum of employee categories, but available and
          experienced manufacturing employees are particularly scarce.          Furthermore, a few
          companies remarked that many technicians are still trained on obsolete equipment. As a
          result, most companies have considerable in-house training costs and delivery systems.



9
    From the Florida Labor Market / Hillsborough and Pinellas County Wage Survey, 1996.
                                                                                                                                          Page 19
                                  Florida I-4 High Technology Corridor Initiative
                                   Report on the Microelectronics Industry 6/98

13.    Companies have stated that their most common training needs include manufacturing
       engineering, supply chain management, electronics technical school courses, soldering,
       computing, test technician courses, basic math and English.

14.    Companies have identified several categories of service needs, including rapid mechanical
       prototyping, manufacturing systems, software development, engineering design, research,
       software development, quality management, flexible inventory systems, facility layout,
       business process mapping and scheduling, and small business resources. It should be
       noted, however, that companies are generally not well informed of the number of service,
       training, and assistance forms that are currently available to them through public and non-
       profit agencies.

15.    Almost every company described Florida’s corporate tax structure as a disincentive to
       growth, particularly in the area of capital equipment investment. Most companies feel that
       Florida organizations place an inappropriate emphasis on attracting companies, rather than
       growing and retaining existing businesses. A few companies also stated a need for tort
       reform.

With immediate action, the timing is appropriate to create a consortium or ‘critical mass’ of
microelectronics manufacturers, to cooperate in investing in training institutions or training
facilities, the identification of standards, standard training programs, and common certifications, to
help generate funds for industry needs and solutions. Such a consortium must be limited in size
and location.

Recently, a Tampa-Bay area “High Technology Manufacturing Consortium” has been initiated, with
charter members including Honeywell, Group Technologies, Reflectone, and others. The purpose
of this consortium is to meet long term and large-scale needs, many of which are identified in this
report.

Phase Two

63 companies completed and returned Phase Two questionnaires by mail and facsimile by March
1, 1998. As shown in Appendix 3, the survey was designed to elicit responses to the following
broad categories: (1) the most critical microelectronics issues / problems, (2) the most appropriate
solution / form of assistance to maximize growth; (3) the most appropriate qualification criteria for
such assistance; (4) skill categories in highest shortage and need; (5) most needed training
programs; and (6) most needed service / consultation programs. The resulting responses were
ranked in each category, and presented in Figures 20 to 25 below10.

By comparison of geographic, sales, and industry code information between the response and the
entire database, the Phase Two respondents appear to be very representative of I-4 Corridor
microelectronics manufacturers as a whole11.

Figure 20 shows that respondents ranked “marketing and exposure” issues as most important
(mode), with “workforce and training” issues as a close second (minor mode). These responses
10
  Due to survey design, percentages may not total 100%.
11
  Based on category distributions, the estimated error for Phase Two responses is ±10%. However, an error score is
frequently not calculated for studies of this type, wherein the entire population is contacted for response.
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are consistent with Phase One results. However, the low ranking of “infrastructure” issues places
the Phase One discussion of transportation and power issues as relatively insignificant compared
to other problems.
                                 Figure 20. Ranking of Critical Microelectronics Issues



                        Other


  Vendor, Supply, Distribution



     Technology and Products


      Marketing and Exposure


               Infrastructure



       Workforce and Training


          Tax and Investment


                             0%             5%           10%           15%           20%   25%    30%




Figure 21 lists the ranked responses from participants as to which form of assistance would be
most effective in maximizing the growth of I-4 Corridor microelectronics manufacturers.

                             Figure 21. Ranking of Appropriate Assistance Methods


                        Other
     University Investment

       Legal or Tort Reform
  Site Location / Expansion

          Employee Training
         Capital Investment
                   Sales Tax
               Income Taxes
          Real Estate Taxes

                                 0%         5%           10%          15%           20%    25%   30%




Quite clearly, companies indicated that relief from capital investment burdens are most needed.
Corporate income tax is ranked a far second, but may be related to capital investment (Phase One
identified states where capital equipment investments could qualify for credits against corporate
income tax). Despite the importance of other issues (Figure 20) to all participating companies,
capital investment was seen as the most appropriate area for government assistance (modal
category).


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Figure 22 lists the forms of assistance criteria that companies identified as most appropriate to the
microelectronics manufacturing industry. The results show that that high priority should be given to
economic performance as criteria for receiving assistance, based upon the modal category (“Rate
of company growth and number of new jobs”) and minor mode (“startups and spin-offs”). These
two categories may be appropriate criteria for receiving state / government assistance not only for
capital equipment and investment (prioritized in Figure 21) but also for other forms of assistance
(including financial / training assistance).

                                        Figure 22. Ranking of Criteria for Assistance



                           Other

          Startups or Spinoffs

  Company Size or Total Jobs

             Employee Training

          High Employee Wages

          Growth or New Jobs

                                 0%           5%         10%         15%          20%         25%   30%   35%




Survey response has shown that employees in the engineering fields (industrial, electrical and
mechanical) are by far the most difficult to obtain in Florida (Figure 23, major and minor modes).
As participants have stated a growing need in all skill categories, these represent only the skills the
are most lacking.
                             Figure 23. Ranking of Critical Workforce Skill Shortages



                             Other


  Skilled / Technicians/ Machinists


           Business / Management

          Computers / Information
               Technology

       Electrical / Mechanical Eng.


    Manufacturing / Industrial Eng.


                                   0%              5%          10%          15%             20%     25%     30%




The next figure ranks training programs that companies identified as most necessary for their
employees, specifically for the production-level workforce. Employee software, network and
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computers, and general manufacturing / assembly courses are ranked as most critical. Please
note that since many companies are not necessarily aware of all programs that are already
available, Figure 24 represents only companies’ most critical needs, and not necessarily training
that is not currently provided.

                                   Figure 24. Ranking of Critical Training Needs




                          Other


            Specialized Training


              Blueprint Reading

         Basic Communication /
                Literacy

          Basic Math / Science


               On-Site Training


      Self-Directed Work Teams


        Productivity Initiatives


                      Soldering


         Fabrication and Testing

         Employee Leadership /
             Supervisory

    Assembly and Manufacturing

        Software / Networks /
             Computers

                                   0%        2%       4%       6%        8%      10%      12%   14%   16%




Similar to the previous figure, Figure 25 ranks the most needed services for the I-4 microelectronics
industry, with all lowest-ranking programs compiled together under the “Other” category. These
represent training needs for management and executive-level employees as well as overall
company procedures, qualification and certification. The most common service needs include
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                                        Florida I-4 High Technology Corridor Initiative
                                         Report on the Microelectronics Industry 6/98

ISO9000 and ISO14000 certification / audit services as well as services under the broad category of
“manufacturing process improvement” (automation, efficiency /waste management, scheduling,
etc.).
                                      Figure 25. Ranking of Critical Service Needs




                        Other


     Organizational Efficiency

        Federal Compliance /
            Procurement

       Technology Transfer /
             Research

  Importing / Exporting / FTZ


   Statistical Process Control


           Master Scheduling

           Continuous Quality
             Improvement

    Small Business Resources


    Total Quality Management


            Inventory Control


  Manufacturing Improvement


        ISO9000 / ISO14000


                                 0%         2%        4%       6%        8%       10%     12%   14%   16%




Based upon manufacturer responses listed in the previous figures, the following can be
summarized about the needs of microelectronics manufacturers in Florida’s I-4 Corridor:


                                                                                                      Page 24
                              Florida I-4 High Technology Corridor Initiative
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1.    The most important issues that I-4 microelectronics manufacturers face are workforce and
      training, marketing, and exposure problems.
2.    To increase the growth of I-4 manufacturers, the most important form of assistance would
      be credits against capital investment and against sales tax for manufacturing equipment
      purchases.
3.    The most appropriate targeted criteria for assistance (as stated in #2 or otherwise) would be
      based on company growth rates or new jobs, or for startup / spin-off companies.
4.    Employees that are hardest to obtain are manufacturing / industrial, electrical, and
      mechanical engineers.
5.    The most needed training programs for manufacturing employees include software,
      networks, computers, and general assembly and manufacturing courses.
6.    The most needed company certification or training services are ISO9000 / ISO14000 and
      Manufacturing Process Improvement.


Correlations

The Phase Two data was also analyzed using network analysis affiliation methods to search for
cross-category correlations between SICC categories, corporate sales levels, geographic location,
and survey responses 12. This method was used to determine if particular variables were
interconnected (independent of response frequency). For example, network affiliation analysis
could help identify such possible scenarios as “companies with sales of less than $1 million tend
to list marketing as the number one problem, but companies with sales higher than $10 million
tend to list R&D as a primary concern.”

Based upon an affiliation “K-Core” analysis of the survey responses, only one cluster of survey
variables appear to be interconnected. Due to the homogeneity of the survey results, most of the
correlated variables were also the highest ranked survey responses (Figures 20 - 25). The
following variables are most associated with one another for I-4 Corridor microelectronics
manufacturers:

1.    Companies that identify workforce and training, and marketing and exposure as the most
      important issues to be solved.
2.    Companies that identify income tax relief, capital investment and equipment credits, and
      funding for employee training as the most needed forms of assistance.
3.    Companies that identify the most appropriate criteria for receiving assistance as company
      economic performance.
4.    Companies with primary SICC category 367X, Electronics Components.
5.    Companies with annual income levels of $1 - $2.5 million.




12
  Social Network Analysis includes methods based upon mathematical graph and set theory to characterize
relations between data.
                                                                                              Page 25
                          Florida I-4 High Technology Corridor Initiative
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These company characteristics appear to be interconnected for I-4 Corridor microelectronics
manufacturers.




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                              III. Conclusions and Recommendations

The results presented in the previous chapters lead to the following conclusions and
recommendations, broken into five general categories: organizational recommendations, tax
recommendations, training recommendations, transportation recommendations, and research
recommendations.


Organizational Recommendations

The highest priority issues for this industry are based upon industry exposure and an increasing
shortage in the technical workforce. Both issues manifest on the national, state, and local levels.
As a result, addressing these issues will require large-scale mobilization of government, public,
and industry stakeholders.

The first recommendation is to establish one or two industry manufacturing consortia, coordinated
on a regional level by local universities. These consortia should include large microelectronics
manufacturers, and should cooperate to interface with government and economic development
organizations, with training and education institutions, invest in marketing and workforce issues,
and coordinate existing resources.

First, the consortia should address marketing issues, as described on two significant levels: (a) a
nation-wide perception of Florida as a relatively low-technology state with poor education, and (b) a
state and local lack of awareness of careers in manufacturing. Both of these issues create
barriers to attracting qualified employees and clientele to Florida manufacturers. Although more
directed research may be necessary to identify solutions specific to these issues, the area-wide
marketing activities of organizations such as the Tampa Bay Partnership and the career
marketing/advertising strategies of the Tropicana program in Manatee County may serve as useful
models.

It is well known that the entire nation is suffering from a shortage of high-technology employees;
however, companies claim that the Florida labor pool is well below the nation’s average. Solutions
to this problem must begin with local strategies; for example, a microelectronics consortia could
develop a set of “training standards” or flexible training modules that are commonly needed by all I-
4 Corridor microelectronics manufacturers. In conjunction with this, the consortia could investigate
cooperative training facilities, with shared support between K-12 education, community colleges
and technical schools, and local universities. Such a shared center would have the advantage of
focusing industrial investment, encourage continual upgrading of training, and give feedback
between industry and education for primary through graduate training.               Microelectronics
manufacturers must maintain a considerable overhead for in-house employee training, and a
cooperative center could serve to cost-effectively outsource many of those costs in a consistent
fashion. The BICSI program developed by the Florida telecommunications industry has set
standards for such cooperative training for much of the Southeast, and may constitute a useful
model 13. The Queen’s College program of Belfast, Ireland, may provide yet another model that is
financially self-sustaining. In addition to classrooms and training shops, the effectiveness of a

13
     Summary information about these programs is included as Appendix 4.
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                                 Florida I-4 High Technology Corridor Initiative
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cooperative facility might be enhanced with the investment of one or more microelectronics
fabrication / assembly lines (such as produced by Panasonic, Fuji or Siemens) for use as a ‘model
manufacturing’ facility.

Although many companies indicated a need for training assistance in addition to workforce training
(such as ISO9000 and quality certification), many of these services are already available. Many
companies have stated that they were unaware of current resources, did not know whom to contact,
or felt that service and training providers seemed overly competitive. Development of a high-profile,
industry-specific consortium and / or cooperative training facility could provide a central contact
point for companies requesting assistance, and help provide feedback to service providers as well.


Tax Recommendations

The single most effective recommendation based upon manufacturer feedback would be to
implement state-level credits for investment in capital equipment and manufacturing facilities.
Such credits would probably most affect the manufacturers at highest risk–companies with annual
sales of $1 million or less. One manufacturer’s comments (included as Appendix 5) quite clearly
describe the problem experienced by many I-4 Corridor microelectronics manufacturers: this
industry requires increasing upgrades in manufacturing technology, and current Florida sales tax
and depreciation structures discourage such improvements for many companies. As stated in
Chapter 2, some other states have policies that are more supportive of manufacturing
infrastructure improvements. These manufacturing assistance policies take many forms, but
usually incorporate income, sales, or property tax credits based upon purchase of qualified
industrial equipment. Other credits are targeted against inventory and materials, which are other
issues sensitive to this industry. A more detailed listing of capital equipment credit programs is
included in Appendix 6. While it is possible that other high-technology manufacturing states (such
as Texas or North Carolina) may or may not have similar manufacturing assistance strategies,
such a strategy may be required to bring Florida’s manufacturing infrastructure to a level
competitive to those states. Although at least two programs currently exist in Florida for similar
purposes 14, I-4 Corridor microelectronics manufacturers (specifically in the $500K-$2.5M sales
range) appear to be either unaware or unable to take advantage of them.

Although it was not identified as pivotal as other issues, investigation of legal and tort law reform
may also benefit this industry.


Training Recommendations

Few microelectronics manufacturers qualify for the Enterprise Florida Quick Response Training
credit, as many companies have disproportionately high numbers of lower-paid technical workers.
Typically, these companies are small- to mid-sized contract manufacturers and other “support
industry” manufacturers. The development of a Quick Response Training credit (i.e., a “Qualified
Manufacturing Training Credit”) for manufacturers–separate from the service and sales
industries–is necessary to provide assistance specific to workforce issues in this industry. Criteria

14
  Refer to Florida’s “Qualified Target Industry Tax Refund Program” and silicon-technology “Sales-and-Use” tax
refund program. Please note that the data presented in this report is not sufficient to serve as an evaluation of
these programs.
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                             Florida I-4 High Technology Corridor Initiative
                              Report on the Microelectronics Industry 6/98

for this assistance should be suited to this industry or based upon options identified by this survey,
such as (a) basing wage criteria on average manufacturing wages, instead of average wages for
all sectors; (b) number of new jobs added; (c) economic growth of company; (d) capital
investments, or (e) even performance on “career advancement tracks” for employees.

Unfortunately, the assumption that “all jobs at high-tech companies are high-paying” has not been
proven by this report. However, it should be considered that these companies support high levels
of engineers and technical specialists compared to many other industries.               Furthermore,
companies with high percentages of relatively low-paid assemblers are probably required to
establish a solid, high-technology microelectronics infrastructure in the I-4 Corridor.


Transportation Recommendations

In general, local airport authorities should communicate with industry leaders to identify possible
route expansions that could be profitable for both manufacturers and air carriers. In addition, public
transportation limits the metropolitan regions from which manufacturers can draw their workforce.
Local transportation authorities may find manufacturers are more than willing to participate in
innovative transportation programs (such as ride sharing, special busing, etc.)


Future Research Recommendations

The I-4 Corridor microelectronics manufacturing industry would probably benefit from additional
research in the following areas. First, a “targeted growth” study to determine appropriate goals for
the microelectronics industry for one or two decades from now. Second, specific marketing
research may be necessary to inform potential manufacturers and clients of the I-4 Corridor as a
critical resource. Third, multi-year, longitudinal research may help improve understanding of
Corridor-wide trends, obstacles, and opportunities over time (especially turnover). Research may
also be necessary to study the impact of suggestions from this report with other programs already
offered by the State of Florida, or their overall repercussions to the State as a whole. Finally,
comparable studies in other, possible complementary high-technology manufacturing industries in
the I-4 Corridor (such as medical products and information systems) would be constructive to
identify common variables and needs.


Summary

Despite the lack of a clear support infrastructure for microelectronics manufacturing, the I-4
Corridor has demonstrated potential for considerable growth in this industry. Many problems
demonstrated by Corridor companies are characteristic of the nation as a whole; however, the I-4
Corridor requires considerable infrastructure changes in order to compete with areas such as
Austin, Texas or the Silicon Valley. High-technology areas such as those have considerable
advantages in terms of national perception, investment and training assistance, and education /
training programs. Nonetheless, targeted tax and assistance reforms in conjunction with
expansion of current programs through the I-4 High Technology Corridor Initiative and Enterprise
Florida may be sufficient to remove existing obstacles and maximize current growth in the I-4
Corridor microelectronics manufacturing sector to become competitive with the rest of the nation.
                                                                                              Page 29
                             Florida I-4 High Technology Corridor Initiative
                              Report on the Microelectronics Industry 6/98


                                        IV. Contributors

All stages of this project were coordinated and executed by the USF Office of Economic
Development. The following individuals and organizations also contributed significantly to this
project:

                       Research Design, Execution, Analysis and Reporting
Richard B. Streeter, Executive Director, USF Office of Economic Development
Guy Hagen, Coordinator, USF Office of Economic Development
Anna Lapidus, USF Office of Economic Development
Heather Greenwell, USF Office of Economic Development
Stacie Becker, USF Manufacturing, Training and Education Center (MTEC)

                                  Design and Issue Development
I-4 Corridor Research Committee
Randy Berridge, CKC Consultants

                           Company Outreach and Phase One Interviews
Bill Chapman, Suncoast Manufacturing Technology Center (SMTC)
John Vanacore, Suncoast Manufacturing Technology Center (SMTC)
Bill Boone, Suncoast Manufacturing Technology Center (SMTC)
Richard Korchak, Director, Florida Manufacturing Technology Center (FMTC)
Gordon Hogan, Florida Manufacturing Technology Center (FMTC)
Ted Fluchradt, Director, Enterprise Florida Manufacturing Technology Centers
Bill Castoro, Director, Pinellas County Industry Council

                                 Company Followup and Assistance
Michael Kovac, Dean, USF College of Engineering
Bill Chapman, Suncoast Manufacturing Technology Center (SMTC)
Jack Doherty, USF MTEC Center
Bill Swayles, Pinellas County Schools (PTEC)
Mike Littman, Pinellas County Economic Development
Richard Taylor, USF Continuing Education
Wayne Smith, St. Petersburg Economic Development
Jerry Miller, USF Florida Community Partnership Center
Susan Miller, Fred Learey Technical Center
Sherry Kersey, Hillsborough Community College
Michael Comins, Hillsborough Community College
Bruce Register, Hillsborough County Economic Development
Diane Hufford, Clearwater Economic Development
Gary Brosch, USF Center for Urban Transportation Research (CUTR)
Michael Siebel, Director, Pinellas / Suncoast Transit Authority

                                           Miscellaneous
Denise Stratton, Jabil Corporation
Ronald McVety, Facts Engineering

                                                                                        Page 30
Florida I-4 High Technology Corridor Initiative
 Report on the Microelectronics Industry 6/98


            V. Appendices




                Appendix 1

      Microelectronics SICC Codes
Florida I-4 High Technology Corridor Initiative
 Report on the Microelectronics Industry 6/98




                Appendix 2

          Phase One Materials
               Cover letter
              Questionnaire
        Followup Meeting Minutes
Florida I-4 High Technology Corridor Initiative
 Report on the Microelectronics Industry 6/98




                Appendix 3

           Phase Two Materials
               Cover letter
             Questionnaire
    Florida I-4 High Technology Corridor Initiative
     Report on the Microelectronics Industry 6/98




                    Appendix 4

Cooperative Training Programs for Manufacturing
                BICSI Program
Florida I-4 High Technology Corridor Initiative
 Report on the Microelectronics Industry 6/98




                Appendix 5

            Industry Feedback
                           Florida I-4 High Technology Corridor Initiative
                            Report on the Microelectronics Industry 6/98




                                           Appendix 6

                       Manufacturing Wage Survey (Pinellas County Only)
                                (Courtesy of Jabil Circuits Inc.)

In 1996, the average wage for Pinellas County was $23,793. The average 1996 manufacturing
wage for Pinellas County was around $14,000. The following report of the Pinellas manufacturing
workforce was performed by Kelly Services, Inc.
Florida I-4 High Technology Corridor Initiative
 Report on the Microelectronics Industry 6/98




                Appendix 7

  Capital Investment Credit Programs

								
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