Some of the same pressures that have pushed California toward economic disaster are wreaking havoc in Florida

Specifically, Florida, Michigan, Nevada and Oregon are struggling in part because their economies have depended so heavily on particular industries -- in Florida's case, real estate and tourism. States the Pew analysis:

 "This reliance on a sector may have paid off in times past, but it put these states at greater risk when the recession hit. States cannot choose their natural resources, of course, but they can budget and manage for additional volatility that can result from dependence on a particular sector. States increasingly are seeking to diversify their economies."

The Pew analysis notes the following weaknesses in Florida's fiscal status:

1, For the first times since World War 2, Florida's population is shrinking-- "a disturbing trend for a state that has built its economy, and structured its state budget, on the assumption that throngs of new residents will move to its sunny shores each year."

2. The recession has reversed Florida's growth. No. 2 among states in economic growth in 2005, it ranked 48th in 2008.

3. Though Florida enjoyed some of the biggest gains in jobs just three years ago, its current unemployment rate of 11.0  percent puts Florida among states with the highest jobless rates in the country.

4. The boom in property prices almost doubled tax revenues in many Florida cities between 2001 and 2006, swelling state and local budgets. "Now Florida's governments face significant problems raising enough revenue to cover expenses," the Pew report says. The state is bracing for a deficit as high as $2.6 billion in fiscal 2011.

Concludes the report  about Florida: "This is uncharted territory for a state whose conservative budgeting practices, constitutionally required reserves and go-go-economy largely have kept it out of fiscal trouble for the better half of the past century."

The bigger picture? The budget troubles of Florida and these other nine states can have significant repercussions for their residents, Pew says. Higher taxes or fees; layoffs or furloughs of state workers; longer waits for public services; more crowded classrooms; higher college tuition and less support for the poor or unemployed: All are starting to crop up in Florida.

These budget troubles also pose challenges for the nation as a whole, says Pew:

"Together, the 10 states account for more than one-third of America’s population and economic output. And actions taken by state governments to balance their budgets—such as tax increases and drastic spending cuts—can slow down the country’s recovery."

The Pew Center on the States will discuss this report more in depth this afternoon. We'll offer the highlights of that conversation shortly.

-- Robert Trigaux, Times Business Columnist

That dream -- explored here in a 2005 column -- has not disappeared but it's sobering up from the early euphoria.

Despite its local production of video game blockbusters Madden Football and Tiger Woods PGA  Tour Golf, Electronic Arts laid off 51 employees -- 8.5 percent of its 600 workers-- at its Tiburon studio in Maitland this week as part of a companywide cost-cutting plan, company officials said. The video-game developer said it expects to save at least $100 million a year by cutting 1,500 jobs by the end of March, closing some studios, and restructuring its businesses to focus on its most-profitable games and on the growing mobile- and online-gaming markets, the Orlando Sentinel reports. Here's the full story.

This posting is less an update on Electronic Arts but a reminder how tough it is for a company, even an Electronic Arts, to remain relevant and in the groove in such an rapidly changing world as digital entertainment. It's also a reminder to metro areas like Orlando -- and Tampa Bay as it pursues its own niche focus on industry -- how daunting it can be to choose and nurture a specific high-tech cluster whose momentum can change so quickly.

Don't count Electronic Arts out by any means. But even Phil Holt, EA Tiburon general manager in Orlando (see photo), told me in an interview and in remarks earlier this year that finding the next must-have game for the typically young and restless customer base of gamers is a perilous mission. The company's initial premise -- that gamers will sit together in one room in front of a PC or TV screen and play video game -- is so yesterday's news. Now it's global, online gaming 24/7 and your partner or challenger may just as easily be on the couch or in Singapore. And social media sites like Facebook are becoming hubs of gamers, too. Here's what Holt wrote in an e-mail this week to Orlando employees:

"The game industry is in a period of rapid change, and the pace of that change is accelerating. In order to control our own destiny and succeed in this rapidly changing environment, EA is taking bold action on costs so we can win in the future. We are not exempt from these cost actions here in Orlando and, subsequently, 51 of our colleagues will be leaving Tiburon."

How does Electronic Arts keep up with that tsunami of change? And how does Orlando and UCF make sure they are backing the right horse and teaching the right stuff? Nobody knows for sure, and that's the beauty and inherent risk of trying to become a global player. Go Orlando!

-- Robert Trigaux, Times Business Columnist

Yacht reps said that much of the increase yacht demand is coming from two regions; the Northeast and Middle East. “That correlates in timing with both the big bonuses about to be handed out by several Wall Street Investment banking firms at year end, and increased oil prices in the Middle East,” the WSJ article says.

Lazzara showed off its new, high-end, 92-foot LSX 92 at the show as two spokesmodels in evening wear sat on the private water terrace of the yacht sipping champagne.

"You see that smile on my face?" asks Rich Lazzara (see photo) in an enthusiastic video blog report from the boat show. The boat company sold four boats, and possibly two more, "The show was one of the best we've ever had," Lazzara says. "I'm not ready to say we are back where we've been," he added but Lazzara's well on its way.

This is the same Rich Lazzara recently quoted in Success magazine urging people that, to be a successful entrepreneur, "think like a child." And the same Rich whose own Web site is aimed at "Generation Next Entrepreneurs."

The boat show is one of the largest luxury boat shows in the U.S. each year with over 600 vessels from 25 to 214 feet in length docked along a mile-long intercoastal front pier that displayed over $3 billion worth of luxury yachts currently for sale.

Quite a different spin from the glum reports in recent years from the big South Florida boat shows.

-- Robert Trigaux, Times Business Columnist

Wake up and good morning.

Freeman, credited with such classic one-liners as "Where’s the beef?" for Wendy’s and "Pizza! Pizza!" for Little Caesar's, wrote his first idea for an ad when he was an 18-year-old senior at Northeast High School in St. Petersburg. He later went on to St. Petersburg Junior College and graduated from Florida State Universitywith a degree in advertising. At its peak, Cliff Freeman & Partners was considered one of the more successful New York advertising agencies of the 1980s and 1990s.

New York Times advertising columnist Stuart Elliott recently reported that calls to telephone numbers listed for the agency were answered by recordings that say the numbers are no longer in service or disconnected. And AdAge.com and AdWeek.com reported scenes of empty offices and boxes being packed. A Fast Company piece on Freeman early this year indicated trouble was coming.

Freeman was reported to be down to a handful of clients, including Baskin-Robbins, the Michelin Guide and Saudi Arabian Airlines. The agency had lost several large accounts, among them Bonefish Grill-- started in his hometown of St. Petersburg and now owned by  Outback Steakhouse parent OSI Restaurant Partners -- and Quiznos.

Here's NYT Elliott's take on the passing of an advertising era:

"The end of Freeman is another example of the toll being taken by the recession on the advertising industry. In past hard times, agencies that lost clients and senior managers could pull over to the side of the road, re-engineer themselves and get back in the race. But the severity of this downturn has made such overhauls terribly hard to pull off."

The Freemans moved to St. Petersburg when Cliff was 6. His parents opened up the Flag Ship motel and Sea Rocket motel on Redington Beach. Freeman spent his summers on the beach and his high school years at Northeast High, where he admits he was more interested in chasing skirts than pursuing studies.

After graduating from Florida State University with a degree in advertising, Freeman still wasn't sure he wanted to go into that field. In 1968, the ad agency McCann-Erickson in Atlanta offered him $10,500 a year to work on a Coca-Cola account where he coined the Coke slogan "The Crowd Pleaser." That won him notice from New York and the rest is, more or less, advertising history.

Here's Advertising Age's last recent glimpse of Freeman:

"Few doubt that Mr. Freeman, 67, himself will resurface. The question is where -- and that's one he's not answering. Asked Friday (Oct. 30) in the elevator on the way into what was left of his office, Mr. Freeman had no comment as he walked back to the cardboard boxes that contained the remnants of his agency."

Freeman's biggest claim to fame? His 1980's one-liner -- "Where's the beef?" -- delivered by actress Clara Peller in a Wendy's ad (shown above). Those three words catapulted into an all-purpose phrase questioning the substance of an idea, event, or product. The phrase was even used to great effect in the 1984 U.S. presidential election when the Wendy's commercial-- at its height of popularity -- was used by Democratic candidate and former Vice President Walter Mondale to ridicule the candidacy of his rival, Senator Gary Hart.

Hart had taken the lead over Mondale based on his repeated use of the phrase "new ideas." When Hart once again used the slogan in the debate, Mondale leaned forward and said, "When I hear your new ideas, I'm reminded of that ad, 'Where's the beef?'"

Might be a great time to revive that one-liner.

-- Robert Trigaux, Times Business Columnist

Wake up and good morning.

 "We are a tighter, leaner company that will never make some of the mistakes we made in the past."

Lear also is expected to post a $100 million operating profit and $100 million in positive free cash flow for the third quarter, as well as announce that its new business backlog for the next three years has swelled to $1.4 billion, or 25 percent higher than it was in January, a Lear spokesman told the WSJ. Here's the complete WSJ story.

Lear, headquartered in Southfield, Mich. (shown in photo, left), makes seats and electronics for automobiles. It told its Tampa facility it was shutting down the plant over time (and that time is up). But what it did not tell the Tampa workforce, at least initially, was that it was moving the entire production line, equipment and all, to Mexico because it was cheaper. Here's a Venture post from July when Lear first entered bankruptcy and here's a St. Petersburg Times column from last November on the initial news that the Lear plant till close.

So what happens to the Tampa plant? In nine days, Nov. 18 at 10 a.m., tooling and automation equipment like the stuff from the plant shown in these photos -- whatever Lear has not already shipped elsewhere -- will be auctioned off by Tampa Liquidation Center, whose Web site for the event says:

WE HAVE BEEN COMMISSIONED TO LIQUIDATE A COMPLETE LEAR CORPORATION PLANT TO THE BARE WALLS!

Auto industry analysts give Lear a decent chance of survival and opportunity to grow given its aggressive use of Chapter 11 and finding creditors in such lean times -- all in the midst of an automotive industry overhaul. But Tampa Bay's little piece of the story is all too familiar. It's the loss of another manufacturing site paying good wages. And more folks tossed into the metro area's 11.7 unemployment pool looking for work that will, in all odds, pay considerably less.

(Show above in a photo taken outside the Tampa facility last fall are -- clockwise from top left -- machine operators Betsaida Valentin, Jean Muller, Nedra Banks and Elizabeth Rondon, maintenance tech Eric Franks and control tech and UAW Local 2405 chief Richard Neal. Photo courtesy of Selim Merchant.)

-- Robert Trigaux, Times Business Columnist

The state agency manages $132 billion in public investments for hundreds of local governments and a million current and future retirees and has endured years of controversy over investing mishaps and lack of disclosure. (Freedberg reported in September that the state board invested a quarter billion dollars in retirement funds in a Manhattan real estate deal and lost every penny of it. Here is that story.)

The SEC issue: Did the state and three Wall Street giants -- JPMorgan Chase, Credit Suisse and now-defunct Lehman Brothers -- mislead the public about the risk and liquidity of some of the State Board of Administration's investments?

The state damaged its own credibility when it acknowledged last year that was it was part of an "SEC preliminary inquiry" but then failed to disclose in July 2008 that the SEC began a formal investigation. That significant detail emerged only because Freedberg made public records requests from the state board and found that information among the pages. It's part of a larger pattern of partial- or non-disclosure that's plagued the State Board of Administration reputation as a manager of operating and retirement funds for municipalities, school systems and such individuals as Florida teachers across the entire state. Read the entire story here. Take a look at the original SEC investigative order and accompanying subpoena here.

The revelations of possible fraud come just as the State Board of Administration is busy crowing over the rebound in its investment portfolio, essentially reflecting more recent gains in the overall stock markets since March 2009. At the same time, the State Board of Administration's annual investment report for the year ended June 30, 2009, casually notes in its Oct. 16 cover letter from the board trustees that the Florida Retirement System Pension Plan "appears to have ended the year somewhat underfunded for the first time since 1997." The same cover letter goes on to say the fund is managed with the same "stringent standards as an SEC-registered money market fund."

Really? Stringent enough to be investigated for possible fraud? Read the entire annual investment report here.

-- Robert Trigaux, Times Business Columnist

Wake up and good morning.

Once Florida's largest headquartered bank, the Coral Gables bank (with Tampa Bay offices) was shut down in May then sold to a private investor group led by banker John Kanas that also includes WL Ross & Co., Carlyle Investment Management, Blackstone Capital Partners (yes, the same folks who recently bought Busch Gardens/SeaWorld and a piece of WestShore Mall in Tampa), Centerbridge Capital Partners, L.P. LeFrak Organization, The Wellcome Trust, Greenaap Investments Ltd. and East Rock Endowment Fund.

Kanas, 63, is wasting no time in trying to separate the recapitalized BankUnited from the pack. For starters, he's created a Web site called unhappyfloridabankers.com, which urges quality bankers to "Cheer Up!" and leave their unhappy positions to join BankUnited. The site even offers a tongue-in-cheek "resignation letter" that bankers can "use" to expedite their departures. Here is that letter:

Dear ( Bank CEO’s name ):
It is with great sadness that I tender my resignation.
As you know, I have for some time now felt very frustrated due to the fact that I am not able
to provide my customers with the services they need. I remember when things were different
around here and so do they, and believe me, if it weren’t for me they would have jumped
ship long ago.
Don’t take this wrong, I could not ask for a better group of colleagues. However, it is time for
me to move on, so I have accepted a position at BankUnited where my talent and experience
will be appreciated and I can go back to doing business with my commercial customers the
way we used to.
Best wishes,
( “your best employee” )
P.S. I am sure you realize my customers will follow me. By the way, if you would like to join me at
BankUnited, I will put a good word in for you.

The Miami Herald wrote a story about BankUnited's "brazen" recruiting campaign which includes nearly audible gasps of disbelief from other South Florida bankers unaccustomed to the "cheeky" style of CEO Kanas. This is the same banker who, in August on CNBC, predicted 1,000 banks will fail in the next two years. Cheer Up!

-- Robert Trigaux, Times Business Columnist

U.S. Attorney A. Brian Albritton (in photo) repeated the "ground zero" claim Tuesday in detailing an intensive, nine-month federal investigation of mortgage fraud that stretched from Jacksonville to Tampa and Fort Myers. So far, the investigation's has resulted in charges against 105 people. Here's the St. Petersburg Times take on the story.

Tampa has produced 30 cases, Jacksonville 24, Orlando 19 and Fort Myers 32. Here's a list of all the defendants.

According to Times coverage, the joint investigation with the FBI and other federal and state agencies involved more than $400 million in loans procured by fraud on more than 700 properties. Among those charged: multiple borrowers to real estate and title agents, investors and the president and owners of mortgage companies.

Of particular interest is Tampa FBI Special Agent in Charge Steven Ibison statement that Tampa Bay area banks reported $213 million in losses from mortgage fraud in the last fiscal year. Said Ibison:

"That accounts for about 8 percent of the losses nationally due to mortgage fraud. Losses that were once unthinkable are now becoming commonplace."

Albritton spoke of wrapping up a "surge" of investigative resources to accelerate the pace of the Florida crackdown on mortgage fraud. Notably, Albritton held press events in different metro markets of the state to underscore where the investigations were most focused. Here's a quick rundown:

* In Fort Myers, where the housing market has especially crumbled, federal prosecutors indicted or arrested 32 defendants in the last nine months — the most among the four offices that report to Albritton. Agents want to use the 32 as witnesses in bigger cases against more influential financial players. "To some extent, this is just the tip of the iceberg," Albritton told the Fort Myers News-Press. "You’ll be seeing more defendants and more complex cases."  Here's the News-Press story.

* According to Naples news coverage, FBI Special Agent Ibison blamed "out of control greed" for the fraud epidemic, saying mortgage frauds dwarf the savings and loan crisis in the 1980s and 1990s. Total losses aren’t known because only those banks that are federally insured are required to report them. More coverage here.

As a column in the Fort Myers paper says, we know we're ground zero: "We're living this mess." Tell us something we don't know. And don't take the pressure off the investigations.

-- Robert Trigaux, Times Business Columnist

Liz Smith, president of cosmetics giant Avon Products Inc. for the past five years and known for her turnaround skills, was named chief executive officer of OSI Restaurant Partners Inc., the Tampa owner of Outback Steakhouse,  Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse and Wine Bar and Roy’s restaurants. Here's OSI's press release. And here is St. Petersburg Times staff writer Mark Albright's story, which will be updated through the rest of the day.

A former Kraft Foods executive, the 46-year-old Smith will replace Bill Allen, who becomes chairman after five years as the Tampa restaurant conglomerate's top executive. The transition is official in two weeks, on Nov. 16.

Fortune magazine recently named Smith one of the 50 most powerful women in business. This year, she ranked 29th on the list, up from 42nd in 2007, and was described as heir apparent to Avon's high profile CEO Andrea Jung. Apparently not.

Here's a quick glimpse of Smith's style, courtesy of a 2007 Fortune magazine brief:

"Smith believes in taking detours. In 1996, for example, she was running Kraft Foods' giant Jell-O brand when she opted to transfer to a small U.S. import business related to a new European acquisition. "Everybody thought I was crazy," she says

"But Smith wanted experience in sales and global distribution, and she got it. "I've always viewed my career as a journey, not an endgame," she muses. Since joining Avon as a top marketing executive in 2004, Smith has broadened her duties enormously. Named president in September, she is key to the (Avon) turnaround in progress."

--Robert Trigaux, Times Business Columnist
 

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Update mid morning: St. Joe Co. released its third quarter earnings, reporting a loss of $14.4 million compared to a loss of $19.2 million for the third quarter of 2008. More  details here.

Wake up and good morning. Florida real estate giant St. Joe Co. often gets likened to a feudal lord, at least in the state's Panhandle where the company's concentration of acreage, development history and astonishing political clout seems to let the firm pretty much do what it wants.

The nasty recession has stalled its pace of development, mostly upscale beachfront projects west of Tallahassee and east of Pensacola. But the delays won't last. The latest stimulus to the Panhandle -- or "Florida's Great Northwest" as St. Joe publicity spinners prefer to call it -- is a new airport (see rendering of terminal) due to start operating next May, built on donated St. Joe land. It is the fruition of years of lobbying by the Jacksonville-based company. The coup de grace: St. Joe convincing Southwest Airlines to fly in and out of the new Bay County airport when it opens, with St. Joe covering any Southwest losses there for the first three years. Here are more details on the joint venture.

The airport replaces a smaller one, which means a significant jet service will be able to draw tourists and, St. Joe hopes, vacation home hunters and retirees more conveniently from a greater swath of the Midwest and Southeast.

The airport (see aerial photo) has been a fundamental strategy for St. Joe, in effect introducing a firehose of new people to the Panhandle instead of the trickling garden hose provided by the smaller Panama City area airport.

A new AP story here catches us up on St. Joe and its Panhandle plans. In the story, St. Joe CEO Britton Greene says the company has a chance to reshape Florida by creating new towns, resorts, shopping centers, hotels and highways in places that haven't experienced much more than a few timber mills for generations until now. St. Joe owns 580,000 acres. Says Greene:

"Because this part of the state is so new and so green we have the opportunity to be one of the leaders in job growth. We don't have the massive vacant real estate overhang that they have in other parts of the state."

Not to mention that the Panhandle boasts some counties with the lowest unemployment rates (one under 6 percent) in the state. Not a bad base to build upon.

-- Robert Trigaux, Times Business Columnist