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Bittersweet Solution

Jun 20, 2014


Ed Rosenthal founded Florikan in 1981. He now runs the business with his son, Eric Rosenthal. Photo by Mark Wemple.

The dilemma Ed and Eric Rosenthal faced about the future of their fast-growing fertilizer business was a so-called ‘good problem.’

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Sales at the Sarasota-based firm, Florikan, have doubled since 2009, to around $30 million last year. Most of that comes courtesy of Florikote, a patented polymer-coated fertilizer with a controlled-release mechanism the company developed with help from NASA — and an investment of more than $500,000. The gist behind the science of the product is less fertilizer on a more even distribution plan is better than more product sprayed sporadically. It’s an anti feast-or-famine approach counterintuitive to the industry, but it has resonated with the firm’s customer base of growers and agricultural operators.

It resonated so much the potential for more growth is an immediate opportunity the father-son executive duo doesn’t want to waste. They seek to expand production to a third and fourth shift and hire at least 20 more people, 10 right away.

Therein lies the problem: Where to expand?

Ed Rosenthal, who founded the firm in 1981 in Sarasota, wanted to stay local. So too did his son, the president of the company. But the Rosenthals found nothing that worked for their specific needs, even after more than a yearlong search for a suitable property in the Sarasota-Bradenton region. Eric Rosenthal adds that the firm has struggled, like many other manufacturing businesses, to find the right employees in Sarasota. Turnover for some positions has been high.

“We kicked around every idea we could” to stay, says Eric Rosenthal. “We looked at all kinds of property and land.”

Then Hardee County officials, 60 miles east in Wauchula, made Florikan an irresistible offer: The county would construct a new building on spec for the firm, at a cost of $4 million. Florikan could lease the space it needs, and pay the county back on a lease-buy option by earning credit for new hires.

Sold.

“They made it easy,” says Eric Rosenthal. “No red tape. No politics. They were aggressive and wanted us there.”

Florikan sold its Sarasota facility, but will maintain a corporate office locally, in Lakewood Ranch, where it will have about a dozen employees. But the manufacturing, distribution and warehouse work will all take place in Hardee County starting in 2015. The company, now with about 35 employees, will offer some personnel the opportunity for jobs in the new facility.

The solution is bittersweet for Ed Rosenthal. He’s excited about the possibilities in Hardee County. But he laments that the Sarasota County Commission isn’t as business-friendly as it was under a different makeup, with former commissioners like Jon Thaxton and Shannon Staub. And while he says the Economic Development Corp. of Sarasota County tried hard, it was too little. The general problem, says Ed Rosenthal, is he believes county officials don’t do enough to shift the Sarasota economy away from the service-hospitality-real estate triangle.

“We don’t think Sarasota County really wants manufacturing,” says Ed Rosenthal. “We used to have a commission that was fantastic. There were people who knew how to get things done and were supportive of business. I would have thought they would have done everything they could do to keep us here. There was no effort from the top down.”

Innovative company
Sarasota County EDC President and CEO Mark Huey says this isn’t a case of the county being unfriendly toward business or manufacturing. The EDC, says Huey, worked diligently with Florikan to find space. But a $4 million building with public money isn’t a viable option.

“We admire Florikan incredibly and they are a great business story,” says Huey. “The unique opportunity they were able to take advantage of in Hardee County isn’t something Sarasota could match.”

That leaves the core of Ed Rosenthal’s complaint intact: The bureaucratic machine in Sarasota County sometimes puts a chokehold on new business and expansions. It’s a narrative local officials have heard before. County Commissioner Joe Barbetta, for one, says he’s heard several variations of that theme for the past eight years.

Barbetta, who wasn’t aware of Florikan’s dilemma, says one issue is the commission is usually last to know about a problem. Some businesses, he realizes, don’t complain publicly or in the media, for fear of retribution. “A lot of times it doesn’t get to our level, when it really should,” Barbetta says. “We should have a more proactive approach.”

Yet being proactive might not have been enough to keep Florikan, beyond the building Hardee County dangled.

The employee training and retention issue Florikan faces, for instance, is a thick obstacle. Most of the manufacturing processes the firm uses are specific to Florikan. That makes a Florikan-focused countywide training program cost prohibitive because the graduates would have only one employer option, says Sarasota Manatee Area Manufacturers Association Executive Director Peter Straw.

Not that Straw is happy to see Florikan take its manufacturing work elsewhere. “We are sorry to see them go,” says Straw. “I always thought they were one of the more innovative companies around.”

Another aspect specific to Florikan’s move to Hardee County is pay scale. That scale is lower in Hardee, a rural community with fewer than 28,000 residents, than Sarasota, which has a population of more than 370,000, according to U.S. Census data. So Florikan can save on labor costs when it hires in Hardee County to meet performance-based incentive obligations.

Risk and reward
Those factors spelled opportunity to Hardee County.

The county and the company were connected through a Florikan vice president who grew up there.

The courtship was direct: Hardee County sought to make Florikan the newest tenant of the Hardee County Commerce Park, a 264-acre facility run by the Hardee County Industrial Development Authority. The IDA is funded through a variety of sources, including a lucrative agreement with phosphate mining giant Mosaic, which runs a large operation in the county. The IDA uses those funds to create an amped up economic development centerpiece, where it trades space for jobs.

“We would never reach out to try and steal a company from another county,” says Hardee County Economic Development Office spokeswoman Krystin Chapman. “Florikan needed more room and more space.”
The IDA will become the landlord of the complex in the Hardee County Commerce Park it’s building for Florikan. That 80,000-square-foot building, say county officials, could be ready for occupancy by summer 2015.

Given several recent, and highly publicized, examples of Gulf Coast companies failing to deliver on job promises in return for government subsidies, the Hardee County model seems like an outsized risk. Chapman says Hardee County officials recognize that element of the program. “It’s just like investing your own money,” she says. “There are some successes and there are some failures.”

But the IDA has been a large success overall, says Chapman. It produced more than 300 jobs that accounted for 46% of Hardee County’s total employment increases from 2006 to 2011, according to a study from the University of South Florida-Florida Institute of Government. Those employees, the study adds, earned nearly $38 million in that time.

Better yields
In Florikan, the IDA and Hardee County will get a firm on the verge of some major projected growth, courtesy of Florikote. The product, the firm says, allows farmers to spread polymer-coated fertilizer with a controlled-release mechanism and can be used on several kinds of crops, from sugarcane to citrus. Florikan says a single application of its controlled release can match yields with three to five applications of conventional, granular fertilizer.

Florikan developed Florikote in conjunction with the NASA-funded Space Alliance Technology Outreach Program over five years. It began to sell the product in 2008. In 2012, Florikan licensed the technology to Boise, Idaho-based J.R. Simplot, a $5 billion food and agriculture business. Simplot now manufactures and distributes Florikote on the west coast.

Officials and organizations from Sarasota to Tallahassee have also recognized Florikan for its technology and growth. GrowFL, a University of Central Florida economic gardening organization, named Florikan one of 50 fast-growing firms to watch statewide in 2013. Ed Rosenthal hopes to see more accolades, and growth, in the near and long-term future for Florikan. He also says domestic manufacturing isn’t dead, despite his bitter taste from Sarasota.

“It’s possible for American manufacturing to compete,” says Rosenthal. “We just need a little help.”

- See more at: http://www.businessobserverfl.com/section/detail/bittersweet-solution/


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