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Miami Slice

CE begins an occasional series on what and who a CEO ought to know about cities and regions, how business is done and who can do it. We begin with a classic border town, Miami, Latin America’s gateway to el Node in terms of capital and culture.

Miami is a place where tourists and newcomers of all types have always been welcome. It’s a decidedly optimistic city that has gone through almost regular cycles of boom and bust since its founding less than a century ago. But the last decade was perhaps the most dramatic in Miami‘s entire history.

For Miami‘s business community and for the whole city, the ’80s brought a series of transforming developments and disasters. The disasters came first: 1980′s deadly race riot, the Marielito refugee flotilla and drowned Haitian boat people. As Miami was coping with these internationally reported events, the drug explosion glamorized by Miami Vice gave the city more unwelcome notoriety.

Yet through all of this, Miami was also successfully developing in response to an entirely new set of economic realities. In the course of the ’80s the city ceased to be primarily an American vacation and retirement town. It became an international financial and service industry center. It also became, in effect, the commercial capital of Latin America.

The enormous flight of private and corporate funds from troubled South and Central American nations to Miami occurred for several reasons: Miami’s desirable situation (a prosperous, subtropical American city with easy transportation to most Latin American capitals), its plethora of accommodating banks (there are at least 70 Edge Act branches there in addition to the local banks) and, perhaps most appealing, its majority of Spanish-speaking citizens (60 percent in Miami itself).

Currently, the city is feeling the effect of economic downturns in Latin America as well as a local slump in the real estate, construction and retailing industries. The failure of two large S&Ls (AmeriFirst and CenTrust) has not brightened the atmosphere. But Miami is now diversified and prosperous enough to ride out its reversals.

As American tourists stopped visiting the city in large numbers, foreign tourists replaced them in large numbers. As resort hotel occupancy began to decline, Miami started to become the largest cruise ship port in the world.

As it coped with a huge influx of refugees, a forest of tall new office buildings and condominium apartments rose to transform the city’s skyline.

The top executives of Miami‘s leading corporations have been key to the city’s resurgence. M. Anthony Burns, the CEO of the biggest-the $6 billion Ryder System-has been through it all: “Miami‘s an excellent place to live and do business in,” he says. “It’s an environment that is made to order for those who are comfortable with diversity, change and people as they are. If you’re not comfortable with that, Miami can be challenging and that’s the truth!”

Though Tony Burns’ Ryder System ranks higher in the Fortune 500 than Knight-Ridder, there’s no doubt about which company has the most influence in Miami. Not only is K-R’s Miami Herald the only daily newspaper in town, with the lion’s share of all advertising revenue in Dade county, but Miami is also the corporate headquarters of the $2.3 billion news chain. Of far more importance, however, K-R was the power base of Alvah H. Chapman, Jr.

“Alvah Chapman ran Miami,” asserts a knowledgeable observer of the city. Chapman, 69, was K-R’s CEO from 1976 to 1988, the years in which Miami experienced that unprecedented series of shocks and successes. By some accounts a superb corporate executive, Chapman proved equally adept at civic power brokering, mainly through an informal club coyly named the “Non Group.”

The Non Group was founded some 20 years ago by Chapman and Harry Hood €. Bassett, then CEO of Southeast, Miami’s largest commercial bank. Numbering about 40, its members still meet once a month, usually at a club or restaurant.

The majority are successful businessmen, but the group also includes some civic and cultural leaders. Inevitably, it is criticized in some quarters.

“The Non Group is a perfect example of what Miami is about,” asserts a non-Non Group executive. “It’s absolute, naked power, not at all disguised and not at all embarrassed by the fact that this is an undemocratic institution. It’s business telling the city how the city should be run.”

Whether or not the Non Group can be high-handed, there’s no disagreement that whatever power it has stems mainly from the still formidable presence of Alvah Chapman, Jr. Until 1988, his influence was apparently unrivaled. If he took you up, invited you to become a member of the Non Group, then without a doubt, your business life could gain new dimensions.

In the case of Armando Codina, an already successful young Cuban-American entrepreneur, it could mean an accelerated rise to become the first Hispanic chairman of the Greater Miami Chamber of Commerce and a real estate partnership with a son of the President of the U.S.

In the case of David L. Paul, once an outsider, it could perhaps mean premature acceptance. Paul, as CEO of CenTrust, was ultimately responsible for one of the biggest financial debacles in Miami’s history. When federal regulators seized CenTrust on February 2, it was the twenty-third largest S&L in the nation, with assets of $8.2 billion, in Miami second only to Southeast Bank. The regulators said that CenTrust was about to become insolvent and estimated that saving it would cost taxpayers more than a billion dollars.

“Miami’s always been a city of newcomers,” comments a long-time resident. “You don’t have to be here very long to rise high. You can rise very fast if you spread the money around and get involved in the right things.”

The right things in Miami are such worthy causes as the United Way, the Miami Philharmonic and Ballet, the Chamber of Commerce and the Beacon Council, an organization that solicits out-of-town businesses to establish themselves in Miami/Dade County.

Knight-Ridder Vice Chairman Richard G. Capen, Jr. is head of the Beacon Council. Capen, 56, is an active proponent of Miami. “I think it’s a city of the future,” he says. “Many of the problems we’ve had here are like other cities’, but we’ve had to deal with them on a larger scale and in a shorter period of time.”

Though Dick Capen remains in the forefront of Miami civic life, neither he nor his boss, K-R Chairman and CEO James K. Batten, 54, seems likely to play the role that Alvah Chapman, Jr. did. Comments a local journalist: “Jim Batten is a good newsman and corporate executive, but he’s not a power broker. He would be more likely to report on the power than to use it.”

“Reporting” on the political situation in Miami, Batten observes, “We have not had good leadership in this town for many years, but Mayor Xavier Suarez gives me hope that this is a tradition that’s eroding.”

Suarez, 41, is a widely respected, Harvard-educated lawyer, but probably the most important thing about his mayoralty is that he is a Cuban-born holder of the office. As the 1990s begin, the political and economic power (not to mention the cultural influence) of the Miami Hispanic community (which is 70 percent Cuban) is firmly in place. The structure of this power, however, is quite different from the “Anglo” community’s.

Except for venerable Bacardi, there are no Hispanic-owned Miami businesses with revenues of over $200 million. Most are small or medium-sized companies, many of them family owned and operated. And they have their own economic network, parallel to the Anglo community’s.

“Every community has its own pyramid,” says Joaquin F. Blaya, CEO of Univision, the largest Spanish-language TV network in the U.S. “When the Cubans came here they decided to ignore the existing pyramid and build their own. Eventually, their pyramid grew and with it their economic and political impact. Today, it’s almost as high as the other pyramid and commands attention.”

Blaya, 44, has been chairman of Miami’s United Way and knows his own way around the city’s power structure, of which he says, “It’s a different era now.” He, Armando Codina and Xavier Suarez represent a younger, more Americanized generation of Miami Hispanics (Blaya was born in Chile).

A business partner of Codina’s, John Ellis “Jeb” Bush, 37, seems to move easily between the tops of the “two pyramids.” A son of President George Bush and fluent in Spanish, he says of Miami: “We are uniquely international in a country that isn’t particularly international.”

Today, the pervasive influence of such older, politically oriented organizations as Jorge Mas Canosa’s Cuban American National Foundation is being supplemented by strong commercial groups like the Latin Builders Association, which derives its strength from businesses founded and flourishing in Miami.

Where Canosa wants to hire Milton Friedman to work on a master plan for the Cuban community in anticipation of Castro’s fall, the younger Hispanic men often have their vision focused on a future in Miami. In a recent survey, only 20 percent of the

Cuban-Americans in the city said they would return to Cuba if Castro falls.

In the meantime, the top levels of both of Miami’s “pyramids” continue to work for their city’s enhancement. One of their major projects is an ambitious performing arts center which Knight-Ridder would like to see erected on property it has acquired adjoining its headquarters.

But currently opposing that site is Ted Arison, founder and chairman of the $400 million plus (1989) Carnival Cruise Lines. The man most responsible for Miami’s pre-eminence as a cruise port, Arison, 66, has also become a formidable presence in Miami’s business and civic worlds. A member of the Non Group, he has pledged $10 million to the performing arts center.

“Ted Arison is one of the miracle stories in American business,” says another top Miami CEO. And he’s possibly the one man who could fill the role Alvah Chapman created in Miami. No matter where the performing arts center eventually rises, it will be the result of a typical exercise in civic virtue and corporate power.

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