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Thursday, Mar 28, 2024

COMPANIES—Industry Mix Evident With Top 25 Firms

The San Fernando Valley may be typecast as an entertainment-industry hub, but the Business Journal’s list of fastest growing private companies helps demonstrate the area’s diversity as a business community. Out of the 25 fastest-growing firms, only one, 3 Point Digital a distributor of digital film editing equipment and other software could be considered entertainment-related. The rest run the gamut from construction companies to employment agencies, apparel makers to travel agencies. “Most people think of the Valley as strictly entertainment-related, but the area is diversifying,” said Jack Kyser, chief economist for the Los Angeles Economic Development Corp. “The Valley has a lot of tech companies and a lot of other companies out there doing some interesting things.” Diversity is important given the wallop the Valley suffered in the early 1990s, when the aerospace industry contracted and the area lost thousands of jobs, said Kyser. “The Valley was hit hard, but I’d say the area has a little insulation from future economic gyrations,” he said. This year’s list of fastest growing private companies features a number of new faces. In fact, 18 of the 25 companies on the list seemingly came from nowhere to make the ranking, including No. 1-ranked EPI Enterprises Inc., a commercial construction company out of Van Nuys, and No. 3-ranked NewMark Merrill Cos., a Tarzana company that buys and repositions shopping centers. EPI, based in Van Nuys, experienced a whopping 564-percent increase in revenues between 1997 and 1999. Founder and chief executive James Amato attributes the company’s growth to a strong economy and dynamic growth in the commercial real estate industry. NewMark saw revenues increase 383 percent over the same period. As the retail real estate market softened in recent months, the company was presented with more buying opportunities. While some fast-growing companies disappear from the list seemingly as quickly as they appear, Market Scan Information Systems Inc., a maker of software that helps auto dealers track automobile lease rates, has maintained its No. 2 ranking for two years running. The Westlake Village-based company saw a 454-percent increase in revenues between 1997 and 1999 and, CEO Rusty West said, the company’s prospects remain solid. “The economy has been really strong and new cars are getting so expensive, a lot of people prefer to lease,” said West. Business for Box Brothers Corp., on the other hand, has slowed a bit as the economy cools, said Robert Goodman, the company’s CEO and president. The company sells boxes and packing supplies to people and companies on the move. It also packages and ships items that weigh less than 1,000 pounds. Cardboard on fire Box Brothers, which made it to No. 7 on the list, saw its revenues increase 124 percent since 1997 and, despite the cooling economy, Goodman expects the company’s revenues to continue to grow. “We’ll continue boosting revenue, but it’s going to be through expansion (of locations),” he said. The Woodland Hills-based company plans to open its 30th store in New Jersey this month, a move that will allow Box Brothers to tap into the East Coast market for the first time and increase cross-country shipping, said Goodman. In a somewhat quirkier category of commerce, Chatsworth-based Pipedream Products Inc. made this year’s list thanks to a healthy 78-percent increase in revenue between 1997 and 1999. The company sells risqu & #233; novelty and gag gifts, games, lotions and adult-themed toys to wholesalers who, in turn, distribute the items to consumers. David Feldman, the company’s CEO, said the biggest market for the company’s novelty and gag gifts are bachelor and bachelorette parties. Business is so good, in fact, the company recently had to buy out a tenant in its 51,000-square-foot Chatsworth warehouse so it could expand. By shifting to more in-house production of many of its items, the company has been able to boost profits by reducing manufacturing costs. In addition, the company puts a lot of effort into its packaging, which Feldman credits as a significant factor contributing to its improving sales. “Our packaging is very dynamic,” he said. “We’re selling the sizzle and not the steak.” Bruce Ackerman, president and CEO of the Economic Alliance of the San Fernando Valley, said it is probably no coincidence that nine of the top 25 fastest growing companies are located in places that don’t have business taxes, including Calabasas, Burbank and Glendale. Taxing issue L.A.’s own gross receipts tax puts the San Fernando Valley at a distinct disadvantage attracting and retaining businesses. “When a company’s scanning the horizon (for a place to locate), they’re asking, ‘Where am I going to get the best deal?'” said Ackerman. And often, the answer is not the city of Los Angeles. Kyser agreed that L.A.’s gross receipts tax makes it tough for the city to compete with the surrounding municipalities. In fact, economic development types in other communities and states use rankings such as the Business Journal’s fastest growing company list to woo companies to their areas. “It makes a great shopping list,” he said. Ackerman noted that, despite repeated objections to the gross receipts tax by the business community, the city of L.A. has so far refused to reduce the burden. Revamping the tax has not been a high priority for Mayor Richard Riordan, Ackerman added. “Somebody’s going to have to take a real lead (in L.A. tax reform),” he said. Kyser said it is incumbent on members of the business community to find out where candidates for City Council stand on the gross receipts tax issue, and then hold them accountable come election time. “The bottom line begins and ends with business,” he concluded. “Being business-friendly is very important.”

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