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Friday, Mar 29, 2024

Out of the Stock Market, Into the Valley Business Scene

Out of the Stock Market, Into the Valley Business Scene From The Newsroom by Michael Hart Read the financial news above the fold on the front page these days and you’ve got to believe a lot of people picked a bad time to go into business. Way back at the beginning of the year, it seemed like there would hardly ever again be an opportunity for a scandal to grab headlines the way the Enron debacle did. At the time, of course, we didn’t know it would drag Arthur Andersen down with it. We didn’t know we could expect news equally, if not more, dramatic and discouraging about Global Crossing, RiteAid, WorldCom, Tyco, Xerox, Vitesse, etc. etc. etc. The biggest, baddest tale the local business scene could come up with Homestore.com’s required readjustment of its books last winter is minor league stuff by comparison. Certainly, the Woodland Hills office of Arthur Andersen LLP, around here since 1983, has closed and folks at Universal Studios must be sitting behind their desks with their eyes wide open as they wait to see what impact the demise of Vivendi’s Jean-Marie Messier will have on them. And in an economy that has become both global and fast-paced, everything touches everything else and events one place have an impact on people and companies somewhere else. Still, for most intents and purposes, here in the San Fernando Valley people continue to get up, go to work and collect their paychecks much as they did a year ago. Look at the list in this issue of the Valley’s largest public companies and your eye must travel all the way down to Homestore at No. 31 before you find one that’s announced it’s in trouble so far. When Times Mirror morphed into the Tribune Co. two years ago, it was lamented that there was hardly a major American corporation left that remained headquartered in Southern California and yet, at least where the Valley is concerned, life goes on. The last issue of the Business Journal contained a special report on the Valley’s economic engines, the people, places and products that are driving this region’s businesses. Certainly, giants like Amgen Inc. and the Dole Food Co. were represented. But so were the 7,000 small businesses on Ventura Boulevard. So was a realtor who, year in and year out, sells a house every three days. So was Baja Fresh, a chain of fresh but fast food outlets that took a new idea, tripled sales with it in four years and then sold that idea to Wendy’s International for $275 million. In thousands of “below the radar” ways, the Valley’s small and medium-sized companies continue to plug away at their businesses, making money and satisfying customers, clients and investors without cooking their books in any substantial way. It would be na & #271;ve of any writer to say things are beautiful here, that business is as good as it’s ever been because that isn’t the case. In fact, were it not for the record-breaking local residential real estate market, a mania for mortgage refinancing, both fueled by low interest rates, and the money that phenomenon has allowed consumers to spread around, the story here might be just as grim as it is in Northern California and elsewhere. But, just as water finds its own level, so do economies big and small work out their own kinks. According to the Federal Reserve Bank, this year Americans have put $203 billion into savings accounts at their banks and savings and loans. During the same period, they’ve invested $72 billion in the stock market. Two years ago, investors poured $310 billion into mutual funds and only $142 billion into their savings accounts. No, the returns on those savings accounts aren’t any greater than they were before, but this is 2002, the year we all started out in “hunker-down” mode, committed to keeping our heads down and waiting things out. In the San Fernando Valley, we have done more than that. We have examples of entrepreneurs using their imagination to seize opportunities or to get themselves out of tight jams. For example, in this issue you can read a story about a company called Case Financial Inc., which came up with the idea of providing financing to plaintiffs in injury suits in situations where neither they nor their attorneys might otherwise be able to wait out more powerful insurance companies or defendant’s attorneys. In other words, they found somebody who nobody else was serving and figured out a way to do it themselves. You can read about WonderWorks, a special effects company that hung its hat for years on the work it did for the “Star Trek” movies. That revenue dried up, however, as the film and TV industry began using computer-generated images to take the place of the more prosaic special effects WonderWorks created. Instead, the Canoga Park company branched out and started developing attractions for theme parks around the world. It just signed its biggest deal, $100 million worth of work at a park in Paris. Resentment and anxiety about big business may have driven garden-variety investors out of the market and the usual stock indexes as low as they’ve been in recent years, but here closer to the ground entrepreneurs continue to come up with ideas to turn a profit that don’t require creative accounting in order to work. Rue the day Times Mirror left town, wring your hands because the greater San Fernando Valley can’t get another Dole or Amgen to move in and applaud every biotech startup in Valencia, independent restaurant owner in Reseda and entrepreneur working out of his spare room in Thousand Oaks. They are the ones who will continue to keep the Valley’s economy running. Michael Hart is editor of the San Fernando Valley Business Journal. He can be reached at [email protected].

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