Like much of the nation, the San Fernando Valley counts small business as a key part of its economic growth. In fact in its 2000-2001 report, Cal State Northridge’s San Fernando Valley Economic Research Center found that lending to these firms jumped 30 percent from 1998 to 1999. Of the 28,000 loans under $1 million made to Valley businesses, a third went to firms with annual revenues of less than $1 million. While the report acknowledges that some of that jump is due to increased reporting, additional lending activity is also a factor. According to researchers, the small business industry sectors experiencing the most growth and the ones that will continue to do so for at least the next year are entertainment, bio-med/bio-tech and home health care. Wexler Video Inc., a 16-year-old Burbank-based firm led by president Chris Thompson, is smack dab in the middle of one of the Valley’s hottest trends. This $20 million entertainment company provides equipment to reality-based television productions such as “Survivor,” “The Real World,” “Road Rules” and “Temptation Island.” With its revenues growing at 20 to 26 percent annually, this 90-employee business has found the region extremely conducive to growth. “The San Fernando Valley is where it’s (reality-based television productions) all done,” says Thompson. “We’re in the epicenter of it. There are a lot of production companies here and, if the companies are not here, the people live here.” He believes cheaper rents, proximity to Hollywood and the long history of entertainment firms such as Universal Studios, Warner Brothers and Disney in the Valley are other reasons the industry is so much a part of the region’s economic fabric. Entertainment strike fears While motion picture production and motion picture production services have grown 110 and 116 percent respectively in the last six years, there is a potential major blip on the entertainment industry’s radar screen in 2001: threatened strikes by the Screen Actors and the Screen Writers guilds. But Thompson of Wexler Video does not expect his firm to be unduly impacted, even if a strike should materialize. “(The productions in my business) are unscripted and without actors, so our work is not going to be affected by the strike too much. I don’t expect a downtown at all,” says Thompson, who believes the reality television boom will last another 18 to 24 months. “The entertainment industry is changing just because of the way business is being done,” says Saul Gomez, director of economic development for the Economic Alliance of the San Fernando Valley. “You now have digital imagery, which means you can work on a film in Calabasas and e-mail it to a network server in Burbank.” Steve Donely, deputy community development director for the city of Burbank, which is home to Disney, Warner Brothers and a host of small firms that support these studios, says his city’s tax structure and lower utility rates make the area so enticing. He also points to an investment Burbank made that has become a vital drawing card. “Our fiber-optic loop, which our utility company laid throughout the city, is really unique among municipalities,” Donely said. “Los Angeles has one too, but it’s very limited in the Northeast Valley. In Southern California, we were one of the few cities to lay our own line.” While growth has been the watchword for the San Fernando Valley, Gomez says the very things that have nurtured it could create future challenges. It’s getting more difficult to find land, which is pushing up the cost of both commercial and residential real estate. Then there’s the constant need to train and retrain workers. Within the city of Los Angeles, Gomez says, the cost of doing business must become more competitive with surrounding municipalities. And he believes Valley communities and cities must view themselves as one contiguous region and begin working together to bring in additional industry, instead of competing to attract companies that merely shift from one part of the area to the other. The newest big thing Two other hot industries in the year to come will be bio-med and bio-tech, predicts Gomez. “Bio-med is medical instrument manufacturing and it’s growing, particularly here in the Valley,” he said. “The growth goes back to aerospace and the whole defense industry. There were certain things developed by JPL and larger research institutions for defense that can also be commercialized.” Gomez adds that workers faced with the prospect of unemployment because of the aerospace pull-out suddenly realized they could apply their knowledge and expertise to the entertainment and medical instrumentation industries. While many of the medical instrumentation companies are big (Baxter International, MiniMed and Advanced Bionics), their presence has created a demand for many small suppliers in the area, or has made the environment very friendly for related companies. Medical Illuminations International is an example. “We are one of the premier manufacturers of medical lighting equipment, from surgery through exam lighting,” says Larry Debord, vice president in charge of sales and marketing for the San Fernando-based company. “We feel that in the Los Angeles area, the Valley is overall the best (place to be) in terms of cost of overhead, building and availability of labor. Transportation is also one big factor. We’re near an interstate, and near the 118 freeway which gives us easy access for trucking,” adds Debord, whose company ships about 90 percent of its products by UPS. “The city of San Fernando has a good police department and it’s very pro-business,’ says Debord, whose 40-employee company moved from Van Nuys to Arleta and then in September to San Fernando. While there may be a general perception that San Fernando is not necessarily the “best” place for a business, Debord says, their decisions were based on nuts-and-bolts issues like available building space, security, access to transportation, a quality labor pool and a reasonable cost of doing business. San Fernando offered all of those things. According to Ahmed Enany, executive director of the Southern California Biomedical Council, there are concentrations of medical device manufacturing firms in Chatsworth, Sylmar and San Fernando, as well as a scattering of companies along Interstate 5. MiniMed’s place in the mix He says another reason the industry is growing in the Valley is Cal State Northridge. While many universities around the nation are sources of technology spin-offs, it was real estate the school owned that made it such a critical player. “In 1997, MiniMed was making a decision about expansion and needed 15 acres,” recalls Enany, who says the firm was even getting offers of free land in other states. A chance tip about 60 prime acres owned by CSUN which wanted to generate $1 million in annual revenue with it provided the impetus the company needed to stay in the Valley. At the same time, MiniMed established a relationship with the school, including courses and internships, which would eventually funnel workers into the company. Enany says a similar effort is under consideration at Pierce College in Woodland Hills. The other hot industry in the Valley home health care services has grown 128 percent in the last six years, according to the San Fernando Valley Economic Research Center. This sector, in general, consists of skilled nursing or medical care in the home done under the supervision of a physician. That growth includes a number of for-profit companies like Home Instead and Care Keepers Inc. that Tim Brown of the National Association for Home Care says provide non-medical “chore services.” These provide transportation to medical appointments, house cleaning and meal preparation. According to Brown, spurring growth in this part of the industry is an aging population that overwhelmingly prefers to do its long-term recuperating at home. Also, in the last three years, a decline in government funding for Medicare-certified home healthcare agencies nationwide has pushed many such entities out of business or forced them to morph into for-profit businesses.
OPTIMISM—Small Business Sector Has Optimism About New Year