Modest Gains Mark Most Latino-Owned Firms in State
Angel Echevarria took out a bank loan in 1966 to found his East Los Angeles-based mattress manufacturing company, Angel Echevarria Co. But the firm sagged under the cost of interest payments until Echevarria mortgaged his house and possessions in 1978 and paid off the loan. Since then, he says, he has captured a 3% share of the mattress market nationwide.
“In 1981, our sales were $3.2 million, and we’re going to hit in 1987 close to $50 million. And I’m ecstatic about it,” said Echevarria, who is president, chief executive and owner of the company.
“We don’t owe the bank a dime, thank you,” he added.
But his soaring success exceeds that of most Latino-owned businesses in California, which have experienced more modest growth and remain relatively small compared to their counterparts in other states, a new survey discloses.
Echevarria’s company jumped eight rungs this year, to 51st in Hispanic Business magazine’s ranking (by sales) of the nation’s 500 largest Latino-owned businesses. The jump was the second largest, after Southeast Machine Co. of Newport News, Va., by any industrial manufacturing firm in the top 100.
Just one California company, San Bernardino-based Vanir Group, a construction and financial firm, placed in the top 20 this year. (Frank Dominguez, owner of eighth-ranked Vanir, did not return a reporter’s phone calls late last week.) Oakland-based Lloyd A. Wise, an auto dealership, ranked 21st, while Bell-based Galindo Financial, a real estate company, was 26th.
Three Fewer Firms
The magazine’s third annual survey listed 118 California companies, down from 121 last year. Most of the biggest companies on the list are based in Florida and Puerto Rico. Ranked first and second are Bacardi Imports, a liquor importer and distributor, with $424.61 million in sales, and International Medical Centers, a provider of medical services, with sales of $419.60 million. Both are based in Miami.
Echevarria’s initial financing difficulties are typical of the financing problems many small, minority-owned firms face. Lack of access to venture capital and bank loans continues to stunt the growth of Latino-owned businesses in California, area entrepreneurs and experts say. “Although there are systemic problems inherent to all business (and) industry, the acquisition of capital is probably the most prevalent barrier facing the Hispanic entrepreneur,” said Rudolph Estrada, vice president for corporate lending at Tokai Bank of California.
The size and vitality of California’s entrepreneurial sector may actually be stunting the growth of the state’s Latino companies, some claim. The explosive growth of small computer, aerospace and biotech firms in the state has tended to crowd existing minority-owned firms out of financial markets, several businessmen said.
“We’re competing (for financing) against much more sophisticated firms,” said Ernest Camacho, owner and president of Pacifica Services, a Pasadena-based civil engineering and defense electronics maintenance company. “We’re competing against Silicon Valley and the space industry.”
Founded in 1979, Pacifica ranked 173rd last year in the Hispanic Business 500 with sales in 1986 of $11.5 million. Camacho said he expects sales of $20 million this year.
Stiff Funding Competition
New industries are taking funds that might otherwise go to minority-owned businesses, said Mack Davis, an adjunct professor with the USC entrepreneur program. “There’s definitely a drain--what’s hot in Los Angeles now is biotech,” he said.
Also, Latino entrepreneurs often lack business and professional contacts outside their own community, experts say. “The networks do not exist, or are not as extensive, for Hispanic firms as for other firms,” said J. Fernando Niebla, majority stockholder and chief executive of Infotec Development, a Santa Ana-based computer software development company.
Latino entrepreneurs running small companies often do not know who to contact, nor are there many Latinos in financial services, Davis said. “You look at the (venture capital firms), you look at the banks, you don’t see a heck of a lot of Hispanics in decision-making positions.” Florida has a better developed network of Latino entrepreneurs, Tokai’s Estrada said.
“They have a long-established market and a much richer businessperson,” he said. “And you have a flow of Caribbean money.”
Questionnaires Used
Hispanic Business magazine prepared its rankings, published in this month’s edition, from questionnaires sent to the country’s largest Hispanic-owned businesses. The threshold for listing among the top 500 rose to $2.4 million in sales last year from $1.5 million in 1985. Aggregate sales of firms listed in 1985 and 1986 rose from $7.54 billion to $8.03 billion, the magazine said.
The magazine requires businesses to pledge on their questionnaires that they are majority-owned by U.S. citizens. The magazine also prepared its rankings from sales figures declared by the companies, 489 of which are privately held and thus are not required to file annual stockholders reports stating sales. “There’s a certain degree of the honor system involved,” Senior Editor Stephen Beale said.
“I would doubt at this point that any of the top 100 (firms) are foreign-owned,” he added.
THE TOP HISPANIC BUSINESSES The top 10 U.S. Hispanic-owned businesses plus California companies in the top 100 U.S. Hispanic-owned businesses, ranked by 1986 sales, according to Hispanic Business magazine:
1. Bacardi Imports Inc., import and distribution of Bacardi rum and wine, Miami, $424.61 million
2. International Medical Centers, medical services, Miami, $419.6 million
3. Banco Popular de Puerto Rico, banking services, San Juan, $405.9 million
4. Goya Foods Inc., Hispanic food manufacturing and marketing, Secaucus, N.J., $265.0 million
5. V. Suarez & Co., beer/wine and liquor distributor, San Juan, $260.0 million
6. Bacardi Corp., bottle rum and spirits distillery, San Juan, $234.0 million
7. Banco de Ponce, banking services, San Juan, $225.48 million
8. The Vanir Group, construction and communication, San Bernardino, $180.0 million
9. Handy Andy Supermarkets, retail groceries, San Antonio, $170.0 million
10. First Federal Savings Bank, banking services, Santurce, P.R., $139.0 million
CALIFORNIA COMPANIES IN THE TOP 100 21. Lloyd A. Wise Inc., auto dealership, Oakland, $86.8 million
24. Coast Citrus Dist., wholesale fruits and vegetables, San Diego, $83.0 million
26. Galindo Financial Corp., real estate sales, Bell, $81.3 million
37. Las Casas Realty, real estate sales, Los Angeles, $53.3 million
39. Komfort Industries Inc., travel trailers and motor homes, Riverside, $50.0 million
43. La Reina Inc., Mexican food manufacturing, Los Angeles, $47.6 million
49. Ramos Oil Co., petroleum products, West Sacramento, $41.0 million
51. Angel Echevarria Co. Inc., mattresses and quilting manufacturing, Los Angeles, $40.0 million
56. TELACU, holding company, Los Angeles, $36.7 million
65. Camino Real Chevrolet, auto dealership, Monterey Park, $30.0 million
68. Mendoza, Dillon & Associates, advertising, Newport Beach, $30.0 million
72. 1-Day Paint & Body Centers, auto painting and body work, Torrance, $27.8 million
78. Ruiz Food Products Inc., Mexican food manufacturing, Tulare, $26.0 million
83. Reynoso Bros. Food Inc., Hispanic food products, Vernon, $25.0 million
93. Best Western Paving Co., general engineering and paving, Walnut, $22.1 million
