Population Growth Fueling Southland’s Latino Business Boom

Fueled by a growing Latino population, the number of Latino-owned firms in the Los Angeles area has surged by 56.3% since 1982, and that pace should continue into the 21st Century, according to a new report.

The study, conducted by the U.S. Hispanic Chamber of Commerce, also found that Los Angeles, Orange, Riverside, San Bernardino and Ventura counties are home to about 66,800 Latino firms--the highest concentration in the nation. These companies are expected to report gross revenues of about $3.28 billion this year, according to the report, which will be issued to coincide with the chamber’s eighth-annual convention that begins Wednesday in Los Angeles.

The growth rate of Latino businesses in the Los Angeles area can be explained by the increasing numbers of Latinos, according to Preston Conners, a chamber research specialist. “It all has to do with demographics,” he said. Since 1980, the Latino population in the five-county area has grown by 31.5% to more than 3.6 million.

With a rising population, agreed Maria Guzman-Kennedy, executive director of the Los Angeles-based Latin Business Assn., “it’s only natural for the (Latino) business community to grow.”

Conners predicted that the opening of new Latino business in the Los Angeles area would continue to accelerate through the first three decades of the 21st Century. He noted that the aging of the Latino population--whose current average is 23.7 years--means that more people will have accumulated the money and experience to start their own businesses.

Latino businesses in the Los Angeles area range in size from mom-and-pop restaurants to multimillion-dollar corporations. Most, however, tend to be concentrated in the service and retail sectors; nearly two-thirds of them operate in those two categories, the report found. The reason: lower start-up costs compared to other industries.

But Los Angeles’ large manufacturing sector has proved a boon to Latino-owned manufacturers as well, Conners said. In the five-county area, 3.1% of Latino firms are involved in manufacturing versus 1.8% nationwide, according to the report. Many of these firms act as parts suppliers to larger manufacturing plants, he said.

The report also said the Los Angeles area was home to 81 of the nation’s 500 largest Latino-owned firms in 1986. The 81 companies posted 1986 gross revenues of more than $1.1 billion and employed 11,902 people. Vanir Group, a San Bernardino construction and communications firm, topped the local roster of companies with $180 million in sales in 1986.

The five-county area also accounted for 10 of the nation’s 35 largest Latino-owned high-tech firms. Infotec Development, a Costa Mesa software engineering firm, was the largest, with $21 million in sales and 350 employees.

Los Angeles County--home to 2.6 million Latinos--claims the lion’s share of Latino business. The report found that the county is home to nearly 70%, or 45,700, of the area’s Latino firms, with combined revenues of $1.7 billion. Orange County placed a distant second, with 8,500 firms posting revenues of $423 million.

Although Los Angeles County boasts the largest number of Latino businesses, the report indicated that such firms are popping up in outlying areas with increasing frequency. The number of Latino firms in Los Angeles County, for instance, grew by about 52% from 1982 through 1987. But Orange County chalked up a 60% gain, and Ventura County posted a 72% increase.