An Uplift Upstate : Entrepreneurship Blossoms in Timber Town of Arcata
As towns in California’s northern extremes struggle over how to diversify away from timber and other natural resources, many look with envy at Arcata.
This coastal town of about 16,000 in Humboldt County, nearly 300 miles north of San Francisco, has something going for it that other places do not: Humboldt State University.
The liberal college has proved to be a hotbed of environmentally minded entrepreneurs who decide to stay put for the good life on California’s North Coast, with its white-water kayaking, hiking, fishing and mountain biking.
Among companies spawned there are: Yakima Products, a maker of hot-selling car roof racks that carry bikes, skis, canoes and other boats; Moonstone Mountaineering Inc., which produces rugged sleeping bags and outdoor clothing, and Holly Yashi Inc., which crafts fashion earrings.
Their creative spirit has given a lift to this community and made it a job-development model for other northern towns. The county’s unemployment rate, though troublesome at about 11%, is well below that of many nearby counties.
The more than 250 jobs these companies have created are a godsend for this economically distressed region, which for generations has depended on long-troubled timber and fishing industries.
The ventures have become beacons for other would-be entrepreneurs, demonstrating that a manufacturing business can thrive in a remote coastal location.
And they have inspired Arcata’s economic development officials to back other small businesses. Near Moonstone Mountaineering in a city industrial park, for example, is a fledgling culinary center, where 27 employees make gourmet food products at a dozen tiny companies under one roof.
But clashes with the old order have arisen. Take Yakima Products’ controversy involving the redwoods that temporarily cost the company much of its community goodwill.
In the late 1980s, Houston-based Maxxam Corp. went heavily into debt to buy Pacific Lumber, a respected Humboldt County company that owned some of the country’s last remaining ancient redwoods. The hefty debt load forced the new owners to vastly increase the redwood harvest, and the town quickly became polarized between timber workers and environmentalists.
One of those raising a fuss was Don Banducci, 43, Yakima’s co-founder and a Humboldt State dropout with a passion for white-water rafting. In editorials signed with his name and the company’s logo, Banducci railed against the over-cutting.
Timber workers retaliated with a boycott. When some Yakima employees--with spouses who cut and mill timber--angrily told Banducci that he should not thrust his views onto them, he toned things down.
“I’ve learned you can’t alienate people,” Banducci said in an interview. “I’ve come around to wanting to develop and diversify the Humboldt economy, but in a way that’s extremely sensitive to the things that draw people here.”
Yakima, which has 130 employees, prides itself on its conscience and whimsy. Its new headquarters is dominated by a 160-foot-long mural of cartoonish outdoor enthusiasts by local artist Duane Flatmo, whose style is described as “Picasso on drugs.”
The remote location has a drawback: Banducci estimates that Yakima spends perhaps $300,000 a year in extra costs for shipping, travel and employee moves.
Banducci and his partner, Steve Cole, 47, bought the company from an elderly couple in Yakima, Wash., who made foot braces for kayaks in their garage.
The company said sales--barely $80,000 in 1979--reached $20 million for 1992. Profits have also risen but not at the 15% to 20% clip of sales, according to Cole, whose engineering degree is from Humboldt State.
Banducci hopes that other small companies will follow Yakima’s lead. “We need 10 or 15 of these businesses dotted around the bay like the sawmills of the past,” he said.
On the northern edge of town, another home-grown company is prospering. Fifteen years ago, Fred and Niki Williams couldn’t find the sturdy mountaineering gear they wanted and decided to make their own. The couple, now in their mid-30s, started Moonstone Mountaineering in a 14-foot-long trailer.
Their high-tech sleeping bags ($120 to $465) and clothing ($240 to $370) win praise from Backpacker and other magazines. Sales have been growing lately as much as 35% a year but are still under $10 million, said Michael Crooke, Moonstone’s director of sales and marketing.
Crooke, 35, a Humboldt State graduate, is a former forester for Pacific Lumber who says he “saw the writing on the wall” and went back to school for a master’s degree in business administration.
Almost all of the factory workers at the 84-employee company are women, some of them spouses of lumber workers. As timber layoffs have spread, “their income is becoming a more important element,” Crooke said. The fastest workers earn as much as $16 an hour.
Crooke pointed out a vacant lot below a hillside dense with redwoods and Douglas firs, where Moonstone will break ground next summer to double its space. Product “is going out the door as fast as we can make it,” he said.
“We’re getting to the point where we say: ‘We just can’t take your order.’ It’s so much fun.”
Nearby is Holly Yashi Inc., which makes arty earrings sold at specialty stores, galleries and boutiques.
Best known for its innovative use of colorful metals, the company is named for Holly Hosterman, 37, a Humboldt State grad who designs the jewelry, and her partner, Paul Lubitz, 39, whose childhood nickname was Yashi.
The pair started the company in Hosterman’s living room 11 years ago. It now has 45 employees, 23 sales representatives and annual sales of more than $3.5 million. Among the workers are a former tree cutter and half a dozen oyster shuckers.
Crunched by the recession in 1991, Holly Yashi “redoubled our efforts” and showed 12% sales growth last year, Lubitz said.
“Maybe timber will come back someday,” he said. “Who knows? . . . But we keep machinists busy making tools and dies, and we keep printers busy. It’s not just people making jewelry that we keep busy.”
