Scent of Success : Fledgling Manufacturers Are on the Rise in O.C.

The air in the neighborhood around Blue Gum and Miraloma avenues is a fragrant stew. The tang of paints and resins blends with the odors of machine oil, rubber, plastic, fresh-cut wood and hot metal to create a husky perfume that lets you know a large manufacturing complex is just around the corner.

It is a perfume that some have suggested is fast dissipating in Orange County, but Aaron Bann would disagree. His family’s manufacturing business has been a fixture in this freeway-close strip of Anaheim for 34 years, and if Bann has anything to say about it, All-Bann Enterprises will be going strong 34 years from now.

The company, which for years specialized solely in military goods, has also started producing exercise equipment. Call it the poster child for the new Southern California manufacturing.

While it is true that some industries have been decimated in the past decade, the number of manufacturers is actually growing as the survivors reinvent themselves.

Orange County, where 45,000 manufacturing jobs have disappeared since 1989, is a microcosm for what’s happening throughout the region.

Despite the job losses, more than 1,000 new manufacturing businesses have opened their doors in the county since the recession hit in 1990.

The new companies are mostly small, often started by people who used to work for one of the defense giants. They typically look for a specialty niche to fill, often concentrating in the health care, personal appearance and apparel industries.

“Everyone has focused on the aerospace downsizing and is acting like all manufacturing is going to disappear,” says Jack Kyser, chief economist for the Los Angeles Economic Development Corp. “But there’s a hell of a lot of life left.”

Despite the emergence of new manufacturers, Orange County’s employment numbers are still grim. Economists and other experts say more job losses will follow as the regional economy continues to struggle.

But most of the job losses are concentrated in areas affected by much greater forces than the general economic decline.

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Indeed, 80% of the jobs were cut from payrolls in just four of 20 employment categories, state Employment Development Department figures show.

Government spending cuts that have punished the aerospace, electronics and defense industries for years have helped account for about half the losses while nearly 10,000 jobs have been pared from computer makers’ payrolls because of the economic turmoil in that highly competitive industry.

“If you take out the manufacturers who are gone because of defense and government cuts, the picture in Orange County is a very different one,” says Harry Lambert, general partner of Costa Mesa venture capital firm Innocal.

“Venture financing conferences here are always packed, I see 600 people sitting in a ballroom, and many of them are entrepreneurs who want to start manufacturing something,” Lambert said. “We have an office on the East Coast, and people there have nowhere near the business sophistication and drive that we see here in Orange County. There’s a future for manufacturing here.”

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The number of Orange County manufacturers has grown by about 20%, according to business directory publisher Contacts Influential--which lists 8,522 manufacturers in its most recent Orange County edition, published last year.

“The whole picture is changing as industry becomes primarily technology driven,” said economist Anil Puri, head of Cal State Fullerton’s economics department.

“Manufacturing these days requires fewer but more sophisticated machines and fewer but more sophisticated, educated personnel to run them. That’s worldwide and has been going on for some time.” he said.

Nearly a quarter of the county’s manufacturing businesses have fewer than five employees, said Eleanor Jordan, Orange County labor analyst for the state Employment Development Department.

Many are companies like MCM Motorcycles in Costa Mesa. The firm is set to begin producing a new motorcycle for the off-road racing market, with plans to segue quickly into the street-legal market.

But while technically a manufacturer, MCM is really a marketing and assembly operation. Its “factory” is a network of several dozen specialty manufacturers scattered throughout Orange, Riverside and Los Angeles counties.

It is less expensive at this stage for MCM to contract with others to produce the frame, engine mounts, exhaust systems and other other parts for its motorcycles than it would be to finance construction of an in-house manufacturing facility, said co-owner Bill Kniegge.

Another example is former aerospace engineer Benjamin Carrion who is assembling a squad of subcontractors to build parts for an exercise machine he developed after being laid off by McDonnell Douglas in 1992.

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“I’m a fitness bug and I started searching for work in that field and I found that these fitness companies very much underpay their engineers,” compared to defense companies, he said.

“I think that’s why their equipment isn’t always that good. So I decided to use my background in aerospace precision engineering to come up with solutions that the industry has not yet come up with.”

He said he will use subcontractors for the first few years because the cost of starting a production factory is too high.

“A lot of precision machining companies with sophisticated machinery used in cutting edge manufacturing are still located here,” Carrion said. “They are companies that used to serve the demanding aerospace industry, and now they are looking for other work to do.”

All-Bann, too, is looking at new products to help it move into a future as its traditional defense base continues shrinking.

The plant was started in 1961 by a welder and metal fabricator named Sid Bann. It operated as a job shop, making metal parts for other contractors who in turn were supplying defense industry behemoths like Rockwell International, Northrop Corp. and McDonnell Douglas Corp.

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In 1967, the company stepped up a notch and negotiated directly with the Pentagon’s procurement office for a contract of its own, becoming a prime contractor. By the end of the 1980s, most of All-Bann’s revenue came from defense work and the company had grown to fill five buildings and employed about 230 people.

After years of steady government defense cuts, All-Bann is down to 120 workers now, and while defense contracts still pay most of the bills, it has embarked on an expedition into the civilian world.

Aaron Bann, the third generation of his family to work for the company, came in three years ago to set up a marketing department to sell commercial clients on All-Bann’s expertise in high quality, low cost metal fabrication.

The effort is proving successful: Alongside the stacks of drab green decontamination units, man portable, that it makes for the U.S. Army is a smaller operation turning out shiny black back therapy and exercise machines that the newly minted marketing department sells to chiropractors and physical therapists throughout the country.

In another building, next to hefty trailers on which All-Bann assembles self-contained fuel stations and vehicle-body repair shops that the military uses in the field, workers have started making rectangular, stackable and refillable 350-gallon stainless steel containers that are sold to businesses tired of fussing with the ubiquitous but awkward-to-store and easily damaged 55-gallon drum.

The ability to jump between military equipment and civilian products exemplifies the flexibility that is a key to survival, says UCLA social geographer Allen J. Scott, author of several texts about industry and society.

In 1988, Scott called Orange County the prime example of an economic community in which industry would survive because of its ability to change. “And I stand by those statements today,” said Scott, now associate dean of the university’s new School of Public Policy and Social Research.