Globalization in a Nutshell: Azusa

By JAMES FLANIGAN

May 31, 2000 12 AM PT

In a single Southern California city, you can see the world economy, with all its promise of larger markets and good jobs, and all its threats of low-priced competition and shifting standards.

Azusa, a city of 50,000 in the San Gabriel Valley, has a vibrant industrial sector of small manufacturing companies. Their stories reflect the triumphs and problems common to industry throughout this vast region.

From just a handful of examples, we can see the drama of business and learn the hard-won lessons of companies and cities in Southern California today.

The most obvious lesson is that companies often must simply adapt to the realities of the global economy.

TruWood Products, a maker of wooden chairs for Nevada casinos and other customers, recognized the inevitable recently and decided to import semi-finished chair forms from Asia.

The 10-year-old company has been selling its Azusa-made chairs at $140 apiece and winning orders against competition from producers in China, who could ship lower-quality chairs into Long Beach for $36 apiece.

But quality goes only so far when prices are so dissimilar. So TruWood is switching. “For the big orders, 6,000 chairs or so, the competitors will now become partners,” says Cliff McMurtrie, co-founder of TruWood. His brother and co-founder, Rick McMurtrie, has been traveling in Vietnam and China, lining up suppliers.

TruWood will now bring in semi-finished forms, assemble the chairs in Azusa and ship them to customers at a good markup for its efforts. For smaller orders, TruWood will continue to manufacture its own chairs from scratch.

Sourcing from Asia will allow the company to fill larger orders. Its annual revenue of about $12 million is likely to grow. The firm’s 100 employees, who earn $7.50 to $12 an hour, “won’t be affected,” McMurtrie says.

Still, assembly is risky because the U.S. firm can more easily be displaced by a lower-cost overseas assembler.

Very Special Chocolats, on the other hand, shows that you have to use the international economy to help your business at home. The company, which makes liquor-filled specialty chocolates, has reached out to markets in Asia in recent years. And export sales have enabled it to run its Azusa factory and work force more efficiently.

Very Special, founded in Montreal in 1950, started making chocolates in Azusa in 1985, choosing the location because the city made an empty plant available and had a good labor force, explains Jerry Morris, company president and son of founder Abraham Morris.

Very Special now has roughly $15 million invested in four production lines in Azusa, where it employs 100 workers full time and up to 350 on a seasonal basis as it rushes to meet Christmas holiday demand in the U.S. and Canada.

But the company’s business is becoming less seasonal, thanks to new customers in Japan, Taiwan, South Korea and China, where the cycle of holidays is different. As a result, Very Special Chocolats now derives 15% of its $100 million in annual revenue from international markets and its plant operates full time for nine months of the year, creating more full-time jobs for Azusa’s “good work force,” Morris says.

That work force tends to be younger than those in neighboring cities, such as Duarte, Glendora, Monrovia and West Covina. Azusa also is unusual in its encouragement of manufacturing, which employs roughly 4,000 of its 16,000 workers.

“It is important for this region to support manufacturing in small cities such as Azusa and Torrance and others,” says City Manager Rick Cole, who came to Azusa in 1998. Manufacturing jobs generally pay more and offer more opportunity, he points out.

The opportunities certainly grow in Azusa as local companies adapt to changing conditions in world business. Wynn Oil Co., for example, is shifting its market approach and pursuing research and development.

Wynn was founded in Azusa in 1939 as a maker of additives for automobile engines, later to stumble as a conglomerate in the 1960s. Today Wynn Oil is the chief operating subsidiary of Wynn’s International, which is headquartered in Orange. But the Azusa company is the main force, employing 532 people and generating revenue of $260 million a year--72% of the corporation’s total. And it is a pioneer in automotive services, a field that is changing fast, says Wynn Oil President Donald DiCostanzo.

With car engines becoming more electronically complex, “do-it-yourself car repair is giving over to do-it-for-me” car repair, DiCostanzo says. So Wynn has shifted its marketing focus and now sells its engine fluids and testing equipment primarily to professional mechanics and auto dealership service operations.

The greater the technical demands, the greater the opportunity, says DiCostanzo. Wynn is about to break ground for a research and development center in Azusa. That kind of facility holds the promise of still more good jobs for the city’s young people.

Criterion Catalysts is another highly technical Azusa company--a smallish subsidiary of giant Royal Dutch Shell group--that has shifted its work to suit changing times.

Criterion makes catalysts to remove sulfur and nitrogen from oil in the refining process. The company’s location in Azusa stems from Southern California’s historic place in the world oil industry. But that emphasis has shifted, says Azusa plant manager Chris Lawrence.

“We’re in the environmental business now,” Lawrence says. His plant, working on catalysts to serve environmental needs, meets the stringent requirements of this region. Thus it is ideally suited to create environmental compounds for refiners in Mexico, Japan, South Korea as well as North America.

Such work demands employees who can be continually re-educated. So Criterion has extensive training programs for its 65 employees and supports study at colleges and technical schools all over Southern California. The jobs available at Criterion amply reward such study, paying from $40,000 to $70,000 a year for plant work.

Azusa has its own local school system and two institutes of higher education, Azusa Pacific University and Citrus College, to support local industry. The city also has its own utility company, Azusa Light & Water, which works with local companies to help them lower energy costs and conserve power.

But being a relatively small city, Azusa does not waste time trying to attract big companies. Rather, it concentrates on helping small businesses that themselves succeed by finding niches in larger industries.

Azusa-based La Flor de Mexico is not the largest manufacturer of tortillas in Southern California, but it is one of the most successful. It produces the handmade tortillas sold at Trader Joe’s.

Mike Esquivel and his sister Irene run the company, which was started as a bakery in East Los Angeles by their father, Tomas. Its big break came in 1988 when a buyer from Trader Joe’s asked Mike Esquivel if he could supply 500 packages--5,000 tortillas--a week.

“I agreed but didn’t know if we should do it; we were just a bakery,” Esquivel says.

Well, Trader Joe’s grew and so did the bakery’s production of special handmade tortillas. Today La Flor de Mexico supplies 250,000 tortillas a day to Trader Joe’s. Mike Esquivel, as chief executive, presides over a $4-million-a-year business and is investing $140,000 to install a fourth production line.

There are many other examples of niche companies in Azusa, from the firm that specializes in printing labels on oddly shaped plastic bottles, to the maker of bathroom fixtures for the disabled.

But while rich in innovative companies, Azusa is not a materially rich city. Its median household income of $37,861 is below that of neighboring communities in the San Gabriel Valley.

But Azusa is typical of many cities throughout Southern California in its efforts to plant more trees, reduce crime--down 49% in the last nine years--and to upgrade its public library for the Information Age.

Like every other city in this region, Azusa wants to be a good place to live and work and do business.

In a single city, you can see the real strength of Southern California.

James Flanigan can reached at jim.flanigan@latimes.com.

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Azusa at a Glance

* Population: Almost 50,000

* Size: 8.8 square miles

* Year incorporated: 1898

* Origin of name: Property was the El Susa Rancho during the Mexican era of California

* Median age of residents in 1998: 28.6

* Median household income in 1999: $40,248

* Number of housing units in 1999: 13,459