Despite Thorns, State Is Still Fertile Ground
Like many California small-business owners, Joseph Dvoracek is no fan of the state’s current economic climate.
The president of Three D Plastics Inc., a Burbank-based maker of highway signs and hardware implements, is particularly upset with the troubled workers’ compensation system.
California officials “must have had a plan to make it so bad,” Dvoracek declares. “The state says to business: ‘Goodbye, we don’t want you.’ ”
But in the next breath, Dvoracek acknowledges that California still has plenty to offer -- in his case, cheap money.
Dvoracek’s company has received more than $500,000 in low-interest loans from the Los Angeles County Community Development Commission for hiring and training workers and from the California Integrated Waste Management Board, a state agency that promotes use of recycled materials.
Access to such loans, says Dvoracek, ignoring the schizophrenia inherent in his comments, “is the great part about California.”
Beyond that, the Waste Management Board has been helping Three D launch new products and tap new markets for the last year and a half. “They were awesome,” Dvoracek says. “They came in here with university professors, profiled our company and gave us contacts for new business with railroad companies, airports and even colleges.”
All in all, many of the business community’s complaints -- about workers’ comp, other high expenses and tangles of red tape -- are real and should be heeded.
Today, a group of leaders from the Chamber of Commerce, Business Roundtable and Manufacturers & Technology Assn. is set to gather in Sacramento to decry the dozens of bills moving through the Legislature that would further “increase costs and regulatory burdens for California businesses.”
But, as Three D and other companies show, it is far too easy in the midst of our recall craziness to turn a complex economic picture into a caricature. Yes, California takes away. But it gives plenty to business and industry as well.
In Three D’s case, the state’s rescue effort came none too soon.
The company lost a major customer recently, an Eastern hardware chain called Lehigh Crawford, “because some guy said he would supply them cheaper,” Dvoracek says. Meantime, competition from plastic fabricators in China and Israel is intense. Three D, which rings up about $9 million in sales a year, has had to cut back its workforce from 120 to 75.
But the company is getting a new lease on life thanks to the Waste Management Board, which “is helping us to develop an entirely new product line with recycled materials,” Dvoracek says. Specifically, Three D is converting recycled car tires into bases for the orange posts that it turns out for the state’s highways -- a fitting rebirth for automobile treads.
“The only way to stay in business today is to reinvent your company, every week and every day,” says Dvoracek, a 27-year veteran of Three D, whose late father founded the company in the 1950s as a manufacturer of plastic chicken feeders.
Doug Lane, president and chief executive of ViaLogy Inc. in Altadena, knows a thing or two about inventions himself. And he couldn’t be happier about being in the Golden State right now.
“I like to be in California on all counts,” he says. “I don’t share the feelings of many businesspeople about government policies.”
What Lane sees is a state that, because of its inherent brainpower, is able to give his company an edge -- regardless of what any chest-thumping gubernatorial candidate says about the dire economic situation here.
“California has the people and the infrastructure to support business,” says Lane, whose 2-year-old firm resides in an incubator for entrepreneurial firms run by the county Community Development Commission. The panel handed ViaLogy a $250,000 start-up loan two years ago.
ViaLogy is pushing the limits of technology, generating algorithms that detect obscure signals of genetic structures to help the pharmaceutical industry with drug discovery. The company has built on work first undertaken at Pasadena’s Jet Propulsion Laboratory, where its two founders, computer scientist Sandeep Gulati and electronics engineer Carl Kukkonen, were on staff.
ViaLogy, which sells its specialized genetic-sensing services to firms worldwide, attracted $4 million in venture capital from a London backer two years ago and is now trying to raise $10 million from Swiss venture capitalists, among others. So it would seem well on its way.
The reason that such a promising young company received a loan from the Community Development Commission, which funnels federal and state money to manufacturers, is that it exhibits the cutting-edge characteristics the government is trying to support, explains CDC director Robert Swayze.
Legislation is pending that would increase the amount that such development commissions could lend annually while further extending the largess to companies in software, biotech and other technology fields. The intent is to help California enterprises bring to market new products and processes that will keep them ahead in a brutally competitive global business environment.
“California has lost more than 300,000 manufacturing jobs in the last decade,” Swayze says. “We try to stem the tide.”
It is no easy task. But campaign season rhetoric notwithstanding, the state is indeed trying -- and in some cases succeeding -- to make business bloom.
James Flanigan can be reached at jim.flanigan @latimes.com.
