SMALL BUSINESS: Making It Personal When the company he worked for went out of business, Miguel DeLeon was not willing to watch his career and those of his co-workers go down with it By JACQUELINE FOX Staff Reporter Miguel DeLeon’s 17-year career at California Electrofab in Pacoima came to a halt in 1994 when the company’s financial difficulties forced the owners to file for bankruptcy protection and shut the doors for good. Well, almost for good. It only took DeLeon, who had worked his way up from the assembly line to vice president of Electrofab, three days to clean out his savings account, secure a loan from the Valley Economic Development Corp., find a warehouse in Van Nuys and re-open the business as De Leon Enterprises. The company, which manufactures electronic circuit board components, primarily for airport security and runway lighting systems, was more than just a place where DeLeon worked. After arriving nearly penniless from Guatemala, DeLeon started on the Electrofab assembly line, working his way up to quality control manager and ultimately into top management. Along the way he forged deep relationships with his co-workers, eventually marrying one of them, and he wasn’t about to sit back and watch everything they had worked for evaporate. “I took it very personally,” said DeLeon. “The company was just having some terrible financial problems, partially due to the Northridge Earthquake and the bad economic situation of the early 1990s. And it was very hard to lay people off and watch them shut down. But I just couldn’t let it go. This was like a second home to me and to many of the people who worked here.” To keep costs with the new operation at bare-bones levels, DeLeon did not draw a salary that first year and, though he managed to retain most of Electrofab’s employees, they also took hefty pay cuts just to get their jobs back. “It was very painful,” said DeLeon. “But I had a lot of faith in my people and our clients, and we just started in doing what little business we could just to keep it going in those first few months.” But it wasn’t easy to start over from scratch. While DeLeon could count on his own passion and a core of committed employees, he had inherited a company with a reputation for not paying its bills and a customer base that threatened to dwindle quickly as competitors jumped in to pick up where Electrofab had left off. “The banks wouldn’t even talk to me back then,” says DeLeon. “So I got a lot of help from the (VEDC). But I also think a lot of credit goes to the customers we’d been doing business with for years. They stood by us. I gave them my personal assurance that we were going to start out fresh with no debt. And they came through for us.” With the help of the VEDC and the support of long-standing clients, like Raytheon Co. and Eaton Corp., DeLeon Enterprises, said its top executive, is stronger than its predecessor ever was. Revenues in that first quarter of 1994 were $35,000, but by the end of 1995 sales had skyrocketed to $500,000. Revenues for 2000 were $1.6 million and DeLeon is now hoping to more than double that figure in the next five years. Since 1998, DeLeon has manufactured components for airport tower lighting and security systems for Honeywell Airport Systems in Simi Valley. Steven Sortillon, director of operations for Honeywell, said DeLeon acts more like a second tier to Honeywell than an outside supplier. “Really, the thing they do best for us is they provide an incredible response time, just incredible customer support,” said Sortillon. “We turn 70 percent of our orders within 24 hours and we don’t know what those orders are going to be beforehand. So very often we have to ask them to jump through hoops, and they have really become more of an extension of our business, not just a supplier of product.” DeLeon has been impacted to some degree by the slowing economy, but orders have also increased since Sept. 11 as airports have raced to ratchet up security equipment to meet new federal guidelines. “We haven’t really seen much growth yet in the defense industry, but we have been very busy with clients who supply the security systems in the terminals and in the vans that scan aircraft for bombs and weapons,” said DeLeon. While revenues and orders remain stable, DeLeon’s greatest challenge may come from his competitors who are likely to be in a position to fill orders for airport security equipment if he doesn’t have the capacity to do so himself. He said the company is now faced with a decision: make big expenditures for new automated assembly equipment to step up production, or farm out production overseas. Again, said DeLeon, it’s personal. “Today it’s tricky to compete in this business without established customers, but we had that going for us from the beginning,” said DeLeon. “We have had to cut our prices over the last couple of years because of cheap labor and competition coming out of China. So we are looking ahead now and thinking about replacing some of our equipment. We can do that, or we can go to China. “And for me, China’s not an option.” SPOTLIGHT: DeLeon Enterprises Core Business: Electronic circuit board manufacturer Revenue in 1994: $165,000 Revenue in 2000: $1.6 million Employees in 1994: 8 Employees in 2001: 24 Goal: Increase sales to $2.5 million a year Driving Force: Demand for electronic components in airport security systems
