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Friday, Mar 29, 2024

Traditional Businesses Still Dominate Growth in Valley

Forget the new economy. Most of the companies on the Business Journal’s list of the 50 Fastest Growing Private Companies are as old school as they come. Sure, this year’s list, drawn from firms in the San Fernando, Conejo, Simi and Santa Clarita valleys that showed the largest sales volume percentage growth between 2004 and 2005, includes technology companies of varying kinds, aerospace firms and Internet-based businesses. But the majority of those whose growth was large enough to win a place on the list also came from among the ranks of homebuilders, construction companies and related contractors, moving companies and auto dealers. The results, say pundits, are not surprising. Even if, in recent years, the new economy companies are the ones that have drawn all the attention, it is those who supply bread-and-butter goods and services that really make up the backbone of the economy, both in the greater Valley area and nationally. “If you think about our annual computer purchases relative to food, it isn’t a whole bunch,” said Daniel Blake, director of the San Fernando Valley Economic Research Center and a professor of economics at California State University Northridge. “What we tend to read about is where the changes are taking place, but there’s a bulk of activities like the gas station on the corner that’s satisfying a much larger demand.” A full two-thirds of the national economy is driven by consumers, and more specifically, housing, food and fuel. The most recent Valley statistics compiled by the research center at CSUN show that housing accounts for about 32 percent of the average consumer’s spending; transportation expenditures take another 18 percent and food accounts for 12.5 percent. Although the Valley is chock full of consumer businesses, many of them are not headquartered in the region and, as a result, don’t show up on the Business Journal’s list. Although the majority of the fastest growing companies in the Valley are business-to-business enterprises, about 38 percent of the list is made up of companies that sell goods and services directly to consumers. <!– No. 17: NorthStar Moving Corp. has found a niche in traditional industry. –> No. 17: NorthStar Moving Corp. has found a niche in traditional industry. And not surprisingly, 42 percent of those consumer companies are in or related to the housing industry, including Larwin Co., a homebuilder that ranked No. 2, California Home Builders, with a No. 5 ranking, Prime Building Material Inc., No. 13; Repipe Specialists Inc., which provides copper plumbing to residences at No. 15; NorthStar Moving Corp. at No. 17; iHomeowners Inc., an Internet-based search engine for home buyers that ranked No. 25; Amigo’s Flooring Monster, a retailer of flooring that ranked No. 35; custom home builder Structure Homes at No. 38 and PCL Construction Services Inc. at No. 44. “You think about the gross national product and two-thirds of it is driven by consumption expenditures,” said Blake. “Most of that is driven by basic needs.” Blake added that even within the construction industry, the economy is weighted toward the residential sector, which accounts for two-thirds of the activity while commercial construction accounts for one-third. The other consumer goods companies on the Business Journal list are also old school economy businesses including two auto dealers, Bob Smith BMW and Vista Lexus ranking No. 32 and 36 respectively; Munchkin Inc., a baby products manufacturer at No. 34 and Maria’s Italian Kitchen at No. 45. In addition, the list includes a number of consumer service companies including Medispas/PASC at No. 9 and McAlister’s Collision Centers Inc. at No. 20. The gap between old- and new economy businesses is less evident within the business-to-business sector where 57 percent of the companies on the Business Journal list are engaged in the traditional economy and 43 percent are new economy companies. And of the top 10 fastest growing companies in the Valley, 60 percent are old economy companies while 40 percent are new economy businesses.

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