Manufacturers Told ‘Take the Money and Stay’

In a push to find renewable sources of energy, the Los Angeles Department of Water & Power has turned to power generated by the wind. That the major parts of the turbines to rise above the Mojave Desert were all purchased from manufacturers in Germany, South Korea and Brazil is a source of frustration for Randy Howard, DWP’s director of resource planning, procurement, and development. The department is ready to spend its money in Southern California and offer preferential treatment to area companies for the wind farm and other renewable energy projects. “There is a lot of money available and we would like to create jobs here,” Howard said at the 2008 Manufacturing & Distribution Forum that took place March 19. That message was echoed by a number of other speakers at the event sponsored by the Valley Industry and Commerce Association and Councilman Greig Smith. There is opportunity for business, opportunity for capital and investment, and for those seeking a job, manufacturing provides that opportunity, too. For all three it is just a matter of knowing where to look. Take financing. Panelists in a discussion on the mergers and acquisitions environment shook off gloomy media reports on the subprime meltdown and credit crisis, pointing out that banks are still lending, albeit with tighter terms and the re-emergence of mezzanine capital. “If you have assets, the financing is out there and available,” said John Johnson, a managing director of The Spartan Group in Pasadena. Last year, 250 mergers or acquisitions took place along the 101 corridor, Johnson said. For the Valley, these transactions typically involved businesses in the $5 million to $30 million range, he added. The Valley also has a robust middle market with thousands of companies bringing in sales from $10 million to the multibillions, said Jason Horstman, a senior vice president with Bank of the West in Sherman Oaks. “For every business that goes away, there are two new businesses starting,” Horstman said. “They can go from zero to several million in a short period of time.” No business can be successful without a qualified and trained workforce and manufacturers face a major challenge in finding those people. Los Angeles schools gear their curriculum for students to continue on to college and have cut back or eliminated vocational and trade programs. Media reports focused on layoffs and transfer of jobs overseas give the impression that manufacturing no longer exists. “We need to change the mindset that U.S. manufacturing is dead,” said Tom Murphy, executive vice president, manufacturing and wholesale distribution with RSM McGladrey. “It isn’t.” A recent report from McGladrey recommended companies invest five percent of their budget in training; establish partnerships with local schools; and teach employees soft skills.