Some SLO County businesses do well in harsh economy

Tribune photo by Jayson Mellom

Despite the harsh business climate in recent years, some local companies managed not only to survive but prepare for the future.

Some diversified or shifted gears — moves that allowed them to hire new employees. Others held steady or took painful steps to keep the business going.

All are now poised for growth when the economy rebounds.

The keys to their success: Having a clear strategy for growth, reinvesting in the company, fostering teamwork within the organization and tapping into the local entrepreneurial spirit.

As Jody Birks, quality and regulatory manager at Eagle Medical Inc. in Paso Robles put it, company president Doyle Timmons invested in the business “instead of just pulling back.’’

He wasn’t alone.

“There are many positive stories about local thriving businesses even in this recession,” said Mike Manchak, president and CEO of the Economic Vitality Corp. of San Luis Obispo County.

Manchak added that many of the county’s businesses in such promising sectors provide head-of-household jobs, which “in turn creates a healthy balance of businesses and community.

“These jobs create economic benefits such as sorely needed tax revenues for community infrastructure and services,” he said.

The Tribune interviewed the leaders of four privately held companies — PCF Aviation, Eagle Medical, Cygnet and REC Solar — about how they navigated the economic downturn and what their plans are in the years ahead.

REC Solar Inc.

When the economy dimmed, consumers went into save mode, and for some, that meant putting off home improvement projects.

But homeowners continued to harness the sun’s rays for electricity, and that is what helped San Luis Obispo-based REC Solar keep business humming during the recession.

“We are actually lucky enough to be diversified between different customer groups that have allowed us to continue to grow in terms of revenues and in terms of the people that we hire,” said Angiolo Laviziano, chief executive officer of REC Solar Inc.

REC Solar, specializing in solar electric design and installation for business and residential customers, experienced lower sales in its commercial division last year compared to 2008, Laviziano said.

But residential fared better, he said, because customers saw a “clear financial benefit” to installing solar panels on their homes. Last year, consumers also took advantage of a federal tax credit if they embraced solar power, he said.

The commercial side of the business has strengthened this year, Laviziano added. The company is putting solar panels on two Costco and three Albertsons stores, and is working with the cities of Madera and Hayward to install large solar systems on government facilities.

Laviziano declined to disclose annual revenue or profit for the company.

REC Solar has come a long way since it was founded in 1997 by Cal Poly engineering graduates Judy Ledford and Fred Sisson.

It now has regional offices throughout California, and in Arizona, Colorado, Hawaii and Oregon. More than 500 people work for the company. About 100 people were hired last year, and another 250 will be hired this year.

While Laviziano acknowledges that doing business in the county has its difficulties — including the high cost of living and limited options for flights at the airport — Laviziano said REC Solar plans to grow locally. The company recently expanded its offices off Fiero Lane.

“We believe there are advantages to being here,” he said, noting the pool of talented Cal Poly graduates, the area’s central location and its high level of home ownership. “This has always been a good market for solar.”

Eagle Medical Inc.

Eagle Medical Inc. in Paso Robles offers services that are in high demand in the health-care industry.Established in 1992, the company contracts with medical device manufacturers to assemble, package and sterilize everything from orthopedic devices to dental implants. It operates out of a 10,000-square-foot facility on Union Road and has more than 1,600 square feet of clean room space, a sterile environment where packaging is done.

“We’re surviving well,” said Jody Birks, quality and regulatory manager, who spoke on behalf of the company.

In the last three to five years, the company’s revenue growth has remained steady, about 15 percent each year, Birks said.

Birks said the company’s ability to weather the downturn is largely attributed to being in a thriving industry. But it’s also due to the addition of new services for clients.

For instance, Eagle Medical recently started offering sterilization capacity in house, she said.

“We’re not even advertising and we probably get three to five calls per month from manufacturers interested in sterilization,” said Birks, who declined to disclose annual revenue or profit.

The company recently secured a contract with an electro-surgical device manufacturer, she said.Eagle Medical, with 19 employees, has hired three additional workers in anticipation of the new business.

Birks said that the company’s president, Doyle Timmons, is “planning to take the company to the next level,” looking to double its size in the next two years.

“In watching the way Doyle has taken hold of the business, he’s still willing to take risks,” she said. “He’s willing to invest in the business instead of just pulling back.”

PCF Aviation

The recession wasn’t kind to the aviation business.

When the downturn hit, business air travel declined, and flight training — a recreational outlet for many aspiring pilots — was no longer an expense they could afford.

“For a while, it became unpatriotic to fly your own airplane,” said Jim Willis, one of five owners of PCF Aviation. “A lot of people looked at aviation as being the bad guys.”

Pigs Can Fly, which offers jet fuel, aircraft maintenance and flight lessons at the San Luis Obispo County Regional Airport, experienced about a 15 percent drop in business two years ago and another 15 to 20 percent last year.

Even so, it was able to withstand economic turbulence, said Willis, who declined to disclose annual revenue or profit.

Its owners made the decision to stop taking salary out of the company for about two years and instead reinvested that money in the company. Rather than lay off workers, Willis said the business chose not to replace a few employees who retired or moved out of the area. Founded in 1998, the company currently has 25 employees.

To save money, it also looked at overtime in certain departments, and changed the schedules and shifts of some workers. A small perk — buying pizza for employees on Fridays — remained intact, a ritual that meant a lot to the workers, Willis noted.

These steps, Willis said, helped to pay the bills and will allow PCF to continue the expansion plans it set in motion about five years ago. The company leases a portion of land at the airport and would like to build there. It is counting on a resurgence of air traffic and additional air carriers to service that growth.

“In the coming year, the economy will continue to improve, and aviation will increase again,” Willis said.

Cygnet Software

In 1994, two engineers at PG&E branched out on their own to build a software company in San Luis Obispo.

In the early years, founders Tom Black and Jeff Brady’s technology shop — Cygnet — worked with any customer in need of software to help run their operation.

Soon, they discovered that the technology they developed worked well for the oil and gas industries, and today Cygnet is responsible for helping many of North America’s top oil and gas companies manage huge amounts of data.

“We have over 100 customers, and 62 percent of the top 20 natural gas companies’ production runs through our system,” said Chris Smith, president and CEO. “We have a customer that does over one billion updates a day on our software.”

While it was not easy for the company to grow last year because of a 75 percent reduction in natural gas pricing, the company still experienced double-digit growth,” said Smith, who declined to disclose annual revenue and profit. Smith noted that revenue has grown consistently and that the company has been profitable for the last five years.

He touts the company’s clear strategic focus and the quality of its employees for its success.

“We just have a great team, and we’re very competitive and focused on doing a great job,” he said. “Those are such key pieces. If you don’t get those (things) right, then nothing else matters.”

With more than 70 employees, Cygnet is poised to grow “for many years to come,” Smith said, building new products and investing in research and development in San Luis Obispo.

As well, the company is moving to Railroad Square, where it will occupy 60 percent of the space, from its current headquarters in downtown San Luis Obispo.

“I would be stunned if we didn’t double over the next two to three years,” Smith said.