Doing Business in California: Manufacturing CAN Thrive in a Difficult Climate

EBMG Special Contribution

East Bay Manufacturing Group (EBMG) hosted the panel discussion “Doing Business in California: Manufacturing CAN Thrive in a Difficult Climate” on Wednesday, February 12 at Finelite in Union City.

Panelists included Mark Benguerel, Chief Operating Officer of Finelite; Rich Stump, CEO of CaliBowl and Principal of FATHOM; and Peter Vermeulen, Director of Finance for Sugar Bowl Bakery. Attila Bardos, Division Director for Robert Half Management Resources, moderated the discussion.

Bay Area Benefits
All three panelists agreed there are numerous benefits to having their headquarters and/or manufacturing centers in the Bay Area. Benguerel cited that the manufacturing technologies of the companies in California are superior to many companies in different states, and Finelite knew they wanted to be near the Silicon Valley. Stump agreed that the Silicon Valley is a great asset.

“We are in the trenches of innovation and a lot of talented people are around us, “ said Stump. “There is a great core of innovative people in the Bay Area.”

He added that there is a higher sense of urgency and demand for perfection from their California partners and suppliers when compared to companies they have worked with outside of the state.

Benguerel also noted that people are Finelite’s most important asset, and it is important to their company to maintain the environment and culture they have created with their employees. Changing locations would mean changing people, and that would not be an attractive option for many companies who have established a successful manufacturing team.

California Challenges
While the Bay Area boasts obvious benefits, there are certainly challenges to starting or maintaining a business in California. Vermeulen cited costs as the largest challenge to manufacturing in the Bay Area. Benguerel and Stump agree that real estate costs for both the company and the work force are a constant challenge. While office space and manufacturing centers can be expensive in the Bay Area, real estate prices also pose a challenge to employees who hope to live near work.

In addition to costs of real estate, Stump said it can be challenging maintaining margins to get product to market cost effectively. He also faced unexpected challenges when on-shoring CaliBowl manufacturing. It was difficult for them to get their tools from the offshore factories, and it took time to get up and running when everything was brought back to the United States.

East Bay Successes
While there may be challenges associated with having a business in California, Bay Area companies continue to have the unique advantage of working with quality partners to produce quality products.

After starting in the East Bay in 1991, Finelite continues to thrive here, manufacturing high performance, environmentally sustainable lighting solutions. They attribute their success to the supply chain they created within California and lean manufacturing.

“We are never satisfied with the end result because we know there is always a way to make it better,” says Benguerel.

Sugar Bowl Bakery, which was founded in 1984 in the Bay Area by five brothers, now sells to the top 40 national retail chains including Target and Costco. Vermeulen attributes their continued success in the Bay Area to their investments in equipment and automation. They also focus on lean manufacturing techniques and recruit lean manufacturing specialists. The company, which offers certified organic and gluten-free products, continues to believe that customers value that their food is made in the United States.

CaliBowl, which was created in California, was first manufactured abroad. Their dedication to the U.S. economy led them to move the manufacturing process from China to California. They hope that other manufacturers will follow their lead. Stump believes that manufacturing in the U.S. reduces the freight cost and carbon footprint and improves the company’s response time to fulfill orders.

Oakland-based FATHOM, Stump’s newest company, continues to grow as its groundbreaking 3-D printing services are sought after in the Bay Area and beyond.

Overall, innovation, quality and consistency continue to be key motivators for companies to successfully do business and thrive in the Bay Area.