A flatbed truck rolls into a Chatsworth recycling yard loaded with 10 tons of cardboard.
East of the San Fernando Valley, burly workers in hard hats erect an $80 million hospital wing with a clang of steel on steel.
For the father-and-son owners of Valley Recycling Center, the sight of cast-off boxes means hope. And for Tower General Contractors of Sun Valley, the ring of construction means a rare business opportunity during the worst economic recession in memory.
“It sounds like victory,” said Tower Executive Vice President Alex Guerrero, admiring the 80,000-square-foot emergency department taking shape at Huntington Memorial Hospital in Pasadena. “I love the sound of money in the morning.”
A glimmer of gold. A clink of cash. On Thursday, business leaders from across the San Fernando Valley will huddle for a half-day conference on finding the silver lining during the two-year economic slump.
Hosted by the Valley Industry and Commerce Association, the conference will focus on “finding optimism and opportunities in uncertain times.”
The Universal City confab will feature more than two dozen panelists discussing issues ranging from recession to government reform. Jane Wurwand, founder of Dermalogica, a $200 million skin-care company, will give the luncheon pep talk.
“Times are tough. And there is a lot going on that people question. The Dow is up to 10,000, yet unemployment is 80 percent higher,” said VICA President Stuart Waldman. “(But) there are opportunities.”Economic forecasters, however, disagree over when the economic fog will lift.
For James Paulsen, chief investment strategist for Wells Capital Management, there will be clear skies next year. The massive federal stimulus, company cutbacks and a rise in consumer confidence will be central to driving economic growth, the VICA panelist wrote in a report last month. In addition, growing housing and auto sales, overseas exports and a stall in the rise of mortgage rates and oil prices “should foster a recovery that continues to surpass expectations.”
Others predict the business climate in Los Angeles will remain dreary until 2011.
Unemployment in Los Angeles County has reached close to 13 percent. They say this year’s holiday sales will remain weak, with no sector performing well next year. With governments deeply in the red, public workers will lose jobs.
“Unfortunately, 2010 may be a tough year,” said VICA panelist Bill Watkins, director of the Center for Economic Research and Forecasting at California Lutheran University in Thousand Oaks. “California was in the recession before the rest of the country, and we think it’ll be lagging after the rest of the country.”
“I’m usually an optimist,” he said. “That’s what’s scary.”
William Roberts, director of the San Fernando Valley Economic Research Center, takes the middle ground. The California State University, Northridge, economist sees the sun poking through the clouds next spring.
He said real estate prices are the best economic indicator in the Valley. That the median price of homes has hovered around $390,000 for five months is a positive sign, he said, with prices likely to rise in March. At the same time, unemployment will likely drop.
“I’m very optimistic,” Roberts said. “From the economic signs that we’re seeing, we’re starting into a recovery.”
For businesses like Valley Recycling Center, that’s great news. Sam Samzadeh had led his family from Iran to Spain and Canada before opening the recycling warehouse 30 years ago in Chatsworth.
Then his son, Sepand, a mechanical engineer with an MBA, hopped aboard. Revenues at the company that shreds documents and buys and recycles scrap paper, metals and plastics took off, while the number of employees grew from six to 20.
But when the recession hit, newspapers got lighter, manufacturers sold less packaging and many businesses quit recycling to cut costs. With consumption down, the amount of scrap - and demand for recyclables - fell.
Then prices, which had skyrocketed during a China construction boom, plummeted last year before beginning to creep back up.
“It’s tough,” said CEO Sepand Samzadeh, who just got married and celebrated U.S. citizenship. “It’s so brutal … (But) we’re a survivor. Forty percent of our competitors have gone out of business.
“We see new opportunities everywhere.”
The father-son team has persevered by buying a fleet of trucks and better bailers, making prompt deliveries and payments and adding computers and other e-waste to their menu of recyclables.
On a recent day, the younger Samzadeh watched as a full load of compressed cardboard pulled into the warehouse stacked from floor to ceiling with cardboard, paper, aluminum cans and bundles of plastic bottles.
“That’s money,” said Samzadeh, 34, wearing a pin-stripe suit and a shirt with French cuffs. “That’s 170 trees on that truck that we’re seeing, $1,500 (to the customer). And it’s a lot of environment we’re saving, plus 33-cubic yards of landfill space.”
One entrepreneur thriving during the recession is Nato Flores, an immigrant from Zacatecas, Mexico, who at 13 had washed cars for $1.65 an hour. While in college 24 years ago, he founded Tower General Contractors to coincide with his true passion - building.
Seven years ago, Tower was a small Sun Valley company that specialized in tenant improvements, but Flores had the urge to grow. He hired more talent and tightened the balance sheet. Business jumped from nearly $4 million in contracts to $136 million today at 12 construction sites.
Using sophisticated computer modeling, Tower was able to win such bids as LAX terminal and Gibson Amphitheatre renovations, Columbia Space Shuttle Museum, as well as the new green Laborers Local 300 headquarters downtown.
Guerrero said that, unlike with other construction companies, the recession hasn’t run Tower into a ditch.
“In order to get the jobs, we bent over backwards to separate ourselves from national companies,” said Guerrero, who like Samzadeh is a VICA member. “So when the recession came, when it got tough, we were already doing more things to close a deal and perform.”
At Huntington Memorial, where Tower is building the nation’s largest Emergency Department, that deal meant tying in a four-story addition without disturbing the preemies or ER operations next door.
“What we have here is one of the most nightmare jobs you can get,” said Thomas “TC” Two-Coats, a Tower senior superintendent, who rides a Harley in a Native American motorcycle club. “We’re getting around ambulances, people who are injured.
“To deal with a job like this takes a certain kind of contractor.”