Chief financial officers have a central role as Orange County businesses get back to spending, a trend fueled by cash built up during the downturn and a favorable climate for borrowing.
“We’re hearing from our customers that they’re … moving in the positive direction on the continuum [of] ‘cautiously optimistic,’ ” said Craig Hirson, a senior vice president at Bank of America who oversees the bank’s OC business banking unit.
“We’ve seen investments in a few different forms, like real estate, equipment and human capital. Over the past few years, there was a lot of dry gunpowder, if you will. Now they’re starting to invest more.”
Tustin-based liquor and wine distributor Young’s Market Co. recently purchased several warehouse and distribution centers “in order to take advantage of lower long-term interest rates,” said Chief Financial Officer Kevin Manion.
The company also increased its borrowing capacity by 33% “with our banking partners from Bank of America, Wells Fargo and Union Bank” to have adequate inventory levels for the fall and winter holiday season, he said.
Young’s Market had about $3 billion in sales last year, up 22% year over year. It was ranked No. 6 on the Business Journal’s list of private companies and No. 177 on the Forbes list of the largest private companies in the U.S.
Recent purchases are expected to help the company “be very efficient in delivering brands, such as Jack Daniels, Bacardi and Sutter Home, to all points of consumption,” Manion said.
“[And] as our business continues to attract new brands … we have increased our overall inventory investment while at the same time improving our inventory turnover by 20%.”
Young’s Market also has made hires “in both the sales and infrastructure functions, information technology and human resources in particular,” bringing up the number of workers in each group by 35%, according to Manion.
The company now has about 450 employees in OC and 2,450 companywide.
Projects, Hiring
Recruitment and consulting firm Experis—part of Milwaukee-based ManpowerGroup—is benefiting from the trend, according to Brian Goodman, who oversees the firm’s Western U.S. operations from its Huntington Beach office.
“In 2013, many of our CFO clients are putting their cash to work by revving up both project-based and full-time employees,” Goodman said. “Our business is up as a direct result of this increase in human capital expenditures. The increase in human-capital spending is occurring in tandem with our clients’ growing investments in innovation, technology and expansion efforts.”
Information technology has been drawing investment dollars from local companies, said Tony Uyehara, senior regional vice president at global staffing and consulting firm Robert Half International, which is based in Menlo Park and has a handful of offices in Orange County.
“Companies have been extremely focused on cost containment for the past five years,” Uyehara said. “In OC specifically, there are many organizations here that do have cash, and they are putting it to use. We see it across the board in manufacturing, financial services, retail … in various industries. CFOs now find their jobs becoming more and more collaborative with IT. Some 20 years ago when I started [in this industry], IT and finance were sort of necessary evils for each other. Now they work more closely together and collaborate.”
Some local companies also are eyeing acquisitions.
Shopping Around
“We are in fact actively looking for potential acquisitions at this time,” said Cal Laird, chief financial officer and chief operating officer of Kenny the Printer, a printing and marketing services provider in Irvine.
The company, which combined with West-ern Printing and Graphics in Orange about four years ago, employs about 40 workers here and sees about $10 million in annual revenue.
“We have more of a foundation to build on now compared with three or four years ago,” Laird said. “[Meanwhile] we have resized our business to [focus on] where the growth opportunities are. We’ve made some developments in the higher-growth areas.”
Irvine-based design, architecture and construction firm gkkworks also might consider unlocking some cash for deals, said Chief Financial Officer Sam Porter.
But it’s keeping a careful stance, primarily because “the market sectors and geographical zones that we serve tend to be the last to recover,” Porter said.
Gkkworks ranked No. 20 on the Business Journal list of the largest architecture firms here. It has about 30 employees in its Irvine office out of a companywide total of about 200.
“Gkk … has closely monitored and strictly enforced cash preservation requirements,” Porter said. “As we all know, ‘cash is king,’ and a construction company must maintain a fair amount of it for working-capital requirements.”
So far, so good this year, Porter said.
More of the same could see gkkworks open its wallet to hire people to help with acquisitions, he said, “provided it was the right target.”
