One of the first things Victor Sim did as chief executive of Union Inc. was to change the Irvine company’s name to Solafide,latin for “by faith alone.”
Sim knew he would need some faith. In June, he and a group of investors bought the $30 million a year ramen company, which was on the brink of shuttering its doors.
The noodle maker had lost $3 million annually for a decade under its former owners, who he declined to identify.
It has relatively little market presence,4%,compared to the 90%-plus of the two largest ramen makers, Japan’s Nissin Co. and Maruchan Inc., which has its U.S. headquarters in Irvine.
Solafide shipments sometimes were late. Even the company’s landscaping was a mess.
And it didn’t look like it was going to get easier as other Asian companies, including some in China and Indonesia, are making a bid for their own piece of the U.S. ramen market.
But the noodle maker was an appealing turnaround candidate to Sim, a former lawyer who specialized in acquisitions. He also saw an opportunity to save more than 120 jobs mostly held by Hispanic and Asian manufacturing workers.
Thirty-nine-year-old Sim said he was looking to do something different when he took on Solafide.
“You don’t quantify these things in dollars,” Sim said.
Sim said he has ambitious plans to boost the hourly wage of workers from about $7.50 to $13 and give them the chance to rise through management. He wants to launch an employee stock ownership plan.
The company’s main investors are Korean-Americans who live in Los Angeles, Sim said. He declined to name them, though he said the investors have turned around other companies, including some in the aerospace industry.
He doesn’t think Solafide can succeed by beating its big competitors on price. Maruchan and Nissin can be profitable selling soup noodles and a flavor packet for a few dimes each because they produce so many.
Instead, Sim is set to go more upscale with Solafide’s noodles and soups. He plans to offer healthier ramen soup versions with more vegetables and minus the MSG (monosodium glutamate).
His target market is middle-class and lower-income families who are on the move, but want something that’s more substantial than other ramen soups. He said details still are hazy, but he’d like to launch the new products in the next year or so.
“I think the American consumer would pay 10 cents more” for a ramen package, Sim said.
Sim went to work at a law firm in Dallas in the early 1990s. To ride the boom in technology, Sim moved to Palo Alto in 1995 to work at Wilson, Sonsini, Goodrich & Rosati Professional Corp.
Sim had his hand in more than 30 initial public offerings at the law firm. He worked on offerings for Santa Ana-based SimpleTech Inc. and CheapTickets.com, which later was bought by Cendant Corp.
Just as the bubble was bursting, Sim teamed up with other investors and launched HeyAnita in Los Angeles. The voice recognition technology company raised $60 million in venture funds when he was there.
The telecommunications downturn pounded HeyAnita Inc. It took its toll on Sim, who was getting little sleep traveling the Pacific Rim to raise funds.
In early 2002 Sim said he woke up with half his face paralyzed. Although doctors weren’t sure the paralysis was from stress, they knew his lifestyle wasn’t helping the situation.
It took three months of therapy to get Sim back to normal. He decided to leave HeyAnita to go back into law.
Sim was hired by Brobeck Phleger & Harrison LLP. But the technology focused law firm collapsed within a year of his joining.
So he took a hard look at his life and goals and eventually decided to take a chance on Solafide.
Sim said basic communication and cultural barriers hindered the company in the past. Managers in Irvine would negotiate agreements and then send along the documents to Korea for approval. They would wait for days for a response. Customers would get impatient.
Barriers between the warehouse and the administrative offices didn’t help. The company didn’t appear to connect its sales orders with production.
By the time Sim arrived, crates were stacked to the door with unsold ramen. The company has rearranged warehouse equipment and workers and upgraded some machinery.
Sim said daily production volume has grown by 20% in the first six weeks under the new owners.
Sim expects to have the company back to profitability or break-even within a year and hopes to increase workers’ wages as well.
The company expects to post revenue of $20 million to $25 million this year, down from $30 million last year when Solafide was bleeding cash.
In the next few years, he expects the ramen firm to grow to $30 million to $35 million annually.
