In the news: Diverse Group of Firms Shares a Fast-Growing Bond
Oct 3, 2011
By Kelly Quigley Monday, October 3, 2011
San Diego Business Journal
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What’s old is new again. A century or more before the Internet was even a word in our vocabulary, industries such as ship repair, packaging and construction were chugging along in San Diego. Today, companies in these sectors that are represented on the San Diego Business Journal’s Fastest-Growing Private Companies list are growing just as fast as youthful online media firms as they focus on meeting changing market demands.
Take, for example, YYK Enterprises Inc. in National City, a ship repair and painting company with major clients such as the U.S. Navy and the Coast Guard. "A lot of companies in this business are old school; they do things the way they’ve always been done," said YYK Chief Executive Steve Johnston, who bought the company in 2008 and has grown it to more than 200 employees from 12. "We’re bringing in green technology that reduces environmental waste. That’s something our clients like."
The "green" factor, he said, is a point of differentiation that helps the company win government bids. To remove paint from ships, the company uses a technique called "sponge blasting," which is more eco-friendly than sandblasting because the sponges can be recycled and overall waste is minimized.
YYK’s revenues have grown more than 250 percent since 2008, to $7.9 million in 2010 from $2.2 million in 2008, and the company is gearing up to add 100 more employees in October, Johnston said.
On a very similar growth path is Poway-based Square Peg Packaging and Printing LLC. While the packaging industry itself has been around for hundreds — if not thousands — of years, Square Peg provides a highly customized, creative twist that has made it one of the area’s fastest-growing private companies. The eight-person company has seen revenues jump to $7.4 million in 2010 from $3.3 million the year earlier and from $1.9 million in 2008.
"We’re in such an old industry; printing and packaging have been around forever," said John Kellogg, president of Square Peg. He said the company has combined those two industries, which gives clients better price leverage and brand consistency. "Clients typically had to go to two separate companies," Kellogg said.
Square Peg has had particular success with the booming craft brewery business. "We found that it was a neat segment so we decided to wrap some infrastructure around it," said Kellogg, who’s in the process of hiring four new employees and adding 30 percent more physical space. Square Peg also has seen growth from clients in electronics, food packaging, and biotech. "We’re always looking for growth areas."
Age Is Just a Number
The vast majority — 78 percent — of the companies on the Fastest-Growing Private Companies list were established locally during the past two decades, and nearly 20 percent were started in the last five years, including Square Peg and YYK. So it’s worth calling attention to the two firms on the list that are more than 100 years old: general contractor T.B. Penick & Sons Inc., founded in 1905, and insurance brokerage Barney & Barney LLC, founded in 1909.
"We have a culture of not being complacent around here," said Paul Hering, CEO of Barney & Barney, which saw revenues grow 22 percent to $77 million in 2010 from $63.2 million in 2008. "We’re good at patting each other on the back, but we’re always looking to push things to the next level."
In the hip branding and marketing space, San Diego-based MiresBall is the elder on the Fastest-Growing Private Companies list. The company started in 1984, the year that former California Gov. Ronald Reagan was reelected as president of the United States and Apple Inc.’s first Macintosh computer went on sale.
"While the mediums have changed — print, to video, to interactive — effective brand strategies have largely remained the same," said CEO Scott Mires. "We love to learn and grow, so change makes our job that much more interesting."
The 33-person agency has increased revenues by 53 percent, to $10.6 million in 2010 from $6.9 million in 2008, thanks to clients who see the recession as a branding opportunity, Mires said. "While many companies have clearly been stung by the recession and continued economic downturn, others are following the old adage of marketing during a down economy," he said, adding that MiresBall has recently added new clients in the health care, luxury products and technology sectors.
Diversity Gives Economy a Boost
The wide range of industries new and old represented on the Fastest-Growing Private Companies list is reflective of the local economy in general, according to a recent economic forecast report by Los Angeles-based Beacon Economics.
The report said that San Diego "has clearly turned the corner towards growth over the past 18 months," even as other economies in Southern California lag. The research firm attributes that recovery to job gains — 24,000 positions since late 2009 — due to an uptick in various industries, from health care to technology and professional services.
