Santa Monica’s Week In Business

Michael Rosenthal

Road Trip

   I headed north on highway 99 to the hopping industrial capital of the San Joaquin Valley, Fresno, or more specifically Clovis. I was there for the President’s Dealer Advisory Council, held annually and hosted by one of the largest suppliers in the video security industry, Pelco. Not exactly a household name to most people, but in my industry they have made their mark via a commitment to “fanatical customer service,” as expressed by their president David McDonald. His guiding principles were partially gleaned from the influential business book “In Search of Excellence” by Tom Peters, who analyzed the top businesses in the U.S. in order to find out what made them great. The #1 attribute that the top performing and most respected businesses shared was a commitment to good manners. Good morning, good afternoon, a pleasant and cooperative tone, and a dedication to serving customers were the hallmarks of a great company. Focus on this area with all the resources you can muster and you will separate yourself from the crowd. Sadly, most businesses do not dedicate themselves to servicing clients’ needs and actually consider service centers to be too costly to the bottom line.
   Back to Pelco. This company manufactures the essential ingredients in a closed circuit television system (CCTV) — or, in more modern terms, video security. Mounts, housings, pan and tilts, super-high-speed Spectra Domes that have integral cameras with zoom lenses all condensed and built into tight dome-type housings. You will find their equipment all over, including the U.S. Banks that were once Santa Monica Banks, in the Santa Monica P.D. Jail, at Santa Monica’s luxury hotels, at commercial properties owned by our real estate moguls, Douglas Emmett, M. David Paul and Rick Caruso. The stuff is everywhere – on our freeways and roadways, our power utility plants and our cable companies. And Pelco is considered by most to be the best supplier in the industry.
   I was asked to join the President that day as he polled his top-installing dealers nationwide as to how his company was doing and, more specifically, how can it improve its position in the marketplace. Now we have had lots of Japanese manufacturers traipse through our offices and poll our salesmen as to what they ought to do better, but it has always been primarily product-oriented. This day McDonald wanted to talk about customer service and how he differed from the rest of the industry. Truth is, Pelco does set the bar in this area. They have a 98% on time delivery schedule; they provide prompt turnaround on service items and manufacture with the highest quality and reliability.
   The security industry is going through a major consolidation and a technological revolution. The venerable old Pinkertons’ company (some remember them as strikebusting goons, others for chasing Butch Cassidy and the Sundance Kid) has gobbled up dealers across the nation, Johnson Controls has acquired several companies and has become far more aggressive in the marketplace, and the behemoth of the industry Tyco, has merged API into ADT.
   Tyco just recently acquired Sensormatic Corp. for $2.1 billion, providing ADT with a national network of accounts in the retail end and a major manufacturer of digital video recorders and multiplexers. If you live in Santa Monica, you may have noticed that Southern California Edison acquired Westec in its attempt to enter the alarm market. Utility companies figure it is just another line item on a consumer’s bill and they already have a fleet of service vehicles.
   This national chain stuff began to sound like the Santa Monica Promenade on steroids – all these billion-dollar acquisitions and mergers in an attempt to dominate the marketplace and squeeze out the little guy. Pelco has built its business on the strength of its relationship with independent business owners and was making sure its base was covered. The best part of joining the advisory council was getting the opportunity to visit with my professional peers and realizing that though their business might be in Raleigh or Chicago or Boston or Ft. Lauderdale or New York City the challenges we faced were entirely similar. I also loved to guess where they were from by their accents, though I mistook the Aussie for a South African.

   The elephant in the room was the news that Tyco had just bought Sensormatic and was going to merge it with ADT, one of Pelco’s largest accounts. This would threaten nearly $40 million in business that ADT was promising due to the fact that Sensormatic would now become its prime supplier. That topic never came up in general discussion, which was okay, as Pelco provided a truly hospitable environment, fed us well and allowed for a few friendly jabs between the Pres. and his band of merry installing dealers.
   I lived in the Central Valley when I went to college in the early 70’s and learned a lot about how food is produced in this country. The entire valley is basically a giant food factory. With some of the richest topsoil in the world, this region has consistently helped feed the country. There are several threats to its way of life. First of all is water — always an issue in California. Nearly 80% of the water in this state goes to agricultural needs and a great preponderance of that goes to feed crops for meat. Water is so cheap that there is little incentive for farmers to improve water conservation methods such as drip irrigation, used in many regions of the world. And besides, the prices would be passed on to consumers who currently enjoy some of the lowest food prices in the country for fruits and vegetables.
   Another threat to the Valley is rampant development of farmland. Thousands of acres of prime agricultural land are paved over every year, with its precious topsoil lost forever. Fresno is a lot like Santa Monica in that it seeks to develop itself constantly and forgets to include the long-range costs of the development. All of the housing and industrial space that ate up top agricultural land created the need for all types of infrastructure improvements including sewer, power, water, road ways and more police and fire department help. In the end, it was determined that the development cost more than it was contributing. Ring a bell? Though our population has dropped in Santa Monica, the infrastructure costs keep going up, including more city staff, more road work, more police, and a new $52 million public safety facility, to serve the shrinking resident population and growing tourism trade and business development.
   Efficiency of the small farmer. One of the great myths of our time is how efficient large farms are. The same is often said of large corporations. Nothing could be farther from the truth, however, as anyone who has watched a farmer work 60 acres and extract maximum production out of it and then watched a corporation leave 20 to 30% of its crops in the ground. Not to mention that most corporate farms need to pick for shipment and transport, meaning the fruit is rarely ripe, juicy and delicious. True, large corporate farms do produce a lot, but they are given subsidized water and often farm for one single buyer i.e.: a Safeway store that orders a field of strawberries. Small farms are more able to produce unique varieties, deliver product when it is ripe and ready and pay closer attention to their entire field, including better pest management without the use of heavy pesticides. Of course, if you read Laura Avery’s Farmers Market Report on page 19 of the Mirror every week you know all this.
   Highway 99 is one of the great highways in America. During the summer, the trucks are laden with fresh fruits and vegetables headed for all points on the compass. Driving with them made me feel like I had joined the great industrial machine that is the U.S. There is the town of Selma, famous for its raisins and Sal’s, the best Mexican Restaurant in the world. I stopped and devoured the world’s sweetest table grapes picked fresh from ripened vines and headed south, toward the infamous Grapevine and home.