Auto sales are depressed, but local car dealers aren’t blaming high gas prices. With sales down 14 percent statewide this year, through April, compared to the same period last year, they’re blaming the lagging housing market for the drop. Real estate contractors aren’t buying as many trucks to carry their tools to construction sites, and some nervous homeowners are putting off buying big-ticket items like cars because they can’t sell their homes and are worried about plummeting prices and rising interest rates, said Marc Cannon, senior vice president of communications with Florida-based Auto Nation. Auto Nation is the largest auto retailer in California, with sales of 600,000 cars a year. Cannon said he has noticed plummeting truck sales since July. “All of California is really struggling along,” Cannon said. “We are cautious right now with our outlook for the rest of the year. We are hoping to see it stabilize, but right now it’s hard to predict. We don’t see recovery in the second quarter.” With gas prices inching toward $4 a gallon, however, Cannon said there has been a trend of people trading in their gas-guzzling vehicles for CUVs, or car-based SUVs, which are more fuel-efficient. Although more car buyers are considering hybrid vehicles, not many people are trading in their cars for hybrids, Cannon said. Santa Clarita Valley’s “Auto Row,” located on Creekside Road in Valencia, has seen less foot traffic as well, but some car brands are showing stronger sales than others, Cannon said. More fuel-efficient, Asian-brand vehicles have had stronger sales overall than American brands. “GM is holding on,” Cannon said. “Premium luxury cars are hanging in there. Chrysler is down. The Caliber is doing well.” According to Don Fleming, president of the Santa Clarita Valley Auto Dealers Association and owner of Valencia Acura on Auto Row, sales throughout the auto mall as a whole are slacking but not substantially. “We’re selling cars, but business is down a little bit,” he said. “We have seen a slowdown, but I’m not sure gas prices have affected sales yet. If you live in Southern California and you commute, you gotta buy gas.” The Acura dealership’s medium-sized SUVs and smaller RDX SUVs are selling the most. “Certain models of our cars are selling. Certain models are not,” Fleming said. Although gas may not yet be affecting auto sales, it is starting to affect the types of cars consumers are buying. Fleming said he has noticed some owners of larger SUVs looking to trade in their vehicles. “It looks like people are trying to find ways to save money,” he said. As such, Lexus-brand automobiles are doing well since they manufacture a hybrid, Fleming said. To that end, some dealerships that offer smaller, gas-efficient SUVs and hybrids are seeing a spike in sales. Tim Mendenhall, general manager of Saturn of the Saturn Clarita Valley, said gas prices are helping his business. “As gas prices go up, we do better,” he said. Nationally, sales at Saturn dealers increased 29 percent each month over last year. According to Mendenhall, sales at the Santa Clarita dealership are even better than the dealership is doing nationally. The dealer’s small SUV, the Outlook, has been selling out because it gets 26 miles per gallon and its Saturn Aura, which gets 30 miles per gallon on the freeway, has been selling well also, Mendenhall said. In addition, the dealer’s new hybrid vehicle, which gets gas mileage in the mid-30s, recently sold out and the dealer had to order more. Due to demand for its hybrids, “We’ll have more green vehicles in 2008 than any other manufacturer,” he said. Although Saturns used to attract many first-time buyers, many people are now trading in their Lexuses and BMWs for Saturns, Mendenhall said. But not everyone has been following suit. According to Tim Smith, owner of Bob Smith BMW MINI in Calabasas, “BMW sales are doing fine. It looks like right now we’re ahead of last year’s pace by 3 to 4 percent. I think there’s a lot of enthusiasm for the BMW MINI.” According to Smith, the MINI Cooper, gets gas mileage in the 20 mpg to 30 mpg range. “I think people are putting emphasis on fuel economy,” he said. According to Bert Boeckmann, owner and president of Galpin Motors, who owns dealerships in both the San Fernando and Santa Clarita valleys, “California has slowed down more than the rest of the nation. The San Fernando Valley is no worse off than the rest of the nation.” Nationwide, certain areas have been hit harder than others, Boeckmann said. But nationally, auto sales are “pretty much the same.” Because people are putting off purchasing bigger trucks, the sale of Fords in California are down more than they are in other areas in the country. According to Boeckmann, Galpin sales in the San Fernando and Santa Clarita valleys are up due to the opening of a new Honda store last year. Without the new store, sales would have decreased 7.2 percent at the Galpins in both valleys. Boeckmann predicts sales will increase in the summer, as they normally do. As for the rest of the year, “I think we’re going to continue somewhat on the same track,” he said.

Natrol, Inc., a Chatsworth-based manufacturer of nutritional products, has entered into a joint venture to distribute its products in China. Partners in the joint venture are a group of Chinese businessmen who will help develop an operational platform in the country for marketing and distributing Natrol’s products. The company recently opened an office in Hong Kong to house a sales staff and regional distributors. “We believe that the market opportunity for our products in China and the Asian region is extremely compelling,” said Wayne Bos, Natrol’s president and chief executive officer. “Chinese culture has, for thousands of years, understood and accepted the wisdom of herbs for wellness.” According to Bos, venturing into China will give the company a much-desired foothold in the Asian market, as it’s an important region for trading and growth. Although the company’s more than 200 products are already distributed worldwide, an office in Hong Kong “gives us a little point of presence” there rather than doing business from L.A., Bos said. The Chinese venture isn’t the company’s first foray outside the United States. Bos, an Australian native, said as much as 8 percent of Natrol’s revenue is from international distribution. The company has an existing office in the United Kingdom and is interested in expanding throughout Europe, he said. According to Gerry David, owner of Certified Nutrition For Less, based in Florida, many nutraceutical companies are expanding into foreign markets. “There’s a major trend going into the Asian market, especially China,” he said. The Chinese market has been largely untapped in the past, due to its heavy restrictions which are the most severe in Asia. For the few who have penetrated the market, Asian sales have reached more than $1 billion, David said. Expansion is important, David said, because “The U.S. market is fairly well saturated with (nutraceutical) companies selling their product.” But that may soon change. The FDA will start regulating the manufacture of nutraceutical products in the near future. Subsequently, some U.S. companies won’t be able to afford to adhere to the new rules and will be forced to shut down, David said. Natrol’s Chinese venture comes about a year after the company experienced an economic turnaround. In 2005, the company experienced a net loss of $2.6 million, or $0.20 per share on sales of $67.5 million. The drop in sales of Natrol’s Carb Intercept product came during a declining market overall for low-carbohydrate products. Bos, who joined the company a year ago, said heavy investment in a new product, Brain Speed, also affected revenues during that period. Sales of the brain-enhancing tablets were initially sluggish but are improving substantially, he said. In the first quarter of 2006, the company posted a profit, with net income of $73,000, or $0.01 per share, on net sales of $17 million. In the first quarter of 2007, the company had an operating income of $743,000, compared with an operating income of $719,000 during the same period the prior year. In late May, Natrol stock was selling for $3.15 per share. Bos attributes the turnaround to managing costs, new management and continued investment and stabilization of the company’s core business. A $26 million lease-buyback deal for Natrol’s corporate headquarters and shipping center in Chatsworth in April eradicated the company’s debt. Natrol agreed to lease back the space for five years, with two five-year renewal options, which brought the company $12 million after taxes and debt. The money from the deal will be used to help Natrol grow, but it wasn’t used to start its Chinese venture, Bos said. Bos said it may take a long time for the company’s products to begin selling successfully in China, but he isn’t worried. “I’m not expecting a lot at first,” he said. Natrol’s hair growth products may be one of the best sellers, according to Bos. Regulatory approvals for Natrol’s products in China are pending.

Golf enthusiasts Craig Reibenspies and Dewayne Sode have always dreamed of owning their own business. So when they learned about the opportunity to purchase a franchise territory in the GolfTEC store chain, the duo jumped at the chance. GolfTEC, headquartered in Denver, provides golf lessons to aspiring golfers. They began offering franchise opportunities in 2003, giving entrepreneurs the sole rights to own and develop GolfTEC stores in specific territories. Reibenspies and Sode purchased GolfTEC’s north Los Angeles territory in 2004 and now own three stores, in West Hills, Pasadena and Sherman Oaks. The advantage of buying a franchise store, Reibenspies said, is that “you don’t have to start from scratch. You don’t have to reinvent the wheel.” Indeed, the ventures have been so profitable that the duo plans on opening a fourth location in the Conejo Valley by the end of the year. In addition, they plan on eventually opening a store in the Burbank/Glendale area. Their territory runs from Thousand Oaks in the west to Pasadena in the east and includes part of downtown Los Angeles. “We’re actually looking for space in Thousand Oaks,” said Reibenspies. Finding a good location, he said, has proven to be the most challenging aspect of developing the franchise territory. The business partners had some potential locations in the Conejo Valley to open their fourth store, but lack of space has prevented an expansion. “Commercial space is so tight in Southern California,” Reibenspies said. The business partners are looking for prospective stores in their territory based on where they believe the greatest need and desire for their services exist. Their existing stores, they say, are in areas where many residents are golf enthusiasts who have incomes in the middle and higher range but can’t afford expensive golf lessons. According to Reibenspies, the GolfTEC chain has been hugely successful, with a new franchise opening every three or four days. There are currently 83 GolfTEC franchises throughout the nation and a total of 100 stores are expected to be open by summer nationwide. They hope to expand to 300 stores at buildout. Although the GolfTEC chain still owns 15 to 20 stores across the country, they are continuing to sell new territories. The success, Reibenspies said, is because the stores use state-of-the-art, high-tech equipment to assist golfers with their golf swing. The lessons, which are given indoors, use high-speed video that tapes a golfer’s swing from two angles. After the golfer is attached to a harness equipped with sensors, the swing is analyzed at various positions during instruction. The video, which shows the head of the golf club striking the ball, can then be downloaded on the Internet. The advantage of this type of instruction, Reibenspies said, is that golfers and their instructors get instant feedback and can see exactly where improvement needs to be made. In addition, aspiring Tiger Woods’ can compare their performance to the pros. “The golfer is able to see and feel what he’s doing,” Reibenspies said of the instruction. The videotaped instruction has been so successful, Reibenspies said, that the GolfTEC chain has developed its own instructional video software, Seva Pro, which the franchises use for their golf lessons. “We’re the only one that’s taken it to a national level,” Reibenspies said. “We’re the only one that’s branded golf instruction.” The chain has developed a new software program that came out earlier this month, which expands the existing computerized technology to include putting skills. According to Reibenspies, it was GolfTEC’s innovative golf instruction that first inspired Sode to purchase the franchise territory. “We saw something that’s just phenomenal in what they’re putting together,” Reibenspies said. Prior to the franchise purchase, Sode took golf lessons at GolfTEC in the Golf Smith store in Woodland Hills and was so impressed with the state-of-the-art instruction that he approached Reibenspies to go into the golf business. The business partners now own that same Woodland Hills store that Sode first took lessons at. Golf Smith, which sells golf merchandise, is a separate entity from GolfTEC, but the two chains often work together, with Golf Smith allowing GolfTEC to open stores in their locations. Most of the GolfTECs, however, are standalone stores. The first GolfTEC franchise Reibenspies and Sode purchased was the existing Woodland Hills store. Their Pasadena location was opened in 2005, and the Sherman Oaks store opened last year. “We’ve had really good success in Woodland Hills because it’s a mature store,” Reibenspies said. Since the Pasadena and Sherman Oaks stores opened, revenues for the three stores combined have nearly doubled from 2005 to 2006, Reibenspies said. “We’ve just had tremendous momentum in the last couple months,” he said. Encino resident David Meshulam, who has been taking golf lessons at the Sherman Oaks store for two years, said it’s a combination of GolfTEC’s personalized instruction and computerized system that makes it attractive to golf enthusiasts. The 15-year golfer said he chose GolfTEC for lessons because of its unique teaching approach. “I liked the feedback I got with the video replay because I’m a visual learner, so I could see very clearly exactly what I was doing, and with the aide of my instructor, I could make corrections,” he said. Since taking lessons, Meshulam’s golf handicap has improved, going from an 18 or 19 to a 17 now. SPOTLIGHT – GolfTEC: North Los Angeles Year Franchised: 2004 Revenues in 2005: $375,000 Revenues in 2006: $680,000 Revenues in 2007 (projected): Just under $1 million Employees in 2004: 3 Employees in 2007: 10 Goal: To open locations in the Conejo Valley, Burbank/Glendale area and Downtown Los Angeles.

A year after receiving federal approval to make over-the-counter drugs and cosmetics, Basic Solutions stands ready to enter new markets and tap into new revenue streams in a multi-billion dollar industry. In its laboratory in Chatsworth, a growing number of Basic Solutions scientists research ointments, creams and personal care products to give the company an edge over its competition. “We’re fortunate to have an executive staff that understands and encourages that,” said Tim Crawford, technical director for drugs and cosmetics. “Looking for something out there we can put in a bottle and give us a unique position.” Vast Resources, Inc., a decades-old family-owned firm, launched Basic Resources in 2004 as a separate contract packaging and private label business and brought on cosmetics industry veteran Crawford to head its efforts. Vast Resources also owns Topco Sales, the well known adult novelty firm for whom Basic Solutions develops lubricants and cosmetics. Despite common ownership and the sharing of a building, Crawford does not consider Basic Solutions part of the adult products industry as its product line will be more general and sold in major drug store chains. (Vast Resources also owns a third business, MiracleBeam, a maker of laser, LED and electroluminescent products.) The certification from the Food and Drug Administration means the Basic Solutions manufacturing process meets strict requirements. Crawford was familiar with the lengthy and expensive process to obtain FDA certification to make over-the-counter drugs and cosmetics. In undertaking that process, a change in the corporate culture at Vast Resources took place that at times did not win Crawford any popularity contests with his co-workers. No department at the Chatsworth office building was left untouched by the changes implemented in the hygiene of the workers, the cleanliness of the facility, the record keeping, and the tracking of the products themselves. The procedures manual compiled for this endeavor measured about three inches in thickness. “We are talking about over-the-counter ointments and creams; things that people will apply to their body for specific results,” Crawford said. Basic Solutions takes the time and expense to make sure their products are safe from beginning to end, said Karine Aylozyan, president and senior microbiologist with Micro Quality Labs in North Hollywood, a facility specializing in microbiological and analytical testing for the cosmetic and pharmaceutical industries. Crawford himself, Aylozyan said, is excellent at developing formulas; knowing exactly what preservatives to use or not use. There are certain ingredients that react with others, so it is important and critical to know which ones to use, especially when working with natural ingredients that are more prone to bacteria, Aylozyan said. “It has to be well preserved or well combined where one preservative or product can be destroying the bacteria of the other,” Aylozyan said. Basic Solutions registers all its products with the FDA and undergoes inspections of its lab and manufacturing line. Some of the first products to come out of the Basic Solutions lab were baby care and diaper rash ointments. This year the company is working on a line of topical analgesics. Future products will include anti-dandruff shampoos, sunscreens, lip plumpers, anti-aging ointments, and natural or organic products. Because the Topco name was not unique, Basic Solutions was chosen as the new business name. In addition to making the actual creams and ointments, the company also has an in-house design and graphic arts department to come up with presentation ideas. On the crowded shelves at the local Longs and Walgreens, a distributor needs all the help they can get so their product will stand out by utilizing packaging that enhances the product. “There is a lot of work to get a tube of diaper rash cream on the market,” Crawford said. With additional clients clamoring for its products, Basic Solutions finds itself in a good position to enter national and international markets previously unexplored by the company and providing increased diversification for its parent, Vast Resources. The growth area in the industry is in anti-aging products because, Crawford said, everyone wants to look younger. In keeping up with the trends in the industry, Crawford remarked on reading an article reporting that women in their late teens already receive Botox treatments to prevent wrinkles. “It’s not just the Baby Boomers,” Crawford said. “The next generation is taking it farther.”

Robert Allen, executive vice president/chief financial officer of CHA Hollywood Presbyterian Medical Center, was chosen to replace Valley Presbyterian Hospital’s outgoing vice president and chief financial officer. Albert L. Greene, Valley Presbyterian’s president and CEO, chose Allen to replace outgoing vice president and CFO Tracey Talley. Allen will join Valley Presbyterian on June 1. He has served as the CFO of several San Fernando Valley hospitals, including Verdugo Hills and Sherman Oaks hospitals. The new CFO said he believes his 13 years of experience with “standalone” hospitals, renegotiating payer contracts and finding funding sources have prepared him for his job at Valley Presbyterian. Despite Hollywood Presbyterian’s large indigent population, “We’ve kept it remarkably financial stable,” Allen said. “I served as a stabilizing influence when Tenet decided to sell the place.” “I’ve done a lot of refinancing debt at a lower interest rate or with a different payment mechanism,” he said. According to Allen, the challenges he will be facing in his new position are similar to the challenges he faced as the CFO of Hollywood Presbyterian. Both hospitals are about the same size and have similar demographics, with large immigrant, uninsured and indigent populations. Balancing the budget and serving a growing population are concerns many hospitals face. “Everybody’s trying to figure out how to finance health care,” Allen said. However, he noted, Valley Presbyterian “is nowhere close to debt capacity.” Allen said as the new CFO, he will be looking at expanding programs into the community to acquire a larger patient base and additional funding. Some of that growth will come from the hospital’s pediatric unit due to the demand for pediatric services, said Norma O’Flaherty, director of marketing and communications at Valley Presbyterian. Greene, who previously worked with Allen at CHA, said Allen “will play a vital role in Valley Presbyterian’s commitment to providing advanced quality health care for our community.” “Robert has a wealth of experience with both the not-for-profit and for-profit hospitals, making him a perfect fit for overseeing Valley Presbyterian’s long-range strategic financial requirements along with significant technological investment initiatives,” Greene said. Talley, Valley Presbyterian’s outgoing CFO, has accepted a position as the CFO of a newly formed hospital acquisition and development firm in San Diego.

The cost of passes provided by businesses as incentives to get workers to use buses and trains is expected to go up following a fare increase approved May 24 by the Metropolitan Transportation Authority board of directors. The annual Metro pass given only to businesses is tied to the cost of the monthly pass that will increase to $62 in 2008. In addition, the transit agency’s B-Tap program that provides passes to all workers at a company, in a manner similar to medical or dental benefits, would increase as well. The MTA board approved the fare hike following a daylong hearing at which some 1,500 people showed up to voice their opposition or support. Under the new fee structure, monthly passes will go from $52 to $62 in 2008, $75 in 2010, and $$90 in 2012. The $3 day pass rises to $5 in 2008. The new prices are significantly less than what they agency had sought and which had drawn criticism from advocates claiming an increase would most harm the working poor, senior citizens and students and possibly result in a drop in ridership. “It would be great to have it continue on at the same fare but our costs are going up,” said Don Sutton, director of Metro Commute Services, the department charged with working with business to provide alternate means to solo commutes by car. Days before the Metro board met, Mayor Antonio Villaraigosa called for more modest increases that would lessen the burden on low-income riders and suggested the agency find other ways to make up the loss, such as borrowing money for bus and rail car purchases and going after state gas tax money. Current fares are heavily subsidized through tax dollars. For seven years, Metro could not raise its fares under a federal consent decree, which also ordered an expansion in bus service that resulted in a $1.8 billion operating deficit over the next decade. Metro is just like any other business in that when there is increase in expenses, there must also be an increase in revenues, said Brendan Huffman, the president of the Valley Industry & Commerce Association, which has not taken a formal position on the increase. “No one likes to pay higher fares but sometimes it is necessary,” Huffman said. Sutton’s office works with five Valley companies offering annual passes and another 34 companies offering monthly passes at a reduced rate. When purchased in a small number, an annual pass costs $624. When offered to all employees of a company, Metro offers a group rate based on based on the level of service in that area. In the west Valley area, many member companies of the Warner Center Transportation Management Organization offer monthly passes for Metro and other transit agencies at a discount of anywhere from $10 to $40, said executive director Christopher Park. If the Metro board goes ahead with a fare increase, he doesn’t expect companies to change their policies. “Most companies are offering a generous subsidy,” Park said. “I don’t see that increasing just based on a fare increase.” The Warner Center TMO, with a membership of 58 companies representing 35,000 workers, has not taken a formal position on the proposed fare increase. Nor has the Burbank TMO, with its membership of 115 companies representing 30,000 employees. The Burbank companies face not only a potential Metro increase but also a 3.5 percent hike in Metrolink train fares beginning on July 1. The Burbank Metrolink station is one of the most used, outside of Union Station in downtown Los Angeles, said Burbank TMO Executive Director J.J. Weston. “We always have concerns if the price goes up because we don’t want to see a reduction in train ridership,” Weston said. Use of public transportation in the Warner Center area nearly tripled following the opening of the Orange Line busway through the Valley in October 2005, Park said. “That is attractive to the employee that wants flexibility to come in earlier or later in the morning or leave earlier or later,” Park said. “It’s quick and it’s a very reasonable cost.” The boundaries of the TMO are Ventura Freeway to the south, Vanowen Avenue to the north, Topanga Canyon Boulevard to the west and DeSoto Avenue to the east.

Diane and Stewart Deats , owners of Deatsdesign in Woodland Hills, were honored with the small business award by the Woodland Hills/Tarzana Chamber. The husband-and-wife team started their graphic and web design company in 1982. “We’ve changed through the years with different companies,” Diane said. When the Deatses started their home-based business, they had to perform graphics layout functions via typesetting machines. Once computers came along, they had to relearn their trade. “It all changed from 1980 to 1990,” she said. Other things have changed as well. In the 1980s, the Deatses designed record and LP covers. They now design packaging for compact discs. Today, the couple also designs print and digital brochures, book covers, Web site banners and ads. Their past and current clients include Johnson & Johnson, Hewlett Packard, Warner Music Group and AIG Sun America. During the Deatses first year in business, their gross sales were only $10,000. Since then, they have sold millions of dollars’ worth of graphic design products, Diane said. The couple still finds the time to give back to their community. They directed the Web site design for the Woodland Hills/Tarzana Chamber when the chambers merged, and they designed the program for the chamber’s inaugural celebration in January. Diane also serves as the chairwoman of the Public Relations and Marketing Committee for the chamber. As longtime parishioners of St. Bernardine of Siena in Woodland Hills, the Deatses donated part of the services for the church’s new brochure and dedication materials when the church was rededicated in 2001.

State Assemblyman Paul Krekorian was named as chairman of the new Select Committee on Preservation of California’s Entertainment Industry. Krekorian represents a district that includes many entertainment-related companies in Burbank, Glendale and parts of the San Fernando Valley. Many other states lure away film and television production because they know it produces economic benefits and revenues with good middle class jobs, Krekorian said. “We are going to fight hard to keep those jobs here, keep California competitive and make sure the state is a great partner for this industry,” Krekorian said. Krekorian was elected to his first term in Sacramento in 2006.

Dell Inc. will break its longstanding tradition of building and selling its personal computers directly to consumers and begin distributing through Wal-Mart Stores Inc., the company said. Wal-Mart will sell two models of Dell computers with a pre-selected package of options to retail at under $700. One of the models will be an exclusive to Wal-Mart.

The Metropolitan Transportation Authority Board of Directors approved Thursday an increase in fares for bus and train service beginning in July of next year. The new fees, however, are significantly lower than what the agency had sought to reduce a projected deficit created by court-ordered expansion of bus and rail service. Starting in July 2008, the cost of a day pass increases to $5 from $3. Monthly passes will jump to $62 from $52 in 2008. Single ride tickets will increase to $1.50 from $1.25 in July 2009.