A dozen years ago, NorthStar Moving Corp. was a fledgling company operating out of a tiny office with a rented truck and just one employee: founder Ram Katalan. “It kind of started from nothing,” he said. But Katalan had a plan. With little money in the way of advertising, he hoped that word-of-mouth would bring him customers. Somehow it worked. “Once we started touching clients, it was a snowball effect. People started referring us,” he said. Today, what was once a painfully small company has grown into a major moving service in Southern California. In 2005 alone it tackled 5,000 jobs out of its 107,000-square-foot Chatsworth warehouse. “We can stack three tall in here,” said Katalan, 42, as he walked along one row of the hangar-like space, the rough outlines of padded bicycles, strollers and lawn furniture protruding from the hodgepodge of shipments. Many of the belongings here are in transit, stopping for a few days as they move to Arizona or Seattle or Rhode Island. Mostly, though, the company deals with local moves in the Los Angeles region. Clients usually hire NorthStar to move belongings to a new apartment or home. Rates vary, but a two-man crew usually costs about $75 an hour. For long-distance moves, belongings are placed in cardboard boxes, which are then inventoried, stacked on wooden pallets and wrapped in a cellophane-like material. Then, the whole pallet is moved into a truck and shipped to the storehouse in Chatsworth, before being moved to the final destination. The company contracts out-of-state moves with another carrier. “They’re off-loaded and come here,” Katalan said as a forklift with someone’s boxed home wares zoomed past. Goods can also be stored here for a longer period in the crates. Katalan said it’s easier than a storage facility. “They would have to open the door, start shuffling around,” he said. “That’s what we do. It’s a huge inconvenience.” A ‘star’ is born The company started 12 years ago when Katalan and his wife moved west from New York. He had worked in the moving industry since he emigrated from Israel, where he was a member of the Special Forces. At first he lugged boxes, but eventually worked his way up to foreman, semi truck driver and operations manager. After eight years of labor-intensive work, though, Katalan was more than ready to move on. In 1994, he started NorthStar Moving, a name that was suggested by his wife. “NorthStar is the guiding light towards a new beginning, a new life,” he explained. Early on, he would hire movers to help out on jobs. “For the first few months, we leased a truck,” he said. Today, the company owns 13 bright red trucks and moves hundreds of people every month, ranging from a dorm room that takes a few hours to entire offices that may take two or three days. It also has a number of clients in the movie and television industries, including the Jim Henson Co., Stan Winston Studio and Image Entertainment. NorthStar crews have also moved furniture out of tony mansions for Oscar parties and countless movie and television sets. There are celebrities as well, including Diana Ross, Chuck Norris, Diane Keaton and Angelina Jolie. “Her belongings are still here,” Katalan said with a smile. Keep on trucking Katalan said part of the success they did $5 million worth of business last year is because he has consciously distanced himself from the moving industry’s often-bad reputation. “Everybody has a horror story,” he said. Steve Weitekamp, president of the California Moving and Storage Association, which represents thousands of moving companies in the state, including NorthStar, said the industry is marred by a growing number of bandit movers. “The Internet is rampant with illegal operators,” he said. “A good part of the complaints that come to our office are companies that just don’t have licenses.” It is among the biggest headaches for the industry, the No. 1 being gas, he said. “These trucks get four to six miles-per gallons,” he said. “It’s absolutely a factor.” For Katalan, his red trucks cost about $200 to fill up, which happens about every other day. So far, Katalan hasn’t passed the additional onto customers, he said. But it’s getting tough. “We’re optimistic and hope it goes down,” he said. For now, gas prices have not slowed down expansion. He recently expanded to commercial storage, which now takes up the north side of the warehouse. The idea is to offer the space to companies that don’t have enough room to store goods office furniture, papers or even products that can then be picked up by a client or another company. “If they want to ship a computer to France, they can bring it here and we’ll deal with the paperwork,” Katalan said. In this respect, NorthStar has turned into a freelance distribution facility, acting as relay between manufacturer and vendor. It’s a new niche that has NorthStar bringing in an additional revenue stream. Katalan said nearly all of his new storage clients had used his moving service. It’s the same word-of-mouth model that Katalan has been using for years. “We believe that everyone we touch will be a repeat customer,” he said. Spotlight NorthStar Moving Corp. Year Founded: 1994 Revenues in 2005: $3.5 million Projected Revenues in 2006: $5 million Employees in 2005: 35 Employees in 2006: 50 Driving Force: A full-service moving and storage service focused on the Los Angeles region. Goal: To provide solid customer service while growing financially.

Talk to a manufacturer these days and eventually the topic turns to the problem of finding qualified employees. That problem extends from entry-level positions to managerial or supervisor roles, a situation made worse when a long-time worker retires, leaving a gap of not only a body but in the skills that employee brought to a company. “You can’t replace the 30 years of internal knowledge that an employee has given you,” said Fabian Grijalva, the human resources director at wristband manufacturer Precision Dynamics. To keep up a supply of qualified employees for advanced positions, companies turn to training both inside and outside the workplace. People in these advanced positions not only need skills to deal with workers below them, but technical training as well to work with sophisticated equipment. At Precision Dynamics in San Fernando, employee training to groom future managers involves managerial skills training, different computer applications, and lean manufacturing initiatives. “We’ve even done Spanish for managers,” Grijalva said. The “sharper” employees at DeKing Screw Products in Chatsworth will move up in the shop and be sent off-site for training through Pierce College, said President Geno DeVandry. But DeVandry concedes a lack of success with getting managers from within the company’s ranks and that he faces a tough choice over how to make a promotion. “I don’t know whether to take the educated person and bring him into the shop and teach them machining or take the person with a machining background and teach them to be a manager,” DeVandry said. As more communication is done electronically, those technical skills are essential to a manager’s role. Use of those skills can be applied to scheduling, job routing, and accounting systems. But National Tooling and Machining Association Chairman Mike Mittler cautioned that the most competent person skills-wise may lack other skills, such as interacting and working with other people. “It’s not always a guarantee that your best technician is going to be your best management level person,” said Mittler. A lack of a qualified pool of job applicants has plagued the manufacturing industry for years. The 2005 Skills Gap Survey by the National Association of Manufacturers found that 81 percent of the respondents faced a moderate to severe shortage of qualified workers. Additionally 90 percent of respondents indicated a moderate to severe shortage of skilled production employees, a figure that did not vary significantly when controlling for company size, industry segment or region. The whys behind this struggle for manufacturers are varied. A lack of knowledge about the industry coupled with a public perception of shrinking job opportunities has led to a lack of interest in young people to enter that field. While in Europe where the trades are seen as a viable career, the ethic in the United States guides students to continue their education at the college level. “You’ll have to look far and wide to find a parent who says I want my kid to grow up to be a skilled machinist,” said Robert Gardner, of the Association for Manufacturing Technology. Efforts are being made at a local level to meet the needs of manufacturers for trained employees. Los Angeles Valley College recently wrapped up a two-year, $743,000 state training grant for Valley manufacturers and has applied for a federal grant to provide advanced training for employees. The two-year grant was intended to serve 233 people and the college ended up training triple that amount, said Lennie Ciufo, director of the job training. The new grant plans to serve even more workers by upgrading their skills to take on managerial roles. Movement up the company ladder will in turn create open entry-level positions. “We are creating a pipeline to establish new hiring opportunities within the companies that wanted it,” Ciufo said. No matter how useful training programs may be during flush times, when profits fall and a company is squeezed financially those programs often get the axe. Such moves can be shortsighted thinking. “The progressive shops train in the good times and bad times because they know they will need to fill that pipeline,” Mittler said. “They know that baby boomer is going to retire and he’s going to need to be replaced.”

Guitar Center, the Westlake Village-based purveyor of electric guitars, keyboards and drum sticks, is amp-ed up about by the new California state budget. That’s because it earmarks $105 million annually for music and arts education, along with $500 million for music supplies, namely instruments, during the first year. For Guitar Center, which operates more than two dozen stores in the Golden State, the budget boost could mean thousands of students going to stores for guitars, amps, strings, picks, snare drums and drum sticks come this time next year. In a call to investors, Guitar Center Chairman and CEO Marty Albertson said he’s hopeful more states will take California’s lead. “We believe this action in California may be the beginning of a trend that will move across the country, as there is solid support for this type of investment in music and arts education broadly in communities as well as politically,” he said. While that may be wishful thinking, overall the second quarter ended June 30 was a solid one for Guitar Center, which has 187 big-box-style stores across the nation. Sales growth topped nearly 14 percent year-over-year, continuing a longstanding trend for the company, (it’s increased 18 percent since 2001). The company earned $13.4 million, or $0.47 per diluted share, a gain from the previous year in which profit was $12.9 million, or $0.46 a share. Revenue topped $458 million from $402.3 million a year ago, meeting analyst expectations of profit of $0.47 on revenue of $458.5 million, according to a Thomson Financial poll. The average ticket price what a typical customer pays on an average store visit is also increasing despite increased traffic on the company’s website. It topped $164 for the second quarter, the company said, up from $156 a year ago. Net income growth, however, was just 4 percent. That may be a product of a choppy or at least cooling retail market. The company also scaled back third quarter expectations for net sales to a range from $489 million to $501 million. A Healthy Quarter Health Net Inc. is continuing on a recovery track as evidenced by strong second-quarter returns influenced by gains in commercial plans and higher margins on commercial businesses. The Woodland Hills health plan company reported an 8.2 percent jump in revenue for the second quarter ended June 30, to $3.3 billion from $3 billion one year ago. Overall net income tallied $77 million, or $0.65 per diluted share, compared with $53.6 million, or $0.47 a share, a year prior. One dark spot was cash flow, which continues to be negative to the tune of $6.9 million for the quarter. (In the same period last year, operating cash flow was $10.7 million.) The negative flow was a result of a build-up of Medicare Part D and some $16 million paid to settle provider disputes. Overall, though, health plan enrollment jumped by 22,000 members for the first quarter to more than 3.4 million. In an Aug. 3 conference call to investors, Health Net President and CEO Jay Gellert said the additional members are an indication that the company’s fiscal health is on the mend. “Gross new sales in the quarter across all of our plans were much higher than last year in the second quarter, a clear sign that we’re very much back in the game,” he said. Health Net has been in recovery mode since 2005 after profits plummeted by $234 million in 2004 to $42.6 million. Gellert said the company wants to continue to invest in California, mainly on the lower end of the mid-market, the small group market and the specialty market. “We’re working on strengthening our position in the California market,” he said. The company spent about $4 million in a new advertising campaign in the second quarter “to reintroduce some of our products,” he said. Yet things are far from rosy and in a note to investors Doug Simpson, an analyst with Merrill Lynch, said there is a consensus that Health Net will likely be acquired. “But there is still considerable debate about (the) price and timing of an offer, especially given jittery sentiment toward potential acquirers,” he said. “The challenge ahead for Health Net is to grow the platform while maintaining pricing discipline in its very competitive major markets in California and the Northeast,” he wrote. Piece of Cake? The Securities and Exchange Commission is looking into the previous stock options granting practices by Calabasas-based Cheesecake Factory Inc. The chain known for outrageous portions, fantastical interiors and 200-plus item menus also said that two shareholders are suing alleging breach of fiduciary duty and unjust enrichment related to its option granting. This follows reports of possible backdating of stock option grants by a variety of companies, which prompted Cheesecake last month to voluntarily review its stock option granting practice. (It also delayed releasing second quarter results until the review wrapped up.) The news came on the heels of an announcement by videogame maker THQ Inc. that it is also turning over documents to the feds on its stock option practices. Local companies Semtech In and Vitesse Semiconductor Corp. are also the subject of SEC inquiries. Staff Reporter Chris Coates can be reached at (818) 316-3124 or at [email protected] .

It is known as “fast fashion” in the trade, but Inditex S.A., an $8.3 billion conglomerate, has been slow to move into the West Coast market. Until now. The Spanish company, based in a town in the Galicia region, will open its first two Zara stores in the San Fernando Valley this fall as part of a six-store expansion in the U.S. this year. The two Valley stores, at Westfield’s Topanga mall in Canoga Park and its Fashion Square center in Sherman Oaks, along with a location in Westfield’s Century City mall, will join two existing Zara stores in Southern California one in Costa Mesa and another at the Third Street Promenade in Santa Monica. Zara, a retailer of men’s and women’s apparel, is the largest of the Inditex companies, which currently count nearly 3,000 retail units operating in 64 countries, but it has just 10 stores in the U.S. market with the majority in the New York area. Indeed, Inditex operations are so few in the U.S. that the stores hardly register on the radar of retail research companies that track shopping patterns. “I think they’ve gotten some awfully good customer service experiences,” said Britt Beemer, chairman and founder of America’s Research Group, a Charleston, S.C.-based consumer behavior marketing firm. But while ARG interviews about a half million people a year, Beemer said he had precious little feedback about Zara. Not so in most of the rest of the world where the company has earned a great deal of attention, both for its financial performance and its business model. Along with Hennes & Mauritz (H & M;), Zara is one of the pioneers of a new category of retail operation, fast fashion, named for the speed with which the stores can move into (and out of) fashion trends. “Fast fashion has clearly paid off in Europe, capturing and creating loyal customers,” Bain & Co. wrote in a report for one of its clients. In the U.K., the Bain report noted, fast fashion accounts for over 20 percent of apparel purchases by 13 to 24-year-olds. What makes Zara and the other Inditex divisions so fast is an operation that spans everything from the design of the garments to the manufacture, distribution and retailing. “The key to this model is the ability to adapt the offer to customer desires in the shortest time possible,” reads the company’s press dossier. “Vertical integration enables us to shorten turnaround times and achieve greater flexibility, reducing stock to a minimum and diminishing fashion risk to the greatest possible extent.” (Inditex officials confirmed the store openings planned, but referred the Business Journal to its press dossier for further comment.) By handling all aspects of its operations in-house, Zara is able to turn its inventories 5.3 times per year, compared to 4.9 times for traditional U.S. apparel retailers and 3.4 times per year for U.S. department stores, the Bain research notes. In general, the stores take markdowns averaging 15 percent on about 15 percent of their inventory compared to U.S. department stores that take an average 40 percent markdown on about 60 percent to 70 percent of their merchandise, according to Bain’s research report. The company employs some 200 designers for Zara alone. But unlike other fashion companies that develop cutting-edge styles in hopes that they will attract the attention of shoppers, Zara’s designers react to the trends that have already appeared in the market, either on runways or as evidenced by what shoppers are buying. And because of its vertical integration, the company can move those fashions into and out of the stores at lightning speed. Zara replenishes its store shelves with new merchandise twice a week. And it takes just 48 hours from the time an order is received for Zara to deliver goods to its U.S. stores “The superior business model with a flexible supply chain and the relative cheap valuation call for outperformance,” wrote Olivier P. Muller, an equity analyst who covers the company for Credit Suisse in recommending Inditex stock. “The main driver is the successful international expansion. Additionally, positive same store sales, further gross margin gains and cost control should help to boost the bottom line in the next years.” Zara’s first store opened in New York in 1989, nearly 15 years after the company was founded. And it has continued a characteristically slow pace in its efforts to penetrate the market. “The usual way of entering a new market is to start with a small number of stores,” the press dossier reads, “which can explore the possibilities of a specific country in order to gain a critical mass of customers.” The Fashion Square store will be smaller, about 1,640 square feet, and carry women’s fashions only. The Topanga store will be about 2,460 square feet and carry both men’s and women’s lines.

After seven months in control, the new management of the local Small Business Development Center program has gotten off to a rocky start. Officials running the Small Business Administration program which helps small business owners and entrepreneurs, however, say they are overcoming the hurdles they have encountered. Since January, the program which is now being administered by lead agency Long Beach City College and operated locally by College of the Canyons in Santa Clarita, has been through two interim directors at the local office and has served only 300 businesses in the greater-Valley area. The program’s goal was to serve 1,600 businesses by the end of the year, according to Shenui Sloan, director of the Small Business Development Center at Long Beach City College. “There’s a lot of confusion with the changing of lead centers,” Sloan said. “A lot of people don’t realize how the program works and the area serviced changed.” Sloan said that with Long Beach just taking over the program it must create a new network of providers and educate the public where resources are available. “I think the first year is a gearing up year as we establish our presence and put our programs in place,” said Dena Maloney, dean of the economic development division at College of the Canyons. The college was close to picking a permanent director for the center and the school’s board is expected to give approval in mid-August, Maloney said. While the school had hoped to have a full-time director already in place, it wanted to bring on board someone experienced in economic development and working with small businesses, Maloney said. College of the Canyons became the host locally following the awarding of a grant in January to Long Beach City College as the new lead agency for the program in Los Angeles, Ventura and Santa Barbara counties, a 2,000-square-mile area. The College of the Canyons center serves the San Fernando, Santa Clarita and Antelope valleys The SBDC program is the Small Business Administration’s largest counseling and training network with locations in every U.S. state and territory. The lead SBDC institution holds the contract with the SBA and administers and operates the area’s SBDC program. California State University, Northridge, had been the lead center for the program beginning in July 2003 and when it decided to opt out of that role, the Valley Economic Development Center put in a bid as a replacement. The VEDC was the lead agency through December 2005 when its contract was not renewed. This forced the closure of small business development center offices in Oxnard, Santa Barbara, Glendale, South Los Angeles and Santa Monica, resulting in up to 10 people being laid off. One challenge facing College of Canyons as it ramps up its service is that it has had to establish a network from scratch where the VEDC already had connections in place, Sloan said. Former interim director Mike Haviland whose last day was Aug. 4 made the rounds of chambers from the West Valley and met with representatives from area community colleges and organizations such as the Economic Alliance of the San Fernando Valley, Sloan said. Pierce College was an early supporter of the program with its assistance to obtain space at the Build WorkSource building in Northridge for seminars and counseling. Pierce, however, receives no funding to be part of the SBDC and made that gesture as a way “of being nice,” said Judith Trester, director of workforce development at Pierce. The school continues to provide referrals for SBDC services but its involvement ends there, Trester said. “We don’t follow up on the referrals,” Trester said. “That is their job. One of those contacting the center was Jimmy Anderson, who opened ExpressPrint in Santa Clarita two months ago. A visit to the SBA website led the Air Force veteran to the Small Business Development Center for help in refining his business plan and helping to organize it for growth in the next three to five years. “They’ve helped me organize and plan my business to the point where I am going to be one of the first to hire on employees with the SBDC’s help,” Anderson said.

The board of directors of Henry Mayo Newhall Memorial Hospital in Valencia is considering a contentious plan to turn a 27-bed unit used for the elderly and recovering patients into an acute care ward that treats life-threatening emergencies. The possible conversion is in response to a huge up-tick in demand for acute care facilities in the Santa ClaritaValley. Andie Bogdan, director of planning for Henry Mayo, said the current 217-bed hospital does not have enough room for patients who need serious care “Bottom line: we’re in a big expansion phase,” she said. The plan would focus on the hospital’s transitional care unit, used to house patients too sick to go home, but well enough to not need round-the-clock medical care. Bogdan said that because those patients could be moved elsewhere, the TCU is ideal for conversion to meet acute care needs. “There’s a variety of options, but the most immediate opportunity in terms of meeting growth in the community in the acute care area is to really look at that TCU and see what the benefits are of using that as the place for capacity,” she said. “That is the lowest cost, fastest option to provide acute care.” The threat of closure has been met with resistance in the community, primarily from the group Committee Against Closing the TCU, a group of elderly and supporters which has staged a series of protests outside the hospital and have taken the case to the Santa Clarita City Council. “We view transitional care as a vital part of medical services delivery,” said Brad Berens, a committee member and executive director of the Santa Clarita Valley Committee on Aging, which represents 9,000 senior citizens and the disabled in the area. “Experience tells us that people are not quite ready to go home and they’re discharged to the home setting without adequate care and therefore are re-admitted back to the acute setting,” he said. Bogdan said hospital officials realize the dilemma, but have little choice. Demand for acute care is increasing, especially for seniors. Medicare admissions are up, especially through emergency room visits, which account for one in six of all Medicare patients in the hospital, she said. Bogdan said that if the hospital does not add more TCU beds by 2010, 700 Medicare patients at acute level will be turned away. “We need to open up capacity. We can’t have people waiting for a bed in the ER,” she said. Bogdan is adamant that no decision has been made, but admitted that the hospital has moved to investigate what it would take to alter the TCU. In mid-July, hospital officials presented the board of directors with a financial and clinical analysis about converting the unit. If plans did move forward, the earliest the changeover would happen is 2008. Bogdan said the hospital would need to have its state TCU license changed. Some patients would shift to other facilities and providers and senior citizens would be transferred to senior care facilities, she said. The conversion would take about a year, some of which would be used to recruit and prepare a staff. Bogdan said that the hospital would work with the existing staff to resolve “possibly anxieties.” Nursing education would be part of the preparation for staffers who want to move into an acute care setting, she said. The actual changeover would be fairly simple, since the TCU was constructed in the 1980s as an acute care facility, Bogdan said. “The leadership of the hospital at the time had the foresight to prepare for acute care growth,” she said. “It was built that way.” “From the facility side, relatively minimal modifications and expenditures will need to be made, since TCU was designed beyond skilled nursing standards, so as to eventually be suitable for acute care,” said hospital Chief Operating Officer John Schleif. While it’s still at least two years away, Berens said he’s not waiting around. He said he understands the need for more acute beds, but disagrees with the how Henry Mayo is expanding. “We certainly realize the need for more acute beds is on the near horizon,” he said. “It’s just they’re strategic planning for future must include some modicum of TCU beds and hospice.”

First of Two Parts According to John R. Talbott, visiting scholar at UCLA’s Anderson School of Management, in his book Sell Now, The End of the Housing Bubble, (2006 St. Martin’s Griffins): “If you are trying to accumulate wealth in your lifetime, you are missing a once in a lifetime opportunity. By remaining in your home and doing nothing, you are creating paper profits, and we all know they have zero value. Profits are not real until you realize them by cashing out. If you don’t cash out now, you are missing the opportunity to create real wealth of between $200,000 and $500,000. you need to know that today’s high housing prices are an abnormal bubble about to burst ” Talbott makes a pretty good case for such a bubble through one of the most complete statistical analyses I’ve ever seen on the housing market. He illustrates through various charts and graphs that while home prices have always grown over the long term, they have actually increased generally by trend no more than the rate of inflation over the last 100 years, except during the last 6 years a dramatically abnormal spike at the end of a 100-year flat trend. He concludes in part, “The flatness of the real historical price data presented here tells us another important story. Whenever a boom in real estate has occurred in the past, it was eventually followed by a bust: real prices always returned to normal levels.” Talbott also comes up with a clever formula to devise a P/E (Price/Earnings) ratio for housing markets across the country. He equates earnings as potential rental income in the local housing market, vs. the cost of housing (price), to formulate the ratio. Just as in stocks, the bigger the spread on the ratio, (i.e. you pay more for less substance) the more inherent risk there must be in the purchase of the asset. However, if a stock price has a high P/E ratio, your hope is that the company will eventually show higher earnings, and you in fact have bought the stock at what will eventually seem like a bargain early in the company’s successful history. But I would venture to guess that P/E risk in housing is less likely to play out in severely rising rental incomes in the coming 2-5 years, than by a drop in residential real estate prices if the P/E risk ratio comes back toward earlier norms. In 2000, a home in the Los Angeles / Long Beach Metro area cost 12.3 times what you could get in rental income for that house. By 2005 the ratio had grown to a P/E of 24.9. That’s a 102.4% increase in volatility, my friends. And just wait until the foreclosures heat up on all those Adjustable Rate Mortgages, as their annual payments climb, to see a real buyer’s real estate market begin. “But I don’t want to sell my house” Look, I don’t really know if real estate is going up or down in the coming years any more than the next guy with an opinion. I’m not an economist, and I’m not officially taking any position herein on what is really going to happen. But as a middle-income homeowner and a typical Baby Boomer with a negative savings discipline, what really concerns me is this: The value of that real equity in my home, albeit “paper profits”, is in fact today the single greatest asset I’ve yet accumulated. And whether I opt to realize my gains by retiring to Montana one day, or by mortgaging it out to invest in the next dot com mania, real estate mania, or other perhaps quite levelheaded opportunity for growth, if I don’t act now to capture or otherwise preserve those gains made over the last five years by building equity in my home, that asset could well vaporize by the time the dust settles in the real estate market in the next couple of years. New wave in financial planning This very pinch is today causing the incredibly rapid emergence of a somewhat controversial, if not remarkably contrarian new strategy for financial planners. The approach, sometimes referred to as Home Equity Optimization, promotes removing the maximum available equity value out of your home by means of creative mortgaging, debt consolidation, or otherwise optimizing the greatest possible tax deductibility of mortgage interest payments, and repositioning the equity values into what is referred to as a “cash” position. Now it’s not really cash, because in theory the homeowner is going to get the repositioned asset to earn at a rate greater than the costs to mortgage it out. Primarily being vanguarded by two key figures nationally; Douglas Andrew, in his book Missed Fortune 101 (2005, Warner Books); and Ric Edelman, on his DVD Why You Should Carry a Big Long Mortgage and Never Pay It Off (ricedelman.com/store/video_mortgage.asp), I guarantee that if you haven’t been introduced to these concepts, you soon will be. I can also tell you first-hand that thousands of financial planners are going to these models to restructure and renew their most current advice for their clients, and whether wise or foolish, if it’s sweeping inside of the industry today, it’ll coming to a CPA or planner near you soon. I’ll look further in detail at the tactics taken to implement these strategies, as well as the inherent risks, in the next edition of the Business Journal. But in the meanwhile, check out the above two references for a head start on salvaging home equity values. My opinion for now: For some an excellent opportunity to capitalize on recent R.E. market gains. Overall potentially dangerous without strict adult supervision. Bruce M. Weide is the author of “Getting Rid of Taxes in Business and Retirement”and President of TAX-FREE Benefit Specialists & Insurance Services, a firm in the San Fernando Valley dedicated to bringing Fortune 500 tax and retirement savings strategies to small and mid-size businesses. He can be reached at [email protected] or by calling (818) 896-5958.

Banking David R. Misch was named chairman and CEO of Mellon 1st Business Bank. He reports to David F. Lamere, the bank’s vice chairman and head of the private wealth management group. Education Alan Goodwin joined California Lutheran University as director of counseling services, Kerri Lauchner joined as director of health services and Christopher Christian has been appointed as director of marriage and family therapy and assistant professor of psychology in the graduate program. Mitjl Capet has joined College of the Canyons as the new assistant superintendent and vice president of instruction. He previously served as vice president of student learning at Cerro Coso Community College in Ridgecrest. Phillips Graduate Institute President Lisa Porche-Burke received the Distinguished Contributions to Service award from the American Psychological Association, Society for the Psychological Study of Ethnic Minority Issues. California State University Northridge’s Oviatt Library Dean Susan Curzon has been named to a six-member panel to select the winners of the New York Times academic librarian awards. The awards recognize librarians who provide outstanding community service. Entertainment Simon Barsky has become special counsel to the chairman and president of the Motion Picture Association of America. Barsky will become an independent consultant to the MPAA at the end of the year. Erika Lewis was named vice president of development and Chris Greenleaf was tapped as vice president of comedy and entertainment for GoTV Networks. Lewis will be responsible for developing new channels and brands for the company and creating original content for existing channels. Greenleaf will spearhead the re-launch of GoTV’s comedy network and oversee the creation of original programming and look for properties to license. Susan Lambert has been retained as a consultant by AvatarLabs, an Encino motion graphics and editorial design studio. Her role will be to advise AvatarLabs on business strategy as the company expands its online advertising team for movies. Lambert previously worked as director of creative content, online marketing and publicity with The Walt Disney Co. Gary Wilson resigned as a member of the board of directors for The Walt Disney Co. Wilson served on the board since 1985. He also serves as chairman of the board at Northwest Airlines Corp. Alicen Schneider has been promoted to vice president of music supervision a NBC Universal Television Music. She will be responsible for music supervision and licensing for select NBC Universal Television-produced programming, and NBC Agency promotion and marketing campaigns; and serve as liaison between current programming and show producers to create music partnerships. Phyllis E. Grann was elected to serve on the board of directors of the Warner Music Group. Grann is a senior editor at Doubleday, a divison of Randon House, Inc. Warner Music Group is the parent of Warner Bros. Records based in Burbank. Health Care Sherri Lewitz joins Northeast Valley Health Corp. as its new quality improvement and compliance officer. Lewitz will be responsible for managing quality improvement and patient safety efforts, compliance standards and regulatory requirements. Lamya Jarjour has been elected as president of the medical staff of Northridge Hospital Medical Center. In her role as president, Jarjour will be responsible for enforcement of medical staff bylaws, rules and regulations and serves as chair of the medical executive committee. Jarjour joined the staff at the medical center in 1991. Vicki B. Escarra has been appointed to serve on the board of directors for Health Net, Inc. Escarra is president and chief executive office of food bank America’s Second Harvest, and previously served as executive vice president and chief marketing officer with Delta Air Lines, Inc. Human Resources Bill Wells has been named as managing director for the Southern California region of Lee Hecht Harrison, a career management services company. In the role Wells will focus on growth, marketing, operations, client relations, account management and delivery of quality career management services. Wells joined Lee Hecht Harrison in 1997. Land Use Marissa Aho has joined Rosenheim & Associates with responsibility for working with clients on land use entitlement matters throughout the L.A. region. Aho was most recently with the LAUSD facilities division. Marketing Carl White has been appointed as chief executive officer of ValueClick Europe, a division of ValueClick based in Westlake Village. White has been with the company since 2001 and will be responsible for the overall management and growth of ValueClick Europe’s operations. Media Michelle Freridge has resigned as executive director of the Free Speech Coalition, a Canoga Park-based trade organization for the adult entertainment industry. She joined the organization in 2004. Real Estate AMCAL Multi-Housing in Agoura Hills has promoted Maurice Ramirez to vice president of operations. AMCAL, a developer and builder of affordable housing, has also made a number of hires. James Cullinane and Paul Winley were named senior construction managers. Pam Jollota was named construction administrator. Aleta Legget-Lesh was named project accountant. Lisa Moeder was named assistant to the asset manager. Candice Nesbit was appointed assistant construction manager. Nicole Norori was tapped as project manager, finance department and Randy Slabbers was named finance associate. Retail Shoe Pavilion Inc. has named Bruce Ross executive vice president and chief financial officer. Ross was most recently CFO at Guitar Center in Westlake Village. He replaces Neil Watanabe who has left the Sherman Oaks-based footwear retailer to pursue other interests. Technology Philip Otto has been appointed president and chief executive officer at Optical Communications Products Inc. Frederick T. Boyer has been named as senior vice president and chief financial officer, and Muoi Van Tran, the current chairman, president and chief executive officer takes on the additional duties of chief technology officer. Boyer was most recently president and chief financial officer at Qualstar Corp., a Simi Valley manufacturer of automated tape storage systems.

The Cheesecake Factory, long known for its heaping helpings, is rolling out a new menu with smaller-sized versions of many of its dishes as the number of diners at many casual restaurants thins. In what the Calabasas Hills restaurant chain calls its “most extensive menu change in a decade,” Cheesecake has added a larger selection of lunch-sized portions priced about $3 below the original versions. “We’ve always had lunch-size portions for certain dishes, and there are people who use appetizers as meals,” said Howard Gordon, senior vice president, business development and marketing for Cheesecake Factory, which is known by diners for its generously-sized portions. “What we decided to do is expand that to include different favorites in lunch-size portions. We’ve also added some smaller salads and factory combinations.” Cheesecake, which has always offered a selection of its menu in smaller, lunch-size portions, has expanded those offerings, making its salads and many of its favorite dishes like meat loaf, shepherd’s pie and salmon dishes as well as its so-called factory combinations, like Steak Diane with shrimp scampi, available in the smaller versions. Cheesecake’s menu revamp also includes a number of new dishes and salads available in lunch size as well as dinner size versions. “We do two menu changes a year, and we usually put on or take off about six or seven items,” Gordon said. “This year, we put on 16 new food items, eight new drinks and five new desserts, so it was pretty extensive.” Gordon, who noted that the company has even redesigned its menus, said the changes were made to accommodate diners who had been asking for smaller portions. “For dinner, everyone wants their full size portion,” said Gordon. “For lunch, a lot of people don’t have that much time. They want to be able to get in, order and get back to the office and they didn’t want to take home as much food at lunch.” Traffic down At the same time, diners have not exactly been rushing to casual dining restaurants in recent months. For the second quarter ended July 4, Cheesecake Factory said its comparable restaurant sales were down by 1.2 percent. Same-store sales at Darden Restaurant Inc.’s Red Lobster chain were down 2 percent in July while its Olive Garden units saw a modest 2 percent to 3 percent increase. Company-owned Outback Steakhouses saw same store sales decrease 4.7 percent for the month of July. And while Denny’s Corp reported same store sales rose 3 percent for the month, most of that increase was due to a rise in the average check. Guest counts fell 1.1 percent. “The vast majority of restaurants we look at are facing issues,” said Lynne Collier, an equity analyst with Stephens Inc. in Dallas. “It seems the higher-end with check averages of $50 to $60 are faring okay. But the mid-level casual dining restaurant like Outback or Cheesecake with a $10 to $20 average check seems to not be doing as well.” Stephens maintains a market in Cheesecake common stock. Analysts say they began to see restaurant sales slow down last summer, but the trend reversed earlier this year and many attributed the weaker sales to one-time events like Hurricane Katrina. Economic issues But in recent months, as sales again shifted downward, there’s been increasing concern that many of the economic factors hitting the middle market higher gas prices and interest rates along with the slowdown in the housing market could be impacting the restaurant industry for a longer term. Analysts said that Cheesecake’s menu changes are an effort to coax customers back to the restaurant. “Obviously they’re putting out these smaller menu portions to entice consumers to come in when budgets are tight,” said Eric Wold, an equity analyst at Merriman Curhan Ford & Co., who said he is not convinced that the smaller portions will do much good. “They’re known for their very large portions,” Wold said. “Your core customers are going to go there no matter what. Now you’re going to have your core customer ordering smaller portions, so your check is going to be lower anyway.” MCF does not have a position in the company. Although no one is yet certain, it is beginning to appear that mid-price restaurants like Cheesecake, where the average check is in the range of $12 to $17, are going to feel the impact of new gas-price economics the hardest. Customers may be trading down to fast food restaurants, especially since many of those companies have added expanded selections including healthier items and value-oriented meals. But for those stuck in the middle, there are few options, analysts said. Advertising can put the restaurant’s name at the top of diners’ minds, but it hardly matters if they’re not willing to spend the money to dine out. Some said the $3 difference could help bring some diners back to the restaurant, but they too noted that Cheesecake is taking a risk with its strategy. “To provide a little smaller portion size at a little lower price makes sense in my view,” said Collier. “Financially, our hope is they drive traffic. But the negative is you get a bunch of people who choose the lower price, and it reduces the check average.”

When starting out in the machine tool business a quarter century ago, Joe Ostrowsky would need a calculator to manually adjust the equipment making parts for use in the aerospace and other industries. Nowadays at his Delta Hi-Tech manufacturing shop, the same function requires entering numbers into a computer to save time and making for an efficient operation. “It makes it go much quicker,” Ostrowsky said of the software to program the company’s machines. “You put it in the computer and the computer tells the machine where to go automatically.” While use of software programs in the machine shop is not new, its application is pushing into new areas and providing new ways to present data and information. A programs such as CATIA Computer Aided Three dimensional Interactive Application has been used to design aircraft and boats and even been applied by architect Frank Gehry in designing buildings. Such software is changing how information is given from an engineer designing to the person actually making the part, said Brad Hart, president of Roberts Tool Co., in Chatsworth. “They’ll send a digital representation so you can look at it,” Hart said. “There’s a picture on a computer screen and then they use that to program your machines.” New to discrete manufacturing those companies making machine tool parts is software such as Freedom E-log that tracks the performance of individual machines and troubleshoots for problems that idle the equipment. That data at hand makes for a more efficient manufacturing process. “With a job shop, when they have invested hundreds of thousands of dollars or perhaps millions, they want the spindles cutting all the time or as frequently as possible,” said Dan Gustafson, marketing manager with Fadal Machining Centers in Chatsworth. There probably isn’t a machine shop in the country that doesn’t use computers and software to some extent to do business, said Robert Gardner, a spokesman with the Association for Manufacturing Technology, the sponsor of the International Manufacturing Technology trade show. At the biennial trade show there are often more computers than machines on display, Gardner said. And those computers and the software running them is a good reason why U.S. manufacturing productivity increased over the past decade, he added. Small manufacturers benefit because the technology allows for the completion of a higher number of job workloads and for shops to operate for longer hours, Gardner said. “All these things allow U.S. manufacturers, especially small manufacturers, to be competitive in the global marketplace,” Gardner said. “High output and high productivity is how you compete with low wage nations.” Fadal has not fully installed Freedom E-log but does use one element of the program to optimize the run times on its machines by automatically adjusting the spindle speed rate needed for a particular job. Freedom E-log has been commercially available for several years with a modified version to be unveiled next month at the IMT trade show in Chicago. New capabilities include multiple languages, viewing an entire factory across multiple machine tool types, watch lists, email reports, and expanded machine interfacing. The improvements were made following suggestions from customers, said James Siderits, vice president of business development and marketing with Maintenance Technologies, the software designer.