Scammers Bilk Businesspeople In Check Scheme By SHELLY GARCIA Senior Reporter Cary R. Bronstein was doing some routine accounting, reconciling his real estate appraisal and consulting company’s checking account when he noticed something was very wrong he had bounced a check, something he never does. It didn’t take long to discover that someone had duplicated his checks, forged his wife’s signature and written and cashed three checks to the tune of $14,400. “I asked the bank for a list of the checks cleared,” said Bronstein, whose business is in Woodland Hills, “and the first check I found was a sequence 100 numbers higher than the last check I had written. Someone took a copy of one of my checks, took a Xerox copy of my wife’s signature and made a jpg and started cashing checks.” It’s a predicament playing out more and more for individuals as well as those running businesses. The advent of desktop publishing combined with the use of processing centers to process check payments has caused the incidence of check cashing fraud to skyrocket. By 2001, the most recent period for which statistics are available, the number of cases of check fraud increased to 600,000, up 34 percent from 447,000 in 1999, according to the American Bankers Association Deposit Account Fraud Survey Report. The ABA calculated bank losses for that same year at $698 million. Banks are understandably circumspect on the topic officials at Washington Mutual, where Bronstein’s situation occurred, wouldn’t even discuss the kinds of patterns they have seen but others point out that business accounts are often targets of checking account fraud. “People who have commercial accounts write a whole lot more checks,” said John Hall, a spokesman for the ABA, the industry’s trade group in Washington D.C. “Businesses write hundreds of checks a month, so criminals are hoping to slip one in.” Computer assistance Computers have increased the problem exponentially because with them, criminals can duplicate any check, but law enforcement officials say that the even if the check is not a good copy, it is not likely to matter. “You have these lovely cartoon checks? Doesn’t matter,” said Lt. Michael Ranshaw, with the commercial crimes division of the Los Angeles Police Dept. “We’re in an age where you can print your own checks now if you want to, and if that account number is at the bottom, it will come out of your account.” While most of the headlines are reserved for complex cases of identity theft like phishing where social security numbers and other identification is pulled from cyberspace by skilled hackers, but much checking account fraud isn’t very sophisticated at all. Bronstein’s forged checks were typical of the kind of fraud that takes place. Bronstein believes his checks were copied after he made a bill payment the old fashioned way. (The bank has only just begun to investigate his case, so it is too early to know how the theft occurred.) And checking account fraud is often traced to check processing centers with a large workforce and a lot of turnover. But thieves can also get hold of a bank account number simply by stealing a bill payment left in a mailbox awaiting pickup by the postman. “We haven’t found our crooks are all that high tech in their dealings,” Ranshaw said. “They steal your mail. It doesn’t take a genius to scan a picture of your check, and it doesn’t take a genius to buy a program to print your check.” Criminal ways As companies and banks have tried to ease the process of conducting transactions using all methods of payment, there are literally hundreds of ways in which criminals can get hold of a checking account number. “There are 42 billion checks going through the system every year for some banks,” said Hall, “so that’s 1 billion checks a day at some banks.” Hall said banks conduct spot checks and match signatures and the amount of the check, but the effort is necessarily limited. “No, they don’t look at every single check and signature,” he said. “If they did do that your check would take a month to clear.” Similarly, banks could tighten the procedures for paying checks considerably, but were they to do that, they would likely also lose customers. “If they make it too difficult for the criminal, then they make it difficult for the customer,” Ranshaw said. “And the reason the customer is the customer is convenience. If they make you stand inside the bank and show ID and be fingerprinted, these things would stop fraud, but you’d stop going to the bank.” So what’s the owner of a small business to do? The ABA suggests that companies purchase their checks only from well-established printers to keep the check from falling into the wrong hands, and protect their check stock to keep it from falling into the wrong hands. There is also a software program available, Positive Pay, that allows businesses to report to the bank the check numbers it plans to write on any given day in advance. Experts also suggests reconciling checking accounts promptly and paying particular attention to the check sequence. Crooks often believe that if they use a check number that’s already been cleared, they may be caught, so they choose a number well in advance of the number on the check they’ve stolen. And banks will usually make restitution if the forgery is reported early. Finally, check your credit rating annually. But while these common sense rules will help reduce vulnerability, they won’t eliminate the chances of being victimized completely, say all those who work in this area. “It won’t prevent the crime from occurring,” said Ranshaw, “but it will prevent you from being harmed by the crime.”

United Online Move Expected To Boost Its Tech Capabilities MEDIA & TECHNOLOGY By Slav Kandyba For United Online, a Westlake Village-based dial-up Internet service provider, the move to a new facility at LNR Warner Center this month serves several purposes. First, the company will be able to house its entire local workforce 250 people under one roof, as opposed to several structures in Westlake Village. Second, it will be able to add new technological amenities and have room to grow, said Mark Goldston, United president and CEO about the move to Woodland Hills. The new facility will have more than 100,000 square feet of space, doubling the area of the main Westlake Village building. United, which is behind the NetZero and Juno dial-up Internet brands, will expand its network operating center, which is “pretty much the command center from which we run our Internet service,” Goldston said. “It’s going to allow us to do things under one roof and allow employees to have access to many more tools,” Goldston said. New amenities will include a “very sophisticated” quality control lab and a formal usability lab, he said. The latter will allow United to “do focus groups and do real-time market research.” The company currently outsources market research. The Woodland Hills offices will also have a state-of-the-art soundstage where the company’s marketing staff will be able to edit commercials and do voiceover recording for radio and the Internet. The Woodland Hills location was chosen because analysis revealed most employees live in the area. Daily News Departures The Woodland Hills-based Daily News of Los Angeles is losing its Los Angeles Lakers beat writer to the New York Times. Howard Beck is headed to New York to cover the New York Knicks, said Daily News executive sports editor Doug Jacobs. Beck’s last day at the Daily News was July 27 and he said he plans to move to The Big Apple sometime in late August. “This is a great opportunity at the perfect time,” said Beck, who has covered the Lakers for seven years. “I was looking for new challenges and somewhere where I can grow. There’s no place better on the planet than the New York Times.” Also, the Daily News sports department is losing the No. 2 editor in Michael Anastasi, who will join the sports department at the Salt Lake Tribune as managing editor. In another Daily News-related departure, former publisher John Schueler was appointed to run Alameda Newspaper Group in the Bay Area. He was serving as president of the Los Angeles Newspaper Group, which includes the Daily News and the Long Beach Press-Telegram. Both ANG and LANG are owned and operated by the Denver, Colo.-based MediaNews Group Inc. Wildcat Acquires Distributor Agoura Hills-based Wildcat Communication Group, founded last year by the entrepreneur who pioneered the bottled juice industry with his Naked Juice brand, is continuing to grow through acquisition. Wildcat President David Bleeden has acquired the assets of K & B Electronics, a Mesa, Ariz.-based electronics distributor. Two marketing employees were to remain at K & B;’s office as Wildcat employees. Wildcat sells cell phone accessories through a number of Web sites and has had a strategy of growth through acquisition of mobile communications accessories and peripherals companies. “What really attracted us to K & B; was that they have a great catalog and great technology,” Bleeden said. Financial details of the acquisition were not disclosed. Another part of K & B; that Bleeden found attractive was that firm’s government market access, he said. K & B; provides “communications products” to the U.S. Army, Air Force and the State Department, among other federal and governmental agencies. “K & B; has a well-developed government sector and that’s a new market for us (Wildcat),” Bleeden said. “We actually provide technology products through K & B; to the troops in Iraq.” Staff Reporter Slav Kandyba can be reached at (818) 316-3126.

CBS Entertainment Staff May Move By SLAV KANDYBA Staff Reporter CBS Studio Center in Studio City will house television stations KCBS (Channel 2) and KCAL (Channel 9) when the complex is renovated that’s not a question. The question is whether CBS Entertainment, currently located at CBS Television City in Los Angeles, will be joining the Viacom-owned TV stations as plans for construction at the complex move forward. “We’re guessing construction will start in May 2005,” said Michael Klausman, president of CBS Studio Center, said of development plans for the studio compound off Ventura Boulevard. As far as CBS Entertainment relocating, he would only say “there is a possibility.” “Until the approval process is finished we can’t make any comments,” Klausman said. “We are early in the planning and development process and it’s too early to comment on any specifics.” CBS Entertainment is the Viacom arm that develops and distributes all television programming, including primetime comedy and drama series, television movies, miniseries, and others. According to Studio City Chamber of Commerce President Jack McGrath, however, there have been “show-and-tell meetings” where plans for CBS Entertainment’s move were revealed. And as a public relations representative for a number of high-end Studio City restaurants, McGrath said Studio City will benefit greatly from development at the CBS complex. “My whole point on this was that this is going to be a lot of people coming into this small community,” McGrath said. “The high-end restaurants are going to get a large slice of new business.” A new condominium development just north of CBS Studio Center indicates “realtors who know potential buyers are looking for housing,” McGrath said. Art Howard, executive vice president of the Studio City Residents Association, confirmed that Klausman told SCRA that CBS Entertainment would move to Studio City. Previously, five Viacom-owned radio stations located in L.A. were slated to move to the complex, but that plan was scrapped, Howard said. KCBS and KCAL are currently broadcasting from Columbia Square on Sunset Boulevard, a historic Hollywood landmark that was built in 1938 as a radio broadcast facility. The CBS Studio Center in Studio City was built in 1927 by Mack Sennett.

How Next Depression Has Been Planned Guest Columnist by Bruce Weide Second of three parts Robert Kiyosaki, author of the “Rich Dad Poor Dad” series predicts it to be “the biggest stock market crash in history” starting roughly around the year 2016. Harry Dent, an incessant bull for the current decade, calls it “The Next Depression” starting roughly in 2009. If you and your financial adviser have never even spoken about it, I’d call it whistling in a hurricane, or at least na & #271;ve financial planning, to be kind. The problem with many investors and even financial advisors is that they too often look only at the minute short-term causes and effects on stock market behavior. We know that there was something called a “tech bubble” and it burst for a couple of years. But that’s all “corrected” now right? Then there was this inconvenient war upsetting the market, but when that blows over things should be fine. But what is it that actually propels the long-term trends of markets? Do they in fact climb naturally if we just don’t make any severe blunders? And more importantly, are those driving forces inherent and can we count on them forever? I’m afraid stock market growth is not as inherent as gravity. It doesn’t just take a lack of mistakes for the stock market to appreciate in value. It takes the correct set of circumstances, demographically and subsequently economically, to make a market climb. Now I’m no economist. But I have a personal predilection for Harry Dent’s studies. His two best sellers, “The Roaring 2000’s” and “The Roaring 2000’s Investor” are chock full of the key demographic statistical charts that have astonishingly forecast economic and stock market behavior for the last 50 to 100 years or more. In other words, if you want to know where the Dow is can we look for a graph(s) that is identical to the Dow’s behavior, but is actually a precursor of it by a number of years? Dent does this exhaustively, and he writes: “The critical insight is this: The massive baby boom generation will drive spending and productivity trends higher into late 2008 to mid-2009 Then there will be an economic downturn that will change your life and your investments. You have to plan for the boom and the bust today.” Dent is certainly not alone in crediting the overshadowing dimension of the Baby Boomers, born from 1946 to 1964, as the key force propelling up stock prices today. Retirement boom But what happens when the Boomers begin to retire in the next decade? What happens when the principal demographic majority, born over an 18-year span mind you, wants to take those savings and sell their stocks? Demand decreases and well, you can guess the consequence. Now here’s where Robert Kiyosaki’s complaint comes in. Because even if you have planned perfectly and have so much wealth that you don’t need or want to sell your stocks, if they’re in a Qualified retirement plan, such as a 401K, IRA, or Keogh plan, you have no choice. Under the ERISA (Employee Retirement Income and Security Act) laws of 1974, which formulated many of these plans, when you hit age 70 & #733; you must begin a program to liquidate your portfolio and pay taxes on the income. No way out. Unfortunately, these type of Qualified plans are how the majority of Baby Boomers have nestled their savings. 3 Types of Investors Consider three different types of responsible investors. The first type is hands-on involved in managing his/her portfolio on a routine basis. They study each of their funds and stocks, are watchful of market trends, and they are deliberate about how they invest for long-term vs. short-term goals. What should this investor do about these risks I mentioned above? If you haven’t previously considered these scenarios then you are undereducated for the risks you’re taking. You’d better start boning up on it today. Again, Harry Dent’s material is a good place to start, but continue on from there. The second type of investor is much like the first type in that they are willing to closely manage their portfolio, but they don’t have time for it. This investor may want to consider hiring a professional money manager who will charge you 1-2 percent of the value of your portfolio annually, however you’ll need to start typically with a $100,000 portfolio to give them. But please, get a darn good one who can think with the potential shifts in the next decade. The third type of investor understands that over the long run stocks have a history of greatly outperforming safer guaranteed investments. They are disciplined about saving and investing, but they just don’t have the time or propensity to be as vigilant with their portfolio as the first type, and they are not inclined to pay fees and hand over large sums of their security to a money manager with no guarantees. This investor needs to invest with downside guarantees. For example, there are financial vehicles today that will allow you to participate in the gains of several major market indices, such as the S & P; 500, DJIA, or Russell 200 small cap, but they also have minimal guarantees (typically around 2 percent) that will still protect your values in the event of a market collapse. In these types of vehicles you can get double-digit returns in the good years, your values lock-in each year, and will never decrease in the bad years. Bruce Weide is the author of “Getting Rid of Taxes in Business and Retirement,” and CEO of TAX-FREE Benefit Specialists and Insurance Services. Headquartered in La Crescenta, he can be reached at (818) 896-5958 or at [email protected].

Flight of Firms From L.A. Not Always Fault of Business Taxes By SHELLY GARCIA Senior Reporter When officials at Branam Enterprises Inc. moved from Chatsworth to Santa Clarita a few years ago, they weighed several factors where they and their employees lived, the cost of buying their own facility instead of renting as they had been doing and their space needs, much larger than the building they were occupying at the time. “For us, it was a matter of convenience,” said Leslie Tolle, marketing manager for the company’s West Coast operation. “I would say the tax situation really didn’t have anything to do with it.” Branam is not alone. Many of the companies that have made a move into the cities that surround L.A. in recent years say the Los Angeles city business tax that has garnered much attention and focus of late had little, if anything, to do with their decision. Rather, they cite a slew of reasons that range from the sheer availability of sites to accommodate their needs, proximity to where executives and employees reside, more attractive, newer buildings in well-planned business parks and even the weather as the more important determinants for their moves. Although the evidence is anecdotal, and it is difficult to separate such local concerns as the gross receipts tax, and statewide issues such as family leave laws and workers’ compensation insurance, from other operating issues, the laundry list of reasons provided by companies that have recently relocated suggests that underneath the business tax lurk far more difficult problems that will have to be solved if the city is to retain its business base. “We have to look at land in a different way and say how can we recycle this, how can we have higher quality growth in a developed urban area,” said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., “and it’s going to be very difficult.” This year to date, some 45 companies have relocated throughout the Los Angeles area, according to the LAEDC, including eight greater Valley-based businesses. Only three of those companies relocated from Los Angeles city locations in the Valley to surrounding cities. Some, such as Image Entertainment Inc., stayed within the city borders moving from one location in Chatsworth to another. Some, like Deluxe Media Entertainment, which went from Glendale to Burbank, moved from one incorporated neighboring city to another. And some, United Online Inc., for example, even relocated from an outlying city (Westlake Village, which does not have a business tax) to Woodland Hills, within the city’s jurisdiction. While it doesn’t include all of the companies that have relocated, the LAEDC list does suggest a more complex set of factors influencing these moves than the cost of doing business. Complex problems Officials working on the problem of business tax reform also recognize the multitude of underlying factors involved. “Anyone coming into the city or making a decision to leave the city will take all the factors you mention into account,” said Mel Kohn, managing partner at accounting firm Kirsch Kohn & Bridge LLP and chair of the Business Tax Advisory Committee working on reform. “My personal feeling is business tax can be a tie breaker, and that’s the whole point of business tax reform.” That may be true for a few companies. Thermal Research & Development, which designs and manufactures exhaust systems for race cars, moved from Winnetka to Lancaster late last year in part to get out from under the city’s business tax. But while Chuck Asher, president of Thermal Research, said he was happy to get away from the city’s gross receipts tax, he also noted that taxes were not the only or even the biggest reason behind the company’s decision. “We wanted a building of our own, and it wasn’t cost effective to do (in L.A.),” said Asher, whose company employs seven workers. “The largest motive was the price of real estate, but on top of that a real perk was getting away from the business tax as well as we were able to find a state Enterprise Zone to help out with some of the other costs.” A company that relocates to one of California’s enterprise zones is eligible for $33,000 in tax credits per year for each employee that also resides in the enterprise zone area. That proviso can save a company, even a small business, millions over the five years that these credits are available. But some areas within the city of Los Angeles are also earmarked as enterprise zones, and for many companies, costs are just one part of the equation. According to the Kosmont-Rose Institute Cost of Doing Business Survey, published annually by Los Angeles-based Kosmont Cos. in association with the Rose Institute of State and Local Government at Claremont McKenna College, the additional cost of locating a business in the city of Los Angeles versus Santa Clarita is $700,000 over a 10-year period. The survey considers utility and lease costs as well as business and other taxes. Larry Kosmont, CEO of Kosmont Cos., points out that the difference is far more dramatic for office users, who bear the brunt of the city’s tax policies five times the rate for industrial users. But he adds, “The decision matrix is not solely about business taxes.” Quality-of-life factors And for some employers, particularly those with industrial or warehousing operations, the added freight is not nearly as important as the savings in commute time and the quality-of-life benefits they associate with their moves outside the city of Los Angeles. When Branam made its move, the company’s general manager lived in Santa Clarita, but just as important, so did about half of the company’s employees. “They wanted to be closer to home, so that was another factor,” Tolle said. With the bulk of homebuilding in recent years pushing out into Santa Clarita, Simi Valley, Moorpark, Conejo Valley and Antelope Valley, more and more top executives at Valley companies as well as their workers are now commuting into the Valley floor, and as the population in these once outlying areas has grown, so too has commercial development, giving these companies alternatives they did not have before. But perhaps most important, these executives say, they were hard-pressed to find a property comparable to the sites they located in outlying areas. Such was the case when Brendon Bonnar, the president of Natural Oils International, a supplier of oils for products like beauty lotions, and Flexible Alternatives Inc., which manufactures shipping containers, began looking for a new location after Caltrans announced that the agency planned to take back the site the company occupied in Arleta. “We’d been looking at staying in the San Fernando Valley, but there was no new construction there that had the type of concrete tilt up with open space and clearance height that we could find that was reasonably priced,” said Bonnar. “So we expanded our search to include Simi Valley and Moorpark and Camarillo.” It wasn’t just the limited supply of properties in the Valley that influenced Bonnar’s decision to move to Simi Valley. Just as important was the ability to move to a well-planned business park that offered a better working environment, more amenities for the company’s officers and employees and even a climate that averages temperatures five to seven degrees cooler in summer than the Valley floor. “I’m looking at trees and mountains and it’s all neat and tidy and you don’t feel as if you’re all boxed in,” said Bonnar. “There’s a cool breeze blowing and it’s pretty pleasant. You don’t get that in the San Fernando Valley. It’s just blah.”

Insurer Consolidates in Warner Center By Brad Smith Staff Reporter One of the top ten insurance brokerage firms in the nation will be centralizing its Los Angeles County operations in Woodland Hills this month, officials said. U.S.I. Holdings Corp., based in Briarcliff Manor, N.Y., will move 200 employees from three separate offices in Los Angeles to a new location in Warner Center. U.S.I. will be leasing 51,655 square feet on three floors of Tower I at 21600 Oxnard Street in a 72-month-long deal valued at $6.5 million over the life of the lease, representatives of the company said. The space in the 21600 Oxnard property, owned by Douglas Emmett, was previously leased by Health Net Inc. “The Warner Center towers provide excellent amenities and a central location,” said David Kluth, with the Los Angeles office of Julien J. Studley, Inc., who represented U.S.I. along with Justin Hodgdon. “It is a very central location for their existing workforce and the labor pool out there is attractive.” Part of the attraction of Warner Center is its position as a hub for the insurance industry in Los Angeles, officials said. Among the insurance firms clustered in the area are Blue Cross of California and Blue Cross Life & Health, 21st Century Insurance Group, Zenith Insurance Co. and Health Net. Previously, U.S.I. had offices in downtown Los Angeles, Sherman Oaks, and Woodland Hills. Overall, by consolidating the offices and achieving more efficient use of space, the move should allow the company to reduce its current square footage commitment by 16,000 square feet and its parking rates by 25 percent, officials said. The company’s new spaces will include two full floors and one half of a third floor in the building. The move will begin in mid-August and should be completed by Sept. 1.

VICA Raises Volume on Business Advocacy By BRAD SMITH Staff Reporter Stem cell research? The Valley Industry and Commerce Association is for it. A statewide standard for development in oak woodlands? The association, known as VICA, is against that. Reductions in state funding for in-home assistance for the mentally ill, the elderly and disabled children? Against it. Reducing the city of Los Angeles’ tax on businesses? Most definitely for it. The 55-year-old business advocacy organization, after decades of laboring in the background of politics in the San Fernando Valley, has taken on a much higher profile in recent years. In the first half of 2004, the association’s 90-member board has voted to take official positions on 52 separate issues, ranging from ballot measures to legislative proposals By the same time in 2003, the organization had only taken 39 such votes. The almost 30 percent increase has garnered attention from elected officials and the media, which is exactly what the group’s current leaders led by Board Chairman Martin Cooper, who took the chair in January want. “My officers and I have been driving the organization to be (more) ambitious and more aggressive,” said Cooper, 62, of Encino. That effort has paid off, at least in one respect: media coverage of VICA is up almost 50 percent from 2003 to 2004, according to the organization. “That’s a big jump,” said Cooper, chairman of the Woodland Hills-based Cooper Beavers public relations firm, whose clients range from major corporations to the Girl Scouts of America. “Part of it is that it is an election year, part of it is this effort.” The organization’s influence and that of its blizzard of e-mailed and faxed opinions is open to debate, but elected officials say VICA plays a significant role in increasingly politicized decisions about growth and development. “They can do strong advocacy work,” said Ventura County Supervisor Linda Parks, who found VICA arrayed against her in the fight to prevent a 3,000-home development on Ahmanson Ranch in 2003. The development died when the state bought the ranch as parkland. “It can have an impact because they provide a source of education, but it is rather one-sided,” Parks said. “They are kind of manufacturing a type of opinion base.” Republican lawmakers say they listen to VICA, but the group gets short shrift from across the aisle. “People pay attention to what VICA says, both locally and in Sacramento,” said Assemblyman Keith Richman, whose district includes the northwest Valley. “But despite VICA’s good efforts in advocating on issues of importance to business, it has had relatively little impact on the votes of the Democratic legislators from the San Fernando Valley.” VICA members, however, differ with both assessments. “It is true our constituents are the businesses, not the residents or the voters,” said former Democratic Assemblyman Richard Katz, a VICA board member. “But issues like workers compensation reform and access to health care cut across party lines.” Given the organization’s history it was founded in 1949 VICA officials say their current efforts are not substantially different than the sort of business advocacy the group has practiced for the past half-century. No political endorsements VICA cannot endorse candidates, but it did come out in favor of San Fernando Valley secession. The secession vote, which carried in the San Fernando Valley in 2002 but failed citywide, was a major issue for the organization. “Secession was a turning point for VICA,” Cooper said. “There was great ferment within the organization over whether or not to take a position (but) a lot of the post-secession events have shown VICA can make a difference.” VICA’s offices, on a stretch of Van Nuys Boulevard in Sherman Oaks, are decorated in what could be called Chamber of Commerce Moderne. A mix of framed wall-sized maps and newspaper front pages VICA BACKS CITYHOOD in the Daily News; VICA ENDORSES VALLEY SECESSION in the Times the office is quiet on a Monday morning. Katz, in a short-sleeve shirt and casual slacks, jokes about the dress code being far different than under the Capitol dome, but discusses at length the realities facing an organization made up of business owners in a state that skews increasingly Democratic. “We joined recently with the Service Employees International Union on the in-home assistance measure, unlike some other business organizations; that’s not a slam on them, but we’re very cognizant we can’t succeed without relationships,” Katz said. “And we know we have to be very sensitive to the changing (political) demographics as well; it is something that comes of understanding the mistakes other business groups have made in the past it is critical that we are not just standing still.” The history When VICA was founded, the San Fernando Valley was poised to become the industrial heart of Los Angeles County. General Motors, Lockheed, North American Aviation’s Rocketdyne Division, and RCA all located in the Valley in the 1940s and 1950s, and employment at those factories fueled the suburban housing boom; by 2000, only the Rocketdyne plant, now owned by Boeing, remained, and the last major development Porter Ranch, above Highway 118 was being built. Recognizing those changes is the key to the organization’s continued relevance, VICA officials say. As evidence, they point to VICA’s vote to support Prop. 71, the November ballot measure that would direct $3.5 billion to stem cell research. The measure is expected to be politically divisive, both in the general electorate and within the Republican Party. “We see it from the standpoint of growing the next Silicon Valley,” Katz said. “We already have a lot of biomed and health care here in the Valley and the investment in the colleges and universities, so we see it as a business decision.” But Katz, a veteran of decades in California politics, understands why VICA may find itself apart from many traditional GOP allies on the issue. “The Republican centrists have an internal problem with the religious right,” Katz said. “We hope they can come to the realization that this is the next great hope for California’s economy.” That kind of evolution away from its conservative, small business-oriented roots says as much about VICA than its support for secession, observers said. “They lost the secession battle and you might suspect they would become even more disaffected from the city, but instead VICA has realized that it does have influence,” said Tom Hogen-Esch, a political science professor at California State University Northridge. “It’s fair to say that VICA has filled a power vacuum over the years in the Valley (because) it is a sort of geographically cohesive group,” he said. “But I think the jury is still out on some of the major issues that VICA has been out in front of.” They include the drive to reduce Los Angeles’ business taxes in an effort to make the city more economically competitive and the passage of legislation requiring state agencies to break out statistics involving the Valley from those of the rest of Los Angeles. At the same time, those efforts, whatever their ultimate impact, may help unify what is today an often fractious part of the city, observers said. “What I see emerging in the Valley is a political consensus, between the business community and residents, to protect the Valley as kind of a livable suburbia,” Hogen-Esch said. “When you have that kind of political consensus among stakeholders you have the potential for some powerful political movements.”

Indies See Niche Between Big Box and Mom and Pop By SHELLY GARCIA Senior Reporter Two recent store openings in the San Fernando Valley seem to suggest that the independents are back to reclaim some of the turf they have lost to large chains over the past two decades. The retailers a new Maytag appliances store in Northridge, and Home Design Center, a home improvement store in Encino which does not sell appliances both cater to homeowners, but their similarities are related less to their customers than they are to the niche each is carving as an alternative to big box stores like Best Buy and home improvement chains like Home Depot and even other specialty stores. Maytag Store, though independently owned and operated, is a concept supplied by major appliance manufacturer Maytag. The Northridge store, which opened late last month, is the first of its kind in Los Angeles. The store is bigger than the typical authorized Maytag reseller, about 5,000 square feet, and all of the appliances on the display floor are operational customers are even invited to bring in their own laundry to test drive the machines or a favorite baking dish to see if it fits in the oven. The idea stems from research conducted by Maytag that showed that shopping for major appliances is a consumers’ worst nightmare, second only to shopping for a car. “It’s daunting. They feel they can’t get good help and the innovation cycle is so quick, it’s hard to keep up with what’s new out there,” said Kathryn McClelland, marketing manager for business development at Maytag Appliances. The notion for Home Design Center, comes from the store owner’s personal experience working on a new home. But like the Maytag store, the Home Design Center was born of the idea that there’s a void for a professionally run store that caters to a homeowners’ needs when making major purchases. “When I shopped at the small, mom and pops it was constant frustration, disappointment and delay,” said Frank Moran, president of Home Design Center, which opened in February. “The Expos were too large and impersonal. It’s a polarized market and the independent voter is lost.” Getting help At Home Design Center, shoppers who are remodeling a kitchen or bath for instance, can sit down with a salesperson or consult with a resident architect and map out the entire project, getting advice on everything from the plumbing work that will be needed to accommodate a new sink to the color of the cabinets that would best coordinate with the tiles. Large chains like Home Depot’s Expo Design Center and Lowe’s home improvement stores, through force of sheer size and advertising power, have driven many of the smaller mom and pops out of business and snagged an ever increasing share of sales. Home improvement centers’ share of washer and dryer sales, for instance, has grown from 9 percent to 15 percent between 2000 and 2002 and from 12 percent to 18 percent for ovens and ranges, according to Mintel International Group Ltd., an industry research group. Meanwhile, the share of market for appliance and electronics stores, which include independent operators as well as big box chains like Best Buy, has slid from 43 percent to 39 percent for ovens and from 37 percent to 32 percent for washers and dryers over the same period, the Mintel research shows. Aggressive action And there are signs that they are becoming even more aggressive. Even Home Depot, which was traditionally known more as a hardware super store has jumped on the home improvement bandwagon. “Home Depot went out and hired two well-known executives and it took them a couple of years to lay the groundwork and now they’re very serious about major appliances,” said Gerry Beatty, senior editor for major appliances at Home Furnishings News, an industry trade publication. But these new independents say that even as the chains have upgraded their merchandising they have not been able to provide the kind of service the upscale customer demands. And the mom and pop stores are often too inconvenient or too unprofessional to instill the confidence of that customer, leaving a gap they hope to fill. “Why would I take a chance on a small mom and pop when the pricing is the same, and I can have architects and designers helping me,” said Moran. “Even to save a couple hundred bucks, it’s not worth it.” So far his hunch seems to be on target. “We’ve exceeded our first six-month goals,” Moran said. “We’re over our weekly numbers by 16 percent or 17 percent every week.” Retail Beat is an occasional column covering news and trends in the San Fernando Valley.

Boeing Considers Merger Options for Rocketdyne Unit By BRAD SMITH Staff Reporter The future of Rocketdyne Propulsion & Power, the San Fernando Valley’s largest remaining industrial employer, could include it becoming the centerpiece of a merger resulting in the leading rocket engine manufacturer in the world. The Boeing Company, which owns Rocketdyne, is examining how much competitors may be willing to pay for the division, which employs some 3,000 people in the San Fernando Valley. According to employees, Rocketdyne management has said there has been no decision to sell the division but workers have also been told the consideration of a sale is part of Chicago-based Boeing’s ongoing effort to evaluate its business strategy. The possible sale is one element in discussions that have occurred over the past several years between the three major rocket engine manufacturers, which include Rocketdyne, Sacramento-based GenCorp Inc.’s Aerojet division and Hartford, Conn.-based United Technologies Corp.’s Pratt & Whitney subsidiary. The likelihood of consolidation in the space launcher propulsion sector received a new impetus when Byron Wood, general manager of Rocketdyne, spoke in July before a conference on propulsion engineering co-sponsored by the American Institute of Aeronautics and Astronautics. At the conference, Wood, a veteran of four decades at Rocketdyne who worked on the engines that sent American astronauts to the moon, said the three main players need to “reinvent themselves now” and that a single “national propulsion company” may be the best response to the current slim market for launch services. Wood’s comments have sparked speculation by industry analysts that Boeing and United Technologies are discussing a sale of Rocketdyne to Pratt & Whitney, or the potential for a joint venture. Boeing officials declined to comment in depth on the matter. “It is a suggestion that he raised, it’s not the first time that’s happened, and it may be raised again, (but) I’m not seeing any additional comment on it from anyone else in the business,” Rocketdyne spokesman John Mitchell said last week. Mitchell and other Boeing officials declined to comment at all on the possibility of negotiations, as did officials from Pratt & Whitney and Aerojet. Aerospace experts, however, said that given the expected continuing decline in government and commercial space launches over the next decade, consolidation in the propulsion sector would make economic sense. “Given the way the launch market is, both commercial, civil, and military, there probably isn’t enough business there for three companies to survive and make a whole lot of money,” said Marco Caceres, an analyst with the Fairfax, Va.-based Teal Group Corp., an aerospace consulting firm. “Our forecasts are very stagnant for the next five years, so if somebody wanted to exit the market right now this would be the time. Five years in the future nobody’s going to be making a ton of money if there are still three competitors.” Fewer payloads Just over 1,200 payloads including satellites and manned missions are currently proposed for launch over the next decade, down 14 percent from approximately 1,400 proposed payloads as of 2003, studies show. About half of the proposed payloads are of American origin, and of those, 60 percent would be funded by the U.S. government and 37 percent as commercial ventures. Another 21 percent of the total is of European origin, 14 percent are from Asian/Pacific Rim countries, and almost 10 percent are of Russian origin. Along with the United States, Europe, Russia, Japan, China, and India all have or are developing space launch vehicles and rocket engines. “Things are difficult because in addition to the domestic suppliers (in the U.S.) there is also a fair amount of global competition,” said Jon B. Kutler, chairman of Jefferies Quarterdeck, a Los Angeles-based investment banking firm specializing in aerospace and defense companies. “You will see further consolidation in this industry, a combination of transactions and people just downsizing out of the business.” Currently, Rocketdyne builds the RS-68 engine for Boeing’s Delta IV booster, while Pratt & Whitney reconditions Russian-built RD-180 engines for the competing Atlas V booster, built by Bethesda, Md.-based Lockheed Martin Corp. Both rockets were developed through the Defense Department’s Evolved Expendable Launch Vehicle, or EELV, program. The initial flights of both vehicles, priced at about $75 million each, carried communication satellites. The rockets can be used for military, civil, and commercial satellites, and could provide the launch vehicle for a manned spacecraft to replace the space shuttle. Pratt & Whitney also builds the RL-10 upper stage engine at its West Palm Beach, Fla., plant, and many analysts suggest a combination of Rocketdyne’s RS-68 and Pratt’s RL-10 lines would give a consolidated company an excellent group of products. “If (Boeing) could get a really good price from United Technologies they might let it go,” said Jerry Grey, a Princeton University aerospace engineering professor and policy director for the AIAA. “But the most likely way to go would be a new company that would pick up technology from both,” Grey said. “It could be set up as a new joint venture, and both United Technologies and Boeing would own big chunks of it.” Previous attempts Aerojet, which manufactures its own designs, announced a joint venture with Pratt & Whitney in 2000, but that proposal fell through. The possibility of consolidation in the engine sector is also playing out against the backdrop that Congress will require the Defense Department to drop, or “down-select,” one of the two boosters programs. A study of the possible impact of such a decision is expected before the end of the year, Air Force officials said. Delays by Pratt & Whitney in opening a domestic production line for the RD-180 could lead to the Atlas V being redesigned for an American-built engine, analysts said. “The question they’ve got to be looking at on this propulsion thing is, are they going to re-engine the Atlas V?” said John Pike, director of Alexandria, Va.-based GlobalSecurity, a defense policy group. Pike suggested that whatever discussions are underway, a merger and acquisition or joint venture may have to await the results of the November presidential election. “Things may be on hold until they figure out who the commander-in-chief is going to be,” Pike said. If he is elected, it is unclear what changes, if any, Sen. John Kerry would make in procurement policy for the DOD and NASA from what is current under the Bush Administration. Although President Bush has announced his support for a renewed lunar exploration program, decisions on actual designs are years away. The Defense Department wants to retain the competitive launch vehicles for military satellites, officers said. “We still believe it is important to have two launchers to have the assured capability of launching national security payloads to space,” said Air Force Maj. Karen Finn, a Pentagon spokeswoman. “We’ve stated that again and again.”