SCV NEWSMAKER OF THE WEEK:


Bill Kennedy
Bill Kennedy
Bill Kennedy
President, Valley Industrial Association

Interview by Leon Worden
Signal Multimedia Editor

Sunday, May 14, 2006
(Television interview conducted May 2, 2006)

    "Newsmaker of the Week" is presented by the SCV Press Club and Comcast, and hosted by Signal Multimedia Editor Leon Worden. The program premieres every Wednesday at 9:30 p.m. on SCVTV Channel 20, repeating Sundays at 8:30 a.m.
    This week's newsmaker is Bill Kennedy, president of the Valley Industrial Association, vice president of sales for Gruber Systems, and the city of Santa Clarita's newest planning commissioner. Questions are paraphrased and answers may be abbreviated for length.

Signal: The Valley Industrial Association ć formerly the Valencia Industrial Association ć has put on a Business-to-Business Expo for a few years, but you¼re doing something different with it this year.

Kennedy: Exactly. I think the transition of the name, as well as what we are doing this year, is an indicator that were growing up. We started out as the Valencia Industrial Association, and then we changed it to Valley Industrial Association to reflect the fact that we were more than just Valencia, and we were going to incorporate businesses from other areas that weren¼t really inside the city limits.
    In the same vein, our Business-to-Business approach has changed. The B2B, as we used to call it, that we¼ve held for the past four years was a opportunity for local businesses to get together to collaborate. But now we understand and appreciate that we can¼t operate in isolation from others around us. So this year we¼re trying to take it to the next level.
    Interestingly enough, by the way, this is our 25th anniversary year, so it¼s kind of a significant tipping year for us, and we¼re doing a lot of other things, too, to try to change and gear for the future. But the B2B, starting this year, will be a Regional Executive Summit. We will be pulling together business elements from the three-county area of Los Angeles County, Kern County and Ventura County. It¼s a major step for us.

Signal: What do businesses in Santa Clarita have to do with businesses in Kern and Ventura counties?

Kennedy: That¼s a interesting question, and it gets to right to the heart of why we¼re taking this change of direction.
    When you look at the business climate throughout the state of California and Southern California, it becomes really clear that there¼s a lot of interconnectivity between the businesses. When we look at the issues confronting businesses in these three-county area, we find that there¼s a lot of commonality.
    For example, the recruitment and retention of qualified labor, as an issue. Transportation infrastructure is a issue, that we¼re all confronting. The availability of reasonably priced housing. The availability of affordable health care. These are all common issues, among others, that businesses in all three counties confront.
    One of the reasons why we want to get a Regional Executive Summit together is in recognition of the fact that a solution that might be implemented in one county can actually have an influence or effect on another. Transportation is probably be the best example.

Signal: Like how we dump salt into the river here and it affects farmers in Ventura Countyć

Kennedy: Good point. Exactly. So they wouldn¼t want to see our businesses doing that; in fact, they have already told us so, haven¼t they?
    When goods come into the Port of Los Angeles or into Port Hueneme and have to be transported northbound or eastbound out of those locations, they¼re going to have to come through here. That¼s going to affect us.
    So rather than confront all these issues in isolation, we see an opportunity here for, first of all, synergy in fighting and resolving the common issues that confront us. We also see an opportunity for cooperation for better solutions, especially when it impacts the other areas.
    And then you might ask: Why Santa Clarita? Why VIA? If you look at a map, you will see that the three-county area basically comes together in this region. The modes of transportation come through here; we are nicely positioned in the middle of that three-county area. From location alone, that is a good argument for having the regional summit here.
    Beyond that, I think that we are very blessed ć and I feel extremely blessed, by the way, to be president of VIA ć to have an organization of people with great ideas and the ability to put the energy of their labors behind those great ideas. This issue was born in our committee, in our board of directors, and volunteers stepped forward and said: Let us pull it together. They have done a masterful job of connecting with the business leaders of the other counties and pulling together a group of sponsors that are standing behind this Regional Executive Summit.

Signal: Los Angeles is a pro-growth county; Ventura is a no-growth county. There have always been some fundamental differences. And what about Kern? Where are the commonalities?

Kennedy: There are differences between the business structure in each of the counties. Los Angeles County is a manufacturing-based economy. You look like Kern County, and it¼s agricultural in nature. Ventura County is a mix of the two. How are we connected? I will tell you. There is a lot of commonality.
    First in terms of growth of the region: All of us are facing the same growth problems in that there is going to be a increase of population over the next several years. As far out as the economic forecasts go, to 2025 or so, there¼s going to be growth. That growth is going to put pressure on businesses.
    In addition, we see jobs increasing in all three areas as a result of the growth. I think the most rapid growth is in Kern County, and that¼s the one that is mostly agricultural-based now. But they are converting to a more product- and-service-based economy. So we¼re going to see change of complexion of the type the business they do, to get more in line with what we do here in L.A. County.

Signal: Tejon Ranch is a big factor in that?

Kennedy: Take home Ranch is going to be a big factor in that. There¼s no doubt about it.
    Now, given that there is that growth in jobs, then an issue that we face together is: Where are we going to recruit and train personnel to accomplish those jobs? And how are we going to educate them?
    If you look at the labor force projections ć and I have ć that the Department of Labor puts out, for example they are predicting that nationwide, there is going to be a shortage of labor starting in the year 2008. Quite frankly, in high-growth areas such as Southern California, the effect is going to be felt more strongly than it is in other regions nationally.
    We, together, are going to confront a labor shortage here. How do we resolve that, with the growth in business that we anticipate? That¼s not going to be an easy issue to confront, but we hope that by getting business leaders together from all three counties, that we can collectively come up with some possible solutions that independently, each of us working alone, would not come up with.
    I am a firm believer in the old adage that no one of us is as smart as all of us. And I like idea exchanges to get good, smart people together so we can feed upon each other. That¼s where the synergy comes into play.

Signal: Why will we have a labor shortage if were having such tremendous growth? Is the problem that we won¼t have enough skilled labor?

Kennedy: It¼s the skilled labor. That¼s part of the issue.

Signal: What do the colleges need to be doing?

Kennedy: What we want to do there is ć we¼re working hard on this in VIA, by the way ć it is to get to the „business needs¾ and translate them into specific job skills that the schools and colleges can work on.
    For example, right now were experiencing a shortage of welders. We¼re experiencing a shortage of sheet metal operators. There will be a shortage of computer science majors, probably, in this area, and on and on it goes. As we identify those job skills that are going to be in short supply, we want to be able, well enough in advance, to get that message to the school system ć and not just the colleges and community colleges, but also down into the high school and even into the middle school levels, so they can start to prepare their students for lifelong careers and manufacturing job skills.

Signal: Do the high schools need to offer more shop classes, welding classes, that sort of thing?

Kennedy: We absolutely believe so.

Signal: Are too many kids into computers and not into the good, old-fashioned, American trades?

Kennedy: I don¼t know if it¼s so much that the students are into that, but that¼s a possibility. We know that with influx of video games and what-not, a lot of kids get enamored very quickly by the computer sciences.
    But yet, the schools are preparing students, for the most part, to go on to college. Yet we know a very small percentage of them will ever really finish college. They need to be trained in job skills that are employable for a lifetime.
    We recently had a discussion with the National Association of Manufacturers, which is bringing a interesting program online that I think might have some merit in this era. It¼s called „Dream !t / Do !t.¾ What the program entails is instilling in youth the desire to go on to a manufacturing job. It kind of serves as an offset or a counterweight to this notion that if you¼re not preparing for college, then you have low self-esteem or low net worth. Rather, this program, Dream !t / Do !t, builds up a manufacturing job in sheet metal work, in welding and so forth.
    We¼re hopeful that a program like that can be brought to Southern California. It will help parents guide their children who might not be inclined to go to college and may not have the wherewithal to go to college, but at least guide them into positions that they could get into and make a living.

Signal: Does Los Angeles County really have the manufacturing base it used to? Didn¼t all manufacturing go to China?

Kennedy: No doubt that a lot of manufacturing is done in China. A lot of it is being exported. But that said, nonetheless, I still think that if you look at (Los Angeles Economic Development Corp.) projections, there is still growth in the manufacturing base here in Los Angeles.

Signal: Tell us about VIA. Why is it growing beyond Valencia? Why does VIA exist? What does it do that¼s different from the SCV Chamber of Commerce?

Kennedy: I will give you my sense of the difference in that regard. First, VIA was born to service the particular needs of the (Valencia) Industrial Center. Then we grew beyond that, in recognizing that manufacturing companies that are located here ć and I can use my own company that I work for, Gruber Systems, as an example ć many of them, although located here, have no business here to speak of.
    Gruber Systems is a provider to the worldwide cast polymer industry. We manufacture machines, molds and equipment, and build factories for people who want to manufacture cast polymer products. We don¼t have any customers in the Santa Clarita Valley. But we have customers all around the world. So we have a different set of issues to deal with than does a local company that is doing all its business here.
    I think the chamber of commerce is better suited to fit the needs of those types of companies, and we in VIA are better suited with a broader, worldwide perspective for manufacturers who are inclined to export.

Signal: VIA has newly formed a legislative committee. What kinds of initiatives do you plan to bring forward?

Kennedy: That¼s another big step we are taking this year, in our 25th anniversary year. We have formed a legislative committee for the first time, and I can tell you, in the past we have talked about it, but we could never get consensus among our board of directors to either see the need, or to want to take on that activity. Because sometimes it¼s difficult to get consensus within any organization of our size on the issues.
    But this year we decided to do it because of the confluence of factors that made the timing just right for us. First, we had a board of directors that understood that we can¼t operate in isolation here; that there are factors, legislative issues, especially in the state, that affect businesses here, and unless we put our oar in the water and weigh in on some of those, then the times may pass us by.
    Secondly, (on) our board of directors, an individual, Ernie Villegas, who is with Southern California Edison, has a bent for working issues of this nature, and we had other volunteers step forward to join him on a committee. So we had the wherewithal, the timing was right, and then we have the issues to work.
    There are a lot of things that need to be done that could help businesses. For example, environmental issues; the high cost of doing business in the state is driving some businesses out of the state. Tort reform is another thing that we have great interest in and would like to see that become more favorable toward businesses. We are going to take advantage of this opportunity now, where there is consensus among our 380 members, and carry that message to Sacramento and then, if need be, to Washington, to see if we can¼t get some change to benefit businesses.

Signal: You are the newest member of the city of Santa Clarita Planning Commission. Are there things the city could be doing that it isn¼t doing to help manufacturers here?

Kennedy: There are things that the city can do, and I think that they are doing them.
    Carrie Rogers, the manager of economic development, has a active program to go out and recruit businesses to come to this community ć the right types of businesses, by the way. I think the city is taking the right approach, which is that we don¼t want to focus on any given sector of business, but rather we¼d like to have a variety of businesses here so that we¼re not linked to any given sector ć so we won¼t make the mistake that Silicon Valley made several years ago. They were sitting on a one-legged stool, and when the dot-com bust came, that place had a lot of economic problems for a while. They have worked through that to some extent, but if they were more diverse in their business base, they would have had a much easier go of it. I think that¼s what is important here, and I think the city is working on that.

Signal: Newhall Land commissioned a study several years ago that identified aerospace, filming and attraction services as the valley¼s key sectors. The idea at the time was to put most of our local economic development eggs into those baskets and attract more ancillary businesses that serve them. You¼re saying that¼s not the approach that¼s being taken now, and it wouldn¼t be the right approach?

Kennedy: I don¼t sense that that¼s the approach being taken now, and I think were on the right track. Aerospace is still one of the elements of business here, and the film industry is, too ć film and entertainment. But there are others that they are seeking.
    I think that¼s the right thing to do, to bring better balance to the portfolio of businesses. For example, the automotive industry; manufacturing in general; education is another major element in this valley. With all the community colleges and local schools that we have, I think it has helped develop quite a reputation that this is a place where creative people come.

Signal: So should they be recruiting the University of Phoenix and other private schools?

Kennedy: I don¼t know if they are going to recruit something like University of Phoenix, but I think they might try to lure other schools here; that would be beneficial.
    Biotech is another important element of the business base that the city is working on and, I think, doing quite well at attracting businesses here.

Signal: When Newhall Land was Newhall Land, it did much of the economic development here. It built the Valencia Industrial and Commerce Centers and determined what businesses would be best suited for our valley. Are you saying the city has taken over that role?

Kennedy: Yes. From my perspective, that¼s what I see. And by the way, I¼d like to say that by my lights, Newhall Land did an excellent job of planning this community and laying the groundwork for what we are today. Now I think that others are picking up the reins and ready to take the city to the next level.

Signal: How long have you been in town?

Kennedy: I got here five years ago.

Signal: What brought you here?

Kennedy: I came here because I was recruited by Gruber Systems. ... They established a new position of vice president of domestic sales, asked me to come in and take over that position, which I did, and since then, they have granted me the whole world. So now I¼m vice president of worldwide sales for Gruber Systems, which I am very proud to be.

Signal: Where are your chief markets?

Kennedy: Chief markets are in North America ć United States and Canada; we do some business down in Mexico. Outside of the North American market, our biggest markets are in Asia, the Middle East and Europe.
    We see a lot of growth right now in eastern European countries. This past year, we opened up a plant in China that will mirror our facility that we have here in Valencia. That will serve the Chinese domestic market, as well as provide us some products for export to the Pacific-Asian Rim, which will allow us to more efficiently service those markets than (we could do) from here in California.

Signal: How well suited are Santa Clarita companies to do business in China and elsewhere?

Kennedy: I think they are extremely well suited. There is a big demand in China for U.S.-type technology and products. Not only in China but the rest of the world. But right now China is the big consumer, and that seems to be the game to get into. Obviously, India is another big one; Brazil is another one ć and Latin America, by the way, figures into our plans, too. There are examples of other companies here that are doing business worldwide and are in China, right here from Santa Clarita valley.
    I think that companies are only limited by their imagination, their creativity and their value proposition that they can take to foreign buyers. (If we had a) free trade zone ć enterprise (zone) ć it would make it even easier.

Signal: How easy is it to set up shop in some of these countries?

Kennedy: It¼s not uncommon in these countries that they give a little bit of a favorable benefit to their own indigenous manufacturers or businessmen. Every county is different; you have to learn how to do business within those countries.
    I can tell you from our personal experience in setting up our operation in China, we found it very beneficial to have a Chinese partner. We knew that in advance. Before we ever made our move, we made sure that we had signed up a China businessman we had faith in, to go in as a partner in with us. That step alone made it easier for us to get established there.

Signal: What¼s your position on „outsourcing¾? What do you say to people who criticize companies like Gruber for setting up shop in China instead of expanding in place and providing more jobs at home?

Kennedy: This is my personal take, and not necessarily represent(ative of) the views of the Valley Industrial Association; My personal view is that I like a free market system. If that means worldwide that we go to a free market system, and we outsource things that can be more conveniently purchased from outside the country and imported here, then I think that¼s to our benefit.
    I also believe that in order to be successful in business, you¼ve got to be able to stay agile enough to adapt to the changing market conditions. I think that¼s what were seeing here on the world stage. Certain areas of the world are coming out of the shadows now and trying to get into the world market in terms of manufacturing and export, and they¼re bringing their best skills to bear on the issues.
    I think in order to stay competitive, what we have to do is look ahead and say, what is the next step? What¼s coming down the road? How can we position ourselves to take advantage of that? If we stay stagnant, I can guarantee you that there are other countries in the world that will be able to emulate what it is that we¼ve produced in our industrial base and probably do it cheaper, ultimately. But as long as we keep moving forward with our technologies, I think we will be fine.

Signal: Does the coming shortage of skilled labor factor into the decision to set up shop abroad?

Kennedy: Indeed it does. I think, clearly, that we¼re not going to be able to survive without outsourcing some elements of our job force. Because we¼re going to have a shortage of labor. There is no doubt about that. And that¼s one of the arguments I would use to the critics say, „We shouldn¼t be allowing guest work to come into our country.¾ Well, you¼re going to have to have guest workers come in or we¼re going to have to outsource jobs elsewhere within the next couple of years, because we¼re not going to have enough skilled laborers in the right skill mix to manufacture everything that we are manufacturing now.

Signal: Is a lot of the skilled labor we have now, coming from outside the U.S.?

Kennedy: I think a lot of it is. Yes.

Signal: Do people who weren¼t U.S.-born and -educated represent a big percentage of the work force in the typical manufacturing business in Santa Clarita today?

Kennedy: Yes. I think so. In many of the companies, that is the case.

Signal: What needs to happen to get the schools in tune with the needs of businesses in the Santa Clarita Valley? Do people from the business community need to run for local school boards to get the point across?

Kennedy: Businesses need to somehow get connected by whatever means ć whether it means they¼re running for the school boards to make sure their views are heard; whether it means they are just acting as engaged citizens, to attend school board meetings and make public statements about their needs; or whether they get involved, as we are in VIA, for example, with the School and Business Alliance, to bring our ideas to the table to some of the movers and shakers within the school system and see if we can¼t get our views aired.

Signal: Give us some more information about the Regional Executive Summit.

Kennedy: We¼re pulling together the business leaders of the three-county area in June in a two-day event.
    The first day is going to be the fun day where we get people together in a relaxed environment. It¼s a golf tournament at the Tournament Players Club right here in Valencia on June 15. That evening, we will have a CEO reception, which will be the CEOs of the companies that are coming to participate. It will be their opportunity to mingle in a social environment and with our guest speakers who will be appearing the following day.
    The 16th is our main business day. In the morning we¼ll start with a „CEO exchange.¾ We will allow these chief executive officers from various companies to meet together one-on-one in short meetings on a by-invitation-only (basis). Then we will go into a lunch where we will have a keynote speaker.
    I¼m absolutely excited about the fact that we have Sunne Wright McPeak coming to be our keynote speaker for this event. (Readers) may recognize Sunne¼s name because she is the secretary of Business, Transportation and Housing for the state of California. It is the largest department in the state of California, and she is an extraordinary individual.
    Obviously a lot of the elements that I¼ve talked about that are affecting business come under her portfolio ć housing, for example; transportation for example; business itself. She brings an amazing array of skills to the table in her own right. I first knew her when she was on the board of supervisors, up in Contra Costa County, where I lived before I came down here. She has been named by the San Francisco League of Women Voters to be one of the possible women presidents. She has been named for, I think, six years running as one of the 100 most influential women in business in the country, so she brings a wide array of skills, and I am really looking forward to hearing her remarks as the keynote speaker.
    When she finishes her remarks, then we¼re going to divide up the groups into various forums to discuss the issues that confront businesses today. For example, we¼ll be talking about how to recruit talent and bring it to Southern California. We¼ll be talking about the vocational training needs that we mentioned earlier, and see if we can¼t come up with a common list from among the three-county area of what those needs might be. We want to talk about how we overcome the cost of doing business in Southern California, and in that forum we¼re going to get at things such as legislative changes that could be more favorable toward business. How to keep businesses in the region will be another topic, and then we will have a summary panel discussion where we will bring all the attendees together and outline what common factors were raised at our conference.
    Then, from the VIA perspective, we will take those issues, as we have in the past with the CEO forum in our valley, and we will let them form the basis for the work that we do going forward to the extent that it applies to people right here in the Santa Clarita Valley.

Signal: How do people contact VIA?

Kennedy: This (summit) is open to everybody, and the more people (who) come and attend, the better, because we¼re looking for everybody¼s ideas.
    It¼s easy to sign up. You can call (661) 294-8088 ć that¼s the VIA office ć or you can go www.via.org. Follow the link to the Regional Executive Summit and it will show you how to sign up, or (you can) sign up for a sponsorship.

    See this interview in its entirety today at 8:30 a.m., and watch for another "Newsmaker of the Week" on Wednesday at 9:30 p.m. on SCVTV Channel 20, available to Comcast and Time Warner Cable subscribers throughout the Santa Clarita Valley.


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