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SOUTH GATE : City Is Tops in Area for Entrepreneurs

October 23, 1994|SIMON ROMERO

Thanks to great freeway access, low taxes and a knock-'em-dead pro-business attitude, said Mayor Albert Robles, South Gate has been ranked the No. 1 city in Los Angeles County for young, growing companies.

"Our ranking came as a pleasant surprise to us, since we didn't go after it with an aggressive PR campaign," Robles said. "I really think it's the result of a concerted effort between the City Council, the Community Redevelopment Agency and the number of exciting new businesses that have chosen South Gate."

The city used to be known as the base for industrial giants such as General Motors and Firestone before they closed their factories and took thousands of jobs with them in the 1980s. Recently, it was ranked first in Los Angeles County and third among 85 California communities within large metropolitan areas in a study published by Cognetics Inc., an economic research firm based in Cambridge, Mass.

The study, titled "Entrepreneurial Hot Spots: The Best Places in America to Start and Grow a Company," ranks places in the United States that are most favored by entrepreneurs who are starting and growing companies. It provides rankings for regions, states, metropolitan and rural areas.

The dominant theme of this year's study is the surge of activity in the mountain states, said David Birch, Cognetics' president. The Pacific region, which includes California, ranked third after the South Atlantic region.

According to the report, the major factors contributing to high entrepreneurial activity for a city are proximity to universities, a skilled labor pool, airports, quality of life and a positive entrepreneurial climate.

In California, Sunnyvale ranked No. 1 and Irvine No. 2, followed by South Gate, San Francisco and Compton.

The city's high ranking came as no surprise to Dan Kang, who manages Care-Tex, a garment-dying firm with $4 million to $5 million in annual sales and 38 employees. Care-Tex moved to South Gate two years ago from Paramount because it was expanding and needed more space, said Kang, a second-generation Korean American whose family owns the business.

"It was a do-or-die move for us, because if we stayed where we were we would have ended up like a lot of other similar businesses and gone under," said Kang, who after an extensive site-selection process chose South Gate over Santa Fe Springs.

"When I first heard of South Gate, I thought about South-Central--that it would be a dangerous place to start a business. After meeting with city officials and getting to know the community, we had a completely different opinion. . . . And after it came through the riots with no damage, we knew for sure."

Compared to neighboring communities, South Gate emerged virtually unscathed from the 1992 riots, with only $4,900 in property damage, Robles said.

Total sales have tripled in the two years since Care-Tex made the move, Kang said, and now the company is looking to expand into emerging markets in Asia, especially Vietnam, whose economy recently became open to American business after the United States ended a trade embargo.

One reason for South Gate's impressive showing among entrepreneurs has been the city's ability to withstand fundamental shifts in its economy, according to Andrew Pasmant, the city's director of community development.

Another reason is the city's lack of a utilities tax, which can run as high as 9% in neighboring cities.

"It's been said that we're a community going from smokestacks to short stacks," said Pasmant. "We've seen a few large employers like General Motors leave the city, only to be replaced by a number of smaller-sized garment producers and more service-type industries. I'd say we've weathered the changes in a positive way."

On the street level, though, not everyone is convinced that all is well for entrepreneurs in the city.

If restaurant owner David Rodriguez had to start his business again, he said, it wouldn't be in South Gate.

"Almost every time I try to advertise with banners or flyers, the city gives me a hard time," said Rodriguez, 44, who founded Nana's Restaurant along Firestone Boulevard seven months ago with a $75,000 nest egg.

"You still need permission for this and permission for that," he said. "If I were to do this over again, I'd do it in a place like Rancho Cucamonga or Signal Hill."

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