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CALIFORNIA | SMALL BUSINESS | LEARNING CURVE / KAREN
E. KLEIN

Matching Components

For Parts Manufacturer, Acquisitions Are the Way to Grow

June 10, 1997|KAREN E. KLEIN

Gorko Industries President and CEO Jerry Gorko immigrated to the United States from Poland in 1980 with a background in manufacturing and engineering. In 1986, he became a U.S. citizen, married a fellow immigrant and together they purchased a small machine shop. Since then, Gorko Industries has grown by acquiring similar companies and expanding its employee and customer base. Its most recent acquisition was also its largest: Gorko bought Cal-Swiss Manufacturing Co. of Pasadena, a family-owned business whose products and customer base complement and enhance Gorko's.

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A big part of my success is that I have a very good working relationship with my wife, who supports me 100% as vice president and chief financial officer of the company.

As we grew and became successful, we acquired two tiny companies. Through those experiences we learned that if we want to grow, acquisitions are the way to do it. Anyone can add machines and hire people, but that is a very long process, especially in our field, where trained, skilled employees are valuable and in short supply.

We learned about Cal-Swiss about a year ago from a mutual sales rep who told us he envisioned the two companies in a perfect marriage. Cal-Swiss had 39 employees and was founded in 1947 by Peter Martin, an immigrant from Switzerland. He brought fine Swiss watchmaking technology into manufacturing tiny precision components.

Because we manufacture medium-sized components for many of the same industries, putting the two companies together was like adding two plus two and getting five. With their product line and extremely high-quality Swiss equipment, we can grow faster and be more confident.

When you acquire companies, you have to borrow money and take a calculated risk. I look at companies and review their operations for six months to a year when I know they are for sale.

When we were negotiating the deal with the banks, their first question was, "How many people from Cal-Swiss are you going to send home?" That was very devastating to hear. I told them we want to grow and hire more people, not lay anyone off. I knew that the employees at Cal-Swiss were valuable assets and I did not want to lose them.

Eventually, the Martin family helped us acquire the company through private loans [because they did not want to see their employees laid off]. They liked us and they had so much pride in their company that they wanted to sell to someone who would keep it going. They did not want it acquired and destroyed, especially since they will celebrate their 50th anniversary in September.

When we were nearly done with the acquisition, the banks learned how well it was going and started calling us and offering to lend us money, but by then we did not need it.

Our vice president of operations, Jan Hiszpanski, has gone to Cal-Swiss to manage the operation there. The next step, within three years, will be to find a new facility somewhere in between our two current locations so that we can all be at one site.

In the future, we look forward to continue expanding through internal growth and more acquisitions. We already know it works--it is a proven system for us.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

AT A GLANCE

Company: Gorko Industries Inc.

Owners: Jerry and Lidia Gorko

Nature of business: Manufactures parts for aerospace, space, medical and commercial applications.

Locations: North Hills and Pasadena

Founded: 1986

Employees: 67

Projected revenue: $6 million

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