Pacific Coast Business Times http://www.pacbiztimes.com Proudly serving Ventura, Santa Barbara and San Luis Obispo counties Fri, 27 Mar 2015 19:17:02 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.1 Haas revs up Formula One to expand globally http://www.pacbiztimes.com/2015/03/27/haas-revs-up-formula-one-to-expand-globally/ http://www.pacbiztimes.com/2015/03/27/haas-revs-up-formula-one-to-expand-globally/#comments Fri, 27 Mar 2015 07:04:23 +0000 http://www.pacbiztimes.com/?p=22198 Team Ferrari's Michael Schumacher makes a pitstop at the Formula One Grand Prix of China. (Bloomberg News file photo)

Team Ferrari’s Michael Schumacher makes a pitstop at the Formula One Grand Prix of China. (Bloomberg News file photo)

 

Some executives take to the golf course to reap the benefits of mixing business and leisure. Gene Haas heads to the race track.

The founder and CEO of Oxnard-based Haas Automation is building a Formula One team that will be the motorsport’s first American-owned entrant in 30 years when it joins the F1 grid in 2016. The operation will stand alongside Stewart-Haas Racing, a NASCAR team Haas founded in 2003 that he now co-owns with stock-car star Tony Stewart, as a platform for the tool manufacturer to engage customers and expand its dealer network.

The NASCAR outfit won the Sprint Cup championship in 2011 and 2014 and counts Danica Patrick and Kurt Busch among its drivers. Its staff of 280 works out of a 200,000-square-foot, state-of-the-art mechanical and testing facility in North Carolina, but so far the operation has been limited to an American audience.

In hopes of amplifying his firm’s global presence, Haas has been quietly assembling an arsenal of industry veterans to undertake the process of building a top-tier Formula One team from scratch — an endeavor the company’s vice president of European operations and special projects, Peter Zierhut, said Haas had “been interested in for a very long time.”

“NASCAR of course is the highest level you can get in the United States in racing,” Zierhut said. “But Formula One is really the pinnacle on the world stage for racing, so [Haas] is finally able to realize that dream and start a Formula One team.”

When Haas Automation’s sales dropped during the recession, prompting staffing cuts at its Oxnard plant, Haas expanded business in international markets.

Though the firm’s products claim a hefty 40 percent of America’s machine tools market, market share overseas is comparably weak, at about 5 percent. According to Zierhut, Haas sees the team, Haas F1, “as an important tool to promote Haas Automation’s products on a world stage.”

“We’re the No. 1 machine tool builder in the entire country,” Zierhut said. “We’re one of the top few in the world, but we’re not there yet.”

Though it lacks popularity in the U.S., F1 racing is a highly respected sport in many European, Middle Eastern and Asian countries and generates an annual $1.8 billion in revenue. The competition is the top class of single-seat auto racing and ruled by a set of strict technical regulations, with points tallied across a series of Grand Prix events in 20 countries. The 2015 season attracted a global audience of 425 million people per race.

But the sport’s pool of competitors is thinning, with its 12-team field thinning to nine in the past three years. Last fall saw British team Caterham fold after running out of money, and its fellow UK competitor Marussia is likely to bow out next.

Though it may have been simpler to buy and rebrand one of these struggling outfits, Haas preferred to do things his way from the ground up.

“That’s evident in the way we’ve built this company. We look at everything and we consider ourselves an extremely efficient operation,” Zierhut said. “Instead of buying someone else’s old race team, he gets to actually start one from scratch and do it in a much more efficient manner — we hope anyway, and we feel that we can do that.”

When Marussia entered receivership last November, Haas bought the team’s headquarters near Oxford to serve as Haas F1’s European base for connecting with suppliers and conducting mechanical rebuilds.

“They had some equipment that was useful to us at that facility, very close to the center of the Formula One world near the Silverstone Formula One race track in the UK, so it was convenient,” Zierhut said.

Haas has already staffed the British facility with industry experts, including team manager Dave O’Neill and chief designer Rob Taylor, both of whom had most recently worked at Marussia, and chief aerodynamicist Ben Agathangelou, who has been head of aerodynamics at Jaguar, Red Bull Racing and Renault F1/Benetton during his 18-year career in Formula One.

And Haas tapped into his NASCAR connections in search of a team principal to oversee operations and caught Günther Steiner, who has worked in F1 since 2001, when he was recruited as the Jaguar team’s managing director by three-time circuit champion Niki Lauda.

The operation’s official home base, however, will remain at the existing Stewart-Haas Racing facilities in North Carolina, and every part in the car will be developed and manufactured at Haas’ Oxnard factory. Since Haas has already invested heavily in the North Carolina compound, the team can maneuver around a lot of the costs that doom smaller competitors.

“Formula One can be a very costly sport but, for example, owning our own wind tunnel eventually can help,” Zierhut said. And Haas doesn’t use just any wind tunnel, but something known as the Windshear — a 180-mph, rolling-road wind tunnel that is the first of its scale available for commercial use.

After absorbing the cost of building their vehicle, Formula One teams pay an entry fee of $500,000, plus a charge of $5,000 per point scored the previous year or $6,000 per point for the constructors’ champion. Drivers must also pay fee of $10,000 plus $1,000 per point for their F1 “Super License.”

Though F1 rules require a team to build its car’s frame itself, other parts can be purchased from a major team. Haas F1 has formed a partnership with Ferrari, who will supply the car’s drive train and engine, and is conducting engineering operations under the wing of the iconic F1 constructor at its testing facilities in Italy.

Agathangelou and Taylor have already delivered a 60-percent scale model of the car Haas F1 hopes to debut in the 2016 series’ opening race at Melbourne, and the team is working with Ferrari to bring that to a full-scale car later this year. Currently, Haas’ technicians are testing the scale model in a Ferrari wind tunnel, but Zierhut said the engineering will eventually be brought back stateside.

According to team principal Steiner, Haas F1 has made great strides toward being competitive when it joins the grid next year, largely thanks to the collaborative nature the operation has adopted.

“The way we’re going about our F1 team is new and different, but it’s working,” Steiner said in a press release. “We’re committed to our plan, we’re committed to F1 and, most importantly, we’re on schedule. This time next year, our cars will have already been tested and we’ll be readying them for Melbourne.”

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Montecito has no cheap fix for drought http://www.pacbiztimes.com/2015/03/27/montecito-has-no-cheap-fix-for-drought/ http://www.pacbiztimes.com/2015/03/27/montecito-has-no-cheap-fix-for-drought/#comments Fri, 27 Mar 2015 07:03:51 +0000 http://www.pacbiztimes.com/?p=22196 Last year it was the Paso Robles groundwater basin. This year it’s Montecito.

Mounting water deficits are forcing smaller communities in the Tri-Counties to take drastic action to cope with the state’s worst drought in decades.

In the case of the Paso Robles groundwater basin, it took a last-minute accord between rival groups, an act of the legislature and new mandates from Gov. Jerry Brown to set in motion the creation of a hybrid special district to manage groundwater supplies into the future.

For Montecito, the options are much more limited. At a meeting of the Montecito Water District on March 24, some 200 residents who attended were presented with two very stark choices — suck it up and pay for water or shell out millions of dollars to build an expensive desalination plant.

In the end residents took the path of least resistance — agreeing to severe rate hikes now and putting off, at least temporarily, the prospect of a desal plant.

Meanwhile a growing group of disgruntled residents is calling for a third and more radical plan—merging the water and sanitary districts and creating a combined plant that would use recycled treated water mixed with desalinated seawater to create a permanent solution.

“There are other alternatives to desalination. It’s time to consider all the possibilities,” said Phil Bernstein, a community member who has been urging the water district to take a look at a combined facility.

Meanwhile, the image of Montecito as a bucolic community where avocado and lemon ranches coexist with opulent mansions from the Gilded Age and the Hedge Fund age is fading away.

At the meeting, Carolyn Chandler, one of just 37 agricultural water users in Montecito said her water rates went up more than residential users and her allocation went down by more as well.

“Our allocation didn’t go down 20 or 30 percent — it went down 60 percent,” she said, adding that the future of her avocado farming operation is now in peril.

“I put a lot of money into cutting down trees, re-doing my irrigation to save water. And I made that 60 percent cut, which was huge,” she said. “I cut down 30 percent of my trees and now the surcharge — applied uniformly — has the potential to cost ag owners up to a 159 percent increase. It’s not a 40 percent increase for us; it’s a 160 percent increase. That hurts. That puts my business out of business.”

Temporarily, purchasing the water is the clear short-term solution, and that’s the only one that water officials are advocating since research into a desalination plant is ongoing.

Water District President Darlene Bierig said supplies will last until “late spring. And then we will come to a grinding halt.”

“There’s this notion that you’re being penalized for conserving. The people who’ve been conserving have been saving us money — all of us money — because we all have to pay for that additional water.”

But the community groundswell for a permanent water resource that’s not dependent on state water or rain is growing in this wealth hamlet of unincorporated Santa Barbara County.

Cindy Feinberg, president of the Montecito Association, said she supports finding an alternative.  “I think desalt needs to be explored and we need to have a diversified portfolio of water,” she told the board.

Montecito resident Robert Lewis agreed.  “There’s only one solution to the problem here — and it’s a desalination plant,” he said.

On the docket on March 24 was a hefty surchange with a two-fold objective:  first, restructure the district finances by temporarily adjusting revenues higher to offset conservation effects, and, second, create funds to offset the district’s financial deficit during the drought emergency.

In the end the surcharge passed. Most experts think the earliest a desalination plant or combined water treatment-desal plant could be operational is 2017.

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Business flyers trade bigger planes for fewer flights http://www.pacbiztimes.com/2015/03/27/business-flyers-trade-bigger-planes-for-fewer-flights/ http://www.pacbiztimes.com/2015/03/27/business-flyers-trade-bigger-planes-for-fewer-flights/#comments Fri, 27 Mar 2015 07:02:32 +0000 http://www.pacbiztimes.com/?p=22190 United Airlines will begin routing flights from the Santa Maria Public Airport to San Francisco International instead of Los Angeles International beginning May 9. (Courtesy photo)

United Airlines will begin routing flights from the Santa Maria Public Airport to San Francisco International instead of Los Angeles International beginning May 9. (Courtesy photo)

 

Small commercial airports may be headed the same way as stratospheric smoking sections and lenient security screening — a relic of the industry’s giddy boom days when airlines vied for the plumpest flight schedule and most posh flight experience.

The standard practice at airlines now is to cut operations to their bare bones, a trend that is thinning the ranks of commercial airlines in the Tri-Counties, most recently with Frontier Airlines’ departure from Santa Barbara Municipal Airport (SBA) as the company pushed its flights toward the East Coast.

That left United Airlines as the region’s dominant carrier, just as the company decided to begin using larger planes and fewer flights.

The airline — whose service in San Luis Obispo and Santa Maria is operated by SkyWest Airlines as United Express — will cut the number of flights it offers to and from the San Luis Obispo County Regional Airport (SLO) in half beginning April 7, when it plans to shelf its fleet of turboprop commuter planes in favor of larger regional jets.

Meanwhile at the Santa Maria Public Airport (SMX), United will begin flying to and from San Francisco, dropping service to Los Angeles International Airport beginning May 9.

According to United Airlines’ website, the number of flights available to LAX and San Francisco International from SLO will drop from 11 to five, increasing layover times and reducing availability.

The company also made some unannounced changes to its Santa Barbara flight plan, cutting a few flights and most notably rescheduling its first flight to LAX from 6:30 a.m. to 9:18 a.m. — too late in the day for business travelers to reach connecting flights that will get them to the East Coast before dinner.

In fact, the airline changed its schedule so abruptly that David de L’Arbre, chief operating officer at the Santa Barbara Travel Bureau, was left scrambling to reschedule flights his clients had paid for before they were unexpectedly canceled by United.

L’Arbre said the loss of early morning flights “is really pretty brutal” considering how much less reliable service through SFO can be: “Anyone who goes there knows it’s like playing Russian roulette with your schedule.”

The tourism industry should also be concerned with diminishing service, L’Arbre said, since both business and leisure travelers will choose destinations that are cheaper and easier to get to.

“There’s this huge ripple effect,” L’Arbre said. “It will raise the cost of businesses operating in and out of Santa Barbara, since smaller capacity and fewer flights means higher fares.”

Other than United, the area is only served by US Airways, which provides limited service to Phoenix from SBA and SLO; Alaska Airlines, which runs once-daily flights between Santa Barbara and Portland or Seattle; and Allegiant Air, which operates one flight a day between Santa Maria and Las Vegas.

By May, SkyWest plans to have scrapped its entire fleet of 28-passenger Embraer EMB 120 Brasilia turboprop commuter planes in favor of 50-passenger Bombardier CRJs.

According to Wes Horrocks, corporate communications manager at SkyWest Airlines, “the idea behind the schedule changes is to keep the seat count consistent.” There are about 516 daily round-trip seats available now, but that number will drop to 458 seats on April 7.

Horrocks said the regional jets “really are an upgraded service” and will deliver faster flights, more space and greater mechanical and scheduling reliability.

In a statement released when SkyWest announced the decision last November, the company also cited “increased costs and challenges associated with new [Federal Aviation Administration] flight and duty rules” implemented in January of last year to give commercial pilots longer breaks between flights.

As far as the decision to route flights from SMX through San Francisco rather than L.A. is concerned, Horrocks said the move was in response to direction from United Airlines, which uses SFO as a fortress hub.

In 2011, SBA opened its new terminal, which took two years and cost $54 million to complete. Since then, Delta Air Lines, American Airline’s American Eagle network and Frontier Airlines have ceased service from the airport, and no new carriers have come in.

Luckily, SLO and Santa Maria both have runways long enough to accommodate the larger aircraft; some similarly sized airports with shorter runways have lost United Express service altogether. The SLO airport is also working through plans for a $27 million renovation that would better accommodate larger planes, a project it hopes to complete in early 2017.

Horrocks said the airline may add flights back to its SLO schedule if there’s strong enough demand. “We want people to be able to fly out of San Luis Obispo and these other regional airports,” he said.

In recent years, Santa Barbara has been successful in marketing itself as an alternative to LAX while Santa Maria and San Luis Obispo have been exploring new destinations, with both looking at Denver as a top pick. But the latest maneuvers by United will mean a race to remain in survival mode as travelers will increasingly look to Burbank and LAX for convenience and cost savings.

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Navy turns to area firms for work at Surface Warfare Center http://www.pacbiztimes.com/2015/03/27/navy-turns-to-area-firms-for-work-at-surface-warfare-center/ http://www.pacbiztimes.com/2015/03/27/navy-turns-to-area-firms-for-work-at-surface-warfare-center/#comments Fri, 27 Mar 2015 07:01:19 +0000 http://www.pacbiztimes.com/?p=22192 The Naval Surface Warfare Center at Port Hueneme has been working on its own version of buying local, counting on a growing number of small area suppliers to meet technical and professional needs.

Officials from the testing and research facility told tri-county businesses during an industry forum on March 25 that it’s now sourcing nearly half of its work from area small businesses.

More than 100 company representatives from Southern California met with officials at the Surface Warfare Center at Port Hueneme to find out about working with the naval center through cooperative R&D agreements and other contracts.

During the event, held at the Embassy Suites Hotel in Oxnard, Navy representatives took the stage to provide presentations on how to work with the center while workshops later in the day focused on specific fields, such as industry, engineering or management services; tech startups, welding shops and financial services providers were just a few of the many business categories that took part.

In 2014 the naval center did a total of 45.7 percent of its work with small businesses, surpassing the center’s goal of doing 25 percent of its work with these businesses.

Daniel Deconzo, small business deputy for the Surface Warfare Center at Corona, told the audience that these numbers reflect the center’s commitment to working with more small companies, although these numbers have declined for fiscal year 2015 so far.

The center also strives to work with woman-owned businesses, companies located in historically under-utilized business zones, service-disabled veteran-owned business and others that are socially disadvantaged, as part of federal efforts to do so.

The annual industry forum was launched just last year, and the crucial difference this year is the program’s focus on tech transfer and the newly created position of the chief technology officer. Kurt Schultzel, who has been working with the NSCW at Port Hueneme for more than 30 years, took on the position in November of last year. He said the Port Hueneme division of the Surface Warfare Center is different from many others across the country because it largely focuses on testing and evaluation.

Since the Port Hueneme division is coastal, it mainly deals with shorter term research and development for weaponry and infrastructure that can be sent out to the fleet quicker, Schultzel said.

“What we’re looking for in businesses is the agility and tech capability to answer questions quickly,” he said. “Out here [at Port Hueneme], we’re very close to the fleet, so we’re interested in shorter term capabilities … Our goal is to get the tech capability to the warfighter as fast as possible.”

One tech company that has joined forces with the Navy’s Port Hueneme research unit is VSolvit, a Ventura-based software tools firm. The company signed its cooperative R&D agreement with the Port Hueneme Surface Warfare Center in December and is working to help develop a cyber intelligence assessment system that would help the Navy assess cyber vulnerabilities aboard ships.

The collaboration is an example of how the naval center is seeking out technology transfers with private companies, enlisting these businesses to participate in research for developing a specific tech capability or product.

“As an outgrowth of our mission to facilitate technology transfers with third parties, the signing of this [cooperative research and development agreement] with VSolvit is memorable,” Greg Wakatsuki, of the center’s Office of Research and Technology Applications, said in a statement from VSolvit. “With a CRADA, we have the unique ability to collaborate with outside companies in the research and development of a product and then we let the Navy test drive the new product to determine whether or not it meets the demanding needs of the Fleet.”

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Dubroff: It’s no easy task to put a fresh face on a spectacular retail disaster http://www.pacbiztimes.com/2015/03/27/dubroff-its-no-easy-task-to-put-a-fresh-face-on-a-spectacular-retail-disaster/ http://www.pacbiztimes.com/2015/03/27/dubroff-its-no-easy-task-to-put-a-fresh-face-on-a-spectacular-retail-disaster/#comments Fri, 27 Mar 2015 07:01:18 +0000 http://www.pacbiztimes.com/?p=22194 Henry Dubroff

Henry Dubroff

For former owner Tesco, Fresh & Easy wasn’t particularly fresh or easy.

Produce wrapped in plastic and pre-packaged foods that didn’t click with middle class consumers left a bad taste in the mouths of shoppers. And the no-service attitude of the British food giant meant none of the easy banter that accompanies a trip to Trader Joe’s.

Tesco unceremoniously dumped Fresh & Easy in 2013 after a $2 billion spending spree that ended up in failure. The company went into bankruptcy and is now owned by Los Angeles billionaire Ron Burkle’s Yucaipa Cos.

Yucaipa said March 23 it was closing 30 of the stores and reformatting others into a neater and tighter package. Among those that will close are three stores along the Highway 101 corridor that did not fit into the new game plan.

Yucaipa’s vision for Fresh & Easy 2.0 includes remodeled stores with a streamlined look that are designed by the same firm that produced the Apple retail experience.  And the company has rolled out what it calls fresher fare.

Yucaipa, which owns the Wild Oats name, has introduced some Wild Oats branded products into the new Fresh & Easy stores. It has rebranded one Fresh & Easy store as Wild Oats, a throwback to the Boulder, Colorado-based chain that’s now part of Whole Foods.

The lessons of the Fresh & Easy fiasco include the fact that some of the best minds in finance were humbled by Tesco’s stumbles in California and elsewhere. Last fall, legendary investor Warren Buffett disclosed that he’d sold off a big chunk of his Tesco shares after calling the investment a “huge mistake.”

• Tesco’s timing was terrible all the way around. The company studied the California market for years, perhaps missing a window of opportunity, and then took a big plunge in 2007 just as the real estate bubble was bursting. Lesson No. 1 — timing still matters in business, in love and in life.

• You had better live up to your brand. Fresh & Easy was a catchy moniker, but walking through stores in Santa Barbara and Moorpark, I encountered the exact opposite of what Tesco offered shoppers as an experience. It was a store designed by committee — not quite a warehouse, not a discount store and not as convenient as, big gulp here, a Circle K or 7-11.

• In America in the 21st Century, you need to be aspirational. Specialized stores such as Trader Joe’s or Whole Foods are not just selling products. They are selling a lifestyle and encouraging you to come back over and over again. Which is why college students, bank presidents and even a few celebrities frequent the Trader Joe’s on Milpas Street where I am a regular. Tesco never got that concept.

Finally, there is a strategic repositioning going on in the grocery business that Tesco totally missed.

The whole industry is moving from multiple players who compete for market share at low margins to an oligarchy of dominant players and very specialized niche stores. That’s part of what’s driving the merger of Kraft and Heinz, announced just as this newspaper was going to press.

With the Albertsons-Safeway merger moving along, only the very largest suppliers will survive. Meanwhile, Whole Foods, and Trader Joe’s dominate their market segments as new players such as Haggen’s try to carve out a niche.

The opportunity for Fresh & Easy 2.0 will be dramatically different from what Tesco envisioned in the pre-recession era. But as that legendary retail analyst Yogi Berra once said, “It’s hard to make predictions, especially about the future.”

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Op/ed: Opening the ‘boys club’ to women — and ushering in success http://www.pacbiztimes.com/2015/03/27/opening-the-boys-club-to-women-and-ushering-in-success/ http://www.pacbiztimes.com/2015/03/27/opening-the-boys-club-to-women-and-ushering-in-success/#comments Fri, 27 Mar 2015 07:00:56 +0000 http://www.pacbiztimes.com/?p=22174 By Ritch Eich

Women continue to be marginalized in the business community.

Whether it is Hollywood studios and their paucity of female directors, the tech industry and its alarming exodus of frustrated women, or the stifling male fraternity culture that dominates Wall Street, the “boys club” is a tough clique to break up.

The vast majority of CEOs responding to a 2011 McKinsey & Co. survey noted that hiring women is essential to “getting the best brains.” That sounds pretty obvious; however, meaningful change remains agonizingly slow. As of June 2014, only 24 Fortune 500 companies had a female CEO, or 4.8 percent. That’s up from 20 companies on the previous year’s list, but still a tiny fraction.

The McKinsey survey authors concluded: “Of all the forces that hold women back, none are as powerful as entrenched beliefs. While companies have worked hard to eliminate overt discrimination, women still face the pernicious force of mindsets that limit opportunity.”

Excelling in business requires leveraging the talents of everyone involved. Having worked in a variety of industries, I’ve been fortunate to work with many incredibly talented and accomplished women including:

Carol Tomlinson-Keasey, the first and founding chancellor of UC Merced. Chancellor Tomlinson-Keasey, who despite being faced with countless obstacles created the first American research university in the 21st Century on grazing land in California’s Central Valley.

Dr. Ora Hirsch Pescovitz, senior vice president of Eli Lilly and Co., former CEO of Riley Hospital for Children and former CEO of the University of Michigan Health System. Pescovitz took sensible risks that enabled her team to flourish and brought creativity, charm and grounded optimism to every challenge.

Cleopatra Vaughns, civic leader, San Francisco Municipal Transportation Agency chair, first female board member and first female chair of the San Francisco Visitors and Conference Bureau, Blue Shield of California community relations head and president of the National Association of Negro Business and Professional Women’s Clubs. Vaughns has devoted incalculable hours after work and on weekends to make the Bay Area safer and a better place to live, work and visit. She was a true “bridge builder” and widely respected in her community.

These women are exemplary role models. Their indefatigable drive, intelligence and adaptability have inspired me and countless others. They welcomed tough assignments and delivered results, often in the face of adversity.

Real leaders commit all available resources to creating a positive organizational climate with zero tolerance for discriminatory behavior. Real leaders require their teams to establish systems and cultures that reward women and men equally, thereby encouraging women to focus on contributing, instead of fighting against out-of-date biases. Real leaders understand that expertise and contributions are what delivers results.

Here are five critical steps leaders can take to increase the role and value of women in their organizations:

1. Make the commitment: It sounds basic, but chief executives need to understand — and accept — that their organization’s bottom line will be enhanced by including women in policy-shaping forums and decisions.

2. Make the commitment count: Tie executive compensation to the active inclusion and advancement of women. Simply meeting a quota is not enough (and, in fact, is counterproductive).

3. Encourage and mentor women: More women take on the combined role of breadwinner and caregiver than men, and organizations need to accommodate those roles or they will ultimately suffer the loss of great talent.  Women want tough assignments, and in my experience, are often better than men when it comes to collaborating.

4. Check male egos at the door: Consciously or unconsciously, the old boys’ network is alive and well. Organizations must adopt a zero-tolerance policy against discrimination. Instead of celebrating the behavior that still exists on Wall Street, it needs to be wiped out.

5. Recognize women’s unique contributions: Most of the women I know and have worked with have been better at multi-tasking than men (myself included), and reach consensus faster and with less contention than most men. It’s no coincidence that more female U.S. Senators have co-sponsored bills and reached across the aisle to get things done than their male counterparts.

Change is long overdue. Plenty of women are up to the task. The old boys club needs some new blood — and maybe a female club president.

• Ritch Eich is a management consultant and the author of two books on leadership. He is the former head of public relations for Blue Shield of California.

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SLO restaurateur rides a wave of business, tourism growth http://www.pacbiztimes.com/2015/03/27/slo-restaurateur-rides-a-wave-of-business-tourism-growth/ http://www.pacbiztimes.com/2015/03/27/slo-restaurateur-rides-a-wave-of-business-tourism-growth/#comments Fri, 27 Mar 2015 07:00:52 +0000 http://www.pacbiztimes.com/?p=22184 The Rooster Creek Tavern in Arroyo Grande. The restaurant’s owner, Bill Hales, is bringing the eatery’s concept to San Luis Obispo. (Courtesy photos)

The Rooster Creek Tavern in Arroyo Grande. The restaurant’s owner, Bill Hales, is bringing the eatery’s concept to San Luis Obispo. (Courtesy photos)

 

After partnering to open more than a dozen concepts, San Luis Obispo native Bill Hales has learned a thing or two about the restaurant business.

Hales and a revolving cast of business partners are eating up opportunities to fatten up their portfolio of locations while the market continues to expand.

His most recent endeavor is similar to Rooster Creek Tavern, an establishment he co-owns in Arroyo Grande. The new unit is slated for the revamped University Square shopping center in San Luis Obispo.

Hales is working with developer Nick Tompkins on the development at the long-vacant building that housed Bank of America on Foothill Boulevard.

The concept is described as a wine-centric, family-friendly restaurant that also appeals to young professionals. The 5,000-square-foot location will feature a patio, brick pizza oven, full bar and will have the flexibility to handle large events.

The not-yet-named casual dining concept has an up-market design and will have food, beer and wine offerings in line with Rooster Creek.

Hales is also considering another restaurant for a site on Tank Farm Road and Broad Street near the new Mindbody headquarters. He didn’t give further details on the project as it’s early in the development process.

“That project is still just dirt,” he said. “We’ve got plenty on our plate this year, so we’re not really worried about pushing that one forward too quickly.”

For the University Square project, the space is expected to be ready by late April or in early May. Once it’s done, Hales said he’d like to shoot for an August opening, but September or October is more realistic.

“There are always delays,” he said. “We’ve done enough of these to know that we need to be conservative with our expectations.”

Hales got his start in the bar and restaurant industry 20 years ago mopping floors. Since then his holdings have expanded to include stakes in a dozen restaurants, with 14 total by the end of 2016. He’s also getting ready to open Mason Bar, a small gastropub that will serve farm-to-table dishes alongside a bevy of craft beer on Branch Street in Arroyo Grande.

Arroyo Grande’s Rooster Creek Tavern.

Arroyo Grande’s Rooster Creek Tavern.

Bruce Baltin, vice president of CBRE’s hospitality research firm PKF Consulting USA,  said the influx of new restaurants shouldn’t come as a surprise since the region has been successful in gathering significant tourism traffic from promotional efforts.

“The area is undergoing a period of upgrading,” he said. “Hotels and motels are upgrading to meet the demands of a greater quantity and quality of guests and that’s being reflected in the restaurant scene. Efforts to market the area have really been taking hold and that’s helped push the local businesses forward.”

An example of that momentum is the expansion of barbecue joint Rib Line to the Villages at Broad Street. The company, featured on Travel Channel show “Man v. Food,” will be taking its popular tri-tip, ribs and chicken to the 2240 Emily St. location. It will be the company’s second restaurant in SLO and third overall; its other location is in Grover Beach. According to those familiar with the project, the new location will feature an open kitchen design, seating for more than 80 and a 10-person bar.

SLO Brewing Co. is also planning to open a larger brewing facility near the airport at 855 Aero Vista Lane. The development includes roughly 19,000 square feet of commercial space. The Business Times previously reported that the popular Ventura-based seafood joint Spencer Mackenzie’s also launched a new location on Higuera Street.

The space between fast-casual and fine dining has experienced the most activity, said Lee Johnson, the city of San Luis Obispo’s economic development manager. In the city’s financial statements for the fourth quarter of 2014, tax revenue from dining establishments shot up more than 10 percent over last year, he said.

The city is building an impressive lineup of new restaurants, many of which are filling up the remaining available spaces. There are a few developments coming online in the long term that will bring some new commercial space, but there could be an upcoming lull in the action, Johnson said.

Two 5,000-square-foot commercial buildings are proposed for a site at Santa Rosa and Monterey streets, and The Junction, a proposed 69-unit apartment complex, includes 3,000 square feet of commercial space — but those projects will take time.

“The big thing is that this kind of activity is important to keeping the quality of life aspect of the city up, where people have options and can get different styles of cuisine at different price points,” Johnson said.

With Cal Poly strengthening its reputation as a research university, a growing student population and the county’s wine industry in full flight, there have been more visitors from the Los Angeles and San Francisco area, and that’s given Hales and his partners more room to experiment with bringing new dining concepts to SLO County.

Hales also co-owns the Shell Beach Brewhouse, Mother’s Tavern, Creeky Tiki, Frog and Peach Pub, The Library Lounge, Bull’s Tavern, McCarthy’s Irish Pub, Wine Shed and two eateries in Mississippi.

Based on the “booming success” at the Shell Beach brew pub, Hales and his partners are looking at Nipomo and Pismo for future concepts, he said.

“For us it’s been a place we’ve always had an interest in and it’s where I’m from,” Hales said of the area’s growing dining scene. “The area isn’t really a secret anymore, which is pretty amazing because it used to just be the vacuous hole where you’d stop to get gas on your way up north.”

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