Each morning, Bob Desautels, one of the two principals of ATI Engineering and Architecture, leaves his Danville home and drives to his Blackhawk office. When he and his partner, Paul DiDonato, also a Danville resident, decided to locate their firm in Blackhawk in 1989, the choice was a no-brainer.
Construction was beginning to boom in the area and their business provided consulting services for many of those projects. Talented people were plentiful and the area offered affordable housing. Employees could live, work and enjoy a high standard of living in the area.
After starting off with only a handful of employees, the company now employs about 100 people in three offices in California. Over the years, it has received national accolades and garnered numerous local awards, including being voted one of the East Bay Business Times Fastest Growing Companies for an unprecedented four years straight from 1999-2002. Unusual business success for a Danville company? Not at all.
According to the “Preserving the Prosperity Report” issued by the Tri-Valley Business Council (TVBC), Danville is a player in the regional business landscape and success stories like ATI Engineering and Architecture are common.
In fact, for the past 10 years, small companies have driven the region’s economic engine. Despite the prevalence of large corporations lining the 580/680 corridor, the report finds that small businesses have grown faster and added more jobs than their large business brethren. And perhaps most surprising: A large percentage of these businesses are founded in Danville.
To perform the study, the Business Council retained consultants, Collaborative Economics, to analyze the area’s current business climate, investigate the types of business currently operating in our geography, and make recommendations for improvements.
Their findings, summarized in the Prosperity Report issued in July, define several key actions the Business Council can take regionally to insure the business climate remains strong.
The report starts by identifying the key types of businesses. In the Tri-Valley region, there are over 18,000 companies doing business, spread among many business sectors. Today, the strongest sector in the region is “innovation services,” or more simply, consulting. It is larger than any other sector, employing 13 percent of the area’s workforce and 2.5 times more concentrated than the California average.
Given the number and growth of homegrown businesses, the report also concludes small businesses founded locally with fewer than 100 employees, like ATI, are the region’s bread and butter. While larger companies have moved to the area in the past 10 years, the firms founded locally have added, on average, about 40 percent more jobs than firms expanding or relocating here.
Small businesses have grown faster, too. The number of small firms with annual revenue over $500,000 whose revenue continued to grow by at least 20 percent for four consecutive years, nearly tripled in the last decade.
Many think of Danville as a bedroom community with little impact on the regional business scene, but this is a myth. Danville residents founded more businesses in 2003 than any city in the Tri-Valley.
“The strength of Danville is a surprise,” said Tom O’Malley, the Tri-Valley Business Council president. “The statistics are overwhelming. The idea is we can help (the small businesses).”
Bonnie Guttman, Danville economic development coordinator, agreed.
“I think the news for Danville in this report was very good,” said Guttman. “People think of us more as a bedroom community, but we are a ‘player’ in this region.”
The report points to a great number of businesses in Danville that are very small, with fewer than five employees, and home-based. But, according to Guttman, the concern is that once those smaller businesses start to grow, there is little commercial space available in Danville for expansion.
“That is why the regional aspect of this report is so important,” said Guttman, also a member of the Business Council. “We need to create connections so business can incubate in Danville and move to another Tri-Valley city as they grow.”
O’Malley said the report also shows the opportunity to partner with Lawrence Livermore National Laboratory for commercial efforts that could be a tremendous boon to local small entrepreneurs.
Danville entrepreneurs, in particular, are well positioned to take advantage of this new partnering effort. Many Danville residents are already on the cutting edge of innovation. In fact, Danville residents filed 22 percent of the total patents registered in the region. Couple this innovative know-how with the prospects of partnering with the technologists of the Livermore Lab, and Danville entrepreneurs may be in the business spotlight regularly in the future.
“The Labs in Livermore have the technology for starting points for entrepreneurs,” said O’Malley, “and the technology has applicability to business. There is an opportunity for these partnerships that could become the economic engine for the region.”
With the Lab’s new charter to commercialize its technology, the opportunity seems ripe for local businesses and the Business Council is ready to pave the way for small businesses.
While many local business leaders are excited by the future forecasted, others fear that clouds are looming on the horizon. The reason for their caution: Soaring housing costs are making it difficult for businesses to thrive.
An increasing number of talented employees are no longer able to afford houses in the area. Instead, those employees are buying more affordable homes in outlying areas and clogging freeways with traffic. The bottom line is the cost of living is becoming unbearable and threatens to impact the quality of life enjoyed by Tri-Valley residents.
The study validates these concerns. According to the report, unless there is greater regional cooperation to resolve some of the area’s cost of living and quality of life issues, the business climate could be drastically affected.
“Larger companies are impacted by traffic, housing and lack of a skilled work force,” said O’Malley, “but big companies have better ability to manage them. Big companies can come up with higher pay, carpools, even loans to employees that small companies can’t.”
ATI Engineering confirms that it is feeling the pinch these days. Desautels said it is difficult to hire young engineers in the area because of cost of living issues. The company opened satellite offices in Roseville and Costa Mesa to ease some of the hiring pain and remain close to construction, but that strategy hasn’t completely resolved the issue.
“Now, only our senior managers can afford to live here, not staff,” noted Desaultes.
Guttman said the city is aware of the problem, too. “The problem is endemic. It was one of the first problems (the Tri-Valley Business Council) identified as a key issue.”
While the area has not seen a major departure of business despite the increase in the cost of living, it remains to be seen how much more the business community can tolerate.
“Unless we do something as a region, businesses will leave. There is only so much they can take,” said O’Malley. He added, “People need to understand, regionally the economy will take a hit at some time unless some of these problems are solved.”
So, what does it mean if businesses can’t afford to be here? No one knows for sure, and O’Malley hopes we will never find out.
To address these concerns, the Business Council is beginning work on the opportunities and challenges uncovered in the study. Four teams will tackle the actions identified, which include promoting innovation and entrepreneurship, encouraging partnerships with the national laboratories, creating, attracting and retaining talent, and enriching the regional quality of life.
O’Malley said the teams are in the process of identifying priorities. Once the names of the local businesses are available, the teams will begin defining what those companies need to continue thriving in the Tri-Valley. And once those needs are known, the action teams will create plans to resolve the common barriers to success.
“A lot of time is spent attracting big companies to this region,” said O’Malley. “Maybe we need to start nurturing smaller companies.”
And with its breadth of smaller entrepreneurs, that may be good news for Danville businesses.
Protect all businesses
Founded in 1994, the Tri-Valley Business Council has the mission to represent the interests of the private sector on regional issues that impact the economic vitality of the Tri-Valley. President Tom O’Malley leads the organization along with Chairman of the Board Phil Wente of Wente Vineyards and Chief Financial Officer Weldon Moreland of the Accounting Offices of M. Weldon Moreland.
The organization, which has more than 80 businesses currently participating, is focused on bringing together business, government and the community. Its geographic reach includes Danville, Dublin, San Ramon, Pleasanton, Sunol and Livermore.
The Business Council protects the interest of businesses of all sizes regardless of sector. Its key projects include Vision 2010: the Golden Valley, the Tri-Valley Career Expo, the Economic Vitality Study, Crayons to Computers Warehouse, the Tri-Valley Science and Engineering Fair and more.
For additional information about the Tri-Valley Business Council, visit www.trivalley.org.
