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Saturday, Jul 2, 2022

Furniture Maker Brings Cost Savings to the Table

San Fernando outdoor furniture manufacturer Caluco isn’t exactly sunbathing in today’s economic climate as much as trying to avoid being burned by the real estate bust.

For the first five years of its six-year existence, the company has grown revenue by 45 percent annually, and it now has 30 employees, up from two at the start. Recently, though, the company laid off 12 workers and had to cut its wholesale pricing, according to founder Aaron Gochman.

Nevertheless, Gochman has an optimistic take on the situation.

“The outdoor furniture market is a growth industry and with great weather in the Southwest year-round, where our strongest market is, we know it will come back and can keep afloat until then,” he said.

Indeed, with Caluco’s upscale but less expensive furniture catching on strongly, the company hopes it can grow another 10 percent this year. Its products are sold at upscale furniture retailers, but its basic set of table and chairs go for $2,500, more than half off some competing brands. That’s a formula that works in a recessionary environment, where ostentation is out.

“I’ve had double the orders for Caluco’s products this year compared to the last,” said Ron Safran, owner of Victory Furniture, a West L.A.-based retailer of outdoor furniture with four Southern California locations. “I think people appreciate the quality you get for a lower price, and it’s been their best year at my store in the five years I’ve carried them.”

A growing L.A. furniture company is an anomaly in an industry that was nearly wiped out by tighter air quality regulations and cheaper Asian imports in the past two decades.

Caluco’s model basically follows the path that many other furniture makers in the United States have taken to keep costs down. The company designs its models in Los Angeles, but most products are made in Indonesia, China and Vietnam.

However, the company last year started manufacturing its own custom cushions at its San Fernando facility, which can turn around orders in two weeks or less, from more than 100 kinds of fade-proof fabrics from Sunbrella, a leading fabric maker.

Gochman also said he plans on opening a distribution facility in Tennessee in the next two years to handle growing East Cost demand.

Switchblade Upgrade

Unmanned aircraft maker AeroVironment Inc.’s development of a new remote-controlled flyer is generating buzz among analysts as a potentially lucrative military product.

Analyst Michael F. Ciarmoli of Boenning & Scattergood said in a note to clients that he believes the company’s Switchblade flyer will soon become a Department of Defense program, which could lead to an initial boost of $50 million to $100 million in government business.

The Switchblade is a small, remote-controlled flyer that launches out of a tube that fits into a backpack. It can glide and propel itself while providing real-time global-positioning satellite coordinates. It also is armed with an explosive that can detonate when reaching an enemy target.

“There could be some significant demand,” Ciarmoli said.

Steve Gitlin, AeroVironment’s spokesman, declined to comment specifically on Ciarmoli’s statement, but did say the Switchblade will fill a new niche of military needs increasingly leaning on remote-controlled aircraft.

“The Switchblade is meant to help in situations in which the military wants to inflict the least damage, and help the soldier on the ground being attacked by a sniper,” Gitlin said. “This flyer launches automatically unlike the other drones we make.”

Ciarmoli upgraded the company’s stock from “neutral” to “outperform” in his Oct. 19 note, causing the stock to briefly trade above $30 per share. Since then, it has settled back down to close Oct. 29 at $27.56. Ciarmoli has a $33 price target on the Nasdaq issue.

Youth Brigade

After nearly a decade of volunteering with Hillsides Youth Moving On, a transitional housing program for former foster kids in Pasadena, Mark Mertens recognized he could use his business to further help the youth.

So Mertens, the chief executive of athletic apparel maker A4, recently partnered with Hillsides on a job training program at A4’s manufacturing and distribution facility in Vernon.

The first class has five trainees whose crash course in business will be a project requiring them to sort, pack and deliver about 36,000 garments that A4 is donating to four local charities over the next few months.

“The idea is to show how these students, who come from situations where they didn’t grow up with a whole lot, still learning they have skills and talents they can use in helping someone else,” Mertens said. “It’s important that they have job skills so they can compete in this market, too.”

The trainees learn how to use Microsoft Excel to tally and track the inventory, help research which charities are most in need of the apparel, operate forklifts, sort the clothes and arrange for delivery. Their first deliveries were to the Violence Intervention Program and Walden House in Los Angeles, and Union Station and Hillsides in Pasadena.

Staff reporter Francisco Vara-Orta can be reached at fvara-orta@labusinessjournal.com or (323) 549-5225, ext. 241.

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