MIRACLE IN THE VALLEY OWNERS BUILD EVEN-BETTER BUSINESS AFTER DISASTER.

Byline: Brent Hopkins Staff Writer

When workers arrived at MS Aerospace Inc.'s industrial building on Foothill Boulevard in Sylmar on Jan. 17, 1994, they found its roof lay in sections, strewn across the shop's punch presses, lathes and grinders - obscuring its wares: high-tech bolts used in jet engines.

``We were the only building taken out on our block,'' recalled Jim Cole, the company's vice president and general manager. ``We were none too pleased, because we'd only been in business for 18 months at the time, so it was a potentially mortal blow. But we put it in our minds that we wouldn't let this defeat us.''

Executives frantically sought a place to relocate, eventually finding a new space near Burbank's airport. Strapped for cash as a fledgling company and reeling from the sudden interruption, they sought out the Valley Economic Development Center, whose workers lined up $500,000 in loans from the city of Burbank and Los Angeles County government.

The manufacturer wasn't alone in turning to the nonprofit business-assistance group for help. In the three years after the quake, the VEDC helped owners of 10,000 businesses through counseling, debt restructuring and loan packages attracting more than $100 million in disaster loans from the Small Business Administration. For businesses unable to qualify for the SBA loans, the VEDC created a revolving loan fund, which has since doled out $13 million to companies willing to restructure.

``They were freaking out,'' said Roberto Barragan, now president of the Van Nuys-based VEDC. ``If you're a homeowner you can stay in a hotel until FEMA (the Federal Emergency Management Agency) shows up. If you're in a business and your building's lying in ruins, you're losing money from Day One.''

Post-quake, California Electrofab's panicked aerospace customers put their orders on hold, delivering what the company's now-owner described as a knockout punch. The business folded, but its then-Vice President Miguel De Leon bought its equipment and retrained the workers to handle new fields with $305,000 in loans from VEDC. Today, the company has annual sales of $2 million, up from $325,000 in 1994.

``We went into a crash course of diversification, so we had to cover medical and entertainment, not just defense,'' said De Leon, who rechristened the company De Leon Enterprises after purchasing it in July of 1994. ``After that last 100 grand, things got a lot better.''

With city approval of its disaster recovery plan, VEDC hired 15 workers within days to begin conducting workshops to help guide businesses through the arcane federal loan process. At the same time, VEDC eyes were on the future, looking for a plan that would not only rebuild the Valley, but transform it from the wounded manufacturing hub it had become.

Roya Saberzadeh, owner of Rochie's Greek Row, a Northridge retailer specializing in apparel and gifts for fraternities and sororities, got some immediate help. She received three loans totaling $180,000, and though she's still paying them off, doubts she could have survived in business without them.

``Normally, doing loan paperwork is hard enough,'' said Saberzadeh. ``Combine that with the fact I'd just lost my business and my house - everything, I didn't know where to start. If I'd had to do it myself, I couldn't have done it.''

Business leaders were only a few steps ahead of her, operating on instinct and luck to quickly corral millions of dollars in aid money.

``Most of our offices were devastated,'' remembered Bob Scott, who at the time served as president of the United Chambers of Commerce of the San Fernando Valley. ``We were sitting at our home offices, rolling with the aftershocks and trying to figure how to save the world.''

Though the groups were unable to save everyone - Barragan estimates 10 percent of affected businesses never reopened after the quake - they were able to bring about a dramatic amount of change, starting only days after the quake. In the first month, UCC and VEDC conducted more than 50 workshops to get commerce flowing once again - the precursor to long-term change for the area.

``That was the silver lining to this cloud,'' said Jonathan Goldhill, who was then VEDC's vice president. ``There were a lot of outside dollars that came into focus on the long-term viability of this region.''

At the same time they labored to get that loan money into the hands of business, business leaders labored to design a plan to help the area improve itself once the immediate crisis had passed. At the time, the San Fernando Valley was still struggling to right itself after the collapse of aerospace, so the business leaders were anxious to find a way to attract new industries.

This led to a 1995 study which envisioned an organization dedicated to marketing and aiding the Valley, which spawned the Economic Alliance of the San Fernando Valley. Initially funded by prominent local businesses, including Galpin Ford, The Gas Co. and the Daily News, the group serves as an advocate for local entrepreneurs and attempts to attract new industries to the area. In addition, it lobbies for tax reform and community planning and played an instrumental role in converting the abandoned General Motors facility into The Plant shopping complex.

Business leaders say the alliance never would have been created without the earthquake to serve as a catalyst. Similarly, for businesses able to move on, the catastrophe proved to have hidden benefits. Within months of their relocation to Burbank, workers at MS Aerospace began hitting new productivity goals double what they had in their old facility. They've since moved back to Sylmar, now posting sales of nearly $20 million a year, almost 10 times what they did before Jan. 17, 1994.

``Ironically, it was our biggest spur to growth,'' Cole said. ``I can't say it was a good thing; the aftershocks were nightmarish. I never want to go through it again, but it turned out to be a blessing in disguise.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com

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Photo:

(color) Hugo Torres operates a punch press at MS Aerospace Inc., where workers dramatically increased productivity in a new facility after the Northridge Earthquake destroyed their old one.

John McCoy/Staff Photographer