Only about 30 percent of family businesses survive into the second generation, 12 percent to the third and just 3 percent to the fourth generation and beyond.
But while keeping a family business thriving can be especially difficult in California due to the state’s taxes and regulations, a number of companies that are members of the Family Business Association of California have beaten the odds and are celebrating milestone anniversaries this year.
“These companies deserve congratulations for standing the test of time despite all of the challenges family businesses face,” said FBA Executive Director Robert Rivinius.
“Family businesses are the bedrock of our communities and the economy. In fact, our state’s 1.4 million family businesses employ 7 million people and tend to pay their employees better, train them better and provide more generous benefits than nonfamily companies. We hope examples like these help persuade state officials to encourage and incentivize family businesses instead of making it harder for them to continue on.”
The companies are:
Teichert Inc., Sacramento, founded in 1887 (130 years). The company was founded by Adolph Teichert, who immigrated from Germany in 1866 and whose early work can still be seen in Golden Gate Park and near the Mark Hopkins Hotel in San Francisco and in the sidewalks around the State Capitol. The business has grown into a diverse mix of businesses, most notably Teichert Construction and Teichert Materials. Judson Riggs, the fourth-generation member of the family to run the business, serves as president, CEO and chairman of the board. http://www.teichert.com/teichert-way/about-us/our-history/
C.F. Koehnen & Sons, Glenn, 1907 (110 years). The company was founded by Carl Fredrick Koehnen as a beekeeping operation and over the years has grown to be one of the largest honey bee and queen producers in the world. Koehnen also grows, maintains and harvests almonds and walnuts in Glenn and Butte counties. Third-generation Mike Koehnen is the company president, while his cousins Kamron and Kalin Koehnen manage operations. https://www.koehnen.com/history
Nor-Cal Beverage Co., West Sacramento, 1937 (80 years). Nor-Cal is the largest independent co-packer of teas, ades, chilled juice, waters and energy drinks west of the Mississippi and also produces its own line of Go Girl Energy Drinks. The company was founded by Roy Deary as the Hires Root Beer Bottling Company but sold off its soft drink franchises in 2007 because of changing market trends and soon after sold its beer distributorship. Third-generation Shannon Deary-Bell was named president and CEO in 2010. http://www.ncbev.com/ncbev/assets/File/Our_History_full_story.pdf
Rogers Jewelry, Modesto, 1937 (80 years). The company was founded by Harry Marks, a young jewelry salesman, and his partner, Dr. Robert Moon. Two third-generation family members are now in charge. Robert Marks is president and Bart is vice president and CEO of the company’s Nevada operations. Rogers is best known for its Superstores, which have more than four times the square footage of average mall jewelry stores. https://www.thinkrogers.com/about/
The Fruit Bowl, Stockton, 1947 (70 years). This San Joaquin County landmark began accidentally over the Fourth of July weekend when Frank and Ina Lucchetti had a bumper crop of freestone peaches but stores in San Francisco didn’t want to buy them because they were closing for the holiday. So on the advice of a fieldman they placed a couple of signs on Waterloo Road and set up a table to sell produce. A parade of cars stopped as people drove back from the Sierra and the stand has been operating ever since. Today, second-generation Ralph and his wife, Denene, run the farm and The Fruit Bowl. http://www.thefruitbowl.com/about-us/
Kenco Engineering, Roseville, 1957 (60 years). Kenco manufactures longer-wearing parts for asphalt plants and construction machinery designed to reduce unnecessary equipment downtime. The company was founded by Ken Lutz and his wife, Dorothy, as a welding supply house before moving into manufacturing parts in the 1960s. Dave Lutz is the second-generation president and brother Don is vice president, while third-generation son-in-law Brian Handshoe is VP for Operations. https://www.kencoengineering.com/general/aboutus.php
“Family businesses are the bedrock of our communities and the economy. In fact, our state’s 1.4 million family businesses employ 7 million people and tend to pay their employees better, train them better and provide more generous benefits than nonfamily companies,” Rivinius said.
“For example, legislation was introduced this year that would create a new California estate tax to replace the federal tax being considered for elimination. Estate taxes are one of the biggest obstacles in allowing businesses to remain family-owned from one generation to the next. Proposals like this are absolutely the wrong approach and would make it harder for family businesses like these to survive.”
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About the Family Business Association of California (FBA): Founded in 2012, the Family Business Association of California is the only organization working exclusively at the Capitol to educate lawmakers and regulators about the importance of family businesses to the state’s economy and to their communities. For more information, visit www.myfba.org.
Since the beginning of the 2016 presidential election cycle, President Trump has repeatedly argued that trade deficits with other nations are indicative of unfair trade. His contention is that if we just negotiate better trade deals, deficits would disappear, and economic growth and employment would improve. Regrettably, this view is simplistic; usually deeper economic forces are at work, making trade deficit reduction more difficult. That said, pushing nations with chronically large trade surpluses to reduce them would be good because large trade surpluses are economically destabilizing.
A trade deficit is always the result of a nation consuming more than it produces; that gap, or savings deficit, is what produces a trade deficit. By contrast, a trade surplus means a nation saves money by consuming less than it produces. As a result, while protectionism can alter those with whom we run trade deficits and surpluses, it cannot alter the size of our overall trade deficit.
Think about it: you run a trade surplus with your employer, but a trade deficit with Costco, Target, and your mortgage company. If Target is unfair to you, you can reduce your trade deficit there by buying less, but you would likely increase your deficit at Walmart. The only way to reduce your deficit with retailers is to buy less stuff, meaning that you save more!
A country in recession is likely to run a trade surplus as the population pulls back on spending, allowing exports to rise, which is equivalent to saving more. Conversely, a nation enjoying an economic boom would normally run a deficit because domestic spending would be very high, causing exports to decline and savings to fall. In the United States, we run chronic trade deficits because we consistently consume more than we produce, but the size of the deficit varies depending on domestic economic conditions. To rid ourselves of our annual trade deficits would require reduced consumption, which means consistently saving more, and absent substantial tax reform, that is unlikely.
This is how trade normally works. However, some countries with strong economies run chronic trade surpluses, which requires cheating. Normally, such a country would see its currency rise, pushing down exports as they become costlier in foreign countries. However, between 2000 and 2013, China spent trillions of dollars artificially depressing its currency. That reduced imports, boosted exports, forced savings to rise, and resulted in large trade surpluses. This financial repression should be fought and here’s how: if a nation deliberately intervenes to depress its currency, the U.S. should intervene and strengthen that nation’s currency by selling dollars and buying the currency of the offending nation with the proceeds. Once offenders know what we will do, they will likely stop, preventing nations from running chronic surpluses. Instead, those nations will probably increase their consumption and save less, and, consequently, see their trade surplus wither. In the process, other nations will export more and see employment gains.
Trade surpluses that result from cheating not only deprive workers in other nations of employment in export industries, but also destabilize the global economy. By manipulating their currency, the Chinese destroyed jobs here in the U.S. (and Europe) and weakened our economy. As a result, when the Great Recession hit, it was worse than it would otherwise have been, and the recovery was weaker because we could not increase exports as much as we should have been able to.
In short, trade deficits normally result from too little savings. Because the amount saved by an economy changes over the business cycle, deficits and surpluses usually wax and wane and are thus reasonably self-correcting. It is only when a nation cheats and runs a chronic surplus that we should be alarmed, and in those cases, we should fight back. Doing so will discourage cheating and make the global economy more resilient.
Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.net. His daily 70-word economics and policy blog can be seen at www.econ70.com. You can subscribe and have the blog delivered directly to your email by visiting the website or by texting the word “BOWTIE” to 22828.
By Dennis Albiani and Faith Lane
California Advocates
On July 21st, the Legislature adjourned for a month- long summer recess. When lawmakers return in late August, they will have four weeks of session remaining this year to act on the hundreds of bills still pending — plenty of time to play ball.
There have been a number of key victories for the Family Business Association and the business community so far this year. Perhaps the top two wins were putting on hold SB 762 (Wiener), the proposed death tax bill, and halting SB 562 (Lara and Atkins), the single-payer legislation that would have cost employers an estimated additional 15 percent in payroll taxes to pay for the $400 billion per year legislation.
A united employer coalition also stifled attempts to impose millions of dollars in significant tax increases on California employers. One example was SB 567 (Lara), which would have taken away several advantages for family businesses to transfer property to heirs and other family members. Like SB 762, the bill is on hold but still alive.
Even in light of these successful hits, there are plenty of wild pitches. Legislation attacking California employers continues to advance towards Governor Brown’s desk. Businesses have been the middleman this year in political fights between the Legislature and the Trump administration. AB 450 (Chiu) and SB 49 (De León) are two key examples that demonstrate California’s efforts to place employers in a no-win situation between complying with federal and/or state laws.
AB 450 would prohibit employers from cooperating with federal immigration enforcement unless there is a valid warrant. Additionally, it has numerous posting and notification requirements. If AB 450 is enacted, employers that are otherwise fully compliant with state and federal laws could be charged up to $10,000 for complying with federal authorities if any immigration enforcement occurs at the workplace. Likewise, under SB 49 businesses would be subject to private rights of action and writs of mandate arising out of new, more- stringent California standards and requirements that are in reaction to any loosening of environmental regulations by the U.S. Environmental Protection Agency and other federal agencies.
Another bill to follow closely in the final weeks is SB 63 (Jackson), which would create the New Parent Leave Act. This would mandate up to 12 weeks of job-protected maternity and paternity leave for workers who work for companies with as few as 20 employees. This benefit would be on top of leave that California already requires, for a total of seven months of protected leave. Although the additional mandated leave is unpaid, it is not without significant costs to employers who are burdened with costs such as overtime pay for other employees covering the workload, or costs associated with temporary workers, in addition to maintaining medical benefits for the employee on leave.
FBA will remain at the forefront of efforts to defend against hostile, unfavorable legislation and regulations, and will continue to lead in advocacy for the creation of jobs and success of family-owned business in California. Play Ball!
