Mike Maendl’s workers at ProtoFab in Petaluma use milling machines to shape intricately marked spinal implants and small automotive components so identical that their dimensions vary less than the width of a human hair.
Alain, Renée and Marc Pisan’s workers at Chloe’s French Cafe in Santa Rosa create delectable Napoleons, pear almond tarts and other pastries that attract cafe customers and catering clients.
Their products differ, but these business owners have something in common: They run growing enterprises at a time when the Sonoma County economy is gaining national attention for its signs of strength.
In the last three months, the county has been recognized for strong growth in personal income and jobs and for the economic contributions of its small businesses.
*ranked third among 106 metro areas for small business vitality by the American Cities Business Journal, a media company that owns 40 business publications around the U.S.
*ranked fifth among metro areas for personal income growth from 2012-2015 by Governing.com, a publication owned by media and research company e.Republic.
It’s rare for this many spotlights at one time to shine favorably on the county’s economic performance.
“In my time here it’s unprecedented,” said Ben Stone, executive director of the Sonoma County Economic Development Board. “I’ve never seen such a cavalcade of accolades.”
Economists who study the county said there is substance behind the rankings.
“Sonoma County’s had a great run here in the last five years,” said Sonoma State economics professor Robert Eyler. And the economic outlook should remain good through at least 2018, because the county typically doesn’t slip into recession until a year or more after the state or nation suffers a downturn.
Together the recent reports offer a portrait of a county that is outpacing the nation in a number of key economic measures.
From the Milken Institute report, the county ranked:
*first in one-year economic growth among large metros for beverage and tobacco product manufacturing, a sign of the strength of the local wine industry.
*10th for the rate of job growth from 2010-2015.
*21st for tech diversity.
The last number measures how many different tech sectors in a community have higher rates of employment compared to the nation. Out of a possible 19 sectors, the county had eight above the national rate, said Minoli Ratnatunga, an economist and associate director of research at the Milken Institute. In contrast, the San Jose/Sunnyvale metro area, which ranked as the nation’s best performing community, had 14.
The Bay Area’s tech strength has been a boon to ProtoFab, a precision-machined component company that came to Petaluma in 2004.
In a dozen years it grew to 27 workers from three, said Maendl, the founder and president. And from 2011 until the end of this year it is investing roughly $6 million in equipment. That includes a new Swiss-made, five-axis milling machine that can automatically switch among 300 different tools and can make components so similar that their dimensions vary no more than 4 microns, or less than 2 ten-thousandths of an inch.
ProtoFab specializes in making parts for companies in electronic tests and measurement like Santa Rosa’s Keysight Technologies, as well as those in the medical device and automotive sectors. Such specialty machining companies play key roles in tech manufacturing today, said Dick Herman, president of 101 MFG, a Petaluma-based alliance of manufacturing executives.
Herman called it noteworthy that ProtoFab has made such a significant investment in new equipment and workers.
“You don’t do that unless you’re positive about the outlook,” he said.
Maendl said the company saw business pick up markedly in 2011 and it hasn’t let up. Moreover, a new contract from an automaker he can’t name is causing him to make another significant expansion.
“This company is going to easily double gross revenue over the next year and a half,” he said.
For the county, another sign of strength has been strong personal income growth. But data from the U.S. Bureau of Economic Analysis suggests the marked increase came a few years after the Great Recession officially ended in June 2009.
Sonoma’s growth rate lagged the national rate from 2010 to 2012, then significantly surpassed it. When adjusted for inflation, the county’s per capita personal income increased 11.9 percent from 2012 to 2015, the most recent years available, to $53,520, according to governing.com. In comparison, per capita personal income for the U.S. grew 5.3 percent to $49,827.
Jesse Rogers, an associate economist for Moody’s Analytics based in West Chester, Penn., examined the county data seeking possible reasons for the personal income growth.
“Some of it seems to be that there’s a bit of an improving job mix in the form of the food and beverage manufacturing industry,” he said.
Rogers said he was surprised to learn the impact of such jobs. According to data from the Bureau of Labor Statistics, he said, the typical position in the county’s food production sector “pays more than twice the average job in the hospitality industry.”
Rogers made another noteworthy finding when looking over how personal income growth in the county was affected by wages, proprietors’ income from small businesses and investment income from dividends, interest and rent.
According to his calculations for 2015, the effect on total personal income growth from investments was about the same for Sonoma County and for the nation. Meanwhile, rising wages contributed more to the rate of total income growth for the nation than the county.
But the reverse was true for income from small businesses. Proprietors’ income in 2015 contributed to 14.2 percent of the county’s total personal income growth, compared to 7.7 percent for the nation. That means the contribution was nearly twice as important for the county as for the nation, he said.
Rogers’ last finding fits the picture of the local small business sector presented by the American Cities Business Journals.
In the county, 15.2 percent of the workers are self-employed, the highest rate among the 106 metro areas surveyed, G. Scott Thomas, an author of the report, said in an email.
“And nowhere else do small businesses generate a larger share of local jobs … or local pay,” Thomas wrote. Nearly 49 percent of the county’s jobs belong to small businesses, defined as those with fewer than 100 workers.
Among the county’s growing small businesses is Chloe’s French Cafe, an eatery and catering business located in a sprawling, three-story medical office building on Airway Drive near Kohl’s department store in northwest Santa Rosa.
Alain Pisan and his wife, Renée, acknowledged that a decade ago their friends initially thought the former title company building was a most unusual place for launching a catering business. A short time later, Sutter Health moved in and the Pisans, along with Alain’s brother Marc, opened a ground-floor cafe in what formerly had been the building’s cafeteria.
“We saw the potential,” said Alain Pisan. He explained he had grown up in a similar family business in France and with his wife and brother had operated an eatery and catering business for 15 years outside Cleveland, Ohio.
Chloe’s soon got good reviews in print and online. The cafe, which is open for breakfast and lunch Monday through Friday, now accounts for about 70 percent of revenues, with the remaining 30 percent from catering.
The Pisans are preparing later this year to take their next step and move their catering business to a new location on Old Redwood Highway in Windsor. The extra space will allow them to expand from business box lunches and sandwich trays to hot foods for casual catered dinners. And they will have room on site for an event center, where they can host banquets and other gatherings.
“It will help us a lot,” said Renée Pisan.
For all the talk of economic strength for the county, a few observers noted the good news is tempered somewhat by a lack of affordable housing here.
Sonoma County home prices and average rents remain less than for most of the Bay Area, but the county has long had a reputation as a place where it takes a large amount of available income to secure a place to live. Last summer, RealtyTrac named the county the 10th least affordable county in the nation for home purchases.
Eyler, the Sonoma State economist, said housing “probably is the biggest problem for the next three or four years.”