The Article below appeared in the Business Section of the SF Chronicle on September 28, 2008.

John Nelson, Chief Manufacturing Officer of Manex client American Licorice (makers of Red Vines) and Manex CEO Brent Meyers were interviewed.

Turning to Licorice During Hard Times
by Tom Abate, San Francisco Chronicle

In a Union City factory that twists out 150,000 pounds of Red Vines licorice a day, plant manager John Nelson is betting that $10 million in capital investments, made when money flowed freely, will help his 240-person plant prosper through tough times.

"We won't call it recession-proof, but licorice has always held its own. It's kind of a comfort food," Nelson said. Red Vines is a product of the American Licorice Co., which invested in labor-saving machinery that trimmed the workforce but kept the plant in the Bay Area.

But the nation's deepening financial crisis could prevent other Bay Area manufacturers from borrowing money to tool up and remain competitive, said Brent Meyers of Corporation for Manufacturing Excellence, a San Ramon consulting firm.

"Lines of credit are being frozen or reduced," he said. "Or if they are new requests, may not be approved."

Starting about a year ago, Meyers said, bankers clamped down on credit for manufacturers related to the housing industry. In recent months, the squeeze has spread to all but a few sectors - food makers and biomedical producers being two fields still in favor.

Despite a long and lamentable exodus of Bay Area factories to other states or nations, Meyers said there are still 2,200 manufacturing firms in greater San Jose, the East Bay and the San Francisco metropolitan area. More than 60 percent are factories with fewer than 100 employees, and it is these smaller firms that have the toughest time getting loans, he said.

As a larger manufacturer in the favored food sector, the Red Vines plant expects to weather this crisis. But Nelson said the critical decisions that saved the factory were made several years ago, with the decision to make labor-saving capital improvements - rather than move the plant out of Union City.

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