The gains outweigh the losses

Sometimes, the bigger they are, the harder they fall. But often the bigger they are, the better they can hang on.

Even as Sonoma County slipped into recession last year, its largest companies continued to churn out jobs and increase sales, according to The Press Democrat's 17th annual survey of local employers.

The Top 100 companies created more than 700 new jobs last year, providing employment to nearly one of every five workers in the county while generating almost $1 billion in new revenue.

Strong performances by the county's top wine, technology and food companies more than made up for declines at firms that struggled to sell homes, cars and appliances to increasingly conservative consumers.

A stumbling housing market and soaring energy costs dented consumer confidence in 2007, sending sales of big-ticket items tumbling.

Nearly every car dealership saw sales sink, particularly those selling trucks and SUVs that have fallen out of favor with consumers as gas prices soared past $4 a gallon.

Home builders, many of whom expected 2007 would be a rebound year, endured another wrenching stretch of stagnant sales and delayed projects.

But for all those travails, the Top 100 companies still expanded in 2007, driven by growth in the county's signature industries.

Wine sales surged as consumers continue to savor the high-end wines for which Sonoma County is renowned. Medical device manufacturers grew, thanks to innovative lifesaving products designed by Santa Rosa-based engineers. And food companies processing everything from chicken to cheese saw revenues rise as food prices increased at a runaway pace.

While the reasons for their success are as diverse as the products they sell, one common theme stands out -- the largest companies on the list saw some of the largest revenue gains of 2007.

The county's 10 biggest companies accounted for $753 million in increased revenue, fully 80 percent of the $952 million in new revenue generated by the entire Top 100.

"Obviously, the big companies provide a degree of stability because they are diversified by their nature," said Ben Stone, executive director of the county Economic Development Board.

The biggest winners

One of the largest revenue increases was seen by medical device maker Medtronic. The Santa Rosa-based vascular division generated $195 million in new sales last year for the Minneapolis-based company, a 16 percent increase.

"Diversification of product line and geographic reach have really insulated us from the pain that some other companies have felt," said Joe McGrath, spokesman for Medtronic, which employs 1,200 people in Sonoma County.

Much of that success stems from the U.S. launch of the company's newest drug-coated stent, Endeavor. Strong sales of the company's other devices also contributed, particularly its overseas sales, McGrath said.

Like other local manufacturers that sell their products abroad, the weak dollar helped boost Medtronic's bottom line when its European sales were converted into greenbacks.

"We get the benefit of foreign-currency translation," McGrath said.

Another major advancer on the list, Jackson Family Wines, also benefited from strong sales overseas. A weaker dollar means the price of a bottle of Kendall-Jackson chardonnay in London looks pretty good compared with European rivals.

The Santa Rosa-based wine group, owned by Kendall-Jackson winery founder Jess Jackson and his family, poured an extra $135 million into the company's coffers. Revenue growth was driven by higher prices, said spokesman George Rose.

Following a $1 increase in the bottle price of its Vintner's Reserve tier of wines in 2005, the company increased prices $1 again last year, Rose said. The 3 million-case brand now boasts an average suggested retail price of $14 a bottle, Rose said.

Winery expands

While the county's biggest wine company may be leading the charge, it's not the only one surging.

On a percentage basis, Rodney Strong Vineyards had the best year of any winery on the list.

The winery, owned by Tom Klein and his family, saw sales jump 35 percent last year to $92 million. By comparison, the county's largest wineries increased sales 12 percent, on average.

The results sent Rodney Strong Vineyards surging 15 places up the list to No. 52.

"Tom made a decision that Rodney Strong really had to take a leadership role in Sonoma County, and we're seeing the results of that," said Carmen Castaldi, senior vice president of sales for the Healdsburg-based operation.

Price increases, more salespeople, new brands, higher tasting room sales and last year's purchase of Russian River pinot noir specialist Davis Bynum winery all played important roles in the company's improved fortunes.

Now the challenge is to keep up that kind of growth, which will be virtually impossible this year, Castaldi said. The first several months of 2008 were tough, as consumers, buffeted by bad news, adopted a "bunker mentality," he said.

But business has picked up some since, perhaps because shoppers see wine as an affordable luxury.

"Wine is great because for $20 you can feel like a millionaire," Castaldi said.

Food companies grow

Just as winery revenues are up on price increases, most companies connected to food saw their revenues rise. Wholesale food distributor Ritz Food Service, chicken farm Petaluma Poultry Processors and dairy Clover Stornetta Farms all saw healthy growth of 10 percent to 20 percent.

Grocery stores, too, saw revenues rise as food prices increased 6.8 percent in 2007.

Some, like Whole Foods and Oliver's Markets, grew further by opening new stores, in Sonoma and Santa Rosa, respectively.

The combination of stagnant wages and rising food and gas prices has taken a toll on the previously impervious consumer.

In the last recession, which followed the Sept. 11, 2001, terrorist attacks and the tech bust, businesses pulled back on capital spending. But consumers charged ahead, pushing up housing prices while showing little fear of adding new debt.

Now the roles are reversed. Business balance sheets are strong, but consumers no longer feel flush following the evaporation of home equity cash, Stone said.

He likened the county to a chariot being pulled by two horses, one of which sometimes gets tired while the other picks up the burden.

"Looking at the economy, it's more complex than ever," Stone said. "There are some parts in recession, but other parts are doing very well."

Home builders shrink

Home builders are one sector of the economy clearly suffering. Revenues at the county's largest home builder, Christopherson Homes, were chopped in half as the company dramatically reduced the pace of construction around the state.

The company, which generated $178 million in revenues in 2006, saw its sales fall to $89 million last year. The drop was accompanied by deep staff cuts.

"You don't want to let them go, but the market just kept changing and not in the direction that we would hope for," said owner Brenda Christopherson.

Despite predictions that the housing market is unlikely to turn around until next year, Christopherson is moving forward with a new phase of its Ragle Ranch subdivision near the Sonoma County Fairgrounds in Santa Rosa. The Chaparral project will include 138 homes selling in the low $700,000s.

"You've got to look forward, or you're going nowhere," Christopherson said.

Other parts of the local economy are untouched by the housing slump.

Tech firms, for example, are enjoying surging demand from telecommunications companies that continue to invest in networks to deliver improved services, Stone said.

AT&T expanded its work force and revenues in Sonoma County, building a new network in Santa Rosa, where it is starting to compete with Comcast Corp. for TV subscribers.

The diversity of the Sonoma County economy helps to stabilize the job market, keeping people employed and preventing the downturn in consumer spending from getting too steep, Stone said.

Overall, the Top 100 companies created 765 additional jobs last year, a 2.2 percent increase. This fact is further evidence that while there are pain and job losses in several sectors, the county economy is resilient.

"Quietly at many companies, especially those that have benefited from the international economy, job creation is going on," Stone said.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.

mccallum@pressdemocrat.com.

TOP 100 COMPANIES

Ranking the top for-profit and nonprofit companies in Sonoma County by total revenue, employees between 2007 and 2008 / E2

SURVEYING SECTORS

Ten industry sectors in the county comprise companies employing more than 36,000, generating more than $16.7 billion in revenues E3

ON THE WEB

A searchable database of

the Top 100 companies in

Sonoma County is available at www.pressdemocrat.com