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Every now and again I read the local papers and wonder: What the hell am I doing in the printing business? With all the
cash sloshing around Silicon Valley—a mere 30-minute drive from my factory—why aren't I part of the dot.com madness?
Certainly, the case can be made that my proximity to the valley does me no good. My rent and labor costs are about 20% higher than my
Southern California competitors, and high-tech companies make off with my best workers. Meanwhile, friends and neighbors who have cashed
in on the boom buzz around in Porsches buying big estates. I have one family member whose personal net worth, at age 40, is several times
larger than my entire company's, thanks to his recent initial public offering.
Yes, I'm living in the shadow of the valley, and it's easy to wallow in Silicon envy. I even sit back sometimes and fantasize about
putting together a company I've dubbed packaging.com. The mood usually passes quickly, though. I know I have no talent for the dot.com
world. I don't deeply understand the technology, and I have no path-breaking ideas to grab the attention of financiers on Palo Alto's Sand
Hill Road. And besides, I actually enjoy the brick-and-mortar world, the whirl of our machinery, the fact that we make things.
Still, the infernal valley poses thorny business problems quite apart from my emotional state. For instance, I compete hard for skilled
workers, especially maintenance mechanics and electricians. Last year, one of our electricians was offered 30% more money by a Sunnyvale
company that did high-tech manufacturing for Intel and Hewlett-Packard. I was floored. While talented, this young man had little formal
education and no background in computing. But we needed him, so we matched the offer and he stayed. However, I suspect at some point he'll
get a deal that will price him beyond our reach.
Our location just north of San Jose poses problems for holding on to our less marketable employees as well. The housing market in the
Bay Area is the hottest in the country, with prices up 20% annually over the past three years, thanks to the success of dot.com stock
option programs. Although our average wage of $13.60 an hour puts us in the top echelon among manufacturers nationally, it isn't enough to
buy a home around here. So, we've had to step in and help some employees with downpayments. And our company has joined two credit unions
to help workers finance home and car purchases.
Human resources problems aren't the only ones posed by Silicon Valley. Rents in Union City, where our factory is located, have jumped
15% over the last year as computer and Internet companies have swung into the area. Traffic jams through San Jose sometimes hold up
shipments to our customers in Salinas, 45 minutes south. And the local government often seems more inclined to woo clean dot.com startups
than help us through the prosaic permit process to expand our less sightly operations, like our new, 30,000-square-foot warehouse.
Living in the dot.com universe does have some benefits. I think the area's high-tech expectations have made us more likely to adopt
cutting-edge ideas. We were among the first in our business to have e-mail, a network, and to go online, all of which vastly improved our
customer service. No doubt this will give us a leg up as our industry, like most others, consolidates. I also think we're more innovative
in our approach to human resource issues because of the surrounding market. Hiring bonuses, housing loans, and tuition reimbursement have
become part of our arsenal, just as they are part of Apple's or Intel's. As a result, I think we have the most talented collection of
employees we've had in years.
It's also true that with a population of 5 million-plus, not everyone wants to, or can, work for the valley's high-tech companies. As
many manufacturers have moved out of the area to save money, they've left a well-trained pool of workers. As one of the last package
printers remaining in the area, that has left us in surprisingly good shape. Still, I can't stop wondering: Why can't an old-line
manufacturer like us cash in on the IPO craze? Hey, we're a packaging company. Maybe we just need a new wrapper.
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