SAN DIEGO BUSINESS JOURNAL THE COMMUNITY OF B U S I N E S S TM
Medical AL Puts Tangy Taste in Supplement Biz DJO Takes New Tack
DIRECT SALES: Health direct seller of health products and a coffee In Arthritis Relief
Appeal Drives Sales of 400 While the coffee side called CLR Roasters HEALTH CARE: Novel Material
is going gangbusters, it’s the Youngevity side
Products; a Foray Into Coffee that’s the driving force behind the company’s Makes OA Nano Light and Strong
rapid run-up in revenue, Wallach said.
“If there’s a silver lining in the economic
Steve Wallach says a big reason behind downturn, it’s that people are taking better DJO Global is adding to its long line of
his company’s explosive growth is the stag- care of themselves,” he said. nonsurgical orthopedic rehabilitation devices
nant economy. Eating healthier and taking nutritional with the introduction of the OA Nano, touted
Wallach heads up AL International, the supplements have gone mainstream, he by the Vista-based company as the world’s
Chula Vista parent firm to Youngevity, a AL page 31 lightest off-loading knee
brace for mild to moderate
Page 3 knee osteoarthritis.
Brian Moore, direc-
tor of sales for DJO
Global, said the
Kudos/Giving product has ter-
rific sales potential
because of the preva-
lence of osteoarthritis,
especially among aging
and obese populations.
DJO cites research
saying nearly three out
of four Americans over
age 40 experienced knee
pain in the last year.
Weighing 14.2 ounces,
the OA Nano is designed to
reduce the pain associated with
osteoarthritis and increase the stability of
DJO page 30
GOT A MATCH? Food Court Success Has
Chain Hungry for More
ECONOMY: Nearsourcing Brings Together Local Businesses
DINING: Hot Dog on a Stick
Number of manufacturers and
Survey the factory floor at Rancho suppliers in the area who are Looks to Expand With New Food
Bernardo’s D&K Engineering Inc. and you available for outsourcing jobs.
will see kiosks, kiosks and more kiosks.
They are for a range of customers, includ- and manufacturing of its product without At age 66, Carlsbad-based Hot Dog on a
ing San Diego-based ecoATM, which is even leaving the city limits. A third area Stick is looking to learn some new tricks, on
rolling out a network of kiosks across the company DD Studio of Carlsbad did ad- the theory that its biggest fans don’t just crave
United States. ditional design work on ecoATM’s kiosk. corn dogs and fresh-squeezed lemonade at
The scene goes against conventional It’s an example of a trend that some call county fairs and mall food courts.
wisdom. Final assembly isn’t taking place in “nearsourcing.” They might also like
China. In fact, a San Diego company is us- breakfast on a stick, or
ing a second company for the development Nearsourcing page 30
the chance to pick up their
treats without getting out
of their cars. With that in
New Enzyme Could Be a Rock Star mind, the company recent-
ly chose a Utah location
to open its first restaurant
BIOTECH: Its Heat Tolerance enzyme for nonfood applications.
The enzyme may prove useful in hydraulic
with a drive-through in
addition to a walk-up window.
Makes It Promising for Fracking fracturing — the emerging, next generation That store is also the first, among its more
process of oil extraction. than 100 locations in 12 states, to serve up
Verenium is an industrial biotechnology portable breakfast offerings like pancake-bat-
Locally based Verenium Corp. expects company focused on the development and tered sausage with dipping syrup, French toast
to introduce an addition to its line of eight commercialization of high-performance sticks and fresh orange juice.
products later this year now that the Environ- enzymes. Its lead product, Phyzyme phytase Dan Smith, president and CEO of the entity
mental Protection Agency has given regula- XP, is a poultry feed additive that replaces formally known as HDOS Enterprises, said
tory authorization to market its new cellulase Verenium page 32 Hot Dog page 32
Nearsourcing: Appearances Can Be Deceiving
On paper, manufacturing in the Far
from page 1 East may cost less money. But there are
Nearsourcing connects companies in issues such as communications problems,
the same or nearby regions in order to markedly different time zones and the
find needed resources, services or manu- amount of time products spend on the
facturing. The companies benefit from water. “Those are hard to put on your
the convenience of operating in a known spreadsheet,” said D&K’s Dennis.
business environment — where laws and Ron Krippner says he witnesses cli-
protections are understood — and easy ents’ internal struggles, where account-
ing pushes for China while production
access to facilities as well as from the
executives stay frustrated about quality
generation of wealth for the communities
issues or time zone issues. “I see this
which the businesses call home.
battle that happens inside of a com-
“We are seeing this trend more and
pany,” he said.
more,” said Gerry Krippner, president of
At times, trade secrets don’t stay so
family-owned HK Plastics Engineering
of Oceanside, as well as a second busi-
Yannuzzi, the attorney, says it’s a
ness that produces metal parts. Some 80 generalization, but some intellectual
percent of the manufacturers’ business is property that goes to China ends up
local, said Ron Krippner, vice president. going into black market goods. Some
companies deal with this fear by break-
Fast Times ing their intellectual property into pieces
EcoATM’s machines buy back cell- and splitting it among several factories,
phones and other electronics from and which the maker wants to produce Among the services Connect hopes he said.
consumers. Currently ecoATM has 100 at low or medium volumes, might just to provide is business matchmaking. It More than one executive reported
kiosks at shopping centers in six states. It be a good fit for U.S. manufacturers, the begins with defining and refining what labor costs are rising in China. One of
plans to have 300 deployed by year-end, executives said. the business needs from the outsourcing them is Ted Fogliani, CEO of Outsource
and hopes to exceed 1,000 by the end of D&K did $40 million of business last company. It ends with Connect giving Manufacturing, a contract manufac-
2013, said ecoATM Chairman and CEO year and expects $65 million this year. the business a shortlist of appropriate turer in Carlsbad that works on military
Tom Tullie. Several executives interviewed say engineering or manufacturing subcon- equipment, medical devices and other
With the factory and the business that nearsourcing steers a company tractors. projects.
offices so close together, ecoATM was clear of the drawbacks of outsourcing As a resource for its searches, Con- Fogliani reports that he has brought
able to develop the technology rapidly, to Asia: long airplane flights, time zone nect uses a highly detailed database of entire manufacturing projects from Chi-
said Tullie. In fact, he said, ecoATM has differences and language barriers. Marco manufacturers called the Connectory, na to San Diego two or three times in the
progressed through four generations of Thompson, executive vice president of which has been a longtime project of the past year. He said it can be tough going.
machines in only 18 months. San Diego-based Solekai Systems Corp., East County Economic Development “It’s a lot easier to start manufacturing
D&K uses more than 90 area subcon- said the beauty of nearsourcing is “the Council. here than to bring it back,” he said.
tractors to build parts for the machines. ability to put everyone in a conference Local companies bring advantages D&K’s Kunczynski said that the nature
Is there still a place for manufacturing room quickly to solve a problem.” with them, said Jo Marie Diamond, the of a product dictates where it would best be
in the United States? Alex Kunczynski, “There is a lot more (manufacturing) economic development council’s presi- developed and manufactured: in the United
president of D&K, says yes. “Abso- capability in San Diego County and dent and CEO. That might include an States, in the Far East, or in a mix of places,
lutely.” Southern California in general than you independent point of view, and insight perhaps with development stateside and
“I think the manufacturing sector in might otherwise realize,” said Dan Yan- into how to engineer the project better. large-scale manufacturing in Asia.
the United States is poised for consider- nuzzi, a partner at Sheppard Mullin Rich- The nearsourcing effort may be an “It’s about doing the right activities
able growth, and we’re excited about it,” ter & Hampton LLP in Carmel Valley. appropriate strategy in an era when tech- in the right region at the right time,”
added Scott Dennis, D&K’s CEO. Connect, San Diego’s multidisci- nology companies bring in less venture Kunczynski said.
“We’re not bullish about these being plinary business support organization, is capital, and may not be able to do as D&K, which employs 200 people in
made in the United States,” Dennis said, putting a new emphasis on the concept much with in-house staff. the San Diego region, has all of its bases
holding up a smartphone. The same goes of “outsourcing in San Diego,” and plans “We’re encouraging innovation com- covered.
for the flying-saucer-style phone on the to publicize it more in the fall. panies to stay as virtual as possible, and For those times when manufacturing
conference table, he said. Camille Saltman, Connect’s president, outsource or nearsource as many com- in Asia makes all the sense in the world,
But complex machines with high said there are more than 6,000 manufac- ponents of their business as they can, in D&K can accommodate clients with fa-
amounts of innovation, with high turers and suppliers in the region, which order to minimize infrastructure costs, cilities in Singapore and Shanghai. Those
amounts of intellectual property, where might pair up well with San Diego’s 6,000 increase levels of innovation and get to facilities bring the company’s total head
labor is a small part of the total cost, innovation companies. market faster,” Saltman said. count to 600.
DJO: arthritis, it is a chronic condition char-
acterized by the breakdown of the joint’s
porates nanoMAG TTMP, a next-gener-
ation metal that is as light as magnesium,
but has the strength of aircraft-grade
from page 1 cartilage, which cushions the ends of
the bones and allows easy movement of Revenue: aluminum.
joints. The breakdown of cartilage causes Steve Ingel, president of Bracing and
Moore said the OA Nano is intended No. of local employees:
the bones to rub against each other, caus- Supports for DJO Global, said the OA
for people with mild to moderate osteo-
ing stiffness, pain and loss of movement Investors: Nano was developed based on decades of
arthritis who are less
of the joint. Headquarters:
clinical data and experience in functional,
active than athletes.
Dr. Joseph Hellmann, a board-certi- high-performance bracing products that
The new knee brace Year founded:
fied orthopedic surgeon in Ohio, said protect and rehabilitate athletes of all
is an off-the-shelf
sports injuries to Company description: levels. The nanoMAG TTMP process
product that can ac-
age-related deterio- refines grain size to increase strength
commodate a range
ration will result in and ductility to levels superior to com-
of sizes from small
joint line narrowing. mercial cast and wrought magnesium
to triple extra large,
Hellmann said the alloys, he said.
condition is synony- “The OA Nano is differentiated
“You could hold
mous with degenera- because it is designed for the everyday
this brace in your hand and it’s just like
tive joint disease so user with mild to moderate arthritis
holding a Pepsi can, but like a Red Bull it
its progression can and is light enough to be used in active
packs a punch,” Moore said. “It’s really
be slowed but can’t be stopped. therapy, ointments or anesthetic drugs sports such as golf, tennis, running and
able to stabilize people’s knee and lighten
The OA brace line can help unload the can buy a patient time before they en- other noncontact fitness activities,” Ingel
the load to alleviate pain.”
pressure, slowing down the progression tertain expensive and invasive surgeries said.
Osteoarthritis is Form of Arthritis of the arthritic process, he said. such as partial or total knee replacement, Alternative products sold by DJO
The product is sold under the DonJoy “Having the brace on will decrease the he said. Global include the OA Adjuster, a pre-
brand and priced at between $500 and forces, decrease the pain and allow you to fabricated knee osteoarthritis brace de-
$1,000 depending on whether it’s covered live a more active lifestyle than you could Brace Uses a Next-Generation Metal signed for active patients with moderate
by insurance, Moore said. achieve without it,” Hellmann said. “We’re all trying to stay away from the to severe unicompartmental osteoarthri-
According to the Arthritis Founda- The OA Nano also fits in with a trend knife until we know our options for con- tis, ligament instabilities or postoperative
tion, osteoarthritis is one of the oldest toward conservative care options. Using trolling symptoms,” Hellmann said. “It’s rehabilitation; and the Defiance, a carbon
and most common forms of arthritis. a brace in conjunction with such things relative to each person’s goals in life.” composite brace recommended for use in
Known as the “wear and tear” type of as steroid or lubricant injections, physical DJO Global says the OA Nano incor- high-collision sports activities.