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Saturday, February 04, 2012
Regional Focus: December 2008
Engineering Decree
A quiet tech boon in the foothills
Story by Mark Larson
Eleven years ago, Dan Castles left his job managing Grass Valley Group in Nevada City to start Telestream Inc., a high-speed digital media exchange provider.
At the time, Grass Valley Group — which for decades was the grandfather company of the region’s tech sector — had more than 1,100 employees and was the region’s economic engine for private industry. In 2002, French media conglomerate Thomson acquired Grass Valley Group for $172 million. Although it’s still thriving as Thomson Grass Valley, it has about one-third the Nevada City employees.
Meanwhile, Castles’ company has grown to about 150 employees, and other small high-tech firms have sprouted nearby. And while the industry’s presence might be bringing big ideas to the small city, Nevada City’s little tech boom is no anomaly. Sacramento’s high-tech industry added 1,200 jobs for a total of 43,700 in 2006, according to AeA, a nonprofit trade group representing the technology industry.
Tech diversity has made the local economy much less dependent on the fortunes of the former Grass Valley Group, which was a big international player as a broadcast production equipment manufacturer.
The first startups in the area were spinoffs of the ex-Grass Valley Group as engineers chased niches in broadcasting equipment technology, Castles says, but that has changed. “There’s more variety of technology,” he says. “The base is far healthier than it’s ever been.”
The Nevada County Economic Resource Council, which works to attract business to the region, lists 88 local tech companies. But Gil Mathew, president and CEO of the council, says many of those are one- and two-person firms. Still, he says, they’re pursing a diverse mix of tech niches: medical, software, wireless networking and geological engineering. Civil engineering and software firms began to surface in the mid- to late-1980s, he says.
Branching out, the largest tech sector in Sacramento in 2006 was telecommunications services, employing 10,800 workers. The next largest was semiconductor manufacturing with 7,600, an increase of 500 from the previous year.
Among the local tech companies Castles has seen prosper are AJA Video Systems in Grass Valley, which builds video signal conversion products; NVision Inc. in Grass Valley, which builds video and audio products; and 2Wire Inc. in Nevada City, which builds products for digital subscriber lines.
And leading the charge is Castles’ Telestream, which continues to thrive through a tough economy. “We’ve brought on about 30 employees this year,” he says. Last month the company still had two openings. Castles calls his company’s growth “a constant trickle.”
Offering good pay and benefits, Telestream has no problem finding locals to work in customer support, software quality assurance, finance and accounting or shipping and receiving. But filling engineering jobs wasn’t as easy. “We’ve had to step up to the whole virtual world,” Castles says. “It’s a huge challenge.”
Before the housing market imploded, and as recently as a year or so ago, Telestream hired engineers outside the local market who’d sell their homes and buy locally, turning a profit. But times have changed. The past five engineers hired took jobs without selling their homes in the San Francisco, Portland, Sacramento, El Dorado Hills and Folsom markets because it didn’t make financial sense. They work from home and commute to Telestream once a week.
Thomson Grass Valley wants its engineers and research and development team to work on site, so the company promotes commuting programs such as vanpools to get their top talent on site every day.
Castles says this year has been the toughest at Telestream, though he manages to grow, because big customers have been canceling orders. These slowdowns to company growth, which Telestream managers call “headwinds,” began last December.
Castles won’t disclose revenue but says he expects a 15 percent growth next year. Since its inception, Telestream’s revenue has grown 20 to 40 percent annually.
Even with the slowdown, Thomson Grass Valley expects to hire more workers into next year. In late September the company was trying to fill 15 openings, says Rebecca Sturgess, the Nevada City site’s human resources manager. The company has more than 300 employees, or about 8 percent over its 2007 work force.
The Nevada City site is a design center and performs all final product assembly and testing of the company’s products designed and built at other sites: signal routers, servers and control room automation systems.
While the economy has slammed many businesses across the country, Thomson Grass Valley has been awash in new equipment contracts with NBC Universal, ESPN, World Wrestling Entertainment Inc., the Australian Broadcasting Corp. and Major League Baseball Advanced Media LP. Perillo says his company was likely one of the biggest suppliers of broadcast hardware for the Beijing Olympics.
Sturgess says the company works to be more visible in the community as a way to help it recruit talent locally and closer to Sacramento. “Grass Valley is a rural community,” she says. “It’s a challenge to pull people from local colleges and the Bay Area.”
She’s found the same problem as Castles. Outside job candidates feel anchored by the value of their homes. “It’s not as attractive here as before,” she says. “Now people don’t want to sell their homes.”
