EYE ON THE ENTERPRISE ZONE : Optical Lens Manufacturer in Central City Sets Example of How Well Program Can Help Create Jobs and Boost Business

By NANCY YOSHIHARA

Sept. 14, 1987 12 AM PT

Times Staff Writer

Joseph David Rips looks a little out of place in his conservative pin-striped suit as he ducks in and out of windowless buildings, some decorated with rubbed out graffiti, others guarded with sturdy wrought iron window and door grilles.

But Rips is at home in the midst of the depressed Central City district, a hodgepodge of businesses and residences located south of downtown Los Angeles--an area recently designated as an enterprise zone by the state. His family has built a successful business that manufactures and ships millions of optical lenses around the world from a complex of six buildings in the area.

But his firm, Younger Optics, is gaining new distinction these days. State and local officials extol the Rips venture as a model of how a successful business can take advantage of the enterprise zone program, a controversial idea that the Deukmejian Administration initiated last October to help depressed areas around the state.

Designed to help bring jobs and industry into such areas, the state and municipal governments have joined forces in a 15-year program of tax breaks and other incentives to businesses that expand or locate within specially designated enterprise zones.

Last month, Younger Optics, which moved into the Central City 15 years ago, got final approval for a low-interest, $300,000 loan from the state Department of Commerce to purchase, renovate and equip a building for its expanding operations, which means 30 new jobs for workers in the area. The firm will soon relocate its offices, machine shop, employees and hundreds and hundreds of plastic lenses from cramped facilities across the street.

The company also is taking advantage of the program’s sales tax credit under which it receives a credit equivalent to the sales tax it pays on equipment and machinery used in the enterprise zone. In addition, Younger Optics has hired some workers recruited through approved training programs, and so is entitled to an annual $5,250 tax credit for each new employee. The credit decreases over five years, based on wages paid.

Through the enterprise program, Younger Optics also was able to make contacts with the robotics department at the University of California at Santa Barbara, which will help the firm move toward automation.

The firm could have financed its expansion through conventional credit lines with Bank of America, Rips says. But the interest rate would have been higher and pay-back period shorter than the 7.5%, 12-year loan Younger Optics received from the state Department of Commerce. He also says most banks hesitate to lend to businesses in the Central City, and those that are willing will finance only 50% to 60% of a real estate purchase.

The enterprise zone program represents a break from past government programs because it assists only companies that are already successful and have the best prospects for long-term employment opportunities in the depressed areas. Many past government programs were designed to help fledgling or troubled businesses, particularly minority-owned ventures.

“There is a wide array of misperception about the enterprise program,” says Jasper Williams, manager of the Central City enterprise zone for the Los Angeles Community Development Department. “When a public program comes into being, many people expect it to meet everyone’s needs. It is difficult to be all things to all people. We have a level of disillusionment among some” who expect the program to help troubled businesses.

“It is not that kind of program . . . it is a business-oriented program that is aimed at creating ultimate benefits for residents through employment opportunities and through enhanced environmental conditions. . . . Many are looking for the giveaway programs of the 1960s. They didn’t work then and they are not feasible now,” Williams says.

That sentiment is echoed by John Henry King, marketing manager for enterprise zones at the state Department of Commerce. “Being in an enterprise zone doesn’t guarantee anything, it doesn’t make you a better business. An enterprise program can’t help a business that isn’t sound to begin with.”

Younger Optics is among the 40 to 75 businesses in the Central City to use the enterprise program, but that’s still just a tiny fraction of the estimated 1,200 businesses that range from garment makers to printers to machine shops operating in an area between Alameda and Figueroa streets and the Santa Monica Freeway and Martin Luther King Boulevard.

Williams, at the Los Angeles Community Development Department, says his office is working to package financing of between $10 million and $20 million for businesses in the Central City.

Other areas in the Southern California designated as enterprise zones are Pacoima, Watts, San Diego, Calexico, Agua Mansa (near Colton) and most recently Boyle Heights/East Los Angeles.

State and city officials say Younger Optics has been the most aggressive and sophisticated firm to use the program to expand an already successful business. The company is one of only half a dozen firms in the United States to manufacture lenses that are shipped around the world, according to Rips, 33, chief operating officer.

Focus on Speciality Lenses

“What they represent is an astute management team,” said Williams. “They came to us. They were the first company in the state (to be granted an enterprise zone loan) administered by state Department of Commerce . . . they are a fast growing company.”

Younger Optics was started in a garage in Westchester in 1955 by Rips’ father, Irving, who invented the bifocal with no split lens. The company slowly grew and shifted to plastic lens from glass in the 1970s, following the industry trend. The second generation of Rips--Joseph David and his older brother, Ted, 35, vice president of sales and marketing, joined the firm in the 1970s. The elder Rips continues as president, and their mother, Grace, is treasurer.

The sons have focused the company on specialized optical lens products such as lenses that shut out ultraviolet rays and those that are lighter and thinner than normal plastic lenses. Joseph David Rips says the firm grew tenfold between 1972 and 1982. Since 1982, sales have grow in excess of 20% a year.

Younger Optics employs 250 people at its own research facilities, a machine shop, assembling, warehouse and offices at its complex at 3788 S. Broadway Place. It has distribution facilities in Dallas, Webster, Mass., Chicago and Amsterdam.

The company is not affiliated with Rips Eyeglasses Unlimited, a retail chain originally begun by Irving Rips’ brother, Norman, who has since sold that chain.

Rips says he learned about the enterprise zone program from a newspaper article and attended a meeting last October shortly after its creation. “Of the 50 people in attendance, 47 were with the government--city and state employees--maybe two were CPAs and I was the only business person,” he says. “I sensed government would do everything in its power to help businesses in the enterprise zone. . . . This was refreshing since most businesses think government is working against you. So I said OK, I’ll take advantage of it.”

Rips sees a lot of opportunities for companies because of the enterprise zone program, but he admits that it will be a while before all the questions are answered. “It has less to do with the product and the company, than for a business person to be opened-minded and ask how do I take advantage of this?”