In Times of Contraction, Eager Companies Find Growth

NJBIZ, Nov 10, 2008

THE ECONOMY

THE ECONOMIC OUTLOOKis short on cheer, but firms that know how to extract savings for themselves and their customers are confident, as three expanding companies demonstrate.

Elizabeth-based Atalanta Corp. is adding a $16 million, 75,000-square-foot warehouse to its existing facility of 172,000 square feet, according to Charlie Stough, its chief financial officer. Generic drug maker Novel Laboratories Inc. in Franklin Township plans to add 100 jobs and nearly double its facility's size, to 85,000 square feet, said Veerappan Subra-manian, chief executive officer. And Global eProcure, a Web-based procurement software firm in Clark, is adding 25 jobs, Roopa Gandhi Makhija, its founder and president, said.

Stough said three "secrets" explain the bullish outlook at his 60-year-old firm, which relocated from lower Manhattan 20 years ago. The first secret, he said, is its ability to save costs by hedging currency risks, as the dollar has weakened against the Euro in recent years.

Atalanta also has begun sourcing a lot of food products from outside its traditional supplier base in Europe, Stough said, explaining his second secret. "Sixty years ago, the company started importing hams and other meat products from Europe, and paying for them in dollars," he said. "We are now going to places that are cheaper."

Continually adding new products to its offerings is Atalanta's third trade secret, Stough said. "You get one product approved, and they want more," he said of his customers. The firm's main clients are food service companies that deliver to schools, restaurants and hospitals.

Atalanta's owners - the Gellert family - have contributed land worth about $2 million as its equity to the expansion project, while the rest of the project is being financed with government loans, Stough said. It has won $14.5 million in loans under the federal New Markets program from the Elizabeth Development Company and the state Economic Development Authority, he said, and it won another $2 million loan from the EDA for the project, he adds.

Stough said Atalanta considered the area around Scranton, Pa., before deciding to expand in Elizabeth. "New Jersey scored by being near the port and having qualified workers," he said.

The ability to help save money for clients is why Global eProcure feels confident in expanding its 300-strong work force, Makhija said. About 50 of its 300 employees are based in New Jersey, while the others are spread across Los Angeles, China, the United Kingdom, India and Czechoslovakia, she added. As an incentive for creating 25 new jobs, the EDA approved a $195,628 grant for the firm, according to the agency's public filings.

Global eProcure sells software and processes in what Makhija describes as "strategic sourcing" to clients. Her firm studies a client's existing supplier base, identifies additional suppliers, sends them proposal requests, evaluates responses and manages the process with online price negotiation tools.

"It's a good time to grow," since cost reduction is at the forefront for the company's clients, Makhija said. That companies are willing to invest in cost-saving tools is borne out by the surge in demand her eight-year-old firm experienced in the economic weakness that followed 9/11 and the tech bust in 2000, she added.

Lower-cost generic versions of branded drugs drive the expansionary mood at Novel Labs, Subramanian said. The firm is awaiting regulatory approval for eight generic drugs and hopes to start production in late 2009, he said.

"The drug market is always good and steady, except there is a lot of pricing compe-tition," Subramanian said. He selected New Jersey for the firm's operations because "it is a pharmaceutical hub where everything is available even though cost considerations are not favorable at times, and the state is not quick enough in helping us with permits."

In July, Novel Laboratories won an EDA job creation grant of $610,785. The firm has so far invested $14 million in its 45,000-square-foot facility, and is looking for additional warehousing space of 40,000 square feet in the vicinity, Subramanian said.

E-mail to shankar_p@njbiz.com