Tipped Scales

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Tipped Scales
Off Hook: Ernest Doizaki at Prospect Enterprises’ ‘fortress’-like facility in L.A.’s Skid Row.

Lately, the last half-mile of Ernest Doizaki’s commute to work has been a bitter stretch of road.

For more than 40 years he has been making the short trip from his home in Little Tokyo to the Kohler Street offices of Prospect Enterprises Inc., a holding company for a handful of fish distribution businesses his family has had a stake in since 1947. But that trip, to the heart of downtown L.A.’s Skid Row, has become increasingly bleak in recent years, and not just due to the homeless who mass along the walls of his buildings.

Faced with ever-increasing regulations and a new city law that will raise the minimum wage to $15 an hour, Doizaki has decided to get out. He’s selling Southern California’s second-largest fresh and frozen seafood distribution business to his biggest competitor.

Prospect owns American Fish & Seafood Co., Los Angeles Fish Co. and San Diego-based Chesapeake Fish Co., and he has agreed to sell the companies to Santa Monica Seafood Co., the region’s largest distributor, in a deal set to close July 4.

“It’s just the combination of different things – the rules and regulations, and the current environment I work under,” said Doizaki, 68. “I just finally said, ‘Why do I have to deal with this?’ Maybe if I was 20 years younger I would deal with this, but I’m not.”

American Fish’s operations on Kohler, between Sixth and Seventh streets, are expected to be moved into Santa Monica Seafood’s 120,000-square-foot Rancho Dominguez headquarters. When complete, the deal will mark the departure of yet another business from Skid Row, the roughly 50-block area within L.A.’s eastern central downtown area.

Raquel Beard, executive director of the Central City East Association, which administers two business improvement districts covering most of Skid Row, said several businesses have sold buildings and left, largely due to the environment. Others have moved operations out of their buildings, which are now just used for storage.

“There are businesses that have lost contracts with vendors because of site visits (from customers),” Beard said. “What’s so scary is that these conditions are putting really good businesses in jeopardy and at risk.”

Doizaki’s is the latest.

His Kohler building was built with rooftop parking, a design created to shield American Fish employees from car theft. One night a number of years ago, he said, someone from the neighborhood was chased into one of his buildings nearby and killed.

“If you had to come down here every day, would you like it?” he said.

Always dicey

The area surrounding Prospect was a dicey area, Doizaki said, even when his father, George, and his partners started it in 1947. But it was also bustling with food processors, manufacturers and other seafood distributors because it was close to rail lines that brought in fish from Seattle and other places.

Prospect’s seafood businesses generate about $110 million in annual sales and were once part of the largest distributor in the region. But the company struggled to recover from the loss of a major customer five years ago that accounted for 35 percent of its business. Sales have rebounded since, but it has taken longer than expected.

At the same time, Doizaki struggled with a changed business climate.

While it might have been a rough neighborhood when he joined the business in the 1970s, he said, the environment was much more conducive to the business. Back then, things such as temperature control and food safety measures consisted of having plenty of ice and smelling the fish to make sure it was still fresh.

Now, seafood distributors must record the temperature of fish and shellfish in their possession at several points along the distribution chain. Six different public health departments and state and federal agencies regulate the industry, with rules that change frequently and are often in conflict with each other, Doizaki said.

Seafood temperature is a critically important element that should be kept stable and closely monitored, Doizaki said, but record-keeping can get onerous. At just one plant, he has 17 notebooks at least 3 inches thick full of records.

“We’re talking about thousands of documents signed off on a weekly basis and keeping records of them, which is a costly event,” he said.

Companies that distribute numerous kinds of fish have to develop approved food safety plans for each species, said Rob Ross, executive director of trade group California Fisheries and Seafood Institute. The plans describe when to take temperatures and require they be recorded to ensure seafood stays fresh continually.

“Let’s say if you check two times a day for 50 different species, that’s 100 times,” Ross said. “Freshness is more important to consumers of fish than in other proteins. We really have to have an eye on quality all through the process. There’s no room for a bad day.”

The city’s new mandate that raises minimum wages to $15 an hour over the next several years was something of a last straw. Doizaki figures that will raise his payroll by about one-third – a huge increase.

New challenges

As regulations increased over the years, so too did the homeless population downtown.

Doizaki’s father bought several parcels in the area around the two seafood operations, and as Skid Row’s problems grew worse, Doizaki built facilities with ramps to rooftop parking and access to the buildings. Guard booths are manned 24 hours a day, seven days a week – another expense.

“This building is a fortress,” Doizaki said.

About 1,200 businesses and 489 property owners are members of the Central City East Association, of which Doizaki serves as secretary, but the homeless number about 2,000 in Skid Row, Beard said. The homeless population has swelled 16 percent citywide in the past two years.

Businesses stay because many, such as Doizaki’s, are owned by families whose members have been in the area for years, she said. Plus, rents are much lower than other industrial areas of the city and county, and property owners give huge incentives to renters.

But those property owners can pay up to $50,000 a year in association dues depending on the size of their building, Beard said. The fees go to pay for BID safety officers, who try to get tents dismantled and deal with trespassers, and a maintenance crew that power-washes the sidewalks six days a week.

While Santa Monica Seafood will move Prospect’s Kohler operations and some of the employees to its Rancho Dominguez headquarters, the Los Angeles Fish business on Stanford Avenue will remain, said Santa Monica Seafood’s chief executive, Roger O’Brien.

He conceded that the area is tough for employees, but pointed to a seafood business his firm bought nine years ago in the same area that had a tent city behind its building.

“It did not impact their business operations,” O’Brien said, “but it was an environment that I think had some impact on their employees out of safety concerns and such.”

The real estate is not part of the deal with Santa Monica Seafood, and Doizaki would like to sell some or all of the buildings, but the location is not appealing to many buyers. And the size of American Fish’s 65,000-square-foot facility is a challenge.

“The problem we have is that a specially built building is hard to sell,” he said. “If this building was sectioned off into five 10,000-square-foot sections it would be easy to sell.”

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