From Humble Beginnings…

Delaware’s 2012 SBA Small Business Person of the Year

First State Manufacturing owners Eli Valenzuela, Sher Valenzuela, and Ashley Wolfe have been selected as the U.S. Small Business Administration’s Delaware Small Business Persons of the Year. This is the story of the genesis and growth of their business.

It began in 1998 with a man, a woman, a sewing machine, and a dream in a Milford, Delaware garage. A humble beginning that today has become First State Manufacturing (FSM), a thriving business employing more than 40 technicians working in a new 66,000 sq. ft. facility funded by a $650,000 Small Business Administration (SBA) 504 loan.

As an Army communications technician, Eli Valenzuela took a correspondence course on upholstery while serving with the Second Armored Division in Germany. Little did he know that the course would lead to a second career and ownership of a multi-million dollar business. After his military service, Valenzuela returned to Texas and first worked in civil service upholstering military aircraft and later moved to Delaware, where he secured a position at Dover Air Force Base upholstering the C-5 Galaxy, one of the largest aircraft in the world and the largest airlifter in the Air Force inventory.

Oftentimes, as he discussed his work day with his wife Sher, he would think out loud about how much American taxpayers paid for upholstery work contracted out for the C-5, specifically how he knew ways to provide a better product at a better price. Together the husband and wife decided that they should start a business to do just that.

With help from SBA resource partners SCORE and the Small Business Technology and Development Center the Valenzuelas composed a business plan and opened First State Manufacturing in their garage with an old but reliable sewing machine named “Betsy.” Rapidly outgrowing the garage, they secured financing through a SBA $20,000 Express loan and leased space in a 2,000 sq. ft. warehouse.

Providing higher quality at lower costs led to rapid growth and with assistance from their local Procurement Technical Assistance Center (PTAC) they secured more and larger contracts. Earning an SBA 8(a) certification enabled FSM to leverage a number of long-term contracts from 2000 to 2009 as the business expanded to include military and commercial contracts across the country.

Mr. Valenzuela, president, is known for his ability to create, design and manufacture textile products to meet a commercial or defense customer’s exacting specifications and has led FSM to more than $10 million in government contracts. Ms. Valenzuela has significant experience in public relations and marketing campaigns for FSM and a variety of Fortune 500 companies. The important addition of Ashley Wolfe to the ownership and management team brought a different area of expertise to the business as executive director. Wolfe contributes his 30-year background in manufacturing and production with an emphasis on efficiency and innovation.  Together the three principals have developed a strong management team with a workforce that produces and delivers quality products while providing above-average wages to more than 43 employees.

By 2001 FSM was ready to grow again, with a $96,500 SBA backed 7(a) loan to modernize and expand their inventory, with recurring business from national restaurant and hotel chains. Their reputation grew for quality, cost effectiveness and innovation. Through extensive testing with Chili’s restaurant chain, FSM developed a trademarked seating product, Speedy Cushion, made with environmentally-friendly cushion foam and a “green” maintenance protectant that reduces fading from the sun.

The 9/11 tragedy brought a massive downturn in business to FSM and challenged their very existence. Once again FSM turned to SBA for assistance, with a $65,800 SBA Disaster loan they were able to maintain their business and employees until revenues returned.

The heart of FSM’s business lies in unique, customized, military aircraft solutions. FSM has consistently demonstrated its ability to provide quality, durable products to meet customized solutions.  A small sampling of innovative products FSM provides and awards won include:

• FSM was chosen by the US Air Force to participate in a joint venture to standardize manufacture and installation of all C-5 insulation due to its innovation and knowledge of C-5 Galaxy fuselage insulation characteristics.
• During reengineering of the V-22 Osprey aircraft, FSM provided custom-made fabric oil plugs and engine covers needed for the tilt-wing aircraft to remediate several issues including durability, safety, storage ease, and timely installation.
• FSM developed a customized watertight cover, now in use throughout the military, for the Joint Air to Surface Standoff Missile (JASSM).
• Recipient of the Lockheed Martin Small Business of the Year award in for superior quality and early completion of work. 
• SBA Minority Small Business Person of the Year for Delaware and Region Three.

• U.S. Defense Logistics Agency Vendor of Excellence for Small Disadvantaged Businesses.
• Named by Delaware Today as one of the “Best Places to Work” in Delaware.

Using virtually every SBA program and resource partner available, FSM reached out to the state of Delaware’s resources as well. With funding from the Delaware Economic Development Office they trained staff to receive AS9100 Quality Certification, which allowed FSM to secure contracts for the commercial equivalent of the military aircraft it supported, such as the Boeing 737, in need of insulation and upholstery. FSM also worked with the Delaware Manufacturing Extension Partnership to improve processes and efficiency and after receiving support from the Delaware Workforce Investment Board, FSM’s owners now serve on their executive board.

Through good economic conditions and bad FSM has a history of growth and job creation. From two employees in 1998 to 43 employees in 2011, FSM has continued its growth while many companies were reducing staff. With the recent expansion of facilities, employment is forecasted to continue to increase steadily over the next three years.

Revenue growth over the last four years has more than doubled. FSM’s revenue growth has been generated through the expansion of its sales from primarily local markets to national markets, national chains, government contracting, and international markets. Consistent with the growth in revenues, FSM has also demonstrated growth in profitability. Profits declined during the recession and due to increased occupancy costs, personnel and administrative expenses absorbed while transitioning to the plant’s new facility. However, throughout the first six months of 2011, FSM reported net income that placed them on track to double their pre-recession profits.

FSM’s owners actively give back to their local community and the state:

• Supports Junior Achievement expansion in Delaware: FSM speaks to and supports area students to broaden their perspective of career and entrepreneurial paths, and donated 13,000 sq. ft. to establish a Junior Achievement campus. 

• Partners with City of Milford and State of Delaware (Department of Labor) to establish “First State Moves the Nation,” a Small Business Manufacturing Accelerator, and donated 15,000 sq. ft. of space to establish a non-profit virtual center to guide manufacturers to state and federal resources.
• Serves as executive board member of Delaware Workforce Investment Board
• Received First Place in “Megabizfest,” SBA-supported Business Plan competition for GrowUSA, a line of information products that enables small businesses to succeed through leveraging of small business state and federal resources.
• Co-creators with State of Delaware: first Governor’s Entrepreneurial Business Conference in 2009.
• Monthly financial supporter of local family-oriented radio station and orphanages throughout Africa, India and the Philippines to provide basic necessities and advanced education degrees to children who would not otherwise succeed.
• Provides free sewing and upholstery classes to the local community.
• Chair, City of Milford Economic Development Panel.

First State Manufacturing, Inc. is a financially sound small business that has demonstrated consistent growth and sustainable employment in a highly competitive field and difficult economy.  Through the creative use of resources, technical knowledge, experience, thorough understanding of Delaware and national markets, FSM has competed successfully, won competitive projects against significantly larger firms and established its niche as a premier provider of textile manufacturing products.

FSM was built on the concept of doing more than what is required. When asked where that extra effort originated Valenzuela said, “As a second generation Mexican-American, I grew up very poor in the projects of Corpus Christi, Texas. My father told me “Eli, never be like a wheel barrow… it only goes as far as you push it.” This instilled the belief that hard work is rewarded and that hard work would be his only path to success – clearly expressed in FSM’s moniker and business practice: “AND THEN SOME.”  From humble beginnings and hard work, great things can come.

The 2012 observance of National Small Business Week is May 20-22 in Washington, D.C. where more than 100 outstanding small business owners from around the country will be honored and the National Small Business Person of the Year will be announced.

The Delaware District Office’s Small Business Week event, to be held at The Executive Banquet and Conference Center at 205 Executive Drive, Newark, Delaware on Monday, May 14th, will honor Delaware’s Small Business Persons of the Year along with seven other business and business champion award winners. Additionally, seven lenders will be recognized for their support of small businesses in Delaware by making loans for business startup and expansion. Nominations for all of the awards were accepted last fall, and winners were selected by an independent panel of judges. Contact Jim Provo at (302) 573-6294 x227   for more information.