Last week, I posted a similar but brief report: "Ohio, Cleveland - Optical Lab's computer glitch frustrates customer". Maybe the companies in both stories are one and the same?.....

February 20, 2000

The Santa Cruz County Sentinel, California

Santa Cruz firm sees success in prescription eyewear industry

By CATHERINE ZANDONELLA, Sentinel correspondent

SANTA CRUZ - Wearing a blue smock and safety glasses, Lionel Zamorra slips a half-inch-thick slab of glass into a grinding machine. A diamond-head saw whirs to life and slices through the glass disk, shaping subtle curves for a prescription eyeglass lens.

Dong Kim, president and owner of CSC Laboratories, watches Zamorra with pride. Kim has steered CSC from a one-room operation on Mission Street into a thriving maker of prescription eyewear. Over the past three decades, he has transformed CSC into a $25 million eyeglass empire.

Along the way, he has fought off industry competition, changing demand and even Y2K problems.

CSCs 45,000-square-foot Santa Cruz facility is on Dubois Street, tucked in the Harvey West Park industrial area. The company operates five other facilities nationwide and one in Mexico. With $25 million in revenues last year, CSC ranked seventh in the market.

The company employs 260 people - 125 in Santa Cruz - and has sales representatives in South America, Mexico and the Caribbean. Kim now has his eye on Spain and Portugal.

Kim, who has no background in optometry, is an unlikely eyeglass entrepreneur. He was born in Seoul, Korea, and came to the United States to study law. Hearing about a business opportunity to import eyeglass frames from Korea, he invested his entire savings.

A few months later, his partners in the deal said they were broke, and that the American market apparently wasnt interested in Korean frames.

Kim disagreed, tapped friends and family for more capital and bought out his partners.

New technologies

~snip~

Grinding lenses into prescription eyewear accounts for 60 percent of CSCs business. The remaining 40 percent comes from the sale of frames imported from Italy and Korea.

Though sales have increased, overall profits have remained steady due to increases in the costs of raw materials, Inman said.

Chain eyeglass stores like LensCrafters also have taken a bite. But chain stores send difficult jobs to labs like CSC, Kim said.

CSC also makes eyeglasses for those stationed on seven U.S. military bases.

~snip~

Y2K problems

The Y2K bug hit CSC hard.

It took two technicians working day and night to work out the companys computer problems.

"It was a mess," Kim said. "Sometimes we couldnt bring up the right order number, and wed have to tell the customer wed call him back." Y2K wreaked havoc not only with ordering and billing, but in the lab, too. A computer system controls every step in the lens-grinding process.

When a new order arrives, a technician assigns it a bar code. For each step in the cutting and grinding process, a technician keys the order number into a different machine. Each machine retrieves instructions from the central computer on how to cut, shape and polish each lens.

To combat the Y2K bug, Kim said he had employees check every order - the lens material, diameter, edge thickness and curve - by hand before it left the building.

Quality control is essential. Mistakes are costly not only in dollars but reputation. In the competitive optical lab industry, reputation is everything, Kim said.

Managed care has cut into profits, too. "Managed care has been good for the optical lab industry in general," Kim said. "But it has not been so good for small businesses like mine."

Health-care companies dictate prices and policies, which can squeeze small labs, he said. "We have had to become better, faster, and cheaper."

Stiff competition

CSC was one of the first optical labs to computerize, according to Kim. "Eighty percent of the other optical labs still use yesterdays technology," he said.

Even with this advantage, the competition is fierce, Kim said.

Industry consolidation swept the optics lab industry two years ago, with many large conglomerates and investment firms rushing to buy small labs like CSC.

Rival company ESLO controls 25 percent of all U.S. labs, and 95 percent of all Canadian ones, according to CSC. ESLO tallied $363 million in sales last year.

"We had offers, but weve held out," Kim said, adding that if he doesnt sell, he plans to take the company public in 2003.

~snip~

http://www.santa-cruz.com/archive/2000/February/20/local/stories/4local.htm

-- Lee Maloney (leemaloney@hotmail.com), March 02, 2000