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Huy Fong Foods: Why the Sriracha Maker Isn't Playing Nice With His Neighbors

David Tran's Sriracha sauce is a cult favorite, but people in his hometown aren't so fond of the business.

I know most entrepreneurs don't like to think about public relations. But Huy Fong Foods' recent conundrum shows why you should -- and exactly how not to do it.

The story of Huy Fong Foods, the maker of Sriracha hot sauce, starts with that nice Horatio Alger glow.

David Tran emigrated to the U.S. from Vietnam in 1979, without much money and without any English. Within a few months he'd started making his signature hot sauce, Sriracha. Now Sriracha is made in a $30 million plant in Irwindale, California, and Tran employs about 70 people shipping $80 million of hot sauce each year.

Despite his clear success, Tran has a blind spot--and it's threatening his business.

Here's the problem: In the autumn months, when it's time to grind chile peppers, Tran's neighbors claim that the fumes from his factory are so toxic that they burn their eyes and cause asthma.

Here's the bigger problem: Tran doesn't seem to care.

Last fall, the city of Irwindale got a judge to issue a preliminary injunction against Huy Fong Foods. Tran didn't make changes to his plant. Today, the city will vote on whether to declare his plant a public nuisance.

Tran has never been one for outreach. The company doesn't do any marketing or advertising. Its web site is bare bones; its Twitter and Facebook accounts nonexistent.

Now's the time. Being considered a public nuisance could clear the way for the city to make changes to the plant itself. If Tran thinks the complaints are overblown, he needs to say why. Or Tran can show that he's making changes to clean things up.

Instead he assumes the role of martyr, and refuses to play ball with the city. The fumes don't bother him-- "I have worked face to the chile for 34 years," he says -- so he doesn't see why they would bother anyone else. At the last city council meeting, according to the New York Times, Tran asked, "Why do you hate me? … Why do you want to shut me down?" He told the Times, "I’m not sure why the U.S.A. lets local government do stupid things like this."

This is not helping. You don't just ignore a preliminary injunction. You hire a consultant, and tell the city council you're working on it. The Los Angeles Times reports that the South Coast Air Quality Management District has offered to help the company. If the proposal is too expensive, you ask the city for help, pointing out that you're employing 70 people (200 in the busy season) and that other towns in California, as well as Texas, would be happy to help you relocate. You show the city how much your business pays in taxes.

Then, hopefully, you're able to remind the city council that you're an upstanding corporate citizen: maybe you sponsor a Little League team, give employees paid time off to volunteer in their communities, and donate Sriracha to give a kick to the spice-challenged meals at the local homeless shelter.

That would be the cynical reason to be a good corporate citizen. It's still a good reason.

Tran says he has filters on his plant, but obviously they're not enough. He says he'll do whatever the city council asks, but that they haven't made a specific request. The council says it's Tran's job to figure out a fix.

This is where a full-fledged management team comes in handy. Yes, it's expensive, but when a company founder tries to do everything himself, it's unreasonable to expect everything to get done. Not every founder is wired to complete every management task.

Then there are the personality issues. As Tran's sister-in-law, the executive operations officer for his company, told the Times, "I think a lot of people just see this as what it is. For him it's something deeper--in his mind, he believes that they're not all real problems."

If his plant gets shut down? That'll be a real problem.

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Last updated: May 14, 2014

KIMBERLY WEISUL | Staff Writer | Inc.com Editor-at-Large

Kimberly Weisul is editor-at-large at Inc. and co-founder of One Thing New, the digital media startup that is rebooting women's content. She was previously a senior editor at BusinessWeek.




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