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BUSINESS
TRENDS - April
2000 Feature Article by Campbell Wood
A
Commitment to Diversity To put things in context, Dr. James Blaine Hudson of the University of Louisville drew on history. About 30 business men and women representing 20 majority-owned companies had gathered for the first tour of Louisville minority-owned companies. Dr. Hudson’s talk harkened back to the 1830s, when an African American, Shelton Morris, operated a barbershop and bathhouse at the Louisville Hotel. In 1860, Washington Spradling, another African American in Louisville, ran a barbershop and speculated in real estate, accruing a fortune for his day – more than $100,000. "By the mid-1920s, there were four insurance companies, three banks, two hotels, two building and loan associations, six real estate firms, three drug stores, eight undertakers, two photographers, 15 groceries, four newspapers, three architectural firms and three movie houses in the African American community..." stated Hudson in the event’s program. Later in the day, the business people toured several prominent minority businesses located in the Louisville area: Eagle Steel Products, Inc. with Shirley Ohta, a Native American woman, as its chief executive officer; Active Transportation Company, founded by African American Charlie W. Johnson, CEO; and Ollie Green & Company, Certified Public Accountants, founded by African American Ollie Green, managing partner. Hudson says the program conveyed two important messages. "Number one, minority business can become a major player in the economic health and development of the city, the region and the state. Number two, beyond the notion of a social good, the business decision to invest in the black community is a wise one." The tour presented the reality of competent minority business men and women at the helm of thriving businesses – a picture not often conveyed to business people, nor to the general public. The event was made possible by a Ford Motor Company Quality Initiative grant. Nathaniel Green, a Louisville businessman and an expert in Total Quality Management, was invited by the University of Louisville to head the program. Green says he identified two needs. One was for more minority businesses to become familiar with Total Quality principles, and the second was to introduce quality minority businesses to majority businesses. That was in 1998. The program’s success planted seeds that are beginning to germinate. Charles Dixon, who oversees minority business concerns at the Center for Small Business with the Louisville Chamber of Commerce, is planning a Minority Business Tour for this fall. The Louisville Chamber of Commerce is reaching out to minority businesses, Dixon says. Of the approximately 2,400 Chamber members, about 60 are minority businesses. The Kentuckiana Minority Supplier Development Council, a leading advocacy organization for minority businesses, has about 350 affiliated minority businesses, most of which are in the Louisville area. The two organizations are finding new ways of working together. One joint project is a Minority Summit, tentatively scheduled for August. "Basically, it will serve as a forum of sorts to develop a strategic plan to foster new relationships between members of minority and majority owned businesses," says Dixon. Another joint project is the Minority Business Mentoring Program, which will give developing minority businesses the opportunity to receive business guidance from an executive who works in a similar business that is well established. "Our goal is to promote the economic growth and development of minority businesses in Lexington and surrounding counties," says Nichols. "We are also working to recruit minority businesses into the area. We are working very aggressively with Lexington United, the recruiting arm for Lexington businesses. We are currently working with three minority owned businesses to expand their existing operations by opening additional facilities here, which would contribute to the overall economic development of the area." She says that the Chamber is currently engaged in research to determine the total number of minority businesses. "And this includes all ethnic groups," she adds. One ethnic group that is growing rapidly in Central Kentucky is the Hispanic community. There is now an Hispanic Chamber of Commerce in Lexington. Formed in 1999, it currently has 15 business members and is headed by President Mirna Cerrades. "I receive calls from Spanish-speaking people who want to open a business," says Cerradas, "but they don’t know what steps they have to follow. So we give them the information of where they have to go and what to do. We are also planning different seminars for our business members. We are planning to have a Spanish interpreter for people here that don’t speak any English." The Lexington Hispanic Chamber of Commerce will receive a boost from the recent announcement of a strategic alliance between Bank One and the United States Hispanic Chamber of Commerce. The U.S. Hispanic Chamber of Commerce is a 300,000-member organization with a network of over 200 local chambers. Bank One has committed to contributing $5 million and helping to raise an additional $5 million to form the first nationwide venture capital fund exclusively for Hispanic businesses. "We expect the fund to be up and operational within a year," says Nancy Norris, a spokeswoman for Bank One. Hispanic entrepreneurs, by joining a local Hispanic Chamber of Commerce, can approach funding through the U.S. Hispanic Chamber of Commerce. Norris says that Bank One will also have an Affinity Rewards program benefiting local Hispanic Chambers. Hispanic chamber members earn points by banking with Bank One, and those points enrich a fund for educational programming at the Hispanic Chamber. Norris says that 1992 economic census figures, the most recent available, reveal that Lexington had 158 Hispanic businesses that generated $21 million in receipts – 0.5 percent of overall business receipts for the Lexington economy; Louisville had 216 Hispanic businesses generating $39 million in receipts – 0.3 percent of overall business receipts for the Louisville economy; and Greater Cincinnati had 443 Hispanic businesses generating $236 million in receipts – a total of 1.1 percent of the Cincinnati business economy. The U.S. Small Business Administration has released figures showing an 82 percent increase in Hispanic businesses nationwide between 1992 and 1997. During that same period annual revenues generated by Hispanic businesses increased by 152 percent. Carol Hatfield, Women Business Owner’s Representative with the U.S. Small Business Administration in Kentucky, says that women of color (African-American, Hispanic and Asian) are now the fastest growing segment in business creation in the country. The SBA estimates that there were 3.25 million minority-owned businesses in 1997, generating $495 billion in revenue and employing nearly four million workers. The overall growth of minority business over the last decade measured was 168 percent with a 343 percent growth in revenues. On the state level, the Kentucky Small Business State Profile for 1998 showed significant business growth in all minority groups. Between 1987 and 1992, black-owned businesses increased by 36.4 percent to a total of 5,097 businesses; Hispanic-owned businesses rose 109.5 percent to a total of 752 businesses; and businesses owned by Asians, Pacific Islanders, American Indians, and Alaskan Natives increased by 79.5 percent to a total of 1,164 businesses. "By 2030," writes Michael A. Bateman in his report Minority Business Development: 2000 and Beyond, "African Americans, Hispanics and Asian Americans will form the new majority of the U.S. population. As we enter the new millennium, these same three racial groups are the fastest growing among all ethnic groups in the United States." Bateman makes the point that imaginative advertising will not be sufficient in itself to engage the new majority, but that corporations will need to connect by having an ethnically diverse work force and/or by doing business with minority-owned suppliers and services. Bateman is president and CEO of the Kentuckiana Minority Supplier Development Council. KMSDC, a regional council linked to about 40 other councils under the National MSDC umbrella, has as its mission to facilitate the developing of partnerships between minority businesses, corporate America and government while "leveling the marketplace for basic fairness for all." KMSDC has a membership of about 150 major public and private sector organizations/corporations and a roster of some 350 affiliated minority businesses. It has a stringent program to certify minority businesses. That certification opens doors to many corporations and government organizations wanting to do more business with minorities. KMSDC hosts an annual trade show, which brings together majority-owned businesses and minority-owned businesses. A series of mini-business conferences throughout the year serve to introduce minority entrepreneurs to key decision makers in corporations. One corporate member of KMSDC that has made it a strong priority to create business with minority vendors is Toyota Motor Manufacturing North America, Inc. "Creating opportunities that open doors for minority business development is among the top priorities of Toyota’s diversity initiatives," says Teruyuki Minoura, president of Toyota. "First and foremost, Toyota is a company that thrives on new ideas from our suppliers, and more diversity leads to more ideas. And second, our customer base is diverse, and we think our way of doing business should reflect that." Toyota hosted its 10th Annual Opportunity Exchange last November. The event brings together Toyota’s Tier I suppliers (those that provide parts, materials and services directly to Toyota) with minority businesses to create new supply partnerships. The first Opportunity Exchange in 1990 had 100 participants and resulted in $350,000 in Tier I and minority business contracts. Through 1998, the Exchange has engaged over 1,000 participants and generated over $20 million in contracts. In reflecting on his own success, Jackson mentions three points that he thinks are critical to success for minority entrepreneurs. "The number one element is mentoring," says Jackson. "I have benefited from mentoring with two companies in particular. Through McKechnie Vehicle Components I was able to get a contract and get exposure to the Toyota production system. The second company that mentored me is Textron Automotive Company, and we are in the final stages of a joint venture to develop and supply component parts to Toyota for the new model Camry. "Another important point is understanding what government programs are available to help entrepreneurs. And the third point is benchmarking your company – measuring your company against those companies that are leaders in the field."
Campbell Wood is a staff writer for The Lane Report.
Minority Business – Who to Contact Charles
Dixon Michael
Bateman De
Asa Nichols Mirna
Cerradas Norris
Christian PRO-NET
web site: Certification for minority businesses is also available from the Office of Minority Affairs under the Kentucky Department of Transportation. This certification, as does certification with KMSDC, can open doors for commerce with governmental buyers as well as private companies. For more information call (502) 564-3601
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The
Lexington Chamber of Commerce has also caught the wave. Since hiring
DeAsa Nichols in February 1999 to head the Minority Business Development
Program, membership of minority businesses in the Chamber has jumped
from 18 to 47. The Lexington Chamber recruited Nichols from Cincinnati,
where she worked in minority business development. She credits Chamber
President Robert C. Douglass and Chamber board members (including a
couple of African American business owners) with the move to strengthen
ties with the minority business community.
"I’ve
been attending Toyota’s minority business event as a Tier II supplier
providing parts and materials to Tier I suppliers for many years,"
says Henry Jackson, president of Jackson Plastics of Nicholasville,
Kentucky. "My business has grown by leaps and bounds, so much so
that I will soon be a Tier I supplier for Toyota."