Minority contractors building a firm base. Private-sector projects open new doors
Minority companies are discovering an avenue to progress with the private sector. Outlets include subcontracts and joint ventures with major contractors and new opportunities through equity participation in enterprises, private sector as well as public sector.
Growth of minority contractors has been phenomenal, says Ralph Thomas III, executive director of the National Association of Minority Contractors (NAMC).
Using the Black Enterprise magazine's listing of the top 100 businesses as his guideline, Mr. Thomas reported that in 1977, the year of the first such listing, no contractors were included.
``In 1987 six firms made the list,'' he says. ``This year 16 made the `Black 100.'''
Minority contractors are doing more business than ever, say NAMC leaders, who held their national meeting in Boston recently.
But, they say, these companies - run mostly by blacks, Hispanics, and women - still face persistent and basic problems.
Contractors must be insured as a guarantee that they will finish a project on time.
Bonding firms have traditionally been reluctant to serve minority businesses, which are often short of liquid capital.
Second, minority companies are quite often underfinanced. This is true, even when they are originally capitalized with the support of a government agency such as the Small Business Administration.
Third, because many minority firms are supported with the help of government programs, they often are paid more slowly.
Money is a problem, Mr. Thomas says. ``Although we have billions of dollars in opportunities from the federal standpoint, our financial problems increase with these opportunities,'' he says.
``Minority firms are high-risk, and surety [bonding] companies shy away from high risks,'' he says. ``They don't have the million-dollar liquid funds most surety companies desire.''
Getting bank loans is not easy, even when minority firms have government contracts in hand, Thomas says. ``Only high-interest loans are available,'' he adds. ``Our firms used money collected from one job to finance the next contract.''
Enforcement of affirmative action laws, which mandate that a certain percentage of business goes to minority companies, firms is uneven, Thomas says. ``Although 32 states and 136 localities have such laws, few have the staff and funding needed to aggressively meet the goals of these programs,'' he says.
Minority contractors should be supported by both the public and private sectors, he says. ``They provide jobs that help the nation's economy,'' Thomas says.
Major construction firms are beginning to work with minority contractors. One such firm is the Gilbane Building Company with headquarters in Providence, R.I.
``Working with minority business enterprises is good business,'' says Edwin J. Quinlan of Gilbane. ``We run an aggressive program. ... We are well rewarded in our regional activities, too.''
Mr. Quinlan cites as an example Gilbane's joint venture, a $48 million apartment construction project for Howard University in Washington, D.C.
``Minority participation is 42 percent of this project,'' he says.
``We are running under budget and on time. This exceeds the 35 percent goal set for the project. This is the key to our minority program success - not only meeting the numbers goals, but exceeding them,'' Quinlan says.
Precision Contractors of Chicago is the joint-venture partner for the Howard project, scheduled for completion in 1989, says Quinlan.
``Major bid packages were awarded to minority firms,'' says Orlando Dickson, deputy project manager for Precision. ``We checked the identity of these firms and the quality of their work. Then we signed contracts with them.''
When minority partners fall short in finances, Gilbane helps them find funding, Mr. Quinlan says.
``We deal with identification problems, with bonding troubles. It's easy to sit on the sidelines and do nothing,'' he says. ``Our policy is to take aggressive action to ensure minority participation in our developments.''
Since 1983, the Gilbane company has won 15 major awards and commendations for its work with minority firms.
Minority developers support the joint venture idea. Says Richard Taylor of Taylor Properties of Boston:
``Getting 10 percent of something is worth more than zero percent of nothing. We can spread corporate and personal risks through joint ventures. We have exciting opportunities in Boston.''
Developer Pablo Calderon praises Boston's linkage program, which requires contractors for major construction downtown to contribute to local community developments.
``The community benefits from new jobs and the provision of community needs,'' he says.