The 'Birmingham' Model

The excerpt below contains an illustration of the kind of affirmative action program that will mollify the Associated General Contractors of America, a largely European-American contractors lobby, by substituting a taxpayer financed program of education and racial subsidies for the hated contract "set- asides".

The excerpt illustrates a common problem with American business and with our political system.

The Contractors Association is apparently incapable of learning the larger lesson from its own affirmative action woes and will not resist these programs on principle. Rather, they will support shifting the costs of preferences from themselves onto taxpayers generally.

They uphold the "education and subsidy" program of the City of Birmingham as a model.

The problem with our political system is that we have no group that can assert and protect the interests of European-Americans generally. Thus, there is no fairness in the political process.

Most amusing is the confession in the excerpts below, that the set-asides often fail to produce the result desired by liberal politicians, namely the formation of a class of wealthy minority capable of participating in and financing the liberal political enterprise.

Apparently, the recipients of these set-aside contracts often fail to make profits and go bankrupt because of a basic lack of business skills.

Thus, it is taxpayer financed education and subsidy to the rescue. No sense incurring the political cost (white male anger) without getting the political benefit (a wealthy, politically active class of racial minorities).

Yggdrasil-

Feb. 27, 1995 Wall Street Journal A14 Birmingham's Plan to Help Black-Owned Firms May Be Alternative to Racial Set-Aside Programs

BY PAUL M. BARRETT

Staff Reporter of THE WALL STREET JOURNAL

BIRMINGHAM, Ala. - At a time when affirmative action is widely under attack, this gritty Deep South city once known for civil- rights strife is taking a new approach to the hot-button issue.

Birmingham is trying to help black-owned construction businesses grow without the sort of racial set-asides that have fueled fraud and white resentment across the country. The focus of the city's program isn't on giving blacks an immediate percentage of public works, but instead on building stable black businesses that can compete in private markets as well as public. "Of everything I've seen . . . this offers the best long-term hope for affirmative action in the construction industry," says Prof. John Mouton of Auburn University's building science department, who helped design the educational component of the plan. The vehemently anti-set-aside Associated General Contractors of America backs the city's program and has made it a major topic at its national conference next month in San Diego. Meanwhile, Chattanooga, Tenn., has started a program modeled on Birmingham's, and several other cities have expressed interest.

Debate Is Heating Up

Debate on the broad issue of racial preferences is heating up far beyond Birmingham. Encouraged by the GOP takeover of Congress, conservatives have launched the first broad assault on affirmative action since such programs became firmly established more than 20 years ago. The first wave is likely to be efforts to kill funding for federal offices and programs that set aside contracts or jobs based on race. The three leading Republican presidential contenders - Senate Majority Leader Robert Dole, Sen. Phil Gramm and Lamar Alexander--are already jousting over who is more serious about rolling back affirmative action. Meanwhile, popular support is building in California for a ballot initiative that would ban the state from using any form of racial or sex-related favoritism.

* * *

The Birmingham approach to contracting could become an alternative model for either Democrats or Republicans. While some black contractors are highly dubious of the effort here, there have been some early successes. The program combines education, nuts-and-bolts guidance on individual projects, and contacts with white businesses that have volunteered to provide blacks with subcontracting work.

* * *

Black mechanical contractor Ravon Charmichael participates avidly in business-management classes, but nevertheless believes the city's effort must be a sham because white contractors support it. "It wasn't designed to work," he declares angrily.

Distrust was probably inevitable because the Birmingham program was the core of the predominantly black city's 1989 settlement of a series of lawsuits filed against it by the local chapter of the Associated General Contractors. The heavily white AGC claimed former city policies that set aside fixed percentages of public business for minorities amounted to "reverse discrimination." The truce followed a 1989 U.S. Supreme Court ruling that made it much tougher to defend municipal set-asides against such attacks. The AGC and the city agreed to jointly fund a construction authority to nurture black businesses and encourage "mentor- protege" relationships between white and black companies. After an uncertain start, the authority now seems to be gaining stability under its first African-American head, James McCormick Jr., whom the city and the AGC recruited away from H.J. Russell & Co. of Atlanta, one of the country's leading black-owned contractors.

Designated Punching Bag

With a staff of five and a $300,000 annual budget, Mr. McCormick, 43, combines the roles of technical adviser, diplomat and designated punching bag. Physically large, he absorbs verbal blows from both sides of the color line. "It's the nature of this business," he sighs. "We're not doing something easy here, and we're not claiming we're the panacea."

Mr. McCormick strongly believes that Birmingham's white construction industry hasn't done enough to make up for its historic discrimination against blacks. Indeed, he concedes that he viewed the Birmingham settlement as a sell-out when he was still with H.J. Russell. But he rethought his position, he says, partly because of his analysis of the fortunes of some of the city's black contractors during and after a municipal construction boomlet in 1990-92. A number of small black-owned firms expanded rapidly but failed to turn increased volume into profits; in fact, several landed in bankruptcy.

That's the trouble with the "numbers games and set-asides," Mr. McCormick says. "The percentages [of public work] don't tell you whether those contractors are going to make it long-term." (While he won't discuss numbers, his agency's records show that in 1993, the most recent year measured, minorities got 13% of a broad sampling of public and private work up from roughly 8% four years earlier.)

Trouble Managing Employees

Roy Smith's roofing and paving business more than tripled in size and revenues topped the $1 million mark in the early 1990s. But at his peak, he failed to complete some jobs and had trouble managing his 14 employees. "We were losing money left and right," he concedes.

Mr. Smith has retrenched but hasn't given up. The construction authority paired him with the white-owned Brice Building Co., which counseled him to focus on his more profitable paving work and helped him straighten out his accounting books. Brice also pulled some strings to get him a better workers' compensation insurance rate, saving him $10,000 a year.

* * *

Mr. Smith agrees that the city's program has given his business more access. But "it's a struggle," he says. "That's not changing."


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