Supplier diversity needs to focus on industries of today and tomorrow – Crain’s Chicago Business

"Chicago was the center of Black entrepreneurship," says Marquis Miller, chief diversity officer for the city of Chicago and former vice president of the National Minority Supplier Development Council.

While these firms served their own Black communities, they also did business with non-minority firms, whether it was advertisers reaching Ebony readers or supermarkets carrying ethnic hair products.

Perhaps the area's largest Black-owned company is a legacy of that tradition: George Johnson's son Eric in the 1990s acquired small food companies to form Baldwin Richardson Foods. It has grown to be a manufacturer of ingredients and a McDonald's supplier, with sales of $272 million last year.

Gradually large non-minority companies began to diversity their suppliers but largely in fields that have lower barriers to entry. Some had success in airport concessions, liquor distributing and in the McDonald's system as suppliers and franchisees.

Construction firms took advantage of the opportunity to participate as subcontractors. They made money but became comfortable and made the mistake of not building bonding capacity, Moore says.

That was in contrast to Atlanta, where three-term Mayor Maynard Jackson elevated newer Black companies. He used minority set-asides so successfully in the expansion of what is now Hartsfield-Jackson International Airport that it spurred the Federal Aviation Administration to recommend similar initiatives at other national airports. "Jackson made sure Blacks built bonding capacity," Moore says.

Black business in Chicago nevertheless became associated with construction. Rogers recalls serving as board president of the Chicago Park District during the 1990s and organizing an event for the executives of the museums on parkland to meet minority entrepreneurs. The invitation to the event was a picture of a worker with a shovel and hard hat with the tagline, "Digging up business." "These decision-makers thought about Black and Brown businesspeople with a shovel in their hands," Rogers says.

Fortune 500 companies have meant well by signing on to the Billion Dollar Roundtable, pledging to spend $1 billion with minority- and woman-owned businesses. But many young Black firms don't have manufacturing capacity and end up passing along goods such as computer equipment, corporate gifts or masks. Revenue isn't the best barometer if the margins are minuscule, Rogers says, adding, "You're not creating real jobs or wealth."

Everyday business is a series of small transactions, Blackwell says. "We don't need a $30 billion plan to save the world."

A NEW GENERATION

Younger Black-owned companies are forgoing the pass-through route, winning customers and building capacity. Entrepreneur Nosa Ehimwenman in 2012 started general contractor Bowa Group in Chicago after spending 10 years at national builder Gilbane.

Ehimwenman credits Joan Archie, executive director of construction compliance at the University of Chicago Medical Center, for opening Bowa's first opportunitya group of lab, office and clinic renovations. Bowa, which means "to build" in the Edo language of southern Nigeria, went on to serve as general contractor for a Starbucks concession at O'Hare International Airport, becoming the first African American firm to be a primary contractor at the airport. One of Bowa's biggest clients is megadeveloper Related Midwest, a supporter of minority- and women-owned businesses.

Bowa has grown to revenue in the range of $35 million with a workforce of around 60. The contractor's bonding capacity, which was less than $1 million at the start, has grown to $100 million. "That doesn't happen if you're a pass-through," Ehimwenman says.

Another contractor making progress is Trice Construction in Chicago, headed by second-generation owner and attorney Stephanie Hickman. Hickman left her job in human resources at Commonwealth Edison to acquire her family's business, which poured concrete for residential garages and home projects on the West and South sides and in the south suburbs.

Hickman knew the firm's future would lie in utility work. It pivoted by patching streets for Peoples Gas after the utility had to drill through the concrete for repairs. She spent years attending industry networking events to get her name before potential clients and added to bid lists. Although she had earlier worked at ComEd, it took seven years to build enough capability to win a contract. Today, utility work represents 60 percent of revenue at the company that she calls lower middle market. ComEd and other utilities have been "intentional about positioning us for success and growth," she says.

While Trice declines pass-through work, it participates in government projects that typically set aside 26 percent for minority firms and 6 percent for women-owned firms. The difficulty is that minority firms can become too big to qualify and end up competing with much larger non-minority contractors. "You don't have the same constraints outside government, so we look to build our business in the private sector," Hickman says.

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Supplier diversity needs to focus on industries of today and tomorrow - Crain's Chicago Business