Victories in Capitalism
How Minority-Owned Enterprises Are Helping Revitalize America’s Economy Through Global Growth
By Nicole Whitsett
When you see McDonald’s glowing golden arches rising above a highway, you might initially think of hamburgers and fries, but from an economic standpoint, that sign represents much more. In fact, a leading producer of those steel sign and lighting poles is a Hispanic- and woman-owned firm that is just one of many diverse companies driving America’s economic recovery.
Founded in 1925, Funk Linko of Chicago Heights, Ill., manufactures sign poles for major oil companies, fast-food operations, hotels, car dealers, airports and municipalities around the world, making it a leader in its industry. Over the last year, as the U.S. endured some tough economic times, Funk Linko continued to diversify and reach new markets through exporting. As the premier pole manufacturer for the oil industry, it has supplied every American petroleum company as well as their global affiliates and owners.
Vicky Linko, the President and CEO, points to Funk Linko’s lighting and signage work at Chicago’s O’Hare Airport as the company’s “forest of poles.” She believes a key element to taking a business global is changing one’s perspective to see the big picture. “In the domestic market, you focus solely on your specialty and grow the business one customer at a time. To be a global enterprise, you must think broader,” she says. To that end, Funk Linko is constantly evolving to seize opportunities where they arise. The company has incorporated green technology into its overall business practices, and has expanded into new arenas, like the rail and locomotive industry. Adds Linko: “There is nothing we cannot achieve, if we have the passion to achieve it, and the vision to see it.”
A Strategy for Success
The Obama administration firmly believes that exporting will jump-start the American economy and create new jobs. In March of this year, President Obama and Secretary of Commerce Gary Locke unveiled the National Export Initiative (NEI), a plan designed to double American exports over the next five years and support 2 million jobs.
“This initiative was designed with one overriding goal: to get people back to work in jobs that provide security, dignity and a sense of hope for the future,” says Secretary Locke. “Under the NEI, there is going to be more credit available for exporters, a sharper focus on knocking down the barriers that prevent U.S. companies from getting access to foreign markets, and more government trade promotion.”
The Minority Business Development Agency (MBDA), a bureau at the U.S. Department of Commerce, has long recognized the unique benefits that minority-owned firms offer as exporters. As the only agency that supports the growth and competitiveness of minority-owned firms in the U.S., MBDA plans to ensure it contributes significantly to the success of the NEI.
“To support minority-owned firms’ interest in exporting, MBDA will provide business-to-business networking sessions to link minority-owned firms to global opportunities,” explains MBDA National Director David A. Hinson. “Through relationships with the International Trade Administration, OPIC, the Export-Import Bank and various other government agencies, our business development specialists at one of our nationwide minority business centers will work together with firms to put an export strategy in place.”
Powering Emerging Markets
Many minority-owned firms have already established themselves as successful exporters. These companies are more than twice as likely to generate sales from exporting as non-minority-owned firms, according to MBDA. For example, Combustion Associates, Inc. (CAI), of Corona, Calif., specializes in finding pioneering ways to power business in far-flung reaches of the world. The company combines science and service to provide a wide selection of both skid-mounted and stationary power generation systems. This kind of innovation is particularly relevant because it is designed to meet energy demands anywhere, no matter how big or how small.
“We currently engineer and manufacture modular power plants ranging from 1 MW to 10 MW, and in the emerging markets of the world—Asia, Africa and Central and South America—there is a huge demand for power,” explains Kusum Kavia, Vice President of CAI. “Our units give flexibility to both large utilities that need to meet increased demand and to businesses so they don’t have to rely on the grid or pay high prices for electricity during peak periods, because they have their own reliable power generation unit in-house.”
CAI not only exports, but also is expanding into the energy industry and meeting the growing need for cost-effective energy in emerging markets.
Plan for Global Growth
As exporting becomes a growth strategy for many companies, MBDA recommends that minority-owned firms:
This approach has worked successfully for MarkMaster, Inc., the largest custom marking and identification company in the world, as well as the only global provider in its industry. Based in Tampa, Fla., the Hispanic family-owned business handles all aspects of professional signage and marking, assuring branding continuity, simplified project management and seamless implementation. As with many businesses, MarkMaster, Inc., began to establish an international presence in order to keep up with its clients.
“Expanding globally was a natural progression relative to our client base,” says CEO Kevin Govin. “Most of our major corporate clients are in various stages of being globalized. As a trusted supplier, they wanted us everywhere. Once we began manufacturing abroad for the first client, it was simple to leverage that investment to the rest of our client base. Now it is a definite advantage, as we are the only supplier in our space that can fulfill in the U.S., Europe, the Middle East, Africa and Asia.”.
“To support minority-owned firms’ interest in exporting, MBDA will provide business-to-business
networking sessions to link minority-owned firms to global opportunities.”
David A. Hinson, National Director, MBDA
Spending More Than $1 Billion With Minority Businesses
The Billion Dollar Roundtable (BDR) — a key MBDA strategic partner — is a group of 17 corporations that spend at least $1 billion annually contracting with minority- and women-owned firms.
“Together, the members represent tier-one spend in excess of $39 billion and tier-two spend of almost $10 billion,” reports Sharon Patterson, BDR’s President and Chief Executive Officer. The BDR also issues policy papers and pronouncements and sponsors a prestigious annual gathering to drive supplier diversity excellence through best-practice sharing and thought leadership..
For nearly a decade, Cargill has made supplier diversity a key initiative, and what began as an effort to nurture fledgling enterprises has proven to be an excellent example of good foresight. Now the company works with more than 2,500 diverse suppliers around the world, and in lean economic times, those partnerships have grown stronger than ever.
“We’re very dependent on each other to be successful,” says Roger Larsh, Cargill’s North American Procurement Leader. “That’s always the case, but in tough economic times, it’s even more so.”
Naturally, the recent financial turmoil has taken its toll on small businesses, but Cargill’s relationships with its diverse suppliers have evolved in ways that can help all parties thrive. “The economic downturn had a definite impact on smaller businesses’ access to capital, and that forced us to look at the way we nurture and develop our suppliers,” says Larsh. “In an environment where capital is very tight, we try to take more measured steps to grow our business with our diversity partners so we don’t overwhelm them. This approach allows them to manage their business in a way that’s beneficial for them and for Cargill.”
“In an environment where capital is very tight, we try to take more measured steps
to grow our business with our diversity partners so we don’t overwhelm them.”
A more significant development has been the invaluable return on investment that Cargill is now seeing. While the company’s size gives it the foundation it needs to weather a recession, it can benefit from the flexibility and responsiveness of its smaller diverse partners to help it meet the needs of its clients and take full advantage of any opportunities those partners may present.
“We receive creative solutions that we wouldn’t otherwise think of, or that a lot of majority companies couldn’t even execute. These suppliers often aren’t encumbered by their business process or business model, and they’re willing to listen to us.”
One specific example of tangible benefit came from a diverse supplier that set up warehouses strategically located near Cargill facilities, essentially taking over its inventory function and minimizing the amount of inventory Cargill has to hold. “It demonstrates how their flexibility can reduce our need for working capital,” Larsh explains.
A Key to Success
Ultimately, Cargill’s objective is to always provide the best solutions for its clients, as well as its customers. With its diverse suppliers stepping up to provide fresh ideas and much-needed support, Cargill has achieved that goal. Known for driving innovation in its industry, Cargill’s commitment to leveraging diversity to the fullest is yet another forward-thinking strategy to keep it ahead of the curve, no matter what challenges it encounters.
In 2003, The Home Depot became the first major corporation in the home improvement industry to develop a comprehensive supplier diversity program as part of its overall business strategy. More than an act of good corporate responsibility, the initiative also reflected the changing demographics of The Home Depot’s increasingly diverse client base. Since its inception, the award-winning program has proven to be a clear win-win proposition, with new rewards continuously emerging over time.
“Our relationships with our suppliers are now truly strong partnerships,” says Michelle Sourie Robinson, Director of Supplier Diversity at The Home Depot. “This is much more than a simple contract—it’s a partnership for a mutually beneficial end.”
Investing in the Future
As America’s largest home improvement retailer, The Home Depot also knows that investing in entrepreneurship is one way to support the many diverse communities it serves. To that end, the company stays connected with small businesses through its national membership in the Women’s Business Enterprise National Council (WBENC) and the National Minority Supplier Development Council (NMSDC).
It also created the George A. Lottier Scholarship Fund, a unique, no-strings-attached endowment of $125,000 earmarked each year for minority and women entrepreneurs to use for business development. The scholarship can go toward training, coaching, education or nearly anything an MBE or WBE needs to take its business to the next level.
For every dollar, effort and resource that goes into these partnerships, The Home Depot has discovered it reaps great rewards. “For any supplier, diverse or not, the primary thing we are looking for is value, whether through an innovative product, or excellent pricing on a quality product or service,” Sourie Robinson explains. “But the other important piece that is often overlooked is the fact that these suppliers enhance our brand.”
In diverse communities, entrepreneurs are often the driving force behind local consumer trends. The Home Depot has developed a novel strategy to extend its reach and gain valuable access by tapping into this targeted power. These brand ambassadors understand the unique needs and challenges of their customers, and can bridge divides of culture, language and more. They also provide specific expertise and resources that allow The Home Depot to run its business more effectively as a whole.
One such exemplary partner is Metasys Technologies Inc. (MTI), an Atlanta-based company that has been a strategic supplier to The Home Depot for more than five years. MTI initially was brought in to streamline the purchase order and supplier-enablement processes; however, over time, it began to take on more.
Leveraging its supply chain management expertise and its global outsourcing infrastructure, MTI has delivered cost savings and process improvements that directly impact The Home Depot’s bottom line and the quality of its relationship with its suppliers.
“These types of successful diversity programs help its supplier partners shine, which results in increased visibility for such corporations in the communities where we live,” says Metasys CEO Sandeep Gauba.
A Working Relationship
Today’s tough economic climate has forced even the largest companies to reevaluate the way they do business. The Home Depot, ranked as the third-largest retail company on the 2010 Forbes Global 2000 list, has found that through its partnerships with minority- and women-owned businesses, it can stay ahead of the competition, not only through better products and services, but also through vital connections with diverse customers and communities. In a rare example of collaboration at its best, this winning strategy benefits everyone.
Forbes Custom is a custom publishing site that features
special advertising sections from Forbes magazine
as well as industry articles and videos from our partners.
The editors at Forbes were not involved in the creation of this content.
Site Developed by SmartMark Communications, LLC
© Forbes Magazine, All Rights Reserved