Jessica Haro–HispanicBusiness.com
Dec. 12, 2008
The economic crisis facing the nation presents serious challenges to minority-owned suppliers seeking to land elusive corporate contracts.
As it is, only three percent of contracts go to minority-owned companies, even though minorities comprise 38 percent of the United States population, and minority-owned companies represent 15 percent of the nation’s businesses.
The National Minority Supplier Development Council’s (NMSDC) mission is helping minority-owned businesses obtain corporate contracts. Harriet R. Michel, president, says one major issue the organization sees is reduced corporate commitment nationally to using minority suppliers.
“The economy has changed everything,” said Ms. Michel. Though the NMSDC is not compiling data on the economy’s effects on supplier diversity, observers feel it is having negative consequences for minority suppliers, particularly those in the construction and automotive industries.
“This is a turbulent time in the economy, and major icons of American industry are falling,” Ms. Michel said. “As advocates of diversity, we want to make sure these corporations don’t throw out their supplier diversity programs all together.”
One minority-owned company that can attest to the economy’s effect on supplier diversity is J.L. Patterson and Associates, a civil engineering and construction management firm in Orange, California.
“The economy is a huge concern for us because projects that were in line to be designed or constructed may be cancelled or scaled back as a result of competition for funds or funds being diverted somewhere else,” explained company president and founder, Jacqueline Patterson. “Major corporations are keeping more work in-house and are less inclined to share the work with smaller firms, especially if they don’t have to comply with any small business or Minority Business Enterprise goals.” In response, Ms. Patterson is taking innovative steps to keep her company competitive.
“The business world is always changing, but it is up to us to market smartly so we can keep our workforce busy and steady,” she said.
Gabriel Reyes, president and founder of Reyes Entertainment, a marketing and public relations firm in Los Angeles that works primarily with Hispanic media markets, also sees the importance of minority suppliers adjusting their practices to suit the changing economy. “Companies who can adapt quickly and easily and see the new trends ahead of time will benefit the most,” Mr. Reyes said.
As a minority supplier, Mr. Reyes named his company’s big challenge in the New Year as “finding fiscal balance and a sure footing in a wildly swinging economy.”
However, Mr. Reyes predicts that as companies look to cut their payrolls, demand for consultants will increase. “They are less costly for companies to hire, since companies don’t have to carry insurance or pay benefits and payroll taxes on outside consultants,” he said.
In addition to cutting costs, Mr. Reyes is utilizing the benefit of his company’s niche: “I’m making a stronger point to potential clients that my expertise is targeting Hispanic customers who are the fastest-growing demographic group in the U.S. This is a very important consumer that most companies will want to spend money marketing to even through economic hard times.”
*Originally published on HispanicBusiness.com*