Growth Slows for Black-Owned Businesses

The pace of growth for top black-owned businesses slowed considerably from a year ago amid a backlash against affirmative action and economic difficulties, Black Enterprise magazine reported Monday.

Sales for the top black-owned companies rose 7.75% to $14.1 billion last year--the fifth straight year of growth--but at an expansion rate that fell short of the 11.8% growth measured the previous year.

The change can be traced partly to a hostile business environment, the magazine noted in releasing its 25th annual listing of the top 100 black-owned industrial and service firms and top 100 auto dealerships.

“A lot of the hostile business environment we’re seeing is due to the pullback of affirmative action and minority set-aside programs, which affect smaller businesses to a larger extent,” Managing Editor Matthew Scott said in an interview.

Downsizing and other cost-cutting efforts by Fortune 500 firms also mean “less opportunity for smaller businesses,” he said. Most of the country’s 621,000 black-owned businesses, including many on the Black Enterprise list, are small.

But Scott said the magazine is optimistic. “We fully expect that the firms will find new ways to increase their revenues,” he said.

Companies on Fortune and Forbes magazines’ annual lists also showed a slowing in sales last year, but the change was less than at black-owned businesses.

Fortune 500 and Forbes 500 companies had an 8.3% rise in sales last year, down from the 9.9% growth of Fortune companies and 10% growth registered by Forbes companies a year earlier.

African American business leaders share considerable concern about the national backlash against affirmative action and set-aside programs, in which a certain portion of contracting is earmarked for minority companies.

“As an African American businessperson who believes it’s a very important part of our economy to grow all of our businesses, I’m concerned that this is a very shortsighted strategy,” said Roy Terry, chief executive of Terry Manufacturing Co. of Roanoke, Ala., an apparel manufacturer that ranks 62nd on the Black Enterprise list with $34 million in sales.

Last week, the Clinton administration announced proposals to curb race-based preferences for some minority businesses in the awarding of $200 billion in federal contracts.

Topping the Black Enterprise list for a second year was TLC Beatrice International Holdings Inc., a New York-based food processor and distributor that reported $2.23 billion in sales.

Johnson Publishing Co. of Chicago ranked second with $325.7 million in sales, and Philadelphia Coca-Cola Bottling Co. ranked third with $325 million in sales.

The top black-owned California company was Envirotest Systems Corp., a Sunnyvale-based vehicle-emissions testing firm with $124.5 million, which was ranked No. 12.

Mel Farr Automotive Group of Oak Park, Mich., took the top ranking among auto dealers, which are listed separately. It had sales of $503 million.

To qualify for the list, a company must have been fully operational in 1996 and at least 51% black-owned. It must manufacture or own the product it sells or provide industrial or consumer services.