Having weathered the economy's worst, the B.E. 100s look to exploit openings wrought by change.
Change. It was the watchword of the year in 1992. The U.S. populace needed it, wanted it, believed in it--and before year's end--cast their vote for it. George Bush was out, Bill Clinton was in, optimism was up, and, feeling it, consumers returned to the stores and auto dealerships. They gave businesses and the overall economy a much-needed Christmas gift: a shot in the arm.
The boost was a long time coming, longer, in fact, than most analysts' and entrepreneurs' worst nightmares. Throughout the year, press reports insisted that America was rallying, that the nation's economy was in recovery mode. But the unwavering cycle of cutbacks, layoffs, downsizing and bankruptcies only reinforced a sinking sense that the recession--or at least its lingering effect--was far from over.
Some bright spots emerged. By mid-year the banking system seemed to be out of harm's way, having sidestepped the collapse some feared. The housing market activated again after two years of solid stagnation. Even auto sales--of American cars, no less--were revving pretty strong.
But no new jobs emerged. Unemployment zoomed to 7.8% last June and payroll employment fell by 117,000. With the long-awaited change in power came higher taxes and relief was quickly tempered by ambivalence. For businesses large and small, for Americans struggling with budgets at work and at home, it was a year of taking two steps forward and three steps back, all the while hoping that somehow we'd come out ahead.
Well, BLACK ENTERPRISE's 21st Annual Report on Black Business shows that we did. The collective gross revenues for the nation's 100 largest black-owned industrial/service companies and 100 largest black-owned automobile dealerships climbed to $9 billion, up 14.1% over 1991. That's the largest increase in five years. Combined 1992 sales for the Fortune 500 rose only by 4.4%.
As has been the pattern throughout these troubled times, African-American-owned businesses proved themselves better able to hold up under a lagging economy than many of industry's giants, some of which stumbled, while others fell. Much of corporate America attempted to shrink itself into profitability--Amoco Corp. alone announced plans to cut 8,500 jobs. Yet the BE 100s, which trimmed down in 1991, lost only 703 jobs in 1992, or 1.8% of its collective 38,723 staff.
Vital And Victorious
The nation's 100 largest black-owned industrial/ service companies posted total sales of $5.7 billion, an increase of 13.9% over 1991. Total staff of this group dropped from 32,590 in 1991 to 31,668 last year, a decline of 2.8%.
Threads 4 Life d/b/a Cross Colours was this year's industrial/service standout, earning accolades both as the growth leader and Company of the Year. The Los Angeles-based clothing designer and manufacturer burst onto the scene (under the sobriquet, Solo Joint Inc.) and made the BE INDUSTRIAL/SERVICE 100 list last year at No. 80, with $15 million in gross revenues. It was an astonishing sum for a neophyte company, particularly one in the flat and fickle fashion industry.
Even more remarkable was its progress last year. Thanks to the successful launches of three new divisions in 1992--housewares, women's clothing and Karl Kani, a men's line--Cross Colours posted $89 million in sales, soaring to No. 10 on the list. The company's eye-popping 493% growth margin was so extraordinary that we had to investigate (see Company of the Year, "How Hip-Hop Fashions Won Over Mainstream America," this issue). We found that, yes, Cross Colours really is owned and run by thirtysomething entrepreneur Carl Jones; yes, it really did do that well; and no, 1992 cannot be written off as a fluke. Already this year, Jones has introduced a children's line and other innovative designs are forthcoming.
The four largest African-American-owned industrial/service firms also did well. They maintained their positions on the list, though all of them reported single-digit growth margins. New York-based TLC Beatrice International Holdings Inc.--the nation's largest black-owned company--exceeded its projections, grossing $1.67 billion in sales despite a European recession. The company is made up of food-processing and distribution concerns scattered about Western Europe. Beatrice has ranked No. 1 on the BE INDUSTRIAL/SERVICE 100 list since the late Reginald Lewis bought it in 1987.
Lewis' death from cancer in January saddened the business community. But his final year as TLC Beatrice CEO was vital and victorious. In 1992, Lewis won a $1 million judgment and settled two other lawsuits that had attempted to link him to the 1988 bankruptcy of McCall Pattern Co., a company he owned from 1983 to 1987. Lewis also witnessed the establishment of the Reginald F. Lewis International Law Center at Harvard University, in recognition of an unprecedented $3 million grant bestowed upon his alma mater by his namesake foundation.