December 12, 2003
Cincinnati Business Courier

Some happy endings, some same-old for minority firms

Dan Monk
Courier Senior Staff Reporter

Evans Nwankwo "graduated" in November from an informal mentoring process in which his black-owned business participated in a series of joint ventures with Cincinnati's largest construction companies. His diploma is a $22 million construction-management contract to build a new elementary school and renovate a junior and senior high school for the Georgetown Exempted Village school district. It's the largest deal Megen Construction Co. has ever won on its own. And it follows three years of projects in which Megen, as a minority partner with Turner Construction Co., did $110 million in work for 10 area school districts. "Our partnership with Turner allowed us to be able to tackle" the Georgetown bid, said Nwankwo, who founded Megen in 1993. "That's a strong testimony that it can work and it does work."

But is Nwankwo's success the exception or the rule? It's been more than two years since simmering racial tensions in Cincinnati exploded into riots, following the police shooting death of a young black man, Timothy Thomas. Now, Cincinnati revisits racial turmoil with the death of another black man in police custody, Nathaniel Jones. In 2001, a Courier analysis showed economic issues lay at the root of the city's racial tensions. That report, "The $632 million afterthought," helped make the development of Cincinnati's black economy a strategic imperative. Local business leaders formed the Minority Business Accelerator, designed to forge new relationships between Cincinnati's largest companies and minority-owned firms. The MBA, housed at the Greater Cincinnati Chamber of Commerce, has yet to announce concrete results, although it claims to have several deals in the works.

"Growth takes time," said Mel Gravely, a local consultant who wrote the MBA's business plan. "Evans is probably the vanguard of a trend. What you're going to find is more and more cases like that coming up." One such deal might be announced by year-end, said MBA Director Calvin Buford, involving a minority-owned firm's acquisition of another company. The new entity will have more than $5 million in annual sales and contracts with at least two large Cincinnati companies. Buford declined to provide further details but said it's one of several joint ventures, acquisitions and new-contract arrangements flowing through the MBA pipeline. While Nwankwo's experience might offer reason for hope, not all indicators are as positive.

'We're not there yet' Ed Jackson has seen sales decline by more than 20 percent since 2001, when he reported his industrial laundry company, Fierro Technologies Inc., had $1 million in sales and huge potential for growth. The manufacturing slump and overseas competition squeezed Fierro's margins. The company markets an environmentally friendly way to clean shop towels and clothing. One of his largest customers, Sun Chemical, cut its ties with Fierro in May 2002. "They started buying material from Mexico at the same price I was charging to clean it," he said. "That was probably our biggest blow over the last two years." But Jackson, a former Procter & Gamble Co. executive who bought Fierro in 1999, sees growth potential in a pair of budding relationships. Cintas Corp. has started referring some of its work to his Lincoln Heights company. And Jackson is in early talks with another company about becoming a local reseller of its product. Jackson wouldn't name the product or the company but said the talks were instigated by the chamber's MBA. "We're learning, but we're not there yet," he said. "There's a lot more interest in seeking out opportunities for MBEs. It's just a matter of, you know, finding those matches. But there is a lot more dialogue, a lot more searching to do those matches."

The more things change... Roosevelt Barnes has engaged in such dialogue, but he has little to show for it to date. Last September, Barnes left Western-Southern Financial Group's Eagle Realty division to start his own commercial real estate firm in Madisonville. Barnes Real Estate Group brokered $8.3 million worth of sales and leases in its debut year. It now has 340 area apartment units under management. With annual revenue "north of $200,000" and four employees, Barnes rates his startup year as "pretty good."

More than half of Barnes' sales transactions have involved local black churches. Barnes also has worked on assembling development sites in the inner city. He secures options on sites of an acre or more, then tries to get developers to bring retailers to the site. He's worked on seven deals so far. A Walnut Hills deal is "signed and done," and a second is close in Madisonville, he said. He's talked with larger commercial real estate firms about joint-venture deals but has never gotten past proposed fee arrangements he calls less than equitable. Asked whether Cincinnati offers a better climate for black entrepreneurs than it did two years ago, Barnes said, "Overall, I would say that things have stayed pretty much the same."

© 2003 American City Business Journals Inc.