The Tragic Failure of the Minority-Supplier System
By
Jack Lifton and Diane Carey
Author contact:
Diane Carey
652 North Adams Street
Owosso, MI 48867
(989) 725-1725
Agent contact:
Lori Perkins
L. Perkins Agency
(212) 279-6418
BREAKING NEWS:
JULY 2006: “ENGINEERED PLASTICS, A PREMIERE MINORITY SUPPLY IN MICHIGAN AND OHIO
CLOSES ITS DOORS”
2005: “TOYOTA OVERTAKES GM AS #1 AUTOMAKER”
2005: “GM STOCKS FALL TO JUNK STATUS”
March 2006:
“GM BONDS FALL ON RESTATEMENT,
STRIKE CONCERNS
General Motors Corporation bonds and shares fell after chances for a strike at its largest supplier increased and the automaker disclosed federal regulators subpoenaed records on supplier credits and metals contracts . . . “
“A strike could be very worrying, because GM can’t handle a major disruption . . . “
“GM, FORD MAY ‘POTENTIALLY DISAPPEAR” Bloomberg News
“General Motors Corp. and Ford Motor Co, the two biggest U. S. automakers, need to improve their North American operations or they may collapse, analysts said Tuesday. If the companies, plus DaimlerChrysler AG’s Chrysler unit, can’t stabilize their share of the U.S. market, ‘one or more could potentially disappear . . . “
Robert Schnorbus, J. D. Power & Associates
“GM ADMITS CUTTING BACK SPENDING ON R&D”
“The company lost $10.6 billion last year . . . “
“ . . . substantial legacy costs give us less available cash to invest relative to some of our competitors . . . “
“The report revealed that GM planned to cut an extra $1 billion from structural costs this year . . . and hopes to eliminate 30,000 jobs . . . “
“ANALYSTS: GM BUYOUTS MAY NOT STOP SLIDE”
“General Motors Corporation has big plans to become a smaller company and tried to prove it this week by offering buyouts to more than 100,000 workers . . . (Some) analysts warn GM is unwisely seeking to cut its way to prosperity rather than investing in its vehicles to reverse sliding market
share . . . “
“Until GM stabilizes market share, rationalizes capacity at every point in the value chain and invests heavily in product, its restruction actions will only allow it to tread water at best.”
John Murphy, Merrill Lynch
“Time is short to remedy these issues . . . The next 18 months is very important.”
Robert Schulz, Standard & Poor
And the beat goes on . . . but why? The Untold Story is . . .
FRONTS
The Failure of the Minority Supplier System
In the U.S. Automotive Industry
The creation of business entities with covert white ownership masquerading as minority (mainly black) -owned and –operated businesses that qualify as “minority business enterprises” has frequently been the American OEM auto industry’s answer to political and economic pressures to increase the minority content of their supply base. Now a multi-billion dollar waste, minority content is the unspoken truth and one of the major reasons the American auto industry is collapsing under pressure from foreign competition. Today’s headlines tell us it’s time for this wall to come down.
Travel the 1960’s to the present through the eyes of a man behind the fronts---a white Jewish expert who worked behind the minority “owners” of auto supply companies set up to satisfy social pressure for minority content.
Hear the inside stories of several businesses set up as fronts, the men and women who provided the minority faces, the non-minorities who made hay off the social mandates, and experts who did the real work. See how these deals are made,
how they’re paid for,
and watch their ultimate collapse.
“A bunch of guys who had spent their lives becoming really good at making cars were given a milky, undefined directive to solve society’s problems. Spurred by white guilt, pressured by politics, and armed with business sense, they looked at the American black man and said, ‘Okay, let’s get this over with. Let’s jumpstart him and put him where he would’ve been if he’d put 30 years into the business.’
The problem is, those 30 years can’t be left out.”
“There is no natural corollary in business for solving society’s problems because businesses are not set up to do social work and are therefore no good at it.”
“Stories are told about the one or two minority persons who still get in and make millions, but the dream of the ghetto youth’s being handed an opportunity, starting a little business and becoming Mr. Rich Minority and hiring his brothers from the ‘hood’ remains only a fantasy.”
“Having had all the groundwork done for them, American minorities would then sit still and refuse to build the needed structures. They would wait for that to be done for them. Their businesses were synthetic, serving neither a need nor a desire, created to implement a political rather than an economic need.”
“The people who started minority business programs in the ‘60’s and 70’s were politicians and academics who had no idea how to start or run businesses, yet they wrote the rules by gaining enough favor or inflicting enough fear to get their shallow self-serving dreams written into law. Because the programs were set up by these people who hadn’t a clue how business works, the programs generally didn’t function in the real world and ultimately did not provide minority experts who could actually deliver on a product or service.”
“No one really cared whether the promises carried substance which would later support the family, or just cotton candy which would later dissolve in the mouths of the greedy. Today the minority content program helps fewer and fewer people and those few make more and more money, and the program certainly doesn’t do anything for the majority of the minority population.”
“The result of the OEM automotive industry’s huge expenditure is that no substantial (minority) businesses were built and only a trivial number of jobs were opened to minorities. It sounds like a failed government program, but it is a failed private program.”
“Race relations often solve themselves when race relations aren’t the goal of the relationship.”
From the text by Jack Lifton and Diane Carey
“FRONTS is a wild rocket ride through the machinations and outright scams of the minority content system through the eyes of someone who has been there. This is the story of how a parasitic industry, built upon a mix of Orwellian doublespeak and Khafkaesque fatalism, has not surprisingly nearly killed its host. Auto industry execs will be outraged at being ‘outed’ for their patronizing brand of racism!”
David Forsmark
Book Reviewer for The Flint Journal
Flint, Michigan
OVERVIEW
When the auto industry in America started their minority business development program in 1960’s, it was a pimple on the back of an elephant. A set of stairs here, a ramp there, a few containers of janitorial liquid, a few overpayments for unneeded chemicals, and a few thousand bucks here and there. A black “CEO” was maneuvered into place to provide the loosely required “minority ownership,” supplanted by the real owner and manager, usually a white entrepreneur. The idea was bad, but nobody cared because it really didn’t hurt anything and it made good public relations.
Today the story is much different. Today, minority business enterprise costs a suffering auto industry hundreds of millions of dollars in screw-ups, artificial supports and investment capital, on top of the loss of excellent people and excellent programs which could have saved the industry, which is now dangerously near collapse. Even the PR is no longer paying off.
Jack Lifton’s first-person tour through his 40 years of experience in Minority Business Enterprise is entertaining, eye-opening, revealing and scandalous. Many insiders will be shocked to read about themselves, and everyone else will be surprised to see what really happens behind the scenes to make these arcane deals. Jack free-floated from business to business, never owning a piece of one, but somehow clinging to the flotsam of minority content. His white face, expertise and opinion were sought by several black entrepreneurs and fronts, and also by the enigmatic French entrepreneur, Charles Schein, as he tried to use MBE to enter the American market.
Diane Carey’s cut-to-the-chase third-person analyses and framing sequences give the book a homespun clarity and sense of direction, as well as strong visions of the evolution of race relations through the decades. We are escorted through the stages of Minority Content, which Carey sees as having distinct segments of advancement and manipulation, until finally the impetus for the MBE programs are simply losing steam. The movement is being re-examined in the cold light of reality. The forty years that didn’t have to happen are finally over. As intermarriage, adoptions, mainstream middle-class values and prosperity begin to draw us together, the history and politics which drove us apart are crumbling. We now live in the 21st Century global economy. America will emerge with a common heritage. Color-blind society is within our reach.
Nobody talks about it in the open, but today, 2006, minority-owned manufacturing companies which supply the American auto industry are in crisis. They don’t have the resources to weather the squeeze on capital, raw materials costs, or the reduction in orders as American car companies downsize. They don’t have the skills to seek new markets. They can’t adjust. This year we will see a surge of bankruptcies of minority-owned companies. Why?
Because most of them are not real companies. They are synthetic parade balloons created to pretend that minorities were being included and nurtured in the auto manufacturing world. They’ve been created with winks and nods, supported by a huge in-house Welfare system, and won’t survive the pressure of impending real-world competition. Now it’s time for them to get real jobs, and they don’t know how.
Car and truck sales are accelerating around the world, yet the American auto industry is imploding. This is, in part, because the American industry has become almost a government, prone to do things for political correctness rather than sharp business sense . . . things like minority content. The auto industry is being dragged down by these types of programs, and the synthetic minority-owned companies, now denied the milk of the dying mother, will wither away too.
Did it have to happen? What is coming in the next few months?
Well, there are changes . . . the convulsions of an industry under pressure:
GM just offered “minority” status to woman-owned businesses. What does this mean? It means 1) that the system of creating and supporting racial minority-owned suppliers has turned out to be a failure. 2) It means that dozens of male-owned supply companies will suddenly be shifted to the owner’s wife’s name, or his sister’s, or daughter’s, so that a white-male-owned business will suddenly qualify as “minority.”
And the beat goes on.