Reagan plan to help minority businesses is short on success stories
The Reagan administration has redesigned and redefined its program to upgrade minority businesses, but faces the obstacles of pessimism within the minority sector, a budgetary decrease for its program, and the general ailments of a troubled economy.
''We need success stories,'' says the man charged with carrying out White House policy, Victor Rivera, director of the Minority Business Development Agency (MBDA) of the US Department of Commerce.
The agency's job, he recently told a group of local black and Hispanic leaders in Boston, is to beat the statistics -- 600,000 minority businesses in the nation, with only 20 percent employing nonfamily members; an ''extremely high'' failure rate for new businesses; and lack of investment in minority communities.
So far, the successes are slow in coming. And Mr. Rivera, who is beating the urban wastelands of boarded up inner cities to push the administration's programs, is encountering minority reactions ranging from cautious optimism to outright pessimism. One reason for the lack of enthusiasm: the agency's budget is being trimmed from $59.6 million in fiscal 1981 to $56.6 million in 1982 and a projected $55 million in 1983. The administration is attempting to convince states to make up the funding loss.
Mr. Rivera lists as key MBDA tools to encourage development of minority businesses:
* Interagency Council of Minority Business Enterprise -- coordinates the participation of 26 federal agencies to sign more contracts and conduct demonstration projects with minority firms, as well as to provide them with technical and management assistance.
* General Business Services program -- an agency that signs contracts with professional consulting firms to provide financial analysis, marketing, sales, accounting, and procurement assistance to MBDA clients. It advocates the marketing of new products.
* National Minority Supply Development Council -- an organization that works with corporations to lend its resources to helping minority businesses. ''The MBDA is not a social program; it seeks to help minority enterprise become part of the American economic mainstream. Corporate expertise can be utilized to help us achieve our goals.''
* Minority Business Opportunity Committee -- an MBDA network between the public sector and minority firms. The New England committee was host to Mr. Rivera on his visit to Boston, arranging for him to meet with minority entrepreneurs and cooperating federal agencies and corporate officials.
Third quarter 1981 MBDA totals seem impressive. The agency has helped start 80 new minority businesses and encouraged government agencies to purchase $429 million worth of their products and services. But the MBDA has been able to assist only some 20 percent of the firms seeking help, and its service centers have been reduced from 171 to 48, says Robert Ochoa, MBDA information chief.
Also, the agency has not yet helped its clients to acquire a large, mainstream firm, although one such acquisition is in ''near completion'' negotiation stages.
Critics doubt the situation will improve next year.
''Measured by almost any traditional standard, 1981 has been an unusually volatile year for the US economy and an unencouraging period for blacks and other minorities engaged in business enterprise,'' says Theodore R. Hagans Jr., president of the National Business League (NBL), the nation's oldest and largest organization of minority entrepreneurs.
''This situation is certain to present substantial obstacles to minority business expansion in 1982,'' he says. ''Without the inclusion of blacks on the national economic agenda, this nation cannot achieve its fullest economic potential, nor hope to succeed on its journey to economic recovery.''
The one Reagan program showing progress is the marketing of new products through technological commercialization centers. Its prize package is the Kibbie Corporation in Abbeville, La., which produces the ''kibbie kapsule,'' an invention that detects oil pipe leaks ''as small as a pinhole,'' invented by Kibbie Pillette, a black engineer.
''Mr. Pillette could not get a dollar from a bank nor a nibble from an oil company,'' says an MBDA spokesman. But an MBDA agent developed a $250,000 financial package for Mr. Pillette.