Field of Opportunity Transplants' commitment to minority suppliers questioned

Harold Kutner sees opportunity rising from the dust of Cadillac's old Clark Street Assembly Plant in southwest Detroit.

Vitec, a joint venture between Michigan-based Walbro Corp. and businessmen William Pickard and Lawrence Crawford, will make plastic fuel tanks at the old Cadillac site in Detroit's Empowerment Zone, beginning in July.

The minority company has lined up about $640 million in business with General Motors Corp. and another $40 million with Chrysler Corp. over the next five years.

As the vice president of Worldwide Purchasing for General Motors Corp., Mr. Kutner proudly states GM's role in helping make the Vitec venture a reality, with job opportunities and urban renewal in a neighborhood that desperately needs both. GM, along with three partners, will build the plant and lease it to Vitec.

But as the outgoing chairman of the Michigan Minority Business Development Council, Mr. Kutner complains that this field of opportunity could be even broader, if only the Japanese transplants were as aggressive in hiring minority suppliers as they are in marketing their vehicles toward minority buyers. In other words, the transplants are selling to a diverse population but not buying from one.

"The Big Three have always recognized the value of minority suppliers," Mr. Kutner tells the crowd at the Vitec ground-breaking Oct. 30. "Now, if only the transplants would think along the same lines."

GM spends up to $1.8 billion a year with 625 minority-owned suppliers (defined as racial minorities, not women or the handicapped), and President Jack Smith has committed to making 5% (about $2 billion) of all North American Operations purchases with minority suppliers by the year 2000. Chrysler and Ford have also set similar minority targets for their suppliers.

Jim Wiseman of Toyota Motor Manufacturing North America Inc. admits the Big Three have "shown leadership" in promoting minority suppliers, but that Toyota has recently set the same 5% purchase target for itself and its Tier 1 suppliers by 2002.

Currently, Toyota in North America buys about 3% (more than $100 million) of its parts, materials and services from 100 minority suppliers, Mr. Wiseman says. "We believe we're making some progress," he says.

Nissan Motor Mfg. Corp. uses 250 domestic suppliers at its plant in Smyrna, TN. "We're always looking for minority suppliers," says company spokesman Bucky Kahl. "We typically have long-term relationships with suppliers, so the opportunities don't happen as often as with other companies," Mr. Kahl says. "But we strongly encourage our Tier 1 suppliers to use minority suppliers."

While GM is eager to do business with minority suppliers, Mr. Kutner says they must meet the same standards as all suppliers. "What we're doing here is not social," he says of Vitec. "They are winning this business based on competition, and I might add global (competition)."

Vitec will cover 12.5 acres in the Clark Street Technology Park with a building that will expand to 281,000 square feet. The company will employ 100 people to start, eventually growing to more than 300. Sales are expected to reach $136 million in the first year.

Mr. Pickard, the CEO of Regal Plastics Co. of Detroit, and Walbro each own 47% of Vitec. Mr. Crawford, majority owner of Saginaw Plastic Molding, holds the remaining 6%.

Joint ventures such as Vitec are becoming common among minority suppliers - and small suppliers in general - who want to statisfy the Big Three's demand for full systems and modules.