Tuesday, October 30, 2001

P&G to spend more with minorities, women

Consumer giant seeks diversity in suppliers, customers

By Cliff Peale
The Cincinnati Enquirer

        Minority- and women-owned companies in Greater Cincinnati stand to benefit as Procter & Gamble Co. diversifies its supplier base.

        Cincinnati-based P&G said Monday that it would reach $1.5 billion in annual spending with minority and women suppliers by 2005, up more than half from its current level.

        That could mean $40 million in new contracts for companies owned by minorities and women in Ohio alone, added to about $60 million now, the company said.

        Companies nationally, such as Ford Motor Co., and locally, such as Toyota Motor Manufacturing North America Inc., have increased spending as well.

        Their motivation: As customers become more diverse, big companies want to match their suppliers with those customers, ensuring a growing audience for whatever product they happen to make.

        Locally, about 280 companies are certified with the South Central Ohio Minority Business Council, which matches those minority-owned companies with large companies.

        One local minority supplier is Evans Nwankwo, president of Megen Construction Co. in Forest Park.

        “What's important to us is the opportunity,” he said.

        Under its plan, P&G would join the elite of U.S. industry in awarding business to companies owned by minorities and women. Ten companies, including IBM, Ford Motor Co. and Verizon Communications Inc., already have reached $1 billion in annual contracts awarded to those companies.

        P&G spent only $115 million in 1990, and $932 million in its last fiscal year. With a 15 percent increase every year, it hopes to reach $1.5 billion a year by 2005.

        Toyota set a goal four years ago of awarding 5 percent of its U.S. purchase contracts to companies owned by minorities. It should reach that goal in 2002 with more than $600 million in supplier deals, said Dennis Cuneo, senior vice president at Toyota Motor Manufacturing North America in Erlanger.

        “We want our supplier base to reflect our customer base,” said Mr. Cuneo,

        Toyota also has asked its Tier One suppliers, or those it does business with directly, to institute similar goals.

        Many minority-owned companies have grown to the point where there is little risk for a large corporation. Nationally, the Minority Supplier Development Council said there are more than 150 minority-owned companies with sales of more than $25 million.

        In the Tristate, “we try to make the business case for doing business with African-American companies,” said Eugene Ellington, president of the local South Central Ohio Minority Business Council.

        At P&G, the growth has been steady since the company established its first minority supplier development program in 1972, spending about $44,000 with only six suppliers.

        By 2005, the maker of brands like Tide detergent, Crest toothpaste and Folgers coffee hopes to spend 11 percent of its total procurement budget with the 1,250 companies that make up its supplier diversity network.

        “With minority populations of today quickly becoming the majority of the population tomorrow, we see a competitive advantage in increasing our business with entities that reflect our country's diverse consumers,” said Daryl Hodnett, group manager of supplier diversity development at P&G, in a prepared release.

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