Wednesday, April 2, 2003

P&G invests in minority firm

$30M a boost for empowerment zone

By Cliff Peale
The Cincinnati Enquirer

A $30 million investment from Procter & Gamble Co. will help a minority-owned manufacturing company open in Cincinnati's empowerment zone with up to 200 employees.

P&G and CDO Technologies Inc. of Dayton will announce the deal this afternoon at the TechSolve business park in Bond Hill. CDO, a minority-owned firm that has done engineering work for P&G for four years, has formed a new subsidiary called Valu-Pac.

The plant should be open by mid-2004, with an initial contract to fill bottles of Olay Body Wash for P&G. The zone includes the neighborhoods of Avondale, Clifton Heights/Fairview, Corryville, Evanston, Mount Auburn, Over-the-Rhine, Queensgate, Walnut Hills and the West End.

Officials said the deal will be only the beginning for Valu-Pac, which will use the P&G contract to sell its services to other companies around the region.

They also want it to be a model for future deals in the Tristate, where corporations have pledged to help build the business of minority-owned contractors and suppliers since the riots of April 2001.

"I think this is the way it should work," said Al Wofford, president of CDO Technologies. "This is a major opportunity for us, and a major commitment for P&G."

Harold Cleveland, chief executive officer of Cincinnati Empowerment Corp., said he had "a book full of pledges" from local companies, but P&G's was the first multimillion-dollar commitment.

"This is what the empowerment zone is all about," he said. "It's about forging new relationships that will benefit residents. ... We hope it is but the first step."

The program, which seeks to revive nine city neighborhoods with sustainable jobs, faced criticism from a federal audit last month. The audit charged that the zone failed to document its use of federal funds and spent nearly $600,000 on programs that don't benefit zone residents.

A priority

With racial tension still evident in Cincinnati and a boycott of the city still having an effect, building a minority supplier base is an even bigger priority for local companies.

To make that a community priority, they have formed the Minority Business Accelerator at the Greater Cincinnati Chamber of Commerce. That group is charged with helping about 100 minority-owned companies with annual sales of $1 million or more to grow.

Lynn Marmer, group vice president for corporate affairs at Kroger Co., said corporations need a solid base of information to find qualified minority-owned companies. That can be the main value of the Minority Business Accelerator, she said.

"Today, we don't have a list of Greater Cincinnati minority-owned companies," she said. "As good as all of us are in our own worlds, we don't know that collectively."

Harith Razaa, whose local Azure Waves Seafood LLC was started with a contract from Kroger, said big purchasers want to see other companies make the first purchase from a smaller, minority-owned company.

"The first thing everybody wants to know is, `Yeah, it sounds good, but who's selling it?' " he said. "Nobody wants to be the first to take the chance."

Steve Love, vice president of economic inclusion at the chamber, said the accelerator "is going to focus on deal-making."

"Obviously in this case, P&G had a need, and CDO has the qualifications and the capacity to meet that need," he said.

A long time coming

CDO first approached P&G more than two years ago about forming a manufacturing subsidiary. At the time, P&G was looking for creative ways to increase its roster of minority-owned suppliers.

It's trying to get to $1.5 billion in annual contracts to women- and minority-owned companies by the 2005 fiscal year, and is on track to reach $1.1 billion this year, said Icy Williams, P&G's associate director of supplier diversity. Locally, it spends about $25 million with Tristate minority-owned companies.

P&G said capacity at the plant will be about 90 million units. Once Valu-Pac reaches that level in about two years, it will be big enough to compete with low-cost competitors, said Keith Harrison, P&G's global product supply officer.

"This is not something we intend to subsidize," Harrison said. "We're hoping the lead we take on this one will provide a pedigree that will attract other business."

"I think having a 400 to 500 person operation in the enterprise zone can be a model for Cincinnati," he added. "That's really the vision here, and we're just giving it a jump-start."


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