New Jersey–based utilities giant Public Service Enterprise Group (PSEG) took supplier diversity to a new level when it donated space for the New York & New Jersey Minority Supplier Development Council's (NY & NJ MSDC) first New Jersey office. Supplier-diversity leaders gathered on Aug. 11 to commemorate the opening of the new office, which is in a rather strategic location: the lobby of PSEG's Newark headquarters.
"The Council is in many ways a linchpin—creating wins all around—for this company, local businesses and the community," said PSEG President and Chief Operating Officer Robert E. Busch. "The opening of the council's new offices, located right here as you enter our headquarters building in downtown Newark, reflects the importance of our partnership. It also reflects our commitment to diversity not simple as a principle, but as a way of doing business."
The Newark office will improve access for the NY & NJ MSDC, which has maintained its physical presence in Manhattan since its founding in 1973.
NY & NJ MSDC Chair J. Frederick Canaday, vice president of supplier diversity with PepsiCo (No. 18 in The 2006 DiversityInc Top 50 Companies for Diversity), said it's an important link between the states. It also will stimulate small-business growth in a city already in the process of revitalization. (See also: Why Newark? DiversityInc's New Move Speaks Volumes)
This donation to the NY & NJ MSDC "will go a long way in giving us the ability to interact with our minority- and women-owned businesses and further their businesses to work with our corporate members," said NY & NJ MSDC President Lynda Ireland, who recently received the New York State Federation of Hispanic Chambers of Commerce's Advocate of the Year Award for her outreach to diverse supplier communities.
The shared building reflects PSEG's decade-long alliance with the Council and the company's top-down commitment to supplier diversity.
"It is a key resource in helping our company reach out more effectively to minority- and women-owned companies that have enhanced our supplier base," said Busch.
"What this breakfast proves … is the MSDC is, in fact, a corporate organization, and we cannot be successful without the support of our corporate partners," said Harriet Michel, long-time president of the National MSDC. "Corporations can just pay their dues, hire a supplier-diversity manager and let it go at that, and I'm here to tell you, some of them do that. This is a company, though, that shows you cannot have a successful program in corporate America without having top-of-the-house support."
PSEG spends $100 million each year with more than 200 certified diverse suppliers. Over the past two decades, PSEG has done more than a billion dollars of business with minority- and women-owned enterprises (M/WBE), said Busch. Less than a quarter of Fortune 500 companies have supplier-diversity programs, according to national industry estimates, but those that do spend an average of 2 percent of their procurement budgets with Tier I M/WBEs, compared with 7.5 percent for The 2006 DiversityInc Top 50 Companies for Diversity and 13.8 percent for the Top 10 Companies for Supplier Diversity. Eighty percent of the Top 10 Companies for Supplier Diversity are banks, telecoms or utilities.
Busch recognized two leading M/WBE owners: Tony Singh of Fine Painting, which has worked with PSEG for 10 years and earned other major contracts, including one with the Port Authority for the World Trade Center at the time of the September 11 attacks; and BI Group's Saundra Charles, who founded the mechanical-engineering firm after earning her bachelor's degree in chemical engineering from NJIT and an MBA from Duke University's Executive International MBA programs.
"[Saundra] is a business owner who believes in creating opportunities less traveled," said Busch. In 2004, women earned a mere 1.6 percent of all bachelor's degrees in engineering conferred by degree-granting institutions, according to the National Center for Education Statistics. Of those women, 0.2 percent were black or Latina. Nationally, about one in five businesses is majority-owned by a woman of color, reports the Center for Women's Business Research, but only about 4 percent operate in goods-producing industries, which includes mechanical manufacturing.
Representatives from the Statewide Hispanic Chamber of Commerce of New Jersey, the Black Chamber of Commerce of Northern New Jersey, consulting firms, M/WBEs and Top 50 companies Consolidated Edison, Colgate-Palmolive and Prudential Financial joined in recognition of the national increasing importance of supplier diversity in corporate America, both nationally and abroad. Consolidated Edison, Colgate-Palmolive and Prudential are Nos. 2, 16 and 48, respectively, in the Top 50.
"One thing we do understand here is that supplier diversity is a process, not a program," said John Anderson, PSEG vice president, supply-chain management, who has been with PSEG since 2001. "Part of this is getting outside advice, counsel. We do have an external advisory council whose objective is to help expand whatever we're doing with M/WBE and … we do listen to that council."
"We're at a real crossroads now as far as supplier diversity and business go," said Michel. "These minority companies must grow as well or die and I think a lot of the M/WBEs in this room understand that there are some corporations stepping back from the commitment, using this economic pressure that they feel around the world as an excuse not to do what they know is in this country's best interest."
In times of economic recession, it can be difficult to maintain supplier-diversity budgets, much less expand them. While recent reports indicate supplier-diversity budgets at the nation's top automakers have tightened, many M/WBEs are growing due to the support of new industries leading the supplier-diversity market: telecoms, utilities and banks. (See also: Big 3 Automakers No Longer Supplier-Diversity Leaders)
Gary Gonzalez, president of Gonzalez Design, says that although opportunities with automakers have declined, home-building and telecom industries have expanded their supplier-diversity networks (subscription required), according to an article in Auto News.
Business-adept M/WBEs that can adapt to changing corporate climates and create lasting partnerships can learn from each other to grow and thrive in a fickle economic environment. The benefits transcend these small businesses.
"Supplier diversity is a proven opportunity creator," said Busch. "It helps businesses grow, creates jobs, and contributes to a brighter future for communities and our company too."
"As communities of color become economically empowered, this country does better. And that's what this is all about," added Michel.
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