Many of America’s black CEOs took a wallop in 2007 but carried on their fight for survival in an unrelenting economic environment. In times like these, chief executives must grow their enterprises through strategic leadership and innovation. They demonstrated this through buying and selling operations, seeking synergistic business opportunities, and sometimes opting out of less profitable opportunities — in essence, by making the tough calls.
And it was necessary. For the year, the economy advanced an anemic 2.2%, the weakest performance in five years. Consumer spending grew 5.5%, the weakest growth since 2003. Gross domestic product expanded at an inflation-adjusted 2.2% rate compared to an increased 2.9% in 2006. Depressed housing markets, with foreclosures hitting a record high, and harder-to-get bank credit were contributing factors.
Against a backdrop of the subprime lending fiasco, pre-recession jitters, and faltering consumer confidence, many BE 100s CEOs have restructured operations and even become more acquisitive. Others have taken profits and cashed out to begin new ventures or simply enjoy the wealth they’ve accumulated.
Overall, BE INDUSTRIAL/SERVICE 100 firms posted a 9.8% gain in revenues with essentially the same number of employees. Those that were able to either hold their ground or advance their businesses were those firms with chief executives who employed innovative strategies to capture market share, enter new markets, and acquire or sell off assets depending on market conditions.
THE M&A GAME
The 2007 acquisition of Dimensions International (which ranked No. 24 in 2007) by Honeywell International led to the return of SENTEL Corp., a wholly owned subsidiary of WC Holding Inc. and a former BE 100s company. SENTEL (No. 90 on the BE INDUSTRIAL/SERVICE 100 list with $45 million in revenues) was acquired by Dimensions in 2004 and spun off last year prior to the Honeywell-Dimensions deal. The engineering service firm is now a 50-50 partnership between Russell Wright, former CEO of Dimensions, and Darrell L. Crapps, who served as Dimensions’ executive vice president and general counsel.
Wright felt it was the right time to sell. “Government contracting and logistics and what we do are just sexy,” Wright says. “It’s not that I’m ready to stop work. It’s not that I want to go ride off into the sunset. It was just too big of an opportunity to pass up. To be able to be part of another company moving forward and still have the DI logistics segment stay together — under my direction, just under a bigger company — is just fantastic. It’s a dream.”
It’s less than a year after the transaction, and SENTEL based in Alexandria,Virginia, is already looking acquisitive. “We’re looking at the marketplace to see what makes sense from a synergistic and valuation perspective, but we’re also interested in pursuing things that we’re interested in,” says Crapps. “I mean, we have been in the government contracting business for a considerable amount of time now.” Crapps projects SENTEL will generate $54 million for 2008 and says a planned acquisition, the details of which he couldn’t speak on yet, would propel sales to as much as $70 million.
Ulysses Bridgeman Jr., president of Louisville, Kentucky-based Manna Inc. (No. 11 on the BE INDUSTRIAL/SERVICE 100 list with $475 million in revenues), was one of the CEOs that went on a buying binge. Revenues grew 72% on the heels of the quick-service restaurant owner’s acquisition of some 75 Chili’s stores. Manna now owns and operates 161 Wendy’s Old Fashioned Hamburger restaurants in five states and 105 Chili’s restaurants in seven states.
The move was part of a growth strategy that Bridgeman, 54, and his executive team crafted three years ago. “We started the company on the fast-food side. But looking at trends in the industry and in order for diversification, we felt moving into casual dining would make sense for the growth of the company,” he explains.
Going forward, Bridgeman plans to scale back on new store development and beef up operations to make them more effective and efficient. “With a softening on the commercial side there may be some opportunities ahead, and now may be the time for some land acquisition,” he says.
On the other side of the M&A coin, several CEOs have executed exit strategies. As a result, their companies will no longer rank among the BE 100s. Among them is RS Information Systems, BE’s 2007 Industrial/Service Company of the Year. CEO Rodney Hunt sold the
company to Wyle, a privately held provider of high-tech aerospace engineering, testing, and research services. (Financial terms of the deal have not been disclosed.) Others firms that no longer have black ownership status include IT firms Paradigm Holdings Inc. (No. 67 on the 2007 list) and Advanced Concepts Inc. (No. 82).Another big deal comes from serial entrepreneur Robert L. Johnson. The CEO of RLJ Development L.L.C. (No. 5 on the BE INDUSTRIAL/SERVICE 100 list with $704.3 million in revenues) sold a portfolio of 22 full- and select-service hotels to Inland American Lodging Corp. for approximately $900 million, with an estimated net profit of $300 million. Part of RLJ’s investment strategy was to renovate a number of hotels, change management companies, and create incremental value to the portfolio. Earlier this year the Bethesda, Maryland company also closed out its third private equity fund, the RLJ Real Estate Fund III, with $1.2 billion in assets. Revenues for RLJ grew an impressive 53%.
DIVERSITY AT PLAY
One winning strategy employed by BE 100s CEOs was to identify new revenue streams and seek new business opportunities outside of sluggish industries. Joseph B. Anderson Jr., chairman and CEO of TAG Holdings L.L.C. in Troy, Michigan (No. 6 on the BE INDUSTRIAL/ SERVICE 100 list with $605 million in revenues), was one of them, having made the call to pursue non-Detroit-based automotive companies as they gained market share in the U.S. And for his efforts, revenues for the automotive component supplier climbed 49%. “For each new opportunity I have launched a new company,” he adds, noting that he has not allowed the overall enterprise to be subject to failure or losses at any one plant. So, for example, “if a product in one assembly location is not selling, the volume goes down, and/or there is a strike, that doesn’t impact overall TAG Holdings.” Anderson says the company will continue to aggressively grow the business and pursue diverse customer and product bases in the U.S. and overseas.
Another company to adjust to the slowdown in the American automotive market was SET Enterprises Inc. (No. 24 on the BE INDUSTRIAL/SERVICE 100 list with $205 million in revenues). Because of the state of
the industry, the Warren, Michigan-based metal processing service firm had to make manpower and pricing adjustments to competitively bid for contracts. “For us, it was about having the best price,” says Chairman and CEO Sid E. Taylor. “We were able to be competitive and to do some things internally,” like reducing manpower and renegotiating union contracts, to keep manufacturing costs down. “By doing so, we won contracts that allowed us to grow in a very volatile market.”All told, the company posted a 24% increase in revenues. “At the end of the day you have to decide that you want to stay in business. You have to engage all your key people. You have to advise them on the market and the fact that they cannot afford to be complacent and continue to operate business as usual. This is a new day,” Taylor explains. “The customer has set a different standard and set the bar at a different level. Either you measure up or you are out of business.”
As the auto industry continues its dismal cycle, other areas remain robust. Among them: government services. Benefiting from increased defense spending was Universal Systems & Techn
ology (UNITECH), which designs and manufactures battlefield-simulation devices that the U.S. Army and Marine Corps use to train troops. Receiving more than $45 million in new Department of Defense orders during September and October of 2007, the Centreville, Virginia-based company’s revenues were up 26%, placing it No. 44 on the BE INDUSTRIAL/SERVICE 100 list with $98.8 million in revenues. The total value of UNITECH’s six active DOD contracts has increased to $225 million through 2010. “The growth in the company is being led by the simulation division in Orlando,” says UNITECH CEO Earl W. Stafford.
The company has produced hundreds of harmless improvised explosive devices (IEDs) that simulate these homemade bombs to a tee in impact, sound, and detonation. Recent UNITECH contracts involve designing and manufacturing counter radio electronic warfare, jamming devices used by troops to block cell phone and other remote wireless frequencies that detonate IEDs. UNITECH also makes laser-based weapons-training devices.
FACING AN ECONOMIC WRECKING BALL
It wasn’t all positive news for the BE 100S CEOs. The wrecking
Granite had attempted to restructure its debt and had explored a range of opportunities, including the sale of stations formerly affiliated with the WB Network in San Francisco and Detroit. At the time, Chairman and CEO W. Don Cornwell stated that Granite’s inability to sell those stations was linked to the demise of the WB. These factors were prominent in Granite’s decision to begin bankruptcy proceedings.
But some companies have managed to hold their ground and even grow. Those are the companies whose executives have adjusted to the ever-changing business climate and identified both new and tried-and-true ways of sustaining and growing business while curtailing costs. They’ve identified the right time to jettison less profitable lines of business while developing new ones. The opportunistic and successful have built new foundations on a shifting landscape.
Industrial/Service Eligibility
A company must be at least 51% black-owned and have been fully operational for the previous calendar year. Companies listed must manufacture or own the products they sell or provide industrial or consumer services. (Brokerages, real estate firms, and firms that provide professional services, such as accounting firms and law offices, are not eligible.)
Top 10 Revenue Growth Leaders
| Company | Location | 2007 Sales* | 2006 Sales* | Increase |
| Manufacturers Industrial Group L.L.C. | Lexington, TN | $223.000 | $118.000 | 88.98 |
| Bridgewater Interiors L.L.C. | Detroit, MI | $1,301.088 | $751.000 | 73.25 |
| Manna Inc. | Louisville, KY | $475.000 | $276.000 | 72.10 |
| RLJ Development L.L.C. | Bethesda, MD | $704.343 | $460.020 | 53.11 |
| TAG Holdings L.L.C. | Troy, MI | $605.000 | $404.000 | 49.75 |
| 1 Source Consulting Inc. | Washington, DC | $72.134 | $50.000 | 44.27 |
| Carter Brothers | Atlanta, GA | $80.000 | $55.600 | 43.88 |
| Datrose Inc. | Webster, NY | $50.900 | $38.000 | 33.95 |
| ZeroChaos | Orlando, FL | $480.000 | $366.800 | 30.86 |
| Power & Sons Construction Co. Inc. | Gary, IN | $76.472 | $59.978 | 27.50 |
*IN MILLIONS OF DOLLARS. AS OF DEC. 31, 2007. PREPARED BY B.E. RESEARCH. REVIEWED BY THE CERTIFIED PUBLIC ACCOUNTING FIRM EDWARDS & CO.
Top 10 Revenue Growth Leaders
| Company | Location | 2007 Sales* | 2006 Sales* | Increase |
| Manufacturers Industrial Group L.L.C. | Lexington, TN | $223.000 | $118.000 | 88.98 |
| Bridgewater Interiors L.L.C. | Detroit, MI | $1,301.088 | $751.000 | 73.25 |
| Manna Inc. | Louisville, KY | $475.000 | $276.000 | 72.10 |
| RLJ Development L.L.C. | Bethesda, MD | $704.343 | $460.020 | 53.11 |
| TAG Holdings L.L.C. | Troy, MI | $605.000 | $404.000 | 49.75 |
| 1 Source Consulting Inc. | Washington, DC | $72.134 | $50.000 | 44.27 |
| Carter Brothers | Atlanta, GA | $80.000 | $55.600 | 43.88 |
| Datrose Inc. | Web ster, NY |
$50.900 | $38.000 | valign=”top”>33.95 |
| ZeroChaos | Orlando, FL | $480.000 | $366.800 | 30.86 |
| Power & Sons Construction Co. Inc. | Gary, IN | $76.472 | $59.978 | 27.50 |
*IN MILLIONS OF DOLLARS. AS OF DEC. 31, 2007. PREPARED BY B.E. RESEARCH. REVIEWED BY THE CERTIFIED PUBLIC ACCOUNTING FIRM EDWARDS & CO.
Top 10 Employment Leaders
| Company | Location | Employees | Sales* | Employee to Sales** Ratio |
| MV Transportation Inc. | Fairfield, CA | 10,872 | 510.000 | 1:47 |
| Manna Inc. | Louisville, KY | 10,000 | 475.000 | 1:48 |
| ZeroChaos | Orlando, FL | 5,200 | 480.000 | 1:92 |
| Barden Cos. Inc. | Detroit, MI | 3,950 | 503.000 | 1:127 |
| V and J Holding Cos. Inc. | Milwaukee, WI | 3,600 | 91.000 | 1:25 |
| The Bartech Group Inc. | Livonia, MI | 3,300 | 243.000 | 1:74 |
| OMNIPLEX World Services Corp. | Chantilly, VA | 3,200 | 94.600 | 1:30 |
| Thompson Hospitality | Herndon, VA | 3,000 | 220.000 | 1:73 |
| The Gourmet Cos. | Atlanta, GA | 2,000 | 175.000 | 1:88 |
| H. J. Russell & Co. | Atlanta, GA | 1,948 | 376.612 | 1:193 |
Industrial/Service Summary
| Â | 2007 | 2006 | % Change |
| Total Staff | 79,252 | 79,376 | -0.16 |
| Total Sales* | $19,831.012 | $18,061.790 | 9.80 |
*IN MILLIONS OF DOLLARS. AS OF DEC. 31, 2007. PREPARED BY B.E. RESEARCH.
REVIEWED BY THE CERTIFIED PUBLIC ACCOUNTING FIRM EDWARDS & CO.