Top Black Firms Are Diversifying Into New Areas, Survey Finds

NEW YORK — The nation’s largest black-owned companies are restructuring to face competition and an uncertain economy, according to a new survey released Monday by Black Enterprise magazine.

The magazine’s latest annual survey of the top 100 black industrial and service companies shows that, like many U.S. companies in general, leading black businesses are exploring new approaches in order to be competitive.

Many black companies have grown recently through mergers and acquisitions, joint ventures, new technology and marketing approaches, and branching out into new industries, said the survey in the magazine’s June issue.

Billions in Revenue

Taken together, the top 100 companies ranked in the survey had gross revenues of $4.1 billion in 1987. All but one of them are privately owned.

The competition was fierce enough last year to force into bankruptcy three companies formerly on the list: United Chem-Con, an electronics manufacturer and defense contractor; hair-care products maker American Beauty Products and oil products distributor J. R. Son Inc.

The survey points to black-owned computer and information services companies, construction firms, hair-care products makers and car dealerships as especially successful categories.

The biggest and fastest-growing black company is TLC Beatrice International Holdings Inc., a food manufacturer and distributor formed from the $985-million leveraged buyout of Beatrice International. In a leveraged buyout, the acquirer finances the purchase of the target company with sales of its assets or the cash flow of the target company.

New York-based TLC Beatrice, headed by Wall Street attorney Reginald F. Lewis, was the first black company to make more than $1 billion in annual sales and reported revenue of $1.8 billion in 1987. The company’s 61 businesses include Butterball turkeys and Good Humor ice cream.

Soft Drinks and Publishing

The buyout of Beatrice “places Lewis on the cutting edge of corporate finance and gives him access to Europe, Latin America and Asia, three of the world’s fastest-growing markets,” the Black Enterprise survey says.

Other black entrepreneurs--such as Gary L. White of Trans Jones Inc./Jones Transfer Co. and C. Everett Wallace of City & Suburban Distributors Inc.--have used leveraged buyouts to propel their companies into the top 100.

The second-ranked company on the list, Johnson Publishing Co., saw its growth boosted by its cosmetics and hair-care products and its syndicated television show, according to the report.

The Chicago-based company, which had $201.6 million in sales last year, markets Fashion Fair products and publishes Ebony, Jet and Ebony Man.

Philadelphia Coca-Cola Bottling Co., No. 3 on the list, has grown by purchasing several profitable companies and bottling franchises through joint ventures with other black businesses. The company rang up 1987 revenue of $166 million.

Construction firm H. J. Russell & Co. continues to show its strength in competitive bidding for contracts and has aggressively branched out into real estate development with Gibraltar Land Inc., the survey says. Fourth-ranked Russell, based in Atlanta, posted sales of $141.9 million.

No. 5 Motown Industries has sought to restructure its operations, infusing $38 million into its records subsidiary for the development and promotion of new artists. Los Angeles-based Motown managed to record $100 million in sales last year.

Hair-care maker Johnson Products Co., the only publicly held company on the list at No. 19, was hit hardest by the stock market collapse Oct. 19: its stock dropped from $4 a share to just under $3. The Chicago-based company, like other black hair-care specialists, continues to battle white-owned giants such as Alberto-Culver and Revlon for market share.

Johnson Products’ 1987 revenue was $33.9 million.

LARGEST CALIFORNIA BLACK-OWNED FIRMS

These California companies are on Black Enterprise magazine’s list of the largest 100 black-owned U.S. firms:

1. Motown Industries, Los Angeles, entertainment, $100 million.

2. Dick Griffey Productions, Hollywood, entertainment, $43.9 million.

3. Advanced Consumer Marketing Corp., Burlingame, computer systems integration, mail-order products, $29.4 million.

4. Westside Distributors, South Gate, beer distributor, $28.7 million.

5. Beauchamp Distributing Co., Compton, beer distributor, $20.7 million.

6. Bay City Marine Inc., San Diego, shipbuilding and repair, $20.6 million.

7. Kass Management Services Inc., Oakland, food service management and janitorial service, $15.4 million.

8. James T. Heard Management Corp., Cerritos, fast food, $11.6 million.

9. J. E. Ethridge Construction Inc., Fresno, general contractor, $10 million.

10. Fastaurants Inc., Los Angeles, fast food, $5.3 million.