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Remarks by MBDA National Director David Hinson at United Technologies Corporation
9th Annual Diversity Business Exchange
Hartford, CT. October 2010
Ni Hao… hank you Claudia for the kind introduction.
Elieen Drake, Jeffrey Place, Ron Tates, Dr. Fred, Gold Suppliers and distinguished guests: It is my pleasure to be here today at the 9th Annual Diverse Business Exchange.
On behalf of the President Barack Obama and Secretary of Commerce Gary Locke, I want to thank United Technologies Corporation for inviting me to join you, particularly I want to thank Claudia Munez-Nahar, Tom Donnelly and Dennis Proto for their outstanding leadership and friendship.
I’ve been asked to give an overview of my Agency, the Minority Business Development Agency and talk about how we can be of assistance to you as you build your businesses- and to discuss what you must do to better penetrate the global supply chains of this nations’ most important corporations -such as United Technologies Corporation.
I say “Most Important” because written into the name of this company and burned into their culture is one word that more than any other word will determine the future of our nation.
That word is TECHNOLOGY
Those nations who lead in technology are in the position to ensure that their citizens have the best opportunities to realize their potential. Those companies that produce new and innovative technologies sustain and solidify the foundation of our economy – indeed the very lifestyle to which we have become accustomed.
I would submit to you that United Technologies-whose long history of innovation in air conditioning systems, fire detection and aerospace-Is one of those “most important” companies.
Let me tell you a bit about our agency. The Minority Business Development Agency is the only federal agency tasked with promoting the growth and global competitiveness of the nation’s minority-owned businesses.
Our role in the US economy is to create jobs and expand GDP through a sector of the economy that has been historically under-utilized and under-valued.
Why is this important?
Because for our nation to maintain economic leadership - in an environment of intense global competition-every sector of our economy must fire on all cylinders.
I often use the analogy of an engine-so for the purposes of this group, I will use the analogy of a Pratt & Whitney jet engine.
If several of the blades are not operating with the same level of efficiency as others, the engine can not function at peak performance. Our role at MBDA is to eliminate those impediments and create those opportunities that will help the blades, called the minority business community, operate at peak performance.
This is critical to our nation because of the tremendous economic opportunity that the minority business community offers. According to the Survey of Business Owners, MBEs -YOU -generate $1 trillion dollars of economic output to the nation and create 5.9 million jobs.
However, the potential is $3.4 trillion in economic output and the creation of 11.8 million new jobs. I should also add that the minority business community is creating new jobs at a faster rate than any other sector of the economy.
In addition, minority owned firms are twice as likely to export as non-minority owned firms. Language skills, cultural knowledge, family relationships and often a greater understanding of local business practices gives our minority owned businesses a competitive advantage in exporting.
This is critical for a nation that is increasingly looking to exports as a vehicle for long-term economic growth. MBDA helps minority-owned firms grow by providing them access to capital, access to contracts and access to new markets. Last year we facilitated $3.2 billion in contracts and capital to minority-owned firms, creating nearly 5,000 new jobs and saving tens of thousands of others.
We achieved these results through our 48 business development centers located across the nation. During a time when Americans all over the nation are desperately seeking employment opportunities, every job created is important.
That is why the work you are doing matters so much and that is why you have to be more aggressive in strengthening your product-service offering to your corporate clients – so that your company can grow faster and create more jobs.
A substantial part of your growth opportunity will be participating in the global supply chain of companies like United Technologies.
Recently, I traveled to China with senior executives of 10 major corporations including UTC, and we discussed the trends in their global supply chains, and what minority businesses must do if they are going to gain greater access to this supply chain.
The first trend we discussed was bundling outsourcing.
More and more corporations are bundling component sourcing -manufacturing facilities and supply chain services as they move from a “four- wall” centric view where manufacturing drove their strategic competitive advantage to a “four –corners of the world” approach where managing the global supply chain dominates the battle for strategic competitive advantage.
To compete, minority businesses must develop scalability through joint ventures and strategic alliances to address the increase bundling of large contracts. Many of these strategic alliances will be with local companies where your large corporate partner has a footprint.
A second trend is the move to a lower cost supply base.
The global economic downturn has forced corporations to be laser focused on cost reduction and finding new ways to better control cost across their global supply chains.
Initially, services were being out-sourced to India and manufacturing to China, but as labor costs rise and tax incentives expire corporations are shifting manufacturing and services to the nations with the lowest unit labor cost.
We are seeing some manufacturing being shifted from China and into lower cost Vietnam for example. Intel is investing billions of dollars in new manufacturing facilities in Vietnam--- and call centers which were almost exclusively in India have migrated to places like the Philippines and Panama.
Progressive corporations are now exploring English-speaking African countries that possess fiber-optic infrastructures as their future low cost centers.
What this means is that for minority-owned businesses to be effective participants in the global supply chain they must provide lower cost solutions to corporations by investing in lower cost regions.
On the China trip there were about 15 minority-owned firms who were there seeking partnerships with local firms to do just that and recently MBDA hosted a delegation from the Lioning Province of China to our offices to specifically discuss how to create strategic partnerships between SMEs in China and MBEs in United States.
Building joint ventures and strategic partnership relationships is something you must take advantage of if you want to be competitive in the global arena.
A third trend is the increasing complexity in managing a global supply chain.
When a company manufactures parts in India and South America with materials from China that are assembled in Poland and sold as finished products around the world, complexity management and risk management are key.
And the risks are many. Supply chain bankruptcies, commodity price fluctuations, political risks, exchange rate fluctuations, labor strife, technology failure and even Somali pirates and swine flu outbreaks reminds all corporations of their supply chain vulnerabilities and complexity.
Most corporations are looking for ways to improve supply chain performance by shifting more risks to their suppliers. This creates new opportunities for you to add value by understanding the risks that your corporate partners face and developing solutions to mitigate these risks.
These are just a few of the many global trends that create opportunities for your businesses. But while minority-owned firms are working hard to position themselves as value added partners to corporations these same corporations must become better partners to the minority business community.
As there are no free breakfasts, lunches or dinners, we are asking corporations to take a more active role in promoting their MBEs by increasing their MBE spend ... which will help MBEs to get bigger.
We ask that corporations work with their MBEs to help them better understand their global supply chain which will allow their MBE partners to get smarter.
And increase MBE access to the highest levels of senior management which will help MBEs build stronger relationships across all levels of the corporate structure.
These steps must be taken if minority owned firms are to be true partners in the execution of a corporation’s global strategy.
In conclusion, I want to thank United Technologies Corporation for allowing me to join you today. I encourage you to continue to think globally, to focus on building joint ventures and strategic partnerships so that you are in a better position to expand your product service offering globally.
And finally, I encourage you to partner with MBDA and the U.S. Department of Commerce. We are here to help you identify and utilize the full range of government programs to help your businesses grow.
We are here to help you gain access to new contracts, to more capital, and to new markets. The nation needs you to have bigger and stronger businesses.
And MBDA is here as your strategic partner.
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