Frito-Lay Holds Trade Fair for Minority Firms : 600 Representatives Assemble in Los Angeles

Hoping to snare a part of $100 million in business being awarded this year by four PepsiCo Inc. units, about 600 minority entrepreneurs gathered at the downtown Hyatt Regency Hotel last week to meet with company purchasing officials at a trade fair.

The five-hour trade fair, the first held in Los Angeles by Dallas-based Frito-Lay, is one of only a handful put on by major American corporations each year, according to the National Minority Supply Development Council, a New York-based trade organization. The events are considered so useful that last Tuesday’s trade fair--the company’s second-ever--lured minority entrepreneurs to Los Angeles from as far away as New York and Chicago.

“Our program is set up to identify and help qualified minority suppliers who might not otherwise get though to the proper people in our organization,” said James H. O’Neil, senior vice present for operations at Frito-Lay, which had 1985 sales of $2.5 billion and purchases about $800 million in supplies and services annually.

Big Increase

O’Neil said Frito-Lay expects to award $34 million in business to minority firms this year, compared to less than $1 million awarded during 1983 when the program began. Its largest current minority suppliers range from a Farmington, N.M., Navajo Indian reservation that sells potatoes to Chicago-based Soft Sheen Products Co. The Chicago firm recently branched out from its hair-care business and began supplying Frito-Lay with barbecue spice for its chips.

In addition to the $34 million from Frito-Lay, O’Neil said, Taco Bell, Pizza Hut and the Pepsi Cola Bottling Group expect to transact another $60 million in business with minority suppliers this year.

No one knows precisely how many companies have similar programs or how much purchasing business is done with minority firms. However, the federal government did about $5 billion worth of business with minority contractors last year under the provisions of the Public Works Employment Act of 1977, popularly known as the “set aside program.” And an official of the Development Council in New York said about half of its 154 members have formal purchasing programs with minority suppliers.

For minority entrepreneurs in Los Angeles County, which has the largest number of black-owned business (23,520) in the nation, Frito-Lay’s fair offered a rare opportunity to meet executives who make the decisions about awarding millions of dollars worth of contracts for products and services ranging from potatoes and computers to security guards and cleaning services.

“Events like this are extremely necessary,” said Mozell English, president of English’s Uniforms of Los Angeles. “They (corporate executives) don’t know us very well and we don’t know them.

“If I were to just call a company on the phone cold turkey (to solicit business), I’d never get past the receptionist,” said English, who like others at the event spent the day trading business cards and advice.

Not Charity Program

O’Neil said Frito-Lay’s minority business development program, which also provides counseling services and educational opportunities to minorities “is not a charity program” and that Frito-Lay derives significant economic benefits.

“We feel that by expanding our pool of suppliers we can cut costs,” said O’Neil. “The more people interested in bidding for your business the more competition there is.” Estimating that the program has saved Frito-Lay several million dollars in purchasing costs, O’Neil said Frito-Lay has realized the savings without verring from its policy of doing business with suppliers who offer the best “price, terms and service.”

Although still rare, programs such as Frito-Lay’s appear to be multiplying, experts say, partly because of pressure from civil rights groups such as the NAACP and the Rev. Jesse Jackson’s People United to Save Humanity.

Since 1982, PUSH has signed agreements with 11 U.S. corporations to promote minority economic development programs, said Alvin Pitcher, who oversees the PUSH’s economic development program.

Pritcher said he is not familiar with the Frito-Lay program. But he said that generally, “few companies have made a real commitment to providing serious economic development opportunities for blacks” and other minorities.

“What is out there now is mainly the result of the pressure from organizations such as ours,” he said.

Frito-Lay officials said they were not pressured to start a minority business program.

“We didn’t feel any pressure from PUSH,” said Michael H. Jordan, executive vice president of Pepsico, who initiated the minority business development program when he was at Frito-Lay. “This was purely a Frito-Lay initiative.”