AFTERMATH OF AFFIRMATIVE ACTION RULING : Many Minorities Fear That Opportunities Will Diminish : Advancement: Widespread concern exists that firms that once stressed affirmative action may ease their policies.
For three years, J. Bruce Camino tried to launch his fledgling architectural firm in Orange, only to collect a stack of rejection letters on projects he had bid on. “I did not get considered at all,” Camino said.
Then in 1990, he signed up under the Small Business Administration’s minority set-aside program. That led to a $35,000 contract to design a dog kennel in the California desert for the Navy. More contracts followed. His business now employs seven full-time people and has annual revenue of about $1 million.
But now Camino and many other minority entrepreneurs fear that the types of crucial opportunities that enabled them to get started in business will disappear by virtue of the U.S. Supreme Court ruling Monday undercutting affirmative action programs.
“What that would do is make us compete with big firms with large budgets, tremendous portfolios and personnel,” said Camino, a 36-year-old Mexican American. “I can tell you that government work not only pays well and on time, but it is technically demanding and it’s good for building credibility. If we don’t have that, what other markets do we have.”
To be sure, business authorities say, well-established minority firms--even those that have benefited mightily from affirmative action--will survive the impact of the court decision. And many white business owners were delighted by the ruling.
Still, widespread concern exists among minority business owners and others that an important path to economic success for many Americans is being largely closed off.
Legal experts were still puzzling Tuesday over the potential scope of the Supreme Court ruling, but there was widespread agreement that contractors that have relied on minority set-asides face a tougher future.
The issue of set-asides drew sharply divided reaction among entrepreneurs at the White House Conference on Small Business meeting this week in Washington.
Kevin Reger, who builds houses in Illinois, thinks set-aside programs for minorities are unfair.
The 34-year-old contractor said he started his business in Sandwich, Ill., eight years ago with $2,000 in cash and, later, a $17,000 loan from his parents. By plowing every dime earned back into his company, Reger said, his company grew to sales of $2 million yearly, a staff of seven employees and 30 subcontracting employees, and a possible home-building contract in Germany.
But two years ago, he said, he decided against trying for bigger government road construction and building projects because he could not compete against large construction companies or even firms his own size because he wasn’t a minority.
“It’s unfair for certain businesses to have an unfair competitive advantage over anybody,” Reger said.
Paul R. Valteau Jr., who expanded his New Orleans-based nut shops to 18 airports nationally under FAA set-asides for minorities, thinks it is unfair that, growing up, he received second-rate health care and a second-rate education in a second-rate neighborhood simply because he is black. For him, minority set-asides simply adhere to the American ideal of providing opportunity for all.
Both men are attending the conference and typify the divided reaction there to the ruling. Although the 1,790 small-business owners bring sharply opposing ideas about affirmative action to the conference, the delegates are expected to approve a resolution supporting affirmative action.
Such a resolution would be included among the 60 recommendations due to be approved when the conference ends today. The recommendations will then be forwarded to President Clinton and Congress.
Reger said he will vote against the affirmative action resolution even though he’s certain it will pass. The minority and women business owners at the convention are organized, intelligent and politically savvy, he said. “If they can win here, they can there,” he said referring to the business world.
As entrepreneurs such as Randy Uchida see it, affirmative action programs have brought diversity and opportunity to industries that were long unfriendly to minorities.
“My parents lost everything in . . . [the] postwar years,” Uchida said. “I think there were things done to all minorities, and I don’t see where a little help hurts anything.”
Uchida said his company, Uchida Pipe & Industrial Products in Encino, was able to secure big contracts with Chevron, Southern California Gas Co. and others largely because they have been looking to boost minority representation among their suppliers. Such contracts are usually out of reach for start-up firms, he said.
That is also the outlook of Harriet Michel, president of the National Minority Supplier Development Council in New York, which represents 16,000 minority-owned firms. She said minority-owned businesses need extra help getting off the ground because they typically have less access to capital than established businesses or new firms started by whites.
In addition, big companies that have emphasized the importance of retaining minority contractors in the past may ease their policies.
At McDonnell Douglas Corp., 11% of the approximately 400 suppliers that have earned the distinction of “preferred supplier” are owned by minorities, spokesman Tom Williams said.
Williams said the company will continue to contract with minority-owned firms that have served McDonnell Douglas well, but he conceded that finding new minority businesses to work with may not be as high a priority as it was.
He said it is still “an important item, but the thing you really have to keep in focus is that you have the best product.”
Meanwhile, lawyers stand to gain a lot of business as a result of the ruling, at least in the short run. San Francisco management lawyer Lindbergh Porter Jr. cited two of his clients: a minority contractor and a government agency.
The minority businessman, Porter said, felt he was denied contracts in the past because of discrimination. However, instead of litigating, the businessman focused on securing contracts from firms with set-aside programs.
Now, Porter said, the businessman’s attitude is, “If I don’t get business now, I’m not going to go out of business--I’m going to sue somebody.”
Meanwhile, Porter said, officials at the government agency he represents now worry that they could be sued for discriminatory contracting practices by either white or minority contractors, depending on how their program is perceived.
Their concern, he said, is, “We’re damned if we do, and we’re damned if we don’t.”
However, specialists in employment law said that because the court case dealt specifically with a contracting issue, the impact will fall on set-aside programs, not on hiring initiatives.
Moreover, Los Angeles management lawyer William S. Waldo said, the Clinton Administration “will give the narrowest possible interpretation” to the decision “until and unless forced by Congress to act otherwise.”
Still, said Encino lawyer Joseph Posner, “Companies that want to get rid of affirmative action will have more incentive to do so,” even in their hiring practices.
“The tide of the country is running against what it sees as quota systems,” added Posner, who represents workers in employment disputes.
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Times staff writers Nancy Rivera Brooks, Greg Miller, Karen Kaplan and Rebecca Mowbray contributed to this report.
* AT ODDS
Clinton vows to protect programs. A1
* AIRWAVE AUCTION
FCC assessing minority preferences. D2
