IMMEDIATE RELEASE: Tuesday April 28s, 2009

Minority Business RoundTable Policy Statement for the Auto industry Task Force

Washington, D.C. - We are all agreed that it is in the national interest to preserve a manufacturing base in the U.S. Then, it follows:

"The U.S. needs to have a viable minority business manufacturing base to sustain not only the domestic auto industry, but also other industries that have high priority for the Obama Administration such as mass transit, aerospace, defense, wind power, solar power, etc. The alternatives present unacceptable tradeoffs: shipping materials and oil to Asia to outsource manufacturing to low labor-rate countries-and then shipping high-mass manufactured products back to the U.S.-creates a large carbon footprint, increases U.S. dependency, and exacerbates trade imbalances."

Leonard Greenhalgh, PhD
Professor of Management
Director, Programs for Minority- and Women-Owned Businesses Director, Native American Business Programs
Tuck School of Business at Dartmouth

The auto industry is a key component of that base, and should be helped to survive the recession while making the transition to new-generation vehicles. But help to this industry needs to be extended beyond General Motors and Chrysler: it needs to address measures to ensure the survival of the multi-tier industry clusters that enable final assembly and manufacturing-minority businesses.

Minority-owned businesses are an important and vital component of automobile industry clusters, even though they tend to be included at lower tiers in the value chain. These firms, which are typically mentored in specific value-add sectors of the industry, employ the largest percentage of minority workers, so attending to their needs is a productive way of addressing this Administration's urban agenda. Our data indicates that 75-80% of minority auto suppliers and dealers will be forced out of business without assistance/protection from the Auto Task Force. This is likely to occur soon because we are typically smaller, squeezed by larger corporations for lower profit margins, first or second generation entrepreneurs, and typically do not have the funding necessary to represent us in the halls of power. We also have not had enough time to build cash or other type of financial reserves upon which we could draw down in troubled times.

At stake are approximately 350,000 jobs: the nation can either make a commitment to keep its willing workers employed, or provide equivalent or greater public support in terms of unemployment and other dependant federal and state benefits that does nothing to sustain our national competitive advantage and promote economic recovery.

We believe that the direction public policy needs to take is fairly obvious. Governmental actions should support minority businesses. The specific provisions within the broad economic recovery plan need to include, but are not limited to the following:

1. A pledge from the Federal Government that minority interests will be equally protected, and through the period of automobile industry restructuring.
   
2. Since all (OEMs, Suppliers, and Dealers) operate under the same business constraints and conditions, minority suppliers and dealers should be treated in the same manner as the OEM, in the current and future business models.
   
3. Whatever the manner of treatment the OEMs receive, the minority suppliers and dealers should receive as well.

Specific actions which might be taken now to help minority businesses are:

1. Bridge Loans issued through TARP or TALF via Banks who received TARP or TALF funds. All loans provided to minority businesses should be Interest Free and guaranteed 100 percent to the banks/lending institutions in order to free up working capital. Treasury, Federal Reserve should be creative in allowing banks incentives to lend to minority businesses. Several examples are: from the bank-bank charges interest only loans to minority businesses-Balloon or term out note in 24 months-Bank gets added incentive of 2% interest on matching loan amount that allows federal tax deduction on interest.
   
2. OEM Incentive: All Automotive OEM's who continue to support their current family of minority businesses should receive a tax credit of 100% for 2 years for the entire dollar value of the awarded business. OEM's who received TARP funds get interest owed to the government waived during loan period while they return minority suppliers and dealers to current volume of sales and put companies on immediate pay.

All new jobs created by the bridge loan will be reported and a tax credit of 50% for two year's employment will be provided to the minority business.

1. SBA should expand its maximum loans to each recipient to $20,000,000 and remove the restricting, outdated size standards describing small business (i.e. trucking/logistics can be no more than $23 million in sales or it is not small business). Remove the SBA 504 loan restriction, and allow all money borrowed against assets to be utilized for working capital.
   
2. Establish a pool of financial resources specifically for minority businesses such as $2.5 billion for loans, grants, and retooling for the Nation's 5 million minority businesses.

Treasury should issue a policy statement saying minority businesses are critical to the recovery efforts and must be included in the auto industry restructuring plans.

About the Minority Business RoundTable:

The Minority Business RoundTable is the only national non-profit organization for CEOs of the nation's leading African-American, Asian-American, Hispanic-American, Native-American and other minority-owned businesses. Its members analyze and help formulate effective public policies that impact minority-owned business. Our corporate members work to create sustainable communities and national economic viability through successful partnerships.

The Minority Business RoundTable is proud to have Glaxco Smith Kline, Equifax, Southwest Airlines, IMPAC real estate holding companies, the Allegis Group and Aerotek, Inc., the Business Roundtable, an association of chief executive officers of the country's leading corporations, Western Union, the Kauffman Foundation, U.S. Department of Energy, U.S. Small Business Administration, U.S. Department of Homeland Security, U.S. Department of Labor and other federal agencies, corporations and business trade groups as strategic partners. For more information on the Minority Business RoundTable, please visit www.mbrt.net.

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