In Massachusetts there are many qualified minority-owned businesses (MBEs) in the building trades, yet some construction companies fall short in meeting MBE participation goals.
Such goals are intended to achieve the maximum feasible level of minority participation, to create access and opportunity for MBEs, and to create more diversity in the construction industry.
Those who finance construction projects are now taking a closer look, asking construction companies which fall short in meeting their goals to do a better job. The public sector, private lenders and investors, and developers say that their MBE participation goals are designed to be ambitious yet achievable.
So why do some companies do well while others fall short when it comes to giving MBEs their fair share of jobs in the construction industry? And what can underperformers do?
According to Travis Watson, Community Impact Officer at Massachusetts Housing Investment Corporation (MHIC), a private nonprofit community development lender, there are a several reasons for non-compliance, but “a primary reason is that they don’t know how to do it. Companies have minority business goals but little support. They often don’t know where to turn for help in finding qualified MBEs, so they improvise and therefore they’re not likely to meet the goals,” he said.
While many construction companies do a good job at meeting their goals, others consider mandated MBE goals “onerous,” and they don’t go the extra mile to comply, Mr. Watson explained. But even companies which understand that MBEs are not getting the contracts they deserve, sometimes struggle to meet their goals, he said.
In response to that issue, Mr. Watson has helped MHIC create a new resource – the Access and Opportunity Network (www.accessandopportunity.org) – a clearinghouse of strategies, news, best practices, and directories to help companies meet or exceed their minority participation goals, and generally help create more diversity in the construction industry. The website provides support for developers and construction companies working on MHIC-financed projects, and makes it easier for them to comply with hiring goals.
More broadly, the Access and Opportunity Network website provides resources for finding qualified MBEs based in Massachusetts and Rhode Island for a range of jobs in the building trades. It has a manual on Best Practices, examples of company Minority Participation and Diversity Plans, links to organizations such as the Massachusetts Minority Contractors Association, case studies and news related to the field. Perhaps most importantly, the website has a downloadable data base of MBEs in Massachusetts and Rhode Island, broken down by sub-specialties, and direct links to directories of state-certified MBEs. For noncertified companies that want more work on construction projects, the website provides guidance on how to get certified as well as the forms required to apply. Mr. Watson said that the Access and Opportunity Network is the only centralized source and data base with information about expanding diversity in the building trades in Massachusetts and Rhode Island.
Joe Flatley, President of MHIC, said that, “We’re seeing a lot of progress in terms of companies meeting or exceeding their MBE goals, but for those companies that need guidance in finding the right partners, we created the new website. On projects we finance, we help our sponsors set goals and we monitor compliance. We also make sure they have the resources available to do the best they can do.”
Another reason why some companies fail to achieve good results in reaching minority business goals, according to Mr. Watson, is that they typically do business with the same subcontractors over and over again rather than expanding the pool of subcontractors they go out to bid for and work with.
One company that goes the extra mile is Bilt-Rite Construction, founded in 1982 by brothers Chris and John Sullivan. Since the company was founded, it has included women and minority-owned firms as part of its team. Currently, Bilt-Rite is contractor for the Bartlett Station development in Dudley Square, being developed by Nuestra Comunidad and Windale developers and financed, in part, by MHIC. That project is a multi-phase redevelopment of a blighted, former MBTA bus yard into housing, retail and commercial space for Roxbury businesses. On this project and others, Bilt-Rite has earned a reputation for reaching out, going to community meetings and events, being willing to work with MBEs which they have not previously worked with, including small companies, and for paying quickly.
According to John Sullivan, Bilt-Rite CEO, “The main thing in hiring women and minority businesses (MWBEs) is it has to be an integral part of the job from the very beginning. Compliance has to be on the front burner and you have to have your own team members engaged in the process. Companies that wait until the last minute are setting themselves up for failure in terms of meeting minority business goals.”
Regarding the barriers to MWBEs securing contracts, Mr. Sullivan said that “a big part of the problem for smaller subcontractors is they don’t have the back-office resources they need to do the paperwork, bid on jobs quickly, and pay their people when they do get the work. To get around that, in some cases we pay those MWBEs before we get the money. That’s particularly important for small minority subcontractors. We pay them to make sure they can make payroll.”
Mr. Sullivan added, “It is critical that there is an emphasis placed on getting more minority and women workers into the trades at an early age because we are seeing a retiring workforce at a time when there is more construction than ever so it can create a shortfall in workers. If more young people got into the trades, some of them would go on to start up small businesses that want to grow, which is critical moving forward.”
Beverley Johnson, President of the Massachusetts Minority Contractors Association (MMCA), said that “the primary reason why minority participation goals are not always met is lack of outreach. We are constantly having that conversation with private developers who say they are not able to find qualified MBEs when they are not doing enough outreach. There’s plenty of expertise out there – plumbers, HVAC people, masons, carpenters, who are ready to do the job.”
“Another challenge for MBEs is bucking up against established relationships,” said Ms. Johnson. It’s sometimes hard to create that bridge allowing minority trade and contractors to develop contact with majority held companies. It can be a hurdle to get work on jobs if they don’t have those relationships and access to decision makers. There needs to be some organizational structure that brings it all together.”
Ms. Johnson pointed to a model initiative that is significantly expanding opportunities for MBEs: the Boston Pilot Program, launched in 2012 by the MMCA teaming up with the Massachusetts Association of Community Development Corporations (MACDC). That program involves six community development corporations which have pledged to boost the participation of MBEs in their development projects. Since the program was established, it has generated more than $50 million in new contracts for MBE businesses.
Surely there are many ways to expand MBE participation for construction projects and several highly-successful minority-owned businesses in New England, like Cruz Construction and Janey Construction Management & Consulting, that have prospered notwithstanding challenges.
“There’s no good reason why other qualified MBEs shouldn’t also have the opportunity to grow and prosper,” Mr. Flatley said. “Our website will help by creating a network and providing tools for those committed to meeting minority participation goals, making more equitable the distribution of contracts and creating more diversity in the building trades.”