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South African blacks do business
BUSINESS
BRIEFS
Dow Dips
on profit-taking
Profit-taking is driving down
blue-chip stocks on W allStreet. In
mid-day trading, the Dow Jones
industrial average was o ff 28.32
points at 5,981.68 following an
early run-upto 6.044.29. The Dow
jumped41 points yesterday toclose
at a record high o f 6,010.00 after
gaining48 points Friday, as inves­
tors cheered the outlook for con­
tinued moderate economic growth
and low inflation.
GM earnings
in high gear
Despite labor trouble in Cana­
da, General Motors says it rolled
to a $1.3 billion profit in the third
q u a rte r. T he w o rld ’s largest
automaker was boosted by both its
North American and international
automotive operations. GM says
the combined net income o f its
North American Automotive O p­
erations and its Delphi Automo­
tive System s parts businesses
reached $515 million, the first
third-q u arter profit for NAO-
Delphi since 1986.
CSX acquiring
conrail
A major deal was announced in
the railroad industry. CSX Corp,
says it has agreed to acquire Conrail
for about $8.4 b.Jion in cash and
stock. Conrail is a rival rail trans­
port company in the eastern Unit­
ed States. The merged entity will
offer extensive rail service in 22
eastern states over 29,645 miles o f
track. It covers a territory from
Chicago, Boston and New York to
Miami and New Orleans.
Buffett gets
another one
Warren Buffett has struck again.
Berkshire Hathaway, the holding
company controlled by the bil­
lionaire investor, says it is acquir­
ing FlightSafety International for
about $1.5 billion. FlightSafety
provides high-technology training
to operators o f aircraft and ships.
Berkshire Hathaway says it has
executed a definitive agreement
under which FlightSafety will be­
come a wholly owned subsidiary
o f Berkshire.
Tl $148 million loss
Plunging prices for computer
memory chips have cost Texas In­
struments. The Dallas-based semi­
conductor giant says it lost $148
million in the third quarter and will
offer early retirement to 5,300 em­
ployees tocut costs. Tl says the loss,
equal to 78 cents a share, is due to a
one-time charge of$ 192 million for
research and development costs as­
sociated with its acquisition this year
of Silicon Systems.
Bank profits up in
3rd quarter
Major U.S. banks are reporting
strong gains for the latest quarter.
Chase Manhattan says its earnings
in the third quarter rose to $858
million, up 12 percent from $764
million in the same period o f 1995.
Chase surpassed Citicorp this year
as the nation’s larges, bank com ­
pany after its merger with Chemi­
cal Bank.
Coke, Pepsi Report
Results
The two combatants in the cola
wars released their earnings re­
ports. Coca-Cola says its earnings
jum ped 21 percent in the latest
quarter, thanks to strong soft drink
sales. Coca-Cola says it earned
$967 million, or 39 cents a share,
in the third quarter versus year-
ago earnings o f $802 million, or
32 cents a share. Revenues slipped
to $4.7 illion from $4.9 billion.
Rival PepsiCo reported a sharp drop in
income due to a previously announced
charge to restructure its international
soft drink operation.
The end o f apartheid two years
ago dissolved white minority rule
but not white economic dominance.
Since then, however, black South
Africans have made strides in gain­
ing economic power, particularly in
forming consortia led b\ big names
to buy chunks o f some o f the coun­
try's larges, companies.
In the months after President
Nelson Mandela’s African National
Congress came to power in 1994,
blacks controlled only a handful o f
companies that accounted for less
than half o f I percent o f total equity
o f the m ore than 6 0 0 -m em ber
Johannesburg Stock Exchange.
Now that stake has increased to 10
percent, and black-owned groups
have cut major deals such as the
recent purchase o f at least $333 mil­
lion in shares ofa major subsidiary of
the giant Anglo American Corp
Major players include Dr. Nthato
Motlana, Mandela’s physician who
heads New Africa Investments with
holdings in banking, insurance and
media companies valued at $262
million on the stock exchange.
But so far, changing ownership
hasn't created jobs, and economists
say it is new, small businesses—like
N iki's Oasis—that can get the impov­
erished black majority working to
create a middle class.
Sondlo quit her job with an em­
ploy ment agency and put up her apart­
ment and all her savings as collateral
for a $44,500 loan to open N iki’s
Oasis a year ago.
Since then, sh e ’s added lunch ser­
vice, hired extra staff to help her
eight full-time employees on the
w e e k e n d s and grow n used to
working 12-hour days, seven days a
week
With its mauve walls and cool
jazz, the renovated store front does
feel like an oasis in the crowded
downtown streets.
But Sondlo remembers how hard
it was during the African winter to
lure people from their homes.
"Sometimes when you’re experi­
encing problems, you think, 'How
did I get m yselfintothis?’ Butyou do
feel good when you know you're
working for yourself," she said.
The challenge for any new busi­
ness in South Africa, whether black-
or white-owned, is daunting. The
country's high crime rate is news
around the world, worrying potential
foreign investors, sending skilled.
white South Africans fleeing over­
seas and keeping restaurant patrons
at home a, night.
Since February, the rand currency
has fallen 20 percent against the U.S.
dollar, battered by concern about the
crime rate and other factors. Eco­
nomic grow th has hovered at around
“ More people are trying to do something
positive with their lives since the first all-race
elections in 1994.”
-Makhaola Mohanoe
3 percent in recent years, half what
the government says is needed to
create jobs.
Some people, though, have man­
aged to take advantage o f the chang­
es.
JafPen Landscapes, started las,
year by Penwell MsimangoandJaftha
Nyama with just two workers, now
has a staff of 15 and envisions em­
ploying as many as 50.
Msimango and Nyama borrowed
$6.660 from a white developer to
buy lawnmowers, a truck and other
star,-up equipment I hey do about
$5.300 a month in business as a di­
rect resultofgovemmentpolicy They
Nelson’s ar- !-Que
It had been a long time desire of
Oscar Nelson to open a Bar-B-Que
restaurant. Finally in August he re­
alized his dream and opened
Nelson's Bar-B-Que. Located at
Dekum and 8th. Nelson works for
the City o f Portland Maintenance
Department, and he is also an or­
dained Baptist Minister.
He characterizes his Bar-B-Que
as southern style influenced by his
travels to such places as Chicago to
Mississippi.
Nelson’s Bar-B-Que is a family
run business involving all six ofhis
children and wife. O ldest son
Lathan runs the operation week­
days when his parents are at work.
The decor at the restaurant is
sparse, with white-washed walls
and a checkered black and white
tile flooring. However there is a
free standing circular fire place in
the center o f the seating area. The
restaurant seats up to 28 people with
booths.
Compared to most Bar-Be-Que
restaurants N elson’s prices are mod­
est: charging $6.50 for a chicken
dinner and $7.50 fora rib dinner. Mr
Nelson says that his experience in
working in the meat packing busi­
ness gave him the ability to pass the
savings on to his customers. Accord­
ing to Mr. Nelson, business has been
real good... since we have been
opened we sold out once. I think my
plant gardens around homes being
built with state subsidies, earning
$33 per plot from the developer
The government wants to build I
million homes for poor blacks by
1999, though there are signs the goal
is too ambitious.
But even if the housing plans fall
time has come for what I had in my
hear,.
I own the place, I can’t lose.
The people o f the community
have stood by us.
The N elson's were kind enough
to provide me with a sample plate
so that I could describe to the Port­
land Observer readers what their
food tastes like.
I had catfish, pork ribs, hush
puppies and sweet potato pie.
The ribs were tender and well-
done the sauce was dominated by a
tomato sweet taste.
The catfish was a pleasant sur­
prise and one o f the best fried cat­
fish items I had to date. The outside
o f the cattish was crispy with a
slightly salty taste. The fish was
well done and didn’t have a hint o f
under cooking. The sweet potato
pie, was firm, sweet and very palpa­
ble with a flaky crust.
short, Msimango and Ny ama believe
JafPen will expand with the black
middle class. They're planning to
star, a nursery to grow their own trees
and sod, and say they’ll be first in line
for landscaping contracts when the
government builds parks and schools
in new subdivisions.
“As an entrepreneur, you see op­
portunities and you use them," Ny ama
said.
Others say frustrating obstacles
still exist for blacks. Makhaola
M ohanoe and his two partners,
M etsing M alebo and P erpétua
Makhuba. struggled for a year to find
star,-up funds for a business.
Even their parents tried to dis­
courage the three-all in their mid-
20s--from leaving secure jobs in ad­
vertising. In the end, they turned to a
franchiser, who helped them get a
bank loan and find rental space for
their London Pie fast food joint.
“ It’s almost impossible to get any ­
thing on your own. You still need a
white face to present your case,"
Mohanoe said.
The w hite-ow ned London Pie
Corp, has provided advertising sup­
port and expertise, the partners ac­
knowledge. I he product is one South
Africans know and love, and cus­
tomers line up for the crescents of
flaky pastry filled with steak-and-
kidney or lamb stew at their prime
retail location near the entrance to a
shopping mall.
"More people are trying to do
something positive with their lives"
since the first all-race elections in
1994, said Mohanoe. “You have the
confidence to approach someone and
present your ease, whereas three or
four years ago you wouldn’t even
have bothered, because you already
knew what the answer would be.
Attitudes are changing, and that's a
start."
Corruption brings
down minority firm
A far-reaching corruption probe
in Florida apparently has brought
down the nation’s biggest minority-
owned municipal bond firm and one
o f its founders.
Calvin Grigsby, co-founder o f
Grigsby Brandford & Co. in San
Francisco, is a figure in the bribery
investigation that has ensnared a
growing number of major players in
Miami politics.
Last month, without giving a rea­
son, Grigsby suddenly resigned from
the firm he founded in 1981. He has
hired former O.J. Simpson defense
attorney Johnnie Cochran.
His firm once headed for robust
growth and trend-busting earnings
was unraveling this week with the
resignation o f the com pany’s other
two partners. The fallout left Grigsby
Brandford & Co. without Grigsby,
newly appointed chairman and co­
founder Napoleon Brandford III and
new ly nam ed c h ie f ex ecu tiv e
Suzanne Shank.
The firm "underwrote more than
all the other women and minority-
owned firms put together," said
Muriel Siebert, who owns a New
York securities firm that has hired
Brandford and Shank. "To see some­
body that has built that up through so
much work come down like this
yes, it is pathetic.”
Siebert's firm, Muriel Siebert &
Co., is forming a new unit headed by
Brandford and Shank, who took with
them more than half o f Grigsby
Brandford's 70 employees.
•
Grigsby Brandford was one of the
nation’s largest municipal underwrit­
ers, ranking 19th las, year, according
to the trade publication Bond Buyer.
I'he firm handled 65 bond issues in
1995 totaling more than $ 1.23 billion.
Chips are up for a woman in a man's world
W hen Abby C ole began her
Chip Factory, her friends thought
she was dabbling in chocolate or
potatoes.
Instead, Cole, founder and presi­
dent o f The Chip Factory, entered
the highly competitive and male dom­
inated world o f computer memory
chips, where she has been outdoing
the com petition bit by bit.
After a few years o f selling pe­
ripherals for another company , Cole
recognized a need for memory chips.
Inthe late '80s, computer com pa­
nies were putting out a new model
with expanded memory and faster
processors every six months.
Ifyou happened toow n lastyear’s
model, your computer may not have
had enough memory to run the next
generation o f software, so computer
users were forced to upgrade their
com puters every year.
In this system o f “programmed
obsolescence,” Cole recognized a
real business opportunity.
She decided to sell memory chips
that would allow her customers to
upgrade their computer systems so
they could run the new software pro­
grams.
With this idea, Cole built her Chip
Factory from the ground up—well
below the ground up.
Cole began her business in the
basement o f her home. "I had three
employees helping me out," says
Cole. “ We made sales calls, took
orders and shipped the product, like
we were a major distributor. No one
would have guessed we were work­
ing out o f a home.”
While the orders were coming in
and the product shipping out. Cole
recalls this period as more hard work
than profits. “ I was new to the busi­
ness and I had to learn by trial and
error,” says Cole. “ I made some mis­
takes and some bad decisions, but
we eventually go, it right.”
Confident she had worked out the
bugs, she moved her company into a
new office building. There, she took
on additional employees and worked
harder than ever to watch profit mar­
gins continue to grow thinner and
thinner. “The industry just became
increasingly competitive until com­
panies were forced to sell huge vol­
umes just to stay in business," says
Cole.
Realizing she couldn't compete
with the larger distributors, but nev­
er one to g iv e u p a fight. Cole sought
new opportunities in new market
arenas, and she found them in her
own electronic back yard.
While scanning the Internet. Cole
discovered several bulletins calling
for pricing bids on memory chips for
a variety o f government agencies.
She quickly acquired minority/woni-
an-owned business status and began
bidding on contracts for various uni­
versities and government agencies.
"In acquiring these university and
government contracts, w eareableto
fill a niche and remain profitable,"
says Cole, “no mean feat in this
highly competitive m arket"
While Cole enjoys her recent suc­
cess, she is never one to sit back on
her laurels. She is alway s looking for
new opportunities and new ways to
stay ahead o f the competition. She
continuesexpandingherproduct line
and she has begun offering a variety
o f peripherals. Also, she is continu­
ally seeking new markets.
Havingconquered the public sec­
tor, she is beginning to glance back
at private industry. "W e also started
doing business with larger corpora­
tions. They are constantly needing
to upgrade their computers."
REESE’S OIL, INC.
Startup smooth with
/4Â Furnace Repair
•*
usiness Development Fund 7 Day Service/24 Hours Service
With the metropolitan region to
choose from, Marilyn Riggs ofG re-
sham decided Northeast Portland,
with its varied economic assistance
programs, was the place for her
start-up business.
A Business Development Fund
loan o f $40,000 and additional as­
sistance from the Portland Devel­
opment Commission helped Riggs
set up her Magnetic Attractions.
She and four workers, located at
Oregon Assoc iat ion o f M inority En­
trepreneurs campus at 4134 N.
Vancouver Ave., make refrigerator
magnets sold by Disney and Hall­
mark, among others.
Business Development Loans,
administered by the state Econom­
ic Development Department, can
be up to $250,000, and up to 40
percent o f the financing, for capital
costs for emerging small businesses.
They are targeted to industrial firms,
bu, retail and food services that
are located on N ortheast Martin
Luther King Jr. Boulevard are also
eligible.
As a condition o f the loan a bor­
rower must sign a first source hiring
agreement in which they agree to
seek employees firs, from the local
community.
Riggs first tried to obtain all of her
financing privately but, she says, "The
commercial banks wan, you to be
fully collateralized, preferrably in
liquid funds. If I had that kind of
money I wouldn’t have needed a
loan. Start-up businesses have a ter­
rible time. If I’m successful, I hope I
remember my roots."
l
A Gresham native, she says she
was attracted to the area as a busi­
ness location by the benefits o f the
Northeast Enterprise Zone. “ I had
the ÖAME staff, the Portland Com­
munity Collette staff and the ODD
staff to run things by, so I didn't feel
so isolated,” she says. "I had access
here to so many resources here to
make sure I succeeded that locating
here seemed like the prudent thing
to do.”
Any concerns about operating in
“bad" northeast Portland? Riggs
says that at first she was nervous. "I
drove the streets here a lot before I
signed a lease. Now I stay here late
a, night, go out to eat, and I'm no
more uncomfortable than I would
be in Gresham I’m cautious, bu, I
would be anywhere ’’
A To Z C onstruction C o .
GENERAL CONTRACTOR LICENSE
Certificate o f Insurance, Bond, and C.C.B. registration No. I 17751
Remodeling, Complete Roofing Repairing, Plumbing, Electrical,
and Dry Wall.
Reese’ s Yard &. Weed Service
No Job Too Big or Too Small
Call Joe Reese for a free quote. Permit required
Joe L. Reese/President
4.34 N.E. Failing St.
Phone #287-2121 or Cellular #318-7213