B.E. 100s Built to Last.

The B.E. 100s have prepared for change. They have bolstered their bottom lines and proved staying power.

TODAY

Develop smart highway systems to help traffic move more smoothly

TOMORROW

Think up new excuses for being late to work

TOYOTA

"The dog ate my alarm clock."

"My long-lost uncle dropped in for tea."

"A squirrel short-circuited the garage door."

There will always be plenty of excuses for not getting to work on time. But in the future, traffic may not be one of them.

In San Diego, Toyota has tested a highway system that helps vehicles automatically maintain a safe distance from each other, regulating traffic flow. And our engineers are also developing on-board computers that monitor traffic congestion, suggest quicker alternative routes--even locate vacant parking spaces.

But that's just the beginning. We won't stop until bumper-to-bumper crawls are a thing of the past. And to those who say that's not possible, we have just one thing to say. Excuses, excuses, excuses.

www.toyota.com/tomorrow

DID WE REALLY EXPECT TO MAINTAIN THE 5.6% ECONOMIC growth rate achieved during the second quarter of 2000? According to Dr. Andrew Brimmer, a member of the BE Board of Economists, while the overall growth in real gross domestic product (GDP) was an amazing 5% for 2000, the last two quarters were only 2.2% and 1.4% respectively. Brimmer expects that figure to improve to no more than 3% for the fourth quarter of this year, resulting in a growth rate of 1.6% for all of 2001. This slower-growth economy, and the reduced availability of capital that often accompanies it, will make 2001 a more dicey proposition than the years leading up to 2000. The ability to grow--through joint ventures, consolidation, and strategic alliance--will continue to be a critical priority. But growth alone will not be enough--ask the dinosaurs, who were the largest things on the planet when they were liquidated. The ability to adapt and cope with change will continue to be a key common characteristic of those top African American concerns with staying power. (Our 2001 companies of the year, profiled in this issue, are prime examples.)

The BE 100s--our listings of the largest black-owned industrial/service firms, auto dealerships, advertising agencies, banks, asset managers, investment banks, and insurance firms--total 290 companies, employing more than 83,000 people. Total sales for the top 100 industrial/service companies and the top 100 auto dealerships alone were $19.7 billion, up 23% from $16 billion in 2000.

It seems that black entrepreneurs are starting to heed the growth imperative: 58 industrial/service firms and auto dealerships grossed $100 million or more in revenues, up from 46 last year. And 23 industrial/service firms and auto dealerships grossed more than $200 million in revenues in 2000, almost twice the number of such companies that did so in 1999 (12). What factors drove this trend? The increasingly acquisitive nature of black entrepreneurs--from Radio One's (No. 17 on the BE INDUSTRIAL/SERVICE 100 list with $177 million in sales)purchases of radio stations around the country to March-Hodge Holding Co.'s (No. 2 on the BE AUTO DEALER 100 list with $324.5 million in sales) plans to increase its phalanx of dealerships--has spurred them to buy other businesses to complement their existing holdings. In addition, broader consolidation in their respective industries has encouraged BE 100S CEOs to be far more open to seeking the equity partnerships, joint ventures, and strategic alliances necessary to remain competitive.

The biggest news in a record year for the BE 100s is that there is a new No. 1, with St. Louis-based World Wide Technology Inc. ending Oak Park, Michigan's Mel Farr Automotive Group's two-year reign as the nation's largest black-owned business (see sidebars). World Wide was barely edged out by Mel Farr Automotive for the title of the nation's largest black company last year. The flip-flop reflects two ongoing trends: the emergence of information technology in the growth of the BE 100s, and the difficulties experienced during the last two quarters of 2000, especially by the Big Three automakers and those, like Farr, who sell their products.

In 2000, the top 20 black-owned advertising agencies enjoyed impressive billings, reaping a respectable share of the record $236 billion spent by advertisers. Black-owned financial services companies, which includes our lists of the 10 largest insurance firms, the 25 largest banks, the 20 largest asset management firms, and the top 15 investment banks, had more of a mixed year--thanks to the opportunities and competitive challenges created by the Financial Modernization Act. This new law, which allows banks, brokerages, and insurance companies to merge and expand into each other's markets, has accelerated the consolidation already taking place among financial services companies, and forced many of the BE financial companies, including Chicago's Ariel Capital Management (see sidebar) into "head-to-knee" competition with industry giants. In fact, in both the advertising and financial services industry, consolidation is forcing many companies into a merge-or-be-purged posture.

Companies and entrepreneurs with proven track records against adversity--whether surviving earlier harsh economic times, retrenchment in their particular industries, or a crisis--will have an edge over those companies that came of age while the economy was growing at a 5% clip, and during which the letters "IT" were followed by the "ka-ching" of venture capital desperately seeking a home, and "bear market" was something you had to look up in the dictionary. The rocky economic terrain to come will favor businesses built to last--rugged, not necessarily pretty, vehicles able to bump, grind, and power around, over, and through the wreckage of the flashy business models that had fascinated investors in the recent past.

Buckle up--it's about to get interesting.

Sales by Industry

Auto Dealers $8,728.730 44.36%

Technology $1,131.810 5.74%

Publishing, Broadcasting $1,078.694 5.47%

Food & Beverage $1,704.224 8.65%

Construction $355.543 1.80%

Transportation $420.000 2.13%

Other $895.75 4.55%

Healthcare $132.210 0.67%

Entertainment $189.750 0.96%

Computer/Office Products $30.000 0.15%

Telecommunications $915.000 4.64%

Manufacturing $526.074 2.67%

Health & Beauty Aids $132.00 0.67%

Commodities $350.000 1.78%

Automotive Supplies $1,583.466 8.04%

Diversified $1,504.551 7.63%

Eligibility for the B.E. 100s

The BE 100s are comprised of the BE INDUSTRIAL/SERVICE 100 and the BE AUTO DEALER 100 lists. To be eligible for the INDUSTRIAL/SERVICE 100 list, a company must have been fully operational in the previous calendar year and be at least 51% black owned. It must manufacture or own the product it sells or provide industrial or consumer services. Brokerages, real estate firms and firms that provide professional services (accountants, lawyers, etc.) are not eligible. To qualify for the AUTO DEALER 100 list, a dealership must have been fully operational in the previous year and be at least 51% black owned.

BLACK ENTERPRISE consults industry analysts and other sources verify the information contained in the lists. All data are reviewed by the accounting firm Mitchell & Titus L.L.P. Companies not appearing on this year's list (but previously listed) have been excluded because they are no longer black owned or their gross sales have dropped below the minimum level required to make the list.

The BE 100s, as well as other business lists compiled by BE, are available on computer disk, in both Windows and Mac formats TopList Software provides mailing addresses and phone numbers of the companies listed. as well as information on black organizations.

For more information, contact B.E. Unlimited at 212-886-9576.

RELATED ARTICLE: World Wide Dominance

E-commerce is real. Just ask David Steward, CEO of World Wide Technology Inc., the largest black-owned business in the nation. Last year, Steward's customers point-and-clicked his information technology (IT) products and services firm to $802 million in revenues, and he unabashedly proclaims, "Our projections are that we'll probably do a billion and a half dollars worth of business this year."

Meeting those projections would make Maryland Heights, Missouri-based World Wide Technology only the second black-owned company to break the billion-dollar barrier--a feat first accomplished by TLC Beatrice International Foods, headed by the late, legendary dealmaker Reginald F. Lewis.

So why is World Wide thriving on e-business when so many dotcoms have struggled? Steward says it all comes down to what products and services you choose to offer over the Web, and the strategic alliances and relationships you enter into to deliver them. The company has strategically targeted "old economy" corporations, showing them how electronic procurement logistics and the operation, deployment, and delivery of IT applications can make their businesses more effective and efficient. World Wide helps companies develop systems that catalog inventory, track customer orders, file past purchasing information, or create databases of virtually any type of information suppliers or customers may require. And through its Telcobuy.com division, World Wide has teamed up with world-class telecommunications and IT providers to offer 500,000 telecommunications products and 150,000 IT products over the Web.

"We have a one-stop shop, whether you're looking for Sun Microsystems products, networking equipment from Cisco Systems, or for software products," says Steward. The CEO says that World Wide is excelling because it has made the value of accessing information services and ordering products online a competitive advantage for its customers. "We provide a central line to warehousing, distribution and integration services, and supply-chain management services that a company can't get anywhere else."

"Those companies that are able to invest in the Web technology, the supply-chain management systems, and electronic procurement logistics systems have an opportunity to define vertical market spaces," Steward explains. "In the process of defining those market spaces, they'll have a competitive advantage and a whole new frontier that they will have an opportunity to dominate."

--Matthew S. Scott

RELATED ARTICLE: Downshifting for Better Performance

Mel Farr admits, "It was not a very good year for us," but the CEO of Mel Farr Automotive Group in Oak Park, Michigan, is hoping that the theory of "addition by subtraction" will help his firm return to the position of the nation's No. 1 black auto dealer.

Slowing auto sales, legal difficulties, and a reorganization plan, all contributed to a reduction in the revenues for Farr's automotive group by some 31%, from $432 million in 1999 to $258 million in 2000. As a result, Farr surrendered his two-year hold on the title of the nation's largest black-owned business to World Wide Technology (see "World Wide Dominance"), and fell to No. 3 on the BE AUTO DEALER 100 list.

A year that began with a grand plan to open used-car superstores to serve consumers with risky credit in Detroit, Houston, Baltimore, Cincinnati, and Dayton, Ohio, ended with Farr selling four dealerships and settling a class-action lawsuit. But he insists that making these adjustments are just part of being in business.

Of the loss of the dealerships, Farr explains, "It was time to retrench and decide where I would like to see the automotive group go." He reasons that subtracting two poor-performing dealerships and accepting generous offers for the sale of two others, adds to the overall profitability of the four remaining dealerships in the group. It also gives him additional cash to use for expansion plans.

The lawsuit, settled last June, compensated customers who leased cars equipped with the controversial On-Time Device, which automatically prevents vehicles from starting if the lessee is behind on payments. Customers alleged that the device shut down their cars even when they had made payments, some even while they were driving. Those who leased cars from June 1999 through May 2000 received $200 in coupons to cover vehicle repairs; free inspections; and an upgraded On-Time Device, which Farr continues to use to insure that customers make prompt payments on their leased vehicles.

With the turmoil of 2000 behind him, Farr says he is even more committed to providing affordable vehicles to inner-city buyers with credit problems.

"There is a lot of money to be made in the used-car market," says Farr. "The market is overlooked, neglected, and forgotten. With the financing arm of my company, that is a gap I can fill. Basic transportation is what people need, and I want to perfect the selling of used cars in the urban marketplace."

--M.S.S.

RELATED ARTICLE: A Tortoise Laps the Hares

When John Rogers launched Ariel Capital Management in 1983, the chairman and CEO borrowed his philosophy from the old Aesop fable about the tortoise and the hare. The tale's lesson: "slow and steady wins the race." That maxim has served the Chicago-based money management firm well, over the years. Today, Ariel has vaulted to No. 3 on the BE ASSET MANAGERS list with $5.2 billion in assets under management.

The concern, which manages equity and fixed-income investments for institutional and individual clients--75.6% of Ariel's managed assets were derived from government agencies and corporations--has had a spectacular year. Its two equity funds, Ariel and Ariel Appreciation, produced impressive annual total returns of 28.77% and 18.82%, respectively. Lipper Analytical Services, the Summit, New Jersey-based mutual fund tracking company, ranked the Ariel Fund No. 1 among 12 small-cap value funds that have been in operation for the past 15 years. Last year, through a deal structured by the Rainbow/PUSH Coalition's Wall Street Project, Ariel was tapped as one of several minority firms to oversee $800 million in pension fund assets for the Raytheon Corp., one of the largest defense contractors in the world (see "Grow or Die," this issue).

That's not to say that this steadfast and methodical firm doesn't face major challenges. For one thing, deregulation has put smaller firms like Ariel toe-to-toe with behemoth-sized financial supermarkets like Citigroup and Fidelity Group, companies that handle trillions of dollars in assets. "We already feel like David going against Goliath," says Mellody Hobson, Ariel's president. She adds that such competition will make it a bit tougher for her firm to retain customers and increase its clientele.

Hobson says those larger companies might be interested in tapping in to Ariel's client base by offering small-cap and midcap mutual funds to African American investors, a niche market for the firm. She is hopeful that as these financial companies expand, they will consider Ariel for services on such things as 401(k)s for their larger clients.

Don't think for a minute that Ariel has retreated into its shell: it has already developed several partnerships with at least one larger financial provider. Over the past few years, the company has teamed with Charles Schwab & Co. to develop and release a survey that compares the investing habits of whites and African Americans, and the two firms have given joint presentations. The move has meant greater exposure for Ariel. "The advantage for us--and other black-owned asset management firms--is providing the capability of a larger distribution network," Hobson says. "By virtue of the fact that we're minority-owned, we would give many companies access to a unique client base that they have not traditionally tapped in to."

--Jeffrey McKinney