Barden's excellent adventure.

IT WAS ONLY A MATTER OF TIME BEFORE North America became a bit too small for Don Barden.

After all, we're talking about a man who has amassed a fortune by always being two steps ahead of the pack. And whether it was stints as a newspaper publisher, real estate tycoon or cable television czar, Barden realized many years ago the only way you truly get ahead is by going into areas where others fear to tread.

Perhaps that explains the BE 100s CEO's latest venture, Barden International (BI). Brokering a deal between U.S. automaker General Motors and the African country of Namibia, Barden, 54, has built a $15 million auto manufacturing plant where he will retrofit vehicles purchased from GM from left-hand to right-hand drive and sell them to Namibia.

BI has become a General Motors Overseas Distribution Corp. fleet and retail sales dealer of Chevrolet and Cadillac vehicles in Namibia. As part of the 1996 agreement between BI and the Namibian government, the Ministry of Works, Transport and Communications has purchased 823 vehicles for $31 million. The shipment included 1997 and 1998 Chevrolet light- and medium-duty trucks and its Bluebird line of buses. Barden's fleet will comprise one-quarter of the government's vehicles.

But why set up such a potentially risky venture overseas? While the partnership is a potentially lucrative move, Barden could certainly have brokered a domestic deal with GM or another auto manufacturer if he was determined to enter the auto industry. Ask Barden, and he says auto manufacturing holds no real lure for him. The deal with GM is simply a means to an end--establishing a business base in Africa.

"We want to explore other opportunities on the continent, and this gets us there," admits Barden. "First you establish a profitable business, then you move into other areas. For us, that might include telecommunications or the development of natural resources. You just need a foothold."

That said, Barden has set his sights on and invested his money in the low-profile nation of Namibia. He plans to establish a beachhead there that, he hopes, will be just the start of his global empire.

ROLLING THE DICE

If Don Barden believes in past lives, then surely he imagines himself as a swashbuckler from days gone by. How else to explain a brash business style and gambling nature that would give even the most aggressive executives reason to pause?

Well, whatever Barden may have done or accomplished in a previous life, in this incarnation he has made a career out of living on the cutting edge. Whether it was being one of the first African Americans to Jump headfirst into the billion-dollar cable industry or deciding one day to dance with lady luck by running his own riverboat casino, he clearly thrives on new and risky challenges. Indeed it was Barden's flair for risk-taking and his success in a variety of business endeavors that made Barden Companies Inc. the BE Company of the Year in 1992. Today, with revenues currently at $93.2 million, his firm is No. 18 on the BE INDUSTRIAL SERVICE 100 list.

So it shouldn't surprise many that Barden would engineer such a deal with GM, even though he has no background in auto manufacturing. For him, this latest venture is no more far-fetched than any of the earlier gambles in his entrepreneurial career. "It's not like I had a background in cable before I went into that industry," he says. "It's the same with the casino business and radio before that."

So how did Barden convince one of the world's largest auto manufacturers to come along for the ride? Quite simply, the deal happened because Barden put his own money on the table to see that it got done. The Namibian plant is 100% owned and financed by Barden. And he's not shy about taking credit for it, either.

"General Motors had tried unsuccessfully for years to establish sales with the Namibian government. But the Namibians wanted benefits for their people and their country, not just to purchase vehicles from anyone that was selling them," explains Barden. "Namibia wanted to work with someone who would show a commitment to their people by providing jobs."

His willingness to put capital into the operation and the connections he'd made with Namibian President Sam Nujoma made the deal happen. Joseph W. Parker, GM fleet sales manager for Africa and the Middle East, says now that the deal is in place, Barden will get substantial support in making the venture a success.

"We're throwing a considerable amount of technical and managerial expertise into this program," Parker says. "We've worked with Barden not just on training all the technical people like mechanics and technicians, but also the managerial people in getting them educated about the GM method of doing business," adds Parker. "So is it a risk? Yes, there's always a risk. But I think it was a very good move on GM's part."

GOING FOR A RIDE IN THE MOTHERLAND 

While Namibia doesn't have the political intrigue and history of neighboring South Africa, it does have many enticements to call its own. With spectacular scenery that includes a wide variety of wildlife, the world's largest sand dunes and oldest desert, the Namib, the country boasts a population of 1.7 million, a modern infrastructure as well as economic and political stability. As such, Namibia presents "a small but attractive market for foreign investment," says K.L. Fredericks, director of the Harlem Export Assistance Center, U.S. Department of Commerce. "Namibia enjoys a stable multi-party democracy and a good human rights record. Its economic growth in 1997 rose 4% after rebounding from sluggish growth of 2.6% in 1996," she says.

Known for its contrasting landscapes of sea and arid desert, as well as a rich sense of cultures and traditions, "Africa's Gem" is also rich in natural resources. The mining industry is the principal source of income for the country and contributes approximately 13% to Namibia's gross domestic product. Diamonds are the major export, while other resources, which include uranium, copper and gold, are also found in great supply. "New competition laws under discussion in, both Namibia and South Africa could play an important role in opening the market to new players, including U.S. companies," says Fredericks. "The government seems committed to foreign investors."

This new approach didn't go unnoticed in Detroit. One of Barden's greatest talents is recognizing opportunities that will eventually turn him a profit. His second gift is for closing the deal. Barden got his first whiff of the burgeoning opportunities that might come as democracy swept through the former apartheid countries in Africa some nine years ago. He arranged meetings with both the Namibian ambassador and prime minister to get a sense of the types of business opportunities available to foreigners in the country.

Yet it wasn't until Namibian President Sam Nujoma was Barden's guest in Detroit in 1995 that an opportunity arose. As part of that visit, Barden arranged a tour of a local GM plant for Nujoma. "Don called us and asked if we'd like to be involved with this visit by the president," says GM's Parker. "He also inquired whether we'd be interested in doing some business in Namibia."

It turns out GM was very interested. According to Barden, the automaker had held prior discussions with the Namibian government about selling vehicles in the country, but talks ended when the Namibians insisted on GM building a manufacturing plant in the country. The automaker was unwilling to make such a financial commitment because Namibia, with a population of under 2 million, was considered too small a market. Instead Parker convinced both men that a conversion plant was GM's most viable option. But only with some assurances. GM was only interested if they could lock down a major purchase commitment from the Namibian government in advance. "We needed something that would help this enterprise sustain itself in the short run while they built the business in the long run," says Parker.

After that initial meeting with GM, Barden says he made a proposal to the Namibian president on their ride back to the airport. "I asked him if he would be amenable to purchasing vehicles from General Motors if we built the conversion plant. And he said yes," with a commitment from Nujoma, Barden came to terms with GM to acquire a fleet dealership and a distributorship of GM cars and trucks for Namibia. Barden established a headquarters in December 1996 and began construction of the new plant in Windhoek, Namibia's capital city, in July 1997. A ribbon cutting ceremony was held this past March for the new 59,000 sq. ft. Barden International Automotive Manufacturing and Processing Facility. The plant includes BI corporate offices, an automotive retail dealership with a state-of-the-art service center and a factory.

Barden decided to entrust someone close to home to preside over his GM venture. His wife, Bella Marshall, will be BI's president and COO. She brings strong management skills to the position, having served as the finance director for the city of Detroit from 1982 to 1993. An attorney, she has experience as the chair and secretary-treasurer of public entities responsible for the financing and construction oversight of major projects worth billions to the city of Detroit. These projects included the Cobo Convention Center and Greater Detroit Resource Recovery Facility.

To oversee the actual day-to-day management of the site, Barden and Marshall have brought in Audley M. Smith Jr. as managing director of BI. A former president of Africare's Detroit chapter, Smith led the first African American business delegation to Namibia in 1993 and believes doing business there has definite advantages. "It's easy to do business here. You have phones and financial institutions that work. You have a pool of professionals that includes accountants and bookkeepers. You have a democratic government entrenched. The tools are in place to allow you to function," he says.

Adds Marshall, "Namibia is ideal because it has roads, sewers, water, electricity and a low crime rate. It also has the second-strongest credit rating in sub-Saharan Africa, which means internationally the financial markets believe the country handles its finances well. That's extremely important."

The processing facility will be responsible for right-hand drive conversion of GM vehicles for the Namibian market. "In layman's terms you're taking a car that was built to be driven with a left-hand drive configuration and changing it over so you can drive from the right-hand side," says Parker. "This conversion affects every major system on the vehicle, from all the electrical components down to the climate controls."

The plant itself consists of three major sections. The vehicle sales and service division, a conversion branch and a parts and accessories division that will handle the retail and wholesale trade of items including tires and batteries. The plant currently employs 22 workers, including three senior managers. Only two employees are African American. The rest are native Namibians. Barden says by year's end the full staff, which will include management, sales, administrative and production positions, will total 75.

IS THIS AN UPHILL DRIVE?

Michael Sudarkasa, an analyst with Labat-Anderson Inc., says once Barden finds and trains native Namibians to work on the retrofit process, holding on to them will become another concern. "Their initial challenge is maintaining productivity an minimizing turnover," says Sudarkasa, whose McLean, Virginia, firm assists sub-Saharan African countries in private sector development. "Well-trained GM mechanics or assemblymen will find themselves in great demand in that region." While the Namibian government urges the employment of native residents in all business ventures, the government realizes there is a shortage of skilled labor in some areas and allows for work permits for expatriates in the absence of qualified local candidates, according to the country's international trade guide.

Yet, labor issues will be just one of many challenges Barden will have to deal with overseas if this venture is to be successful, says Sudarkasa. "What if the markets don't open up or any significant tariff or nontariff trade restrictions occur between countries?" says Sudarkasa. "Namibia itself is not that big. It's wealthy because of its natural resources but there's not that many people, which limits how much product you're going to sell," says Parker.

There are also significant trade restrictions to hurdle as the African automobile industry is extremely protective. "The South African Customs Union (SACU) regulations, of which Namibia is a signatory, is really geared toward protection of the South African automobile market. And it puts at a disadvantage any automobile maker that would like to do business in any country in the region other than South Africa," says Parker.

Tariff restrictions are also an issue. Depending on the make, model and weight of the vehicle involved, the automobiles GM is shipping overseas can fall into a tariff rate that ranges anywhere from 29% to 57%. Other costs include ocean freight, insurance, right-hand conversion costs, plus 13% local duties and taxes. "By the time we send a four-wheel drive pickup overseas that would sell for $19,000 here, that same automobile could cost as much as $48,000 to a consumer in Namibia," says Parker. "And most of that increase is coming from the tariff and duties."

GM's main competition will come from Japan, which controls 25% of the Namibian market with Toyota and Nissan light-duty trucks. Yet Barden and GM won't be operating under the same tariff restrictions. The new Namibian government grandfathered automobile assemblers already in the country. As a result Japanese firms are firmly entrenched and have a distinct advantage over those seeking to enter the market, such as Barden and GM.

So with all the inherent challenges of international business, why did Barden look to an overseas market in the first place? He says the late Commerce Secretary Ron Brown made him give serious consideration to doing business overseas. "Ron was a good friend, and he was very much for investing in emerging nations," says Barden, who hosted a 1989 fund-raiser in Detroit that helped catapult Brown to the chairmanship of the Democratic National Committee. "He played a major role in my decision to seek out opportunities beyond this country. Ron had the vision to recognize early on that we have an expanding global economy. And we're benefiting from his vision right now."

The deals looks like a viable opportunity for all parties involved, and there's a big upside, says Sudarkasa. "It's GM's opportunity to establish a regional beachhead because they're looking to establish a greater presence in southern Africa. I doubt the Namibian operation is going to be solely for the Namibian market."

He's right. Parker says there are plans to expand into other African territories, but won't say where or when. But he does mention that neighboring South Africa's market consumes approximately 375,000 new vehicles a year versus Namibia's 15,000. "Obviously we would like to see this thing go beyond what it's going to do in Namibia," he says.

That seems a reasonable expectation if Barden can successfully establish a regional distribution center and assembly point in Namibia. Its deepwater port, located at Walvis Bay, is one of the most efficient and modern ports in Africa and compares favorably with port facilities in developed countries. "It will allow easy product transport up the southwesthern coast," says Sudarkasa. "You have Angola, which is a very wealthy neighbor, notwithstanding political problems, so there's the possibility of selling there. Of course you have South Africa, which offers a very good market, as well as Botswana There are a lot of good opportunities."

U.S. Namibian Ambassador George Ward believes Barden and GM's joint entry into the country will have beneficial effects for the country. Ward says the Namibian government will have to do more if it wishes to continue attracting large U.S. investors. But this is a start. With BI, says Ward, comes a significant investment with the building of an industrial plant as well as the symbolism that doing business in Namibia makes good economic sense. And in a country struggling to lure international investment, every little bit helps.

"Namibia is rich in gold, diamonds and uranium. But those are things that can be extracted," says Ward. "There's no processing that would allow income to distributed more equally. There needs to be more employment for the disadvantaged here, and the only way we can do that is through building more industrial enterprises. The Barden deal does that because it brings jobs and training. I just hope it's only a start."

So does Barden.