Coming on strong: with the economy on the upswing, the B.E. 100s broke the $10 billion barrier and got back into the business if job creation.

What a year! It still remains to be seen whether an economy on the rebound can keep inflation in check and whether the stock market can keep the bears at bay. But 1993 will certainly be remembered as one of the best years ever for the BLACK ENTERPRISE 100s.

Last year, the BE INDUSTRIAL/SERVICE 100 and the BE Auto DEALER 100 broke the $10 billion gross revenue barrier for the first time. With combined 1993 sales of $10.28 billion, the revenue growth of the BE 100s was 13.9%--not as large as 1992's 14. 1 %, but still ahead of the 1993 revenue growth rate of only 4.5% for the Fortune 500.

More important, the nation's 100 largest black-owned industrial/service companies and 100 largest black-owned automobile dealers experienced their first major boost in employment--an incredible 20% increase--since 1988.

Billed as a comeback year for the American economy, for African-Americans 1993 was filled with more confusing subplots and unresolved story lines than a made-for-TV movie--family feuds, dramatic comebacks, desperate gambits... Here are just some of the cliffhangers of BE's 22nd Annual Report on Black Business:

* Have Visa, Will Travel starring Loida N. Lewis and Jean S. Fugett Jr. The nation's largest black-owned company, TLC Beatrice International Holdings Inc., launches a search for a new CEO--nearly a year to the day after the sudden death of founding Chairman and CEO Reginald F. Lewis. Lewis' widow, Loida, an immigration attorney and informal business adviser to her husband, assumes the chairmanship of the company. Moved over, if not out: Reginald's successor and half-brother, CEO Jean Fugett, an attorney who led the food processing and distribution business--with operations primarily in Western Europe--through a European recession. Will a new CEO boost TLC's value to shareholders? And if so, will the company ever go public?

* Dynasty--The Final Episode? starring Joan B. Johnson, with a cameo appearance by George E. Johnson. The CEO of Johnson Products Co. approves a $67 million merger between the Chicago-based black haircare manufacturer and IVAX Corp., a white-owned cosmetics and pharmaceutical conglomerate. Joan Johnson's former husband, the company founder who gave up controlling interest of Johnson Products in a divorce settlement, rails against the loss of one of the nation's most prominent black-owned family businesses. Will Johnson Products be bleached of its legacy of black entrepreneurial achievement?

* Land of the Rising Yen starring the BE AUTO DEALER 100. African-American auto dealers, long penalized by their inability to gain foreign dealerships during the Japanese automobile boom of the 1980s, are in the right place at the right time when Ford, General Motors and Chrysler make their comeback. The plot is driven by a rising Japanese yen, which makes Japanese cars more expensive than their Big Three counterparts. The result: A record sales year for die BE AUTO DEALER 100. But will there be enough new-car buyers in 1994 to continue to let the good times roll?

* Risky Business starring Carl Jones. Threads 4 Life, last year's BE Company of the Year and the maker of clothing and other products under the Cross Colours and Karl Kani labels, abandons manufacturing and switches to licensing its labels. Early losers: The nearly 200 employees who were let go when the California clothing company shut down its capital-intense manufacturing operations. Can Threads 4 Life CEO Jones avoid losing his shirt as well?

* Smith vs. Smith starring Joshua I. Smith Sr., and costarring Joshua I. Smith II, but not exactly in a supporting role. The suit and countersuit between Maxima Corp.'s CEO and his son, involving $675,000 in company funds, underscores the perils of mixing family with business. But this is far more than a courtroom drama: Will the systems engineering company, which hasn't turned a profit since 199 1, pay the price?

* And Then There Were Five starring Albert W. Johnson Sr. in his farewell performance. After 21 consecutive years in the ranks of the BE 100s, the CEO and founder of Al Johnson Cadillac-Avanti-Saab Inc. retires, selling his dealership back to General Motors. Along with the IVAX/Johnson Products merger, this reduces the number of companies that have been on every BE list of the nation's largest black-owned businesses to five, with only one auto dealership among them.

* The surviving five are Johnson Publishing Co., Earl G. Graves Ltd., Essence Communications, H.J. Russell & Co. and Conyers Riverside Ford. Are BE 100s CEOs surnamed Johnson becoming an endangered species?

AN ECONOMY OF FITS AND STARTS

The dramatic performance of the BE 100s was shaped in 1993 by an economic recovery full of fits and starts--not unlike the administration currently presiding over the nation's economic health. Bill Clinton's first-quarter term will be remembered for a long-awaited increase in consumer demand, a bullish stock market (although a bear season has seemed imminent in recent months), falling long-term interest rates and heated debate over the merits of the president's economic plan and health care reform efforts. While the leading economic indicators were often contradictory and the unsettling stench of layoffs filled the air, reports that the nation was regaining economic strength had far more credibility in 1993 than they had the year before.

That credibility was boosted by the BE 100s' return to the business of job creation last year. Since 1988 (the year the top 100 black-owned auto dealerships were grouped onto their own list), the number of people employed by the combined lists has decreased almost every year, even as total gross revenues have increased. (The one exception: a 2.5% increase in total staff in 1991.) This was due primarily to reductions in staff undertaken by the BE INDUSTRIAL/SERVICE 100 companies, many of which were competitively pressed to boost productivity while reducing labor costs and shedding unprofitible businesses.

In 1993, that downward trend was reversed in a major way: The total number of people employed by the BE INDUSTRIAL/SERVICE 100 increased to 38,649 from 31,668--an amazing 22% jump, and by far its biggest growth in employment in six years.

In fact, for the first time in the history of the Annual Report on Black Business, every company among the BE 100s Top 10 Employment Leaders (see chart) had at least 1,000 people on its payroll. (The 11th largest BE 100s employer, Lundy Enterprises in New Orleans, also reported 1,000 employees.) With the BE AUTO DEALER 100 contributing a 9.9% increase in staff, die BE 100s as a whole employed a total of 45,628 people last year.

The nation's 100 largest black-owned industrial/service firms posted total sales of $6.2 billion, an increase of 8.2% over 1992. Total sales for the 18 new companies on the 1994 list amounted to $447.8 million. The combined gross revenues of companies displaced from the BE INDUSTRIAL/SERVICE 100 was $308.4 million. Thus, turnover on the list resulted in a net sales gain of $139.4 million.

Companies are displaced from the BE 100s when they are no longer at least 5 1 % black-owned or are no longer among the nation's 100 largest black-owned industrial/service concerns or 100 largest black-owned automobile dealerships. (See sidebar, "Eligibility for the BE 100s.")

CHANGE REMAINS CONSTANT

The BE 100s sales by industry (see chart) remained virtually unchanged from last year, as food & beverage, media and technology remained the most heavily represented industries on die industrial/service list. Two industries showed a significant decline: construction and health & beauty aids. In construction, many of the smaller firms, such as Williams-Russell and Johnson Inc. of Atlanta and Powers & Sons. Construction Co. of Gary, Ind., were squeezed off the list; while the health & beauty aids industry was hit by Johnson Products' exit from the list.

Each of this year's top 10 industrial/service companies reported an increase in business. And although the rankings showed few shifts, these businesses, nonetheless, went through plenty of changes.

Take TLC Beatrice, for example. During his first year on the job, CEO Jean S. Fugett faced a European recession as well as a persistent perception among some analysts and shareholders that he was not the best person to fill his late half-brother's shoes. "I took over during a crisis," says Fugett. "My job was to evaluate where the company was and what needed to happen to return it to profitability." Fugett then implemented a company-wide restructuring and cost-cutting program.

Even as the company conducts its search for his successor, Fugett, who will remain on TLC Beatrice's board, is pleased with the results. Sales for the food processing and distribution company rose by 2.1 % in 1993, to $1.7 billion, while staff fell from 5,000 to 4,500. "In 1992 we lost money," he says. "In 1993 we made money." Meanwhile, a group of shareholders, which was pressing TLC Beatrice's directors to register their common stock, has officially withdrawn that demand.

Threads 4 Life, the Commerce, Calif.-based clothing manufacturer of Cross Colours clothes, also has a challenging road ahead of it. Last year, while it generated sales of $97 million, the company saw its biggest retail customer, Merry-Go-Round, file for bankruptcy. That became a major factor in Threads 4 Life's decision to abandon manufacturing--an area of the business it has struggled with--in order to switch to licensing its Cross Colours label to other clothing makers.

Will the strategy work? It could, say fashion industry observers. But the apparel company's sales are sure to plummet in 1994, especially since the "new' Threads 4 Life will no longer include Karl Kani. (CEO Carl Jones has projected figures as low as $30 million.) At least in part because Kani wanted to establish stronger control of the design and marketing of his creations, the 26-year-old hip-hop clothing designer has severed his ties to Threads 4 Life in order to launch his own company, Karl Kani Infinity.

The 1994 BE Company of the Year, another apparel company, took an opposing evolutionary path to rapid growth. It moved from licensing to manufacturing. Addison, Texas-based Drew Pearson Companies (DPC) began by sublicensing its major sports league licenses to other sports-headwear makers, before acquiring its own manufacturing facilities. (See "Coming Through In The Clutch," this issue.) With 1993 sales of $77.5 million, DPC has made the BE 100s Top 10 Growth Leaders for the second consecutive year.

The Johnson Products/IVAX merger stirred passionate debate over whether the selling of black-owned businesses to nonblacks was detrimental to black economic empowerment. Yet, Johnson Products was not the only BE 100s business to pass from black ownership last year.

Technology Applications Inc. (TAI), an Alexandria, Va.-based systems integration and engineering concern, was ranked No. 21 on last year's industrial/service list, but its founder and CEO, James 1. Chatman, sold it upon his retirement last November. TAI is now a subsidiary of Reston, Va.-based DynCorp, a $911 million high-technology company.

Continuing the trend of the past decade, the revenue gains of BE 100s companies acquired by African-American entrepreneurs counterbalanced the lost sales of BE 100s companies sold by their owners. Some of the most prominent acquisitions were in the food industry. For instance, Reston, Va.-based Thompson Hospitality L.P. landed as No. 44 on the industrial/service list, with sales of $34.25 million, after acquiring a string of Bob's Big Boy restaurants from Marriott Corp. and converting them into Shoney's outlets. (See "The Freshman Class of 1994.") And New Orleans' Lundy Enterprises logged in at No. 69, with $23.3 million in sales, after CEO Larry Lundy acquired 31 Pizza Hut restaurants. Thompson Hospitality and three other food-industry businesses--Milwaukee's V & J Foods Inc. and Atlanta's La-Van Hawkins Inner City Foods and The Gourmet Companies--are among the BE 100s Top 10 Employment Leaders.

The acquisition of Johnson Products, which traded on the American Stock Exchange, also reduced by one the number of publicly traded BE 100s companies. However, another newcomer to the industrial/service list, Envirotest Systems Corp., which trades on NASDAQ, joins BET Holdings Inc. (NYSE) and Granite Broadcasting Corp. (NASDAQ), in keeping the number of publicly traded companies at three. Tucson, Ariz.-based Envirotest, No. 11 on this year's list with $90 million in sales, is the nation's largest vehicle-emissions testing company.

A NEW YEN FOR AMERICAN CARS

The comeback launched by Detroit's Big Three more than a year ago continued unabated in 1993--and the nation's largest African-American-owned car dealerships are playing that fact for all it's worth.

"Our 1993 profits surpassed our forecasts--we had a phenomenal year," says Charlene Mitchell, advertising manager for Mel Farr Automotive Group, who adds that first-quarter sales suggest a great start in 1994 as well.

In addition to posting its second consecutive increase in hiring since the 1990-1991 recession, the BE AUTO DEALER 100 delivered $4.1 billion in gross sales last year, an impressive 23.6% increase over 1992. Several factors converged to make this a big year for the nation's largest black-owned auto dealerships.

First of all, the improving economy released pent-up consumer demand. After years of holding back on spending in fear of the recession, many Americans finally loosened their purse strings--just in time for a domestic automobile rebound led by hot new hits like Chrysler's LH line of cars and the American-made trucks and minivans that were already the Achilles heel of Japanese car makers.

Finally, a skyrocketing yen helped domestic automakers, which had finally drawn even with their Japanese counterparts in the race for quality, to gain a competitive advantage on price--still crucial in a consumer market made value-conscious by the recession. According to the American Automobile Manufacturer's Association, prices for Japanese cars jumped 5.9%, compared with a mere 0.8% increase last year for cars produced by the Big Three.

After a decade of being on the outside looking into the showroom windows of Japanese dealerships, African-American auto dealers were perfectly positioned for the domestic auto industry's return to competitiveness. Of the Big Three automakers, Ford had the greatest representation on the BE AUTO DEALER 100 (55%), followed by General Motors (26%) and Chrysler (22%). Fourteen percent of the BE AUTO DELEAR 100 sell foreign cars; 10% sell Japanese vehicles. Only one of the 100 largest black dealerships sells foreign cars exclusively. Ironically, Ferndale (Mich.) Honda Inc., No. 54 on the BE AUTO DEALER 100, had a great year, with a 29.8% increase in sales.

Seven of the BE 100s Top 10 Growth Leaders (see chart) are auto dealerships, with University Motors of Athens, Ga., leading the charge with a whopping 294% increase in sales. Last year's BE Auto Dealership of the Year, Alan Young Buick-GMC Truck Inc. in Ft. Worth, Texas, is No. 2 on the growth leaders list with a 254% sales jump. Macon (Ga.) Chrysler-Plymouth Inc., No. 3 on the growth leaders list, posted a 139% sales increase.

These dealerships have at least one thing in common: They all used fleet sales to increase sales volume. This was also the strategy of Trainer Olds-Cadillac-Pontiac-GMC Truck Inc. The Warner Robins, Ga. dealership is No.1 on the BE AUTO DEALER 100 for the second consecutive year, with sales of 402.7 million--95% it derived from fleet business.

However, while fleet sales may pump up sales volume, they also deliver meager profit margins that don't add up to significant revenues unless you move a lot of cars. That's probably why the largest of the BE AUTO DEALER 100 usually pursue fleet business, even though the vast majority of the others on the list do business the old-fashioned way: through single-car sales and service. Only 8% of the auto dealer list (including 7 of the top 15) reported fleet sales as more than 40% of their business.

In fact, the only top 10 dealership to show a significant decrease in revenues was Shack-Woods & Associates, a former No. I dealership on the BE AUTO DEALER 100 list. It saw sales drop 63% as a result of giving up most of its fleet business.

Meanwhile, dealerships such as S & J Enterprises in Charlotte, N.C., and Mel Farr Automotive Group in Oak Park, Mich., achieved significant sales growth with little or no fleet business. S & J Enterprises, No. 5 on the auto dealers list and this year's BE Auto Dealership of the Year, achieved a 24% sales increase with only 12% of its business coming from fleet sales. (See "Sam Johnson Does It Again," this issue.) The Farr Automotive Group, meanwhile, posted a 39% sales increase in 1993, with only 5% coming from fleet business.

The Baranco Automotive Group, No. 10 on the dealership list with $69.5 million in sales, is another former No. 1 dealership that gave up high-volume fleet sales in favor of bigger margins. Even though the company had virtually no sales growth last year, executives at the Decatur, Ga., dealership believe the decision helped them renew their commitment to customer service. " 1993 was an improvement over 1992," says Vice President Juanita Baranco. "The slow year allowed us to prepare and train employees for a better year.

There are 19 new dealerships on this year's BE AUTO DEALER 100. Their sales range from the $67.64 million generated by Rutledge Chevrolet-Oldsmobile-Cadillac-GEO Inc. in Sullivan, 111. to Edmond (Okla.) Dodge Inc.'s $17.6 million. New dealerships added combined revenues of $530.94 million to the auto list. Total sales for the 19 dealerships displaced from the list was $336.36 million. That means turnover on the auto list resulted in an increase of $194.59 million in gross revenues.

JUST WAIT UNTIL NEXT YEAR

Can the BE AUTO DEALER 100 maintain their near double-digit sales growth? That depends largely on whether American automakers can continue to produce winners--and whether there are enough new-car buyers left to snap them up. "The trends in automotive sales are up for everyone," says Mel Farr Automotive Group's Mitchell, "but that doesn't mean that every auto dealership is having a good year in 1994 or had a good year in 1993."

However, only 10% of the BE AUTO DEALER 100 reported sales decreases in 1993. Most of the nation's largest black dealerships see little reason not to be optimistic. "It's going to be a great year," says Juanita Baranco. "We have a lot of new products on the market." In addition, she points out, the average car on the street is eight years old. "And there are still a lot of pent-up buyers," she says.

Meanwhile, although the CEOs of the BE INDUSTRIAL/SERVICE 100 interviewed by BE revealed few clues as to how the cliffhangers of 1993 would end, most were willing to admit that they expected more great performances in 1994. Most expect the economy to maintain its strength this year. They also expect to continue to benefit from the productivity-boosting strategies that they adopted last year. As they say in the business: You ain't seen nothing yet. "1993 was a good year--but nothing overwhelming," says Don H. Barden, CEO of Barden Communications, which reported a 4.8% increase in gross revenues to become No. 13 on the industrial/service list. "We are optimistic about expanding our business in 1994 and 1995," he adds. That sentiment is echoed by Warren Anderson, president of Solon, Ohio-based Anderson-Dubose Co., No. 6 on the BE INDUSTRIAL/SERVICE 100. Anderson is "very pleased with the performance" of the McDonald's Corp. distributorship, which did $115 million in 1993 sales. "1994 looks exceptionally bright," he adds. "There's a good chance we'll surpass last year's sales."

No matter what the outlook for their individual companies, the CEOs of the BE 100s were in universal agreement about how to do business in 1994 and beyond: Come strong, or don't come at all.