Texas: they say everything is bigger in Texas, but is this true about opportunities for African-Americans in the state's largest cities?

AS THE SAYING GOES, EVERYthing in Texas is bigger. Texans are known for big money, big cars, big homes and big hair, and now even their population is getting bigger; gaining an average of 29,000 new residents a month. Sometime this year, according to the U.S. Census Bureau, Texas will replace New York as the nation's second largest state (just behind California), with more than 18 million residents.

And Texas has big business on its mind. Home to 36 of the Fortune 500 companies, it is considered the energy capital of the world. Emerging from economic problems brought on by upheavals in the oil industry and by the banking and real estate crises of the early 1980s, it is fighting to reclaim its position among the most economically viable states in America.

With an unemployment rate of 7.5%, Texas still offers an array of opportunities for its citizens, especially African-Americans. Many minorities describe the Lone Star State as one of the last frontiers of opportunity.

Texas is home base to three industrial/service companies and eight car dealerships on the BLACK ENTERPRISE 100s lists. It is also the home of this year's BE Company of the Year, Drew Pearson Companies in the Dallas-Ft. Worth area. (See "Coming Through in the Clutch," in this issue.)

The state's two most populated cities are Houston, with more than 1.6 million residents, and Dallas, with just above 1 million. Both cities enjoy substantial African-American populations, and despite some problems, they are forging pathways in the corporate and business arenas. BE takes a look at the problems and promises for African-Americans in Houston and Dallas.

DALLAS: THE |NEW FRONTIER' FOR BLACK BUSINESS?

The city is best known as "Big D," home of America's football team, the Dallas Cowboys. But all that bravado aside, Dallas is a city with more than its share of ups and downs. Like its distant neighbor, Houston, it has thrived, thanks to the tremendous worldwide demand for oil. But unlike Houston, its economy has not been as dependent on the black gold.

Nonetheless, Dallas did have some severe economic problems during the 1980s. That's when the bottom fell out and its overbuilt real estate market took a real beating, forcing many people into bankruptcy and onto the unemployment lines. But Dallas, like Houston, is once again climbing back on top, and many African-Americans are calling this city of one million the "new frontier."

"Dallas is finally opening up for African-Americans, and it's been a long time coming," says Calvin Stephens, the owner of Calvin W. Stephens & Associates, a Dallas-based management consulting firm. "From the entrepreneurial standpoint, Dallas is one of the last frontiers of untapped resources for entrepreneurship for blacks," adds Stephens, 49. Considered a major power broker in the city, he served as campaign manager for Dallas, popular mayor, Steve Bartlett, who was elected two years ago. The first African-American to head up such a campaign, Stephens is credited with helping Bartlett, a former U.S. congressman, win the election.

"Entrepreneurs can come to Dallas and get involved in things right away," says Stephens. "Dallas is also one of the few places where outsiders, people not from here, can come in and be part of the inner circle." Having said that, Stephens adds, the city still has "a long way to go in making sure that [African-Americans] have the same opportunities as everybody else . . . opportunities to borrow money, to get our fair share of the contracts from the public and private sectors and make a good living."

His wife, Sandra, 45, a manager of the Office for Civil Rights at the U.S. Department of Education, agrees that, along with opportunities in Dallas for African-Americans, there are still serious problems facing the city's minorities.

"Part of the civil rights movement in the 1960s and 1970s passed Dallas by," she explains. "We have not become fully empowered like African-Americans have in other major cities." While she says that racism is more subtle than it was in the past, it's still "a very real problem." As evidence, "you can still go to certain restaurants, certain stores, and be treated in a different manner than whites are treated," she points out, "It doesn't matter what kind of clothes you have on or what color your shoes are. It's definitely the color of your skin."

The Rev. Zan W. Holmes, of St. Luke Community United Methodist Church, also believes that opportunities for African-Americans have increased over the past few years, but those gains have not kept pace with others in the city.

"We have made some progress, but it's not the kind of progress that has made a major difference for the masses," says Holmes, whose 4,000-member congregation includes many of the city's young and influential African-Americans.

He says there needs to be more accountability on the part of the total community, elected officials and business-people. Without it, African-Americans in the city cannot afford to take any progress for granted. A theology professor at Southern Methodist University and a board member of the powerful Comerica Bank, Holmes notes that blacks are "not keeping pace with our numbers in terms of being in positions of power.

FROM COTTON TO HIGH TECH

As in the rest of the United States, the economy of Dallas has gone through quite a bit of transition and now relies heavily for its growth on high technology, financial services and health care. Founded in 1841 by Tennessee lawyer and trader John Neely Bryan, Dallas originally was one of the largest markets for cotton in America. During the 1930s, the discovery of oil near the Dallas area created millionaires almost instantly. Throughout much of its history, Dallas, economy has been robust, with the exception of the 1980s when it fell on hard times as a result of a regional banking crisis and a tremendously overbuilt real estate market.

Today, Dallas has emerged as a strong and diversified economy. While oil is still an important industry, the city has also become known for other industries, such as banking, computer technology and trade. Health care is also a major growth industry in the city, accounting for more than 10% of the Dallas area's gross product. In fact, the city is now home to 62 hospitals with nearly 14,000 beds.

Business travel is another big draw. The number-two convention city in the United States, Dallas attracts more than three million conventioneers a year who pump more than $2.1 billion into the local economy.

The result: Dallas houses more than 138,000 businesses and 11 foreign banks. There are more than 550 foreign-owned companies, which alone have generated 41,000 jobs. In addition, 12 Fortune 500 companies are headquartered there. And major Dallas employers include the likes of Texas Instruments Inc. with its 22,500 workers, Southwestern Bell Corp. with 8,600, J.C. Penney Co. with 6,000 and Banc One Corp. with 3,500. Other giant companies in Dallas include American Airlines, Exxon and NationsBank Corp. The Dallas-Ft. Worth International Airport, which the Federal Aviation Administration says will be the world's busiest airport by 1995, is another major employer.

GLASS-CEILING ISSUES

Clearly, opportunities in the corporate sector abound. But the city still has a long way to go in including African-Americans at the higher echelons of the corporate world, according to Lee R. McKinney, who is responsible for all branches of the Bank One, Texas-Dallas bank in the southern sector of Dallas County. As in most major cities, there are glass ceiling issues in Dallas. "While there are a reasonable number of African-Americans in mid-management positions," says McKinney, "in senior-management our numbers are very scarce."

McKinney has some hope, however, that sensitive corporations will soon promote qualified African-Americans to higher positions. More than two years ago several major corporations formed Dallas Together Forum, an organization designed to give minorities greater opportunities for hiring and promotions. The companies also committed themselves to using more minority vendors and to publishing an annual report on their progress.

The Rev. Holmes applauds what Dallas Together is doing but says more corporations need to be involved: "More of them must develop programs to make sure their workforces reflect the diversity of the population of this community."

|BIG D' OR |LITTLE D' FOR BLACK BUSINESS?

Chip Johnson, 33, says opportunities are finally opening up in Dallas for the investment banking company he started in 1990 with partner John Walton.

Today the firm, which does corporate and public finance, real estate acquisitions, underwriting, corporate and municipal securities and investment advisory, has an excess of $13 million in corporate assets and 13 employees.

"The climate for African-American entrepreneurs in Dallas has improved over the last five years," explains Johnson, the company's managing director. The major problem is still access to capital, something not unique to Dallas. It took Johnson and his partner three years to start their firm because of problems raising capital. All those years, Johnson says, they "knocked on doors and ran into brick walls and eventually we broke through a few and made it."

Today, however, Johnson says Dallas is actually a good place to start a business because, unlike a number of other major cities, Dallas is not flooded with a lot of start-up or minority businesses all competing for the same piece of the pie.

"In Dallas, good or bad, it's almost a frontier type of environment," he says. "There are still opportunities available if you're willing to work hard and persevere. But, remember, people need capital. That's the key."

HELP FOR MINORITY BUSINESS

Texas state Rep. Helen Giddings is working on getting capital for minority business owners. Elected two years ago, Giddings, who owns several concessions at Dallas, Love Field Airport and is a partner in several other concessions, immediately went to work authoring a bill designed to help financially strapped minority companies. Known as the Texas Link Deposit Bill, it makes $4 million available over two and a half years.

The bill works by making state deposit money available at a discounted rate to banks, which can then offer low-interest loans to businesses in distressed communities and in "historically under-utilized businesses," explains Giddings, owner of the Java Coast Gourmet Coffee and I Can't Believe It's Yogurt airport concessions. Currently, the loans have a ceiling of $ 100,000. Giddings wants to push for up to $10 million for the loan program, during the next legislative session.

In addition to the minority loan bill, Giddings also helped push through legislation that creates minority opportunities to land state contracts. Under the new law, at least 30% of all state contracts are supposed to go to small and minority-owned businesses. During the past two years, purchasing and contract opportunities for African-Americans have jumped from 1.47% to 8.3% of total state contracts awarded. In 1993, that translated into $30.2 million worth of contracts out of a total $4.45 billion awarded by the state .

Calvin Stephens, the Dallas management consultant, is also working hard to get more city contracts for minority-owned businesses. In addition, Stephens, a top adviser to Mayor Bartlett, has worked to get more blacks on important city boards where contracts are issued.

"While others talk about diversity, I believe in inclusion," says Stephens. "Inclusion means you've got to be at the table where the decisions are made about where the money is going to be spent."

For the first time, the majority of the 11 members of the Dallas-Ft. Worth Airport board are minorities. With the airport getting ready to spend more than $800 million on a construction project, Stephens says that the black presence on the board means that "minority companies will get some of those contracts." In addition, African-Americans now sit on the parks board, one of the most influential boards in the city.

With the city's prodding, private corporations are also getting involved. In 1992, Mayor Bartlett challenged local banks to evaluate their lending and community reinvestment practices, and he appealed to them to do more for the city's African-American communities.

As a result, NationsBank Texas recently unveiled a plan to invest $40 million during the next five years in the minority communities of South Dallas and Fair Park. The bank plans to make at least $5 million in small business and consumer loans during the next 12 months alone. NationsBank also plans to build or expand at least two child-care facilities, make at least 150 home-improvement loans, provide technical assistance to at least 100 neighborhood businesses and offer counseling to 600 first-time home buyers.

"I am always believing that we're just around the corner from stepping into the future," says Giddings. "People of color are about to be able to take advantage of the many economic opportunities that are available in this city."

A TRULY LIVABLE CITY 

Increasingly for Dallas, African-American residents, all that reinvestment is translating into an increasingly livable city. For five consecutive years (1989-93), Dallas was named the number one U.S. city for business relocation and expansions by Site Selection magazine.

Of Dallas, highly skilled pool of workers, more than 62% are white collar, while 22% are blue collar. The median household income is $27,489. Dallas, unemployment rate is 6.6%; however, for African-Americans it is more than double that.

Housing in Dallas, thanks in part to the overbuilt real estate market, is still a good deal. The average price for a new home with 1,800 sq. ft. of living area on an 8,000-sq.-ft. lot is $103,825, compared with the U.S. average of $112,634. "A nice affordable home is still a reality in Dallas," says Sandra Stephens. The average monthly rent for a two-bedroom, two-bathroom apartment is $577 a month.

Like many large cities, Dallas, public school system is beset with more than its share of problems. The Dallas Independent School District has 143,000 students, and African-Americans make up close to 44% of the school population, while Hispanics represent 40%, with the remaining 16% composed of Anglos, Asians and Native Americans. (Of Dallas' one million residents, 29.5% are black and 21% are Hispanic). The district does have six very good magnet high schools. Dallas, suburbs also boast a number of good school systems.

HOUSTON: RISING FROM THE ASHES 

When you drive into Houston on Interstate 45, you can't help but notice the incredible skyline of glass and steel buildings that look like inverted icicles glistening in the bright sunlight.

Houston is a relatively new city, and its skyline reflects that. Full of energy and opportunity, this fourth-largest city in the United States is on the comeback trail. Thanks to vast resources of oil, Houston reached "boomtown" status during the 1970s and early '80s. But boom went to bust when energy prices fell, shattering the dreams of tens of thousands of people.

In 1836 two brothers, John K. and C. Augustus Allen bought a 6,642-acre tract of marshy, mosquito-infested land 56 miles north of the Gulf of Mexico and named it Houston after the hero of the Texas Revolution, General Sam Houston.

Oil was first discovered in the area in 1901, and until the 1980s, Houston's economy relied heavily on that industry. In 1973, the Arab oil embargo quadrupled oil prices in 90 days, fueling Houston's economic boom for almost a decade. Job gains averaged 7.2% a year from 1974 to 1981. Thousands of African-American professionals from all over the country flocked to the "energy capital of the world" in those days to take advantage of the job opportunities created by the oil "boom," and many remain in Houston today. But in 1982, the bottom fell out as oil prices plummeted. A recession blew into Houston like a deadly tornado claiming 221,900 jobs by the end of 1986.

Today, Houston is like a phoenix, its economy rising and new jobs being created.

About 28% of the city's 1.6 million population is African-American, 28% is Hispanic and the remainder is essentially Anglo. Many in the black community say Houston is the place to be.

"Even in 1994 Houston is still a pioneering city," says city council member Sheila Jackson Lee, who came here from Jamaica, N.Y., after graduating from Yale Law School.

"It's still a city that is brokering new ideas for business, job creation and housing. Even though it takes work, some hardships and some bite in your bark, the doors are still opening for African-Americans," says Jackson Lee, who defeated U.S. Rep. Craig Washington to represent the predominately black 18th Congressional District in last November's elections.

"There are opportunities for a certain portion of the African-American community in Houston," says Dr. Franklin D. Jones, political science professor at Texas Southern University, the largest African American university in the nation. "Those who have the skills and education can take advantage of the diversification of the Houston economy and prosper from the opportunities that are here. But so many others in the black community will not."

Founder of a successful investment firm and president and chief investment officer of Smith, Graham & Co., asset managers Ladell Graham, 36, is not overly impressed with the city's track record for black businesses. "Houston is not the mecca of opportunity for African-Americans," he says. "Houston has a motto: Be patient. When we started they said wait until you've been in business three years and are managing half a billion dollars and a track record. We are managing a $1.2 billion portfolio and they're still saying be patient." Since starting in 1990, Smith, Graham has been one of the fastest growing fixed-income management firms in the United States. Its clients include the cities of Houston, New York and Los Angeles, the Atlanta Fire and Police pension funds, Southern California Gas and Honda of America Manufacturing Inc.

Despite his own success, Graham insists that, in Houston, getting business is not based on qualifications. "It's not based on anything other than being a good old boy, which typically means you are a non-minority or white individual."

Graham's partner, Gerald B. Smith, the company's CEO, is more optimistic. "The climate for African-American entrepreneurs is getting better," says Smith, 43. "I don't think it has been that good in the past. Up until this year, we only had one client in Houston. We now have three. It's very, very tough to build a local business."

The encouraging news, however, is that big business is booming in this reenergized city. Houston is the headquarters of Compaq Computer Corp., with 7,000 employees and sales last year of more than $7 billion. The world-famous Texas Medical Center, known for its cancer research and heart transplants, is also located in Houston. The center employs more than 54,000 doctors, scientists, researchers, technicians and nurses.

The Johnson Space Center (JSC) and related space enterprise has become a multibillion dollar industry for the city. Since its inception in 1965, space and aerospace research and development dollars funneled to Houston are estimated to exceed $47 billion. JSC supports more than 21,000 scientists and engineers as employees and contractors.

The Port of Houston annually handles more than 126 million tons of cargo and was ranked first in foreign tonnage among U.S. ports in 1991. That year foreign shipments totaled 72 million tons, up 6.6% from 1991. Total value of foreign trade through the port last year was $25 billion.

Thirteen companies on the Fortune 500 list are headquartered in Houston, and one business publication ranked it third in terms of ected job growth from 1991 through 1996. According to forecaster M. Ray Perryman, employment will expand at a healthy compounded annual rate of 1.8% through the year 2020, with gains especially in the areas of services, transportation, communications and public utilities.

To meet the employment demands, Houston has developed a skilled workforce, about 60% of which is white-collar, with a median household income of $26,261. Houston's unemployment rate is 7.6 %, but, as in most urban areas, it's double that for African-Americans.

One black professional who has taken advantage of the opportunities is Sarah Freddie, 36, an investment executive with Paine Webber. "If you're educated, have entrepreneurial skills and are aggressive, you can make it here," she says. "There's a wide open market for almost any kind of service or product."

Exxon USA wholesale brand support manager Jesse Tyson, 41, agrees: "It requires not only capital and knowledge of where those opportunities may be, but also courage. The opportunities are there and the timing couldn't be better for us to seize them."

Despite the opportunities for white collar professionals in Houston, as in all cities, African-Americans must still contend with racism and the glass ceiling. "The system in general hasn't gotten to the place where the playing field is leveled," says Tyson, who has been with Exxon 18 years. "There are barriers in front of us that may not be in front of someone else that may not look like us."

CITY OF OPPORTUNITY

One African-American entrepreneur who has broken through the clubhouse mentality now regards Houston as a "mecca." In 1990, Earl Thomas formed Gold Line Refining Ltd., an oil refinery company with offices in Houston and Lake Charles, La. "The business climate in Houston is tough, but I think it's fair," says CEO Thomas, 45, whose BE 100s firm pulled in more than $108 million in 1993. "If you've got something to sell, there's a market for it. Yes, we're involved in a good old boy network and unless somebody gives you a shot, it's not going to work. NationsBank gave me a break with a line of credit that helped me grow my business. I've always looked at Houston as a city of opportunity."

Last year, of the $572 million in construction, purchasing and professional service contracts awarded to area businesses, more than $88.3 million of that went to minority- and women-owned and disadvantaged businesses. Ten years ago, only $2.5 million in contracts went to minorities and women.

City leaders like Kenneth L. Lay recognize that still more needs to be done to bring African-American business owners into the economic mainstream. Chairman and CEO of the multimillion dollar energy giant Enron Corp., Lay is the 1994 chairman of the Greater Houston Partnership, an organization committed to business opportunity and economic prosperity in Houston. Recently, in addressing the issue of black economic development, he said, "I would like to see the Partnership play a much more proactive role in stimulating the creation and growth of minority-owned and minority-managed businesses."

A white executive considered to be one of the most powerful men in the city, Lay has made an appeal to large companies to do their share in helping black businesses grow stronger. "I'd like to see each major employer in our community, public and private, establish a mentor relationship with at least one significant and successful minority enterprise," he said. "That means providing help on strategic and financial planning to assisting in opening doors for the sale of goods or services to other major businesses in our community."

Taking up his own challenge, Ken Lay already has agreed to hear investment managers Gerald Smith and Ladell Graham pitch their firm to do business with the giant energy company.

As in Dallas, the amenities of life available in Houston make the city a highly desirable place for African-Americans, not only to build their businesses and career, but also to raise their families.

Even during the boom years, housing was relatively inexpensive and it remains so. In 1992, the average price for a new home with 1,800 sq. ft. on an 8,000-sq.-ft. lot was $92,736. Starter homes range from $60,000 to $90,000. The monthly rent for a two-bedroom, 950-sq.-ft. apartment averages $566.

"Houston is one of the better places in the entire U.S. to live," says Paine Webber's Sarah Freddie. "A single person on an income of about $35,000 can live very comfortably here."

The city school system, with close to 195,000 students, is one of the largest in the United States, yet funding for Texas public school students is one of the nation's smallest, at $3,424 per pupil. The Houston Independent School District recently hired its first African-American superintendent, Dr. Rod Paige, to run the predominately minority school system.

"There is no doubt that the mountain is in front of us, and we're still climbing the mountain," says council member and congressional candidate Sheila Jackson Lee. "But the doors are finally cracking open." Houston's strong suit, she believes, is that everyone--of every political stripe, and on every economic level--is finally pitching in together to make the city work. "I think we're poised with new leadership and business opportunities to break those barriers down."