By the numbers
$380 million: Amount TVA spent with businesses owned by minorities, women or veterans in fiscal 2015, up from $269 million in the prior year $946 million: Amount TVA spent with small business contractors in fiscal 2015, up from $899 million in the previous year 10 percent: The share of TVA spending with diverse contractors, up from 8.1 percent in the previous year. 77.5 percent: Share of TVA contracting done with businesses with a presence in the Tennessee Valley Source: Tennessee Valley Authority
Andre Gist moved his Manufacturers Industrial Group from Detroit to Tennessee nearly a decade ago when the company acquired a Johnson Controls automotive supply plant in Lexington with the help of a Tennessee Valley Authority loan program.
Gist, who has since built MIG into Tennessee's biggest minority-owned firm, has capitalized on the growth of the Southern automotive industry as a major supplier to Nissan and other car makers. But the company also began doing business as a steel fabrication supplier to TVA in 2007 and a year later bought one of his suppliers, Modern Industries in Chattanooga, and renamed the company MIG Wire & Tube LLC.
Last week, Gist was among the suppliers who gathered in Chattanooga for a conference to help minority-, women- and veteran-owned businesses develop more supply relationships not only with TVA but also Southern, Duke, Dominion Power, SCANA and other utilities and their suppliers.
"We developed some relationships and got some first-hand information that we hope will help us grow even more in this industry," said Gist, who has supplied steel parts for the renovation of TVA's Raccoon Mountain Pumped Storage Facility and hopes to be a supplier for the $1 billion natural gas plant TVA is building to replace the Allen Fossil Plant in Memphis.
Ric Perez, senior vice president of shared services at TVA, said utilities are working to promote more diverse suppliers like MIG as the utility industry transforms from coal to more natural gas, solar, wind and distributed energy.
Perez said last week's three-day conference in Chattanooga - billed as "Energizing Powerful Connections" - "helps make us more competitive and more innovative" by helping utilities tap into more local and small businesses in their service territories.
In the fiscal year ended Sept. 30, TVA increased its purchases from minority-, women- and veteran-owned businesses by more than 41 percent to $380 million and increased the amount spent with all small businesses by 5.2 percent to $946 million.
Perez said TVA tracks its use of diverse firms and wants to do better by inviting more diverse firms to bid on contract work and subcontract work with TVA contractors. But he said there are no racial or gender preferences or set asides for diverse contractors.
"Our brass ring is not hitting some percentage, but how can we best continue our mission of low rates and reliability to help build our region and support the businesses that help build the Valley," he said.
TVA said 10 percent of its purchases with contractors last year were with businesses owned by minorities or veterans. The population of the Tennessee Valley includes 22 percent black, Hispanic or Native American persons and women.
The Tennessee Valley Authority has been on a record spending spree for capital projects over the past three years with the completion of the Watts Bar Unit 2, the clean up of TVA's coal ash ponds, the installation of scrubbers at the Cumberland coal plant, and the construction of new gas-fired power plants in Memphis, Rogersville, Tenn., and Paradise, Ky. Although TVA has trimmed its operating expenses, TVA plans to spend a record high $3.5 billion on capital projects in the current fiscal year.
"As our capital expense has gone up, we've tried to really leverage that," Perez said. "We've seen an increase in the share of business we are doing with minority- and women-owned businesses even as our capital spending goes up and that can really leave a legacy. It not only helps the community, it creates a situation where we have a supply base close to our plant that helps us for the future."
TVA is working to replace the Allen coal plant with a $1 billion gas-fired plant in a way that can aid Shelby County, the biggest county with the biggest minority population in TVA's 7-state region.
At Southern Co., purchases from diverse suppliers have totaled $4.1 billion since 1978 and Ken Huff, who manages a 15-employee division responsible for supplier diversity for Georgia Power, Alabama Power and other Southern Co. operations, said the utility is eager to do even more.
"A more diverse supplier mix helps ensure we have adequate and reliable vendors when we need them," he said.
The increased emphasis on diverse suppliers comes as electric utilities in the South are acquiring natural gas companies and building gas plants to take advantage of the drop in gas prices.
Southern Co. has agreed to an $8 billion purchase of AGL Resources, the parent company of the Chattanooga Gas Co., and Duke Energy. Duke Energy plans to buy Piedmont Natural Gas for $4.9 billion.
"The utility industry in the South is being sliced and diced and as suppliers you need to figure out how to adapt," Reginald Williams, CEO of Procurement Resources Inc., told suppliers at the Chattanooga conference. "We are looking at a repositioning of the key players."
Such changes, combined with a generational switch in the electric power industry as thousands of Baby Boomers retire, create new challenges and opportunities for diverse suppliers. The industry is not growing as fast as it did in previous decades, but Williams said utilities are becoming more focused on diversifying their suppliers and, in some instances, are being asked by state regulators to do more to promote use of minority- and women-owned businesses.
"You are going to have to be cost competitive and help these utilities meet the changing needs of the marketplace," Williams told the suppliers gathered in Chattanooga. "But the opportunities are there."
Patsy Hayward, president of Hayward Bolt and Specialty, is among those trying to tap into the utility market. The Trinidad native who took over the family business in 2007 following the death of her husband said she is pursuing the American dream with her Chattanooga business.
"Growing our business means I've had to get out there and build relationships and try to sell our products across many businesses, including TVA," she said. "What sets us apart is our huge inventory so utilities like TVA can know we'll have the parts and can get nuts, bolts and fasteners to their plants very quickly."
The Chattanooga-based supplier of bolts and fasteners was started in 1976 and has sold to TVA since its start.
"TVA has been tremendous to me in opening doors to other suppliers and other utilities," she said.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.