CHICAGO (AP) _ The promise that the construction of a Wal-Mart Stores Inc. outlet on Chicago’s West Side would boost business for black contractors may have come up short.
Crain’s Chicago Business reported that instead of boosting minority contractors as was hyped when the store was approved by the city in 2004, the $17.8 million project, which had about $10 million in cost overruns, resulted in the bankruptcy of the lead general contractor, a black woman.
According to Crain’s, the overruns contributed to the demise of Broadway Consolidated Cos., owned by Margaret Garner. Garner was promoted by Wal-Mart as its African-American female general contractor, even though much of the large-scale work on the store went to non-minority firms. Minority firms were represented among the sub-contractors.
“What happened at the end of the day is that (Wal-Mart) paraded her around the country as its African-American female (general contractor),” Omar Shareef, founder of the Chicago-based African American Contractors Association, told Crain’s about Garner. “And she wound up going down.”
Much of the overrun was due to the site of the new store, a former Helene Curtis hair-care products factory. In addition to hazardous materials, buried concrete structures had to be removed.
Numerous changes and design revisions required because of Chicago building standards also contributed to the cost overruns.
Subcontractors said recovering unexpected costs requires general contractors to submit “change orders,” a detailed process on any project but more so when it involves demanding clients such as Wal-Mart and other large retailers.
Herb Lande, whose firm, Joliet-based Imperial Construction Associates, worked with Broadway Consolidate, said Garner struggled with Wal-Mart’s record-keeping requirements, which he called “very difficult.”
Broadway Consolidated filed a Chapter 7 liquidation petition in December, citing $14.1 million in liabilities.
Garner did not respond to Crain’s requests for comment. A Wal-Mart spokesman said the retailer will continue to give minority- and female-owned businesses key roles in building its Chicago stores.
When Wal-Mart announced plans to build the West Side store, the retailer touted not only the jobs it would create, but also the opportunities for minority contractors.
For its Austin store, Wal-Mart chose Garner as the public face of the project, introducing her to media and at other events designed to boost the company’s image. However, she farmed out the duties of a general contractor to white-owned firms.
A Wal-Mart spokesman told Crain’s the company isn’t involved in the hiring of subcontractors, but encourages its general contractors to meet or exceed minority set-aside requirements for public works projects. He says the retailer will require general contractors to use an online system that tracks the amount of work done by minority- and women-owned firms.
Wal-Mart, last year, announced plans to build dozens of stores in Chicago after overcoming opposition from unions and community activists.
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