Building capacity and expanding business opportunities for local suppliers are other ways Chevron promotes responsible economic development in the countries where the company operates. Our supplier initiatives grow and diversify the local economic base for communities and national economies by creating new businesses, generating employment, and promoting the transfer of appropriate technology and skills.
We think it is important that our supplier base be reflective of our customers and the markets we serve. We also strive to be a partner of choice, and this includes partnering with businesses large and small to build stable economies through the creation of jobs. In 2008, we purchased approximately $45 billion in goods and services from suppliers and contractors ranging from large multinationals to locally based small and medium-size businesses.
Building capacity has the dual effects of empowering local suppliers and supporting the sustainability of their businesses. Our engagement with suppliers includes sharing our skills and know-how, delivering practical training and awareness programs, and promoting supplier diversity and engagement.
We help our suppliers develop their capabilities in a variety of ways. For example, Chevron's engineering team in Lagos, Nigeria, works side by side with engineering services contractors to share knowledge, skills and good practices. Lead engineers from our company embed themselves in supplier firms, helping the firms strengthen their capacity in process management, mechanical and structural engineering, and quality control.
Promoting Supplier Diversity and Engagement
Through our U.S. supplier diversity and small business program, we work with small, minority and women-owned businesses to develop innovative, cost-effective solutions. We believe that a supplier network reflecting the communities where we operate creates value for our business and supports local economic development.
In 2008, we spent approximately $2.9 billion on goods and services provided by small and medium-size businesses in the United States. We also spent $515 million with minority-owned businesses and $450 million with women-owned businesses.
In July, Chevron hosted supplier forums and diversity fairs in Houston, Texas, and San Ramon, California. The goal of these events, which together attracted more than 150 suppliers, was to educate our large, traditional suppliers on our subcontracting processes and to promote diversity in subcontracting.
Indonesia: Empowering Local Small Companies and Cooperatives
Operating in Indonesia since 1924, Chevron has deep roots as a national development partner in the country. We produce nearly half of the country's crude oil. We also market lubricants throughout Indonesia and manage two geothermal projects on the island of Java.
PT Chevron Pacific Indonesia began the Local Business Development program in 2001 to provide practical training, mentoring, and business opportunities for local companies and cooperatives. The program develops and enhances the capabilities of local entrepreneurs to become certified suppliers not only to Chevron but also to large Indonesian companies.
Since the program was launched, more than 700 small suppliers were certified, 2,400 contracts were awarded and approximately 6,000 jobs were created. In total, Chevron purchased $31.5 million in goods and services. The annual purchases increased from $1.5 million in 2001 to $7.1 million in 2008.
One supplier beneficiary is Cauliflower Trimajaya, PT, a building maintenance, landscaping and contract labor company with 73 permanent employees. Cauliflower joined the business development program in 2001 and received training in such business basics as procurement, work safety, project management, financial administration and business ethics. From a small initial contract awarded by Chevron in 2001, the company was winning contracts in the range of $20 million seven years later. It continues to benefit from training we provided. In 2008, improved administrative and financial management systems helped the company pursue new contract tender opportunities. Through Chevron's contractor health and safety management program, it is putting standardized health, environmental and safety systems in place.
It's a win-win proposition, says H. Bastian, Cauliflower's director and owner. "As a business partner with Chevron Pacific Indonesia," he says, "we are improving our capabilities and, through that, improving the opportunities for everyone in our community."
Because of the success of companies such as Cauliflower, Chevron Pacific Indonesia's program won a Padma Community Development Award in 2008 from the Indonesian Ministry of Energy and Mineral Resources. The award is given to individuals, social organizations and companies that make a significant contribution to community development in resource-based communities.
Developing Local Suppliers
"Local content" is an increasingly important part of Chevron's global business. In 2008, Chevron developed Local Content Guidelines to align business units along a set of common goals and actions to support the company's commercial interests and corporate responsibility commitments. The guidelines aim to promote sustainable, high-quality local capacity and capability. This not only provides business value to Chevron but also supports local economic growth and workforce development.
Updated: May 2009