November 1, 2012

The Political Toolkit: What Works and What Doesn’t

From picketing to social media, multiple techniques for effectively influencing policy

MORE THAN A HUNDRED manufacturing executives gathered in protest in front of the White House one morning in October 2003, carrying signs and placards. Their leaders spoke from the platform of a semi0trailer next to a 20,000-pound stamping machine. It was, one participant acknowledged candidly, “a media event.”

The group’s complaint? A tariff on imported steel that the George W. Bush administration had dropped on the metal forming industry like a pallet of hot ingots. According to a spokesman for the protestors, the 18-month-old tariff had ballooned the price of steel, forced thousands of layoffs in the manufacturing sector and offered a juicy incentive for factory owners to relocate overseas. It turned out to be an inspired piece of street theater, complete with a bread-and-butter appeal to the bottom line and a straight-from-the-American-factory visual aid.

“We had a whole production line on the truck, with a generator to make it go,” recalls William Gaskin, president of the Precision Metalforming Association (PMA) based in Independence, Ohio. “We were ready to fire it up right there in front of the White House, but Capitol security wouldn’t let us.”

Nevertheless, the message must have resonated with an administration that prided itself on a commitment to free enterprise. Within two months, the tariff was gone.

The Washington demonstration was a pivotal moment for PMA, which represents almost 900 U.S. manufacturers. The notion that government policy, particularly federal policy, was a major factor in running an American business had been simmering on the back burner for years. But, at least for the metals fabricators, the time had arrived for their political “A” game.

Spreading Awareness

Today, like other American and Canadian industries, the metals fabrication and services industries are a consistent and visible presence in Washington, D.C., and statehouses across the country. Representatives are lobbying on Capitol Hill or in Ottawa, Canada, participating in letter-writing campaigns, testifying before congressional committees, contributing to candidates and political action committees and even participating in political campaigns.

Trade associations like PMA put out weekly bulletins and summaries of relevant news items and alert their members to key legislation being considered by Congress. PMA and others have even set up their own systems to rate incumbent members of Congress based on their votes that favor or hinder manufacturing.

“We keep a tally of the key votes that are business-oriented,” Gaskin says.

In addition, they have learned to use most of the techniques of modern political campaigns, including blogs, lobbyists for hire, group arm-twisting excursions to Washington, D.C. (as earlier noted), coordinated email blasts, Twitter alerts and more.

Shortly after the White House demonstration, PMA hired Washington lobbyist, Omar Nashashibi of The Franklin Partnership, a Washington, D.C.-based lobbying agency, and public relations specialist Paul Nathanson of Bracewell & Giuliani, a Texas-based law firm. The pair set in motion an aggressive program to make their voices heard whenever decision makers were considering public policy options that directly affected their membership.

Their reasoning was simple, says Gaskin. “If you’re not active, somebody else is.”

Three years ago, PMA joined with the National Tooling and Machining Association (NTMA), another restive manufacturing trade group, becoming something called “One Voice.” By joining forces, the two associations can now draw on the political might of more than 2,000 U.S. manufacturers.

With a whole range of issues that are high priority for the $277-billion metal fabrication industry, involvement in politics has become, for most of these stampers, tool and die makers, metals distributors and others, as much a part of doing business as running a production line.

It’s still an uphill battle, says one veteran Beltway dealmaker familiar with their efforts. Getting a piece of legislation passed in the rigidly divided Congress is hard to do. “You already know the outcome ahead of time,” says Nashashibi, the sole lobbyist who represents the One Voice membership. “In very few votes do you get more than 20 from each party crossing over. It’s pretty much staged.”

Learning What’s Most Effective

Industry leaders who have been involved in the political process have war stories illustrating the travails of trying to get something done. As a result, they can usually tell you from experience what works and what doesn’t.

Why not just designate some industry representatives as candidates for office, carriers of the manufacturing banner? Metals manufacturers contribute and vocalize, but, for the most part, they don’t run. While many executives in the industry have lavished congressional candidates with campaign contributions, few have sought election to either the House of Representatives or the Senate in recent years.

There are no members of the 112th Congress listed in the Congressional Research Service’s annual report on the membership of Congress as “manufacturers,” though Michigan Rep. Bill Huizenga can attest to sterling business credentials as the co-owner of the Huizenga Gravel Co., a mining company in Jenison, Michigan, and Kentucky Rep. Brett Guthrie has worked for his father’s tool and die firm, Trace Die Cast, in Bowling Green, Kentucky. Both congressmen’s pro-manufacturing bona fides have earned them campaign contributions from PMA’s political action committee, PMA Voice of the Industry. Also, U.S. Sen. Ron Johnson of Wisconsin has worked for, managed and ultimately owned a plastics manufacturing company in Oshkosh, Wisconsin.

But, even with the rare exceptions, the scarcity of a manufacturing perspective in Congress is a frequent lament of the industry. “There are so few people in Congress who understand the manufacturing economy,” says William Hickey, president of Lapham-Hickey Steel Corporation in Chicago, Illinois.

The situation is depressingly similar at the state level, industry members say. NTMA member Mark Romanchuk, owner of P R Machine Works in Ontario, Ohio, has waged an energetic campaign for state representative in Ohio’s Richland County. The former home of large Westinghouse and Tappan plants, the county has fallen on hard times since the 1970s, and Romanchuk wants to help bring manufacturing back to the state, he says.

“There aren’t a lot of people with experience in running a business or making a payroll at the Statehouse,” Romanchuk says.

Not Running, but Still Pushing

Really, though, who’s got the time to run for office? “Most of us are working 60 hours a week running our businesses,” says Ralph Hardt, president of the Jagemann Stamping Company.

Spare time or not, Hardt is typical among manufacturing executives in the amount of attention he devotes to the political process. Two or three times a year, he and fellow One Voice members travel to Washington, D.C., to meet directly with their representatives. He has also arranged informational visits by congressmen and state legislators to the Jagemann plant.

“The goal is to make sure that legislative actions, economic actions and the like continue to provide a level playing field [for manufacturing],” Hardt says.

For One Voice, the political controversy of the moment is tax reform, specifically a possible $250,000 annual income cut-off for who benefits if parts of the so-called Bush tax cuts lapse. Hardt traveled to Washington, D.C., in July to testify on the matter before the House Ways and Means Committee, arguing that small, family-owned businesses would suffer great hardships if the current tax rates were allowed to expire for small companies that earn more than $250,000.

“There is a lot of noise in Washington right now about only raising taxes on the ‘wealthy’ to pay for social programs and hopefully balance our federal budget,” Hardt told the committee. “However, as a small business, we may report $250,000 or more in profit, but few manufacturers take those profits home. They are overwhelmingly reinvested in the business.”

Using Social Media and Plain Old Email

Though the battle is yet to be won or lost, Hardt’s appearance before the House Ways and Means Committee demonstrated One Voice’s political sophistication in the ongoing effort to sway opinions. The group used Twitter to alert members of the appearance and to link to a website where they could watch the hearing.

“It was a very active campaign to promote [Hardt’s] appearance,” says Nathanson. “There was a lot of retweeting to employees and the media picked it up. I think the jury is still out on the future of social media, but you can’t ignore it. It can play an important role.”

One Voice’s own Twitter account has 1,500 followers. “It’s not at Ashton Kutcher’s level but a good number,” Nathanson says. The actor and estranged husband of Demi Moore has some 12 million followers. One Voice has organized similar campaigns against the union-backed “card check” bill (allowing organizers to garner quick votes for unionization through signed cards from workers rather than secret ballots) and cap-and-trade proposals to cut carbon emissions.

On its own, NTMA has been in the political game at least since 1943, says NTMA’s director of marketing Jim Grosmann, when six members went to Washington to meet with War Department officials about the way the industry was losing its highly skilled tool and die makers, undermining the war effort.

“They were drafting anybody with a heartbeat who was over 18,” Grosmann says. “They were taking our journeyman tool and die makers, compromising the industry’s ability to make the tanks and planes. Every part that was made out of metal came from our members.” The delegation was able to negotiate a draft exemption for machinists and tool and die makers.

“It took two weeks,” Grosmann says. “Nowadays you couldn’t do that in two years.”

Like PMA, NTMA participates actively in collective measures to make its opinions heard. Letterwriting campaigns or email barrages can be especially effective. “We send out action alerts, saying, ‘We need a response via email,’” Grosmann says. “This can generate a lot of response for us.”

Grosmann takes particular pride in the demise of the Employee Free Choice Act, the so-called “card-check” bill, in 2010. The bill was heavily supported by unions and opposed by the U.S. Chamber of Commerce, as well as business and manufacturing groups.

One Voice, with numerous members in Pennsylvania, had its Washington, D.C., advocates deliver a letter to former U.S. Sen. Arlen Specter of Pennsylvania, who had recently switched from the Republican to the Democratic Party. “We listed every company we had in Pennsylvania, along with the number of employees each had,” Grosmann says. “It showed how many votes we had in our pocket.”

Specter, who was wavering in his support for the pro-union bill, “flipped” because of the pressure from manufacturers, Grosmann contends. The bill, which could not muster the 60 Senate votes required to overcome a filibuster, subsequently died.

Large Company Strategies

Larger companies, even some privately held ones, are able to use their own heft to score political points. Ron Travis, vice president of tax for O’Neal Industries, a manufacturer and distributor of metal and metals products, made his entry into the political sphere about five years ago, he says. That was when he discovered that the federal government was planning to eliminate last in, first out (LIFO) accounting methods for all U.S. businesses.

Companies like O’Neal would no longer be allowed to report the cost of goods that they sold based on the most recent sales, rather than goods that had been sitting on the shelf in inventory. LIFO, which has been used by the Birmingham, Alabama-based company for more than 60 years, has the effect of raising the reported cost of goods sold, and thus reducing claimed profits and decreasing a company’s tax burden.

“I almost drove my car off the road when my boss told me,” Travis says. What may seem like an arbitrary distinction actually could mean significant losses to companies like O’Neal, with a lot of slow-moving inventory.

Searching for a way to address the problem, Travis realized that his company’s geographical reach gave him a great advantage. “I’m not going to be a D.C. lobbyist from Birmingham,” he says. “We have 90 locations in 36 states. I can go beyond just contacting my Alabama congressman.”

Travis got all 90 of O’Neal’s general managers involved, having them write letters and make calls to their elected representatives. “We got a decent response,” Travis says. “A lot of congressmen sent letters saying, ‘Hey, we understand the issue.’ One even came down from Illinois for a tour of the plant here.”

The issue was tabled by the Bush administration, but it has since resurfaced as an Obama administration initiative to close a $59 billion tax loophole over 10 years.

The Canadian Offensives

Canadian companies often go through similar exertions, though their parliamentary system is less receptive to complaints from small trade associations or individuals from the manufacturing sector. Fortunately, more than 100,000 manufacturing companies can rely on Canadian Manufacturers & Exporters (CME) to represent them on national matters, such as taxation and trade.

“Not that I don’t pay attention,” says Peter Baines, vice president of communications for Samuel, Son & Co., an Ontario, Canada-based metal distribution company. “But, we’re covered pretty well by CME and the Canadian Chamber of Commerce.”

Covered well indeed. Since Prime Minister Stephen Harper, a Conservative Party member, took office in 2006, manufacturers and their allies have been able to wrest a series of advantageous tax measures from the federal government. These include a reduction in the federal corporate rate from 21% to 15% and an elimination of tariffs on imported manufacturing equipment.

The big push now, says CME president Jayson Myers, is for an extension of Canada’s two-year accelerated depreciation on manufacturing equipment, which was instituted five years ago as a temporary measure. “If it runs out, manufacturers will pay a lot more,” Myers says. “We’re looking to the government to make it permanent.”

The focus is on Canada’s executive branch of government. “There isn’t as much active lobbying of members of Parliament,” Myers says. “Most of it is directed at cabinet ministers, who are in charge of various departments.” The key official in this case is Finance Minister Jim Flaherty, who’s under pressure to reduce spending.

“The parliamentary system is a different beast from the political system in the U.S.,” Myers says. “There’s a lot less consultation with businesses.”

Business leaders who want to have an impact can go the “indirect route” with letters, phone calls and email, Myers says, or the “direct route” with hard-to-arrange face-to-face meetings. Or, they can use surrogates, like CME, which, by virtue of representing 52 trade associations, automatically brings considerable credibility to the table.

The Importance of “Local”

Politically active metals industry leaders often neglect state and local issues (or, in the case of Canadians, those of the provincial governments) to their subsequent regret. “If you’re running a business, you should really know who your mayor and councilpeople are,” says Jonathan Kalkwarf, vice president of MSCI. “There are local issues and building and EPA permits that you have to pay attention to. There are workers’ compensation and litigation issues for each state.”

Ron Travis stays alert to changes in local tax ordinances, such as a sudden licensing tax instituted by Alabama’s financially troubled Jefferson County two years ago. “I made the one-and-a-half hour drive down to Montgomery and participated in a hearing before the Department of Revenue,” Travis says. “I work with the Birmingham Business Alliance, and we made targeted phone calls to state [lawmakers].”

So far, the licensing tax remains in place and the county has declared bankruptcy. The real action is at the federal level, many industry leaders say. That’s where the big-ticket regulatory and tax issues are being hashed out, says Wes Smith, president of E&E Manufacturing in Plymouth, Michigan.

“It’s really the federal government that does the important things,” Smith says.

Money and the Impact of Individuals

Metals industry leaders contribute to candidates and political action committees, but there are apparently no Sheldon Adelsons (the billionaire Mitt Romney backer) among them pitching in multi-million-dollar gifts to super PACs or high-profile candidates. Most, like Lapham-Hickey Steel’s William Hickey, portray themselves as modest givers, ready to spring for a ticket to a banquet, but not to make six- or seven-digit donations. Hickey talks about giving “a couple of hundred” to U.S. Rep. Dan Lipinski, a Democrat, adding, “I like to pay 50 bucks for a ticket to a fundraiser, where I can shake hands with the candidate and talk to him a bit.”

However, many do contribute to various political action groups or even super PACs. “My wife and I contribute, but we keep it to ourselves,” says David Wolfort, president of Olympic Steel, based in Bedford Heights, Ohio. Whether through campaign donations or lobbying techniques, the ultimate goal is to get elected officials to step, if only briefly, through the looking glass into the world of manufacturing, suggests Hardt. “We have to make them understand the realities and the challenges that manufacturers face in the global world,” he says.

Nobody does this better than people like Hardt and Hickey, says Nashashibi. “Ultimately, the best lobbyists are the manufacturers themselves,” he says. “Congress has the largest freshman class in years. A lot of them needed, and still need, significant education on business realities. The manufacturers can do this.”

Edmund Newton is a Washington, D.C.-based writer, formerly of the L.A. Times, Newsday and the New York Post, as well as the former managing editor of New Times-Broward Palm Beach. He has written for, among others, The New York Times, Time, People, Daily News Sunday Magazine, Black Enterprise, the Ladies Home Journal, Essence and Audubon.