November 30, 2005    Volume 12, No. 21

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Domestic Manufacturers Continue To Press NAM On Trade Issues:
They Raise Basic Questions Concerning NAM's Governance


The group of domestic manufacturers within the National Association of Manufacturers that has become active in trade policy deliberations has raised some fundamental questions regarding the organization's governance and the way it sets policy. The companies believe that NAM still does not represent the interests of U.S.-based manufacturers on trade issues and that the association's agenda is being dictated by the large multinational corporations that provide NAM with a majority of its dues. Members of the group say they have no intention of leaving NAM, and believe they are making progress in changing the association's approach to trade.

Nevertheless, during NAM's recent board and policy committee meetings, the group of domestic manufacturers said they felt betrayed by NAM and asked that the organization tell them specifically how it determines its stance on issues. The small manufacturers were irritated by the way NAM had lobbied wary Republicans in the House of Representatives to pass HR-3283, the U.S. Trade Rights Enforcement Act, sponsored by Rep. Phil English (R-Penn.). They view the English bill as being an ineffectual measure that was used as a cudgel to assure approval of CAFTA, which passed by a vote of 217 to 215. The small manufacturers claim that NAM acted without their knowledge or approval and against the best interests of U.S.-based manufacturers.

"What NAM did was out of order and nobody had to answer for it," says Dave Frengel of Penn United Technology of Cabot, Penn., a leader in the group.

Earlier this year, NAM asked the so-called "domestic manufacturing group" (DMG) to stop making any representation of its affiliation with NAM. Members of DMG were lobbying lawmakers on Capitol Hill for passage of the Hunter-Ryan China currency manipulation bill (HR-1498), which NAM had not endorsed. There was confusion among politicians as to whether these companies were representing NAM.

As a result, DMG was asked by NAM staff and counsel not to meet at NAM headquarters or utilize NAM resources, even though the DMG members argued they had never claimed they were representing NAM and had done nothing wrong.

Then came the English bill. The small manufacturers say that NAM's lobbyists, working in lockstep with Republicans and without approval of the small manufacturers, misrepresented them on the issue.

"Is there a double standard here?" Frengel asks. "We don't do anything wrong and we get mistreated and some other people do all kinds of goofy stuff and they don't even get mentioned. We can reach behind us and pull a knife out of our backs now and say, 'What is this?' because what NAM did was out of order."

Among the domestic manufacturers who contacted Manufacturing & Technology News, the episode raised fundamental governance questions concerning NAM. They say they are sensitive to the fact that the big multinational companies that foot a majority of dues for the organization are tacitly calling the shots - and that NAM's lobbyists are reflexively and intuitively representing their interests - and not those of domestic manufacturers. The big companies probably have a right to set the agenda, they say, but NAM claims it abides by a one company / one vote means of determining its lobbying position on issues, and there are numerically a lot more small company members than there are large.

In order to avoid having to deal with the small guys, NAM is taking a position "that it's not good for the organization to run on votes and that it's better to run on consensus," says one member of the domestic manufacturing group who asked that neither his name nor his company be disclosed.

Adds Frengel: "We're saying: 'What is it guys? How does it work? Are we going to vote when the multinationals get their way and work on a consensus when they don't?' "

The group posed some questions to the NAM staff, governing board and counsel:

  • Do NAM members have to be present in order to vote on policy issues, or can they vote via proxy - by phone or e-mail?
  • Who determines the policy agenda?
  • Who determines whether an item on the agenda is going to be discussed and voted on, or discussed but not voted on?
  • Who determines if a decision is going to be made based on a consensus that does not require a vote? Who determines what a consensus is?

"All of these questions came up and several different staffers within NAM could not give us answers," says Frengel.

Despite their displeasure with NAM and its vigorous lobbying for a free-trade agenda that runs counter to the interests of small manufacturers, members of the domestic manufacturing contingent who spoke to Manufacturing & Technology News were quick to point out that they believe NAM is not acting in bad faith, and that the problems come from small manufacturers having never been involved in the association's trade policymaking committees. They say they do not want to create a deep rift that forces NAM to be neutralized on the trade issue.

The domestic manufacturing group has been "active, smart, respectful, informed and organized," says Patrick Cleary, NAM's senior vice president of communications. "They are not deceitful or dishonest. They engage in the debate and some days their view prevails and some days it doesn't."

The number of small- and medium-sized manufacturers on NAM's board has increased "dramatically" over the past five years, says Cleary. On virtually every issue in which NAM is engaged -- ergonomics, patient's bill of rights, death tax, China policy, currency manipulation, respect for copyrights and trademarks and enforcing WTO rules especially on subsidies -- "our agenda is the SMM agenda," says Clearly. "In terms of tactics, there are some internal disagreements, but I would say that our track record is good on working through them all. There is no process that they are not intimately involved in."

But the trade issue is different from all others, say members of the group. "Trade has created a moment of crisis in American manufacturing," says one member of the small manufacturing group. "We can't even get NAM to officially declare that it's a crisis."

Adds Frengel: "You see a movement that is beginning to be successful in challenging the trade position within NAM. It is a big change that has rattled cages and caused them once again to question their organizational structure in a major way."

Members of the DMG believe they are starting to make an impact, and remain committed to NAM, due to the fact that there are open and honest lines of communication with NAM staff and other members of the board of directors. "We look back over the past year since we formed DMG and see that we didn't get everything we wanted, but we got so much more than we thought we would," says Frengel. "Every member of the group acknowledges progress and has no desire to quit."

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