October 17, 2007    Volume 14, No. 18

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Domestic Manufacturers Worry About Loss Of Influence In NAM's New Policy-Making Process


The National Association of Manufacturers has overhauled its policy-making process and is getting ready to analyze all of its current policy positions and create new ones in every area in which it works. It has created policy committees and subcommittees to report the new policies to NAM's Executive Committee, which will report the policies to the Board of Directors for final approval.

The changes were the result of a contentious period in which an ardent group of domestic manufacturers successfully pushed for a controversial vote of NAM's International Economy Policy Committee endorsing congressional legislation that would hold China and other nations accountable for currency manipulation. The vote was eventually overturned by NAM's Executive Committee and Board of Directors. The controversy led to a confrontation on January 9, 2007, between NAM president John Engler and a group of NAM's domestic manufacturing members. Some of those companies have subsequently left the organization and one group even started a rival trade association.

The flap became a hot topic in Washington because it highlighted the discord that exists between domestic manufacturers and large multinational companies that have moved production offshore and are seen as benefiting from Chinese protectionism. NAM doesn't want another situation like it to occur, according to members of NAM.

"From time to time, the Policy Committees may create advisory councils with limited membership comprised of Board or non-Board members to provide advice and recommendations on policies to the Policy Committees," says an announcement on the changes in the policy-making process that went out to NAM members on Oct. 9. Fourteen Policy Committees will be comprised of members of NAM's Board of Directors. These committees will review recommendations from their subcommittees, which are open to all members of NAM.

"The role of the subcommittee is to develop recommendations to the Board Policy Committees for continuation, amendment or sunset of each NAM policy position," writes NAM in its notice entitled "How NAM Member Companies Shape Public Policy Positions."

Every four years, all of NAM's policies will automatically sunset and will have to be re-approved, revoked or amended by NAM's board of directors "at which time the policy will be in effect for four additional years," says the NAM directive. "The Executive Committee may refer any existing public policy position to the appropriate Policy Committee or Subcommittee, which will review the policy and recommend to the Board of Directors any changes or modifications that might be appropriate. The Executive Committee has the authority to resolve any conflicts in policy."

The subcommittees will be comprised of any NAM member wanting to get involved. "Each NAM member has one vote; no individual may represent more than one NAM member," says the directive. "There is no proxy voting."

Agenda items that will be discussed at scheduled meetings of the policy subcommittees will be sent out 10 days in advance. "Consensus on issues is desirable; but in some circumstances a vote may be taken," says NAM. "In lieu of consensus, a majority vote of a Subcommittee is required to recommend a policy position to a Committee, which will then consider whether Board action is necessary. Only the Board may adopt policy.

"A Subcommittee may also take positions on specific legislative or regulatory vehicles, consistent with public policy positions already adopted by the Board," the directive continues. "If the Subcommittee Chair is in doubt as to the whether said position is consistent with Board approved policy, he or she may seek guidance from the Executive Committee of the Board."

NAM encourages small- and medium-sized manufacturers to get involved in the policy committees and subcommittees. Its SMM Steering Committee "may review any policy proposal prior to action by the Board of Directors or the Executive Committee and may make recommendations as it deems necessary to the Executive Committee."

The new process is overly complex and is partly the result of a substantial turnover in the staff at NAM, taking policy advocacy away from specialists who worked at the association for decades, say those familiar with the deliberations.

Others involved in NAM's ad-hoc Domestic Manufacturing Group (DMG) say it might be good for small- and medium-sized domestic manufacturers to overwhelm the new subcommittees with members concerned about fair trade issues. "The worst case scenario for NAM is to have all the small companies get involved in the trade committees," said one NAM member. "They'll say, uh-oh, that wasn't the idea here."

Another executive with a small company NAM member involved in the trade policy debates said small NAM members will not have much say in making policy. Many small companies do not have a full-time Washington representative and do not have the time to attend meetings, so the perspective of the domestic manufacturers could be marginalized. "This is going to be a whole new ballgame because they've gone through what they went through with us and they are sure they want to prevent us from continuing to function as powerfully and effectively as we have," he said. With all the layers of process required to get any policy approved, "they will be holding meetings and doing it in such a way to make them non events."

Another member of the DMG contacted by MTN was also skeptical. "The new leadership at NAM at the staff and board level are saying we need to cut our losses with these clowns," he said. "Let's just let them know indirectly but clearly, nicely, but clearly, that they aren't going to have the influence that they thought they were going to start to have, and if they get mad and call us all kinds of names and leave, so we lose a couple of hundred members. We can go on with our business."

NAM spokesman Hank Cox says the purpose of the changes was to create more transparency in the policy-making process. "The new procedures were developed by a board-level constitutional review committee, not by the staff," he said. "There is no longer any question about how policy is made. There were people who thought that if they were on a working group of an advisory panel that approved something, that was it. But as the changes make clear, the final policy has to be approved by the board of directors."

There is a sense among the DMG members that the big companies still do not want to be beholden to the policy needs of domestic manufacturers. "If we passed Ryan-Hunter [currency bill] and if we fixed the border tax [VAT] and addressed the Chinese subsidy issue, I doubt it would hurt companies like Caterpillar at all," said one executive with a small NAM member company. "They would adjust their international business plan to find another financial advantage and make just as much money in a different fashion. For those of us who don't want to move our manufacturing offshore, we'd be able to make money also. It would be a win-win. They don't have to lose, they just have to change. But they're the big guys and they want it all. They like it the way it is even if it is killing domestic manufacturing. They think we should just go ahead and die. They're not going to lift a finger to help. If NAM gets rid of us it's going to be by wearing us down gradually by attrition."

There are still good reasons for the small companies to be involved in NAM, said the domestic NAM member. "We're getting political mileage out of this on Capitol Hill. We can go into a congressman's office and say, 'Let me tell you what happened at the NAM board meeting last week. Here's what they did and here's our side of the story and here's why they don't speak for us.' That is having a huge impact."

Cox says NAM can understand the frustration of the small- and medium-sized domestic manufacturers. "But we urge them to keep in mind that we are the only big organization in this town to take on the China trade problem and confront them and to pressure the Bush administration to brand China a currency violator." NAM is doing everything it can "short of calling for a disruption of international trade" to require China to play by the rules, said Cox. "We love small manufacturers and it is because of our concern for small manufacturers that we have made China a priority. We have board policies saying that China's currency policy is totally unacceptable."

Below are the subcommittee meetings scheduled by NAM to review the association's policy positions. The names of the Board Policy Committees are in parenthesis:

  • Regulatory Improvement, Oct. 18, 2007
    (Infrastructure, Legal and Regulatory Policy)
  • Education and Workforce, Oct. 23, 2007
    (Human Resources Policy)
  • Health Care, Oct. 23, 2007
    (Human Resources Policy)
  • Employment and Labor, Oct. 23, 2007
    (Human Resources Policy)
  • Export Controls, Oct. 24, 2007
    (International Economic Policy)
  • Transportation and Infrastructure, Oct. 30, 2007
    (Infrastructure, Legal and Regulatory Policy)
  • Energy and Natural Resources, Nov. 1, 2007
    (Energy and Resources Policy)
  • Technology Policy, Nov. 7, 2007
    (Tax, Technology and Domestic Economic Policy)
  • Corporate Finance and Management, Nov. 13, 2007
    (Tax, Technology and Domestic Economic Policy)
  • Environmental Quality, Nov. 14, 2007
    (Energy and Resources Policy)
  • Legal Issues, Nov. 19, 2007
    (Infrastructure, Legal and Regulatory Policy)
  • Tax and Budget, Nov. 19, 2007
    (Tax, Technology and Domestic Economic Policy)
  • International Trade, Dec. 12, 2007
    (International Economic Policy)
  • International Investment & Finance, Dec. 12, 2007
    (International Economic Policy)

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