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The Engler Era

The Former Michigan Governor Overhauls NAM

When Michael Baroody, a fixture at the National Association of Manufacturers for more than 15 years, bid the organization farewell by e-mail on June 6, he left his colleagues with the words of the late Bryce Harlow.

“If the business community would ever abandon its habit of dividing and conquering itself,” Baroody wrote, quoting Harlow, one of the city’s most revered lobbyists, “there just might be no stopping it.”

Baroody’s e-mail, an admonition that rings true for any trade association and certainly for NAM, marked an official end to the tenure of its former chief lobbyist. Baroody, though, had been on his way out for years, since 2004, when he lost out for the top job to former Michigan Gov. John Engler (R).

Since Engler settled into his new job as president and CEO in the fall of 2004, he has worked to restructure NAM and create a more top-down leadership style than his predecessor, Jerry Jasinowski, a Commerce Department official during President Jimmy Carter’s administration who spent 14 years running the organization. Engler says his goal for NAM has been to raise its profile, make it a more visible voice for manufacturing and to infuse the group with new energy.

As Engler has implemented his vision, many employees, including senior ones like Baroody, have left.

Some see the changes as a path toward greater clout on Capitol Hill. But numerous NAM members, Congressional aides and K Street observers say NAM is often overshadowed by rival business groups and is hampered by a membership divided on issues such as international trade and currency manipulation, fuel economy standards and patent reform.

“It is a happy day — and a rare one — where everybody is in agreement,” Engler said during a recent interview at NAM’s headquarters on Pennsylvania Avenue.

Engler likened NAM’s internal dissent to intraparty conflicts, like a Democrat opposing abortion rights. Generally, he said, a minority-held view isn’t going to prevent NAM from advocating the majority view.

“It isn’t bad training to be head of an association to have been governor,” Engler said. Mediating conflicts in Michigan among rural and urban constituencies was all part of the job.

NAM’s membership includes the big Detroit automakers, who oppose the toughest fuel economy standards, as well as FedEx, whose chairman, Republican Fred Smith, testified in support of higher mandatory gas mileage requirements, Engler said. Auto industry sources privately have complained that NAM has not done enough in recent weeks to push back Congressional efforts on tough new fuel economy standards.

But NAM’s vice president for energy, Keith McCoy, said NAM did mobilize to back fuel standards supported by Detroit and Toyota. He said because the auto-industry-backed standard was defeated in the Senate, NAM’s effort in the House will be “much more intense and more proactive.”

While NAM focuses much more on policy than politics — it does not have a political action committee — it is nonetheless widely regarded as a Republican-dominated organization, especially under Engler, who acknowledges that priorities have changed as a result of the 2006 elections, as have “our prospects for success.”

Earlier this year, for example, the tech-heavy immigration coalition Compete America, which had been housed at NAM, moved its base of operations to the lobbying firm Mehlman Vogel Castagnetti. Intel lobbyist Jenny Verdery, a longtime member of Compete, said the group merely wanted to retool its operations. But NAM’s GOP tilt and a Democratic Congress were clearly part of the analysis. “It was really a tactical and political decision about how to deal best with the new Congress,” Verdery said, adding that the group thought the coalition was better run by a “bipartisan, neutral firm.”

NAM was founded in 1895, and its 11,000 members, who represent a cross section of the economy, manufacture everything from cigarettes to drugs to heavy equipment. Most are smaller local or regional companies and are not household names. Then there are the giants, such as General Motors Corp., Ford Motor Co., Harley-Davidson Inc., Boeing Co., Southern Co., Shell Oil Co., Verizon, AT&T, cigarette and food company Altria Corporate Services Inc., Merck & Co., ConAgra Foods Inc., Goodyear Tire and Rubber Co. and Cargill Inc.

Patent reform also has provided a good example of buffeting cross currents within the group. On May 18, for example, according to four tech industry sources, the organization sent a letter to Members of Congress expressing “serious reservations” about the patent reform bill, despite the fact that most large technology companies, some of whom are NAM members, are in favor of patent reform. The tech sources said some of NAM’s technology-focused members were dismayed by the letter and angry that NAM’s board had not taken the necessary steps to vet the position.

NAM’s vice president for tax, Dorothy Coleman, who wrote the patent reform letter, said the correspondence represents NAM’s position and articulates the views of the “vast majority” of its membership.

A Weakening of Clout?

Baroody, who had been planning to take a now-scuttled appointment to head the Consumer Products Safety Commission, was certainly not the first to leave. Other top NAM staffers who have left include health care lobbyist E. Neil Trautwein; Patrick Cleary, who decamped for Fleishman-Hillard; Darren McKinney, a five-year communications shop veteran who left for the American Tort Reform Association; and Christopher Wenk, a trade policy expert who is now at the U.S. Chamber of Commerce. A NAM spokesman said he could not provide the number of staffers who have left because it’s a personnel issue. But some former NAM employees say more than 50 have left since Engler took office.

Some left because they were unhappy with the leadership or unsettled by change, some were squeezed out, and others were lured away by attractive offers.

Trautwein, a former aide to Sen. Mitch McConnell (R-Ky.) and now a vice president and employee benefits policy counsel at the National Retail Federation, spent eight years with NAM and views his new gig as a promotion. The turnover and changes at NAM, he said, are similar to the transformation at the U.S. Chamber of Commerce a decade ago when Thomas Donohue took over.

“My impression is, it’s not a question of John Engler or Tom Donohue bringing in their own people — certainly they did and they do — but it’s more of a question of seeing the boat rock and then varying degrees of comfort and discomfort with that,” he said.

But others say the departures have seriously lessened NAM’s clout.

“For more than a century, the NAM had been respected on both sides of the aisle as a highly credible source of nonpartisan information on policies affecting America’s critically important manufacturing sector,” said one former NAM staffer. “But since Gov. Engler has taken over, that credibility, along with the organization’s effectiveness on Capitol Hill, have been eroded significantly. You can’t drive the likes of Mike Baroody and scores of other seasoned and respected staffers out the door without sacrificing influence.”

Engler downplays any partisan aspect to NAM or himself. He said he meets with Members of both parties — he has recently met with Democratic stalwart Sen. Edward Kennedy (Mass.) and Reps. Melissa Bean (D-Ill.) and Rick Boucher (D-Va.) — and hires not by party affiliation but based on who can best advocate for the manufacturers’ agenda on Capitol Hill. NAM’s top lobbyist, Jay Timmons, a former aide to then-Sen. George Allen (R-Va.), said Engler has been focusing on outreach to new Members as well as Democrats and Republicans on Capitol Hill, including more meetings this month.

Engler said he takes the staff departures as a sign of flattery. “As we are viewed by other organizations as being more active … on a wide array of issues … people get more exposure and get hired away.”

The changes get mixed reviews on Capitol Hill.

A Senate Republican leadership aide said NAM is raising its profile under Engler and Timmons. “Under the new leadership they’ve done a better job of getting out there on the Hill and making their presence known; however, they still need to do more to increase their presence,” this aide said.

Timmons, who became NAM’s senior vice president for policy and government relations 18 months ago, said he has added new recruits to the lobbying team — people who are “fresh from the Hill and know how to get things done in the House and Senate” — such as Ohio Republican Sen. George Voinovich’s former chief of staff, Aric Newhouse.

More Advocacy

Part of Engler’s goal at NAM includes a bigger focus on advocacy and policy, and NAM’s lobbying expenditures have grown under his watch. Last year, NAM spent $13.2 million on lobbying, up from about $6.2 million in 2003 and in 2004, although much of that increase was due to a special “flurry of activity” on asbestos reform, NAM spokesman Hank Cox said.

NAM has a considerable — and expanding — communications operation, including a radio program, podcasts, publications and a daily blog called “The communications effort … has been ramped up significantly under Gov. Engler,” said Robert McDonald, the vice president for government affairs at Emerson Electric Co., a long-standing NAM member.

Something else also has changed since the 110th Congress convened in January. Engler said he is spending far more time on Capitol Hill.

“I think that Jay Timmons, who does their Congressional shop, and Engler have actually taken NAM to a new level,” said one downtown Democratic lobbyist who worked with NAM on asbestos. “It’s still an association, and you still have to get consensus on most issue items moving forward, but what we’ve seen out of Engler and Jay is a willingness to take a stand even when there isn’t 100 percent consensus.”

During Engler’s tenure, NAM, for the first time, moved well outside the traditional manufacturer’s lobby sphere to support the nominations of two Supreme Court justices: Chief Justice John Roberts and Associate Justice Samuel Alito. While the move ruffled some feathers, even inside the association, both justices in their relatively short tenures have become known as reliable pro-business jurists. In a key decision last month, the court sided with manufacturers when it decided they should have a say in the retail prices for their products.

Of course supporting Roberts and Alito hasn’t helped NAM win friends with Congressional Democrats.

“I think they’re useless,” said one senior Congressional Democratic leadership aide. The aide said that manufacturing is an extremely important Democratic constituency, but NAM “takes the side of big multinationals over the mom-and-pops that Democrats are trying to help.”

Last year, NAM’s international economic policy committee voted to endorse legislation that would deem currency manipulation by countries such as China as an export subsidy. But that decision ultimately was overruled by NAM’s board, an example of the undue influence of NAM’s largest, multinational members, according to several sources.

Such sentiments haven’t escaped the notice of Sen. Sherrod Brown (D-Ohio), who has been a leading opponent of free-trade agreements. “NAM tends to favor its largest members that pay the most money in dues,” he said.

Engler believes that when it comes to trade, NAM is viewed as the city’s No. 1 group for big-picture thinking.

But not every NAM member sees it that way, in part because of the divisions from within. One member, who spoke only on the condition of anonymity, said NAM has been eclipsed by the chamber and the Business Roundtable, especially when it involves trade.

“Part of it is the chamber is doing such a great job, and the BRT does a lot of sophisticated things. So you’re comparing [NAM] against a really high bar,” said the NAM member.

David Frengel, the director of government affairs at NAM member Penn United Technology in Cabot, Pa., prodded NAM — unsuccessfully, as it turns out — to endorse the currency manipulation legislation.

“When it comes to trade, we’re looking at where do we find a voice for ourselves and it just doesn’t seem to be NAM,” Frengel said.

But even critics such as Frengel, who says his company has no plans to leave NAM, give the association credit for many things, such as taking a lead against a union-backed bill allowing workers to unionize by an open ballot process. “NAM does a lot of great things for all of us,” Frengel said. The card check bill “was very frightening, and NAM had a loud voice against that.”

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