Jack Gerard Shakes Up ACC

When Jack N. Gerard took the reins as president and chief executive officer of the American Chemistry Council (ACC) in July 2005, he found that the chemical industry's largest trade association was having a difficult time advancing its agenda on Capitol Hill. A little over a year later, Gerard is being praised by industry leaders and outside observers alike for moving swiftly to coordinate the group's message on natural gas and security issues and for strengthening the organization's role in advocating public policy. He has pledged to make ACC the "gold standard" of trade associations.

"For an organization representing a $550 billion industry, we were punching below our weight," says Gerard, who was hired away from the National Mining Association (NMA) to reinvigorate ACC, which had been struggling from internal disputes following the absorption of the American Plastics Council (APC) in 2002.

Gerard replaced Thomas E. Reilly Jr., the former chairman of Reilly Industries, who took over the presidency on an interim basis after Gregori Lebedev resigned under pressure from the group's board in the summer of 2004. Lebedev's less-than-two-year tenure in the top post was marked by member company complaints that the merger with APC did not result in cost savings as significant as they had hoped and that ACC was largely ineffective in pressing Congress for relief from soaring natural gas prices. Three of the nation's biggest chemical manufacturers—Huntsman Corp., Chevron Phillips Chemical, and Lyondell Chemical—quit the association.

"When I first arrived at ACC, it was clear that they had been through some difficult times, which had forced an internal review of what the members really wanted from their trade association," Gerard says. "I was pleased to find that they had come to the conclusion that what they wanted was a first-class advocacy organization. So from my vantage point as a newcomer to the association, that made the vision clear and the strategy relatively simple."

Gerard says ACC's problems were not unique. "Many trade associations in Washington, over time, lose their way. Historically, trade associations have been built on more of a bureaucratic model where their success was measured by the number of people they employed and the size of their budgets. I disagree with that approach. I feel very strongly that a trade association can and should be run like a business."

Formerly a top staffer for retired Sen. James McClure (R-Idaho), who headed the Senate Energy & Natural Resources Committee, Gerard joined NMA in January 2001 with a plan to transform the mining organization into a proactive lobbying force. He streamlined operations, reduced staff from 70 employees to 30, modernized its communications capabilities, and focused the association on its core public policy objectives.

Five months after taking the helm at ACC, Gerard began to implement a similar strategy. In December 2005, he announced a significant restructuring of the top-heavy organization, reducing the number of vice presidents from 13 to five and eliminating 41 of the association's 265 jobs. "We moved on many good people who were quality employees but no longer had a role in the association because we had changed our mission," Gerard explains. "We streamlined and said, 'Let's stay focused on the heart of the issues that are most important to our sector.' "

ACC, which represents 133 U.S. chemical companies, has a structure that is a lot like a political campaign. A lobbying component, a communications operation, industry performance programs such as Responsible Care and the Long Range Research Initiative, and a range of product-specific ChemStar panels support the advocacy mission.

"The new structure is lean and mean. It's more efficient," Gerard says. "But again, every day of the week, we ask ourselves: Are we focused on advocacy? Are we delivering value to the members by achieving through our collective efforts what they can't do individually?"

Gerard has filled several vacancies within the new organization. In February, J. William Ichord was appointed managing director of global affairs, and in April, Lisa Harrison was named vice president of communications. Earlier this month, Thomas Gibson was selected to fill the newly created position of senior vice president of advocacy, and Sharon Kneiss was picked to serve as vice president of the ChemStar panels, including ACC's chlorine and plastics divisions. All have extensive experience in government and regulatory affairs. "I'm very pleased with the new people we've hired. We've been able to attract some very high-quality talent," Gerard says.

Cost savings have also been achieved, he notes, by more fully integrating affiliated groups such as APC and the Chlorine Chemistry Council under the ACC umbrella. "The chlorine council is focused specifically on chlorine issues. But there are a lot of synergies we can achieve on questions like rail transportation and others that cross over and overlap," Gerard explains. "So by defining each component's role, we've been able to achieve multimillions of dollars in savings, and yet at the same time deliver the same value, and hopefully more value, to the member companies."

So far, the restructuring has resulted in a savings of about $7 million, according to the ACC chief. "We're still looking at other opportunities, longer term, to cut back our cost structure and to operate more efficiently," he remarks. "So I believe there are still millions of dollars yet to be achieved in savings as we move forward."

While he was directing the mining association, Gerard moved the group's long-time headquarters in downtown Washington, D.C., to Capitol Hill as part of his strategy to make NMA a more effective advocate for the industry. He would like to make a similar move with ACC, which relocated from the high-tax District of Columbia to adjacent Northern Virginia in 1996.

"It's important psychologically and politically to be where the action is," he stresses. "If our strategy is to save on real estate costs, then we ought to go to Middle America where we can get space for $10 a square foot. But it's pretty difficult to be a key, exceptional advocacy organization if you're in the middle of Iowa. So we need to think about what is the value of being in the heat of the battle."

ACC is only one of thousands of business groups that are constantly trying to get their message out and capture the attention of federal policy makers, he points out. "If we're great advocates, we're going to do everything it takes to break through the clutter and get people to pay attention to our agenda and to our needs. Presence is a significant added value," Gerard says.

By moving NMA's headquarters to across the street from the U.S. Capitol, he says, industry officials were able to interact a lot more with members of Congress and their staffs. "We were able to have our people on the Hill on an ongoing basis. That's where the action occurs in Washington. We need to be present in the heat of the battle more often than we have been," he says. "And so it will be important for a longer term vision and strategy to get us back to Capitol Hill." But for now, Gerard says ACC has "some long-term leases that we have to deal with, and we're not willing to do something fiscally irresponsible."

Conventional wisdom suggests that most advocacy work at the federal level is conducted by lobbyists "inside the Beltway," but Gerard says that is only partly true. The real keys to political success, he says, are voters and constituents. "At ACC, we're going back to the grass roots, back to political fundamentals. And by doing that, we will build the advocacy tools that will allow us to prevail in policy debates," he remarks.

One major goal is to mobilize the 885,000 workers who are directly employed by U.S. chemical companies and the millions of people up and down the industry's value chain. "They have never been deployed in this art of advocacy, but their livelihoods depend on it," Gerard says. "Our industry has not done as good a job as it should have in terms of educating those people and bringing them into the advocacy arena for the benefit of their jobs and the benefit of the industry generally."

ACC's top legislative priority for the past few years has been to secure passage of legislation that would open new areas off the U.S. coast to drilling for natural gas, which the industry uses in huge amounts both to power its plants and as a key raw material. Natural gas prices are triple what they were in the late 1990s, and business groups claim that hundreds of thousands of U.S. jobs have been lost as chemical makers and other manufacturers have shifted operations overseas where fuel and feedstock costs are much lower.

But Congress has been unwilling to lift a moratorium on new drilling that it put in place more than two decades ago. Environmental activists and coastal state lawmakers who are worried about potential damage to coastlines and to tourism strongly oppose any change.

In a bid to spur congressional action, Gerard has enlisted industry leaders, such as Andrew N. Liveris, president and CEO of Dow Chemical, to visit Capitol Hill and talk with lawmakers about the crippling impact of high natural gas prices. Gerard has also called on member company CEOs to encourage their employees to contact their elected representatives.

In the weeks leading up to a crucial Senate vote last month on a bill to allow energy development in a section of the eastern Gulf of Mexico, chemical industry workers sent more than 70,000 communications to their senators, urging them to support the legislation. The Senate passed the bill by a vote of 71 to 25. In June, the House approved an even more ambitious offshore drilling measure, 232 to 187.

"These things didn't happen by chance. I think our message was heard loud and clear," Gerard states. "For the first time in 25 years, the House and Senate by huge bipartisan majorities have voted to overturn what in my view is an irresponsible policy. That is significant, and I believe our members see that. It doesn't mean we're done yet."

The ACC chief says he is "cautiously optimistic" that Congress will reconcile differences between the offshore drilling bills passed by the House and the Senate before adjourning for the midterm elections. "But that's a long-term issue that's 25 years in the making." If lawmakers pass a narrow bill or fail to take any action, "Then we still have some work to do," Gerard says, "and we won't give up until we get the job done."

Rep. John E. Peterson (R-Pa.), who has led the House effort to lift the moratorium on offshore drilling, says Gerard has played a major role in pushing his legislation forward this year. "Jack brought ACC into this debate at a time when a lot of other groups in Washington were content to stand aside," Peterson tells C&EN. "He connected the dots early on, recognizing that the biggest losses brought on by our failed national energy policy would be underwritten by the biggest consumers of natural gas, his group's members in particular. Because of that, he and his organization have been tireless in their efforts to increase American access to American energy so that American industries can remain competitive."

Gerard says ACC will expand its grass-roots advocacy program over the next few years. "If we can deploy our people into the political arena, have them express their views when a serious piece of legislation comes up for consideration, we'll reshape the landscape of American politics," he remarks.

"When the business community begins to play this game the same way the environmental community and organized labor and others have been playing it for many years, it will be a new day in America. I believe the business of chemistry is on the cutting edge of that effort, and I believe you'll see ACC as one of the leaders moving that forward."

Gerard is also committed to increasing campaign contributions by ACC's political action committee (Americhem PAC) and to bolstering the "get out the vote" effort in support of candidates who espouse the industry's public policy agenda.

"This isn't about Democrats and Republicans. This is about good public policy," the ACC president says. "We need to educate our employees, remind them of the issues important to the industry. And we need to encourage them to fulfill their civic duty and responsibility by going to the voting booth." When elected public officials begin to see that chemical industry employees are voting in "droves and masses," Gerard says, officials will become more responsive to the industry's needs and concerns.

In addition to making ACC a more vocal advocate on behalf of policies that affect chemical manufacturers, Gerard believes it is also important to build coalitions and work with nonchemical groups on issues of mutual interest. Earlier this year, ACC and other trade groups representing industrial consumers of natural gas banded together to form the Consumer Alliance for Energy Security to urge Congress to end the drilling moratorium.

The problem of high energy prices "is bigger than just the chemistry industry," Gerard says. "We've come together in a common cause. To me, that's how you're successful in advocacy." He notes that the impact of the broader issues that Congress is now grappling with, such as energy and security, is not limited to individual sectors of the economy. "To prevail and win, you need to build your base."

ACC's reorganization followed the September 2005 launch of the organization's essential₂ public outreach campaign, which aims to increase awareness of the chemical industry's contributions to everyday life and its role in the U.S. economy (C&EN, Sept. 26, 2005, page 10). A strong communications program is critical to the industry's success, in both Washington and the rest of the country, Gerard notes. "It's only the beginning of what has to be a long, sustained effort, not only to communicate with the public generally, but to also communicate with our employees," he remarks. "This is all part of our integrated strategy to bring our employees into the mix, to make them feel better about their jobs, about the industry, and about their profession."

Gerard says the campaign, which is targeting "informed Americans," is off to a good start, with all indicators positive after the first six months. "In New Jersey, for example, a state legislator who had seen a billboard on the turnpike said during a meeting with our industry, 'Now I get it. You are a huge employer in my state.' This is the sort of feedback we are hoping for," the ACC president says.

For his leadership, Gerard is winning high marks both inside and outside the industry. "Jack has taken on a tremendous challenge and is working hard with his team to reinvigorate our industry's presence in the public policy debate and our ability to work collectively," Dow's Liveris says. "In just his first year at ACC, Jack has made great strides in revitalizing ACC and having its voice heard in Washington." Liveris says ACC is now "a leaner, more focused advocacy organization that is starting to make a real difference on issues critical to the industry."

Gerard "has great relationships and knowledge on how to improve our visibility and our reputation, both of which are so important to the future of our industry," adds J. Brian Ferguson, chairman and CEO of Eastman Chemical. "Jack has a great sense of how the public policy engine in Washington works, and he is bringing about one of most important and significant transformations at ACC since my association with it began more than 12 years ago."

Christopher D. Tucker, communications director for Peterson, says Gerard "took what was a modest advocacy program at ACC and turned it into a major political force seemingly overnight. I think anyone who has followed the vicissitudes of the House energy debate recognizes that without Jack's simultaneous work as member educator, media spokesman, technical adviser, and, at times, extemporaneous whip, we wouldn't have gotten meaningful legislation to the floor, much less gotten it passed."

Don H. Olsen, senior vice president for global public affairs and communications at Huntsman Corp., says Gerard "has done, and is doing, a terrific job on issues of concern to the industry. There's no question about that. He has improved the organization's advocacy, and by extension, the industry's advocacy by orders of magnitude." But Olsen adds, "Of course, he had nowhere to go but up." Huntsman Corp. withdrew from ACC at the end of 2003, citing the group's "inability to deal effectively with its diverse membership," thereby making it "extremely difficult, if not impossible" to reach consensus on issues.

Huntsman Corp., the nation's fifth-largest chemical maker, quit ACC for several reasons, according to Olsen. "Part of it was just return on investment and the fact that advocacy for the industry under the other regimes—before Gerard—was just so horribly lacking," he says. "When you pay million of dollars in dues for membership in an organization, you've got to get a good return on your investment, and we didn't think we were getting one."

In addition to the failure to get Congress to address the high and volatile price of natural gas, Olsen says the company was also discouraged by ACC's refusal to help methyl tert-butyl ether (MTBE) makers in their fight, which was ultimately unsuccessful, to obtain legal protection against defective product lawsuits.

Petrochemical companies and refiners face hundreds of suits across the country that accuse them of polluting drinking water because MTBE has leaked from underground storage tanks. Producers of the gasoline additive claim they should not have to pay potentially billions of dollars in cleanup costs because the 1990 Clean Air Act effectively required them to add MTBE to motor fuel to reduce air pollution. But Congress has refused to provide a liability shield.

"MTBE was kind of a symptom of what we saw as an overall disease," Olsen observes, "and that was the inability or the unwillingness of ACC to separate its pure chemical members from its chemical/energy members."

Olsen notes that the National Petrochemical & Refiners Association has both refiners and chemical companies at the table, but "they found a way to advocate for MTBE. That's something that ACC wouldn't even look at. All we were asking them to do was say something about the folly, the danger even, of banning a chemical product based on political fiat. ACC wouldn't even do that. So it was a concern to us and it was a factor in our decision."

Although Salt Lake City-based Huntsman has not ruled out rejoining ACC at some point, Olsen says the company continues to be disappointed that the group is focusing all of its natural gas advocacy efforts on expanding production. "We are all in favor of increasing supply. But the way that natural gas is traded and subsequently priced is a second element to the natural gas crisis that ACC has basically ignored," Olsen asserts. "So while Jack has done a terrific job overall, if there is a hole, it's in that one area."

Gerard expects the legislative focus to remain on energy and security next year, while issues such as railroad competition and chemical regulation will become more prominent. "We've made significant progress, but the work's not done in many of these areas," he notes. And with polls showing that Democrats might be in a position to win a majority of seats in the House in the November elections, Gerard says, "You have to deal with the political reality. Sometimes the two political parties have very different philosophies, particularly on our issues. So we would have to adjust our strategies" if Republicans lose control of one or both chambers of Congress.

Gerard stresses, however, that effective advocacy is built on a nonpartisan basis. "Our goal is to educate Democrats, Republicans, Independents, and anybody else who's elected to public office," Gerard says. "We don't care what their political stripe is. We're interested in making sure they understand the business of chemistry, the significant role we play in society, the value we bring to our economy, and what we do to support our national security."

Five years from now, Gerard predicts, "we'll look back on this time as a major turning point for this industry. And we'll get back the recognition that we should have had as a major force to be reckoned with in Washington and around the country."