Upward Movement

EXECUTIVES ATTENDING the American Chemistry Council's annual meeting earlier this month were generally in a good mood. Their happiness with the health of the chemical industry and its main trade association more than offset any unease they might feel about the Democrat-controlled Congress in Washington.

Although the chemical industry's fortunes are not rocketing upward like they were during parts of 2005 and 2006, most companies are still enjoying decent profits. Moreover, executives surveyed at the meeting, held at the Greenbrier Hotel in White Sulphur Springs, W.Va., claimed not to see any dark clouds on the horizon to change that scenario.

The meeting marked the end of the association's second year under the leadership of Chief Executive Officer Jack N. Gerard, and attendees kept singing the praises of the revitalization he has led.

Andrew N. Liveris, CEO of Dow Chemical and chairman of ACC, said as much at a press breakfast with reporters. "Three or four years ago, you guys would have written that the ACC had lost its way, and we certainly all felt that way," he said. "Today, we feel very good about the business of chemistry and this industry on multiple fronts."

A sign of the turnaround came in March when Gerard announced that Huntsman Corp. and Chevron Phillips Chemical had rejoined the association. Along with Lyondell Chemical, the two big firms had left in 2003 over dissatisfaction with how ACC was handling issues ranging from natural gas prices to proposed bans of the gasoline additive methyl tert-butyl ether.

Other new members include the smaller firms Compass Minerals, DJG Chemical, and Montgomery Chemicals; several other prospective members were scheduled to be voted on at the ACC board meeting. All in all, Gerard said, some 25 new companies have joined ACC in the past two years.

Robert L. Wood, CEO of Chemtura and next in line to succeed Liveris as the ACC chairman, said one key to the change in the association's fortunes has been Gerard's decision to focus it on just a few key issues. "Instead of trying to be everything to everybody," he said, "we now have a prioritization system that the whole organization participates in."

Those issues, Gerard said, include competitive rail transportation, chemical plant security, and, above all, energy. Signs that the strategy is working, he argued, are ACC's role in the passage of legislation opening up some drilling on the outer continental shelf and in industry-friendly chemical security legislation. After years of ignoring the group, the Washington, D.C., newspaper The Hill has now twice ranked ACC as one of the city's top trade associations, Gerard noted.

He acknowledged that ACC goals such as a further opening of offshore gas drilling will be tough to achieve now that Democrats are in charge of Congress and political attention is focused on the battle for the White House. "But we believe there is a window of opportunity within the general stalemate to advance our agenda," he said.

Gerard and other executives voiced their continued support for ACC's essential₂ advertising campaign, which promotes chemistry's role in modern life. Stephen Gardner, managing director for communications, said ACC plans to spend $13.7 million, up 5%, on television advertising during the season that begins in September.

At the 2006 annual meeting, ACC officials unveiled statistics showing that, after six months of the essential₂ campaign, 49.0% of "informed Americans" had a favorable view of the chemical industry, up from 46.8% before the launch.

At this year's event, Gardner reported that the favorable figure has crept up only slightly more, to 49.8%. More impressive, he argued, is the 900% increase in traffic on the association's website, americanchemistry.com, since the launch of essential₂, to surpass 1.1 million hits in May.

Noting that the ad campaign is part of a broader advocacy program that began by targeting company employees, Gerard pointed out that the industry's workers sent Capitol Hill more than 70,000 communications of one sort or another during the offshore drilling debate. "I don't know of any other trade association in Washington that has generated that individual participation," he said.

Gardner added that the plastics industry's ad campaign ran for three years before it began to have a favorable effect on public sentiment. He said ACC is prepared to keep pushing the essential₂ message, although he did note that Ogilvy & Mather, the advertising agency that created the campaign, will be freshening up the message for the fall television season.

At the banquet that closed the annual meeting, Gerard extended a special welcome to senior executives from two prospective ACC members, Hexion Specialty Chemicals and Cognis. It's telling of the membership challenges the association faces that both companies are relative newcomers to the industry, formed from assets that were cast off by traditional players. And both are now part of private equity firms, financially oriented owners that are often seen as having little loyalty to the industries in which they operate.

Gerard has been successful in focusing ACC, enhancing its finances, and raising the industry's profile in Washington. But the true measure of his success will perhaps be whether he can convince the CEOs of this new breed of chemical company to come aboard.