The biggest U.S. manufacturers' alliance has gone from being a ferocious critic of global warming legislation to being a quiet observer in recent months, even as debate about Senate climate legislation increasingly focuses on global trade issues and jobs.
The National Association of Manufacturers has largely stood on the sidelines since September. That month, environmental groups and the Obama administration launched a campaign against the U.S. Chamber of Commerce that sought to weaken its considerable lobbying might. The public attention and the loss of a handful of large companies upset about the chamber's opposition to a House-passed climate bill forced its president, Thomas Donohue, to recant some chamber rhetoric and soften its position.
During that period, environmental groups were trying to paint NAM's opposition to the House bill with the same broad brush.
Like the chamber, NAM was an outspoken critic of legislation that would cap carbon dioxide emissions and establish a national program for trading pollution allowances. Both spent millions of dollars in the summer on lobbying, advertising campaigns and position papers opposing climate legislation, saying it would be too costly for the nation's industrial sector and would mean millions of job losses. NAM spent $6 million in the third quarter, and the chamber spent $34 million in the same period.
"It's a fringe position," said David Yarnold, executive director of the Environmental Defense Action Fund, describing his view of NAM's opposition.
In August, NAM and the National Federation of Independent Business launched a national advertising campaign opposing the House-passed bill sponsored by Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.). "Our message to senators is that the Waxman-Markey bill is an anti-jobs and anti-energy piece of legislation," NAM Executive Vice President Jay Timmons said at the time.
The guns of August grow silent
That same month, NAM and the American Council for Capital Formation released a study predicting that 2.4 million jobs would be lost, total loss of gross domestic product through 2030 would be $3.1 trillion, and residential electricity prices would increase by up to 50 percent by 2030 if the Senate were to pass the House bill.
The Environmental Defense Fund, the Natural Resources Defense Council and a tightly bound network of environmental investor groups called on companies to leave the chamber and NAM. Three major utilities Exelon Corp., Pacific Gas & Electric Co. and PNM Resources Inc. defected from the chamber. Apple and Nike also announced plans to quit the chamber's board and leave the organization. Duke Energy Corp. had already left NAM, but no companies followed Duke in that decision. For the most part, NAM's reputation has remained intact as critics have pummeled the chamber, sources said.
"It's appropriate to challenge them on spreading half-truths, and then pushing others to have discussions in the trade associations about their position on climate change," said Timothy Smith of Walden Asset Management.
Still, some major manufacturers, including Whirlpool and Dow Chemical, have said they don't agree with NAM's staunch opposition to the House bill, but are staying in the organization.
"Obviously our position is different than theirs," said Peter Molinaro, vice president for government affairs at Dow Chemical.
Different structure than the chamber
Dow sits on NAM's executive committee. "We work as a member of the leadership to get our point across," Molinaro said. The chemical maker is also part of the U.S. Climate Action Partnership, which is a group of corporations that support a mandatory cap on carbon dioxide emissions.
"You're not going to agree on all the issues," he said. "You may not agree on their position, strategy or tactics, but there's a breadth of issues they're involved with."
For years, NAM has been among the most powerful and vocal trade groups in Washington. That has changed some, as the U.S. manufacturing sector has declined in the past decade and as individual companies have bulked up their lobbying arms.
Under the Obama administration, NAM officials say they have a seat at the table as the White House searches for ways to recharge the manufacturing sector. Still, the group's leadership, led by former Michigan Gov. John Engler (R), appears to be walking gingerly into the Senate climate debate, even as the bill could turn on the votes of industrial-state senators concerned about its price tag for big greenhouse gas emitters. They say it could drive manufacturers out of business or put them at a competitive disadvantage globally.
Silence about the Senate bill
NAM has held off from taking any firm position on the climate bill wending its way through the Senate, sponsored by Democratic Sens. John Kerry of Massachusetts and Barbara Boxer of California.
Its spokeswoman Erin Streeter says the group is working with Republicans and Democrats to expand research and development for clean energy technologies, increase funding for carbon capture and sequestration projects and boost energy efficiency. But it isn't ready to take a position, firm or soft, on the Senate bill. The Kerry-Boxer bill is largely modeled on the House bill, but faces tough issues dealing with the allocation of emissions allowances, border tariff issues and market oversight.
She also said NAM has no plans for a repeat in the coming months of the August advertising campaign proclaiming that the House bill is a jobs killer. State-level manufacturing association officials involved in the August campaign also said NAM doesn't appear to be planning a repeat.
NAM has tried to distance the group from the chamber, with which it has been closely aligned for decades. Policy positions at NAM, Streeter said, are developed by task forces led by its members and reviewed by several layers of other committees before getting approval from the board of directors. "All of these groups and committees are members, not staff," she said.
At the top of the NAM board's pecking order are top executives for Dow Chemical, Emerson, Exxon Mobil Corp., Arch Coal, Devon Energy and American Electric Power, among others.
Critics of the U.S. Chamber, including some members, have said its policies are developed by a handful of top executives in Washington and don't reflect the views of its broader membership.
But even while quiet, NAM exerts a lot of influence. And its actions in August reverberate on Capitol Hill.
The group's study suggesting 2.4 million jobs are at stake if Congress passes cap-and-trade legislation has been championed by Republicans and climate bill opponents. And there is real concern among top proponents of climate action that the study could influence the debate.
"Politically, manufacturers are difficult to marginalize," said David Kreutzer of the conservative Heritage Foundation. "People are especially sensitive to losing manufacturing jobs."
To marginalize the study, he said, you have to assume that large amounts of nuclear power, efficiency and tradable offsets will be available to mitigate costs over time. "You have to assume these things will happen and happen fairly easily."
Sen. Kerry and other Democrats sparred at a hearing last week with one of the study's authors, Margo Thorning, chief economist of the American Council for Capital Formation. They complained that the study's assumptions bias it toward heavy job losses.
"Models done by the Congressional Budget Office show a fairly narrow range of potential cost," EDF's Yarnold said in an interview. "And the models that show exaggerated, distorted figures, whether from the Heritage Foundation or NAM, they're just plain wrong, written for radio talk shows."
Border tariffs to protect manufacturers against cheap goods from China and India -- in case those countries they don't take steps to slash emissions -- are among the chief issues for labor unions and domestic manufacturers.
The issue threatens the manufacturing sector. Groups with a strong labor presence are pressing for Congress to include border tariff adjustments and provisions to help energy-intensive manufacturers. But multinational companies, such as General Electric Co., alongside NAM, are concerned about creating a trade war that could shut them out of the most lucrative markets, particularly Asia.
"There is a way to do this that is World Trade Organization legal," said Scott Paul, executive director of the Alliance for American Manufacturing, which has a big industrial labor membership.
Streeter said NAM supports a WTO-consistent international agreement on climate change that provides a global framework for border measures. "NAM believes that a comprehensive global agreement with common, enforceable measures will ensure there are not unique, individual enforcement measures that would negatively impact global trade, including U.S. exporters," she said.
Boosting exports to Asia and rebalancing U.S.-China trade relations are critical issues for U.S. manufacturers as President Obama begins a nine-day trip to the Pacific Rim.
But NAM is sitting out the trip, which includes a stop in Singapore for the Asia-Pacific Economic Cooperation summit. A fleet of American business leaders, including the U.S. Chamber of Commerce and Exxon Mobil, are expected to be there.
At that summit, and in meetings in Beijing in the coming days, Obama administration officials are expected to push China to loosen trade restrictions on clean energy products to boost job creation for U.S. manufacturers.