After eight years of isolation during the Clinton presidency in what he describes as a political “wilderness,” Alan Kranowitz, senior vice president for National Association of Wholesaler-Distributors (NAW), said he plans to press hard for passage of pro-business legislation that's favorable for NAW distributors.
“We are not on the defensive anymore. We are going on the offensive,” he said in a press briefing at the NAW Annual Meeting in Washington, Jan. 29-31. Kranowitz, who served in the Reagan Administration and is a close associate and former college classmate of Vice President Dick Cheney, outlined NAW's plans for lobbying efforts on upcoming Capitol Hill votes on estate tax reform, product liability, health care reform and overtime exemptions for inside sales personnel.
While NAW, ranked by Fortune magazine as one of the most effective lobbyists in the Capitol on business legislation, was working on these issues during the Clinton years, Kranowitz said the association's positions on most business issues ran counter to that of the White House. However, NAW was an early and ardent supporter of the Bush presidential bid. The association's loyalty was rewarded during the NAW Annual Meeting when President Bush and Vice President Cheney met with more than 150 NAW distributors at the White House to brief them on the Administration's support of small business.
President Bush told NAW leaders that part of his goal was to “get rid of the death tax,” and to engineer an across-the-board cut in income tax rates.
Following Bush's address, NAW president Dirk Van Dongen said, “Our members are very energetic supporters of the president's agenda, so it was a privilege to have an early opportunity at which leaders of the wholesale distribution industry from across the country could express their enthusiasm for his initiatives on a whole range of issues.”
Like Alan Kranowitz, Van Dongen is well connected in political circles both in Washington and nationally. He helped the Bush team plan this year's inauguration.
NAW ties to the Washington political scene were also evident in the program at the annual meeting. Sen. Dr. Bill Frist, R-Tenn., and Rep. John Boehner, R-Ohio, participated in a roundtable discussion on health-care reform, business issues and educational spending. Frist, who serves on the Budget, Foreign Relations and Health, Education, Labor and Pensions Committees, and has been on several committees studying Medicare reform, is the first practicing physician elected to the Senate in almost 70 years.
The NAW program and many informal discussions at the meeting also focused on the U.S. economy. Dr. Allen Sinai, CEO of Decision Economics Inc., New York, said that whether the economy is now experiencing a hard landing or is actually already in a recession, NAW distributors can expect business to be soft this year. “It has very suddenly become a tough business environment. It's going to stay tough all year.”
Another highlight of the program was a sneak preview of NAW's “Facing the Forces of Change” study, which Adam Fein, president, Pembroke Consulting Inc., Philadelphia, is conducting for NAW. Fein said distributors will have to forge tighter relationships with customers and learn to run their businesses profitably despite shrinking margins.
Fein's sneak preview offered a glimpse of the evolution of the Internet as a business tool. A sampling of distributor respondents showed that 79 percent of the respondents said it was likely that the Internet would replace EDI. When asked about the popularity of online storefronts operated by distributors, 88 percent said it was likely that distributors would provide online ordering for customers.
Distributors focused on selling products to institutional customers were more certain than contractor-oriented or industrial OEM-oriented distributors that Internet orders would replace phone or fax orders. About 79 percent of the institutionally oriented distributors said it was likely that Internet sales would prevail. Sixty-five percent of the distributor respondents in the industrial MRO and retail supply markets felt the same way.
Apparently, it isn't only electrical distributors who are concerned about their future role in the market. Forty-nine percent of the respondents in this study said it was likely that suppliers would authorize fewer distributors; 46 percent believed that in the future more suppliers will bypass distributors and sell direct. Respondents were pretty evenly split about the potential of Internet companies with distribution capabilities threatening wholesalers. Forty-one percent of the respondents believed that's an unlikely scenario; 39 percent said it was likely.
The complete Facing the Forces of Change study will be available in the fall. The preliminary findings are available at www.pembrokeconsulting.com/Publication/FTFpreview.pdf .