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American Iron and Steel Institute Public Affairs Conference, New York, NY, January 14, 1965
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American Iron and Steel Institute Public Affairs Conference, New York, NY, January 14, 1965
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The original documents are located in Box D19, folder "American Iron and Steel Institute
Public Affairs Conference, New York, NY, January 14, 1965" of the Ford Congressional
Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. The Council donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Rm. Irm. steel Institute
Public affairs Conference
Our only copy
N.Y. Jan. 14,1965
WHAT IS AT STAKE
by
Gerald R. Ford, Member of Congress, Michigan;
Minority Leader, House of Representatives
Thank you very much, Mr. Johnston, members of American Iron and Steel
Institute. It's a real privilege and a pleasure to be here this afternoon
and to participate in this public affairs discussion.
I would like to say at the outset that according to the schedule which was
suggested to me, it would take about 45 minutes of your time for my remarks
and whatever questions you might ask and whatever answers I might give. I
feel very strongly, in a meeting of this sort, that it is far better for me
to take approximately half the time for what I should say directly to you,
and then to give to each of you an opportunity to ask any questions for the
remainder of the time.
Whenever I have a time limitation, or whenever I impose one on myself, I
always take the admonition somewhat seriously. This reminds me of a story
that happened in our family a year or so ago. My wife and I were attending
a dinner where I was to be the principal speaker. I was sitting here, and
my wife was sitting on my right and another gentleman was sitting on her
right. As the Toastmaster made the introduction she took a little piece
of paper and wrote on it K-I-S-S, all in capitals. As I got up to speak,
the gentleman who was sitting on her right thought he would make a nice
comment, a complimentary remark concerning this note. So he turned to
her and said "My, you were thoughtful to pass that note to your husband
with 'K-I-S-S' inscribed on it." My wife, Betty, was a little concerned.
She didn't know quite how to answer him and said, "Well, I really don't
think it means what you think it means," and he, of course, said "Well,
what did you intend?" To which she replied, "Well, 'K-I-S-S' as far as
this note was concerned, meant 'Keep it short, stupid."
It was suggested, when I was talking to Bill Whyte and some of the others,
that I might make some comments concerning what is at stake, and may I say
with all the sincerity and all the persuasiveness that I can, I don't think
I'm exaggerating when I say "at stake." I think there are several basic
concepts that are deeply ingrained in our form of government, our political
society, that are in some jeopardy today. It is my considered judgment and
opinion that unless these basic concepts, which are essential to the
preservation of our government, are saved, the situation in the next decade
or two could be quite different.
And what are they? First, I think there is the system of checks and balances
that has been an essential part of our government that was actually written
into the Constitution at Philadelphia almost 200 years ago. I believe most
Americans, regardless of political faith, would agree with this concept of
the framers of the Constitution. They very carefully drew a form of government
which would permit the majority to rule, but would also by and large protect
the rights of the minority. One of the very crucial portions of this document,
the Constitution, was the delineation of power, or the separation of powers
between the Executive Branch under the President, the Legislative Branch under
the Congress, and the Judicial Branch under the Supreme Court.
GERALD FORD LIBRARY 49
Digitized from Box D17 of The Ford Congressional Papers: Press Secretary and Speech File at the Gerald R. Ford Presidential Library
Under the Constitution, if not directly stated certainly implied, each
of these branches of government was given a responsibility, a very specific
responsibility, but none, nor any one of those branches, under any circum-
stances, as I see it, was given a superior position. And it is this system
of checks and balances that has preserved the integrity of our form of
government. To put it quite bluntly, this system has created the environment
which has enabled 13 poor, struggling colonies to grow into the nation of 50
states that we have today, a nation that is the most powerful economically,
agriculturally, and industrially--and I add spiritually--in the world today.
Now, unless this basic concept of our government is preserved, where you have
three coordinate branches of the government, each with a responsibility but
no superiority, I am convinced we cannot move ahead as we have in the past.
I respectfully say there have been developments in recent months that put in
some jeopardy this basic concept of the separation of powers and the checks
and balances that have been so beneficial in the past.
The second basic concept, which seems to me must be preserved, is one with
which we are all familiar, the two-party system. For the first time in
American history, I think, this nation faces a very serious threat of one-
party dominance of two branches of our Federal Government. This is a
problem that we all must face, and I don't speak here as a partisan,
although I have some partisan interests. I can only say that some of us
in the Republican Party currently in the House of Representatives feel
that this is a very critical issue, and that we intend, in the months ahead,
to fight for a strong two-party system. When we have the legislative branch
overwhelmingly controlled by the same party that occupies the White House,
we have gravely weakened the system of checks and balances.
I might just say, parenthetically, that there are a number of us in the House
of Representatives at the present time, who are trying to get the Republican
Party on the road to a position of responsibility and respect, so that we can
go to the electorate two years hence and get a much more favorable response
than we had on November 3rd.
Let me quickly give you three things we are trying to do:
One--We expect to come up with what we call "Constructive alternatives" to
the proposals submitted by the Administration. We recognize that there are
serious problems, both domestic and foreign, that face this nation today. We
believe that the solutions proposed by the Administration are not the only
solutions. In fact, we think in many cases there are better ones.
On the other hand, we expect to use what I call "selective opposition." In
those areas where we think the Administration is right, it may be that we
will support it more ardently than one or the other elements of the Democratic
Party. And I think we should.
Secondly, whether we like it or not, public relations in politics is an
essential ingredient and we feel that we've got to do better in this regard.
To the extent of our competence we intend to do SO.
-50
Thirdly, I can say that we intend to make the Republican Party a national
party and I would like to add parenthetically, we expect to get the "Eastern
establishment," as some people call it, on the team. We hope and trust that
we can get people from all other areas of the country on the team. If we do,
at least some of us feel that we will have made a constructive start toward
strengthening the two-party system.
Now, let me take just a minute, if I may, to suggest what I think you and
your industry can do not only to help yourself, but also to preserve these
two basic concepts, the separation of powers with checks and balances, and
a vigorous two-party political system.
First of all, in my experience with some businessmen, and I underline some,
I find a failure to recognize that what transpires in Washington in the
Executive Branch of the Government or in the Legislative Branch is important
to them. This has changed somewhat and changed considerably among certain
elements of the business community. At least in the 16 years I've been in
Congress there has been an appreciable increased awareness on the part of
business that it has a stake in what goes on day to day in the Executive
Branch of the Government on the one hand and in the Legislative Branch on
the other.
From Bill Whyte's speech, which I didn't have an opportunity to hear but which
I have read, you know that the steel industry has a very high stake, not only
in one area of controversy but in many, and this doesn't relate only to the
Legislative Branch but to the Executive Branch of the Government as well.
Certainly, in the 89th Congress, which opened January 4th, what happens in the
Executive Branch of the Government is vital as far as the Congress is concerned,
because the Administration has not only control of the Executive Branch but has
also better than a 2 to 1 advantage in the House and the Senate. So you can
start out with a likelihood that what is recommended and urged by the Executive
Branch of the Government will probably, very probably be approved in the House
and the Senate.
Now, after you appreciate that you have an interest, and some areas of your
industry have been cognizant of that, I think you've got to analyze very
carefully what you ought to do. I know from my experience during the last
14 years on the Subcommittee on Defense Appropriations, where I saw our
weapons systems develop from an idea on paper to deployment in the field,
that research and development plays an important part in how these are put
together and used. Through my contacts with industry in this period of time,
I have seen industry go from research to development to a product which is
sold in the marketplace. But you start with research and development.
You know better than I that in the handling of your own personnel problems you
do a great deal of research on what ought to be your policy. And may I respect-
fully say that in the area of public affairs, politics to some extent, I think
you've got to be just as analytical, just as cold-blooded in analyzing what the
problem is and the procedural steps that you should take to protect the interests
of an important segment of our national society.
-51
lue
Too often, from my experience, business people wait until after an election
to really make any contact with a person elected to office. I have seen, in
a number of cases, a person come to an office of a member of the Congress,
after the election is over, and ask to talk about a problem in which that
individual is interested and has a specific point of view, knowing that the
member of Congress, whether he's Democratic or Republican, already has taken
a position in opposition. Now, if this individual coming into this office,
talking to this member of the House or Senate, hasn't participated in the
process of helping that person enter politics, helping him get elected,
getting acquainted with him, establishing a rapport, his chances of getting
his viewpoint to prevail over the previously taken viewpoint, are virtually
nil. You might just as well forget it. You've wasted your time. You're
entering the ballgame at the wrong stage of the contest.
What you have to do, in my judgment, is to start in the Primary period. As
you know, in our 50 states we have a variety of primary dates, some early as
March or April, others as late as September, but if you want your best day in
Court, may I say, help to find a candidate. Maybe you have one in your own
organization. And if you don't have one in your own organization, help to
get one and get some of your people to be on his team. Of some consequence,
of course, is the financing of a campaign, but I might add that personnel
help is far more effective than the mere contribution of dollars. If you
have somebody from your organization who is a friend of a person who is
contesting in the Primary, and he wins, you have taken a big step forward
to success if and when you ever have a need to see that member of the Congress
or the State Legislature or the City Council. Of course, after he is selected
in the Primary, and if he's successful in the run-off, then in my opinion you
have the most legitimate reason in the world to expect that whether it's a
problem with some agency of the government, whether it's a problem on legislation,
you will get a good hearing and will get his help.
It seems to me that there have been companies that have done extremely well in
this regard. Rather than identify a company I would simply like to say that in
the last six months I've had some experience with a corporation, a nation-wide
organization, that about 10 years ago inaugurated a plan that today I think
could be used as a model: at least on a relative basis it's the best I've seen.
They have an organization in their home office, I think they call it the Public
Affairs Section or Division. They have the nation broken up regionally, and
they have people who are knowledgeable politically, and I mean real pros, to
represent them in these various geographical regions. They have established a
rapport with the members of Congress from these areas and I am sure that they
have established a similar rapport with members of the State Legislatures. And
then they have representation in Washington, and I've seen instance after
instance where a problem would come up and help was essential on legislation
or on some other matter, and by the mere pressing of a button or a signal,
action is generated back home, and inquiries and suggestions are funneled to
the members of the Congress in Washington.
I might say that in one case, just recently, they volunteered to be helpful in
my behalf. It was legitimate (you never know how really helpful it was) and
there was activity, bona fide legitimate activity that could be put into use
and effectively used almost instantaneously.
-52
Now some people will say to you that this is improper - this is not the way
to do it. It's contrary to what we have learned in school and in text books
over the years. May I answer that by saying this: Under our system we have
the right of petition individually and collectively. I believe corporate
organizations have a right similar to those of individuals. But if you are
going to do it, you have to do it in an organized way.
I happen to have the analysis of the November election put out by COPE which,
as you know, is the AFL-CIO political action group. In the first place they
analyzed the situation before the election and I had a copy of that. It
scared me when I saw it because it was so well done. A look at their post-
election analysis proved to me that they, in this case too, had done a
masterful job.
And I think that business, if it's to continue to be a vital segment of our
political community, an essential element of our society as a whole, that
business has to do the same thing. There are a multitude of ways to go about
it, or at least there can be variations depending on the business, the size,
the kind or organizational structure you have. But I can only say to you that
if you are to meet the challenge of those whom you meet across the bargaining
table in settling economic issues, if you're to meet their challenge in the
political arena, if you are to be as confident as they are, I say with all the
conviction that I have, that somehow you've got to adapt your corporate
organization to meet this kind of a problem.
I end as I began: it seems to me for the preservation of our political and
economic and social system, each of you individually and as a corporate
organization must exercise properly your right to petition and this, if done
properly, will ensure the preservation of business as an important segment of
our economy. I say in closing: others do it; so must you. Thank you very much.
-53
-54
AMERICAN IRON AND STEEL INSTITUTE
Proceedings
Public Affairs Conference
January 13=14, 1965
The Waldorf Astoria
New York, N.Y.
Steel
COMMITTEE ON PUBLIC AFFAIRS DEVELOPMENTS
TABLE OF CONTENTS
page
Opening Remarks
1
Logan T. Johnston, President, Armco Steel
Corporation; Chairman, Committee on Public
Affairs Developments.
The New Emphasis by AISI on Government Relations
9
John P. Roche, President, American Iron and
Steel Institute.
The Steel Industry's Opportunities in Public Affairs
15
Walter Petravage, Manager, Public Affairs
Department, Chamber of Commerce of the
United States.
The Issues Affecting Steel in '65 - And What We Can Do
About Them
25
William G. Whyte, Vice President, United States
Steel Corporation; Vice Chairman, Committee on
Public Affairs Developments.
We're Sold on the Importance of Public Affairs
41
Roger T. Kelley, Vice President, Caterpillar
Tractor Company.
What is at Stake
49
The Honorable Gerald R. Ford, Republican
Congressman from Michigan: Minority Leader,
House of Representatives.
The Republic Program
55
H. C. Lumb, Vice President and Director of Law
and Corporate Relations, Republic Steel
Corporation.
The Lukens Program
61
Charles L. Huston, Jr., President, Lukens Steel
Company.
Tools of the Trade
77
Richard A. Armstrong, Executive Director,
Effective Citizens Organization.
Communication - The Heart of a Public Affairs Program
89
A. Hugh Forster, Director of Public Affairs,
Armstrong Cork Company; Chairman, Public Affairs
Committee, United States Chamber of Commerce
Does Public Affairs Pay Dividends?
101
Thomas R. Reid, Director, Civic and Governmental
Affairs Office, Ford Motor Company.
Fund Raising
117
Herbert Johnson, Vice President, General Services,
Jones & Laughlin Steel Corporation.
Public Affairs at the State and Local Levels
Russell K. Branscom, Vice President, Industrial
and Public Relations, Bethlehem Steel
Corporation.
121
Richard J. Nelson, Manager, Civic Affairs,
Inland Steel Company.
135
HERALD
OPENING REMARKS
by
Logan T. Johnston, President, Armco Steel Corporation
Good afternoon, gentlemen, and welcome to the first
Conference on Public Affairs, arranged and conducted by the Committee
on Public Affairs Developments of American Iron and Steel Institute.
We have what should prove to be a most worthwhile program.
The subject is timely and important--the men who will appear before
us during the next day and a half are knowledgeable--all that we need
for a successful and significant meeting is your involvement.
Let me stress that this is an intramural meeting--within
these walls--there are no representatives of the Fourth Estate here
so our discussion will be completely off the record. Let me likewise
stress that this is a working meeting. We want and we need your ideas,
your experience, your problems--in short, your active participation.
Now let's take just a few minutes to set the stage for our
meeting by reviewing the background of this new committee, and this new
AISI activity. Why and how did it come into being? What purpose will
it serve?
The Directors of the Institute have never labored under the
delusion that the steel industry operates in a vacuum. They have
always been fully aware that our size and our importance as an industry
make our actions and our accomplishments a matter of interest to many
individuals and groups. Because we live in something akin to a glass
house, and because we don't subscribe to the theory that "People who live
in glass houses should take baths in the basement," we have long had a
Public Relations Program Committee. This Institute committee serves as
an informational bridge for the two-way passage of knowledge and understanding
GERALD
-1
between the steel industry and its various interested publics.
In recent years one of those interested publics the one
we call "government" has grown in importance and complexity to the point
where the Directors felt that it warranted special attention. Therefore,
the Board established a second informational bridge to supplement the
Public Relations Program Committee. This was, of course, the Public
Affairs Developments Committee which I have the honor to chair, ably
assisted by Bill Whyte of U. S. Steel with Leo Teplow as the Institute's
staff representative. The Board also decided that this new committee
should operate under the same policy group which directs the work of the
Public Relations Program Committee.
This new committee made its debut at the Institute's Annual
Meeting last May and I'd like to repeat just a few of the introductory
remarks which were made then:
"The time for viewing with alarm and gnashing of teeth
is past. It is time for all of us to recognize that it
has become the business of business to be concerned about
the business of government. And it is time for us in the
steel industry, when we have common problems, to sing out
of the same hymn book."
After seven months of reflection, I would not change that state-
ment, except to add this one thought:
"If we are to sing out of the same hymn book on occasions,
our choral offeringswill sound best if individually we are
in good voice."
-2
This then is the particular mission of our committee--to
help us blend our voices into an impressive chorus when the occasion
demands; and to offer voice lessons to those of us who may need and
want them. However, at no time and under no circumstances will this
committee attempt to sing your solos for you!
One of my Armco associates had a plaque in his office which
offered this bit of Pennsylvania Dutch philosophy:
"We Grow Too Soon Oldt, und Too Late Schmart."
Gentlemen, when it comes to public affairs, this may indeed
be an apt and accurate description of the steel industry.
As you know, we recently conducted a survey of the member
companies of the Institute on the subject of public affairs. We wanted
to find out about existing programs and to determine the extent of the
latent interest in this subject. You'll be receiving copies of the
summary report, so I will confine myself now to the observation that
our achievements to date fall far short of our aspirations! Present
company excepted, of course, we're getting oldt, and its high time we
got schmart!
We appear to be crossing the threshold of awareness of the
real significance of public affairs to the health and well-being of our
entire industry and our respective organizations. That message comes
through loud and clear in your answers to the survey questions. And,
those of you who have almost single-handedly been doing a job in this
area have every right to look back over your shoulders at the rest of
us and say,
"It's about time!"
GERALD
-3
Every one of us in this room is well aware of his obligation
to be in a position to anticipate those trends, events and developments
which will cast their shadow over the future of his company. That's
why we have sales forces and market research teams to warn us about
what the competition is likely to do that's why we have researchers
and engineers to keep us abreast of technological changes that's why
we have industrial relations staffs to help us anticipate and deal with
the demands of organized labor. But are we adequately organized and
staffed to anticipate and deal with the impact of legislative action
or agency and bureau interpretations?
Every one of us in this room is probably more cost conscious
than ever before. That's why we have industrial engineers and cost
accountants to help us hold the line on rising costs
that's why
we have suggestion plans and methods improvement plans to encourage
our people to come up with cost-saving ideas. Yet are we sufficiently
aware that a dollar added to the cost of our products by government
action affects our profits just as much as a dollar added by increased
labor costs or poor quality control?
Before this committee can hope to be successful, it must
first bring about a realistic understanding and appreciation of public
affairs. Far too often businessmen tend to equate public affairs with
"gut politics," and when the inevitable happens and they get their
fingers burned, they take the pledge and foreswear any further involvement.
Too few of them realize that public affairs is really the study and
practice of what might be termed "applied political science."
It is essential that we know and understand the system, structure
and the day-to-day operation of our government--not as we learned it in a
high school civics class umpteen years ago, but as it exists today. We
must be able to anticipate the social, economic and political forces which
will inevitably influence the progress of our companies. And above all,
we must learn to communicate effectively with this special public we call
government and that requires that we build receiving sets as well as
transmitters.
As the steel industry enters Century Two, the dominant mood is
one of optimism, the dominant theme is progress andthe dominant subject is
technological change. But in our fascination and preoccupation with basic
oxygen furnaces, continuous casting and vacuum degassing, we cannot over-
look another highly significant area of change: I refer to the basic
relationship between business and government, and to the generally accepted
role of government in our private enterprise economy.
In addressing the Annual Meeting in May I said something on this
subject which I'd like to repeat:
"Government is now a partner of business--some even
think the dominant partner. Whether or not business
wants such a partner is academic. The partner is there
businessmen who are frank with themselves in their moments
of introspection know that this partner is not going away,
at least in the foreseeable future."
This then is the context of this two-day conference on Public
Affairs. Our survey indicated that you already accept and endorse the
-5
ideals and objectives of the public affairs movement, that you
acknowledge its relevancy. Therefore, our program will not dwell
on generalities or preachments; it will not attempt to rally you
'round the flag by dealing with specific crises, although goodness
knows we have enough to go around.
Our program will give you what your survey answers indicated
you wanted: not a "why-to-do-it" session, but a "how-to-do-it" session.
Our faculty is made up of men who are qualified by virtue of their
experience to deal with the subject in the most pragmatic of terms
men who can not only point out the destination, but furnish us with
up-to-date road maps to help us get there. And we've even gone so
far as to provide "A Ford in your future."
The kickoff man for today's session will be our own Jack
Roche, President of the Institute. After he has described the Institute's
administrative procedures with respect to public affairs, we will hear
from Mr. Walter Petravage.
Walter is Manager of the Public Affairs Department of the
U. S. Chamber of Commerce, and will share with us his wide and unique
experience in this area.
Following Walter will be another gentleman from the Washington
scene, our colleague Bill Whyte, Vice President of U. S. Steel. Bill,
of course, is Vice Chairman of the Institute Committee on Public Affairs
Developments, and he will discuss some of the primary issues which he
feels our industry will face in 1965.
Then we will hear from a fellow industrialist, Mr. Roger Kelley,
-6
Vice President of the Caterpillar Tractor Company. He will tell
us about some of the "why's" and "how's" of Caterpillar's public
affairs program, and I think his presentation will provide us with
some valuable ideas on how to strengthen our individual company
efforts.
Our anchor man for the day will be the Honorable Gerald R.
Ford, Congressman from the Fifth District of Michigan. As you know,
Congressman Ford has just been chosen minority leader of the House,
and we are extremely pleased and honored that he could take the time
away from his Congressional duties to help us look at public affairs
through the eyes of one who holds high elective office.
Tomorrow we will have an equally full and fruitful session
which Bill Whyte will describe to you before we shut up shop for the
day.
And now, Jack Roche, we are ready to devote our undivided
attention to you.
-7
-8
THE NEW EMPHASIS BY AISI ON GOVERNMENT RELATIONS
by
John P. Roche, President, American Iron and Steel Institute
There is an erroneous impression in certain areas of business
and Government that the steel industry of America waited until 1964 before
becoming aware of the vital significance of Public Affairs in industrial life.
Sometimes I believe we hear so much adverse comment in this area that
we ourselves become defensive. Admittedly, we did not appoint a Public
Affairs Committee at the Institute until last year, but our companies as
well as the Institute have been doing work in Public Affairs for years.
Logan mentioned the Public Affairs survey we conducted last
Fall. We asked 73 domestic companies to answer a questionnaire --
66 replied (90%).
62 of 66 companies said they believed Public Affairs an
appropriate subject for organized corporation activity.
42 identified an official by name as the person responsible for
Public Affairs.
37 companies have a training program to educate employees
in practical politics.
-9
Then why does this Conference state as its purpose to encourage
companies to undertake or strengthen Public Affairs programs?
Because despite the foregoing encouraging statistics only four
companies have a written statement of company policy on Public Affairs.
Because only eight companies have Washington representatives
with any responsibility in the field of Public Affairs.
Because 28 companies expressed a need for better communication
about significant developments on legislative and administrative matters in
Washington.
Because 46 companies expressed a desire to know what other
steel companies are doing in this area and equal interest in hearing what
successful corporate Public Affairs programs exist outside our industry.
So this Conference serves many useful purposes.
At the Institute staff level, we have been working with Government
agencies for years -- Department of Commerce's Business and Defense
Services Administration (BDSA) -- Department of Labor -- State Department
on International Agencies related to steel. These contacts are relatively
routine and seldom involve policy determination. A great majority of these
contacts are identified with some specific committee work at the Institute
and often, in years past, without any coordinated planning in terms of similar
or even contrary interests of other committees.
This brings me to the Public Affairs Developments Committee
and its function.
-10
The committee does not plan to take over the Public Affairs
functions of the member companies or the many Institute committees which
have been dealing with this problem for years. The committee does, however,
hope to coordinate the Public Affairs activities of the member companies
and the Institute committees so that we bring the weight of the industry to
bear in a concerted way on important legislative or administrative matters
which affect this industry.
Neither the Policy Committee on Public Affairs nor the Public
Affairs Developments Committee plans now or in the near future to recommend
opening of an Institute Washington office with registered lobbyists operating on
the Hill in our behalf. But both committees do plan to propose a set of
affirmative proposals on Public Affairs action to be taken by our member
companies in their enlightened self-interest. Twelve chief executives from
this industry can be more effective on Capitol Hill in a week of intelligent
coordinated pin-pointed effort than a dozen of the best lobbyists.
Furthermore, it's no answer to say that steel executives won't
do this job. They will. Last February we proved the point when this
industry made the greatest impact of any industry in the country when 18
of our senior executives appeared before the Trade Information Committee
and the Tariff Commission on the subject of tariffs and trade.
Please note that I said that the Public Affairs Policy and
Developments Committees will recommend affirmative programs relating
to legislative action and administrative policy. This means that we will have
-11
a program of principles on which we can be active instead of constantly
reacting in a negative fashion to the legislative proposals or administrative
decisions of Government people whose interests are inimical to ours or good
intentioned public servants who are confused because of our not anticipating
their problems with affirmative answers or suggestions.
As a further example of our current efforts, some of the legal
representatives of our members have been engaged in very constructive
efforts in several areas in Washington. Some of these men are here today,
and we're delighted to have you. Our new Public Affairs Developments Committee
will be prepared to implement these activities when the time is right.
Other industries, oil and railroads being two, have highly
centralized Public Affairs programs with large staff operations in Washington.
As I have said, we have chosen a different approach and with good reason.
The public thinks of steel in one broad generic sense, but we know that the
industry is a highly diverse and singularly segmented industry with a
tremendous number of problems that are often as different in the area of
Public Affairs as they are in the market place.
Our new committee will, I am certain, be flexible enough in its
approach and sensitive enough to the Public Affairs problems of our various
product groups to generate effective action on any problem with the full impact
of the Institute's broad membership in support. The problems of the large and
the small companies will get attention and where needs be -- action. The
-12
ingenuity, imagination and resourcefulness which typifies the diverse interests
of our product promotional committees can be transferred to Public Affairs
with results equally effective.
My emphasis on individual corporate action in this area does not
mean that the Institute through the Public Affairs Developments Committee
and Policy Committee will never take an industry position on legislation or
administration. Had our Executive Committee and Board of Directors been
so minded, these Public Affairs committees would never have been authorized.
It should come as no surprise to anyone to see the Chairman of the Public
Affairs Developments Committee or the Chairman of the Institute or one of its
other officers testifying in Washington within this year 1965 on behalf of an
industry position, supported at the same time by the active coordinated effort
of all our corporate members with a stake in the problem.
Within the next 30 days Logan Johnston will complete the assignment
of liaison representatives from his committee to other principal committees
at the Institute. These men will sit with our committees when subjects in
the Public Affairs area are discussed to be certain that when an AISI/Public
Affairs position is recommended by a committee to Public Affairs Developments
the liaison representative will bring to the committee a discussion on the
merits and not just a cursory referral prior to consideration by the Policy
Committee. Public Affairs Developments is a working committee.
One short reference to staff -- Leo Teplow is committee
representative on Public Affairs Developments. He is becoming increasingly
-13
knowledgeable as each week goes by. We have no present intention of hiring
a so called expert in this field. No one can say for certain what the future
holds in this area. Our Public Affairs Developments Committee will in due
course become our expert spokesman. We have several experts on the
committee now. A few will prove this point by their appearance on this
platform today and tomorrow.
This is our beginning. Your Chairman has approached his
assignment with firmness and dedication. This Conference will, I am
confident, launch us on a program of profound and far reaching value to
this great industry.
-14
THE STEEL INDUSTRY'S OPPORTUNITIES IN PUBLIC AFFAIRS
by
Walter Petravage, Manager, Public Affairs Department
Chamber of Commerce of the United States
Mr. Chairman, I'm compelled to open my remarks with a bow in your direction
for several reasons. One of them is the leadership that you are giving to this
very significant Public Affairs Developments Committee of the Institute. The
other is for the very fine presentation that you made on Public Affairs to which
you referred earlier at the Annual Meeting of the Institute in May of last year.
I have a copy of it here. I read it immediately following your presentation,
was so impressed with it that I sent it to a thousand business executives with
Public Affairs responsibilities all over the United States with a note saying
that they could well benefit by a very close reading of this. So--a bow Sir, to
you.
I'm also indebted to you for another reason because in this presentation in May
of last year, you made the following statement: "Iam sure that among the 88
member companies of our Institute, there are at least that many different ideas
on just what this phrase, Public Affairs really means." Well, I would imagine that
at the outset of a conference like this, it would serve a very useful purpose to
define to some degree what we mean by Public Affairs because unless we do that,
we could be branching off in fourteen different directions which is what you
deprecated by implication in your speech last year.
So, I say, I'm indebted to you for that remark because it clued me in as to some
of the things that I might, hopefully, constructively contribute here this
afternoon. And, I'd like to begin them by trying to, in some degree, define for
you what is meant by Public Affairs as I have seen it practiced in companies and
organizations all over the United States in the past ten years. Now, I am not
suggesting that you will learn anything at all in what I say in the next few
minutes. But, I think it's important to review this as a framework for the
remainder of my remarks and as a framework for the remainder of this Conference.
So, if we will turn the lights out now, I will use this screen up here to help
me visualize some of these concepts.
It's not news, again, to any of you that in a free society such as we have in
this country, the people are the ultimate source of power. And the people are the
ultimate source of power for a reason with which we are all familiar. It's the
people who elect the lawmakers who make the laws at local, state and national
levels that influence us as individuals, that influence the growth and development
of our communities and our states.
But, since this is primarily a business-oriented audience, let's talk briefly
about the impact of these laws on business, specifically the steel industry.
Now, notice the obvious sequence here. The people, the basic source of power
because they elect the lawmakers who make the laws that have an impact on business.
Certainly, no long dissertation on this impact is necessary to an audience like
this because you're much more sensitive to it than I. You are very sensitive to
the fact that there is an impact in these ways: on your right to manage your own
business; on your ability to make an adequate profit; and the reverse of that
coin, on your ability to control your costs. I have a friend who works for one
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of America's major corporations--incidentally, a company which is a good customer
of the steel industry--and this friend of mine tells me that his corporation has
a rule of thumb that's pretty valid in connection with federal expenditures and
the taxes the company has to pay. Here is that rule of thumb: that every time
federal expenditures increase by two billions of dollars, his company's taxes increase by
approximately one million dollars. Now, his company averages about 5% on sales which
means that to get that additional one million dollars in taxes, his company must
sell an additional twenty million dollars in goods and this is what drives sales
managers, particularly, to ulcers. So, obviously, the impact of government on your
companies in terms of costs and profits is very sensitive.
Now, to follow that thought up briefly, let's take a look at some of the issues
that were before the 88th Congress, in terms of their first-year costs. Now, these
same issues that you see on the screen here will be before the 89th Congress in
some modified form and I'm told by our legislative experts that the cost of each
of those will very probably be higher as they emerge from the 89th Congress. So
this, then, has an obvious impact on your company.
There has been some discussion, as you know, to which you are not insensitive, I'm
sure, about such things as a 35-hour work week and double time for overtime. I
remember in the last session of Congress, the National Chamber, along with a number
of other organizations, called conferences to consider what might be done in
connection, particularly, with the double time for overtime legislative proposition.
Here is a chart which indicates the approximate increase in your direct labor costs
if there was a combination of these proposals: The 35-hour week and the double
pay for overtime. Let me interpret that for you. I'm sure your cost accountants
are very sensitive to this. For example, if prior to the reduction of the work
week from 40 hours, workers are earning $2.00 an hour and $80.00 for a 40-hour
week, it will be necessary to increase the hourly rate 14.3% to $2.28 per hour
to maintain weekly earnings at $80.00 for a 35-hour week. But, let's suppose that
the employees can maintain an actual work week of 40 hours and the overtime premium
for five hours in excess of 35 is 13. Not double, but 1½ times the standard rate.
Then weekly earnings would be $97.14 and hourly earnings would have risen 21.4%
to $2.42. Now, if the employee can maintain the 40-hour actual work week when the
overtime penalty becomes twice the standard rate--in other words, double time for
overtime--coupled with the 35-hour work week, his earnings would be $102.86 weekly
and $2.57 hourly. This rise in hourly rates would then be 28.6%. So, you see,
a combination of these two legislative proposals would increase your costs someplace
between 14% and 28%-something, I would imagine, that you would be highly concerned
about in these days of rising costs.
I had a very interesting experience about six weeks ago. I went on a kind of country
circuit conference tour--Los Angeles, Chicago and New York. The audiences were
composed of representatives of 350 associations from all over the United States.
There were a number of steel related associations represented in these meetings. One
of the things that we asked the people in attendance at the meetings was to put on
paper for us, would you please, the major problems that face your members. We picked
those papers up and we tabulated them and we found that in first place, by far, as
a major problem, was government controls and regulations and then second, the profit
-16
picture and third, the labor relations, personnel picture. So, we come back
then to this concept of people, lawmakers, laws and their impact on business.
I have a survey here that was made among 10,000 people in 24 different cities
all over the United States. I'd like to read you a few of the questions and
the answers on this survey: Question #1 - In normal times, do you think
competition keeps most prices fair or is government control required to keep
them fair? Three out of ten said government control was required. Another
question - Which has the greater influence on prices, what the customer is willing
to pay or what the company wants to charge? One out of three said what the
company wants to charge. They were asked about their ideas on the net profit
that business makes--four out of ten said they felt business made a net profit
of between 11% and 25%--wouldn't you just love to make that kind of net profit?
But even more significant and more important, one out of four had no opinion of
the profits of business, and you know as well as I, when people don't know
something their imaginations run riot.
I mention this only to point up the fact that if this is the kind of understanding
that people have of our business system, our economic system, and if there is any
validity to the fact that people are all-powerful as indicated on this flow chart,
then how would people with these kinds of attitudes and opinions react to
pressures for greater federal regulations and control of business, for a 35-hour
work week, for double time for overtime, and all of these other proposals that
are going to vitally effect your cost and your profit picture?
It seems to me one of the major and basic factors in a Public Affairs Program, is
giving people the understanding of how our business system operates, how your
individual businesses work for the welfare of everyone. Now, unfortunately, over
the years, businessmen have been prone to talk in grand and glowing generalizations
about this wonderful private enterprise system of ours. You see it in articles that
appear in employee publications, you hear it in speeches that businessmen make from
platforms to educators and school audiences and all types and kinds of groups
around the country.
There is nothing, absolutely nothing wrong with this except it doesn't work.
It doesn't change attitudes and it doesn't change opinions. You can, almost,
when you hear one of those speeches or read one of those articles--you can almost
see the flag in the back rising slowly to the top of the masthead while "America,
The Beautiful" plays softly in the background. Gentlemen, I'm suggesting that this
does not change attitudes and opinions.
I'm suggesting that as some, or many, of you are beginning to do now, that you
reach employees with a description of your business and its impact on them in
terms of their personal security--in terms of their personal welfare. I make
a major point of this because it's becoming increasingly evident that right here
is one of the key factors in any Public Affairs Program, whether it be the program
of your Institute or the program of your individual company.
-17
Another obvious factor--a major one in Public Affairs--is political education
and action. Again, unfortunately, too many businessmen, when they think of
political education and action, immediately think of their checkbooks, writing
a check for a favorite candidate or their party, closing the checkbook, the
job is done. But it just is not done. It requires time, it requires manpower,
it requires dedication to getting people selected, nominated and elected at
local, state and national levels. And you can perform a real service here if,
coupled with economic education, you give your people the training that will
permit them to work effectively in politics, get the best possible qualified people
elected at all levels of government. Now, Bill Whyte, you know, is a very fine
golfer. He shoots in the 70's. Now, if Bill Whyte at the conclusion of this
Conference asked me to go up to the Westchester Golf and Country Club and play
a little golf, I would immediately say no for this reason. I shoot in the 140's.
I would be embarrassed to go and play golf with Bill because I just wouldn't be
in his league. I don't know how.
The point I'm trying to make here is many of your own people don't go into
politics because they don't know how. They don't know what to do. So, as part
of your Public Affairs Program, be it the Institute program or your individual
company programs, do something to give your people the training and the under-
standing and the education that will enable them to work effectively for the
candidates and the party of their choice.
Finally, another major and a very obvious factor in Public Affairs is legislative
information and action. All of the multitudinous proposals, for example, before
the Federal Congress that so vitally affect your business. How can your people
or how can anybody communicate intelligent views on these issues if they are not
familiar with the pros and cons of the issues? So an integral part of a Public
Affairs Program is giving your people, your employees, a better concept and a
better understanding of how these issues affect the company but even more
particularly, how they affect them as individuals and their security and their own
personal welfare.
None of these three factors that I've mentioned is an island unto itself. All of them
are inter-related. For example, if you had people with the kind of views which
I mentioned, as expressed in this survey, if you had those people urging or not
urging their Representatives to vote on such things as increased federal control
of business or a 35-hour work week, or double time for overtime, based on the
misconceptions revealed in that survey, how would they urge their legislators to
vote? The answer to that question is obvious. So, there is an obvious inter-
connection and interrelationship between economic education and legislative
information and action and an equally obvious interrelationship between political
education and economic and legislative action. Now, when you add all of these up,
you have Public Affairs.
This might be a good time to get down to 1964 and 1965 and put this into the
current framework of what's happening down in Washington in the Congress of the
United States. I know what you're going to see in the next couple of minutes,
you've read about ad infinitum, so let me give it to you quickly as a setting
for some other remarks I'd like to make.
-18
Comparing the 88th and the 89th Congress, the Senate in the 88th had 66
Democrats, and the 89th 68 -- 34 Republicans in the 88th and 32 Republicans
in the 89th.
The figures for the House: 257 Democrats to 295 in the 89th -- 178 Republicans
to 140 Republicans in the 89th. Now, as you know, going into the election, the
Republicans needed to pick-up about 40 seats to gain control of the House.
Instead, the Democrats picked up nearly 40 seats, 38 to be precise. The
Democratic margin in the House was 3 to 2, it's now better than 2 to 1.
The House has 89 new faces and 4 returnees. The Senate has 8 new faces. Harris
of Oklahoma, Tydings of Maryland, Murphy of California, Fannin of Arizona,
Mondale of Minnesota, Montoya of New Mexico, Bass of Tennessee and Kennedy of
New York, Massachusetts and Virginia. Now, this total of 99 new faces is
nearly one fifth of the entire membership of the Congress and the normal turnover
is only about 10%.
However, this mere recital of the numbers game as between Democrats and
Republicans doesn't tell the most significant story. I think we need to look
at the composition of the Congress in terms of Liberals and Conservatives and I
know, these two words are much maligned and much ill-used words. As I'm going
to use these words, they are defined about as follows: Liberals are persons who
are inclined or who tend to seek solutions for our problems at the national level--
the federal level--at the control and regulation level. Conservatives are people
who are inclined to seek solutions at the local or state level, to depend on
initiative and individual responsibility.
Now, in arriving at a Liberal-Conservative scoreboard in the 89th Congress, we
can, in terms of those who were in the Congress last Session, look at their
voting records and you can tell about where they stand on the political spectrum.
As you know, there are a variety of different organizations that publish voting
records, including COPE, the Committee on Political Education of the AFL-CIO,
and the ADA and the ACA, and the American Farm Bureau and the National Farmers
Union. So for the continuing members of Congress serving in the 89th, you can
place them fairly accurately on the political spectrum. For those who just came
into the Congress, you can take their campaign statements and you can find out who
supported them. For example, if candidate X was supported by the ADA and by
COPE, the assumption might be relatively accurate that he will be no raving
Conservative in the 89th Congress.
So, given those judgments, given those benchmarks, here is about the comparison
between the 88th and the 89th Congress. In the Senate in the 88th, there were
about 56 Liberals as against 59 in the 89th. Forty-four Conservatives in the
88th as against 41 in the 89th. In the House, look at the jump. Two hundred and
twenty four Liberals in the 88th as against 267 in the 89th and a corresponding
decrease on the Conservative side.
This, as you well know, is already having its effect in the 21-day rule which
was just passed in connection with the Rules Committee, which gives the Speaker
-19
the option of calling up a legislative proposal. If it has remained in the Rules
Committee for 21 days, he can call it up even if the Committee has considered
the measure and rejected it. This has not happened in about 53 years. This
could make quite an autocrat of the Speaker.
The change has also been made in Rule 20. On bills passed by both the House and
Senate, but in different forms, the Speaker now has been given power to put the
question to a simple majority vote of the House. In the past, a single objection
in the House could keep such a bill--amended and passed in the Senate--from going
to a conference committee for action.
Now, as I have had the opportunity to work with businessmen in Public Affairs
around the country over the past ten years, I think I've been impressed by--well,
a number of things--one thing in particular. I have always gotten the feeling
or usually gotten the feeling that while they pay lip service to the Public Affairs
concept, it was a kind of half-hearted conviction on their part and that when the
chips were down, they didn't translate their convictions into action. Well, if
this continues, I'm going to suggest to you that other groups that have enduring,
steel-like convictions and who have proven that they translate those convictions
into action, I am going to suggest to you that they are going to have an ever
increasing say in the Public Affairs of this country.
Let me illustrate with one group with which you're familiar. Here is the spokesman
for that group. Mr. Meany made this statement about one year before the 1964
elections and, bless his heart, he was a pessimist because it wasn't 20 to 25 more
seats, it was actually 43 more seats in the House. Their convictions were
translated into action long before November 3rd of 1964. Because on August 3rd,
1963 in the Drake Hotel in Chicago, 30 union leaders met in a political strategy
session where they pinpointed critical Congressional Districts and decided on how
they were going to use money and manpower to win those Districts for their side.
The next month, September of 1963, labor leaders from 22 metropolitan areas had
a Registration Planning Conference in Washington where they planned their voter
registration techniques for metropolitan areas all over the United States.
Three months before the election in 1964, Al Barkan, who is one of the sharpest
political operators in the country, made this statement--and this statement was
followed through on exactly: "Nothing is as important as the outcome of the
election. Drop everything else for the next twelve weeks--go all out."
And Al Barkan, in an interview with Nation's Business, mentioned that they were
spending two million dollars on their voter registration drive and that there were
approximately 400, union officials in the country. He didn't name how many of
those were active in the campaign but we know there were thousands and thousands.
I have here a document that I would suggest strongly that you read. It is marked
"CONFIDENTIAL" in capital letters underlined, put out by the COPE Research Department
after the 1964 elections. I'd like to read you just a paragraph or two from this
Confidential Report on the '64 elections. And they went into a dissection of what
had happened in virtually every state in the United States. "A comprehensive
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campaign plan in Pennsylvania resulted in an increased per capita dedicated to
political action which financed the staff of (get this) financed
the
staff
of
twenty-two full-time political organizers in the State of Pennsylvania." And as
you know, in that state, they've picked up, according to their counting, two
congressional seats. Their report continues, "New leadership in Ohio performed the
impossible in reelecting (and I'm quoting verbatum) in reelecting Senator Young
and they picked up four House seats. An expanded program in Iowa resulted in a
sweep of 6 of the State's 7 congressional districts and reelected a liberal
governor by a margin of over 73%."
More than fifty-five million pieces of COPE literature and ten million COPE voting
records were distributed in the campaign. Two hundred and thirty-seven of 354
labor endorsed candidates of the House, 25 of 31 candidates for the Senate, and
14 of 22 candidates for Governorships were elected. Gentlemen, please get a copy
of this Report and read it. It is most enlightening.
Now, with all this work, which occurred not only in the 1964 elections but which
has been going on for the last twenty years, you would expect some results, wouldn't
you? Gentlemen, I would like to show you the results on a boxscore beginning in
1946 and going up to 1964.
LABOR'S GROWING INFLUENCE IN CONGRESS
Congress
Senate
House
Elected in
80th
25
83
1946
81st
44
209
1948
82nd
38
183
1950
83rd
36
153
1952
84th
40
190
1954
85th
42
191
1956
86th
53
221
1958
87th
55
210
1960
88th
56
224
1962
89th
59
267
1964
These figures show the number of friends of labor who cast more right than wrong
votes by union political standards. Look at how those numbers increased beginning
with the 86th Congress in 1958. Look at the House. Two hundred and twenty-one
in 1958, 210, they lost ground in '60, 224, 267. So their work has begun to pay
off.
I have here the platform proposals that were made by the AFL-CIO to the Democratic
and Republican Platform Committees in the summer of 1964 and I would like to show
you on three slides the legislative objectives embodied in those platforms. As
you look at these legislative objectives, would you please consider the following:
The impact of these proposals, if they become law, on your right to manage your
own business, on your ability to make an adequate profit, and on your ability to
control your costs.
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Here are some more of the proposals made to both the Democratic and Republican
Platform Committees. And, finally, it might be interesting to compare those
proposals with the actual legislative issues that will be handled by the 89th
Congress and you have gotten some indication already of what that legislative
program will be. Do you see any similarity between the two? I'm not derogating
what they're doing--I have the utmost admiration for Al Barkan and the operation
he conducts with COPE. This is a professional man who knows Public Affairs and
he's working for what their own members consider their best interests.
All I'm saying is: Will businessmen who literally have made this country what
it is, will businessmen in the coming years have the same kind of convictions
that they will translate into action in their own Public Affairs efforts? I'm
inclined to believe that there's a good augury in your organization of your
Public Affairs Committee here at the Institute but I would pray with you not
to sit back in your own companies and say--We now have a Public Affairs Committee
at the Institute, God bless them, we'll contribute to them, they'll do our work,
we'll sit down-Amen. It's not done that way. Gentlemen, the burden of the Public
Affairs activity is in your own companies. What the Institute can do primarily
is to help you with ideas and to supplement the basic work that's done in your own
companies.
And so, we come back to your vital interests in the right to manage and make a
profit and control costs, and these will be affected by the degree to which you
get into solid, substantial Public Affairs work.
Now, there's not time here to get into detail. You're going to hear case
histories of Public Affairs Programs that will indicate to you some of the things
you can do. I come back again to my conviction-action theme and I'd like to read
to you a quote from a man who knew what it was like to experience frustration and
experience defeat. His name was Abraham Lincoln and in May of 1856 he said the
following:
"We must not belittle nor overlook the facts of our condition;
that we are comparatively weak while our enemies are entrenched
and relatively strong. They have the political power and right
or wrong, at present, they have the numbers. As it now stands,
we must appeal to the sober sense of the people; we shall make
converts day by day; we shall grow strong by calmness and
moderation; we shall grow strong by the violence and the injustice
of our adversaries, and unless truth be a mockery and justice a
hollow lie, we shall be in the majority."
And about 45 years later Teddy Roosevelt paraphrased that when he said:
"In a Republic like ours, the governing class is composed of
the strong men who take the trouble to do the work of govern-
ment and if you're too timid, or too fastidious, or too care-
less to do your part in this work, then you forfeit your right
to be considered one of the governing and become one of the
governed instead."
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So I think this adds up to a choice that's ours. Do we have the convictions and
will we translate those convictions into action?
Mr. Chairman, that about sums up my remarks. I have tried to inject no humor, no
funny stories into this presentation because we are talking about a very serious
subject. However, on the theory that maybe a little smile is good for us, if
you'll turn the lights on, I'd like to tell you a story.
It seems that in 1864 in the State of Mississippi, there was a young ambitious
lawyer who decided he wanted to run for a State Senate seat. Now, there's one
problem, as you probably know in Mississippi. At the state level, you have the
wet and dry problem. You've got to walk a tightrope. If you come out for the
wets, you alienate the drys, and vice verse. So, this ambitious, young lawyer
was doing a marvelous job of going right down the center of this tightrope when the
Editor of the leading paper in his District, in a front page editorial, demanded
that this young lawyer take a stand. The lawyer could do nothing but acquiesce.
He wrote a letter to the Editor, the Editor printed it on the front page and this
was his stand and this is what he said:
"Dear Editor, I had not intended to discuss this controversial
subject at this particular time. However, I want you to know
that I do not shun a controversy. On the contrary, I'll take
a stand on any issue at any time, regardless of what kind of
controversy it might be. Now, you had asked me how I feel
about whiskey. Well, brother, here's how I stand on this question.
If, when you say, whiskey, you mean the devil's brew, the poison
scourge, the bloody monster that defies innocence and dethrones
reason, that creates misery and poverty and, yea, literally takes
the bread out of the mouths of babes, if you mean the evil drink
that toppled the Christian man and woman from the pinnacles of
righteous gracious living to the bottomless pit of despair,
degradation, shame, helplessness and hopelessness, then, certainly
I am against it with all my POWER!
"But if, when you say whiskey, you mean the oil of conversation,
the philosophic wine and ale that's consumed when good fellows
get together, that puts a song in their hearts and laughter on
their lips and the warm glow of contentment in their eyes; if
you mean, Christmas Cheer; if you mean that stimulating drink
that puts the spring in an old man's step on a frosty morning; if
you mean the drink that enables man to magnify his joy and happiness
and to forget only for a moment life's greatest tragedies and heart-
breaks and sorrows; if you mean that drink, the sale of which pours
into our Treasury, untold millions of dollars which are used to
provide tender care for our little crippled children, our blind,
our deaf, our dumb, our aged, infirm; to build highways and
hospitals and schools, then brother, I AM FOR IT! This is my stand,
I will not retract from it. I will not compromise." AND HE WAS
ELECTED.
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:
THE ISSUES AFFECTING STEEL IN '65 -- AND WHAT WE CAN DO ABOUT THEM
by
William G. Whyte, Vice President, United States Steel Corporation
Thank you, Logan, and all of you gentlemen, for this pleasant
opportunity to talk with you on a subject dear to me and near to us all:
"The Issues Affecting Steel in '65 -- And What We Can Do About Them."
After listening to Walter Petravage I suspect my subject should
be, not what we can do, but what we would hope to do.
Among other things, Walter told us that "public affairs is
people." With that I agree. But, in the governmental area, public affairs
is also issues and problems.
And, gentlemen, of both of them we've got whoppers!
To illustrate let me repeat what the Under Secretary of the Treasury
had to say about us, as reported in the New York Herald Tribune on December
29th:
"We'll never have steel under the government's thumb here," he said,
which was a most commendable thought, but then his sentence went on: "but
there will be a series of misunderstandings and recriminations on through the
years unless the steel people recognize that they are a self-administering
public utility."
Gentlemen, if that statement accurately reflects the considered
judgment of a government official only a step removed from the President's
Cabinet, some place along the line we have failed utterly to tell our story.
Even President Johnson, like President Kennedy before him, appears
in some doubt as to whether or not our industry is willing or able to conduct
its affairs in keeping with what he calls "the public interest." I can only
wonder, as surely you do, whether or not "the public interest" would be better
served by a healthy, prosperous steel industry than by one in the condition
-25
ours is now in -- that of being forever used as a political "fall guy" for
every economic ill that comes down the pike.
There is little question, then, as to our number one public affairs
challenge of 1965 -- the preservation of our freedom to manage our own
businesses. I do not suggest that this problem is new to our industry, or
indeed novel to industry at large. But I do suggest that in Washington the
circumstances are dramatically changed.
Clearly, if we are to preserve freedom of management decision, we
have a selling job every bit as demanding and critical as that being waged
by AISI to promote the use of steel over competitive materials. In Washington,
however, our competition is not aluminum or plastics or glass; rather, it is
competitive ideologies. And our customers there swing a mighty club.
In this industry we know how to sell steel. There is no reason
why these same sales techniques would be less effective in selling ideas --
ideas that in years to come can predetermine the climate in which we do
business.
Let it be crvstal clear that I am not unmindful of the fine work
that has been done, and is being done, by AISI's Public Relations Program
Committee to sell our story to the public at large and to many of its
important segments. These are efforts, however, which of necessity must be
of the shotgun variety.
In public affairs we must use a rifle. Success in this specialized
sales campaign demands that we pick our prospects with great care, know our
product thoroughly, and then send the right team to the right place at the
right time to do the job. In this arena success demands also that we not
-26
send a boy to do a man's job, for when it comes to selling ideas,
Washington, D. C., is as competitive and tricky a marketplace as any in
the whole world.
I offer this further suggestion about selling in Washington. Each
of us should put at the top of his prospect list the Congressmen and Senators
who represent his principal operations. I do not mean just making mental
note of their names, I mean taking time and effort to get to know them, just
as we do to know customers for steel products. These members of Congress
are eager for information. They want to know all about the industries that
provide the economic muscle in their districts. Given the facts, they will
gladly help when an issue arises that would harm a steel industry whose
health means a prosperous Congressional district.
More about that later; now let's survey some of the other important
issues of 1965. And of necessity I will limit my remarks to those issues
that have a direct effect upon the steel industry.
None is more basic than foreign competition, whether here at home
or throughout the world.
And I must say at the outset that this is a controversial subject
in many governmental departments. Some pridefully say that in 1964 our nation
had a $6.5 billion export surplus, the best in many years. They argue that
this surplus will favorably affect our balance of payments and hence should be
good news to all Americans.
But in the steel industry we find it a bit difficult to share the
bureaucratic elation over these statistics, for while the over-all export
total is favorable, we in steel know that certain segments of industry are
-27
running against the trend.
To this audience I give only one reminder of what has happened to
the international trade of our industry these past six years: in 1964 the
switch from a favorable to a negative trade balance resulted in a production
loss of from 6 to 8 million ingot tons.
The point is, what can we do about it, and where and how does
government come in? Unquestionably our industry believes in vigorous and
fair competition and is able and eager to compete with the best of them, be
they foreign or domestic. We protest however -- we protest most vociferously --
when overseas producers are permitted to invade and disrupt our markets
through unfair and destructive trade practices -- in blunter words, through
dumping. And gentlemen, for several reasons this problem of dumping is about
as complicated, if not as intriguing, as the private life of Elizabeth Taylor.
First, take the law itself, which to the pros is known as the
Antidumping Act of 1921. Over the years this statute has become a labyrinth
of amendments amending amendments, a legislative nightmare for the businessman,
but a lawyer's heaven. A second complication is the administration of this
law by two different governmental agencies -- one, the Customs Bureau of the
Treasury Department; the other, the Tariff Commission. And finally, every
facet of the problem is caught up in a perpetual war -- the bitter never-ending
conflict between protectionism and free trade.
To date this maze of governmental red tape has been of little help to
the steel industry. But lately and happily, some light has broken through at
the Administrative level. Last year, thanks largely to steel industry protests,
the Treasury Department reviewed the administrative practices of its Customs
-28
Bureau in the handling of antidumping cases. Ten days ago, on January 3, it
directed a number of administrative changes designed to be helpful. We hope
they will work.
There is hope of progress in the legislative area as well. A group
of steel industry lawyers has been hard at work on amendments to the
Antidumping Act that would put more teeth in the law. The object is to make
the law a more meaningful deterrent to predatory pricing practices of some
of our foreign competitors. Once the barristers can agree on such amendments,
they will thereafter coordinate our industry's efforts with those of other
industry groups that also want the law strengthened.
Incidentally, speaking of coordinating industry efforts -- how
critical this is in so controversial a legislative area as antidumping. Many
a friendly Senator and Congressman asked me, "How do you expect me to go to
bat for you when one businessman asks for one thing, and another businessman
asks for another. Can't you get together and coordinate your objectives
before you come to Capitol Hill?" A good question -- to say the least.
Seldom, by the way, is the question asked of labor unions. Their coordination
of legislative effort is well known in Washington. But, reverting to the
antidumping amendments, we know they will have tough sledding this year, for
two principal reasons -- first the GATT negotiations will be in progress,
which fact invites delay; and, second, the Treasury Department's changes in
the administrative regulations are still untested.
These factors could cause our efforts to fail this year, but even
so the time so invested will not be wasted. It will pay dividends in '66 or
'67. Moreover, unlike the old soldier, unfair foreign competition does not
-29
just fade away. Experience has taught us that controversial legislation such
as antidumping is handled with great circumspection in Congress and this takes
time. Often two, three, or four years of hard work are needed before final
enactment.
Of course, the clincher in our situation will be some early test
cases. These will determine the adequacy of the new regulations and,
therefore, how badly we shall need additional legislation.
So much for dumping, but one other area of foreign competition
needs mentioning.
Many influential people in Washington, notably including Senator
Everett Dirksen, the Senate Minority Leader, strongly feel that to the
maximum possible extent U. S. tax dollars should be spent in the U. S.
Apparently, Secretary of Defense McNamara shares that view. In 1962, the
Defense Department increased the "Buy American" protection of domestic
bidders from six percent to fifty percent. As a result, nearly all on-shore
defense procurement is now going domestic.
Unfortunately, what is true of Defense is not true throughout the
Executive branch. In all other departments, the "Buy American" protection
remains at six percent generally and at twelve percent in distressed labor
areas. The result is that too many U. S. tax dollars are still being spent
overseas for transmission towers, rebars, wire rope, structural shapes, and
tubular products.
The Intertie program offers a concrete and painful example. This is
the largest single electrical transmission program ever undertaken in our
country, involving some 700 million dollars, the procurement of some 230,000
-30
tons of transmission towers, and 118,000 tons of conductor wire. The
Bonneville Power Administration is charged with the procurement of approx-
imately twenty-four percent of the job.
Now, here's the point: Since 1959, about seventy-five percent of
Bonneville's transmission tower requirements have been supplied from Italy.
Not only has the six percent "Buy American' protection been proved inadequate,
but in addition the Italian firm has been permitted to ship the tower sections
into this country as bundles of "like sections" rather than as transmission
towers which carry a seven and a half percent higher- rate of duty. So we
see -- thus far, at least -- that a circumvention of our tariff schedules
coupled with an inadequate "Buy American" provision has caused a huge government
program to conduct a love affair with foreign steel.
Our foreign aid dollars often work similarly to undermine American
industry. For the past two years Congressman Bob Casey of Texas has been
fighting to amend the Foreign Aid Act to prohibit the use of foreign aid
dollars to build industrial facilities overseas where and when Presidential
review should indicate that such facilities will harm our domestic industry.
One cannot but wonder how long we will go on using our own tax dollars to
finance foreign competition. Twice the Casey amendment has passed the House
of Representatives. Each time it has been deleted by the Senate. I think it
would be of value for industry, our own included, to get behind Congressman
Casey in this effort.
Finally -- one general observation on foreign competition. In
dealing with international trade and investment we must strive for ever closer
cooperation between our government and our industry. We badly need to generate
-31
a freer, better-organized, two-way communication between business and
government on issues of mutual concern in the foreign field.
We of steel have made a fine start in this direction at the Trade
Information Committee and Tariff Commission hearings last spring. I
earnestly hope we can build on that auspicious beginning.
Let us turn now to raw materials and the important impact of
government action on this major cost area of steelmaking.
First, let me illustrate by example what I have in mind. In 1963,
efforts were launched to suspend the tariff on manganese for three years.
The Congress agreed that the suspension would make our industry more com-
petitive in the world marketplace. The end result was a cost saving of some
four million dollars a year to American steel producers. In this instance
government was a valuable management partner.
During the current session of Congress, we hope also for three-year
duty suspensions on metallurgical grade fluorspar and nickel. Looking to the
future, our industry may wish to sponsor the elimination of the thirty cent
per pound. duty on moly.
The government touches our costs in another important way. It
powerfully influences the availability of certain raw materials, especially
those in short supply, through its administration of the Federal stockpiles.
For example, in recent years, the Congress has directed the release of four
materials -- quantities of tin, zinc, moly, and nickel -- of great interest
to steel. In this session of Congress, we are working for the release of
additional quantities of zinc, as well as a supply of copper, and possibly
other metals used in steelmaking.
-32
Senator Stuart Symington of Missouri -- "Mr. Stockpile" in the
Senate -- has introduced an omnibus stockpile bill, as he did in the last
Congress. We as an industry may wish to support it in our enlightened
self-interest. This subject is now before AISI's Critical Materials
Committee for study, and we shall soon have its guidance for an industry
position.
When we think of tax legislation, we think of the Ways and Means
Committee in the House of Representatives -- called by Washington natives
"the Committee on Woes and Moans" -- for it is there, pursuant to the
Constitution, that all revenue legislation is supposed to originate.
This year Ways and Means will find itself bowed double under the
weight of two of the President's top issues -- Medicare and excise taxes.
Both issues will take weeks of hearings and study before the Committee can
turn to other concerns.
Wire producers in the audience may be reassured to know, however,
that the technical amendments to the tariff schedules, which were torpedoed
by a ruckus over sugar in the closing hours of the 88th Congress, are likely
to be favorably considered by Ways and Means before it submerges in the ocean
of Medicare. For those of you who may be unfamiliar with this problem, let
me explain that the Tariff Reclassification Act of 1962 opened an unjustified
loophole which has permitted a thirty percent increase in the importation of
round wire. One of the technical amendments to be considered by Ways and
Means in the very near future would close that loophole.
Later in the year Ways and Means will probably undertake what
newspaper reports describe as a "wide-ranging overhaul of the Federal-state
unemployment compensation program including changes in the amounts employers
pay into the jobless insurance fund, the minimum benefits paid to the
-33
out-of-work and the length of time these benefits are paid to certain workers
and the number of workers covered." It is also rumored that the Administration
will propose setting Federal standards on the minimum amounts of benefits and
the duration of their payment.
Another phase of unemployment compensation may also be considered.
The idea would be to establish during a period of good business, such as now,
a uniform extension of Federal-state benefits to be provided during a
recession when such funds run low. This proposal has bi-partisan support,
since identical bills to set it up were introduced in the tag end of the 88th
Congress by Ways and Means Chairman Wilbur Mills, Arkansas, and John Byrnes,
Wisconsin, the top Republican on the committee.
There have been persistent rumors that the Committee might also
consider tax credits to induce more industry expenditures in the air and
water pollution field and similar tax credits to accelerate retraining. Both
of these would obviously benefit the steel industry, but neither is likely to
get serious attention in the current session.
In the area of labor legislation, three issues will make most of
the headlines, the repeal of Section 14b of the Taft-Hartley Act which permits
the enactment of State right-to-work laws, Double Time for Overtime, and the
35-hour Week.
President Johnson's support of repeal of Section 14b makes this
number one on the list for consideration by the two labor committees. The two
others -- both serious pocketbook issues for the steel industry -- will follow
along. The unions will be pushing hard for one or the other or both of these,
so the amount of interest the Administration evidences in them will be of great
-34
importance.
You will be interested to know that a subcommittee of the AISI
Committee on Industrial Relations will visit Washington later this week to
see Assistant Secretary of Labor Reynolds as well as other Administration
officials on the problems of Double Time for Overtime in the steel industry.
We in the Public Affairs Developments Committee felt it important that we at
least make our story clearly known before the Administration position is
jelled. The Industrial Relations Committee urged that we make our views
known and the coming meetings are the result.
That, incidentally, is a fine example of the way the new Public
Affairs Developments Committee can work with other AISI committees for the
good of our entire industry.
It also illustrates a type of activity imperative for American
business in view of the lopsided party division of the 89th Congress. We will
have to speak up, far more than in the past, before proposals are sent to the
Congress. This means working more closely with Cabinet Departments, agencies,
and even with the White House.
One other issue in the labor field bears close watching. I refer
to the expansion of the activities of the United States Employment Service.
Congressman Frank Bow of Ohio, in a recent lead article in Reader's Digest,
had this to say: "Now it (meaning the U. S. Employment Service) is extending
its hand into high school counseling, college placement, company personnel
offices, union hiring halls, and even into private industry's executive suites.
"USES is doing all this -- and more -- under the guise of 'helping
the unemployed.' But it makes no bones about its ultimate goal. That goal,
-35
according to USES Director Louis Levine, is to build the Employment Service
into 'the manpower agency' for the nation, through which all job hiring
would be funneled."
To switch to a perennial for the steel industry, let's talk a
minute about air and water pollution. Certainly the President -- in his
State of the Union Message -- left no doubts about his position. We can
therefore be certain this will be a lively subject in the 89th Congress.
You will recall that the Clean Air Act was passed by the last
Congress. Even though this new law has not had time to be tested, we are
told the Administration will ask Congress to pass new and more stringent
air pollution controls. Also in the last Congress a number of costly and
restrictive amendments to the Federal Water Pollution Control Act of 1956
passed the Senate and almost made it through the House. This issue will be
picked up in a hurry; indeed, the new bill is S.4, sponsored by both Senators
Muskie and Boggs, and will be moved through the Senate almost without pausing
for hearings.
Here I compliment the members of the Committee on Air and Water
Pollution Abatement which reports to the AISI Committee on Manufacturing
Problems. They have done outstanding work in Washington in both Houses of
Congress. They spent many days working with the Congressional technicians,
and I know first hand that their efforts were tremendously helpful to our
industry.
Congressional investigations this year are another problem area, as
in every year. We will have to keep an eye on the activities of the Antitrust
and Monopoly Subcommittee of the Senate Judiciary Committee. This group, as
-36
you know, was formerly known as the Kefauver Committee, but is now headed by
Senator Philip Hart, of Michigan. An investigation started last year on
industrial concentration and conglomerate mergers is to be continued where it
left off in the fall. Indications are that Senator Hart and his Committee
will also take a look at the recent Internal Revenue Service ruling that triple
damage price fixing payments can be deducted from taxable income.
Over on the House side Congressman James Roosevelt of California
and his Subcommittee of the Select Committee on Small Business will resume
its investigation into dual distribution. Congressman Roosevelt also heads
a Subcommittee of the House Education and Labor Committee which has started
an inquiry into multi-employer bargaining. In the meantime, however, the
Congressman has announced his candidacy for Mayor of Los Angeles. This could
keep both of these hearings on a low key.
Certainly some committee or committees in the House or Senate will
once again investigate private pension plans. In 1962 President Kennedy
appointed a Cabinet Committee to review and study the growing impact of private
pension plans on the economy. The report which was prepared for that Committee
has come in for considerable criticism and a number of revisions since its
original drafting. What the Administration position is going to be concerning
the various proposals in the report is still unknown. But it is anticipated
that there will be recommendations concerning the funding of pension plans, the
shortening of the vesting period, and something on the control of investments.
In this same area Senator Vance Hartke of Indiana will probably reintroduce
his proposal from the last Congress which would establish a self-supporting
Federal reinsurance program, which he claims would protect the employee's
rights under private pension plans.
-37
So much for the issues and problems already ahead. There will most
certainly be others, in fact with the make-up of this Congress, lots of others.
Like Will Rogers used to say, "If you don't like the weather, just wait a
minute." In Washington, if you aren't touched yet, just wait. You'll have
your turn.
So what do we do about these problems? How can the Public Affairs
Developments Committee be helpful?
First, as a Committee we will continually observe governmental
developments right on the firing line in the Nation's Capital.
Second, we will weigh and assess developments as to their seriousness
and the probability of action at each stage of the governmental process.
Third, we will communicate and work with the various Committees of
AISI and with member companies on the problem immediately at hand and attempt
to devise the best course for the common good; and, of course, this
communication must be a two-way street.
Finally, we shall help to "muster the troops" and plan the campaign
when such action is deemed desirable by the affected AISI Committee and by
the Public Relations and Public Affairs Policy Committee of the Institute.
That's what we hope we can do for member companies, and for our
industry as a whole. Now let me explain what we can't do. I will illustrate
this point by a personal experience.
A year or so ago Nordy Hoffmann, who represents the Steelworkers
in Washington, and I were calling on the top leaders of both the Senate and
House to explain the seriousness of the dumping problem facing our industry.
-38
One of our visits was to John McCormack, the Speaker of the House.
He was most cordial and showed a real interest in our problem. When we had
told the Speaker our story, he turned to me and what he said made a lasting
impression. He said, "Mr. Whyte, I'm glad you came personally to tell me of
your troubles." He went on to say that he didn't see very many businessmen
in his office. One he recalled was Crawford Greenwalt, Chairman of DuPont,
who had come to see him about the problem of Dupont's divestiture of G.M.
stock. Then Speaker McCormack's eyes lit up and he observed, "Mr. Greenwalt
didn't send an agent or a representative to tell me his story, he came
himself." He concluded our visit by saying that he helped DuPont get its
divestiture bill passed.
The point is, gentlemen, the job our industry must do in Washington
can't be done by AISI alone, nor can it be done by any one or two or three
companies. One lesson I have learned over and over again in my twelve years
in the Nation's Capital -- size, in and of itself, is no asset in politics.
Indeed, it is usually a liability.
Basically, what I am talking about is a chorus of voices -- the
chorus that Logan Johnston referred to at the beginning of our meeting. In
this chorus we must all participate.
I have observed other industries in action in Washington, and let
me assure you our job can be done. Through the years I've watched the
effectiveness of the petroleum industry, the railroads and the textile group
just to mention a few. In the last Congress we saw the beef producers flex
their collective muscles and come out with favorable results.
-39
So the challenge is clear, the issues are coming again to a
head, and I'm confident that our industry will be equal to the task. I
only say, as Secretary of State John Foster Dulles once accidentally
said in a 1954 Cabinet meeting after he had just completed a flawless
30-minute report on the international situation, "We must not leave a
stern untoned!"
Let me wrap this up by leaving this thought with you to chew
on at your leisure: The right of petition given us by the Constitution
may in the final analysis prove to be the avenue of self-preservation
for the steel industry.
-40
WE'RE SOLD ON THE IMPORTANCE OF PUBLIC AFFAIRS
by
Roger T. Kelley, Vice President, Caterpillar Tractor Company
It's been most interesting to hear Bill Whyte discuss "The Issues Affecting
Steel in 1965".
As one of the nation's five or six largest steel consumers, we are naturally
interested in the major problems facing your industry, and we, of course,
stand to benefit as you successfully resolve them.
And you, in turn, are no less affected by rises and falls in our business
for example, by our effectiveness in competing for sales in foreign markets --
for over one-third of the 625,000 tons of steel you sold us in 1964 was export-
ed in the form of Caterpillar products.
It is only logical then that our close supportive relationship be now further
extended to the field of public affairs. I am therefore delighted to be here
to share with you our views on the importance of this activity.
Throughout our discussion, you will observe that what is right or practical
for Caterpillar in its public affairs is not necessarily right or practical
for every company represented here. So we shall simply review our experience,
leaving it for you to draw upon such portions of it as you may find useful.
We've had a public affairs department, with worldwide responsibilities, for
about five and one-half years. When conceived as a department, it inherited
the existing public relations functions which included employee communications
and press and community relations. These were then combined with those func-
tions more commonly associated with the term "public affairs" -- such as
political and economic education, the analysis of issues, and government con-
tacts -- to form the Public Affairs Department.
In confirming this appearance, both Bill Whyte and Leo Teplow stressed that
your conference was to deal exclusively with public affairs; and asked me to
steer clear of public relations matters. This, of course, I shall do. But
as we discuss public affairs, I do hope to make the point -- a highly relevant
one, I feel -- that certain communication tools can and should be involved in
the accomplishment of public affairs programs and goals.
Because we believe this, our public affairs program includes not only the re-
sponsilbility for studying and thinking about public affairs, but also a full
box of communications tools that helps us achieve understanding and agreement
in these vital areas.
This broader concept of public affairs -- which uses the typical tools of
public relations as a means of getting the public affairs job done -- has re-
sulted, we believe, in more purposeful activities than would otherwise be the
case. Moreover, because we involve ourselves in public affairs for reasons
-41
that go far beyond mere involvement -- and because we try to confine our commun-
ications to those occasions when we have something worth saying -- directed to
the audiences that should hear it -- we have been able to assimilate this broader
public affairs activity with fewer people and less cost than were involved pre-
viously in public relations work.
Now
what have we done? Instead of attempting to cover the whole waterfront,
let's talk about three specific fields of activity: political and economic educa-
tion
government contacts
and issues analysis.
At the outset, in 1959, we believed it was necessary to advance the political and
economic education of all Caterpillar employees, and to this end we came close to
developing our own set of political and economic education courses. But then
some of our people wisely decided to examine existing programs in these two fields
before getting involved in course development ourselves. We looked at some 20
programs then in effect or being developed at different companies and trade associ-
ations.
From this investigation, we decided to use three conference-type courses produced
by the U.S. Chamber -- 8-session and 17-session workshops in free enterprise eco-
nomics, and the well-known action course in practical politics.
In the past five years we have promoted these courses continually, but without
undue pressure and never on a "crash" basis. We have scheduled them both in the
community and in-plant -- always on an after-hours basis -- asking the employee
to invest not only his own time, but also one-half the cost of the course.
3200 Caterpillar people have completed these courses. They attended in groups of
15 to 20 ---- with the selection of the conference leader being a key to the success
of the course. The continued participation of our people, together with the re-
sults of surveys we've taken from time to time, would indicate that the courses
have been well received.
For example: A survey of 50 people who completed the political action course at
one plant revealed that most of them had shown little interest in politics before.
After taking the course, 22 helped other voters register, 33 discussed politics
with neighbors for the first time, 36 followed election campaigns more closely,
7 began writing to their local representatives and congressmen, 16 attended
political rallies, 8 worked for their party on election day, and 8 contributed
money to their party for the first time.
Our total investment for the whole program is under $10,000. To put it mildly,
we are well satisfied with the results.
Having approached the saturation point with these courses, we now look to the
U.S. Chamber and other organizations to develop new training tools -- oriented
toward 1965 and 1970 -- that will help us keep pace with fast-moving changes in
today's world.
A second phase of our program concerns the important task of government contact.
Business lobbyists in Washington and the state capitals have demonstrated their
worth in a good number of cases. In our case, however -- though we have a sales
office in the Nation's Capitol -- we have no public affairs people, lobbyists or
otherwise, permanently stationed there or in Springfield -- the capital city of
Illinois -- the state in which over 90 percent of our U.S. employment is concen-
trated.
-42
This is simply to say that our channels of communication and trade association con-
tacts are such that, when we learned how to properly use them, we haven't yet found
professional representation to be necessary. Rather, we have preferred to bring
appropriate influence to bear on legislative and other governmental matters by in-
volving key people at plants, offices, and parts depots in the 21 congressional
districts and 16 different states in which they are located. Let me mention two of
the ways in which we involve such people:
First, we frequently issue what we call a Public Affairs Bulletin, limiting
distribution to a relatively small list of just 90 Caterpillar people. With
total routings, perhaps 400 of our 39,000 U.S. employees actually read these
bulletins. We regard them not as an end, but rather, as a means to an end
the end being action. In pursuing this target, a given bulletin basically does
three things:
1. It informs recipients of existing or proposed legislation, or of the
need for legislation, either on a state or national basis;
2. It describes the likely impact of such legislation on Caterpillar,
and;
3. It often recommends specific action in terms of letters, phone calls,
personal contacts, or whatever method of contact seems most appro-
priate, considering the issue and the time factor.
I've brought along copies of a bulletin we did some months ago on the President's
War on Poverty. If you pick up a copy of this bulletin after the meeting, you
will observe that in addition to an analysis of the proposed legislation, it in-
cludes a number of alternatives to the solutions originally contemplated in
President Johnson's plan. You will also note that -- at the time of the bulle-
tin -- we estimated the eventual cost of the program, as it then stood, at about
$1 million yearly to Caterpillar.
These bulletins are kept in a loose-leaf notebook in which, typically, a parts
depot manager or a chief accountant at one of our plants can also quickly find
out such useful information as who his representatives are, when their terms
expire, and the make-up of congressional committees.
Both bulletins and notebook enable our top managers to be part-time lobbyists --
by making it easy and attractive for them to take the lead in influencing the
course of legislation.
Also please observe that the views expressed by local managers -- or by managers
whose functional responsibility qualifies them to assess various legislative
proposals -- carries considerably more weight with legislators than the views of
the public affairs staff man. The latter, after all, can look pretty much like
industry's full-time lobbyist, unless he assumes his proper role as back-up man,
idea feeder, and coordinator for the front-line managers who contact legislators
on key issues.
A second way we stimulate this leadership group is through occasional special
events. Last May, for example, we staged what we called "D.C. Day" in Washing-
ton
an event that brought 25 of our top people to the Capitol for a one-
day program.
-43
The day began with a breakfast meeting with an equivalent number of national
legislators from areas in which we have major facilities. This meeting ad-
journed in time for congressional committee meetings, and the Caterpillar
people spent the rest of the day in carefully planned informal, off-the-record
sessions with our two Illinois senators; David Bell, Administrator of the Agency
for International Development; Jack Behrman, Assistant Secretary of Commerce;
two assistant secretaries of Defense; and Secretary of Labor Wirtz.
These were not just "meet and greet" sessions
but, rather, purposeful ex-
changes in which we both spoke and listened on some very specific topics.
This kind of involvement, whether in Washington or at the county seat, natural-
1y adds to the experience of the executive who takes part. But its real pur-
pose goes beyond this. It reaches toward an improved understanding, on our
part, of the problems of government, and an improved understanding, on the part
of government officials, of the need for a more favorable government climate in
which we can do business, create jobs, and contribute to the general welfare of
our society.
What results have these contacts produced? Here are a few examples:
In 1961, the Illinois legislature alone added approximately $700,000 to
our annual costs. In 1963, it added virtually nothing to our costs. One
important reason for this improvement was passage of corrective legisla-
tion that put the brakes on skyrocketing costs resulting from abuses of
public aid. We promoted such constructive bills when they were before the
legislature, and months earlier assisted in developing some of the basic
ideas that led to this corrective legislation.
We estimate our share of the Illinois Public Aid Bill at roughly $500,000
per biennium. Holding the line on public aid costs during the last bi-
ennium and saving the "usual" increase of about 20 percent has, in effect,
saved us in the neighborhood of $100,000 in taxes in the last two years.
Another example -- In the months before the 1961 session of the Illinois
legislature, we were among those who encouraged the formation of a bi-
partisan "economy bloc" in the Illinois House. Later, at the request of
a bloc member from one of our plant communities, we provided the services
of one of our people to do leg work and "keep minutes" for the bloc. In
1963 the bloc came up with 41 detailed, documented suggestions for economy.
Although most of these were lost by the wayside, they were widely publicized
and helped materially in creating an economy climate in which a Republican
legislature and a Democratic governor united in the pursuit of economy. It
is worth noting too, that the Public Affairs "leg man" who worked with the
economy bloc was sworn into office last week as a Republican freshman in the
Illinois House of Representatives.
A third area I should like to cover is that of issues
because we can scarcely
talk about influencing the course of legislation without also discussing the kinds
of issues on which we attempt to exert influence.
Here is where, you may have observed, many corporate public affairs efforts seem
to break down. For in spite of well-intentioned commitments to public affairs,
many companies fail to take a public stand -- for example: in their employee pub-
lications -- on major state and federal issues which have a clear and indelible
effect on their businesses.
Now as I say this, I'm not suggesting that corporations attempt to pass judgment
on every issue that comes down the pike. Subjects on which the corporation ex-
presses a judgment ought to bear a relationship to their own operations. And many
do. Here, for example, are some of the issues on which we've taken a public stand
within the past year.
A. Peoria referenda on the purchase of new fire equipment; and the construc-
tion of new fire stations, a new library, and a new county nursing home.
B. In Illinois, we have --
1. Opposed the institution of any kind of state income tax.
2. Supported proposed improvements in the state budgetary process.
3. Supported an increase in the "foundation level" of state aid to
grade and high schools.
4. Supported recommendations for the establishment of a state
system of community colleges.
5. Supported a revised state anti-trust law recommended by the
Illinois Bar Association.
6. Supported liberalization of the state aid to the medically
indigent aged program under the Kerr-Mills Act.
C. At the federal level, we have --
1. Opposed and testified against last year's Overtime Penalty
Pay Act, which could have cost us about $4 million a year
and would not have materially contributed, in our judgment,
to its announced goal of increasing employment.
2. Further, we have supported the Revenue Act of 1964, initiating
cuts in individual and corporate income taxes.
3. Opposed the President's "War on Poverty"
at the same time
offering a 10-point alternative program.
4. Opposed Medicare, while continuing to support implementation
and liberalization of state-administered Kerr-Mills programs.
5. Supported a bill proposing establishment of a National Academy
of Foreign Affairs.
6. Supported the McClellan Bill, seeking to amend the anti-trust
laws by prohibiting certain monopolistic activities among
transportation unions.
This is a sampling -- not a full list. And I would again like to emphasize that
we analyze and take positions only on those matters that have a relevancy to our
own business.
As a corporation of any size faces up to this challenge of taking public positions
on issues, it must naturally be responsible and prudent in its actions. But as we
check on the experience of other companies, we observe it is sometimes possible to
be "too careful". If it is necessary, for example, for a board chairman or a pres-
ident, to pass on each and every issue on which a company intends to take a public
position, then it is evident that such a company will not be speaking out on many
issues, or speaking out frequently.
-45
The way we have come to handle this at Caterpillar is that, basically, only two
approvals are required, prior to a statement of position: The first, from the
manager of our Public Affairs Department; and the second, from the Company
officer who has administrative responsibility for the issue concerned. If the
issue, for example, concerns wages and hours or labor relations matters, it comes
to me for final clearance. If it involves one of our major markets, it goes to
our sales vice president. If it involves a tax or accounting matter, it goes to
our financial vice president. Only rarely does an issue require approval further
up the line; and even when it does, it is the responsibility of the officer who
is administratively concerned to determine what further approval or consideration
is appropriate.
In the past five and one-half years, we have not yet encountered a situation in
which it became necessary to withdraw a pronouncement already made. And, I might
inject, the term "pronouncement" is the right word.
The great majority of the issues I've just discussed, it seems to us, have a high
degree of public interest. And, since they have a definite bearing on our opera-
tions, they ought therefore to be of some interest to our employees. So we have
not hesitated to say what we think about tax reduction, or medicare, or monopolistic
union practices, in our plant newspapers, in our annual reports, or in letters to
employees' homes. And on a subject such as a state income tax -- which has a sub-
stantial degree of public interest in Illinois -- we may incorporate some of our
ideas in a speech-booklet and make a release to the press on portions of it.
We believe the mission of industrial journalism is to do more than merely please
and entertain employees, or to merely inform them where information itself is the
only purpose. The real purpose has to be a seeking. of employee identification
with
company
goals
and of understanding and, wherever possible, agreement with
those goals.
There are naturally some who have questioned our use of employee publications on
such matters. They admonish us that "employees don't like to be told what to do!"
Of course, that's true -- as it is true of communication in any context.
Our experience suggests that communicating with employees is just like communicat-
ing with customers or anyone else. The majority of people, including employees,
can be reached and influenced by communication that is factual, simply and honestly
presented, and couched, wherever possible, in terms of reader benefit or interest.
That's a sampling of what we do in the public affairs arena. But -- do the results
justify the expenditure of managerial time and company money in these programs? We
think the answer is strongly affirmative.
We know, for example, that tax savings to Caterpillar in the State of Illinois --
accomplished in part through our public affairs efforts -- far exceed the money in-
vested in these programs. We know, too, that certain favorable bills have been en-
acted, and unfavorable bills defeated, partly because of the thrust of our legisla-
tive influence.
But justification for the investment finds further significant support in the in-
creased and completely voluntary involvement of Caterpillar people in a wide range
of public activity -- seeking such elective positions as precinct committeemen for
the party of their choice, township and city councilmen, school board members; and
accepting appointive positions in which they give voice, leadership, and support to
local Chambers of Commerce, charity drives, boys clubs, YMCA, and church groups.
-46
Caterpillar people, to a considerably greater degree than ever before, are
"action" members of their communities doing those things needed to preserve
the heritage of our free society and to improve both its private and public in-
stitutions.
Gentlemen, the public affairs movement -- or whatever you'd like to call it --
has been with us for a decade, and quite extensively for the last four or five
years. Yet we still hear debated the question of whether businessmen and
business organizations should "get into" public affairs. I hope we can agree
this is now a pointless debate. We are in public affairs because the health of
the enterprise relies heavily upon the political, economic, and social climate
that surrounds it.
There is no one single correct way of doing the job. The really important thing
is that something gets done.
And the point of our Caterpillar experience in Public Affairs is simply this --
every business organization can be effective in this field ... and with reason-
able investments of its time and talent, can constructively improve the public
environment in which it does business.
########
-47
-48
THE REPUBLIC PROGRAM
by
H. C. Lumb, Vice President and Director of Law and Corporate Relations
Republic Steel Corporation
Introduction
The public affairs approach recognizes that people are the ultimate
source of power in a free society. Their ideas and actions determine
who our lawmakers will be--and these lawmakers, in turn, make the
legislation and participate in the selection of the individuals who
administer the laws under which business and industry operate.
The resulting legislation, as administered, affects:
1. Our right to manage
2. Our ability to control costs
3. Our ability to earn a profit
4. Our over-all planning and decision-making
In short, then, public affairs accepts the basic premise that the economic
success of a company or industry is affected by how people think and act
and by legislative halls as well as by the economic market place.
Realistically, therefore, today's management must be public affairs minded
and should ask itself these important and practical questions:
1. What can we do to increase the public's
understanding of our economic system and the
many problems faced by business and industry?
2. What can we do to give employees a better
understanding of the economic and political
issues that affect them and their companies?
3. What can we do to increase the employee's
understanding of our political system?
4. What can we do to encourage informed employees
to take a greater interest in civic, community,
and political affairs?
5. What can we do to affect legislation at the local,
state and federal levels?
6. What can we, as individuals, do to support--
by financial and other means--deserving political
candidates who may determine the future business
climate under which our companies will operate?
-55
Now if we feel that something should be done in these areas, our public
affairs program would require that we engage in economic education,
political education, issues analysis, and within proper legal limits
legislative contact, and candidate support by individuals. These
activities would, of necessity, evolve personnel policies that
encourage informed employees to take an active part in civic and
political affairs for these items, obviously, constitute the core of any
complete public affairs program.
With this in mind I'd like to trace quickly the key programs we have
developed at Republic Steel. And in my descriptions I'll emphasize the
external value to others as well as internal uses with our own people.
Economic Education
First of all, we believe that economic education is an essential part
of a public affairs program because an employee must understand economics
if he's going to make intelligent decisions or participate realistically
in public affairs.
As far back as 1950, we developed an extensive economic education program
in cooperation with the University of Chicago. This program was called
Basic Economics, and it covered a wide range of subjects--including
"Competitive Prices," "Production and Productivity," Capital Equipment
and Depreciation, "The Role of Profits, "Money and Banking," "Financial
Statements," "Inflation," "The Ups and Downs of Business," and "Personal
Economics.
The program consisted of conference leader guides, evaluation tests,
booklets, flannel board presentations, overhead projectors, tape recordings,
and a specially prepared textbook entitled Basic Economics, which American
Iron and Steel Institute helped finance and distribute.
This textbook, I might add, has been adopted by more than forty school
districts and is widely used by business and industry.
The Basic Economics program was given to exempt and non-exempt people and
was made available to colleges, high school groups and other companies.
I mention this because most industry programs can serve a dual purpose if
properly designed.
In 1958 we developed six additional conferences for a new program called
Building Economic Understanding. These conferences emphasized the
inflationary aspects of our economy, the cost build-up which had taken
place in the post-war period, the need for increased productivity, foreign
trade and foreign balances, and the highly competitive nature of our
emerging economy.
-56
Now this brings up a point that should be given serious consideration.
It's our opinion that all educational programs in public affairs
should be continuous in their format. We should never assume, for
example, that economic education can be done once and for all. New
issues, new problems, new people, and new approaches make the continuous
design more realistic and more meaningful.
...Up until 1962, our programs were limited largely to exempt and non-
exempt personnel, so we decided to reach the bargained-for employee by
means of easy-to-read economic booklets. Seven of these booklets were
mailed to all Republic employees--and our evaluation shows that they
were very well received.
These booklets were released nationally through the Good Reading Rack
Service, which sells disposable booklets to American industry. Their
latest figures show that about seven million copies of these booklets
have been distributed through thousands of different companies.
Our latest venture in economic education is called Exploring Basic
Economics. This program is a generalized version of our economic
education materials, and it centers around a series of films made for
us by authorities drawn from nationally known colleges. These films--
and the supplementary audio-visual and written materials--are distributed
by Modern Learning Aids to colleges, high schools, film libraries and
other industrial organizations.
In public affairs one activity leads to another, so we recently completed
an economic education program by means of television tape. This was the
outgrowth of a conference leader training program we conducted in South
Carolina at the request of the State Chamber of Commerce. You'll receive
copies of the brochure that describes this program, but a few remarks
are in order.
South Carolina has a complete, statewide closed circuit television
system, by means of which it's possible to beam Exploring Basic Economics
to 150 companies simultaneously. By using conference leaders drawn from
these companies, we're able to train thousands of supervisors and hundreds
of teachers at the same time.
In my opinion we're doing a great deal to improve the public's under-
standing of economics--and thus, to improve the business climate of the
entire South Carolina area. This program, in turn, has led to conference
leader workshops in North Carolina, Michigan, Indiana, Texas, Virginia,
and New Jersey. And as a result, we're exploring with the U. S. Chamber
of Commerce the best way to dovetail our activities with theirs.
-57
Now I've reviewed our activities to give you an idea of what can be
accomplished in economic education by an aggressive stand in the field
of public affairs. And I might add, we've done these things with a
minimum staff and a minimum budget over the years.
Political Education
Our approach to political education has followed roughly the same
pattern
Our Building Political Leadership program got underway in 1960 with
twelve conferences and three workshops in the broad area of political
science and precinct political work.
We believe people should have a good background in the values, processes,
and structure of government as well as in precinct politics. I must
confess, unfortunately, that too many people in industry equate public
affairs with a course in practical politics--when in reality, it's just
a small part of the over-all field.
In any event, more than 4500 exempt and non-exempt employees--together
with three hundred wives--took our political program over a three-year
period. Tests, interviews, records of attendance, and personal
accomplishments prove to us that the program was well received and
accomplished its purpose.
I might mention, also, that all graduates of our economic and political
education programs have been certified by schools like the University
of Chicago, the College of William and Mary, and Bethany College in West
Virginia. This certification has lent prestige to our programs as well
as reinforcing the objective nature of the materials presented.
Our political program was run off the company's premises, on the man's
own time, and in his home community. It was taught by our conference
leaders--and they were trained at Williamsburg, Virginia by our staff and
by faculty members of the Collegeof William and Mary.
To date about 900 of the 4500 people who attended our BPL program have
become active in political work. We have had over 125 Republic employees
become precinct committeemen in one county alone--and a substantial
number of employees have been elected to city councils, school boards,
and other important civic and political positions. Quite a few have acted
as campaign managers for other candidates, and a good number have become
quite influential in party work at the city or county level. And, our
experience is shared nationally by other companies who have engaged
aggressively in political education work.
-58
Our political program was also designed for the greatest impact outside
the company. So when the program was developed, we made use of audio-
visual aids, movies, booklets, and other materials that have proved
useful to high schools, colleges, and other organizations interested in
political education.
These materials were also released through Modern Learning Aids in
New York--and an estimated 4,000 different organizations have seen fit
to use them.
Within the past year our political education efforts have led to the
development of movies and public affairs materials for the National
Association of Manufacturers. Thus, we have cooperated closely with
them in the design and production of their Bill and Susan Boynton
Political Program.
We have also helped the Business-Industry Political Action Committee get
started by setting up with our own employees an experimental mail order
procedure that has set the stage for their present efforts.
Moreover, today we serve on standing committees for both organizations
and lend our support to their activities.
Finally, we're planning an educational television program next summer
in the political area, to complement the economic education series which
is now being offered. In this case, too, we're working out a cooperative
approach with the U. S. Chamber of Commerce.
Legislative Contacts
Besides the economic and political education program I have outlined, we
have enlarged our legislative contacts at the state and national levels.
I needn't go into this with you, except to point out that this area cannot
be overlooked by any sizable company working in public affairs.
Personnel Policy
As part of our over-all program we have also developed a personnel policy
that encourages people to become active in political affairs. We believe
an objective and clearly understood policy is in the best interests of
everyone concerned, so I'm making a copy of our policy available for your
information.
Clarifying the Issues
At the present time we're rounding out our public affairs program by
doing a more intensive job of clarifying the economic and political
issues that affect our company and the individual. The impact of many
bills cannot be appraised without intensive analysis and there are
many national organizations which provide such service, such as the
NAM, the U. S. Chamber of Commerce and the American Enterprise Institute.
This will help us keep in touch with our economic and political
education graduates, and will provide program continuity over the years.
-59
Conclusion
In closing, let me say that public affairs must be regarded as a
responsible and high level function in any business. It is concerned
with action and power as these affect the business climate, and the
operating conditions under which our companies and industries work.
Basically, we can draw several conclusions about this whole area of
activity:
First, it's an important activity for any
industry or company--large or small.
Second, the programs that make up a worth-
while public affairs effort are of such a
nature and complexity that having qualified,
experienced personnel should be your ultimate
objective.
Third, public affairs must be accepted by top
management as a continuing long-range effort
of vital importance to the company.
I believe American Iron and Steel Institute should do all it can
to implement a broad public affairs program assoon as possible.
And, of course, we at Republic will do all we can to contribute to
that effort.
-60
THE LUKENS PROGRAM
by
Charles L. Huston, Jr., President, Lukens Steel Company
LUKENS WELCOMES THE OPPORTUNITY TO TAKE PART IN THIS
PUBLIC AFFAIRS CONFERENCE AND PARTICULARLY TO HAVE OUR
SEVERAL REPRESENTATIVES HEAR THE PRECEDING BROAD SCALE
AND MEATY PRESENTATION BY LEFT LUMB. THE ACTIVITIES WE
PLAN TO DISCUSS IN THE NEXT 20 MINUTES ARE PULLED OUT OF OUR
MAIN STREAM OF DAILY LIVING, FOR THE MOST PART. THEY ARE
PART AND PARCEL OF THE WAY A MEDIUM SIZED COMPANY LOCATED
IN A MEDIUM SIZED TOWN PARTICIPATES DIRECTLY AND INDIRECTLY
IN ACTIVITIES AT THE PLANT TOWN, COUNTY, STATE AND NATIONAL
LEVELS -- ACTIVITIES THAT RELATE IN VARYING DEGREES TO THE
SUBJECT OF "PUBLIC AFFAIRS."
IN THE BELIEF THAT A FEW REMARKS OF AN INTRODUCTORY
NATURE ABOUT LUKENS AND ITS LOCATION WILL MAKE THIS PRE-
SENTATION MORE MEANINGFUL, LET US UTILIZE SOME OF THE
MAGIC OF PRESENT DAY COMMUNICATION TECHNIQUES TO JUMP
QUICKLY TO COATESVILLE IN CHESTER COUNTY, PENNSYLVANIA.
-61
VIDEO
AUDIO
SOUND EFFECT
Slide 1 -- Aerial view of
An airplane fades in, holds a few seconds,
Lukens
then fades under and out.
NARRATOR
Below is Lukens Steel Company, the
nation's fourth largest producer of plate
steels. The furnaces, rolling mills
and related facilities span over 800 acres
in two townships, two boroughs and the
City of Coatesville. After landing
Slide 2 -- View of Lincoln
at Chester County Airport it is only a
Highway entering Coatesville
few minutes by car to Coatesville where
Lukens has been a principal industry
and major employer since its founding
along the historic Brandywine Creek
Slide 3 -- View of Main St.
in 1810. Today, with more than 5, 000
business district
employees it is the largest industrial
firm in the county. Coatesville's business
and residential sections literally grew
in harmony with the growth of the company.
Slide 4 -- City Hall
In the center of Coatesville is the seat of
local government, City Hall. Directly
Slide 5 -- Main Office Bldg.
opposite is the Main Office of Lukens
Steel Company.
-62
Slide 6 -- View of Gordon
While the people of Coatesville have a
Jr. High
strong sense of history and deep seated
traditions, community institutions are as
contemporary as tomorrow's newspaper
Slide 7 -- Nurses residence
and as forward looking as bright minds
Coatesville Hospital
and able leadership can conceive.
Slide 8 -- Electric Furnace
Similarly, Lukens has a modern viewpoint.
Exterior
Here are the company's newest facilities:
Slide 9 -- Electric Furnace tap
Electric furnaces
Slide 10 -- Vacuum Degassing
A vacuum degassing unit
Slide 11 -- 140 S&R Mill
A 140-inch slabbing and rolling mill, and
there are others, all working in
conjunction with older steel making,
rolling, forming and fabricating units
to turn out the company's plate steel
specialties.
Like most of its competitors, Lukens is
planning additional modernization moves.
Slide 12 -- Construction
Present electric furnace capacity will
be augmented by an additional 145-ton
furnace in the fall. Continuous casting
is under serious scrutiny and other
refinements, additions and replacements
will require an outlay of approximately
$40-million within the next several years.
-63
It is obvious that Lukens believes it has
a major role to play in the future of
the steel industry.
THAT WAS A QUICK TRIP, BUT HOPEFULLY YOU KNOW US A
LITTLE BETTER NOW.
Slide 13 -- Corporate Objectives Book
ON THE SCREEN IS THE PICTURE OF A BOOK, SIMILAR TO THE
ONE I HOLD IN MY HAND HERE.
IT IS TITLED "CORPORATE OBJECTIVES" AND WITHIN ITS
PAGES ARE GUIDELINES OR POLICY CRITERIA FOR LUKENS DAY-TO-
DAY ACTIVITY. THESE OBJECTIVES WERE PUBLISHED FOR DISTRIBUTION
WITHIN THE COMPANY SEVERAL YEARS AGO. THEY STIMULATE THE
DEVELOPMENT OF GOALS TOWARD WHICH ALL SEGMENTS OF THE
COMPANY CAN STRIVE.
Slide 14 -- First Bedrock Objective
THE BEDROCK OBJECTIVES, FOR THE SHORT AND LONG TERM,
ARE THE FOUNDATION UPON WHICH THE ENTIRE FRAMEWORK OF
COMPANY ACTIVITY IS STRUCTURED. THE GOALS FOR ORGANIZATION,
DIVISION AND DEPARTMENTS OF THE COMPANY FLOW FROM THEM.
Slide 15 -- Second Bedrock Objective
WHILE THERE IS NO POLITICAL ACTION OR PUBLIC AFFAIRS
DEPARTMENT ON LUKENS ORGANIZATION CHARTS, THE SUBJECT
ITSELF IS INCORPORATED WITHIN A VARIETY OF ORGANIZATION AND
DIVISION OBJECTIVES.
-64
BROUGHT TOGETHER THESE EXTRACTED OBJECTIVES PROVIDE
LUKENS WITH A PUBLIC AFFAIRS POLICY
Slide 16 -- Public Affairs Policy
WHICH YOU SEE BEFORE YOU NOW AND A COPY OF WHICH YOU WILL
FIND IN YOUR FOLDER ENTITLED "COMPANY POLICIES."
PARTICIPATION IN PUBLIC AFFAIRS FOR LUKENS IS A NATURAL
AND EVOLVING PHASE OF BUSINESS LIFE. IT IS A PROCESS RATHER
THAN A PROGRAM.
THERE ARE A COMBINATION OF REASONS WHICH INCLUDE SIZE
AND SINGLE PLANT OPERATION THAT MAKE IT LESS THAN NATURAL
FOR LUKENS TO BE INVOLVED IN PUBLIC AFFAIRS NATIONALLY ON THE
SAME SCALE AS THE LARGER COMPANIES. IT WAS MOST NATURAL,
HOWEVER, FOR US TO GO TO WASHINGTON A YEAR AGO TO TESTIFY
BEFORE THE TARIFF COMMISSION AND THE TRADE INFORMATION
COMMITTEE ABOUT UNFAIR COMPETITION FROM FOREIGN PRODUCERS
OF PLATE STEELS. IN PARTICULAR OUR TESTIMONY RELATIVE TO
THE GROWING IMPORTS OF PLATE STEELS FROM THE NEWCOMER --
MEXICO -- AS WELL AS A NUMBER OF OTHER FOREIGN COUNTRIES
WAS REVEALING.
TESTIMONY PRESENTED IN THOSE HEARINGS WAS PUT INTO
A SPECIAL INFORMATION PACKAGE AND SENT TO ALL COMPANY
STOCKHOLDERS AND TO A SPECIAL LIST OF COMMUNITY REPRESEN- -
TATIVES. PUBLISHED IN THE COMPANY MAGAZINE AND LOCAL
NEWSPAPERS, IT WAS THE SUBJECT OF A NEWS FEATURE FOR THE
RADIO STATION THAT SERVES THE PLANT COMMUNITY.
-65
IT WAS EQUALLY NATURAL FOR US, IN JUNE OF 1962, TO
CALL THE NATIONAL GOVERNMENT'S ATTENTION TO AN ALARMING
SITUATION CONNECTED WITH THE GOVERNMENT'S PURCHASE FROM
FOREIGN SUPPLIERS OF PLATE STEELS FOR U. S. NAVY SHIP
CONSTRUCTION. REFERENCE WAS MADE TO A REVIEW OF PROCURE-
MENT POLICIES BY COMMERCIAL SHIPBUILDERS WHICH MUST COMPETE
WITH GOVERNMENT SHIPYARDS ON NAVY SHIPBUILDING PROJECTS,
AND HOW SUCH REVIEW MIGHT RESULT IN ADDITIONAL PURCHASES
FROM GERMANY AND JAPAN TO TAKE ADVANTAGE OF THE LOWER
COST OF FOREIGN STEEL.
PARTICULARLY DID WE STRESS HOW IT COULD APPEAR THAT
THE GOVERNMENT WAS SAVING MONEY, IF CONSIDERATION WAS
GIVEN TO PRICE ALONE. HOWEVER, WHEN UNEMPLOYMENT AND
TAX REVENUE LOSS WERE CONSIDERED THEN THE SAVING ON PRICE
BECAME A NET LOSS TO THE GOVERNMENT.
SENATOR HUGH SCOTT OF PENNSYLVANIA REACTED PROMPTLY
AND DIRECTED AN APPEAL TO THE WHITE HOUSE WHICH WAS FOLLOWED
BY THE DEFENSE DEPARTMENT AGREEING TO AWARD A CONTRACT
FOR 2, 000 TONS OF CARBON STEEL FOR THE CONSTRUCTION OF
THREE GUIDED MISSILE FRIGATES TO THE LOWEST BIDDER OFFERING
AMERICAN STEEL. AT THE SAME TIME, THE PRESIDENT APPOINTED
AN OFFICIAL IN THE DEPARTMENT OF DEFENSE TO EVALUATE PURCHASE
CONTRACTS OF THAT NATURE FOR THE GOVERNMENT.
-66
STATE LEVEL
IF WE WOULD USE A GRAPH TO INDICATE LUKENS ACTIVITY
IN PUBLIC AFFAIRS AND ACROSS THE TOP OF THE GRAPH WOULD
WRITE, FROM LEFT TO RIGHT, NATIONAL, STATE, COUNTY AND
LOCAL, YOU COULD FORECAST CORRECTLY THAT THE PERCENTAGE
OF COMPANY INVOLVEMENT WOULD GROW HEAVIER AS THE INDICATOR
LINE MOVED ACROSS THE FACE OF THE GRAPH FROM LEFT TO RIGHT.
SOME OF YOU WILL RECALL THE HIGH DEGREE OF ACTIVITY
IN MANY PENNSYLVANIA QUARTERS DURING THE 1963 ATTEMPT TO
WRITE SOME MUCH-NEEDED CHANGES INTO THE UNEMPLOYMENT
COMPENSATION LAW SO AS TO CLOSE THE LOOPHOLES THAT PERMITTED
EXCESSIVELY HEAVY DRAINS FROM THE FUND AND RENDERED
PENNSYLVANIA TAXES NON-COMPETITIVE WITH NEIGHBORING STATES.
DURING THOSE EXTREMELY ACTIVE DAYS, LUKENS INDUSTRIAL
RELATIONS PEOPLE WERE IN CONTINUING CONTACT WITH MEMBERS
OF THE STATE HOUSE AND THE SENATE, BOTH IN THEIR HOMETOWNS
AND IN HARRISBURG. SPECIFIC INFORMATION WAS PROVIDED ABOUT
THE COMPANY'S PAYMENTS INTO THE FUND AND WHAT COULD BE
EXPECTED IN THE MONTHS AHEAD IF THE VERY LIBERAL PROVISIONS
OF THE LAW WERE TO STAND. PAYMENTS WERE PROJECTED IN
BOTH SIZE AND THEIR AFFECT UPON COMPANY EARNINGS TO COVER
THE VARIOUS CHANGES PROPOSED. CONSULTANTS IN THE FIELD
WERE USED EXTENSIVELY.
-67
THE GOVERNOR OF PENNSYLVANIA RECEIVED SUFFICIENT
SUPPORT FOR FINAL LEGISLATIVE ENACTMENT OF THE PROPOSED
CHANGES IN THE LAW IN STORMY BUT SUCCESSFUL SESSIONS OF THE
STATE LEGISLATURE.
CONTACTS WITH OUR STATE REPRESENTATIVES ARE ON A
CONTINUING BASIS AND BY NATURE VARIED. LUKENS PEOPLE ARE
ASSOCIATED WITH THEM IN NUMEROUS LOCAL AND AREA PROJECTS
RELATED TO SUCH THINGS AS SCOUTING, Y.M.C.A., COMMUNITY
CHEST, INDUSTRIAL DEVELOPMENT, WATER CONSERVATION, ETC.
THEY ALSO ARE MEMBERS OF THE COMMUNITY REPRESENTATIVES
GROUP WHICH WE KEEP INFORMED ABOUT COMPANY PLANS AND
PROGRESS AND ABOUT WHICH I'LL COMMENT SHORTLY.
IT IS AXIOMATIC THAT WHEN A NUMBER OF PEOPLE WITH
LEADERSHIP QUALITIES ARE PULLED TOGETHER AS PART OF AN
INDUSTRIAL ENTERPRISE, SOME WILL JOIN ORGANIZATIONS AND
ACCEPT IMPORTANT COMMITTEE POSTS. THE DEGREE OF THIS
ACTIVITY IS DEPENDENT IN SOME EXTENT UPON THE AMOUNT OF
COMPANY ENCOURAGEMENT. WE BELIEVE THAT BALANCED ACTIVITY
OF THIS NATURE CAN BENEFIT BOTH PARTICIPANT AND THE COMPANY.
LET ME CITE AN EXAMPLE. THE HEAD OF OUR TAX DEPARTMENT
IS A MEMBER OF THE TAX COMMITTEE OF THE PENNSYLVANIA STATE
CHAMBER OF COMMERCE. DURING THE COMPANY'S FIRST FULL
YEAR OF EXPERIENCE IN ELECTRIC FURNACE STEELMAKING, HE
WORKED WITH PEOPLE FROM THE STATE BUREAU OF SALES AND
USE TAX WHO CAME TO THE PLANT TO MAKE A TAX AUDIT.
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IN DUE TIME THE AUDITORS FROM THE STATE INDICATED
THAT THEY BELIEVED WE HAD INCORRECTLY COMPUTED OUR
OBLIGATION UNDER THE STATE SALES TAX LAW AS THEY INTERPRETED
THE LAW TO APPLY TO THE ELECTRIC FURNACE INSTALLATION.
THE DIFFERENCE IN OUR TAX COMPUTATIONS AMOUNTED TO
APPROXIMATELY $1 -MILLION AND, NEED I ADD, IN THE STATE'S
FAVOR.
THE CHAMBER OF COMMERCE ARRANGED A MEETING BETWEEN
REPRESENTATIVES OF INDUSTRY AND MEMBERS OF THE GOVERNOR'S
STAFF WHICH INCLUDED THE SECRETARIES OF REVENUE AND
COMMERCE AND THE GOVERNOR'S EXECUTIVE SECRETARY. THE
GROUP RECOGNIZED THE SERIOUS IMPACT THE STATE AUDITORS'
SALES TAX INTERPRETATION COULD HAVE UPON COMPANIES
BUILDING MANUFACTURING FACILITIES IN THE COMMONWEALTH. IT
WAS DECIDED THAT THE LAW DID NOT CONTEMPLATE TAXATION
OF THIS NATURE.
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STATE AND COUNTY LEVEL
IF YOU HAVE DRIVEN ALONG ROUTE 30 IN THE COATESVILLE
AREA YOU MAY HAVE NOTICED HOW EASILY "THRU TRAFFIC" CAN
MOVE AROUND THE CITY BY MEANS OF A HIGH SPEED BY-PASS.
THIS WAS NOT ALWAYS THE CASE. IT WAS A TOUGH BATTLE GETTING
THE BY-PASS; NOT MUCH PROGRESS WAS MADE UNTIL A LUKENS
OFFICIAL MOVED INTO THE PRESIDENCY OF THE LOCAL CHAMBER
OF COMMERCE.
THE COMPANY RECOGNIZED THAT A BY-PASS WOULD HELP
REDUCE THE TRAFFIC BOTTLENECK GROWING PROGRESSIVELY WORSE
IN COATESVILLE, WOULD BE OF IMMEDIATE BENEFIT TO TRAFFIC
EAST AND WEST AND WOULD NOT AFFECT ADVERSELY TRADE IN
DOWNTOWN AREAS. ACCORDINGLY, THE NEW CHAMBER PRESIDENT,
WITH THE HELP OF OTHER LUKENS CHAMBER MEMBERS, REACTIVATED
THE TRAFFIC COMMITTEE AND ARRANGED MEETINGS WITH THE STATE
SECRETARY OF HIGHWAYS. BEFORE CONSTRUCTION COULD START,
PENNSYLVANIA HAD A CHANGE OF GOVERNORS, BUT CONTINUING
THE ADMINISTRATION BY THE DEMOCRATIC PARTY. CHESTER
COUNTY IS TRADITIONALLY REPUBLICAN. CONFIDENTIALLY, WHEN
THE NEW CHIEF EXECUTIVE WAS APPROACHED ABOUT THE BY-PASS,
HE WANTED TO TRADE IT FOR SUPPORT FOR HIS LEGISLATIVE PROGRAM.
AT THAT POINT THE TRAFFIC COMMITTEE WORKED THROUGH THE
COUNTY COMMISSIONERS AND WHEN THERE WERE MEETINGS IN
HARRISBURG THE MINORITY PARTY COMMISSIONER, WHO WAS OF THE
SAME POLITICAL FAITH AS THE GOVERNOR, CARRIED THE BALL.
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SINCE WE BROUGHT YOU INTO COATESVILLE BY PLANE A
FEW MINUTES AGO, LET US LOOK FOR A MOMENT AT THE COOPERATIVE
EFFORT BETWEEN LUKENS, CHESTER COUNTY COMMISSIONERS
AND COMMUNITY GROUPS THAT BROUGHT INTO BEING THE CHESTER
COUNTY AIRPORT AT WHICH WE LANDED.
FOR SOME TIME, LUKENS PILOTS CONDUCTED THEIR OPERATIONS
AT AIRPORTS IN WILMINGTON, DEL.; PHILADELPHIA, LANCASTER AND
READING, PA. WE ALSO LEARNED THAT PLANE PASSENGERS WHO
CAME TO COATESVILLE AND OTHER SECTIONS OF THE COUNTY ON
BUSINESS HAD TO LAND AT COMMERCIAL AIRPORTS OUTSIDE OF
THE COUNTY. IT BECAME INCREASINGLY EVIDENT THAT AN APPROVED
AIRPORT WAS NEEDED WITHIN THE COUNTY. THE COMPANY COULD
HAVE BUILT A PRIVATE FIELD AND HANGER BUT IN LINE WITH
BEDROCK OBJECTIVES DECIDED INSTEAD TO PUT COMPANY FUNDS
INTO A PUBLIC FACILITY WITH RESULTING MUTUAL BENEFIT TO THE
COMMUNITY AS WELL AS TO THE COMPANY.
A COMPANY OFFICER WAS THE SPARKPLUG TO GET THE
COUNTY COMMISSIONERS TO SPONSOR THE PROGRAM. THEN HE
SERVED AS CHAIRMAN OF AN ADVISORY AND FUND RAISING GROUP
THAT DID A LARGE PART OF THE WORK INVOLVED IN SITE SELECTION,
GETTING STATE AND FEDERAL AID, SECURING A PERMANENT BASE
OPERATOR AND PUTTING THE AIRPORT ONTO A SOLID OPERATING
BASIS.
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EXAMPLES SUCH AS THESE ARE NUMEROUS. CURRENTLY
LUKENS PEOPLE ARE WORKING WITH THE CHESTER COUNTY WATER
RESOURCES AUTHORITY ON A LONG-RANGE PROGRAM OF FLOOD
CONTROL. THIS WILL PROVIDE ADEQUATE WATER SUPPLIES FOR
INDUSTRIAL USE AS WELL AS TO MEET RECREATIONAL REQUIREMENTS
OF PEOPLE IN THE BRANDYWINE WATER SHED. I MIGHT POINT OUT
THAT THE COMPANY COULD HAVE PURCHASED A NEARBY WATER
RESERVOIR (ICEDALE DAM) AND HELPED ASSURE ITSELF A STANDBY
WATER SUPPLY IN DRY SUMMER MONTHS. BUT, AS IN THE CASE OF
THE AIRPORT, LUKENS ELECTED NOT THE PRIVATE ROUTE BUT THE
PUBLIC ONE WHERE THERE WOULD BE MORE MUTUALITY OF BENEFITS.
LOCAL LEVEL
WHILE THE COMPANY'S INTEREST AT THE NATIONAL LEVEL
HAS BEEN STIMULATED BY THE INCREASING IMPORTANCE OF PUBLIC
AFFAIRS, PARTICIPATION AT THAT LEVEL IS NOT THE EASY GOING,
NATURAL THING FOR US. IT HAS TO BE PLANNED. QUITE THE CONTRARY
IS THE CASE ON THE HOME FRONT BECAUSE WE LIVE AND WORK AMONG
THE PEOPLE INVOLVED. MANY OF THEM, 324 BY ACTUAL COUNT,
ARE ON WHAT WE CALL OUR LIST OF COMMUNITY REPRESENTATIVES.
INCLUDED ARE BUSINESSMEN, EDUCATORS, GOVERNMENT OFFICIALS,
DOCTORS, OFFICERS OF SERVICE CLUBS, CLERGYMEN, THE NEWS
MEDIA, BARBERS AND BEAUTY SHOP OPERATORS.
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WE COMMUNICATE WITH THESE PEOPLE WITH SUFFICIENT
FREQUENCY -- EITHER AT BREAKFAST OR DINNER MEETINGS, OR
BY LETTERS -- THAT THEY ARE NOT SURPRISED TO HEAR FROM US
OR TO BE INVITED TO A LUKENS MEETING. FOR THIS REASON AND
OTHERS, SUCH AS SELECTIVE CONTACTS WITH INDIVIDUALS OR
SPECIAL INTEREST GROUPS, WE CAN SIT DOWN WITH OR CALL UPON
GOVERNMENT AND OTHER COMMUNITY PEOPLE AS THE OCCASIONS
REQUIRE AND THE CONTACT IS ACCEPTED AS A VERY NORMAL AND
NATURAL THING TO DO.
FOR EXAMPLE. CITY COUNCIL FACED A PROBLEM COMMON
TO MANY TOWNS, THE PROSPECT OF REDUCED TAX REVENUE DUE TO
LOWER PROPERTY VALUATIONS AS THE RESULT OF SOME BUSINESS
MOVING TOWARD CONCENTRATED SHOPPING CENTERS. ELEVATING
REAL ESTATE TAXES WOULD HAVE MEANT A 12 MILL BOOST TO
MAINTAIN THE REVENUE STATUS QUO AND THAT WOULD HAVE COST
LUKENS $67,126.32.
THE CITY FELT THAT A $10 OCCUPATIONAL PRIVILEGE TAX
WAS THE ANSWER. THAT RAISED MANY PROBLEMS TOO. IN OUR CASE,
SOME OF THE PLANT UNITS ARE IN COATESVILLE AND SOME IN
ADJOINING TOWNSHIPS. OUR TAX AND PERSONNEL PEOPLE WORKED
CLOSELY WITH THE CITY CONTROLLER'S OFFICE IN DEVELOPING
PROCEDURES, FORMS ETC. THE CITY ACCEPTED WITHOUT QUESTION
OUR LIST OF ELIGIBLE TAXABLES AND FURNISHED FORMS THAT OUR
TABULATING EQUIPMENT COULD HANDLE READILY.
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VERY PROBABLY ONE OF THE REASONS WE FIND OUR DAILY
CONTACTS SO EASY TO MAKE AT THE LOCAL LEVEL IS BECAUSE THE
COMPANY ENCOURAGES ITS PEOPLE TO PARTICIPATE IN LOCAL
GOVERNMENT AND CIVIC AFFAIRS. AT LEAST ONE IN EVERY 60
LUKENS EMPLOYEES HOLDS AN ELECTIVE OR APPOINTED POLITICAL
OFFICE. THE FIGURE WOULD BE MORE IMPRESSIVE IF WE COUNTED
THOSE WHO FURNISH LEADERSHIP IN VOLUNTEER CAPACITIES.
IN THE CITY OF COATESVILLE AND IN NEIGHBORING COMMUNITIES
WHERE LUKENS PEOPLE LIVE THEY ARE REPUBLICAN AND DEMOCRATIC
COMMITTEEMEN, COUNCIL MEMBERS, A MAYOR, TOWNSHIP SUPER-
VISORS, SCHOOL DIRECTORS, JUSTICES OF THE PEACE, ASSESSORS,
AUDITORS, TAX COLLECTORS, CONSTABLES, POLICE AND FIRE
CHIEFS.
MY FINAL COMMENT IS IN THE AREA OF INDUSTRIAL ECONOMICS.
TO PROMOTE A BETTER UNDERSTANDING OF THE SUBJECT AND, AT
THE SAME TIME, TO ENCOURAGE YOUNG PEOPLE TO CONSIDER
ENGINEERING AND INDUSTRIAL MANAGEMENT AS CAREER POSSIBILITIES
AND TO EVIDENCE THE COMPANY'S GENUINE INTEREST IN PUBLIC
SCHOOL EDUCATION, LUKENS DESIGNS AND EXECUTES SPECIAL
PROGRAMS FOR COMMUNICATING WITH SECONDARY SCHOOL TEACHERS
AND STUDENTS. IN APRIL WE SHALL CONDUCT OUR FOURTH ANNUAL
FACULTY SEMINAR AND STUDENT MANAGEMENT CONFERENCE.
-74
TWENTY-FIVE TEACHERS FROM THREE NEIGHBORING HIGH
SCHOOLS WILL VISIT WITH US SEVERAL DAYS IN ADVANCE OF THE
THREE-DAY STUDENT CONFERENCE. WE AIM TO PROVIDE THE
TEACHERS WITH AN OPPORTUNITY TO ADVANCE THEIR KNOWLEDGE
IN THE AREAS OF ECONOMICS, INDUSTRIAL MANAGEMENT AND THE
AMERICAN COMPETITIVE ENTERPRISE SYSTEM THROUGH FORMAL
PRESENTATIONS AND GROUP DISCUSSION.
SIXTEEN STUDENTS FROM THE SAME SCHOOLS WILL SURPRISE
US, IF PAST EXPERIENCE BE A RELIABLE INDICATOR, WITH THEIR
INTEREST IN THE PLANT VISITATION, CLASSROOM TYPE INSTRUCTION
AT THE PLANT WITH COMPANY PEOPLE AS INSTRUCTORS, AND
INDIVIDUAL MEETINGS WITH MEMBERS OF MANAGEMENT. STUDENTS
AND THEIR PARENTS, TEACHERS AND COMPANY PEOPLE WILL
JOIN IN A DINNER MEETING TO CONCLUDE THE PROGRAM.
NOW WE HAVE TOLD OUR STORY. IT'S NOT PERFECT BY FAR,
BUT IT SPRINGS FROM THE WAY WE LIVE AND HARKENS BACK TO OUR
UNDERLYING PHILOSOPHY THAT WHAT APPEARS GOOD FOR LUKENS
IS ONLY SO IF IT ALSO BENEFITS OTHERS. WE SHALL CARRY MANY
CONSTRUCTIVE THOUGHTS BACK HOME FROM THIS CONFERENCE FOR
STUDY, FOR WE SEEK CONTINUAL IMPROVEMENT IN OUR PUBLIC
AFFAIRS PROGRAM. POSSIBLY THIS CONFERENCE WILL BE THE CATALYST
THAT WILL STIMULATE ALL OF US TO RE-EVALUATE OUR OBLIGATIONS
IN THE AREA OF PUBLIC AFFAIRS AND APPRAISE ANEW WHAT WE
CAN DO AND THE VIGOR WITH WHICH WE CAN TACKLE THIS INCREASINGLY
IMPORTANT JOB.
-75
OH YES, WE MUST GET YOU BACK TO NEW YORK NOW!
THAT'S EASY.
Sound of jet plane coming in for a landing.
Slide of entrance to Waldorf Astoria.
HERE WE ARE!
-76
TOOLS OF THE TRADE
by
Richard A. Armstrong, Executive Director, Effective Citizens Organization
Representing an organization dedicated to the concept of public
affairs, it is indeed encouraging to see this evidence of your interest. I
commend the action you have taken and want to assure you of the cooperation
of the Effective Citizens Organization. The crganization feels closely akin
to the steel industry --- particularly this year, since Edward Myers of the
United States Steel Corporation is our President.
I have been asked to discuss the tools of the trade. In other words,
the services, materials, and organizations that can be of help to you in
establishing a public affairs program - or in improving your present public
affairs activities. Unlike those who started in public affairs five or ten
years ago, you have a tremendous advantage today, in that there is an abundance
of material and competent organizations available to help you.
There are many in the business community who feel that public affairs
activities must of necessity be limited to the giant corporations. We would
suggest to you that this is not the case. If time would permit, we could
document instances of smaller companies that are carrying on a commendable
public affairs effort. It's quite true that some companies spend hundreds of
thousands of dollars annually in their public affairs activities. However,
some companies are able to carry on a creditable public affairs program at
negligible cost. Several aspects of public affairs--and some of the m: it
important aspects--require no financial outlay on the part of the corporation
at all. A policy statement, for instance, represents basically a change of
attitude on the part of management--or in many cases, simply an explanation
-77
of what management's attitude actually is: and if I were to look for a
theme to encompass my remarks today, it would be that politics or public
affairs is like yard goods-you can buy it by the yard. In other words,
expenditures can be limited to what you can afford. Many of the costs
of public affairs materials have been prepaid through your support of
trade and business associations.
At ECO we have established criteria for determining whether
a company has a public affairs program. Very quickly, I would like to
sketch out these four basic tenets of public affairs--and then later, we
will examine the tools that you have available in each of these areas.
First of all, the company must have a policy that permits and
encourages political and governmental participation. In a way, it seems
odd that only a few years ago, most corporations had a diametrically
opposed position. Many employees still think that the corporation reflects
the same attitude that it had in the 30's.
A second guidepost for a public affairs program is the use of
educational materials in the area of politics, economics, and government.
Thirdly, we advocate that the corporation communicate with its
employees on issues--not political issues per se, but governmental and
economic issues.
And finally, a company should have either a full or part-time
public affairs officer--responsible for coordinating and following through
on all phases of public affairs. In the large corporation we have seen a
new profession emerge--that of the public affairs officer. In smaller
firms this job is done efficiently by an officer who has this as a
collateral responsibility.
Now, let's take each of these areas and discuss them in more
detail. I don't envision it as my responsibility to try to discuss any of
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these facets in terms of rationale. This is the task of others on your
program. I am the mechanic. In other words, not to discuss the "why"
but the "how to".
Let's start with policy. Generally policy statements are
couched in terms of good citizenship and attempt to place govemmental
and political activity on the same plane of respectability the corporation
gives to civic, charitable, and community activity. A policy statement
may take many forms. It may be a speech by the President, an article in
a house organ, or the more formalized adjunct to the policy manual. Very
often it's treated as a separate entity and is used as the subject for an
inter-office memo or a booklet that is distributed to all employees.
The best approach to creating a policy statement would be to
start by familiarizing yourselves with the statements of other companies--
both inside and outside the steel industry. There is very little originality
or pride of authorship in this area and if you study the policy statements
of 20 or 30 corporations at random, you will almost certainly be struck with
their similarity. Most of the statements being issued today are simply
composites of existing statements. My recommendation would be, therefore,
to take some 20 or 30 statements-study them carefully, and pick and choose
those phrases and paragraphs that might best suit your company's particular
need.
Where do you get these statements? This is easy. Write to us at
ECO. We would be delighted to send you a representative cross-section of
such statements. Or, visit the ECO office-where we have some 75 statements
on file. The public affairs department at the U. S. Chamber would be
delighted to furnish you similar information.
-79
Judging from experience, your problem in regard to policy is not
in constructing the statement 'itself; nor getting your legal department or
your top management to approve. The real difficulty comes in selling top
and middle management that the company really means what the policy says.
And to do this, they must be sold--rather than told.
Let's take a look now at the field of educational programs. And
again, we'll see an abundance of materials that did not exist six or
eight years ago.
It's an .axiom in the business community that economic education
should precede political education. Some are inclined to question this
priority when dealing with management personnel. Unfortunately, economics
is very difficult to teach. ECO surveys indicate beyond question that the
preponderance of companies engaged in political education are enthused with
the results and, conversely, discouraged with the economic education results.
Therefore let us leave the question of priority aside and examine each field
separately.
The ACTION Course in Practical Politics, developed by the U. S.
Chamber of Commerce, has had the most widespread use. It was prepared
specifically for business people. It is non-ideological
uses the case
study technique; and the fact that over half a million people have been
exposed to this program attests to its usefulness and value. The cost of
the materials is negligible and it has many other favorable features.
For further information on the ACTION Course, contact Walter Petravage
at the U. S. Chamber of Commerce, or your local Chamber. Mapy local
Chambers continuously run these programs and if you haven't already taken
advantage of this opportunity to have some of your people participate, you
might want to consider it. Most corporations that use the ACTION Course
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prefer to use it internally.
The NAM has been active in the field of political education for
several years and they have a variety of training materials that are
available to you at small cost. Some of these materials use the group
discussion technique. Others are reading courses and still o thers use
a combination of visual aids and discussion sessions. The nwest program
available from the NAM relies heavily on visuals. It's called the
Boynton Story. It's a four-session course with a film for each session.
It is extremely well done and has been enthusiastically received.
One of your own members--Republic Steel--has developed an
excellent program in conjunction with the political science department
of the College of William and Mary. It's indeed a tribute to the sincerity
and dedication of Republic--who have invested tens of thousands of dollars
in this program, that they have made it available to others. The program
is thoughtful and thorough, makes use of a number of visual aids, and
includes the cooperation of William and Mary in the process of training
discussion leaders and recognizing course graduates. I am sure that Mr.
H. C. Lumb will be glad to give you further information about it and advise
you on its use.
There's a private firm in New York City called Public Affairs
Counsellors. This firm has developed a course called ACT--Applied Citizen-
ship Training. Representatives of the New York office are available to
conduct orientation seminars for your top management and conduct training
sessions for the discussion leaders who use the course. This company has
been retained by U. S. Steel for over five years; and in the process has
been responsible for giving political educati on to over 10,000 U. S. Steel
employees. PAC has a number of other fine clients, including the Pacific
Gas and Electric Company, Allen-Bradley, and Detroit Edison.
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ECO conducts a variety of training seminars that are available to
industry on an in-plant basis. We conduct one-day seminars for top manage-
ment; one- and two-day practical politics workshops for high-level manage-
ment. We also have a three-day seminar to train discussion leaders in the
use of practical politics courses. We have been retained to conduct such
sessions for Armco Steel, Esso-Humble Oil, Corning Glass Works, First
National City Bank, and others. We would be delighted to give you further
facts and figures on these programs.
As you can see, there are a number of materials that are available
to you in the field of political education. Which is the best? This is
a decision that you alone can reach. I would suggest to you that all of
the materials and all of the programs are good. But we all know that
excellent materials can be mediocre in unskilled hands; and poor ma-
terials can sparkle with adriot leadership. It therefore makes sense to
train discussion leaders in the use of the materials. It will be money
and time well spent.
In planning your political education program, don't overlook
your high-level management people. Your public affairs program needs
their enthusiastic endorsement. I am not suggesting that they be given
an overdose of precinct mechanics and operations--but rather a measure
of sophistication on how to deal with politicians and political problems.
Here again you can design your own program or make use of those available
through Public Affairs Counsellors or ECO.
As mentioned earlier, the field of economic education is quite
complex. For the moment, let's forget these difficulties and plunge again
-82
into the resources that are available to you. Economic illiteracy is a fact
of life in the business community and the fact that economic education is
difficult should not be a deterrent.
Of necessity, we are going to have to retrace some of the ground
that we covered in political education. The U. S. Chamber has economic
education programs available. You will recall that there was a great deal
of interest in economic education shortly after the last war. The program
developed--HOBSO--How Our Business System Operates--was given wonderful
use. The growth of the public affairs movement in the late 50's brought
with it other programs. The U. S. Chamber has a basic economic education
course called The American Competitive Enterprise Economy. It has been
used with effectiveness for a number of years. A newer course has been
developed patterned largely along the lines and techniques of the ACTION
course. It's called Freedom Versus Communism and it attempts to teach
our free enterprise system by comparing it with Communism.
The NAM has been developing and distributing economic education
material for years. One of their most recent efforts in this field is a
reading course.
Public Affairs Counsellors has a course following the techniques
used in their ACT program. Again, the staff of PAC is available to train
discussion leaders.
The University of Chicago has had a great deal of experience in
the field of economic education for business people and information is
available upon request.
-83
Your own Republic Steel Company has a program of their own--
developed by Gene Michelon. Republic has many years of experience in
the field of economic education carefully documented by "before and
after" surveys. You will find them cooperative in terms of making
their materials and expertise available.
The American Economic Foundation distributes a number of books,
pamphlets, and visual aids. Most of these materials are designed for
young people, but you might find they have application if you intend to
carry economic education down to the bargaining unit.
Before leaving the educational field, I would like to mention
the work of two other organizations. Brookings Institute has done a
marvelous job over the years to acquaint business people with our Federal
government. A series of one-week seminars are conducted throughout the
year in Washington. These sessions are designed primarily for those
unfamiliar with our Federal government, but available to all. Perhaps
the most surprising thing about the Brookings program is that the
sophisticates, as well as newcomers, sing its praises.
The Ford Motor Company has developed, in the last year, a
program to make their people better acquainted with local government.
They established a basic format that you can follow inside your own
corporation. A copy of their manual is available through the ECO
office or directly from the office of Civic Affairs at Ford.
Next we come to the area of communications. More companies
than ever before are communicating on issues with their employees,
and the question of whether or not a company should communicate on
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issues has become largely academic. The only debate that's taking place
today is on the types of issues that should be used. Should they limit
their efforts to industry issues--or should they broaden their scope to
issues that affect the business system as a whole?
There are many, many sources of issues material. Some of these
may come to you in raw form--in others they are partially cooked--in still
others they are pre-digested. Again, let's start with the national business
organizations. The U. S. Chamber has a monthly bulletin called "Here's
The Issue". It presents both sides of the issue--and does a creditable
job. It's available at a cost of about one dollar per employee per year,
and reproduction rights are also available.
The NAM has a number of issue services available to its members.
If you are not already on the mailing list, by all means ask to receive
their legislative research and reports on specific problem areas.
Bipac has just developed a newsletter called Politics, and an
analysis of high lights from the Congressional Record. Most of your
companies probably support the American Enterprise Institute. This
organization issues in depth analyses of legislation and regularly
issues monographs on long-range economic and governmental problems.
Your own trade associations are doing a fine job in the field
of issues and if you are not receiving the material from the American
Mining Congress and MAAPI, by all means, do SO.
The First National City Bank in New York has a monthly economic
analysis bulletin called the Monthly Economic Letter. This is available
without charge and I urge you to ask to be placed on their mailing list.
-85
It should also be noted that the concept of public relations has
enveloped the Federal government. Every agency and every bureau regularly
publishes descriptive materials on their purposes and programs and pro-
posals. A post card will put you on the mailing list. The Democratic
National Committee and the Republican National Committee periodically
issue position papers on legislation in various problem areas. A note
to either of the headquarters will put you on their mailing list. There
are also single interest organizations that are sources of specific
information on specialized problems. An inquiry to the ECO office will
bring further details.
The resource list on issues could go on and on. Let me wind it
up by mentioning one further service of ECO. We have a Communication
Exchange. When a company develops an interesting approach of their own
to a particular issue they furnish the ECO office with a supply of the
article. Every month the companies that participate in the Exchange
receive a copy together with reproduction rights.
Finally we come to the role of the Public Affairs officer.
This is a new profession, its infancy passed, currently suffering the
growing pains of adolescence.
The Public Affairs Committee of the AISI should be a useful and
valuable tool for industry public affairs people. Obviously you intend
it to be such--and I trust you will periodically gather together to
exchange ideas and discuss common problems.
In addition to your own trade associations you will want to
participate in local, state and national forums that focus attention on
-86
public affairs problems. The NAM Congress and the Annual Meeting of the
U. S. Chamber merit your time and effort. And twice each year ECO conducts
Roundtables for Public Affairs officers in Washington. The program at
these Roundtables will not suffer by comparison in any quarter, but this
is only part of their value. Equally important is the opportunity to
rub shoulders with your counterparts in other industries. For your problems
are their problems - and theirs yours. Until we recognize this--and give it
more than lip service - we will not have the unity of purpose we need to
fulfill our public affairs mission.
-87
SOURCES OF PUBLIC AFFAIRS MATERIAL
outlined by Richard A. Armstrong,
Executive Director, Effective Citizens Organization
in talk before The American Iron and Steel Institute,
New York City
January 14, 1965
American Economic Foundation --
51 East 42nd Street, New York, N. Y, 10017
Fred G. Clark, General Chairman
American Enterprise Institute --
1200 17th Street, N.W., Washington, D. C.
William J. Baroody, President
Brookings Institution --
1775 Massachusetts Avenue, N.W., Washington, D.C.
Walter Held, Member, Senior Staff
Democratic National Committee--
1730 K Street, N.W., Washington, D. C. 20009
Sam Brightman, Deputy Chairman for Public Affairs
Effective Citizens Organization--
1601 Eighteenth St., N. W., Washington, D. 0,20009
Richard A. Armstrong, Executive Director
First National City Bank-
399 Park Avenue, New York, N. Y. 10022
E. Sherman Adams, Vice President
Ford Motor Company--
The American Road, Dearborn, Michigan
Thomas R. Reid, Director, Civic & Governmental Affairs
National Assn. of Manufacturers-
918 16th St., N.W., Washington, D. C. 20006
Robert D. Buehler, Asst. Dir. of Public Affairs
Public Affairs Counsellors--
350 Lexington Avenue, N. Y., N. Y.
Joseph J. Eley, President
Republic Steel Corporation--
Republic Building, Cleveland 1, Ohio
L. C. Michelon, Director of Public Affairs
Republican National Committee--
1625 I Street, N. W., Washington, D. C.
Robert Smalley, Director of Public Relations
University of Chicago--
Chicago, Illinois
Walter Fackler, Dean of the Grad. School of Business
U. S. Chamber of Commerce
1615 H Street, N. W., Washington, D. C.
Walter B. Petravage, Mgr., Publ ic Affairs Dept.
American Mining Congress-
1200 18th Street, N. W., Washington, D. C.
Julian D. Conover, Executive Vice President
Machinery & Allied Products
Institute --
1200 18th St., N. W., Washington, D. C.
Charles W. Stewart, President
-88
*
*
COMMUNICATION-THE HEART OF A PUBLIC AFFAIRS PROGRAM
by
A. Hugh Forster, Director of Public Affairs, Armstrong Cork Company;
Chairman, Public Affairs Committee, United States Chamber of Commerce.
Having been briefed on everything that happened at your
session yesterday, it occurs to me that to come here this morning to
speak on "Communications -- the Heart of a Public Affairs Program, If is
almost belaboring the obvious.
Yesterday you heard from Walter Petravage that economic
education -- political education and information -- and legislative
information and action -- are the essential elements of a Public Affairs
Program. This is Communications. You heard also from Bill Whyte on
legislative matters of importance to business generally and to the Steel
Industry in particular. The gentleman from Caterpiller Tractor, Mr. Roger
Kelley, emphasized that Caterpiller believes communications to be an integral
part of public affairs.
And the speakers this morning have emphasized this again and
again. So it would seem to me to be beating a dead horse to death to talk
in great detail this morning about the communications aspects of Public
Affairs.
I think, instead, we will just mention the basic areas of
communications that are involved -- with a few comments on each -- and then
do some introspective thinking about our own ideas and concepts of
communication.
The position I find myself in today reminds me of a true
story concerning my son. One thing Bill didn't tell you about me is that
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I am the proud father of six children. This, I assure you, gives me a
communications workshop at home every day. My wife and I had two
daughters before we finally got a son. I'm very happy to report that in
his younger days, at least, this son looked up to me, patterned his
behavior after me and sought my advice on important matters.
One week-end, my wife and I were preparing to go away for
a football week-end, and we engaged a beautiful young baby-sitter named
Jane - a high school girl -- to stay with the children. As we started
to leave Friday evening, Jeff was lying on the floor in the living room
watching television.
My wife said to him: "Now, Jeff, you may stay up to see
two more television shows and then you must go to bed. When you go to bed,
you may sleep either in your own bed or in bed with Jane. What do you want
to do?" He looked up at me and said, "Daddy, what would you do?"
I asked myself that same question -- what would I do --
in considering what to say here since so much has already been said about
communications in Public Affairs. My answer was to treat the subject in
two ways. First, briefly examine the basic areas of communication that
are involved in Public Affairs; and second, evaluate our own ideas and
performance in this very critical area.
The basic areas, it seems to me, are these:
1. First, policy. A number of speakers have
emphasized the importance of determining your own policy
with respect to Public Affairs matters -- specifically and
definitely - and then communicating this to the organization
80 everyone knows you mean it and are abiding by it.
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2. The next area, beyond policy, is training --
training in politics --- in political action. The film
you've just seen is a very excellent start for a Training
Program. But there is another training area - that has
been emphasized again and again, certainly by Lefty Lumb
this morning -- economic education, both in the formal
sense and in the informal, continuing sense. By the latter
I mean using your own business as an example of the
economic system in action and interpreting daily what
you're doing, why you're doing it and how it relates to the
economic principles we want people to understand.
3. Another very important area of communications is the
one dealing with issues. This includes both internal
communication with members of your own organization
concerning the pros and cons of issues, as well as official
communication from your organization to elected representatives
and appointed administrative officials concerning issues.
This is a gigantic field. Many people devote full-time
to it as they must because our society is getting progressively
more complex and governmental matters become correspondingly
more complex -- like the one Bill Whyte has just mentioned --
reapportionment. Implicit in the whole idea of communicating
effectively on issues is a point that has been mentioned,
but I want to emphasize it again. It is that. a company
must be willing to take a stand on issues. If we are
unwilling to do so, we can't be very effective in convincing
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others of what is the proper position on each issue.
But it seems to me that the most important point in
communications with respect to public matters is the one of plain numbers.
We've communicated a lot with a few people. We have to communicate with
many thousands more. We have to learn how to convince a majority of
people that our form of society, our form of economic organization -- a
free market -- is the right philosophy that this Nation was not only
founded on but has grown great on.
Today we do not have a majority of people who believe this --
or understand this. This is merely another way of saying that the degree
of economic illiteracy we have in the United States is tremendous. We've
got to do something about it. This is the number one communications job
in the whole Public Affairs area.
With that in mind, I'd like to ask nine basic, searching
questions about our performance in this area of Public Affairs and
communications. How we answer these questions will have something to do
with whether we're going to be able to get the majority of people to
believe in and live by a philosophy of limited government and a free market.
The first question we need to ask ourselves is:
What do we individually mean by a Public Affairs Program? What is our
concept of it? Do we mean that it's just political education -- just
economic education -- or just a consideration of issues? Is the program
just for management people and not for rank and file members of the
organization? I submit that the proper answer perhaps for this question
is that a Public Affairs Program is all of these things. It's political
education, it's economic education -- both formal and the informal
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continuing type -- it's consideration of issues, and it's for everybody --
management and everybody else in the organization. Because if it
isn't for everybody in the organization, then we're not going to
get on with that big job of convincing a majority of people what is the
proper economic philosophy.
The second question I'd like to ask is this: What's our
purpose? What are we really trying to do when we spend money and time on
a Public Affairs Program? Are we trying to get people to vote Republican
or vote Democrat? Are we just keeping in style with the latest management
fad? Other companies have a Public Affairs Program, SO maybe we'd better
have one, too? Or don't we really know? As I said a moment ago, policy
is all-important here. I believe we need to think this thing through
clearly for ourselves and determine specifically what we are trying to
achieve in the Program. I cannot emphasize too much the importance of
having policy in sharp focus. My own answer to the question is that our
purpose is to preserve a society founded upon limited government and
individual freedom with a free market. This is really what we're trying to
do. I submit that it's later than we think. Congressman Ford yesterday, I
understand, made this basic point.
We could draw an analogy between our Nation and a motor car.
Some people say today, "What are we worried about? Look how the economy is
prospering. Let's not rock the boat. Everything is going fine. Let's
not worry. We can afford all the social excesses that we can legislate."
But like an automobile, our economy has been running at top
speed and we've taken the carburetor out or at least the top off the
carburetor. The car is still moving because we have momentum. But I believe
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very deeply that there will come a time when our excesses will catch up
with us. We'll lose our momentum and discover that the carburetor is gone.
I don't believe our Nation is quite as healthy economically as it would
appear to be on the surface. It has momentum but does it have the stuff
from which the momentum was generated? I wonder. Our big job is to be
sure that the carburetor is kept in the car and never removed.
The third question I'd like to ask is this: Are our actions
in this field in harmony with our words? An old axiom of communications is
that "your actions speak so loud, I can't hear what you're saying." So our
actions must be in harmony with our words. If we preach, for example, the
importance of the free market and free enterprise and how wrong it is for
the government to subsidize activites, and then turn around and accept a
subsidy for our own particular purpose -- we are then violating, by our
actions, the principles we say we believe in.
It's highly important for businessmen, particularly, to have
their actions in agreement with their words and their philosophy. We've
got to live the free enterprise philosophy that we say we believe in.
The fourth question I'd like to ask is this: Do we have a
double standard in this particular area? Do we as executives in a business
say that everyone must be active in the Public Affairs field? We say, "Go
out and get busy. Work in your Precinct. Work for the party of your choice."
But do we do it? Is the standard such that we can say others should do it
but we don't have to ourselves? We shouldn't have a double standard.
The next question, the fifth one I'd like to ask is: Do we
imitate or innovate? We hear that someone else is doing a particular thing.
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Do we then just copy it without even analyzing whether it fits our
particular business, our particular situation, our particular community?
I think we do tend to imitate too much. We need to do more innovating.
We need to apply a lot more imagination and ingenuity to the whole job of
communicating these abstract ideas to people than we've put on it so far.
Innovation in this field is desperately needed.
The sixth question is this: Do we try to measure objectively
the effectiveness of our communications on Public Affairs? Or do we just
accept its effectiveness on faith? The words sound good to us, so they
must be good. But it's sometimes a very sobering experience when you do
measure the effectiveness of a program in this area. In the spring of
last year, as Chuck Huston mentioned, a critical matter was up for
consideration in Pennsylvania -- Unemployment Compensation reform. On this
issue, we wrote many stories for our Plant newspapers in Pennsylvania.
Each of those papers also has a Plant Manager's column in which he
editorializes. The Plant Managers wrote column after column about the
importance of these reforms passing the Pennsylvania Legislature and
urging employees to write their elected representatives. You would think
that with all this eloquent prose we put together -- and I assure you it
was beautiful and sounded wonderful to us -- a lot of letters should have
been written by our people. We made a check with the Senator and the four
Representatives from the Lancaster area, and they received six letters
from our non-managerial personnel. Now that's not too bad, but it
certainly isn't good. We need to do this sort of objective evaluation of
our communications more frequently. It might spur us to put more imagination
and ingenuity into doing a progressively better job.
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The seventh question I'd like to ask is this one: Do we
sometimes mistake the media of communication for the message? Do we get so
involved with writing letters, publishing a Plant paper or an employee
magazine, or holding meetings -- that we think these media in themselves
are the answer? Actually, it is much more important to put our time and
thought on the nature of the message that these media are going to carry
because we need to find ways to touch people -- to make issues important
to people. Unless we do this, we're not going to be successful.
We have a statement of policy at our company with respect to
internal communications that would seem to be applicable also to Public
Affairs. The objective of internal communications in our organization is
to get employees to understand, accept and act on the premise that helping
the business be successful is in their own economic best interests. We
try to interpret this theme again and again in all of our actions and in all
of the words we put in our publications.
The eighth question goes a bit beyond the communications
aspect of Public Affairs, but it's a highly important in the ideological
battle in which we are engaged. It is this one: Do we businessmen
particularly have an "I'll-take-my-marbles-and-go-home" attitude with
respect to politics?"
Let me explain what I mean by that. As we look at the total
scene today, we find that there are fully as many differences of opinion
in the Liberal camp as there are in the Conservative camp -- if I may use
those two terms. And yet, when the chips are down, the Liberal camp --
extreme Liberals and Neo-liberals -- all hang together as a unit. They don't
say, "Well, you're not Liberal enough for me so I won't go along with you."
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They go along together and they win battles. Unfortunately, we have the
"I'll take my marbles and go home" approach in the Conservative camp.
If a man is not quite conservative enough for us, we tend to say, "He
won't get my support." But he may be a heck of lot more conservative than
his opponent. We all saw many, many examples of this in last fall's
Congressional elections across the Nation. Businessmen must learn that
politics is the art of compromise; that we must always make a choice;
that we cannot say -- "This guy isn't good enough for me, so I'm going
to take my marbles and go home." We must stop fractionating ourselves
and learn to play politics the way it's played to get the better candidate
every time there is a choice to be made.
The ninth question -- the last question -- I want to ask
is this one. And this question, I think, we must ask ourselves individually.
How knowledgeable and articulate are we -- each one of us -- with respect
to our economic system and our ideological philosophy? Could each of us,
for example, go to the mat with a wily college professor in defense of our
system if he were a fast-talking Liberal? Could you defend our system?
Are you articulate enough to do it? It seems to me that the starting place
for success in public affairs begins right here. Until each and every one
of us has deep-down, bed-rock conviction about the factors that made this
Nation great -- a philosophical conviction that we've thought out ourselves
by reading and discussion and one that we really believe in -- until we
have this, we can't get to first base in communicating the principles to
others or in persuading them to our point of view.
This is the first order of personal training.
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In conclusion, may I tell you a true story, an experience
I had in mid-October of last year. It illustrates the main problem we
have which is numbers -- getting more people to believe as we do. I
had occasion to go to a college campus in mid-October of last year to
make a talk with respect to college recruiting. Enroute to the college,
which shall remain nameless, it happened that I could go through one
of the so-called marginal Congressional Districts where the incumbent
was a man put in office by the AFL-CIO. A strong candidate was running
against him -- a conservative -- a sound businessman with experience in
politics.
I was met by a friend at the airport some distance from
the college. Enroute we stopped for dinner at a hotel in the largest
town in the district. We thought that after dinner we might stop in to
visit the campaign manager of this conservative Congressional candidate
to see how the campaign was progressing. We found the hotel mobbed with
people. We could hardly get a seat in the restaurant and had a difficult
time getting service. There were about 350 people attending a COPE
meeting on absentee balloting in the hotel that evening. COPE had numbers
of people.
After dinner -- when we finally got fed -- we went one
block down the street to the campaign headquarters of the opponent of COPE.
We walked in -- and it was the loneliest place you've ever seen. One
person was there -- the campaign manager, a fine young attorney. He was
seated in the midst of debris -- discarded releases, stacks of literature,
empty coffee cups, old battered typewriters -- but he was all alone.
Not a single volunteer was with him.
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There's no further point to that story, gentlemen, except
that just for absentee ballots, COPE had over 300 people out to work.
Where were the business managers that night to work for COPE's
opposition? They weren't there. They were home, I suppose, or otherwise
disposed. If we are ever going to establish a countervailing force
to COPE, we must influence numbers of people. We can't do this job with
one lonely campaign manager in an office.
Finally, I'd like to tell a story that I heard in this room
sixteen years ago from a man in the Steel Industry, Clarence Randall.
It's about Joshua and the Battle of Jericho. As Mr. Randall told it,
he said that we all know the story of Joshua --- how he had legions to
fight the Battle of Jericho but they couldn't win because the city was
walled. The Lord told Joshua that if his legions would blow their trumpets,
the walls would come tumbling down.
In those days, they didn't have any G.I. issue trumpets.
Each man got his own trumpet. Some were long, and some were short. Some
were tinny and some were brassy, and some were squeaky. But they all got them.
They got the trumpet they could play -- that they knew how to play best.
But they all blew them at the same time -- and the walls came tumbling
down.
The problem we're all faced with in Public Affairs -- as
well defined at this excellent conference -- is to get numbers of people
to support a sound economic philosophy. We can do it provided we all work
in this field -- not just some of us but everybody. We all must get into
the act and blow the trumpet that we know how to blow best. And we've got to
do it all together. Then, perhaps, the wall of misunderstanding may come
tumbling down.
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oot-
- - -
DOES PUBLIC AFFAIRS PAY DIVIDENDS?
by
Thomas R. Reid, Director, Civic and Governmental Affairs Office
Ford Motor Company
I am very pleased to have this opportunity to be with you. And for
three particularly go d reasons.
First, my Company is one of your industry's best customers. The
automobile is about three-fourths iron and steel.
Second, Ford Motor Company is one of you in a very real sense,
We produce some two million ingot tons of steel each year.
Third, you as d I share a common interest in achieving for our
companies a harmonious and profitable relationship with society.
I am aware that. although this is part of a meeting devoted to
fostering more proficiency in civic and governmental affairs, it is not a
gathering of novices in the field. You are a sophisticated audience.
Probably not many of you heard Logan Johnston address the New
York Sales Executives Club two months ago, but in his excellent speech that
day Logan quickly won over the crowd with a neat observation. I'd like to
borrow it now.
No mean slouch as a salesman himself, Logan noted that he was
surrounded by experts. "I feel, 11 he said, "like a man shopping at a lingerie
counter who accidentally runs into his wife. Whatever he says, it better be
quick and it better make sense. 11
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I'll try not to talk too long and I hope to talk sense.
In brief, my intention is to demonstrate to you that there is a clear-
cut case for developing and maintaining a good civic affairs activity on the basis
of dollars and cents return alone. I intend to show that such an activity is not
only an opportunity to enhance profitability -- - - it approaches being a duty of
management.
If we can show that a good public affairs program does pay dividends,
as I believe, then our stockholders and executive officers have a right to expect
that the program be launched, pushed and developed to the utmost, just as we
do marketing programs, public relations, or advertising.
In promoting the idea of business in public affairs, the usual appeal
is to the effect that business must serve as a good citizen, working for the
common weal and guarding the community. In short, we should do it because
the public needs us.
I would be the last to deny business' civic responsibilities, but let's
face it - the major goal of any business is to earn profits by providing goods
and services consumers want as efficiently as it can. And, in so doing, we
also provide jobs for employees, markets for suppliers and tax revenues for the
betterment of the community.
You've probably noticed that not many communities fight to keep
business and industry out. And the communities which have organized campaigns
to attract new industry are legion.
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Why the press to round up new plants and businesses? They are
wanted because of their economic benefits -- the new jobs and payrolls and
purchases they bring the community -- not because they may breathe new life
into city hall or inspire new efficiency in the county building.
As Mr. Henry Ford II once observed, "In the long effort to gain for
business a fair measure of popular acceptance, and to avoid punitive repression
by governments, many business firms have tended to become somewhat
hypocritical. They invariably emphasize in their public postures the non-
economic side of the Company. They foster the impression that the corporation
is in business mainly to support worthwhile civic causes, lead fund-raising
campaigns and march in the Fourth of July parade. 11 End quote.
Sure, we have civic duties. Certainly, we should be judged on how
well we perform them. But the real test of our social usefulness is how well
we succeed in business, so that we can continue to serve customers, pay
dividends, meet payrolls and buy goods and services.
The point, as I see it, is that our public affairs functions can have a
direct, as well as indirect, bearing on profitability. Our work in this area is a
legitimate exercise of citizenship. It is an answer to a dual responsibility - - to
the society in which business operates and to the owners and operators of that
business.
A sound, properly-functioning public affairs program will be to the
public good. But it also will be to the corporation's good and I would suggest
that we put a financial yardstick to our public affairs activity occasionally.
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This means we must determine results in ways other than counting
the number of men and women who've taken our courses in practical politics,
or totaling the number of brochures distributed, or measuring the thickness of
our public affairs scrapbooks.
Education and publicity about the necessity and advantages of political
action are fine. But so are results that show on the Company books.
To test my thesis that we can and should measure the effect of our
civic work on our financial performance, I decided to conduct a small-scale
research effort. I made a limited, informal poll of some of the country's better
known businesses, including some in this room.
The early returns indicate that management can reasonably expect
to see some financial results from a good public affairs program. Indeed, many
of the programs can show they more than pay their own way. However, there
also is an indication that either through timidity or ignorance a program may be
so limited in scope and resources as to offer nothing but the most theoretical
and imponderable benefits.
In our survey, we used the names of about 70 men who are listed in
the Effective Citizens Organization directory as their company's public affairs
officer. We asked each man for examples of actual monetary savings in his own
experience in the field. We promised to report the findings without company
identification exactly as reported to us.
I must admit that the answers received so far, from about a third of
the group, have not been wholly encouraging. About half of the letter writers
apologized for not being able to offer us examples.
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But when I dug into the remaining half, which did offer examples, it
was an exhilarating experience
Those who provided examples cited 44 instances in which their
programs had contributed materially and concretely to company financial results.
The total of their estimates of savings was $21, 146, 000. And it was emphasized
repeatedly that these were conservative estimates.
Let's get down to cases,
For convenience, I have broken our findings down into three
categories -- one for those cases in which a company can clearly determine the
savings achieved; another for cases of actual savings, but of indeterminate
amounts; the third category for those cases in which the dividends cannot be
expressed in cash values, but in terms of intangible benefits such as preserving
management's right to manage or otherwise protecting its freedom or functions.
First, the clear instances of dollar savings.
The "biggest dividend" mentioned by any public affairs function
stemmed from the effective action of the Washington office of a large, international
industrial company that, in my view, has an excellent public affairs program.
Several years ago legislation was proposed to revise the taxing of foreign source
income and end tax avoidances by persons or firms overseas through tax dodges
that were either obvious or devious,
The Washington staff of the company I have in mind organized and
spearheaded an effort to show Congress that the proposed legislation should be
revised so that it actually covered the abuses, while at the same time protecting
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legitimate foreign investment. In the end, the proposal that would have meant
an additional $10 million annual tax burden to the company was substantially
revised. Under terms of the revision the company computed that it had an
annualized benefit of $4 million.
At the other end of the savings spectrum, but significant in another
regard, was the example cited by a company that operates in Pennsylvania. As
you know, Pennsylvania recently conducted a major overhaul of its Unemployment
Compensation Act and now has an excellent system. But it probably wouldn't if
this company hadn't acted forcefully and quickly.
The bill passed the crucial test in the legislature by just one vote.
And a plant manager of this company can prove that he convinced at least one
hostile legislator to change his original conviction and support the revision.
Another of the company's plant managers, located in a key area, having had
the same briefing on the legislation, persuaded the union in his plant that its
propaganda against the bill was wrong. The local came out in support of the bill.
The savings for this company were not large -- $10,000 for the first
year - but the change affects most business in the state and has had immense
impact. Many industrial development people feel that it has removed a serious
bar to industrial growth and expansion in Pennsylvania.
Virtually all states have revenue problems, a situation that makes
for some outlandish tax legislation. It also demands of business intense
concentration on revenue bills.
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In one midwestern state an intelligent and aggressive legislative
analyst for an industrial concern is credited with singlehandedly stopping some
extremely harmful taxation that would have cost his employer alone some
$600, 000 annually
Fearing the outcry from the electorate if a direct tax increase was
sought, the administration had proposed a tax on business that would be felt only
indirectly by the voter Suggested was a three percent tax on utility services,
fuels, machinery and construction materials However, when the analyst
showed officials the effect on his company, compared with taxation in other
states, the matter was dropped. The company received a direct benefit and
the public an indirect one although it probably never really was aware of the
issue
One state needed money for its hunting and fishing programs so it
proposed to tax all marinas But the bill was a "sleeper, " It had almost passed
before it was discovered that a marina was defined as any business enterprise
with dock and piers on any water in the state and, further, that the tax would be
three percent of the value of the adjacent inland property.
A company that would have faced an annual $1 million levy pointed
out the effect of the bill. but was met only with the suggestion that the rate should be
modified. Although in the face of the opposition, the sponsors finally came
around to the view that marinas should be defined properly, the bill ultimately
failed.
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In another state a public affairs representative was called on to
serve as chairman of a group charged with drafting plans for a major state
tax overhaul. This man became the major spokesman in the campaign to win
public acceptance of the thesis that a sales tax was preferable to other levies
aimed specifically at business. The concept won public, legislative and
administration approval and the company, which had provided the wheelhorse
worker in the campaign, can note an annual saving of $1, 960, 000.
Unemployment Compensation taxes are a major drain on business
coffers, and the U. C. programs attract considerable attention from legislators
conscious of the labor vote. A number of the dividends reported in our survey
dealt with the handling of proposals for U. C. legislation. One company tallied
a $170, 000 annual saving for its part in defeating an unnecessary rise in U. C.
tax rates; another a $750, 000 dividend for the success of its employees in
protesting to their legislators against an administrative ruling that would have
raided the U. C. fund to pay benefits to persons who were on paid vacation;
another up to half-a-million dollars yearly for its part in defeating an unjustified
extension of U. C. benefit periods.
Two years ago a major appliance manufacturer discovered that his
merchandise being stored in public warehouses in one state was assessed for
property taxes while the same situation did not apply in bordering competitive
states where the company did business. Other industries faced similar
situations. As a result, the warehousing industry faced a massive loss of
business across the state lines.
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A major legislative effort, with the appliance maker in the vanguard,
was launched and the inequity was erased with repeal of the statute. Not only
did the company save $350,000 and others proportionate amounts, but the state's
warehousing industry was spared a mortal blow.
Public affairs dividends are earned in many areas. They may come
from activity on the local level. One company estimates it saved itself $25,000
annually in preventing an unwarranted annexation of its property to a municipality,
another calculates a similar saving of $165,000. A third company believes its
opposition was instrumental in forcing a school district to use an accumulated
surplus of $180, 000 before coming to the taxpayers for additional money.
The dividends also may stem from careful attention to major state
problems. One company analyzed soaring public aid costs in its state, cooperated
with the state chamber of commerce in working for progressive legislative and
administrative changes and today can look to probable savings of some $80,000
in its annual tax bill alone. Another corporation was a leading force in an
educational campaign to see that several important state constitutional revisions
did not lose by default. Today it computes that the effort is paying off at the rate
of at least $25,000 annually.
I should point out that, while much of what I've been discussing is in
the area of legislation or constitutional revision, it isn't merely expertness in
the legislative field, or ability to sell a case to the public, that matters in public
affairs. Fully as important is the accomplishment that stems from ability to
work with departments and bureaus of government. And this ability comes from
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having men whose job it is to work with government regularly, not as part of
some hastily organized emergency brigade of well-meaning but inexperienced
callers from company headquarters.
As examples of how important it can be to your companies to achieve
harmonious relationships with governmental agencies, I should like to cite
several examples from Ford Motor Company experience. In Ohio, not too long
ago, we discovered that we (like virtually all other industrial concerns in the
state) were in possible violation of an obscure regulation requiring that welds
in pressure piping must be inspected by the state at $25 per weld. While
inspection was theoretically a sound requirement, absolute compliance would
have cost Ford $260, 000 annually -- we made more than 10, 000 such welds each
year.
Our Regional Civic and Governmental Affairs manager in Ohio, in
extensive discussions with state officials, was able to bring about a revision to
satisfy the state's requirements and avoid the thousand-dollar-a-day cost of the
original regulations. The answer was provision for certified company
inspectors, licensed by the state to perform the inspections.
In another instance -- same state, same company, same man -- we
avoided an emotional issue with a union and worked out an agreement that saved
the Company an estimated $71, 000 annually. The plant had agreed with the union
to grant workers permission to stop for lunch without punching out on the time
clock. Years later a state inspector objected, because of wage-hour regulations,
and was prepared to insist on his position. This would have revived the issue
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with the union. Again, meetings were set up by our regional manager with state
representatives and eventually an accommodation was reached which satisfied
the state, the union and the company.
Do public affairs programs pay off?
One man who responded to our poll ended his report with a group of
four miscellaneous items that by themselves had meant a saving to his company
of one million dollars yearly. That was, he observed, ten times the cost of
operating his department.
Of course there cannot always be a neat, monetary measure of your
success, even when you may know that you have achieved a definite savings,
Let's look at Category Two, the responses in which our correspondents
acknowledge dividends but give examples for which a definite dollar value cannot
be calculated.
One instance involved a defense supplier being forced to pay taxes
on government equipment loaned to it for carrying out the contract. An engineer
who had graduated from one of the Company's political training courses testified
before legislative committees and won the company a much-needed exclusion
from the levy.
In another state a large company interested itself in the state budget,
provided research manpower to a budding "economy bloc" in the legislature and
after two sessions saw a rising trend in state expenditures definitely slowed.
One of the company staff members who helped in that drive is now a legislator
himself.
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A retailer, finding that over half the customers and employees of its
downtown store came there by public transit, enlisted the aid of employees in
backing an attempt to update the charter of the municipal bus transportation
system. The campaign succeeded and the transit system, and the store, won
an important victory.
A company which operated a sizeable plant along a freeway discovered
late in the game that plans were well along to condemn for a traffic turnaround
what in essence was its front yard. Not only would the property be disfigured,
but essential plant traffic patterns would be eliminated. To protests by company
legal counsel, every city agency coldly commented that it was too late to revise
plans.
The problem then was turned over to the company's public affairs
office. Having had previous friendly dealing with the city administration, the
staff started at the top, in the mayor's office, and worked down through the
other agencies. In this series of meetings the company presented an alternative
plan under which it agreed to donate to the city a smaller, but adequate portion
of land, which would preserve the basic integrity of the industrial site. In turn,
the company asked for a piece of unused city-owned frontage around the corner.
The company's persistence and positive approach paid off and the deal was
consummated -- to each party's advantage.
In another case involving a governmental reversal of position, my
own company took an important role in successfully representing to a midwestern
legislature that state requirements for industrial ventilating equipment needed
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major revision and updating in the light of modern engineering standards for
such equipment. Cooperating with a leading engineering firm, we made the
case that requirements of the old law were archaic and impractical and that
new legislation would be desirable for the state as well as helpful to industry.
Today that state and its industry have such legislation.
At this point I'd like to tell you how a $2, 000 investment paid off.
A company newly involved in civic affairs put on a skillfully devised political
participation program for its employees So well was the program conceived
and carried out that the company received nationwide recognition for the
effectiveness of the program. The director of the effort, commenting that
he's still amazed at the results, sums up.
"
it is quite apparent that we have received hundreds of thousands
of dollars worth of favorable publicity for what I consider to be a minimum
investment. 11
A few final examples will wrap up my report on this survey. These
incidents I am about to describe prove the point that public affairs dividends
come not only in varying amounts but in different guises, They may not only
help your balance sheet, but they may even have the effect of keeping your plants
in operation.
That is the point made by one industrial firm. It found that a metal,
vital to its processes, was locked up in government stockpiles. If it weren't
made available quickly, production would halt. The company, which had
consistently employed its resources in civic and governmental activities,
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convinced Congress of the need for quick legislative action and got its material
in time
Much of what is done in public affairs is of this nature -- keeping
the company going, protecting it from unfair or inequitable law or ruling,
guarding its rights and its freedom
One company sees its fight against several hot legislative issues of
the moment as representing its "very survival in these areas. " Another reports
that "The most important work we accomplish is not in defeating widely publicized
adverse J
ation but in heading it off before it actually takes form, By keeping
our legislators and congressmen informed of our industrial problems and
maintaining favorable relationships with them, we often are able to guide them
away from action which would be damaging to our company and industry as a
whole, 11
This man might have been referring to such efforts as protecting the
patent rights of a company doing government work, or to the rejection of proposals
that a pharmaceutical manufacturer should be required to employ a full-time
pharmacist at every one of his retail or wholesale distribution points.
He might have been commenting on one company's trials in having
to develop a legislative consensus that it was both unwise and unjust to give an
automatic preference to local industries bidding for state business. Until this
company acted, it appeared the legislature would enact a law which might have
required the taxpayers to pay up to 10 percent more for the privilege of buying
a locally made product.
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The intricate machinery of our government and the delicate
mechanisms of our economy need careful attention. There are no 24-month
warranties in either, and unless business regularly does its part in tending to
the maintenance of free institutions the process may suffer a major breakdown.
Recently I read this plea for public affairs action by George
Champion, Chairman of the Chase National Bank,
"Almost to a man
legislators tell us that one of the most
distressing aspects of public service is the apathy toward pending legislation
that they find among business leaders. Those in the positions of leadership in
the community, they say, usually wait until a particular bill has gone all the
way through the legislative mill to final enactment, then come around to
complain about what's wrong with it."
Was Mr. Champion talking about men such as this group? I think not.
And yet, I must confess to a lingering doubt that there is full
awareness in your industry, as well as in the general business community, of the
full benefits that can flow from public affairs activity.
Although our survey has not turned up as yet any examples of public
affairs dividends from among the steel companies, I know that they must be there
and fully expect that we will be receiving specific case histories within your
industry. Your public-spiritedness and sense of civic responsibility are well
known and your management certainly should know how valuable your public affairs
programs are, or can be. Certainly this should be the case after you have
finished with this excellent conference.
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By tonight this audience will have been listening for two days to an
outstanding group of experts on corporate public affairs programs. There
would be no point in my exhorting you to increase your accomplishments in
public affairs. The names of several steel companies are synonymous with
civic responsibility.
But I should like to express the hope that this assembly of steel
industry leaders will spread the gospel that public affairs programs are
profitable. I would like to see increased awareness among our colleagues
that public affairs does pay dividends
The more than $21 million in cost savings reported in our sampling
represents only a small fraction of the savings the business community realized,
as a result of the public affairs efforts of the companies directly involved. The
dollar benefits from those actions spread in widening circles throughout the
economy
Public affairs programs do pay dividends. And the checks are not
all made out to the public Some of them can be made out to your own company.
1-13-65
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FUND RAISING
by
Herbert Johnson, Vice President, General Services
Jones & Laughlin Steel Corporation
I appreciate the privilege of participating in this first Public
Affairs Forum of American Iron and Steel Institute. We have heard
many useful discussions of policies and procedures--the whys and
wherefores of corporate participation in public affairs. Now we
must consider one of the more mundane aspects of the problem--
fund raising.
To call a spade a spade, we are discussing political fund raising.
I will also state at the outset that my personal opinions may very well
be evident from time to time. This subject has been described as
"sensitive" and "delicate." Both descriptions are correct, because
in the area of political fund raising we are attempting to convince
employees to contribute their own money for a cause which is not tax
deductible and to which the company itself is prohibited from
contributing. I hope that by the time I have concluded, you will
not have concluded that my treatment of this subject has been
insensitive and indelicate.
Why should corporations be interested in political fund raising?
One reason is that the cost of political campaigns has assumed
astronomical proportions with the advent of television. The commission
on campaign costs has estimated that the general election campaign
costs in 1960 were $165 - $175 million. Marshall McNeil, the Scripps-
Howard columnist, has estimated that the 1964 presidential, senatorial
and congressional campaigns cost at least $100 million. A second
reason is that the present base of contributions is much too small.
In 1960, 60% of the money contributed by individuals to the National
Committees of both parties came from about 4,000 people. I am sure
most of you would agree that management has a duty to instill in its
associates the conviction of individual importance of individual
support for causes and candidates. Members of management can do this
by example--by leading as they do in all matters for which leadership
is required.
A large part of the thrust of this Conference has been devoted to the
premise that we need more involvement of individuals in political affairs.
Encouragement of employee giving will inevitably result in increased
employee interest in political affairs. The old maxim that where the purse
is, the heart will be also is perhaps particularly applicable when we
talk about contributions of after-tax dollars.
Not to be overlooked is the self-interest of the company which must live
in a political climate with both political parties, but is prohibited from
making financial contributions.
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The extent of corporate involvement in political fund raising covers
the spectrum from a complete "hands off" policy in many companies, to
cases where company officers (in their own name, but not in their
official company position) make formal solicitations on a partisan
basis. Between these poles are the companies who support community
activities to encourage political contributions; those who use radio and
space advertising for public service messages urging political contri-
butions; those who use company magazines to spread the message; some
who have direct mail appeals on a bi-partisan basis; companies who send
out literature and pledge cards for both parties and some who make
direct appeals personally or by mail, or both, and follow up by asking
that contributions be channeled through the corporation.
The type of fund raising effort which a company selects will be dictated
by its objectives and by the expected participation in the campaign.
It is probable that a company may adopt different techniques in
suggesting political contributions for wage earners and for management
employees.
There are a number of splendid programs designed to encourage rank and
file employees to make political contributions. Generally speaking,
these campaigns, since they are aimed at large numbers of wage-earner
employees, possibly in scattered locations, are conducted by mail using
pledge cards which are returned by mail to party headquarters. These
campaigns are, of course, completely bi-partisan or non-partisan and the
employee's choice remains confidential. The recommended contribution
is frequently in the range of $1 up to 2 or 3 hours pay. Among companies
which have successful campaigns of this type are:
Aeroject General Corporation
Marquardt Corporation
Ford Motor Company
Pacific Gas and Electric
General Electric
Travelers Insurance Company
Hughes Aircraft Company
Western Electric Company
Koppers Company
Information about and assistance in setting up such programs is available
from such organizations as the Chamber of Commerce of the United States,
Washington, D. C., and Effective Citizens Organization, Washington, D. C.
These programs are a useful step in the process of broadening support
of political parties and enlisting the interst of more citizens in the
political problems of our country.
Over and beyond the type of program we have talked about is another aspect
of political fund raising. Let us examine for the moment two problems
faced by all companies. Frequently, financial committees of both parties
suggest informal "quotas" for employees of our companies both in headquarters
cities and in other cities where the company has important operations.
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As a practical matter, the broad-based programs previously discussed
do not solve this problem because the quotas are generally intended to
be applicable to management employees. A second problem is the realistic
problem of the company's relations with elected officials of government.
We are all aware of the frequent necessity of requesting information,
understanding and help from elected officials. Elected officials have
serious problems of raising funds to finance their campaigns in each
election. Human nature being what it is, they will no doubt have a more
ready ear for those who have helped them solve their problems. Since
the corporation cannot make a financial contribution on its own behalf,
the problem is one of "identifying" with contributions made by its
employees. Accomplishing this objective inevitably necessitates more disclosure
with respect to the employee's contribution than is consistent with the broad-
based, confidential choice type campaign used with rank and file employees.
Attempting to resolve this problem often involves both aggravation and
frustration.
STORY
Setting up a program of solicitation among management employees to accomplish
the objectives of meeting quotas and getting identification for the company
with the employee contribution might be done somewhat as follows:
First, a goal may be established which is adequate to meet management's
evaluation of what is needed. The needs must take into account realistic
obligations to all political parties and candidates. With the goal
established, a formula can be adopted which can be expected to attain the
goal. A formula may be established as a percentage of salary ranging from
a figure something like one-quarter of one percent at the $10,000 salary
level to a suggested contribution of one percent or more at the top levels.
Establishing a formula serves two purposes--in the first place, it is
essential in order to evaluate the prospects of attaining the goal. In the
second place, one of the basic questions in everyone's mind when solicited
for a contribution is "How much do you expect?"
When the goal and formula have been established, the solicitation itself
can begin. A letter to each management employee at his home from the
Chairman of the Board, the President or other top executive officer is
desirable. This letter should spell out the reasons for the solicitation
in much the same way as is done in the broad-based campaigns. The letter
should explain the reasons for recommending a formula gift. A contribution
may be suggested to specified political organizations or candidates of
either party at the employee's option with emphasis on the bi-partisan nature
of the appeal. Up to this point, there is not much difference between the
broad-based campaign and the campaign restricted to the management group.
Now, however, comes the "sensitive" and "delicate" problem. In order for
such a campaign to meet its objectives, two things are necessary:
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1. The company must know whether, to whom, and how much
the employee contributes.
2. The company must be able to identify itself in some way
with the employee's contribution.
At this point, I believe the company should cease being sensitive and
face the problem. I suggest the company be forthright and ask the employee
to permit the company to transmit the contribution to the political
organization or candidate chosen by the employee. There is an obvious
element of persuasion involved. The employee knows that the company
knows whether he gave, to whom, and how much. Some employees are reluctant
to have their political preferences known. However, if the company does
a good job of making its appeal on a bi-partisan basis, this reluctance
will in time disappear or diminish. As to the resentment on the part of
the employee about the company knowing whether and how much he gave, I
see no real reason to differentiate between a political solicitation and a
solicitation for such causes as the United Fund. In these types of campaigns,
we are dealing with management employees who have citizenship responsibilities,
and neither the company nor the employee should pretend in either case that
it is none of the company's business.
It will be no surprise when I state my opinion that a solicitation on this
basis is more effective than one where the appeal is impersonal and the
result is unknown.
The end result of a personalized campaign such as the one that I have
described is that goals can be met, the company can achieve identification
with contributions made by employees and the employee is effectively encouraged
to meet his citizenship responsibilities. If everyone does his part, the
individual burden is not onerous and if the company's position has been
effectively communicated, there will be a minimum of resentment and a maximum
of achievement.
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PUBLIC AFFAIRS AT THE STATE AND LOCAL LEVELS
by
Russell K. Branscom, Vice President, Bethlehem Steel Corporation
Others -- not I -- have the assignment of concluding
this first Institute conference on public affairs; and I
certainly do not want to trespass upon them. However, I would
like to say at the very beginning of these remarks that this
meeting has been extremely interesting and informative in so far
as I personally and my company are concerned. I am sure that
each of you shares that view as to yourselves.
Also, at the beginning, I should express the realization
that I was not asked to participate in this conference because of
extraordinary knowledge of the subject nor because Bethlehem Steel
Corporation has any miraculous methods of handling its public
affairs at the state and local level.
However, we have been active in this work for many years;
and we have come to believe that this aspect of public affairs calls
for particular attention and effort on a day-to-day basis. It is
not very glamorous, but in our judgment it is the most important
phase of public affairs to an individual company -- that is, if any
phase of public affairs can be characterized as more important than
another. One reason why we regard public affairs at the "grass roots"
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as so important is that legislative or administrative changes
in the areas of our operations are felt very directly, particularly
from a competitive cost standpoint. When I refer to the costs
of doing business as affected by state and local public affairs
developments, you may need only one example of that: State and
local pressures to control air and water pollution directly affect
the costs of the individual steel companies -- and to a very sub-
stantial extent. "Grass roots" public affairs in the air and
water pollution area is, of course, a story in itself, which would
take more time than we have this afternoon.
That leads me to suggest that public affairs at the
state and local level cannot be reviewed with full perspective
and emphasis in the brief period of this presentation. Therefore,
I must restrict these remarks to some general observations; to
describe briefly the development of public affairs in our organiza-
tion; and to relate several case histories as illustrative of what
can be accomplished at the state and local level.
As you know, there is a very narrow line between general
community relations work and public affairs at the "grass roots".
When one of our plant managers takes a particularly constructive
part in the work of the local hospital, that is good community
relations; but it is at the same time an example of good public
affairs, because it conveys a good image of the company in the
eyes of the public generally, including the political leaders.
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And when, through that example, I refer to the
participation of local management in community betterment,
I am led to suggest that local management people, the non-
professionals, can perform a most essential role in strictly
public affairs matters as well. That is true at the local
level certainly and to a substantial extent at the state
level and even, on occasion, at the national level. Why,
for example, should we defer to our Washington representative
to wait upon Congressman Jones when the local plant or district
sales manager has known Jones and his family for years?
In other words, although our professional public
affairs people have a most significant part to play, including
policy guidance to our operating and sales people in the
field, we believe we should give our management at the "grass
roots" a full measure of authority and responsibility for public
affairs. They know the territory.
In addition, there are many other non-professionals
in management who, because of special interests and talents,
serve with local and state government bodies and administrative
agencies, such as planning commissions, welfare boards, zoning
boards and many others. Their association with the company
improves its standing in the community and provides it with
valuable information and assistance in the public affairs field.
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Public affairs is really not so new -- it has always
been carried on by each company represented here -- but the
difference is in the extent of it, the organization and sophistica-
tion, and the way we now go about it. There was a time, for
example, when our company would rarely take a position, either
advocating or protesting, in the field of legislation or public
administration --- certainly not in the open for all to see. If
we were disturbed about some piece of proposed legislation, we
would not usually breathe a word to our state legislators or the
city councilmen. Maybe it was because as the largest employer
in the community and sometimes in the state, we did not want to
give an appearance of domination; or maybe it was because we were
not aggressive or were not properly organized; or maybe it was
because we were simply afraid. But for whatever reason, we would
often express our concern only to the state manufacturers associa-
tion or the local chamber of commerce -- after all, we paid our
dues to them to represent us. That was public affairs of a sort,
but it was ineffective.
In saying that, I do not mean to be critical of the busi-
ness associations. Many of them have done fine work in public
affairs - and here, to be sure, I include the Chamber of Commerce
of the United States and, as Jack Roche suggested this morning, many
of the state business organizations. But presenting the case for
business is not solely their job; it is also ours, acting alone
or in concert with others. And we at Bethlehem finally began
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really to recognize that and also our public affairs responsi-
bility generally -- along about the end of World War II.
Bethlehem's organized public affairs program, like
that of others, was born of necessity in response to the
increasing influence of government on business. From the
outset we had a good organization base to build upon; namely,
one of the first Community Relations departments, certainly
in the steel industry, whose assignments included the reading
of proposed legislation and the routing of bills to other
departments for comment, although, as I have said, we usually
did little more than that about it. But finally the time had
come to speak out, to let our legislators and government
officials know where we stood, whether they were Democrats or
Republicans, and to be unafraid.
In shaping our program, we were guided by the belief
that Bethlehem, as a member of the business community, has
the right and the obligation to make known its views on issues
which affect company interests and those of our employees, our
stockholders, our customers, or our suppliers.
During the years of development of Bethlehem's
public affairs program, which is, of course, a continuing
process, we have tried to keep several basic objectives in mind:
One, to build and maintain good political relations
on a non-partisan basis at all governmental levels.
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Another objective is to improve our methods of
analyzing proposed legislative and administrative changes,
consulting internally and preparing our presentation to the
proper government people by the proper Bethlehem representatives.
That involves, in turn, an important matter of approach; that
is, when any Bethlehem representative goes to our legislators,
he is armed with information. He knows what he is talking
about. Nothing, it has seemed to us, can impair the effective-
ness of a public affairs program quite so much as simply saying,
in effect, "Please, Mr. Councilman, vote against proposed
Ordinance 200" and have him reply with such unanswered questions
as -- "Just why should I vote against it? How would my voting
against this proposal really do more good than harm in the
general interest? Do you have any language revisions to suggest?
Any alternative proposals?"
A third objective is to encourage our management to
contribute to, and participate in, political activity in their
respective areas.
And a fourth objective is to strengthen our relations
with business organizations, other companies, and the many groups
which are concerned with legislation and public administration.
At present, in addition to our immediate staff, twelve
employees devote all or nearly all of their time to public affairs.
Passing over the effective work of our Washington office as
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outside the scope of this talk, our activities center on the
seven states in which we have our principal operations: Pennsyl-
vania, Maryland, New York, Indiana, New Jersey, California,
and Washington and the counties and cities in those states
where we have operations or other important interests.
Our public affairs people review legislation
introduced in the seven states and localities to which I have
referred, as well as legislation pending in the Congress.
To give you an idea of the size of that activity, in the past
two years over 70,000 bills were reviewed and evaluated.
As I indicated earlier, our public affairs staff
keeps in close touch with our steel operations, mining, and
shipbuilding management at operating locations to encourage
their participation in public affairs at the local level.
Now, to turn to several examples of our public affairs
activities.
Of course, we have all had experiences in this "grass
roots" political business that are amusing, but trying. We
can dispose of those oddities with a couple of examples:
Because we once invited him to a World Series game
in New York, a legislator who shall be nameless has become an
annual solicitor of a pair of the few World Series tickets our
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people are able to get. And, more often than not, he votes
contrary to the way we would like him to!
Recently, a West Coast legislator inquired as to
whether we could furnish him with a ship model. He didn't
want just any old model. He wanted one that was built to
scale, but no more than seven feet in length. Moreover, he
wanted it to be a model of a ship that had called at West
Coast ports and had some historical significance. Some of
our people thought he might like a model of the battleship,
Massachusetts, but it didn't come up to his specifications.
It was only 30 inches long overall!
And, of course, there is always the legislator who
wants a job for his son-in-law or brother-in-law in order to
get him out of the house!
So much for that kind of public affairs experience --
and there is a certain amount of it. But we should now proceed
with a few examples of more serious public affairs business.
In California, we are working with the California
Manufacturers Association and with representatives of other
California companies to gather legislative support for retention
of that state's "Buy American" act, which has been on the books
for many years, and has been of value in stemming the flow of
foreign materials into California.
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In 1963, several bills were introduced in the
legislature to weaken or repeal the act. We were successful
in opposing all of them. But during the past year pressures
for repeal of the law have been renewed. Our Pacific Coast
sales manager has testified at length in behalf of the "Buy
American" act at two subcommittee hearings of the California
legislature. His formal presentation -- preparation of which
was coordinated by our public affairs people -- represented
the combined opinions, carefully documented, of our sales,
operating, legal, and industrial and public relations departments.
Our efforts to save California's "Buy American" act
have not been limited to appearances at committee hearings.
Bethlehem's public affairs people have developed and are actively
pursuing an extensive legislator-education program, which
includes visits by state senators and assemblymen to California
plants so that they can see at first hand the stake California
employers and employees have in the "Buy American" act.
And to give credit where due, in the fight to retain
this act, a number of union officials have proved to be willing
and effective allies.
However, in Maryland, organized labor gave us quite
a battle on reformation of the unemployment compensation laws.
The move to reform the Maryland law -- to tighten
eligibility provisions and, at the same time, to provide increased
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benefits -- required the cooperation of virtually the entire
Maryland business community. As the state's largest employer,
we were in the vanguard of the reform movement.
Our people, including unemployment compensation
specialists, personally contacted legislators and officials
of the state administration. Our UC technicians testified
at hearings conducted by a legislative committee, and were
available to provide information to our legislators.
The reform bill passed and was approved by the Governor.
However, the battle was only half won. Organized
labor succeeded in obtaining enough signatures to put the subject
on the ballot as a referendum.
The business community faced up to the challenge.
Committees were formed, letters were written, speakers bureaus
were organized, and an extensive newspaper, radio and television
campaign was mounted to alert the electorate to the importance
of the new law to the state's economy.
More than three dozen companies participated in
underwriting advertisements -- and under Maryland law these
companies had to stand up and be counted by signing the ads and
paying for them individually.
The managers of Bethlehem's Maryland operations directed
educational letters to every one of our 30,000 employees in the
state.
This massive coordinated effort paid off. The voters
upheld the new law by a substantial margin.
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The general manager of our Lebanon, Pennsylvania,
plant learned that the city council had scheduled a public
hearing on a proposed revision of the Lebanon City Electrical
Code.
He reviewed the proposed ordinance and concluded
that it would be detrimental to our operation. He alerted
our home office public affairs people, and the code was studied
by them and by our legal department. They provided our Lebanon
manager with language to exclude the Lebanon plant from coverage.
Our manager then began direct negotiations with the
chairman of the city planning board, and expressed his opinion
to selected city councilmen. He also informed other local
industries of the problems a revised code could present.
All this action resulted in Code revisions which
were not prejudicial to industry.
Last year, the county executive of Baltimore County,
in an effort to balance his budget, recommended a new tax on
fuel and an increase in the county utility tax.
Our tax people determined that the proposals would
be harmful to the competitive position of our Sparrows Point
plant, and to Baltimore County industry in general.
Bethlehem representatives contacted councilmen in
advance of the council session to determine their views on
the proposals. The general manager of our Sparrows Point
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plant wrote to the county executive and to 22 other Baltimore
County officials and city councilmen, expressing Bethlehem's
opposition. We asked other Baltimore County industries to
send representatives to the hearing. And the chief accountant
of our property tax division testified at the hearing on the
effect of the proposals. As a result, the council voted down
the tax proposals and pared the budget accordingly.
Our general manager promptly sent "thank you"
letters to each member of the council and to the other
officials concerned. "Thank you" letters are a standard part
of our public affairs procedures, and have proved very effective
in helping us maintain good personal relations with public
officials.
After completion of a new general office building
at our Lackawanna plant, the need for a traffic circle on the
main highway at the entrance to the plant became obvious to us.
Auto traffic was extremely heavy and presented a safety problem.
Our job was to convince the New York State Department of Public
Works that a traffic circle was needed. People from the plant
and from our home office kept in close contact with public works
officials at the local level in Buffalo and at the state level
in Albany. They also enlisted the support of other companies
near our plant. It took a lot of effort. But it was worthwhile;
the circle has been completed.
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And so has this talk, except for this brief
conclusion:
We believe that the essential ingredients of an
effective public affairs program at the state and local levels
are:
Public affairs staff people who are alert, aggressive
and imaginative and who are thoroughly familiar with the
operations of the company and the various public and private
agencies and groups interested in matters of public concern;
Cooperation between members of the staff and other
members of the company's management;
Regular and frequent contact and cooperation with
other companies and business organizations;
Development of good relations on a non-partisan
basis with government people at both levels; and, finally,
Just plain hard work.
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PUBLIC AFFAIRS AT THE STATE AND LOCAL LEVELS
by
Richard J. Nelson, Manager, Civic Affairs, Inland Steel Company
The society of which our country's founding fathers were
a part placed a heavy emphasis on the role of local government,
and to a somewhat lesser extent, on colonial or state governments.
By modern standards, it was a simple life, and difficulty of
communication and lack of scientific development gave no suggestion
that circumstances would change. Men of common sense and good will
were generally adequate to fulfill the responsibilities of local
public office and the promise of freedom and a new way of life
motivated them to accept such service.
Fortunately, there existed an extraordinary group of
leaders dispersed throughout the several colonies who were equipped
and willing to deal with the more profound challenge of what to do
about a central government, if and when freedom from Great Britain
was achieved. Able as they were, it took over a decade of conven-
tion and debate, research and drafting, inspiration and compromise
before our Federal Constitution was ratified in 1787. Each of us
has a pretty good idea of what was provided for in that memorable
document - even though our individual interpretations are colored
by our personal philosophic bents.
The great achievement of the drafters of the Constitution
of 1787 was that, despite their or anyone else's inability to
anticipate the extraordinary changes that were to take place in the
United States and the world in the years ahead, they created a
document that has continued to serve, and serve well, to this very
day. I submit that, despite the protestations of some of our
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friends, contemporary society in the United States has not overrun
the Constitution, but rather has been well contained within it. I
submit further, that it is not reasonable for any of us to expect
that there should be no shifting in the locus and administration
of power in our several levels of government when we consider the
degree and breadth of change that has taken place in the past
quarter of a century alone.
It is fashionable to quote Alexis de Tocqueville in dis-
cussing matters of American political philosophy. This usually
insightful commentator observed in 1835:
"I am strangely mistaken if the Federal
Government of the United States is not constantly
losing strength, retiring gradually from public
affairs, and narrowing its circle of action. It
is naturally feeble, but it now abandons even the
appearance of strength. On the other hand, I
thought that I noticed a more lively sense of
independence and a more decided attachment to
their separate governments in the States. The
Union is desired, but only as a shadow; they wish
it to be strong in certain cases and weak in all
others; in time of warfare, it is to be able to
concentrate all of the forces of the nation and
all the resources, and in time of peace its exist-
ence is to be scarcely perceptible, as if this
alternate debility and vigor were natural or
possible.
"I do not see anything for the present that
can check this general tendency of opinion; the
causes in which it originated do not cease to
operate in the same direction. The change will
therefore go on, and it may be predicted that
unless some extraordinary event occurs, the govern-
ment of the Union will grow weaker and weaker
every day."
Now, lest I be accused of doing Tocqueville a disservice,
perhaps even of quoting him out of context, let me skip a paragraph
or two of his writing, and complete this reference with his final
thought on the subject:
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"The future conceals the final result of this
tendency and the events which may check, retard,
or accelerate the changes I have described; I do
not pretend to be able to remove the veil that
hides them."
I presume to quote to you at such length only because I
would like to suggest that historically there has been an ebb and
a flow in the location of power between the states and the federal
government. Few would dispute that we are presently in a period
where federal power may well be at a peacetime high. There are
several obvious reasons for this: Although not at war in a formal
sense, our commitments in Vietnam and to a lesser extent in other
parts of the world, along with the general tension that reflects
the cold war, place a heavy responsibility on our national defense
establishment.
One of the gravest and not always obvious threats to a
reasonable and healthy distribution of power in the federal-state
relationship has been the preemption of many of the likelier forms
of taxation by the national government - particularly the graduated
income tax. The ability to perceive and present a solution for
legitimate government services is meaningless unless the agency of
government involved has adequate revenue to apply to the problem.
As Joseph Loftus, writing in the January 6th New York Times put it:
"Fifteen states.
are considering new sources
of revenue, or higher rates on the old sources. A
few are troubled by financial crises. The trend to
Federal dependence, with rare exceptions, seems un-
abated."
A recent development that puts this issue in even sharper
focus was the suggestion by Walter Heller that, because the general
prosperity was generating such large tax revenues for the federal
government, some of this money should be distributed to the states
to help them with their financial problems.
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Without attempting to analyze the many aspects of this
proposal, it would seem at minimum to reflect a philosophy that
the federal government has not only taken over the lion's share
of the tax potential, but that it should keep that share permanently.
The states would be relegated to a secondary and ignominious role
of being allocated that largesse that might be available in the
more prosperous years. The enactment into law of the Heller proposal
would probably destroy any chances for a meaningful renaissance of
state and local government.
I address myself now to a third reason why we currently
have a disproportionate share of power in the federal establishment.
There is nothing novel about this point. Informed observers in
both parties have been calling attention to it for a generation. I
refer to the failure of state and local government to perform
adequately.
Over half a century ago, there came to being in the state
of Wisconsin, a movement known as the "Wisconsin Idea." A small
group of idealistic young men cherished the notion that the develop-
ing body of knowledge in the fields of administration and the social
and natural sciences could be systematically applied to the govern-
ment of their state. To a remarkable degree they achieved this
object. Unfortunately, and less remarkably, this standard of
excellence has withered away in Wisconsin and many other of the
states that aspired to it.
Your own experiences with the host of government agents
with whom you have contact, will, I suspect, confirm this observa-
tion.
Factory inspectors, tax assessors, highway engineers,
pollution inspectors, fair employment practices investigators, to
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name just a few of the categories, are typical of the local and
state government personnel that steel and other industries must
deal with day in and day out.
I do not charge that all, or even most, of the persons in
the categories I have cited are incompetent or dishonest. In fact
I deplore those who cavalierly demean this group by doing so.
I do say, that for a variety of reasons, the training
and quality of too many of this group is not adequate. More regret-
tably, they frequently do not operate in an environment that leaves
them free to do that which they know is right. Let me give you an
example: Some months ago, in a state I shall not name, represent-
atives of our company were alerted to the fact that specifications
for highway culvert pipe made out of steel were to be changed in a
way that would make it virtually impossible for steel pipe to
compete.
According to the best information we could receive, the
proposed changes did not originate on the technical or engineering
level of the highway department, but rather at a higher level by
those responsible for general policy. Those of us concerned with
steel never were able to get a hearing before a proper forum - and
the specifications were changed.
It was small consolation to find out later that the
apparent motivation for the change was pressure from the state's
business development department that was trying to attract a plant
that produced pipe of a competing material to locate in the state.
Unfortunately this is not a completely atypical exper-
ience in state government. No one took any money. Each state
employee involved probably rationalized his role as doing something
in the best interests of the state and its citizens. Unfortunately
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though, everyone also involved had communicated to him the notion
that such problems are not to be resolved straightforwardly, and
in the open, but by the subjective judgment - or even the whim of
a higher-up.
What permits this sort of situation to exist? What can
be done about it? One obvious answer is that it exists because
of spoils politics. Qualified persons are discouraged from making
careers in state and local governments because of lack of reasonable
job security, inadequate pay, and lack of professional prestige.
And who is responsible for these conditions?
To a large extent, our legislative bodies - the city
councils, the county boards, and the state assemblies. The acid
test of a republic is the quality of the representatives of the
people.
In closing, I would like to make two general recommenda-
tions that I believe all of us should have in mind in dealing with
state and local government problems.
The first is that, we should all resist the temptation
to deal with dishonest or incompetent officials - on their level.
I well understand the extreme frustrations that can flow from
trying to resolve a complex problem with important economic con-
sequences with persons with whom it is seemingly impossible to
communicate. However, I have had enough experience in state govern-
ment to know that the "old pros," the cynical employees, soon
categorize any company with which they deal. Be honest and be
firm - and you will be dealt with accordingly - or even left alone.
My second thought is that we must remember that weak
individuals and agencies in government are symptoms - and not
causes. We should address our attention and energies to the
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causes. We must persuade able people to run for local and state
office. We must set examples by providing that our own employees
can. We must support measures that will permit competent persons
to hold public office without undue sacrifice to themselves and
their families. We must inform ourselves about issues, and com-
municate our views to our representatives.
Finally, remember, there is no panacea. Someone has
said that the contest for good government is a race for the long-
winded.
My final admonition then is - "keep in training!"
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