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New leadership for Associated Oregon Industries

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Wednesday, November 01, 2006

Associated Oregon Industries, the state’s oldest and largest business lobby, overhauls its mission, installs a new leader and sets about shining its lackluster image.

By Christina Williams

Richard Butrick’s retirement reception was a friendly, buffet-table, open-bar affair at the Salem Convention Center. Backs were slapped, speeches were made and jokes were cracked. At the evening’s wane, Butrick, president of Associated Oregon Industries since 1986, asked the well-dressed group to turn their allegiance over to his successor: a tall, gray-haired gentleman keeping a low profile in the back of the room.

For Salem insiders, that introduction marked the end of an era. For two decades Butrick, a former parole officer, was the man out front for the state’s oldest and largest business lobby. During that 20 years AOI built up its muscle as a player in the capitol, raising more money for its political action committee, adding thousands of companies to its membership rolls and taking staunch positions against bills the association deemed bad for business.

Butrick, at 69, wasn’t forced into retirement. But his exit from AOI gives the association an opportunity to bring in new energy. And the change at the top coincides with a year of soul searching by a board of directors eager to brush up AOI’s image, not just among the business folks from the 20,000 companies it counts as members, but also in the minds of the politically inclined Oregonian.

To carry its message and lead AOI into its next era, the board hired Jay Clemens, a 59-year-old chamber of commerce veteran and a self-described collaborator who comes to Oregon from the Tulsa Metro Chamber in Oklahoma.

AOI CALLS ITSELF A NONPARTISAN business association, but the label is dismissed as fiction by many Oregonians who look at the politicians and issues that AOI supports and see a decidedly Republican bent.

It’s not an image that AOI takes pains to avoid. Take Butrick’s retirement party for example. Among a list of corporate sponsors who kicked in money for the goodbye bash was one conspicuous individual name: Saxton, Ron.

Harvey Mathews, director of AOI’s Political Action Committee, says the group’s goal is to look at each political race in a nonpartisan way before deciding to back a candidate. “We don’t just write checks,” he says. “We meet with the candidates and analyze the data. We want to support the best business candidates, period.”

In the current election cycle, AOI has thrown its weight and its cash behind eight Republicans, including House Speaker Karen Minnis, Majority Leader Wayne Scott and four Democrats.

AOI has also come under fire for its cozy relationship with state-owned workers’ comp provider SAIF Corp. Last year SAIF restructured its contract with AOI in response to protests from some legislators that AOI was the beneficiary of unearned financial support from SAIF. To mollify critics, SAIF dropped an annual subsidy — most recently $400,000 — it paid for AOI to publish its bimonthly Business ViewPoint magazine.


1895 — AOI is founded to promote products made in Oregon.

1986 — Richard Butrick is hired as the association’s fourth president.

1988 — The AOI Political Action Committee spends $73,200 during the 1987-88 election cycle.

1991 — AOI starts offering workers’ compensation services to SAIF Corp. customers with an aim of signing up as many as 12,500 businesses in the process. 1992 — Oregon’s Family Leave Law goes into effect, requiring businesses with 50 or fewer employees to give 12 weeks of unpaid leave to employees who need to care for sick or injured family members. AOI lobbied against early versions of the bill, and offered an amendment that raised the threshold from 25 to 50 workers.

1992 — Joan Austin of A-dec, a Newberg dental supply manufacturer, becomes the first (and still only) woman chair of the AOI board of directors.

1993 — Northwest Natural cancels its AOI membership in protest after AOI opposes a sales tax for education.

1996-97 — Oregon Forest Industries Council, an AOI division, splits to form its own association. Former AOI chair L.L. “Stub” Stewart calls for a management review of AOI.

1998 — AOI PAC spends $112,000 on the 1997-98 election cycle.

2005 — SAIF downsizes its contract with AOI to provide workers’ comp services and stops paying a subsidy for AOI’s Business ViewPoint publication.

August 2006 — AOI board hires Jay Clemens, who takes over in September following the retirement of Richard Butrick.

PAC raises more than $400,000.

December 2006 — AOI will release its agenda for the 2007 legislative session.

A deal struck with SAIF in 1991 meant that AOI could sell workers’ comp packages to its members at attractive rates. Thousands of members joined AOI to buy the workers’ comp coverage. Under the current SAIF contract, AOI still offers the insurance, but no longer receives the money for the magazine. Another contract under which AOI provides risk management services for SAIF is likely to expire this year.

In addition to the SAIF complaints, AOI has been charged with exerting its considerable influence in the Legislature — many feel excessively. The group received much of the blame for killing biofuels legislation during the 2005 session by adding an extension of the Pollution Control Tax Credit for Oregon businesses. (Rep Jackie Dingfelder, the Democrat from Portland who sponsored the original bill along with Rep. Jeff Kropf, a Republican from Sublimity, calls the PCTC “the sacred cow of AOI.”) AOI also urged the addition of language that would prohibit the state from adopting clean car standards such as the ones passed in California.

“It was the poison pill of the bill,” Dingfelder says of the AOI-supported additions. “It’s very unfortunate they chose a package that had bi-partisan support.”

AOI vice president John Ledger says AOI was one of several groups backing the final bill and that AOI didn’t request the anti-clean car language. “It was a good bill,” Ledger says. “When a good bill dies everyone points fingers.”
Dingfelder is hopeful that a biofuels package will pass this session, and she’s already working with AOI on another bill regarding electronic waste. “That’s just the way it works in Salem,” Dingfelder says. “They can be your ally on one issue and your opponent on another.”

AOI’S FORMIDABLE HISTORY and lobbying muscle makes it a valuable partner in Salem.

“It’s in every business entity’s interest for them to be a strong organization,” says Mike McCallum, president of the Oregon Restaurant Association, who worked closely with AOI to oppose the energy deregulation bills in the 2001 and 2003 legislative sessions.

“AOI is the one organization that should be the leader and has the potential to give everyone else the backbone to stand up for core business issues,” says J.L. Wilson, state executive director for National Federation of Independent Business. “That’s the role they should assume.”

Wilson says AOI falls short sometimes — “like everyone does” — and can seem to be spread too thin, but he calls the group a “worthy partner.”

Wilson is also president of the Oregon Small Business Coalition, an affiliation of business lobbyists, which was formed in 1995 as an alternative to AOI. “But that’s not how we’ve grown up,” Wilson says. “We work together on 95% of the same issues.”

The Oregon Business Association was formed in 1999 as another alternative to AOI and has about 300 members. “There was a need for a more progressive business voice,” says Tom Kelly, founding board chairman and president of Portland builder Neil Kelly. We felt AOI was too partisan.”

Kelly says OBA’s mission is to lobby for big-picture issues such as education, transportation, access to health care and a sustainable environment. “We’re trying to recapture the magical time when business was a real proactive voice,” Kelly says, referring to the 1970s.

When OBA was formed, AOI was coming out of a contentious decade that saw some high-profile member defections such as Northwest Natural and Portland General Electric and a tiff that led to the Oregon Forest Industries Council splitting off from AOI to form an independent organization.

Since that time, NW Natural and PGE have both come back into the fold as members, and this year the OFIC moved its offices into AOI’s building and enjoys a cordial relationship. Add to that a cleaner relationship with SAIF and the end of a 20-year Butrick regime and it begins to look like a new day for AOI.

It’s a fact that wasn’t lost on the organization’s board of directors, which embarked more than a year ago — even before the announcement of Butrick’s retirement — on an overhaul of AOI’s mission and image.

“IF YOU DON’T DEFINE WHAT YOU’RE FOR, then other people will do it for you,” says Dan Harmon, a Hoffman Construction vice president who serves on AOI’s board of directors. “AOI was defined more by what it is against than by what it’s for.”

Through a process of surveys and interviews, Harmon and the board learned that AOI was known as a defender of corporate interests, but wasn’t seen as a group with any interest beyond its business membership. “People in the public lost the connection between business doing well and the general good for the state,” Harmon says.

Ben Fetherston, a Salem lawyer and new chairman of AOI’s board of directors, will help steer the organization over the next year or so toward a long-term policy agenda that will set goals around Oregon’s trouble spots: education, health care and fiscal reform.

“A lot of the focus of AOI has been moment to moment and issue to issue,” Fetherston says. “What I have in mind is developing and identifying long-term policy objectives and then identifying the strategy to accomplish the objectives.”

Prosperity has become AOI’s watchword. And convincing the average Oregonian that AOI is promoting their individual prosperity is the association’s goal.

It’s just one of several challenges — in-cluding a budget that’s been in the red recently — that will be faced by Clemens, who was selected by the board after an exhaustive search. Clemens’ fiscal turnaround experience was attractive and ultimately pushed the Washington native to the front of the pack. According to those close to the process, there were Oregonians in the running — some with considerable clout in Salem — but, in the end, the board went for the outsider with deep experience.

Clemens says he’s ready for the difficult task of running a statewide business association in a state as diverse as Oregon. The one-time president of the Boise Chamber of Commerce was also eager to return to the Pacific Northwest.

“This is my part of the world,” Clemens says, seated in Butrick’s old wood-paneled office at AOI’s headquarters, a vigorous stone’s throw from the Capitol.

In his first weeks in office, Clemens spent time getting around his part of the world, meeting with lawmakers and a long list of AOI constituents, as well as business leaders representing companies AOI would like to woo as members.

He brushes away the notion that AOI is in trouble, that its conservative stance has driven away some members, that its revenue is lagging. “AOI is probably misunderstood,” Clemens says. “I would tell people not to underestimate this organization.”

“THE NEXT GENERATION OF AOI” is what Clemens calls Associated Oregon Industry’s new phase. He will lead the rebranding effort, replete with a marketing push. And he’ll be working with the board on getting that long-term policy agenda — the “prosperity agenda” in AOI-speak — ready for prime time.

But don’t expect a wholesale change. AOI will still battle “bad-for-business” bills and take stances that might not match the opinions of all of its members.

“If you’re going to be a meaningful organization, you have to take positions on tough issues,” Clemens says. The trick to not alienating your members, he says, is to have a process in which everyone gets to have their say. “It has to be democratic.”

AOI’s partners in Salem are looking toward Clemens to see what kind of change he can actually deliver. “We look forward to new leadership,” McCallum says. “AOI can be stronger. And it will be in Oregon’s best interest.”

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