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Chairmanís Address at the NAW Executive Summit, January 27, 2010

Chairman's Address - February 2010

“What Will Be Left When the Meltdown Is Over?”
Chip Hornsby, NAW Chairman, and Bob Reynolds, NAW Treasurer

Chip Hornsby
    NAW Chairman

Bob Reynolds
    NAW Treasurer

Mr. Hornsby:

I’ve decided to take a little different approach this year in delivering the NAW Chairman’s Address. Frankly, the state of the economy has led me to want to talk about — and I’d like to get us all engaged in thinking about — the critical question: “What Will Be Left When the Meltdown Is Over?”

I’ve asked Bob Reynolds, Chairman, President, and CEO of Graybar Electric, and also NAW Treasurer, to join me.

Bob and I would like to talk about what we’re seeing happening with business now that we’ve experienced a full year of policy decisions by this Administration and the Congress. We’d like to briefly tell you why the two of us — previously without much interest in government, let alone politics — are today deeply involved in NAW’s government relations efforts. And we want to share with you why we believe all of us in our industry need to step up now and get more involved with NAW, so that through this organization, we can make our voices heard effectively as we move toward the elections this year and in 2012.

The tide has definitely turned in Washington, DC. The era of big government has returned and with a vengeance. As you know, we have witnessed massive, unprecedented federal deficit spending — bailouts, the so-called stimulus package, trillion-dollar health care legislation — and aggressive government intervention into the free enterprise system, all supposedly in response to a broken economy. Unless we in the business community mobilize and make our voices heard, the next several years are destined to bring much more of the same with consequences for our economy and our companies that will far outlast the current economic situation.

Our country faces a slow and painful economic recovery, the effect of massive job losses and double-digit unemployment. We’re also dealing with UNDER-employment where some employees are working only 25–27 hours per week. We’re feeling the impact of government regulation, higher taxes, and the detrimental effect of government-controlled health care that will mean more taxes, and health care costs, and insurance premiums, which will only move in one direction — UP! You name it, we’re facing it. Ladies and gentlemen, after several pro-business years, the pendulum has swung in the other direction.

It’s these concerns that keep us up at night. It’s unprecedented, and we must act to defend our free-enterprise system — the most beneficial and resilient economic system in the history of the world.

So, let’s ask: In 2012, what will this country look like? What’s left when the downturn is finally over? What will we be left with at the end of this Administration’s first term? I think we need to visualize where we’re heading, where our country is heading, and we need to get involved NOW by standing up for our industry. We’ve got to think beyond a survival mode mentality. We must do more than just get through the current economic difficulties. We’ve got to think about where American business and the free-enterprise system will be not too far down the road. What will be “the new normal” for our businesses? That’s the real challenge — to think LONG-TERM when thinking SHORT-TERM already is a full-time job.

The long-term impact of government policy on business is all-encompassing. That’s why it’s worth our close attention.

You know, it’s only been in the last several years that Bob and I, individually, have truly become fully aware of the importance of NAW’s capacity to affect public policy on behalf of the wholesale distribution industry.

In my case, frankly, I wasn’t really involved in NAW’s government relations activities, because the political environment in earlier years was friendlier to business. I just didn’t see the need for activism that I clearly see now.

Since my time on the NAW Board of Directors, I’ve become much more involved. Why? Because the political environment has changed drastically, and I don’t like where we’re heading.

Bob, how did you get involved with NAW’s government relations efforts?

Mr. Reynolds:

Chip, until I met Dirk back in 2000, Graybar had only been involved in NAW on the business side — which was, and still is extremely valuable, don’t get me wrong.

But then I met Dirk and he told me what NAW does for our industry here in DC. Until then, I didn’t see a lot of value in communicating with my elected officials, because my experience was that you never heard back from them.

Dirk explained to me that NAW — through its coalitions and broad outreach — makes sure that U.S. Senators and Representatives do understand the scope and economic power of wholesaler-distributors. He told me to give it a try. I said, rather skeptically, I admit: “Okay, let’s see what happens.”

Soon after, I attended the NAW Executive Summit and attended my first WDPAC Dinner. I was seated next to my home state U.S. Senator, Missouri Senator Jim Talent. We had an energized discussion about pension legislation. Like never before, I exercised my right as a citizen and my responsibility as the leader of my company to make my positions clearly known. Needless to say, I was pleased to have Senator Talent’s ear that evening.

Sometime later, there was some asbestos legislation before Congress that we were very concerned about. I called Dirk and asked who on the Hill I could talk to. He said, “Call Jim Talent.” So I did.

I remember giving someone in his office my name and company, and the next thing I heard was “Hi Bob, it’s Jim Talent. How are you doing?” Well, I was doing fine!

To make a long story shorter, the Senator had his staff specialist on asbestos join the call. I brought on my asbestos specialist. In very short order, we were successful in raising their knowledge level regarding our concerns. It happened that quickly because I took action.

Not long after, Jim called and asked if he could visit Graybar. He did. We were pleased to give him a tour and meet with him. Again, Jim learned a lot about our business that day.

My heightened involvement in government relations elevated Graybar in the eyes of our community and our state. It got us involved in serious government relations at the federal level. We haven’t slowed down since, and I can tell you in no uncertain terms that EVERY Graybar employee benefits from that involvement. The bottom line is: It didn’t take long to get engaged and become comfortable in the political environment. There’s a tremendous ROI there.

Today, I don’t see how anyone CAN’T be involved when it’s so very clear that government impacts our businesses every day. Honestly, there are days when government can affect our company as much as our suppliers and customers. That’s why Graybar is involved in lots of issues today: corporate governance, risk management, LIFO, health care, pensions, and more.

Folks, the trends and the threats of big government are all around us. However, if we engage, we can change the outcome in 2010 and in 2012.

That’s why membership in NAW is more critical than ever for our companies. And, it’s more critical than ever for NAW. After all, NAW faces the same economic downturn that our companies face. NAW needs ALL of us.

NAW is doing so much on our behalf, defending our interests, particularly on workplace issues. And keep in mind, playing on DEFENSE has been the watchword under this White House and Congress. The threats are real and the stakes are very high.

This means a heavy work program for NAW as our advocate here in Washington. NAW is at the center of these fights. Through its leadership of several key business coalitions in this town, NAW provides a much-needed multiplier effect to our efforts. A few of those coalitions are the Coalition for Affordable American Energy, The LIFO Coalition, and the Coalition for a Democratic Workplace. NAW is working with its close allies, the National Federation of Independent Business, the U.S. Chamber of Commerce, the National Association of Manufacturers, and the Business Roundtable, dubbed by FORTUNE magazine as the “Gang of Five.” Yes, folks, little old “us” travels with the big guys. Together, we are working to prevent damaging tax increases, rein in runaway federal spending, and bring about health care reform that contains cost by building on the private system.

Yes, ladies and gentlemen, at a time when unemployment and underemployment are high, I can assure you that our government relations lobbying team is working OVERTIME on your behalf!

Mr. Hornsby:

Bob, if I say so myself, I think we’re making the case for everyone in this room to elevate their game in the government relations arena.

Let me stay with the subject of involvement, but shift the focus. I mentioned earlier that I have always immersed myself in NAW’s business side — attending meetings and using strategic research, such as the Facing the Forces of Change studies, to steer our strategic planning.

At first, I didn’t understand what a plumbing distributor would have in common with other types of distributors in the NAW membership. Plumbing and Grocery? Plumbing and Veterinary? Plumbing and Wine? Well, okay, maybe I understood that one.

It didn’t take long to find out that ALL of us had more in common than not. The more I participated, the more the light bulb went on. I’ll never forget listening as a pharmaceutical wholesaler — about as far from plumbing as you can get — explained how his company had implemented operational efficiencies sufficient to LOWER gross margins from around 20% to single digits, while INCREASING market share and bottom-line profitability. I couldn’t wait to get back home and discuss this with our team!

That’s only one example, ladies and gentlemen. There have been so many others through the years.

That’s why, whenever I’m asked what I find most valuable about this organization, I always say: The truly SUPERIOR NETWORKING OPPORTUNITIES I get from NAW!

Bob, I imagine you could share similar stories.

Mr. Reynolds:

Yes, Graybar has been an NAW Direct Member since 1981. We’ve attended our fair share of Executive Summits and Billion Dollar Company Roundtables and we’ve benefited from our share of NAW Institute publications. In fact, we’ve involved our entire C-Suite in NAW: HR, IT, Operations, CFO, Legal. Most of them are in the audience today. We wouldn’t ask our folks to spend that type of time on NAW if we weren’t convinced of the value of networking across lines of trade. Again, it’s about ROI.

Mr. Hornsby:

Bob and I hope you see your OWN story somewhere in ours, and that will inspire you to ramp up your activities on both the public policy and business fronts. Here are a few specific ways you can do that.

Mr. Reynolds:

First, don’t be a “Lone Ranger CEO” in your involvement with NAW. Dig deeper within your company and bring your team to NAW events. Give your team members the opportunity to learn more about our wholesale distribution industry through NAW. NETWORK!

Mr. Hornsby:

Second, attend tonight’s WDPAC Dinner. Bob’s story about how he developed a relationship with his U.S. Senator tells you all you need to know about the value of this event. WDPAC provides us with the best entry point for political action on behalf of pro-business candidates for the U.S. Senate and House of Representatives.

Mr. Reynolds:

Third, focus on 2010 and 2012 by helping NAW to bring pro-business officials to Congress. This is not about Republicans, Democrats, or Independents. This is about electing pro-business candidates who have WHOLESALE DISTRIBUTION on their radar screens.

Mr. Hornsby:

Fourth, get and stay engaged at the grassroots level. We need to work as a collective group of businesses through NAW to make our extreme dissatisfaction with the direction of public policy known to the Congress and to the White House. The easy way to do that is through NAW’s E-Alert Program. All you have to do is go to NAW’s Web site and click on the Tell Congress button on the home page. You’ll find talking points that address the various important issues before Congress. Make your voice count!

Mr. Reynolds:

And fifth, encourage your employees to get out and vote this year. You can and must do this in a non-partisan manner, of course. That is what I do. Your employees need to hear directly from you what effect passage or defeat of certain legislation will have on your company and on them as important company contributors. I’m sure they’ve heard it before, but it bears repeating: Let them know that their vote DOES count — now more than ever.

Mr. Hornsby:

Okay. There you have it. You’ve heard from us, and now we want to hear from YOU.

How can NAW help you? Between now and tomorrow morning’s Discussion Roundtables, please give some thought to what else — beyond our current product and service package — you would like to see NAW do on your behalf and on behalf of the entire wholesale distribution community. We are very serious about providing extraordinary tools to you and your company to assist you as you continue to fight through this downturn.

So, in classic market research fashion, we are “asking the customer.” Tell us what you want and what you need from your association. In part, the focus of tomorrow morning’s Discussion Roundtables will be on your ideas for how NAW can better serve you. When you get to tomorrow morning’s Discussion Roundtables, there will be Feedback Forms for you to provide your ideas. Each Discussion Roundtable leader will solicit your recommendations, secure the reactions of the other folks at your table, and see that a summary is provided for your Board to review and discuss.

Thank you.