The more I read and hear about the failed SPI/APC merger talks, the madder I get. Not because they failed, although I am upset about that (I too believe that one voice for the industry is best), but for the spin that the American Plastics Council has managed to put on the entire process.
It is becoming more and more obvious that APC wants to run the industry's major trade organization. Being a longtime Society of the Plastics Industry Inc. member, I would prefer to see APC fold itself into SPI.
The reasons are simple:
SPI represents the industry, APC does not. SPI has 2,000 members, APC has 24. SPI membership is broad, representing material suppliers, equipment manufacturers, and processors. APC membership is ... material suppliers (and not all of them).
Who helped push mold lien laws through about 30 states? Who runs the worker certification program for processors? Who has been fighting the Surface Transportation Board on the Union Pacific rail mess in Houston? Who's taking the lead on endocrine disrupters? Who runs NPE?
Who has the committees that create the ANSI standards for plastics equipment, which become the OSHA standards?
The answer to all of the questions above is SPI. And those are just a few of the things SPI does for the industry.
This is not to say APC is not busy. APC has devoted tremendous resources to controlling the potential impact of health and environmental issues. I have found its advertising and legislative campaigns to be extremely effective. I suspect that the advertising campaign will probably become a Harvard Business Review case study on how to change public opinion.
What I don't want to see is a case study on how to destroy a viable trade organization — SPI. Make no mistake, this appears to be exactly what APC is doing, intentional or not.
SPI and APC both agree that there should be one voice. Then why did APC's proposal create three organizations? SPI's proposal creates one organization.
APC wants a 50 percent vote on key issues, including the hiring and firing of the merged group's president, with a lesser vote on unimportant issues.
``Unimportant'' is not yet defined. They feel that this is fair because of their golden rule: He who has the gold, makes the rules. Have they forgotten that the plastics industry is a three legged stool? Material suppliers, equipment suppliers and processors are all equally important.
The new SPI reorganization acknowledges this, and creates an executive board with equal membership across the three industry segments.
APC wants all SPI resin company members to join APC. They are justifiably tired of shouldering a burden for entire resin industry. Since there are only 1,000 processor members in SPI, with more than 15,000 processors in the United States, I know exactly how they feel. I too, am tired of pulling along other companies.
Unfortunately, APC membership is costly, over $1 million per year. So this would probably cause non-APC resin companies that are SPI members to leave SPI. The net loss to SPI is probably similar to what would happen if all APC members pulled out of SPI.
APC members are big chemical companies. With a small voting membership, it is easy for APC to accomplish lots of good things. They can react quickly because they all have a common viewpoint, and a small membership. SPI has a huge membership by comparison, and is unable to move as quickly.
I sat at the January SPI board meeting, and I watched the faces of board members when it was announced that the merger talks had fallen apart. Nobody was happy. I felt like I had been punched in the gut. And I am sure other board members felt the same. SPI wants the merger. In fact, SPI's negotiating team was specifically told that there were no preconditions to the talks. This was different from the first merger talks, when SPI had preconditions. Unfortunately, the APC negotiating team was not told the same.
What might happen if APC set up its own trade organization?
SPI would lose membership. Certainly many, or all, APC members would leave SPI. Additionally, some SPI business units that depend upon major financial support from the material suppliers would depart.
Would this be a material-supplier-only organization, or would the other two industry segments be welcome to join?
If processors had to pay dues to join, then they would want a vote. Are the resin companies prepared to give up control? If a processor does not have a vote, is there a reason to join?
If the membership would grow, say to 500, would they offer all of the same programs that SPI does? Would they offer those programs without dues? Too expensive, right? So you have to have dues. Oops, here comes that vote and control problem again.
Suppose APC only wanted to take on the resin company side of a trade organization: resin statistics, Food and Drug Administration interfacing, lobbying, rail regulation/deregulation, etc. Is there some way that SPI is inadequate is this respect? Or is it that APC members only want these programs, and don't want their dues supporting other groups programs? It would cost more for APC to provide those programs then it costs SPI. Why? The National Plastics Exposition. NPE profits provide 35 percent of SPI's core budget. This means that all SPI members get core functions for 65 percent of their real cost.
Call me unimaginative, but I can't come up with a single scenario that gives APC companies control of a new organization with the same diverse membership as SPI, with the same type of programs, and does not cost the resin companies more then they currently pay.
It seems to me that the best solution is for APC to merge with SPI by becoming a business unit of SPI. Think about it. SPI allows business units to have assessments above the basic dues. Those monies go directly to the business unit, and are controlled completely by the business unit.
Additionally, under the new dues structure, companies can designate up to 39 percent (50 percent by 2002) of their dues to the business units of their choice. So APC member companies could send some of their dues directly to the APC business unit.
I realize that this is not a lot of money to APC members, just $80,000 or so per company; but every little bit helps. You know what else might happen? Other SPI members might designate some of their dues to the APC business unit. An APC business unit might have more monetary support than its assessed amounts.
APC wants 50 percent control of the organization, but joining as a business unit gives it 100 percent control of the bulk of the money, and 50 percent control (by 2002) of the remainder. Sounds good to me. If APC companies join SPI as a business unit, they pay approximately $4 million in total dues. They can designate 50 percent of that money to the APC business unit. The balance ($2 million) goes into the core programs of SPI, where it is controlled by the balanced executive board.
Do you think they would get their fair share or the remainder in support? As of last August, SPI estimated its costs of fighting the Union Pacific rail mess to be in excess of $800,000. I am sure the material suppliers would get their money's worth.
There are 24 APC members. At one time, all were SPI members. Five have left. Those 24 members did not provide $15 million in annual dues to SPI. They provided something closer to $4 million in dues. Is that a lot of money? Absolutely. Is it half of SPI's budget? It's not even 25 percent. APC would have you believe that they are the entire resin industry. They are not. Remember, there are resin companies that are SPI members only. I hope they are happy with the power split that the new reorganization provides.
It is my sincere hope that SPI and APC can work this out to both sides' satisfaction. The two associations should be united. It will cost both organizations less to be united than to be separate. The pullout of some of APC companies has hurt several SPI business units. It would be unfortunate if those business units felt that it was necessary to depart SPI just so they could have APC members participate in their programs.
None of this bickering helps the industry.
Dana Molded Products Inc.
Arlington Heights, Ill.
Chairman, SPI Molders Division