Trade Associations Hit Hard by the Recession

Posted March 7, 2009 at 8:21am

Facing harsh economic times, trade associations continue to slash their budgets and fire staff and outside consultants, moves that could potentially undercut their influence on Capitol Hill.Washington, D.C., has long been viewed as recession-proof, and in past years, trade association lobby shops have usually weathered any downturns.But this economic crisis is different, and while associations have been facing cutbacks since mid-2008, the number of trade groups announcing layoffs has now spread to sectors beyond those directly affected by the collapse of the housing and financial markets. Retail, financial services, food, entertainment and manufacturing industries have all announced cuts.Trade groups have also used the dire economic situation as a cover to get rid of Republicans. Industry watchers point to the Food Marketing Institute’s decision to fire longtime head of government relations and GOP firebrand John Motley in January, and the Security Industry and Financial Markets Association’s announcement that its top Republican lobbyist, Richard Hunt, would exit in December as a casualty of the changing political winds.The Mortgage Bankers Association, which has seen its membership drop by 600 over the past 18 months, has been one of the hardest hit. It’s already cut six staff positions in February and four last summer.It’s undergoing a re-evaluation of its products and services, and it is expected to cut several more staff members, according to industry lobbyists. “We’re looking to make sure that we are right-sized,— MBA spokeswoman Cheryl Crispen said. “We’re in the midst of this process.—The MBA is hardly alone in its struggles.The Credit Union National Association has also undergone cuts, although of the eight positions, including two in Washington,hat were eliminated, none were advocacy-related, CUNA spokesman Mark Wolff said.The CUNA also omitted senior staff from the bonus pool in 2008 and implemented a salary freeze in 2009.The organization has also cut back on its consultants. After temporarily increasing its outside lobbyists to three firms, the CUNA decided not to renew its contract with Fierce, Isakowitz and Blalock because of the Democratic takeover, Wolff said.SIFMA also let go about a third of its staff in December, after member companies like Lehman Bros. went out of business.SIFMA, which is the result of a merger with the Bond Markets Association in 2006, does not expect to have any more layoffs, spokesman Travis Larson said.There are a few exceptions in the financial services arena.“We have not had any layoffs, and we don’t anticipate any,— American Bankers Association spokesman John Hall said of the nearly 400-employee trade group.The ABA has a diversified business line that has helped it maintain its revenue. In addition to membership dues, the trade group hosts conferences and has thousands of product lines, including the system that issues all check routing numbers.The manufacturing industry has been hit just as hard as the financial services sector.“We are very aware of the fact that manufacturing is still in a recession and the country is in a recession,— NAM spokeswoman Maureen Davenport said.NAM, which cut 17 positions in December, announced last week that it was canceling its annual public affairs conference scheduled for April at the Ritz-Carlton in New Orleans. The trade group has also implemented a freeze on salary increases and limited employee travel.“We decided to postpone this year’s meeting and do one next year instead,— Davenport said. That’s scheduled for March 21-23, 2010, in Amelia Island, Fla.Cuts have leaked into the entertainment industry as well.The Recording Industry Association of American and the Motion Picture Association of American are cutting staff.The RIAA has laid off from 20 to 30 people, or about 20 percent of its employees, according to news reports. The MPAA is also reducing its numbers by about 20 percent in Los Angeles and Washington.But the government affairs divisions of both groups have been left untouched. “Our companies want to proceed fully on our federal, state and international advocacy efforts,— said Angela Martinez of the MPAA.The American Gaming Association has also taken the economic hardship of its members into consideration.The trade group, which cut one person in Washington, decided to suspend member dues for the first six months of 2009, according to AGA President Frank Fahrenkopf.“We’re trying to watch our p’s and q’s,— Fahrenkopf said. “It’s a difficult time out there.— The association recently dropped the Duberstein Group, one of the city’s most expensive lobby shops, and has asked the remaining firms to reduce their monthly retainers. But Fahrenkopf said the AGA is expecting to hire another Democratic-leaning firm as a response to the November elections.Not all of the association downsizing is because of the economy.As part of a recently approved strategic plan, the National Restaurant Association is undergoing a complete reorganization that includes major changes to its government relations operation.The association will no longer separate its team of more than 20 lobbyists based on federal and state issues. Instead, according to NRA spokeswoman Sue Hensley, the operation will have four issue areas: jobs and careers, sustainability, profitability, and food and healthy living.Employees will be expected to have both federal and state lobbying expertise.While the number of employees in the government affairs division is not expected to be reduced, employees will have to apply for the newly created positions.“The organization has a good reputation for being a strong public policy advocate,— Hensley said. The realignment “is going to make us stronger and more effective.—