On common ground?

A divided government may lead to compromise on legislative issues, but how the industry will fare this year is still uncertain

By -- Industrial Distribution, 1/1/2001

WASHINGTON, D.C.-There are some key issues on the industry's legislative agenda this year, but any action on them is more questionable than ever.

Industry professionals and groups like the National Assn. of Wholesaler-Distributors have their eyes on four key business issues in Washington: product liability reform, OSHA's new ergonomics standards, inside sales reform and tax relief. But in December, as NAW and others readied for a new administration and Congress, an extra-thick cloud of uncertainty hung over their efforts.

The controversy over the presidential election was part of that uncertainty. But more cause for concern was the evenly divided Congress-a 50-50 split in the Senate and a slight GOP lead in the House-and what that would mean for pro-business efforts. Coupled with a slowing economy, the political situation left question marks on the horizon about just what kind of year it will be for industrial distribution.

"Neither [candidate] is going to have a mandate significant enough to move the key items in their agendas," NAW president Dirk Van Dongen said in early December, adding that compromise will be the name of the game if new legislation is to be passed this year.

Van Dongen's colleague, Alan Kranowitz, also weighed in on the issue, noting that the only legislation we're likely to see this year is that which has bipartisan support. Kranowitz is NAW's senior vice president-government relations.

Still, compromise is no guarantee either. And while many are hopeful the two parties will find common ground on issues like tax relief, health care and Social Security reform, the outlook on industry-specific issues is less clear.

"The conventional, feel-good wisdom is that a divided government means a cooperative government," Van Dongen said. "That's nice to say ... but unless events force them to cooperate ... it's difficult to do that."

Don Carlson, president of Carlson Systems and a former NAW chairman, agrees, saying that he expects considerable gridlock in Washington this year. That doesn't bode well for longstanding NAW issues like product liability reform and more recent concerns like inside sales reform. The latter issue aims to change the status of many inside salespeople, exempting them from hourly wage and overtime provisions.

"I hope [Democrats and Republicans] will make efforts to heal up the wounds and work together," Carlson said. "But I don't think that leopards change their spots, either."

NAW also has been pushing for a repeal of the Estate Tax, also known as the "death tax." Kranowitz says a repeal is unlikely, but he's confident there will be some action on the issue, especially with support from President-elect George W. Bush.

Chuck Stockinger, executive director of the American Supply and Machinery Manufacturers' Assn., is equally optimistic about tax relief. He said he's confident tax cuts will come into focus this year-especially if the economy continues to slow-though he's uncertain what form they'll take. Stockinger said he's also hopeful action will be taken on some of the social issues identified by both parties during the campaign-most notably Social Security reform and prescription drug coverage for senior citizens.

"I think what we identified in this election was the great middle," Stockinger said. "When you chip off all the bark, there's more that unites the two parties ... than divides them."

But there is division on the other issue many businesspeople are watching: ergonomics. In November, the Occupational Safety and Health Administration announced that its new ergonomics rule would go into effect January 16. The standards are designed to combat repetitive stress injuries and they require business owners to take specific steps to help workers with those injuries and to prevent new injuries from occurring.

Opponents argue that the ergonomics rule is vague and confusing, and would cost employers, collectively, billions of dollars to implement. A number of legal challenges to the rule have been filed and the new Congress may take it up as well, which will likely delay its implementation. Employers have already been given until October 14, 2001, to begin recording and responding to employees' repetitive stress injuries.

Issues like ergonomics and product liability reform may be too partisan to pass this year, but that's not necessarily a bad thing for business, according to some industry watchers. If there's one thing all this uncertainty adds up to, it's a security in knowing that absolutes will not occur.

"Business people don't have to worry about there being this major shakeout, because there's not this great big division with one side having more power than the other," said Jim Chambers, president of Fluid Connections in Grand Rapids, Mich. "There's less chance of ... major regulations that would be restrictive to business."

And that, combined with the opportunity to reach across party lines, may prove to be good for the economy, Chambers said. Like Stockinger, Chambers is hopeful both sides will agree on a tax relief plan, which he says will help offset some of the economic downturns expected this year. A slowdown in key sectors like the auto industry during the second half of 2000 had many distributors preparing for a slowing economy this year.

"This whole process ultimately ... will probably be a very good thing for business in general," Chambers said. "It will be a pause for reflection, at least."