Ross Born’s wake-up call came in the aftermath of a transportation problem. His Bethlehem, Pa.-based company—Just Born Inc., makers of marshmallow Peeps as well as Mike and Ike and other iconic candy brands—relied on a nearby rail spur to ship products and receive supplies. But in the early 1980s, the railroad decided to eliminate the line. Poor drainage in the city caused the tracks to flood frequently, requiring repairs the railroad deemed too expensive.
Worried that the railroad closing would hurt his business, Born, who serves as Just Born’s co-CEO along with his cousin David Shaffer, urged city officials to fix the drainage system. He pointed out that the city could afford the repairs if it obtained state grants. But his pleas got nowhere. “The city officials just shrugged their shoulders,” recalls Born, 58. “The railroad abandoned the spur, and our costs went up.”
After that painful experience, Born concluded he had to develop closer relationships with elected officials. Over the years, he got to know state representatives and members of Congress on a first-name basis. He has invited officials to tour his plant and touted his business as an employer of 500 people.
All the efforts have proved worthwhile, Born says. In recent years, the company has played a role in Washington politics, supporting rules that limit increases in the cost of sugar, an important factor for a candy company. “We have developed strong relationships,” he says. “If we need help, we get it.” Born and his staff have visited Washington to meet with Congress members and representatives of the Department of Agriculture.
Those family business owners who steer clear of politics tend to assume their companies are too small to shape government policy. But many business leaders who become politically active have discovered that they can reach politicians and have important influence. To cite one high-profile example, family business owners have argued with some success that estate taxes force families to sell businesses that would otherwise be passed onto the next generation, and they are continuing to press the issue. Family firms have also helped shape rules on environmental and health policies.
Family business owners have expressed concerns about provisions of the health care reform bill, says Ann Kinkade, president of Family Enterprise USA, a non-profit organization whose mission is to educate the public, policymakers and the media abut the issues facing family businesses and to promote family firms’ contributions to society. Under the legislation, companies with fewer than 25 employees can receive a tax credit to help cover the costs of health insurance. But the credit cannot cover family employees. “The provision makes no sense,” says Kinkade. “It almost looks like the law is deliberately targeting family businesses.”
A June article by Kinkade in The Hill, a Capitol Hill publication, cited that issue as well as the estate tax and a potential reform measure that would require treatment of “pass through” entities (such as partnerships, S corporations and limited liability corporations) as corporations for tax purposes.
Kinkade contends that not enough family businesses have been organized to lobby on the national level about issues like these. Family Enterprise USA is now working to educate family owners about the need to create broad coalitions. “If thousands of family businesses from around the country could come together, then there would be a critical mass,” she says.
Born rubs shoulders with the mayor and state representatives at events sponsored by community groups, such as Rotary. The connections he made paid off recently when Born decided to open a visitors’ center near his candy plant. The mayor and his chief of staff visited the project regularly to help with construction issues.
Born also been active in his trade association, the National Confectioners Association, which represents 450 manufacturers and has a staff of 27. The trade association periodically arranges for delegations of members from around the country to meet with their congressional representatives.
Reaching out
Family business owners have other means of meeting politicians besides joining large groups, Born points out. A good way to start, he suggests, is to call the offices of elected officials and invite them to visit your business. During your first meeting, don’t ask for a specific favor. Instead, introduce your business and explain the role that it plays in the community. The idea is to establish a strong relationship before you need special help. Don’t be discouraged if a U.S. senator does not respond to your initial invitation personally, Born says. “If you have an auto body shop with five employees, a congressman is not necessarily going to visit right away,” he notes. “But one of the staff people might come. If the business seems interesting, then the staff might encourage the congressman to visit later.”
To facilitate relationships, business owners should be prepared to help government officials. When a low-income housing project recently built a ball field near Born’s plant, he donated money to install lighting and trees. City officials did not forget the favor. When Born needed to move construction equipment on the grounds of the housing project, the city officials cooperated.
No matter what strategies they employ, family businesses should be willing to work slowly for years in order to achieve goals, says Philip Clemens, 62, chairman and CEO of Clemens Family Corporation, a 116-year-old enterprise in Hatfield, Pa., that has 2,000 employees. The company’s businesses include meat production. Clemens recalls his efforts to obtain a permit to build a hog farm in Pennsylvania. After working for three years and spending $450,000 in legal and other costs, the company still had not won the necessary approval.
At about the same time, Clemens also decided to open a farm in Indiana. He was able to obtain the necessary permits in that state within 60 days—and spent only $50,000.
Seeing how cooperative regulators could expedite business operations, Clemens turned to members of his state legislature and said that he was being forced to leave Pennsylvania. The legislators provided introductions to staff members in the governor’s office. Within 30 days, Clemens had his permit. “Once we had the support of the governor’s office, Pennsylvania became a better place to do business,” he says. “The state did not change any regulations. They just started operating more efficiently and providing answers faster.”
To improve relations with elected officials, Clemens has begun serving on a variety of committees, including the governor’s economic task force and an economic committee run by a state senator. The committees serve as sounding boards, offering executives a chance to explain how government actions are affecting businesses. To increase his clout, Clemens also contributes to political campaigns. He makes gifts selectively, focusing on legislators who are involved with key issues. “We go to our friends and explain that we want to keep them in office because they understand our issues,” he says.
Clemens often recruits members of his extended family to lobby. The family has 564 members, including 249 shareholders in the company. “We consider the business a family heirloom, and many members are eager to call their representatives and go to bat for us,” he says.
Steve Grossman, the former president of Grossman Marketing Group (founded as the Massachusetts Envelope Company) in Somerville, Mass., has taken his political activism further than most business owners do. In January 2010—the company’s 100th anniversary year —Grossman stepped down from the helm of the business founded by his grandfather to run for Massachusetts’ state treasurer. Grossman won his election in November 2010; he remains chairman of the company while his sons, David and Ben, have succeeded him as co-presidents.
“I thnk my experience as a small-business owner is relevant to the problems we face today,” Grossman said in an address at the Family Firm Institute annual conference in October 2011. He cited a business owner’s customer-service orientation and background in “bringing common-sense solutions to problems.”
In May 2011, Grossman launched the Small Business Banking Partnership, a Massachusetts initiative that encourages community banks to make more loans to creditworthy small businessses. He has offered more than $100 million in state deposits to the banks, which in turn agree to increase their loans to small -businesses.
“I think more people from the business environment—and especially from family businesses—in government can make a big difference,” Grossman told FFI members.
All his predecessors were deeply involved in politics as well as in the business, Grossman says. The same year that his grandfather Max Grossman founded the company, friends recruited Max to work in the Boston mayoral campaign of John Francis “Honey Fitz” Fitzgerald, the grandfather of John F. Kennedy. Max Grossman continued to work for campaigns and eventually became Boston’s corrections -commissioner.
Steve Grossman’s father, Edgar, joined the business in 1936; his uncle Jerome joined two years later. The two brothers worked for a number of campaigns. In 1968, Jerome was a key aide in Eugene McCarthy’s presidential bid, while Edgar worked for Robert F. Kennedy.
Steve Grossman took the reins of the family company in 1975. In the 1980s, he followed the family tradition and began working for congressional campaigns. After he served as a fund-raiser for a Senate campaign in New Hampshire, more politicians contacted him. “If you do a good job raising money,” he says, “people ask you to help on other campaigns.”
Grossman co-chaired the finance committee of Michael Dukakis’s presidential campaign in 1988. In 1997, President Bill Clinton asked him to serve as chairman of the Democratic National Committee.
Grossman says his family members have always supported each other’s political endeavors. When one member of the family was away on a campaign, others would oversee the business. “My father was my partner in the business, and he always backed me up every step of the way in politics,” Grossman says.
Building trust
When officials know and trust a business, they are especially likely to listen to the business owner’s concerns, says James Warjone, 67, third-generation chairman of the Port Blakely Companies, a group of family-owned timber and real esate businesses in the Pacific Northwest. Warjone says his company has developed strong relations with officials over decades. Regulators who are writing environmental rules often turn to the company for help because the family has long been a leader in preserving lands. “Our reputation has helped to open doors in the political arena,” says Warjone.
Port Blakely often exceeds government regulations that are designed to protect the environment. The company works to protect owls and other wildlife and sometimes spares trees that other companies might cut. “We don’t necessarily squeeze every single cent out of an investment, but we still make money,” says Warjone, who retired as the company’s CEO in 2010.
State regulators turned to Port Blakely when they were designing rules about cutting trees near streams. Many loggers traditionally cut every tree they could find. But the state regulators wanted to save trees along streams, since that could help to keep the water clean. Warjone supported the new rules, saying that the provisions should be even tougher than the regulators intended. Some big competitors were not happy with Warjone’s position. “We got visits from some of the largest timber companies who did not like what we were doing,” he says.
Because of Port Blakely’s credibility with regulators, the company was able to weigh in on the national debates about preserving owls and other endangered creatures. The family business argued that some trees should be preserved as nesting grounds, while others could be cut.
Port Blakely was active in writing laws for an issue known as adverse possession. This involves situations in which people occupy land that they don’t rightfully own. Say a farmer has fields next to timberland owned by a logging company. The farmer clears a few acres and begins cultivating land that doesn’t belong to him. Under Washington state law, the farmer could take ownership of the land, unless the timber company registered a protest within seven years.
The issue had long been a problem for Port Blakely, which owns 200,000 acres of timberland. “We were moaning and groaning about this one day at a staff meeting, and we decided to see if there was a way to amend the adverse possession law,” says Warjone.
The company hired a lobbyist in Olympia, the Washington state capital. He contacted a state senator who was a farmer and was concerned about the issue. Working with the politicians, Warjone helped to draw up revised rules that were passed by the legislature. The new law made it harder to occupy someone else’s land. Under the old system, a farmer could argue that he occupied the timber company’s land by mistake. If the timber company failed to notice the error, then the land would go to the farmer. Under the changed rules, the farmer could not take title to the property without formally reviewing the land survey.
Joining forces
Besides producing pork on its farms, Clemens Family Corporation buys meat from about 100 independent family farmers. These farmers provide reliable political support, often visiting state officials along with Clemens. The farmers receive a welcome reception in the state capital because agriculture is a big industry in Pennsylvania, Clemens says.
In recent years, the farmers have tangled with advocates of animal rights who have argued that livestock should be permitted to roam outside. Clemens and the other farmers have stopped new rules by taking legislators on tours of livestock pens. In another issue faced by Clemens, health advocates argued that processing plants should be kept colder to protect the meat from spoiling. Clemens acknowledged the concern, but he told legislators that extreme cold is hard on workers in the plants. “You have to look at all the issues and come up with a temperature that satisfies different concerns,” he says.
In the 1990s, Port Blakely’s Warjone became involved in a struggle over new rules governing wetlands. Under proposed rules, property would be considered a wetland if there was standing water for two weeks a year. Owners could not harvest timber on ground that was considered a wetland. The new rules would hurt Port Blakely, but they would also impose a burden on family farms, Warjone realized. In many cases, the rules would disrupt farmers who had planned to cut their timber some day and use the proceeds for retirement or college tuitions.
To help persuade regulators to back off the proposals, Warjone traveled around the state, recruiting family farmers to testify about the hardship that the new rules would cause. “I spent a lot of time sitting in Denny’s restaurants with small landowners,” he recalls. “These people were in their 60s and 70s, and they were in tears because they thought that they were going to lose their nest eggs.”
After the landowners testified at state hearings, regulators agreed to modify their positions somewhat. The definition of wetlands was limited so that owners could harvest timber on more land. For Warjone, the incident demonstrated how even small family businesses can pull together to win concessions in political arenas.
Stan Luxenberg is a business writer based in New York City.
Activism 101: How to build relationships with politicos
• Get involved. Community groups and trade associations offer opportunities to meet elected officials. Family Enterprise USA (www.familyenterpriseusa.org) is a new non-profit educational association that works to call attention to issues facing family business owners.
• Extend invitations. Call your local representatives and invite them to visit your business. If an elected official can’t make it, ask if a staff member can come instead. Start out by simply showing your guests around and explaining your company’s role in the community. You’ll have more success asking for favors after your representatives or their staff members have gotten to know you.
• Offer to help. Local officials remember companies that donate money or resources to community-service projects.
• Involve your family. Ask family members to call elected officials in support of issues affecting your company.
• Team up. Join forces with customers or suppliers to advance your cause—especially if these companies are also family businesses.
• Establish credibility and trust. Demonstrate to legislators that your business is a good corporate citizen that follows the rules.
• Contribute money and time. Donate to political campaigns. Volunteer for service on local business task forces.
• Be persistent. Recognize that it might take years of effort to make headway.