Making the right move

With virtually no debate, the National Propane Gas Association’s board of directors in February voted near-unanimous support to restructure the association and move its operations to Washington, D.C.

The board voted 84-12 in favor of the recommendations of the NPGA’s Relocation Task Force, which analyzed related issues and developed a plan to facilitate the move. NPGA President-elect Gene Bissell of AmeriGas chaired the 30-member task force.

Gene Bissell

“There’s never been an issue so challenging,” says Bissell, who presented a detailed summary of the task force’s findings to assorted industry groups right up to the day of the vote.

The potentially divisive issue nearly came to a head at the NPGA board meeting last October in Montreal. Opponents of the move, fearing a quick vote, managed to postpone the decision until a more detailed accounting of the costs and impact could be provided.

“One of the things that caught us by surprise was that some people thought we were trying to railroad them in Montreal. The Executive Committee had debated whether to have the board vote or delay it because we were genuinely concerned about the staff in Lisle. We didn’t want to leave them hanging. We were motivated by the right things,” Bissell says.

Transition timeline

“I think the board of directors did us a big favor by delaying the vote. It protected us from our own enthusiasm. The right thing to do was to delay that vote, which allowed us to build a consensus and articulate a clear vision. I think we would have won had we voted in Montreal, but the worst outcome would have been to alienate a significant portion of the NPGA membership. The value of our association is that it is so inclusive, so I’m really pleased that it worked out.”

Since October’s meeting, separate committees studied staffing, financial projections and real estate concerns. Their findings provided the answers that swayed votes to support the move. They included:

Relocating Headquarters Can Be Done Efficiently. Relocating the NPGA headquarters to Washington, D.C. can be done without a disruption in current member services, and in a manner that enhances the association’s technical and legislative programs.

Significant Savings Can Be Achieved Through Outsourcing. Gross savings in the range of $150,000 to $200,000 can be achieved by outsourcing certain functions such as Pinnacle, meeting planning, fulfillment (current Lisle warehouse function) and member promotion. The prospective savings were sufficiently compelling that the task force recommended outsourcing these functions irrespective of the decision to relocate.

Ongoing Costs Lower in Washington. It would cost about $100,000 less to operate in Washington on a recurring basis, compared to the status quo.

One-time Cost to Move to Washington. The total, one-time cost to move to Washington would be $685,425. This figure includes both severance costs and the cost of staff overlap necessary to ensure an appropriate degree of continuity.

Staffing. Current staff structure consists of 33 employees: 21 in Lisle, seven in Washington and five in assorted field staff positions. The revamped headquarters will have 16 full-time positions plus the field representatives. Only two Lisle employees will remain with the NPGA – Bruce Swiecicki, vice president of technical services; and Sue Spear, recently promoted to vice president of education and training. Both are expected to remain in the Chicago area. To ensure sufficient continuity during the transition, the task force recommended that a total of 32.5 months of staff overlap be authorized. Overlap intervals for eight key positions range from one month to one year.

Reserves Sufficient to Fund Move. The total effect on cash reserves to relocate to Washington is about $450,000 over two fiscal years. Cash reserves as of Nov. 30, 2001 were about $1.1 million.

Expanded Technical and Legislative Program. The structure of a Washington headquarters would include 16 full-time employees. This would include the addition of one full-time codes/standards professional and an additional full-time lobbyist.

Leadership During Transition and Beyond. Rick Roldan, currently vice president for government relations, has agreed to succeed Dan Myers and become the new chief executive officer. He will be responsible for managing the proposed transition and ultimately guiding the organization to achieve its strategic goals.

Bissell maintains that the motivation behind the move was not to save money.

“Our goal from the beginning in proposing the move to Washington was to make the association more effective. Along the way, we were challenged by those who said it would cost more. We were surprised to find that the cost will actually go down,” he says.

“More importantly, I think the industry will see a more effective process.”

Roldan’s appointment provided an opportunity for him to map out a new vision for the revamped association that he will direct. With traditional duties of research and development, marketing and consumer education already turned over to the Propane Education & Research Council, the association wants to beef up its focus on regulation and legislation concerns.

“Rick had a big role in setting the strategic plan and vision for a more effective NPGA,” Bissell says. “We were all very impressed with his work. It certainly confirmed the decision that he has the ability to lead our association. He took our goals and came up with list of capabilities. He laid out a vision for us to become more effective in the legislative arena and in the areas of codes and standards. From discussions with task force members it became clear that we really needed to become more active in the various codes and standards committees because their work has such a significant impact on our members.”

The task force agreed that for NPGA to achieve its strategic goals it must be capable of performing the following tasks:

• Effectively lobby multiple issues on Capitol Hill simultaneously.
• Effectively lobby multiple issues before federal agencies simultaneously.
• Place equal emphasis on the House and Senate.
• Practice preemptive lobbying.
• Respond rapidly to unanticipated issues.
• Become a key player in the electoral process.
• Enhance name identification among federal policy makers.
• Exert grassroots strength in both the legislative and standard-setting processes.
• Be the preeminent force in the NFPA 58 process.
• Boost involvement with other NFPA committees.
• Increase involvement in the activities of both the International Code Council (ICC) and the International Association of Plumbing and Mechanical Officials (IAPMO).
• Increase participation in the American National Standards Institute (ANSI) design, construction and testing process of core products used in the propane gas industry.
• Monitor American Society of Mechanical Engineers (ASME) codes that affect the propane industry.
• Communicate industry positions, actions and initiatives to trade publications, the general media and the Washington “echo chamber.”
• Oversee content maintenance of CETP and utilize broad-based membership to develop and refine the intellectual property related to safety.
• Increase membership.

Bissell takes issue with the suggestion that NPGA is relinquishing its role as industry leader to PERC.

“Our role in providing industry leadership isn’t changing,” he insists. “We each have a clear role to play. Ours includes serving as the voice of industry, government affairs, conventions, and the codes and standards aspect of safety. These critical roles will continue and are not in controversy. In addition, we will continue to proactively address the challenges and opportunities that face our industry.”

The role of PERC is to grow the market through a variety of marketing and research and development initiatives, Bissell says. They also share the burden to keep the industry trained in safety.

“I don’t want people to think the NPGA is somehow less than it was before because of the changes that have been made. I worry that our members see this as we lost something; that’s not the case,” he says.

“We have a good track record of successes in the areas of governmental affairs and standards, but we needed to enhance those areas because they are so vital to our members. It’s a critical role and the real reason that many companies and state associations have rejoined NPGA in recent years. I think it should make people feel good that we have strengthened NPGA in those critical areas.”

Bissell says association leaders worked hard to ensure that staff members in Lisle were kept informed and treated as fairly as possible once they chose not to move to Washington.

“I think we need to commend them on how they performed during all of this. Their future was in limbo, but they continued to give us 100 percent as we worked through all the details. They remained positive and professional, and I think we all owe them a debt of gratitude.

“As for Dan (Myers), we provided for him to stay for a year for continuity, plus we provided him a competitive severance package and we plan to do some other things that let him know how highly we value the contribution he has made to our industry.”

According to Bissell, NPGA still has some work to do. Some state associations voted against the move, and Bissell wants NPGA leaders to get on the road and answer their questions and concerns.

There also is criticism about the projected cost savings on the heels of an association dues increase. Last October, the NPGA board approved a 10 percent hike. In order to maintain pace with inflation, the board also authorized the association’s Executive Committee to raise dues by up to 3 percent each year, beginning in 2003, without further board approval.

“I understand the concern,” Bissell says. “The dues increase was driven by inflation. It became clear to the Executive Committee that since we voted for an 11 percent reduction in dues in 1997 and have not raised dues since then, every year we were having to cut back to live within our means. While membership has increased, consolidation has cut revenues. Every year we face increases in salary and benefit expenses, rent and insurance. That dues increase was meant recapture some of these inflationary expense increases.”

The move is expected to save $100,000 per year. Bissell says NPGA will use some of that to rebuild the cash balance that is depleted by the relocation.