Taking care of business

The new man running the state chamber is an old hand at leading legislators where his members want them to go.
By Tim Gray

The rhetoric in them was so hot that Lew Ebert, then on the staff of the Pennsylvania Chamber of Business and Industry, joked they could burn your hands. He called them "blister faxes," responses to ones he had sent polling members about workers' compensation insurance. His questions weren't intended just to gather information but to remind business owners of the high cost of coverage in Pennsylvania, which in the mid-1990s had rates double those of neighbors such as Maryland.

Republican Gov. Tom Ridge had made overhauling workers' comp a priority, and the chamber was doing whatever it could to hammer his campaign plank into law. As political gamesmanship often does, Ebert's technique tiptoed toward the edge of unethical: Polling is supposed to gather opinions, not shape them. It proved to be an effective part of a $2 million chamber-led lobbying campaign that ended with Ridge signing a bill in June 1996 and, the following January, the state Insurance Department announcing rates would fall an average 15%, saving businesses nearly $500 million a year.

The outcome showed that the chamber could muscle aside organized labor, a potent force in Pennsylvania politics, and cull cumbersome regulations. It also launched Ebert on an accelerated career path that led through Kansas to Raleigh, where last August he became president and chief executive of North Carolina Citizens for Business and Industry. Ebert, 49, quickly began shaking up the 65-year-old institution. In mid-March, it renamed itself the North Carolina Chamber. Along with the new name, there's an aggressive new attitude, one that could signal a historic shift from the traditionally cozy, amicable relationship between the state's business and government leadership.

In Pennsylvania, where he spent the first 45 years of his life, and in Kansas, where he led the state chamber for 3 1/2 years, Ebert demonstrated talent for raising money from members and raising hell in the halls of power. "He was a master of political warfare," says Floyd Warner, president of the Pennsylvania chamber and his former boss. "If you want to succeed, the legislature needs encouragement. The way you do that is to stir up the constituency. He helped to develop our system of what could be called selected-and-directed warfare."

But if Ebert's martial skills are sharp, his ears seem dulled to the down-home swing of political life and how progressive business influence has shaped policy in the Tar Heel State. Asked about his vision for the chamber, he talks about how "business needs to be vigilant against the trial lawyers, unions and environmental groups." It's as if he doesn't know the U.S. Chamber of Commerce has rated the state as having the nation's 10th-best legal system for business - behind only Virginia in the South - or that it's tied for dead last in union participation. Carping about tree huggers may sound aggressively pro-business, but nature is a valuable business asset here, and not just for the tourist industry. The knowledge workers the state strives so hard to attract don't want to live downwind from ponds of pig poop or shoo their kids away from polluted rivers. That's one reason they left places like Pennsylvania.

Ebert replaced Phil Kirk, who led NCCBI a record 16 years. Under him, the nonprofit group complained about taxes and regulation, but it was committed to educational reform and bipartisanship. A former teacher and state senator who was chief of staff for two Republican governors and a U.S. senator, Kirk favored personal politicking - he was known for his handwritten notes - over brawling. More than three decades in Raleigh had won him lots of friends and a bank full of favors.

But some members had tired of his fix-ation on schools - Democratic Gov. Jim Hunt appointed him to the state Board of Education in 1997, and he stepped down 51/2 years later as the second-longest-serving chairman in its history - and his casual style of money management. NCCBI often barely covered its expenses, some years even losing money, and failed to build financial reserves. In fiscal 2005, for example, it went $48,584 in the hole on about $2.8 million revenue. Salaries, at $650,000, were the largest line item on its budget. (Because the chamber isn't a 501(c)(3) organization, it isn't required to disclose salaries, and Ebert declines to do so.) "Phil was a great after-dinner speaker for NCCBI," a prominent Raleigh lobbyist says. "But that's the easiest part of the job. Raising money, that's the hard work."

Rumors were rife as to the reason for his departure, but Kirk, who has joined his alma mater as Catawba College's vice president for external affairs, says he left voluntarily, worn out by the demands of the high-profile job. Another longtime lobbyist says his complaints were more specific than that: With NCCBI slumping financially, recent chairmen, chosen from the membership, were getting more involved in day-to-day management. To Kirk, that felt like meddling. He left at the end of 2005. One reason that, after months of searching, the board picked Ebert was his success in shoring up the finances of the Kansas chamber, says Graham Denton, NCCBI chair at the time and North Carolina president of Charlotte-based Bank of America. The board wanted "a professional state chamber person who could bring in best practices for increasing the membership and expanding the revenue base, which would give us an opportunity to do more things."

Chances are, the organization's style will change. For Kirk, though he's loath to admit it, the position provided a bully pulpit from which the consummate insider could help shape the state's, not just the chamber's, future. He saw himself as consigliere, counseling business leaders in the ways of the capital. He was, in his heart, a wonk. Ebert, in contrast, is the pro-business pro, whose agenda can be summed up in a quote: "Our members have told us what they want, and we're acting on that direct customer input." He plans to be, as the new slogan goes, "a force for business."

If Floyd Warner had been ready to retire a little earlier, Ebert might never have left Pennsylvania. Until he became president and chief executive of Kansas' chamber in 2003, he had spent most of his life within 50 miles of Harrisburg, Pennsylvania's sleepy state capital. He and his little sister grew up in a Masonic orphanage in Elizabethtown, a small town just down the road from Hershey, home of the famed chocolate maker. Their father, a salesman, died when they were young, and their mother, dogged by mental illness, couldn't handle the children alone. Though orphanages are often portrayed as little gulags, Ebert compliments the Masons, saying, "They were very generous - we wanted for nothing in terms of education, tutoring and sports." He began playing golf and today has a single-digit handicap. Golf, not his job, first brought him with North Carolina. He had visited Pinehurst to play its famed No. 2 course.

For college, he stayed close to Elizabethtown, attending Millersville University, where he majored in political science and paid his bills working in a grocery, rising through the ranks from bag boy to assistant manager. He and his wife, Tammie, met in school. (They have two daughters, Ashley, a student at Penn State, and Jamie, who lives in Morrisville, outside Raleigh.) An introduction to chamber work came in college, too. Senior year, he had an internship with a political-action committee allied with the Pennsylvania chamber. That led to a job offer when he finished school in 1980. "I graduated Friday and went to work Monday. I started on the phone selling memberships." During the next 23 years, he did almost every job in the organization but the top one and, except for leaving to run a state senate campaign, worked nowhere else. His forte was communicating with the membership, especially small businesses.

Like North Carolina, Pennsylvania has evolved from a farming-and-factory state into one with a broader, brainier economy. Many of the big-shoulders industries that once dominated have slid into irrelevance, and Ebert realized that the organization had to court small businesses to survive and grow. That meant taking a hard line on taxes and regulations. "Lew knew how to talk to small businesses," says Gregg Robertson, president of the Pennsylvania Landscape and Nursery Association and a former chamber colleague. "They're not interested in process or in the fact that the chamber has a great relationship with the powerful guys in town. They're interested in your supporting legislation that helps their bottom line." He remembers a canny tactician who didn't mind occasionally irking the powerful. "That's not always the way chambers operate - they like to be friends, they like to have those political relationships. Lew's calculus was: 'It's nice to have relationships, but how is that benefiting our members?'"

Witness the workers' comp fight. In late May 1996, several lawmakers from Philadelphia districts where labor was strong were waffling as the summer recess neared. Chamber staff knew if the bill didn't pass before then, it probably would die. Before the final push to adopt a budget, legislators broke for Memorial Day weekend. Ebert hired a plane to tow a banner up and down the beach in southern New Jersey, where several key lawmakers had second homes. On it was emblazoned: Reform Workers' Comp Now. "Half a million people must've wondered, 'What's that?'" he says. "But for the half a dozen who needed to see it, it gave them a sense that we were committed to getting the bill done."

Not every idea worked so well. Sucked into the dot-com craze, the Pennsylvania chamber launched a Web portal for state and local chambers. YBN.com - short for Your Business Network - provided business information and tried to sell insurance, discounts for long-distance phone service and credit cards. "We invested about $4 million and lost most of it," says Ebert, who didn't lead but helped devise the effort.

The Kansas chamber came calling in late 2002, attracted partly by the Pennsylvania chamber's reputation as one of the best-run in the country. The Kansas group was faltering. "The advocacy message was mixed, and the membership was shrinking dramatically," says Jim Gregory, a Wichita-based public-relations specialist who served on the executive committee. As in Pennsylvania, Ebert reached out to small businesses and zeroed in on hot-button issues such as taxes and legal reform. If a chamber gets its agenda right, he says, and communicates clearly and frequently, members and money follow. "It's finding out what your customers want - what they're willing to support financially - and staying in touch on a constant basis."

Ebert and his board targeted a property tax on machinery and equipment. "The insidious nature of the tax was that you were taxing productivity. Companies that wanted to invest in new equipment, you were taxing them." Democratic Gov. Kathleen Sibelius agreed to support the change, but state senators balked. "They were resisting because the tax was collected locally," Ebert says, "and some of their local governments were concerned about how they were going to make up the money, so we ran full-page ads in their districts, and we did radio ads saying, 'Ask your senator why he doesn't want jobs to come here.'" Reluctant lawmakers soon changed their minds.

Education advocates saw his anti-tax crusade as a threat to school funding. The minority leader of the Kansas Senate told Raleigh's News & Observer last summer that Ebert "led the charge against any investment in our K-12 schools" and "is decidedly anti-education." The executive director of Kansas Families United for Public Education added, "I wish your education advocates the best of luck, because I know they're going to need it." Ebert insists he was doing his members' bidding. He says they were tired of pouring more money in-to schools that didn't really need it. "If you understand Kansas, you know they have some of the best schools in America, with some of the top spending per pupil. And the politicians didn't want to work on business issues. They just wanted to make the schools better, and my members were saying, 'Wait a minute. My gosh.'"

The members may have said that, but they got their figures wrong. According to the most recent U.S. Census Bureau report on public-education finances, Kansas spent about $7,500 per student in the 2003-04 school year, which put it below the national average of about $8,300 per student. North Carolina spent about $6,700 per pupil that year, putting it in the bottom third.

Like Kirk a longtime Republican, Ebert points to his last job as evidence that the North Carolina Chamber will continue to be nonpartisan. "In Kansas, we talked a lot about members of 'the Business Caucus.' It's not party-specific. It's how you vote. Kansas had three groups that functioned like three different parties - conservative Republicans, moderate Republicans and Democrats. They even caucused separately. If we'd chosen one of them, we wouldn't have had enough votes to get anything done."

"He's a pragmatist," says Gregory, the Wichita PR man. Victories like the machinery-tax repeal helped to jump-start the slumping Kansas chamber. Under Ebert, revenue doubled and membership grew tenfold, partly because he invited all of the state's local chambers to join, automatically making all their members state members. That growth sang like a siren to the NCCBI board. "We were looking for someone with strong skills in membership development and retention," says Bill Johnson, president and chief operating officer of Raleigh-based Progress Energy.

When Ebert arrived in Raleigh, he found a group that was ailing financially, with almost no money in the bank. "For the last 10 years, this organization has planned to break even or lose money, and you can't be effective doing that," he says. "We're a nonprofit, but that's our tax status, not our business plan." Started in 1942 as the North Carolina Citizens Association by textile, banking and utility executives who wanted more say in state government, it was recognized by the U.S. Chamber of Commerce as the official state chamber in the early '80s and later designated the state manufacturing association by the National Association of Manufacturers. Membership, which had peaked at 1,650, was down to 1,122 when Kirk took over in 1989. He says it reached nearly 2,200 during his tenure, had slipped to 1,950 when he left and was 1,625 when Ebert took over. The number stood at 1,674 in mid-April, says Sherry Melton, vice president of communications. "Lew's goal is to be at 2,000 members by year's end."

As he was in Kansas, Ebert seems intent on showing results quickly. Within weeks of arriving, he barnstormed the state in a series of regional membership meetings and began refocusing the agenda on a handful of issues common to chambers around the country - taxes, tort reform, regulatory overreach and union opposition. "We've been busy trying to identify what the members want us to work on," he says. "We've hired a pollster to bring us to these conclusions. We're just saying, 'Just tell us what you care about.' We're not asking any push-poll-type questions." Yet a visit in February to the NCCBI Web site suggested otherwise. The home page prominently displayed a one-question poll: "Do you believe that North Carolina's current tax structure is a deterrent to business growth and job creation in our state?" It's a reasonable question, and a legislative study committee is considering how to modify the state's tax system for the economy of the 21st century. Even so, the poll suggests that what Ebert seeks is affirmation, not input.

In February, he let go six staff members and farmed out production of the chamber's 64-year-old magazine to a Cary company, leaving a staff of 15. "We had seven people working on the magazine and one lobbyist, and it really needs to be the opposite," he says. The name change was approved at the annual meeting the following month. "Our new name and logo more accurately reflects who we are, what we stand for and what we do. We are a nonpartisan business-advocacy organization working to make sure that North Carolina is and remains the best state in America in which to do business and the most competitive for jobs." The poll did not appear on the North Carolina Chamber's redesigned Web page, which prominently promotes a capital campaign to "transform" the organization.

Ebert admits he has a lot to learn about his new home. "I know a lot about how state chambers ought to work and almost nothing about North Carolina. So I'm learning a lot about the state real quick and trying to combine that with some of the best practices from around the country." If he were better acquainted with North Carolina, he might know V.O. Key's famous description of it as a "progressive plutocracy." The political scientist wrote in 1949 that the state's wealthy ruling class was guided by enlightened self-interest. North Carolina has done better, for example, with race relations than, say, Alabama and Mississippi, not because its leaders were integration-minded liberals but because they knew that TV screens showing deputies beating blacks would tarnish the state's reputation. And that would be bad for business.

That spirit has given North Carolina a national reputation as being both progressive and pro-business. It has helped create support for some of the South's best state universities and Research Triangle Park as catalysts for economic growth. It endures in figures such as former Bank of America Chairman Hugh McColl, who lent his prestige to all manner of public projects in Charlotte, and in former UNC system President C.D. Spangler and current President Erskine Bowles, who before assuming the post made fortunes in business and finance. Phil Kirk's supporters would argue he represented that line of leadership legacy from the government side.

"The challenge for [Ebert] is going to be building the relationships that Phil came with," says Leslie Bevacqua Coman, a staff lobbyist under Kirk and now a director of government affairs at CapStrat, a lobbying and PR firm in Raleigh. To compensate, Ebert is hiring governmental-affairs staff with strong Tar Heel ties. John McAlister, a former lobbyist with Charlotte-based Duke Energy, signed on last winter, as did James Earp, a former staffer for U.S. Sen. Elizabeth Dole. Ebert also intends to spend a lot of time at the legislature, where he thinks lawmakers will be open to hearing his message. "Politicians seem to get what a state chamber does," he says. "And they're interested in someone with a new perspective, someone who's seen how it's done elsewhere."

And if they don't pay close attention, Ebert might hire a biplane to buzz their beach houses.