German companies lobby for stimulus cash
Friday, May 21st, 2010
After a few weeks, the efforts paid off for Volkswagen. Anna-Maria Schneider had worked hard for this in the early summer of last year. Schneider, at that time Volkswagen’s director of industry-government relations in the United States, and her team were reaching out to government officials. As a lobbyist for Europe’s biggest car company, her job was quite simple: to further Volkswagen’s interests in Washington, D.C.
Although both the U.S. and German economies were in the midst of their worst recessions since the 1930s, Volkswagen shelled out $270,000 between May and June to keep furthering those interests. And during those months, Congress was working on the Car Allowance Rebate System, better known as the cash-for-clunkers program, which gave consumers a $3,500 or $4,500 rebate if they traded in an older car and purchased a new one with better gas mileage. The legislation became a hit. By mid-August, after just one month in operation, the $3 billion allocated for the popular program was spent. Nearly 700,000 dealer transactions were reported by the Department of Transportation. The car-rebate-plan was a pretty good bargain — not only for customers but also for some automakers.
And the cash-for-clunkers program is only one example of a larger trend: As the government is spending hundreds of billions of dollars and enacting new legislation, such as the 2009 stimulus and health care legislation, and considering new climate change legislation, the lobbying business in Washington has skyrocketed.
Companies and organizations have never spent as much as in 2009 for lobbying on the federal level. And German companies and their U.S. subsidiaries had their share of it.
While the global economy kept sliding into a financial funk, the federal lobbying activities of German companies and their U.S. subsidiaries skyrocketed, according to an investigation by the Investigative Reporting Workshop at American University and the German Sunday newspaper Welt am Sonntag.
Volkswagen's role
When the cash-for-clunkers program was first proposed, there were hurdles that would have prevented a company like Volkswagen from benefitting – hurdles like a “Buy American” clause that would’ve limited the refund to transactions involving the purchase of a new American-made car.
"I was very active simply because of the ‘Buy American’ provision in an earlier version," Schneider said in an interview.
Convincing lawmakers to change that provision – or support the program at all – relied on convincing many of them that Americans would benefit.
"If you look at earlier votes, some Republicans didn’t care for this bill – they saw the auto industry, particularly GM and Chrysler, had gotten enough government money," she said. "But we argued this had more to do (with the economy) than just manufacturing – the dealerships, they were collecting cobwebs. People just weren’t spending money."
Volkswagen was more active than some other German automakers, like Mercedes and BMW, because of another hurdle – a requirement that the new vehicles have a price tag less than $45,000. Those two companies only had two models – the Smart car and Mini Cooper, respectively – that were eligible under the price limit. At least one version of every Volkswagen model was eligible, Schneider said.
"We had a lot more to gain, so I was a lot more active," she said.
For Anna-Maria Schneider and Volkswagen’s lobbying efforts in Washington, it was mission accomplished. Indeed, she was promoted to vice president, for industry and government relations of Volkswagen Group of America. According to the press release announcing her promotion in December 2009: "Anna Schneider has grown relationships with elected officials and effectively communicated the Group’s sustainable mobility strategy with key constituencies on Capitol Hill and with the Administration."
Schneider, who joined Volkswagen in 2008, said that promotion was a reward for all of the work her office does for Volkswagen, not just the cash-for-clunkers success – something she credits to the hard work of lobbyists for all of the manufacturers, not just Volkswagen.
(Daimler, the parent company of Mercedes-Benz, did lobby on cash-for-clunkers, but BMW did not, according to lobbying records. Sales for both BMW and Mercedes dropped during the weeks the program was active. DaimlerChrysler was a German-American company until 2007, and although Daimler spent $170,000 for lobbying in the second quarter of 2009, their figures were not included in our analysis of lobbying from 2006 to 2009.
Overall lobbying
German companies’ lobbying expenses grew from $15.7 million in 2006 to $33.1 million last year, based on an analysis of about 1,000 federal lobbying records for the top 50 German firms in the United States, according to a recent ranking by the German American Chambers of Commerce and based on annual sales figures.
Especially during financial crises, governments traditionally increase their spending as a means to energize the economy. As companies can win or lose millions of dollars, lobbyists aim at pushing legislation and other government policymaking in their favor. "During a time of turmoil, expenses for lobbying often skyrocket," said Heidi Klein of Lobbycontrol, a public interest group advocating for transparency and democracy in Germany. "Companies fear too much regulation by the government – that’s why they try to contain right from the beginning."
And German industry agrees. Bernhard Welschke, a representative of German industry and trade in Washington, said: "If politics plays an important role in an economy, you have to react. And that leads to higher expenses for lobbying."
In the United States, the reporting and transparency regulations for lobbyists are more stringent than in Germany, where registration is not mandatory. In Europe’s biggest economy – The Economist has called Germany the continent’s engine – it is impossible to track the money flowing from companies to politics.
Therefore, no one knows the precise role of German industry regarding the German economic recovery programs: the lobbying took place in the shadows. And that is why a look at the lobbying expenses of German companies in the United States appears to be one of the best ways to shine a light on how German corporations attempt to influence politics.
Much of the Washington lobbying by German companies focused on the $787 billion stimulus package, consisting of massive spending for projects and tax cuts. Lobbying documents filed by 13 of the 25 German company affiliates in 2009 reported that this bill was among the issues they lobbied on.
From the early planning phase of the package in 2008, a "Buy American" provision in the bill worried foreign investors because it would have barred discounts for new vehicles made overseas. Foreign countries protested, and John Bruton, the European Union’s ambassador to the U.S., wrote a letter to the Obama administration and to Congress urging them to refrain from measures that would violate world-trade rules. German Chancellor Angela Merkel expressed her concerns regarding protectionist measurements in talks with President Barack Obama. And German companies BASF, SAP, Schott, Siemens and VW specifically lobbied against the "Buy American" requirement. Their efforts were successful: the provisions were softened in the final version.
"About one-third of the stimulus package is devoted to projects that are also of some interest for German companies," said Welschke, whose office is near Farragut Square and the White House in Washington. Of particular interest were construction projects in which the German industry could use its edge in green technologies such as wind energy, Welschke continued.
One of the world’s leading firms in this sector is Siemens, Europe’s largest engineering company. In 2009, its environmental technologies’ sales were €23 billion, equivalent to $29 billion in U.S. dollars. In the United States, Siemens generates about one-fifth of its total sales. The U.S. stimulus money is raising Siemens’ hopes: "We expect contracts worth about $8 billion out of the stimulus," Siemens spokesman Wolfram Trost said.
Like many of the analyzed German companies, Siemens regards itself as a global company with deep roots in the United States. Siemens USA Holding ranked first in the top 50 list with sales of about $27 billion a year. The company employs more than 60,000 people in the United States.
In 2009, Siemens spent $5.1 million for lobbying on the federal level. The company invests the money to ensure that its opinion regarding "important key topics" gets heard, said Trost. These topics include energy, trade and the current darling of all lobbyists: health.
The amount the pharmaceutical and health products industry spent on lobbying in 2009 – about $266 million – was the highest ever reported by one industry in one year, according to the Center for Responsive Politics. Not surprisingly, the German pharma companies Boehringer Ingelheim, Fresenius and Bayer had specific concerns regarding the health care reform legislation and lobbied on it.
Bayer and its subsidiaries spent more on lobbying overall in Washington than any other German company, with expenses worth more than $23 million from 2006 through 2009, rising every year (2006: 3.4 million; 2007: 4.4 million; 2008: 8.5 million; 2009: 8.5 million).
"Basically, the expenses contain labor costs, leases or membership fees for associations," Bayer spokesman Rolf Ackermann said. Last year, Bayer and its affiliates, HealthCare, CropScience and MaterialScience, increased the workforce in its D.C. office for "legislative affairs" from six to 10 employees.
The German lobbying boom appears to be ongoing. Even Klein of Lobbycontrol said she appreciates a vivid exchange between society and politics. "Politicians don’t have to work in an ivory tower," she said, though she objects to the big differences in terms of the resources expended: Some lobbyists, like the ones working for big companies, had massive amounts of money. "This helps them a lot to get their voices heard," Klein said. "It is an illusion that politicians listen to the best argument." In the extreme, she said, a country could appear to be run more by companies than elected politicians. And this danger seems to be higher in Germany than in the United States.
German companies don’t report any details about their lobbying in Berlin. There have been hearings in committees of the parliament (the Bundestag) on the pros and cons of a mandatory lobbying registration law. However, no bill has been introduced. "In Germany we need transparency rules like in the United States," Klein said.
Top lobbying firm Bayer now supports the transparency initiative for mandatory registration. "This corresponds to our corporate guidelines. We support the plans," said Ackermann.
Methodology
In order to obtain the information about the lobbying activities by German companies and affiliates from 2006 to 2009, about 1,000 lobbying records from the U.S. Senate Lobbying Disclosure Act Database were analyzed.
The parent companies and their U.S. affiliates were chosen because they appear in the recent (2007/2008) top 50 ranking of German firms in the United States, compiled by the German American Chambers of Commerce in January 2009.
Manuel Bewarder is a reporter for Die Welt, a German national, daily newspaper based in Berlin. He received his M.A. from the American University School of Communication in 2009. Russ Choma, a reporter at the Workshop, assisted with reporting and research. A version of this story was published in German by Welt am Sonntag on May 16, 2010. Earlier editions of this story published in Germany used VW's 2009 lobbying expenses that did not reflect its amended reports.
