Association Mergers: Going to Altar Nothing New

By Margo McCall -- Tradeshow Week, 8/9/2004

With up to 150,000 U.S. associations already in existence and another 1,000 being formed each year, it's no wonder that members of the association community, like their corporate counterparts, are continually joining forces.

As Elmer Queer, president of the American Society of Heating and Air-Conditioning Engineers (ASHAE), said in 1958: "Prestige is itself difficult to evaluate, but a combined society with a broader scope and an increased membership can be expected to be looked on with greater respect by other professional groups as well as by its own members."

The reasons for associations merging are as valid now as they were a half-century ago: increase membership and lobbying clout, improve services to members and reduce operating costs. Although not normally the primary aim of association mergers, one unintended outcome is often a bigger industry tradeshow or expanded conference and seminar offerings.

Some of the country's largest tradeshows are sponsored by associations that grew by gobbling up others. The Intl. Air-Conditioning, Heating, Refrigerating Exposition, or AHR Expo, established in 1930, is one such example. The Tradeshow Week 200 show, which in 2003 measured 400,416 net square feet and drew 1,408 exhibitors and 38,224 attendees, is co-sponsored by the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE) and the Air-Conditioning and Refrigeration Institute (ARI).

Established in 1903 as the Ice Machine Builders of the United States, ARI took on its current name when it merged in 1953 with a related trade association. Since then, several other related groups also have merged into ARI.

Following Queer's advice, ASHAE, founded in 1894, did go ahead and merge with the American Society of Refrigerating Engineers (ASRE) in 1959, reflecting the fact that there was overlap in the groups' research programs, membership and annual meetings. The result was ASHRAE, an international organization with 55,000 members.

For a merger to make sense, the membership bases need to be similar. That was the case with the American Apparel Manufacturers Assn., Footwear Industries of America and The Fashion Assn., which came together four years ago as the American Apparel & Footwear Assn., representing more than 700 member companies.

"The merger has been very successful," said Kevin Burke, who joined the AAFA as president and CEO a year after the merger. "It's been a pretty good fit because the footwear portion of the AAFA has been through a lot of the same things that the apparel industry has gone through."

It's been good for the association's event business too. Susan Lapetina, AAFA director of strategic planning, said the merged association now puts on 16 professional development conferences each year, compared to a dozen previously. "They have been very well received," she said.

Lapetina said the merger made sense because there were many similar facets to the footwear and apparel business. Joining increased the groups' effectiveness in lobbying and pushing for legislative change.

Their tradeshows, however, did not merge. Global Sourcing, a standalone footwear supplies event that started in New England, has now moved to Las Vegas and since 2002 has occupied a pavilion at the semiannual World Shoe Assn. show. The pavilion typically comprises 4,000 sq. ft. of exhibit space.

The association's Material World/Technology Solutions, meanwhile, serves the apparel side of the business. The show, next set for March 16–18 at the Miami Convention Center, typically draws 400 exhibitors and 10,000 attendees.

While Lapetina said AAFA members have benefited from the combined organization's increased strength, the tradeshows serve "very distinct needs." Initially there remained something of a divide between the separate staffs — most of which were comprised of seasoned veterans in their respective industries. But now, she said, "it's become very seamless."

Frequently, even though there's an obvious need to merge two associations, a merger doesn't happen overnight. Consolidation of ASHAE and ASRE, for instance, was discussed for a good 30 years before the merger came to fruition.

Merger attempts were defeated in 1937 and 1941. The problem, according to a 1992 article in ASHRAE Insights, was opposition by fringe members in the cold storage, domestic refrigeration and steam and hot water heating industries.

It also took a while — 20 years — for members of the Alliance of American Insurers and the Natl. Assn. of Independent Insurers to tie the knot. When they finally did last January, the new group was named the Property Casualty Insurers Assn. of America (PCIAA), which represents about 1,000 members.

Joe Annotti, PCIAA vice president of public affairs, said the union was carried out to consolidate political power, staff and financial resources. "In our case, we had two organizations of pretty significantly different size going after a lot of the same things," he said. "While we each represented our members well, and had the same messages on most of the important issues, we were still confusing legislators. It made political sense and it made economic sense."

Annotti said the two groups had "been to the altar three or four times previously. You'd get down to the very end of negotiations and there were still historical ties with members to resolve."

The merger was only finalized after older leaders retired and were replaced with fresh members, many of whom hailed from the financial community. Because of their financial backgrounds, Annotti said, "they were wondering why there were two organizations."

The groups — like the American Society of Assn. Executives and the Greater Washington Society of Assn. Executives, which recently merged — scaled back staffs through attrition rather than laying off workers after the merger closed.

The biggest challenge, said Annotti, was integrating the employee cultures. "What we've heard from members is it was seamless. They discovered they would pay less. For members, it was win-win."

And suddenly interest in the association's meetings has grown. PCIAA hosts seven meetings per year, including a CEO Roundtable, a networking event and an annual meeting.

Attendees at the meetings are primary insurers, representing PCIAA's membership. But their clients, reinsurers, are also eager to attend the meetings. Annotti said when it was operated by NAII, the annual meeting typically drew 400 CEOs or senior managers, another 400 spouses and guests and about 800 reinsurers. This year's annual meeting, he said, is set to attract about 500 executives, an equivalent number of spouses and guests and up to 1,000 reinsurers.

"They have a huge, huge interest in attending our meeting," he said of the reinsurers.

Who knows, maybe attendance at the meetings would be up even more if the industry's other two trade associations — the Natl. Assn. of Mutual Insurance Companies and the American Insurance Assn. — also joined PCIAA. Annotti, however, doesn't expect that to happen anytime soon.