Remarks of the Honorable Kenneth E. Bentsen, Jr.,
President, Equipment Leasing and Finance Association
46th Annual Convention
Orlando, Florida
October 30, 2007
Let me first thank all of our sponsors for their generous support of yet another successful convention, and also thank all of you for taking time from your business and family to attend the 46th Annual Convention.
The Equipment Leasing and Finance Association enters the final months of 2007 well on its way to achieving the strategic plan the Board of Directors adopted in 2006, and poised to serve the membership with increasing effectiveness. While there is much work left to do, the vision set forth by the Association's leadership to position the ELFA as a platform for advocacy, a forum for business development, and the principal resource for industry information has been firmly established.
Last year we asked the membership what they wanted from the Association. You told us that the ELFA needed to be 'front and center' in promoting the industry and its benefits and that our programming needed to be current and relevant to match the changing nature of the market and member companies. The ELFA Board and staff heard you, and over the past year we have begun taking steps to develop and promote our industry's brand value, expand our government affairs activity at all levels, restructure our business and professional development offerings, and leverage our research.
Perhaps most critical to these efforts is the U.S. Equipment Finance Market Study that the Equipment Leasing & Finance Foundation presented yesterday. This seminal work establishes the basis from which we define our playing fieldÉ a $600 billion domestic market encompassing all types of capital goods, businesses and financial productsÉ and our brandÉ the financing of the nation's plant and equipment. In short, we are the people who finance the goods, and services, that businesses need to function and grow the economy, hence our slogan, [F]inancing a Growing Economy. This clarity allows us to put into context the role, importance and contribution of our member companies.
With our new brand and research, the Association has undertaken steps of promoting our industry's value to the various public constituencies that impact our members' businesses. Our new name and look underscore both the growth of our business encompassing multiple product offerings and its importance to the national and global economies. Increasingly, our publications and significantly our website are beginning to reflect that importance. Through our revamped communications strategy we have begun to engage our key constituencies: policy makers, financial media, and Wall Street in terms of the breadth, size and magnitude of our market Ð and the role it plays in the broader corporate sector. Within months of changing our name and promoting the new brand, the financial media took notice. The Association and its data are now carried in major financial publications like Bloomberg and Dow Jones and our voice and view are carried in policy articles on a regular basis. And, I am quite pleased that my former Congressional colleague, and chairman, Mike Oxley will be speaking to us today. Mike is of course well known in his own right as a leading financial policy maker, but even more important is that Mike is coming to us as the Vice Chairman of the NASDAQ Stock Market, as an increasing number of our member companies and their parent companies are publicly listed, many on NASDAQ.
To ensure that our industry and its economic benefits are understood by legislators and regulators, we have enhanced our advocacy efforts at the state, federal and international levels. Our government affairs department is expanding its operations, and will continue to insure that our voice is heard on Capitol Hill and in state capitals throughout the nation. And we have set in place a structure to employ our best assets, our member companies, through a grass roots advocacy program while stepping up our political activities.
At the federal level we continue to focus on tax and capital market issues and we have had success in blocking retroactive tax changes while pursuing new legislative opportunities. We believe it prudent, however, to broaden our issues agenda by establishing the Public Sector Finance Committee and the ad hoc Healthcare Finance Committee to guide staff in these policy areas. And we are increasingly partnering with other financial services and other like trade associations on issues of mutual interest.
We continue to enjoy success in the state government policy arena, particularly with the increased involvement of our members. However, we face an increasing volume of issues in the fifty states, and the territories, as diverse as taxation, vicarious liability and electronic waste. Many of the issues at the state level impact every member company, regardless of size. As such we are investing in additional personnel to ensure that we maintain the ability to effectively represent the industry.
While the work of the government affairs staff has been exemplary, there is no better way to convey the importance of our business and effectively communicate our message to policy makers than through our members. We have increasingly done so at the state and federal level, but we can do more. We have taken steps to make our Capitol Connections program a year-round effort through the development of a grass roots operation. We are tasking members to work with our staff to engage key legislators on our issues and I encourage you to visit our website http://advocacy.elfaonline.org to learn about the issues and get involved.
We have also enhanced our political action committee, LeasePAC, to ensure that our voice is heard, and underscore our commitment to promoting policies that protect and advance the industry. Political giving is not just a fact of life; it's a necessary component of participatory democracy that allows individuals to come together behind a common goal or ideal. LeasePAC is funded through the voluntary personal contributions of hundreds of ELFA members. A personal contribution, when pooled with the contributions of other ELFA members, gives our industry a greater voice than any one member could have alone. PACs provide leverage to the individual giver, and the cause they support. I want to commend the work of our PAC Chairman Bob Rinaldi that has led to an increase in the number of member companies and employees participating in this valuable program. You can learn more about the PAC by referring to the material throughout this room or talking to Bob or Kelli Nienaber here today.
Our industry and its members continue to spread beyond our borders and increasingly we are seeing foreign domiciled companies moving into the U.S. market. With globalization comes a renewed emphasis on regulatory convergence by sovereign regulators and international standards setting bodies. The FASB's and IASB's joint review of FAS 13 / IAS 17 is a case in point. Obviously this is an issue of tremendous importance to our industry and we are fully engaged in participating in the process that will effect its eventual outcome. In addition to employing the various domestic leasing entities such as the trucking and auto lessors, we are also reaching out to other parties such as real estate finance and the lessee community. But just as important is that we are working with our international counterparts, as this likely will be a global standard. As Valerie Jester, noted yesterday, we are honored to have our colleagues from Asia, Canada, Europe and Russia with us, and more importantly we should expect that our collaboration on this and other regulatory matters would expand over the coming years.
Our work over the last year has not been limited to just communications and advocacy. In response to declining attendance at some of our conferences and business development events, the Board created a task force on conferences under the leadership of past ELFA Chairman Dennis Neumann. The task force reviewed every conference program and the convention to identify and recommend changes to expand content and increase efficiencies. The task force spent more than fifty hours reviewing each program and interviewing planning committees and staff to develop recommendations to improve the quality and relevancy of our offerings. Those changes are taking place now and you can expect more substantive and cost efficient programming in the coming year.
In addition we plan to greatly expand the offering of web-based seminars that have proven to be both an efficient and popular means of presenting topical business, legal and market information to a broad group of members.
Our professional development programs remain in strong demand, particularly our staple, 'Principles of Leasing and Finance' as does our Credit Underwriting program, which is co-branded with Moody's Investors Service. To ensure that members have ready access to these popular programs, we are launching on-line versions through our ELFA Academy. The Credit Underwriting course is currently on-line and well subscribed, and our Principles' course will be available by year-end. While we will continue with our traditional classroom offering, this new web-based distance learning model will allow members' employees to access this knowledge and training without the expense and time of travel. And to assist the staff in developing new curricula to meet the demands of our changing market and work force, the board also established the Human Capital Committee, comprised of member- company HR professionals.
ELFA continues to be the principal source of industry information through the industry data and market research we collect and produce. Over the past year, we have increased the number of participants in our annual Survey of Industry Activity (now known as the Annual Equipment Finance Report), while refining and reducing the time it takes to collect and produce our monthly activity index, the MLFI-25, so that it is released in line with key government and market indices and its economic relevance amplified. Participation in our benchmarking studies has increased and we are looking for areas to expand this product. In addition to our CFO Roundtable, we have begun hosting a Human Capital Roundtable to provide member company professionals with a forum to discuss best practices and identify key issues.
Our membership renewal rate in 2007 equaled our historical average of 86% and we continue to count all but a handful of the Monitor 100 companies as members, as well as a robust number of smaller organizations. We have added 72 new members in 2007, just below the 76 added in 2006. At the same time, we are reaching out to the new entrants in our business by establishing a new "Investor" membership category to attract hedge funds, private equity and institutional investors who are increasingly entering our market.
The Association benefits from an extremely strong leadership team including our outgoing Chair Valerie Jester and incoming Chairman Bill Verhelle and very engaged and committed officers and directors. This engagement, and that of our Business Councils and standing committees, provides great direction for the Association staff. But as the composition of our industry continues to change, we are finding that our relationship -- beyond the dedicated corps of volunteers -- is not as strong as it should be. We recognize that most members do not begin and end their day worrying about what's happening at their association, but at the same time we are concerned that their understanding of the benefits and services provided, may not be as thorough as it could be.
Thus, you're going to see a renewed effort on our part to re-establish the Association's brand identity with you, our members, just as we are working to establish your industry's brand identity with the public. We're taking a closer look at how we communicate what we do, what products we offer, and what we're doing to make your investment and continued support more worthwhile. In addition, incoming Chairman Bill Verhelle is undertaking a significant effort to enhance the work of the Business Councils to improve the flow of information and consultation between the Business Councils and the Association leadership and staff.
Finally, the Association ends the year on sound financial footing, but with changes in the offing. We are controlling costs in light of continued decline in conference participation, a trend experienced by many trade associations. We maintain a substantial fund balance in accordance with accepted association practices, which provides for financial security and revenue opportunity. With industry growth among the largest member companies, and increased consolidation we should expect continued pressure on dues and non-dues revenues.
At the direction of the leadership we have implemented a more rational approach to budgeting for non-dues revenues and expenditures, including spending cuts, while adjusting our dues schedule to reflect industry trends and ensure that we continue on the path laid out in the strategic plan. We believe this will allow the Association to continue to provide the superior services, products, and benefits members expect, while increasing the advocacy and brand development efforts members requested.
I want to thank our Chair Valerie Jester for the devotion and commitment of time and effort she has given to the Association during this last year, and really the last thirteen years. On behalf of my colleagues on the Association staff, we applaud the success of her tenure and thank her for the guidance she provided throughout the year. And we are equally excited to work with our incoming Chairman Bill Verhelle and the new board directors and officers.
It has been a productive year, one which has solidified our position as the nation's leading association for the equipment finance industry. Under the leadership of ELFA Chair Valerie Jester, we have forged new ground and increased the quality and level of our services. As we welcome our new Chairman, Bill Verhelle, we are poised to do even more in 2008 for the benefit of our members and the dynamic industry they comprise. Our progress will be dependent upon our ability to reach out to you, engage you, and involve you, as we continue to take the Equipment Leasing and Finance Association to a new level.
Thank you very much, and now I would like to open the floor to questions.