Election fallout has Amway burnishing its image

Booth Newspapers, Detroit/December 14, 2006
By Rick Haglund

Republican gubernatorial candidate Dick DeVos wasn't the only one thrashed in the November election by Gov. Jennifer Granholm's campaign.

The image of his long-controversial family business, Ada-based Amway Corp., took a beating, as well.

So while DeVos has returned to private life -- he heads the Windquest Group, a management and investment company -- Amway is continuing to run a series of slick television ads that emphasize the company's Michigan roots and its massive operations here.

"The election campaign was sort of the trigger for it," company spokesman Rob Zeiger said Wednesday. "By the middle of the summer we were getting knocked around pretty good."

The ads are scheduled to run in Detroit, Grand Rapids, Flint and Lansing markets at least through the end of the year. Zeiger wouldn't say how much the ad campaign, which started in late summer, is costing the company.

Granholm and the state Democratic Party ran campaign ads that claimed DeVos eliminated more than 1,000 jobs in Michigan while building a manufacturing plant in China and adding thousands of jobs there when he ran Amway. The multilevel-marketing, direct-sales company was founded by DeVos' father, Rich, and partner Jay Van Andel in 1959.

DeVos said a restructuring of the company that eliminated about 1,300 jobs was unrelated to its China expansion.

But election analysts said the criticism of Amway's China growth connected with voters worried about losing their own jobs to foreign competitors.

In an interview with the Grand Rapids Press last week, DeVos said Amway suffered "unfair collateral damage" in the election campaign.

"We felt that (Granholm and the Democrats' campaign) did put us at risk because you had senior state officials saying bad things about our business practices," Zeiger said.

And Amway feared the negative publicity would hurt the company in recruiting college graduates, Zeiger said.

Amway's ads feature Michigan Amway workers talking about how much they like their jobs and end with the tag line, "I am Amway."

There are some 4,000 Amway employees in Michigan. The company employs 13,000 workers worldwide. Its parent company, Alticor Inc., posted sales last year of $6.4 billion.

Michael Bernacchi, a marketing professor at the University of Detroit-Mercy, said the ads are well done and effective, as far as they go.

"The ads say, `We're Americans. Look at the jobs we bring here to Michigan, regardless of what anybody says,' " Bernacchi said.

But the image-boosting ad campaign must run over a longer period of time for it to be effective, according to Bernacchi.

"Amway has almost as many image problems as Wal-Mart," he said.

The ads come at a time when the Federal Trade Commission is considering new rules that would tighten regulations and create more reporting requirements for multilevel-marketing companies. Some experts say the rules could create a nightmare of paperwork and cripple the direct-selling industry.

Zeiger said the proposed rules had no impact on the decision to start its image campaign.

Amway hadn't advertised on television in at least 20 years, but felt it needed to address the election-season criticism in a lengthy ad campaign, Zeiger said.

"In some ways, this is the poke that got us moving," he said. "We probably should have done this years ago."

The attack by Granholm and the Democratic Party also renewed old claims in the blogosphere that Amway is little more than a pyramid scheme.

Amway's consumer products are sold directly by independent sales people who also recruit others to sell its vitamins, cosmetics and other products.

The sales representatives get a portion of the new recruits' profits. Critics say many independent sales people at multilevel companies like Amway and Tupperware make little, if any, money.

Alticor also used its own corporate blog to address criticisms about the company during the election campaign.

"We went the extra mile" in the ad campaign, Zeiger said. "We just want to make sure we're as healthy a brand as we can be."