Trade association value: Body language

The Prime Minister at Farnborough International Air Show last year where he stated that the Aerospace Growth Partnership, convened by trade body ADS, would be a model for future government engagement with all sectors

Jane Gray asks whether the crowded manufacturing trade body space could be consolidated for a clearer voice to government and better value for fee paying members.

“In general sectoral representation in the UK is fragmented, duplicative and often poorly resourced.”

This was Lord Heseltine’s observation of the UK landscape of trade associations in his recent review Leave No Stone Unturned in the Pursuit of Growth. The report, published in October last year, was commissioned by government and has become a key reference point in policy making for the coalition. It also holds a great deal of advice on and observation about the role of industry support networks for the private sector in achieving a robust, balanced economy. Referring to a 1972 report from Lord Devlin, Lord Heseltine’s report highlights the importance of establishing “world class support systems” for a competitive, progressive private sector. Trade bodies, and the chambers of commerce, are named as existing systems that should step up to this world class status.

However, as the opening quote indicates, while the UK’s network of trade bodies has proliferated since the 1970s, the extent to which more industry representation reflects high quality, coherent representation is questionable.

In a time of austerity businesses cannot afford to pay for duplicative or poorly resourced services. Trade bodies – large or small – must be more than talking shops.

Graham Chisnall, deputy CEO, ADS
Graham Chisnall, deputy CEO, ADS

Case for consolidation: ADS

In his review, Heseltine identified ADS – formed in 2009 from a merger of the Association of Police and Public Security Suppliers, the Defence Manufacturers Association and the Society of British Aerospace Companies (SBAC) – as leading the way in consolidating industry representation. What prompted the merger?

Graham Chisnall, deputy CEO and MD of ADS, explains: “The big drive behind the merger was the fact that many members of the associations involved had both defence and civil operations. They were fed up with having to communicate their business needs across several different organisations.” Government also said that it was finding it difficult to talk to a fragmented representation of UK defence companies, Chisnall adds.

Recently appointed CEO Paul Everitt says ADS undoubtedly has more clout as a consolidated entity. “Consolidation brought a resource base which can sustain industrial partnerships in a way that the individual merger bodies could not have done. In addition, government can have more confidence that our advice to them is truly in the broad interests of the sectors we represent because our membership base is more comprehensive.”

Proof of this has been the success of the Aerospace Growth Partnership (AGP), points out Chisnall. “This has brought the whole spectrum of industrial stakeholders together on a common platform of engagement with government. Over 80 senior executives from industry have given their time to the AGP and [prime minister] David Cameron, when he opened Farnborough Air Show last year, said that he will use its process as a model for engagement with other sectors.”

“Members said they were fed up with having to communicate their business needs across several different organisations” – Graham Chisnall, Deputy CEO and MD, ADS

So could more be done to stop manufacturers having to maintain multiple memberships and add value to industry-government relations?

“I am not an expert on the trade body landscape but I can see why Heseltine made his observation,” admits Chisnall. “ADS now represents a natural span of companies. But members still subscribe to other trade associations. Intellect, for example, has defence interests and a number of our members are also theirs. I don’t think this necessarily indicates there is room for more mergers. We cooperate with Intellect, and others, where it makes sense.”

Different values

Not all trade associations are driven by the need to speak to government.

The more technically focused have other priorities. “Heseltine focused on trade body responsibilities to represent member interests to government. But providing technical information and advice is also central to MTA’s purpose,” says Paul O’Donnell, head of external affairs at the Manufacturing Technologies Association. Sarah McCann-Bartlett of the British Constructional Steel Association (BCSA), with about 150 members, is similarly keen to express the value of trade bodies as drivers of sector competitiveness rather than as political entities.

Indeed BCSA is so committed to this that it demands rigorous membership requirements, regularly updated, to attain relevant industry standards. “Every member must undertake an on-site technical assessment every three years as well as annual financial assessments,” says Ms McCann-Bartlett. “Companies must prove capability and capacity to undertake certain jobs before they can become members and be listed on our two registers, – the Register of Quality Steelwork Contractors and the Buildings Register.”

BCSA does not make these requirements from a regulatory stand point, but to raise competiveness and help companies win contracts. “We are pushing to make it a condition that constructional steel work for any government funded infrastructure project should be procured using one of our quality schemes,” says McCann-Bartlett. “We have already aligned our membership requirements with the current government procurement standard, TAS 91, so all BCSA members are compliant with that.” The next big drive will be to ensure all members become CE compliant by 2014 to fall in line with new EU legislation.

“This level of rigour is an extremely effective way of driving improvement, quality and competitiveness in an industry,” she says. “More trade associations could benefit their members by requiring more of them.”

Other trade bodies referenced in this article did not feel such an approach would be suitable for their memberships.

Trade association responses

Terry Scuoler, CEO of manufacturing trade association EEF, considers Lord Heseltine’s criticism of trade bodies. “I do think the marketplace is littered,” he says. “But it is a free marketplace and people will join the organisations they feel are most suitable. For large organisations like EEF there will be a wide range of motivations behind membership. Large companies tend to be more interested in our ability to influence policy, smaller companies may be drawn to us for access to advice on health and safety, for example.”

Stephen Tetlow MBE, director general of the Institution of Mechanical Engineers
Stephen Tetlow MBE, director general of the Institution of Mechanical Engineers

Professional bodies

Professional bodies are distinct from trade associations in that they are focused on advancing knowledge about a certain discipline and providing professional accreditation, rather than representing commercial and employer-specific interests or lobbying government.

But nonetheless, they are another group of membership organisations with a remit to represent the interests of their membership base – and there are 36 such engineering bodies in the UK. On the potential for consolidating the array of professional engineering bodies, Stephen Tetlow MBE, director general of the Institution of Mechanical Engineers, says: “Technology never stands still and professional bodies need to move with it. Therefore, I would not be surprised if some bodies merge in the future but equally, as new technologies develop, we may see new bodies established.”

It is important that professional bodies work together to track and respond to cross-discipline developments, says Mr Tetlow. The IMechE and the Institution of Engineering and Technology signed an MOU to tighten their relationship in January and Tetlow insists collaboration on interdisciplinary projects by professional engineering bodies is generally strong. “There is a broad professional panel and a range of jointly hosted learned society events.” One focus for collaborative work is E4E – Education for Engineering. “This brings together a combined view for government of what our members need from the education system,” explains Tetlow.

But collaborative or not, industry seems to value IMechE’s services and representation. In 2012 the institute signed up more professional engineers than any other UK engineering institution and an increase of 25% on 2011.

In his growth review, Heseltine advocates the formation of “lead associations” which can act as an umbrella over a range of niche interest groups. “With some justification, EEF could claim to be in this umbrella position,” says Mr Scuoler, explaining that an awareness of its responsibility to capture a complete voice of manufacturing and convey this to government was behind the launch of its affiliate membership option for other trade bodies in September 2012.

“The affiliate membership programme has been well received,” he says. “Around 10 organisations have joined so far. It was an important step to take at a time when government officials acknowledged they want to speak to fewer bodies, making it hard for smaller organisations to get their messages across.”

David Keene, managing director of RDM Group
David Keene, managing director of RDM Group

What manufacturers say

Automotive and healthcare: RDM Group

It is difficult for David Keene to define exactly how many trade associations RDM might admit membership to.

The MD of the SME manufacturing group does not define trade associations distinctive from a general “sea of initiatives and organisations” offering to help his business in one way or another. He says most SME leaders probably take the same view. “It doesn’t matter to me whether they are technically a trade association or some other form of lobbying group or alliance. The extent to which I value them depends on whether they help me win business.”

For this reason, Mr Keene is hugely positive about the Niche Vehicle Network and a range of local manufacturing alliances, which cluster SMEs around contract or funding bids that might otherwise be out of scope, and supports trade show attendance. “There’s no question of cost versus value in being a member of groups like this,” says Keene. “They are free to join and you’ll get the value of the time and effort you put in, multiplied by the input of other members.”

Keene adds, “A lot is offered at the large trade associations is wide of the mark when it comes to SME value. Their membership offers a reputation. But what I need is local, practical groups.”

But what about the business advice that Norman Hay’s Salisbury thought smaller firms must need? “For around £120 a year I am a member of the local Chamber of Commerce and that gives me all the updates I need on regulation, tax and HR developments,” states Keene.

And what about the opportunity to discuss the big issues facing your sector? “Concerns and expectations get fed down the supply chain. But the way in which this is done has markedly improved in recent years. This is probably linked to the work OEMs and tier ones have done with bodies like SMMT and the Automotive Council, so I can see the value in bigger firms being members of the larger bodies.”

What manufacturers say

Chemicals and coatings: Norman Hay

Norman Hay, through its divisional companies, is a member of various trade associations including SMMT, FESA and Midlands Aerospace Alliance. Membership decisions are largely made by division heads dependent on the value they see in relevant associations. The SMMT membership, costs the company around £1k per annum – the fee relevant to its turnover and employment base of 450 people.

Jeremy Salisbury, group head of marketing at Norman Hay comments, “There are good and bad bodies out there and on resource, I would say that some associations seem stretched. But what Lord Heseltine neglects in his review is that trade association relationships need a two way street to create real value. You get out what you put in as a member.”

In terms of what membership value should look like Mr Salisbury defines two types of trade association, industry focused and technically focused. The former is generally of greater value to Norman Hay, he asserts. “For Norman Hay the key motivation in being a member of a trade association like SMMT is to network, learn how the industry fits together and, ultimately, to win business through this. This makes its work on bringing the UK automotive supply chain together very important.”

In terms of value derived from trade body service, Salisbury says, while access to market research, business briefings and events can be valuable, other services are less motivating for Norman Hay. “For a smaller company I can see that access to this kind of advice and support might be helpful. For the ‘M’s in SME and for larger companies there is less benefit because they will usually have access to their own legal advisers and quality audit processes.”

What manufacturers say

Electronics: Siemens Industry UK

Siemens is a member of around 10 UK trade associations. Brian Holliday, director of industrial automation, Siemens UK says that he is in no doubt of the real value they all bring to the business, whether in niche pockets or across broad issues. “Trade associations allow firms to work together and make the case for growth,” he observes.

That said, Mr Holliday does see that the associations could be better coordinated, “to develop a more consistent message to government about what needs to be done to get the British economy moving.

We have seen steps in the right direction, for example Gambica is now working together with BARA [British Robotics and Automation Association] to achieve a common goal – the promotion of automation technology and investment across our sector. They have built a powerful case that is being heard by key stakeholders.”

Graeme Philp, CEO of Gambica, the trade body for automation technologies, is among EEF’s new affiliate members. “So far the relationship is working really well,” he says. “Our members get access to a limited number of the EEF’s publications and Gambica is consulted and has an input into the formulation of representational positions where the issue will affect both Gambica’s sector and a wider swathe of UK industry. Gambica had sought the opportunity of affiliate membership for some time. “Teams of civil servants have been pruned back and can only afford to spend time with bodies that are going to make a difference,” Mr Philp says. “Smaller trade bodies must work hard now to show the value of their insight beyond the general voices of EEF and the CBI.”

Collaboration

EEF’s affiliate membership model is a positive step in maintaining the ability of smaller bodies to bend the ear of government when they need to – as well as pumping up the value that smaller bodies with fewer resources can offer their members.

But what about collaboration between the more established sector and technology bodies who still have strong individual voices in government? What is being done to ensure they are not working at cross purposes?

Paul O’Donnell, director of external affairs at the Manufacturing Technologies Association, says “I don’t think Heseltine’s comment is fair when it comes to the manufacturing space. The sector’s trade bodies have already consolidated, or are in the process of consolidating, their voice to government,” he comments.

“The MTA, along with ten other associations, is a member of the Manufacturing Alliance. We meet regularly to discuss matters of shared interest and we submit a joint proposal to government ahead of the Budget and other key policy announcements.” But is collaboration enough? EEF’s Scuoler admits that other business representation systems have benefitted from more transformational action. “If you look at the trade unions you can see that consolidation there has made a few key bodies considerably more potent,” he observes.

Is EEF on the acquisition path? “I do not want to appear predatory,” Scuoler emphasises. “Our affiliate programme is strictly limited to affiliate activities and collaboration. But who knows, in the future, closer relationships may be formed.”


You make your own value

Beyond mergers, a more important and urgent angle to work on to ensure that trade bodies create value, says Scuoler, is raising employer appreciation of the relevance and value of being a member. “As well as the opportunity to shape the future of industry, trade association membership should offer access to a lot of useful information on current industry topics. And don’t forget the chance to meet with customers and suppliers. Members must judge for themselves how to use these opportunities intelligently. Don’t simply join for an easy debate over coffee.”

@janefagray