Association Management part 3 the 1970s: Limits to Growth

Association Management in Times of Turbulent Change

Welcome to the blog celebrating the 60th anniversary of Lejeune. In the lead-up to the anniversary conference on Thursday, 31 October, we present a blog series exploring the six decades of Lejeune Association Management. For each decade, we provide context on global history, economic, social, and governance developments, and how our firm has continually evolved in response.

Part 3 – The 1970s: Limits to Growth

Economic, Social, and Ecological

Turbulence

Following the prosperity of the 1960s, the 1970s saw a growing awareness about limitations. In 1972, the Club of Rome published its report, Limits to Growth, warning that if humanity continued on its current path, we would exhaust the planet within a century. Just a year later, in 1973 (and again in 1979), the first oil crisis triggered a reality check. Due to society's heavy dependence on oil, economies were confronted with stagflation – a combination of economic stagnation and persistent inflation, with each phenomenon having opposing effects on wages.

This contributed to the expansion of the welfare state, with governments working to redistribute wealth and establish minimum standards for citizens' well-being. Ageing sectors also had to be restructured. Industry associations actively responded to this new reality, serving as social partners, advocates, participants in the controlled restructuring and modernisation of the economy, and as sources of inspiration for their members in addressing global challenges, including trade and investment in new technologies and process innovations from the US and Japan.

Afbeelding gegenereerd met Dall-E.

The Club of Rome

Club of Rome <a href="https://en.wikipedia.org/wiki/Club_of_Rome">wikipedia commens</a> — Club of Rome wikipedia commens

The Club of Rome, composed of representatives from science, civil society, and business, produced what may be the most underrated book of the 1970s. The report suggested that if humanity continued to develop at the same pace, the planet would reach its limits within a half-century. It linked global population growth, food production, industrialisation, resource depletion, and environmental pollution. The report's summary concluded: “We have a choice between seeking new objectives to take control of our future or subjecting ourselves to the inevitable harsh consequences of uncontrolled growth.”

This report contributed to growing environmental awareness and initiated the first steps in linking ecological conditions to economic policy. It also fit within the growing recognition of global interdependence and the significant disparities in development and living standards between countries and regions. The role of businesses in addressing these issues came under increasing scrutiny.

The Welfare State

The economic climate of the 1960s had been highly favourable, with over 5% average growth and 1% inflation. However, this changed in the early 1970s due to the rising dollar (a consequence of US defence spending on the Vietnam War) and the OPEC oil embargo, which led to skyrocketing energy prices. Due to Western economies' heavy reliance on oil, the economy stagnated, inflation soared, and a wage-price spiral, combined with rising unemployment, caused social unrest. The government's role as a protector of its citizens' welfare and provider of social services grew in many countries, as did the role of industry associations in tripartite discussions with the government and trade unions.

'Warm Restructuring'

In the 1960s and 70s, the Netherlands underwent a ‘warm restructuring’, where outdated industries such as textiles and shipbuilding were phased out. Due to increasing competition from low-wage countries and the 1973 energy crisis, these sectors came under pressure. To prevent mass unemployment, companies were either closed or merged, while employees were supported through retraining or early retirement. Industry associations played a key role in this process. Collective negotiations between employers, unions, and the government established social measures for workers, such as employment guarantees and retraining. They also lobbied for government financial support to help businesses downsize. At the same time, industry associations promoted innovation and modernisation in sectors with a future, enabling companies to operate more efficiently. From a competition perspective, it was a different time in the 1970s when industry associations, with the approval of the Ministry of Economic Affairs, were allowed to prevent ‘hard’ restructuring through industry-coordinated 'warm' buyout schemes.

The Vanished Paper Sack Manufacturers

Lejeune also encountered these developments. The 1960s saw the rise of supermarkets and large retail chains, gradually displacing grocers and small retailers. While the latter still manually packed fresh products in paper bags at the time of purchase, large retail chains like Albert Heijn shifted towards pre-packaged fresh products, using laminated plastic or aluminum packaging with professional branding to extend shelf life and attract consumers' attention. In the book 40 Years Busy with Flexo, published for the anniversary of client EFTA Benelux, co-founder Wouter Veenis discusses the impact this shift had on the ‘paper goods industry’. Of the 40 companies active in this sector at the start of the 1970s, only a quarter had remained by the end of the decade. Many had switched to laminated packaging or disappeared. The industry association Nevapa had a restructuring fund to ensure that machines were removed from production through scrapping. Mans Lejeune played a coordinating role in this fund.

Knowledge Development and ‘Looking Over the Fence’

Ecological, social, and societal issues became increasingly prominent on the agendas of industry associations. However, this did not mean that their primary function as business networks and knowledge organisations was sidelined. On the contrary, connections between sister organisations on a European scale were strengthened. Many sector associations were organised federally at the European level. National organisations were members of European umbrella organisations, mirroring their structures. Each working group had a national delegate representing their country's interests. Members who spoke more than one language benefited, as translators were present at meetings to translate speeches and minutes.

Study Trips

The 1970s also marked the beginning of overseas study trips to the United States and Japan, the sources of new technologies and innovations, not only in machinery and materials but also in the realm of early computers and electronics. Participants on trips to Japan were particularly curious about groundbreaking work in quality management and lean manufacturing, based on the Japanese business philosophy of Kaizen (‘continuous improvement’), developed at Toyota when the European market was first flooded with Japanese cars and electronics.

A Personal Story

As an entrepreneur, Mans saw his client portfolio grow rapidly since founding the company in 1964. Around the turn of the decade, several European and national organisations in the sectors of carton packaging, flexible packaging, and self-adhesive labels had joined. Mans had also hired several employees, including Herman Voskamp, his first employee, whom he had met at a local hockey club. The Lejeune team gradually expanded with colleagues from Mans' personal networks. Business, especially in SMEs and the world of associations, is about people, and personal relationships and word-of-mouth remain key factors in Lejeune's development.

Jules Lejeune

(To be continued)

Verenigingsmanagement de jaren ’70: Grenzen aan Groei