Trade associations at work

This case study covers the role played by Trade Associations in the UK economy. It draws on examples from four contrasting industrial and service sectors: travel, financial services, electrical contracting and road haulage.

The economy is made up of business sectors, each of which contributes to consumer welfare. For example, we all benefit from having goods delivered efficiently to our local supermarket (road haulage), being able to open and use a savings account (financial services), having electrical wiring installed safely in any place we live, work or visit (electrical contracting), and being able to make travel arrangements through travel agents (travel).

The role of Trade Associations

Trade Associations:

• promote the interests of their members
• create conditions in which the sector can prosper
• work together for the general good.

They do this by:

• providing a forum for discussion. This enables member companies to exchange views and identify issues of common concern within the sector
• representing their members. This includes lobbying Government departments and politicians, media and public relations activity, and distributing information
• providing services to members. These include supplying current industrial data, business support services and sector specific training courses.

Trade Associations are funded mainly by their members, most of whom are individual companies and businesses who choose to join – normally there is no compulsion. They are not-for-profit organisations. Each Trade Association is governed by an elected Board or Council comprising trusted and respected leading members from within the sector.

Trade Associations provide a focal point for their sectors and carry out activities which would be difficult or impossible for any single company, no matter how large, to undertake alone. In addition, they provide a means by which companies that are normally in competition with each other can work together for the general good.

Representation

Trade Associations, sometimes working together in alliances, are important pressure groups. They represent the views and interests of their members to politicians and other key individuals and organisations locally, nationally and internationally (particularly at EU level). The dialogue is not one-way. Governments with proposals in mind will normally approach Trade Associations for a view on any important issues likely to affect their particular sector of industry. Trade Associations seek to influence legislation. Recent examples include lobbying the government regarding proposals that are intended to:

• close down rogue businesses that threaten the image and interests of the travel and tourism industry
• introduce tougher safety standards within electrical contracting
• enable UK road haulage firms to compete on more equal terms with firms based in mainland Europe
• lead to a workable system for monitoring how financial institutions conduct their business.

Where an industry is overseen by a Regulator, the Trade Association will seek close contact with that body too. Trade Associations also look to influence public opinion through the media – e.g. in newspaper articles and television appearances.

Public relations

Trade Associations aim to generate a positive image of their sectors and to provide regular news and information to the media.  If the sector is in the news, they are able to provide an authoritative voice.  For example, an ABTA representative appeared on UK television to advise on travel to the USA following the terrorist attacks on New York and Washington in September 2001.

Information

Trade Associations are well placed to produce authoritative information and statistics on their industry sector – e.g. guidance on new legislation, new regulations and other technical, legal and commercial developments that may affect members’ businesses.  This is an important service for their members.  They also supply data to governments and other businesses that use it to inform their own decision-making.

Sector development

Trade Associations play an important, enabling role for their sectors by carrying out activities that will encourage business success.  They help develop a strategic vision for their sectors, often working with a range of stakeholders to co-ordinate mutually beneficial strategic action.  Examples include:

• Market analysis – identifying the most promising markets
• Export initiatives – promoting the sector in target markets abroad through exhibitions and trade missions
• Competitiveness initiatives – taking action to increase productivity
• Research – encouraging development and transfer of technology
• Advisory and consultancy services – helping members to improve their business
• Training – collaborating with education and training providers to develop career paths and to prevent damaging skills shortages
• Technical standards – working with standards bodies such as the British Standards Institution and international bodies to ensure compatibility and quality of products and services
• Legal and contractual – establishing forms of contract that facilitate co-operation between firms
• Consumer protection – developing codes of practice and redress mechanisms to increase consumer confidence.

Current challenges

In a very competitive and increasingly globalised world, there are several pressures on Trade Associations themselves.  The nature of their sectors regularly changes as new technologies emerge, as new competitors appear and as companies amalgamate through merger or takeover. It is a major challenge for Trade Associations to adapt and anticipate change in order to provide leadership for their sectors and to generate adequate resources to fulfil their role.  Increasingly this involves co-operation and partnership.

Trade Associations can learn from each other by sharing best practice.  The Trade Association Forum was formed to encourage the development and exchange of best practice information between trade associations.

Travel: ABTA

The Association of British Travel Agents (ABTA) is the second largest travel Trade Association in the world.  More than 2000 travel agents and over 600 tour operators are ABTA members.  Its logo is recognised by over 80% of the travelling public.

Travel is a vital part of many people’s lives, and so are holidays abroad.  Each year millions of people use a travel agent, and 90% of all overseas package holidays are booked through ABTA members. This is for good reason.  Things can go wrong and people look to ABTA for the vital consumer protection that it provides.

• ABTA offers a travel advice service to customers – including on-line information – used by more than 65,000 people in 2000/2001.
• ABTA members offer customers important financial protection.  Should an ABTA member fail financially before the start of a holiday, then money paid in advance will be refunded. If a company fails while customers are abroad, they will be repatriated at no expense.
• Members must offer the ABTA consumer arbitration scheme which, when there is a dispute, provides redress without the need to go to Court and which resolves over 1,400 cases a year.
• ABTA promotes industry training and members have to comply with a rigorous Code of Conduct committing them to high standards of service.

Although travel agents do not have to be licensed, ABTA has pressed for tighter regulation in the UK and Europe to sustain consumer confidence. ABTA also works with government and members to improve access to travel for disabled people and so help to develop a largely untapped market.

Further information about ABTA can be found at www.abta.com

Road haulage: RHA

The Road Haulage Association (RHA) represents some 9,000 member companies operating over 100,000 vehicles. A significant number of members employ 10 or fewer staff. Transport services are essential in modern economy, and over 80% of the UK’s domestic freight is carried by road. Road haulage is highly regulated: vehicles, operators and drivers are subject to numerous sets of rules. Some of these stem from the EU, others apply solely in the UK.

Transport policy and practice raise big issues. The RHA represents its members when any relevant issue arises. It negotiates continually on behalf of members, not only with national government and the European Commission but daily with local planning committees and regional transport groups etc. These discussions are extremely wide ranging. Recent issues, some still unresolved, include:

• the impact of high diesel duty rates on the competitiveness of the UK haulage industry
• night working restrictions and their impact on operating efficiency and costs
• the 48 hour working week and its effect on costs and on drivers’ earnings
• responsibilities of drivers and hauliers regarding illegal immigrants found aboard vehicles.

Support services to RHA members cover specialist advice on all aspects of running