Management Abroad, the Transition of the Workforce, and the Relevance of Working Conditions for FDI at Hoechst

By 1970 Hoechst—like its West German competitor Bayer—replaced its functional organizations with divisional structures that management considered more flexible and efficient, and were along product lines and/or geographical regions. Hoechst introduced a new corporate organization with twelve product lines in 1969; and Bayer implemented a matrix organization with nine divisions in 1971. Corporate organizational remodeling was an international trend at that time, and it was both a reaction to and preparation for further expansion.^{Footnote 49} Considering falling growth rates, company managers and hired consultancies expected more efficiency through divisional structuring. At the same time, new structures put more pressure on employees because new departments were expected be more profit-oriented.^{Footnote 50}

Until the late 1980s, it was a rule of thumb that Germans led the divisions of the German Hoechst AG, even when those included foreign activities. Foreign subsidiaries such as Hoechst Italia S.p.A., Hoechst UK Ltd., and American Hoechst Corporation (AHC) had a mixture of German and foreign directors on their supervisory boards and/or boards of directors, while a German often held the position of managing director or executive chairman. Acquired foreign subsidiaries had their own national executive management, which was only controlled by Hoechst representatives sitting on the supervisory boards.^{Footnote 51} Dieter zur Loye exemplifies this: he worked for the German parent company since 1955, and became president and chief executive of AHC in 1982.^{Footnote 52} The example of Roussel Uclaf also demonstrates this principle: It was only in 1994 that Ernst G. Afting—a German—became chairman of the executive board; in the 1970s and 1980s, no German Hoechst representative was on the executive management team of the French company. During this period, Hoechst maintained its influence through its supervisory board of Roussel Uclaf.^{Footnote 53}

Consequently, the foreign subsidiaries of a multinational could pursue considerably independent personnel policies and act primarily in the context of a national institutional framework. There were neither centralized corporate personnel policies as a whole nor imitations of the model of German labor relations, with its strong participation rights into foreign subsidiaries. Kurt Lanz, a German who sat on Hoechst’s executive board starting in 1956, was responsible for sales management, public relations, and the Central Regional Conference; as vice chairman of the board (1969–1981) in the 1970s, he promoted the internationalization of Hoechst and advocated bringing local men into leading positions at foreign subsidiaries. He believed that language skills and knowledge about regional markets, labor relations, and national sensitivities were of equal importance to control by corporate headquarters. His colleague Erhard Bouillon embodied the German model of social partnership like no one else. Bouillon, who joined the personnel and social department of Hoechst in 1957, and which he headed starting in 1964, also sat on the executive board of Hoechst as Arbeitsdirektor (personnel director) from 1969 to 1988. He was a member of several employer associations, advocated a cooperative management style, and was primarily engaged in the field of vocational training and employees’ Vermögensbildung (capital formation). However, these measures were limited to domestic employees, even though the department known as international social affairs came under the human resource department.^{Footnote 54}

Since the late 1970s, Hoechst organized decentralized HR meetings for the foreign subsidiaries. Human resource managers met once a year at different locations to discuss unemployment, work hours, inflation, leadership development, motivation, and dismissal of employees in different countries.^{Footnote 55} In 1980 the company’s management, in cooperation with its foreign subsidiaries, formulated common principles of personnel and social policies, but the foreign companies were free to act on their own within this framework. Staff and location policies were established onsite. The consensus included the willingness of local management to cooperate with employees and to accept employee representatives (in the form of works councils or trade unions), to transfer management responsibilities to local employees, and to offer additional benefits. With this loose coupling, personnel policies were multifaceted in the Hoechst Group, as can be seen in the examples of Hoechst do Brasil and Hoechst Belgium.

Education and training in Brazil was organized by each subsidiary; however, it comprised not only company-specific knowledge but also wider knowledge that was (in Germany) taught at high schools or universities. At Hoechst do Brasil, for example, mechanical, machinist, and electronical engineer apprentices were trained through in-house courses. In 1987 Hoechst do Brasil developed simultaneous formal educational models for industrial, data processing, and logistics management assistants and bilingual secretaries in cooperation with a German school in Sao Paulo. This formalized training through one school rather than through in-house courses made it comparable to the dual training system in Germany. In addition, Hoechst do Brasil offered independent courses for managers that allowed for staff development and better career planning.

Unlike Hoechst do Brasil, which was a manufacturing company, Hoechst Belgium was a sales company that first and foremost required salesmen. The integration of the European single market intensified this need. In Belgium, there also was no dual system of formal and vocational training as in Germany; hence, an employee could enter either unskilled or after finishing studies. Consequently, Hoechst Belgium had a high share—25 percent—of university graduates among its workforce at the end of the 1980s. Furthermore, Hoechst Belgium took the opportunity to draw on the German system and sent some employees, after they completed German–Belgian vocational school training, to take the final examination at the Chamber of Commerce in Aachen, Germany. While this type of cooperation with German educational institutions was not possible for foreign subsidiaries that were far away, it shows the many facets of personnel policies at Hoechst: personnel policies were organized in very different ways depending on the respective country.^{Footnote 56}

Along with offering educational and training opportunities for foreign workforces, another important aspect was improving foreign managers’ skills and establishing corporate standards for an expanding worldwide company. To meet this need, there were technological exchanges and regular meetings of the managing directors of the home base and of the foreign subsidiaries as well as managers of human resource departments. At an HR meeting in Paris in 1984, K. Kinsella, of the British subsidiary Berger, Jenson & Nicholson Ltd., suggested internationalizing personnel through equal monetary incentives to attract worldwide high-quality professionals, and that headquarters or foreign services should not be reserved for home countries. Regular regional meetings of executive managers, such as in the Asia-Pacific region, supplemented this information exchange. Furthermore, Hoechst established several criteria to determine the earnings of German ex-pats abroad: position, performance on the job, cost of living, and living conditions (e.g., hardship). Foreign subsidiaries were divided into five groups according to sales volume, number of employees, and fixed assets. Management skills suitable to the foreign context could not simply be transferred from the home country but had to be developed.^{Footnote 57}

In 1964 Hoechst employed 58,290 people in Germany and 9,300 abroad, but internationalization after the European postwar boom fundamentally changed this workforce structure.^{Footnote 58} While the German parent company employed 60,000–65,000 people in the 1970s and 1980s, the staff of Hoechst-World (including consolidated groups and subsidiary companies at home and abroad) increased from 115,930 in 1969 to 178,710 in 1974, particularly through acquisitions. The workforce in West Germany decreased starting in the mid-1970s due to sales problems in synthetic fibers and plastics; but that changed somewhat after overcoming the economic crisis in 1982–1983. The number of employees in other regions of the world remained largely stable during this period, with North America experiencing the largest growth. After the expansion in Western Europe starting in the mid-1960s, the United States became the next desirable location for Hoechst’s investments.^{Footnote 59} Consequently, the proportion of the German workforce of Hoechst-World decreased from 67 percent in 1973 to 55 percent in 1982. During the same period, the proportion in the rest of Europe rose from 15 percent to 21 percent, and in North America from 4 percent to 7 percent. Hoechst became a bit less of a German company and more of a European company.^{Footnote 60}

With the expansion of foreign production, job requirements and the structure of the domestic workforce changed. Similar to the sector level, the proportion of workers decreased at Hoechst in Germany. Between 1974 and 1983, the number of Arbeiter (workers) decreased from more than 50,000 to 44,000; in the same period, the number of Angestellte (employees) increased by about 3,500 to 36,000.^{Footnote 61} This indicates a change in work and qualification requirements, which was reinforced by foreign production companies. Simple tasks became less important in West Germany. Between 1974 and 1983, the proportion of employees at Hoechst rose by 4.5 percent, to 45.3 percent.^{Footnote 62} The decline of blue-collar and rise of white-collar work were not peculiar to the chemical industry but general trends in all Western societies.

According to Hoechst’s 1983 Social Report, increasing demands for certain skills also played a significant role in the declining proportion of foreign workers; it was 16.6 percent in 1974 and declined by 5.5 percent over the next ten years. In addition, the ban on recruitment after the oil price shock in 1973 had a great impact on this development.^{Footnote 63} Finally, age and gender also affected employment numbers. The number of men increased slightly (2 percent) between 1974 and 1983, however, the age structure shows that the proportion of women increased in the long run; by 1983 one-third of trainees were young women. Still, in that same year, male cohorts age 42–55 formed the core of the workforce. Beginning in 1974, staff became significantly older. In 1974, the proportion of people at least 45 years old was 33 percent, which by 1983 had climbed to 45 percent. This was similar at Bayer, which shows an aging and mostly male workforce was a general trend in the German chemical industry.^{Footnote 64} Reasons for the high percentage of older male staff were low personnel turnover and low recruiting rates, although this was counteracted by early retirements in the early 1980s. Low turnover could also have been from the contemporaneous insecurity from rising unemployment, as well as wanting to retain social benefits and high wages.^{Footnote 65} Furthermore, wages were higher than called for in the collective bargaining agreements, which weakened the position of the trade union (IG Chemie). Trade unions in general had difficulties organizing employees in multinational companies, which led to difficulties organizing collective interests.^{Footnote 66}

Labor costs were not the only motive for FDI. In the 1970s, Hoechst management compared production conditions—such as wages, working hours, bonuses, and social services—and workforce structure in foreign Hoechst works. After the collapse of Bretton Woods, fluctuating exchange rates complicated decision making on long-term investments. In 1977 Hoechst had about 80,000 employees abroad: 39.3 percent in the EEC, 10.4 percent in the rest of Western Europe, 12.2 percent in North America, 16.5 percent in South America, 10.7 percent in Asia, 4.9 percent in Australia/Oceania, 5.1 percent Africa, and 0.9 percent in the Middle East. The personnel turnover rate varied considerably nationally, both as a result of national labor regulations and specific plant structures. The international comparison showed that New Zealand had the highest turnover rate at 37 percent, followed by Brazil, the United Kingdom, the United States, Australia, and South Africa, from 21–28 percent; then Mexico, Argentina, Austria, and the Netherlands, from 10–15 percent. Elsewhere, the fluctuation was less: in France it was at 8.9 percent, and in West Germany it was at 7.5 percent. The Social Report referred not only to the opportunities provided by personnel turnover (for example, implementation of short-term personnel adjustments) but also outlined the costs attached to high turnover. The report calculated one hundred hours of unproductive administrative work, ranging from recruiting to full availability (i.e., able to perform work without additional training); and that the company would gain 1.2 million productive work hours by a 50 percent reduction in personnel turnover. Against this background, a medium- to low-turnover rate became an investment incentive. The distribution of activities also reflects the national identity of Hoechst: 8.8 percent of the employees at the German plants worked in R&D, but this was 2.3 percent at foreign companies. Likewise, engineering played a greater role in Germany: 16.4 percent of employees in Germany as compared to 6.1 percent of employees in foreign countries. Abroad, far more employees were proportionately engaged in sales than at home (35.6 as compared to 13.3 percent, respectively). This reflects the continuing export orientation of the parent company Hoechst AG and the importance of foreign subsidiaries for distribution in the 1970s.^{Footnote 67}

In international comparison, in 1977 the number of hours worked in industrialized high-income countries was well above low-wage countries in South and Central America or Asia. West Germany (1,715 hours per year [h/y]) and the United Kingdom (1,708 h/y) were approximately equal, with France (1,683 h/y) slightly behind and the United States (1,744 h/y) and Italy (1,775 h/y) slightly ahead. These figures could have been an incentive for investing, but they include no information about labor productivity. Here, two developments at the international level became relevant. On the one hand, there were experiments away from the previous 5-day/40-hour work week, including a compact work week and flexible hours. On the other hand, there was also a tendency to globally adjust work time and conditions—new labor arrangements in Malaysia, for example, included the rule of an 8-hour day/6-day work week. In addition, strikes affected the number of hours worked and complicated entrepreneurial planning. An annual average from 1972 to 1977 shows Germany experienced only 32 strike days; meanwhile, Japan averaged 294 days; France 325; the United Kingdom 968; the United States 1,054; and India and Italy averaged a staggering 1,635 and 1,877, respectively. Hence, against the backdrop of low personnel turnover and fewer strike days, the high-wage country West Germany had investment incentives, especially for high-skilled workers in R&D, which was conducted mostly in Germany. However, with the exception of Sweden, labor costs were highest in West Germany. Conversely, West Germany was internationally at the top of nonworking costs (i.e., vacation days, sick days, and other benefits).^{Footnote 68} The Hoechst executive board had to make investment decisions based not only on labor costs but also on a variety of criteria, including infrastructure, supply industries, and markets.

Thus, a simple causal link between wage levels and relocation of production is insufficient to understand the corporate strategy of Hoechst in the 1970s and 1980s. Rather, it was a mixture of opportunities, markets, and location. For this reason, Hoechst established different research, production, and distribution structures to account for the various skills of its national workforces.

Nationality in Management and Organization of Redundancies at Akzo

The merger of AKU, VGF, and KZO in 1969 demanded a new organizational structure. Unlike recommendations suggested by the consulting firm McKinsey, the managers of AKU–VGF favored a compromise between functional and divisional management structures.^{Footnote 69} This decision reflected the ongoing resistance of industrial managers over theoretical organizational knowledge. Its new decentralized organizational structure was the basis for further expansion, similar to Hoechst. In 1969–1970, Akzo acquired chemical fiber companies in Switzerland (Sastig) and Belgium (Fabelta), and made extensive investments in the salt chemical sector in the United States (International Salt Company). Akzo also became one of the largest paint manufacturers in Western Europe through the acquisition of Lesonal-Werke in Germany and Astral in France.^{Footnote 70}

Deciding an appropriate representation of German and Dutch managers in the organizational framework became a central point of discussion. How could management integrate the chemical fiber division into the whole group and share competencies between Arnhem and Wuppertal? As noted earlier, in 1969, in a first step, the Dutch AKU was transformed into a holding company, and its previous Dutch manufacturing companies were moved to the newly founded Enka N.V. Meanwhile, VGF remained unchanged in its legal form. Moreover, the company Enka International N.V. was established for the foreign investments of AKU in the Americas, Spain, and the United Kingdom. At the same time, the two operating companies of Enka and VGF were closely interlinked via a union of their executive and the supervisory boards, consisting one-half each of German and Dutch nationals. The chairs of the supervisory and the executive boards at VGF were German; at Enka, they were Dutch. After 1969, the board meetings of VGF and Enka took place alternately in Wuppertal (in Germany) and Arnhem (in the Netherlands), and the presidency alternated between a German and a Dutch representative. Thus both sides lost some of their autonomy; in light of their previous independent business policies, this was an enormous change.^{Footnote 71}

With the merger of the new AKU and KZO forming Akzo Group, the executive and supervisory boards of both groups also merged; hence, the Germans lost some influence on the new parent company Akzo, but the agreements related to Enka and VGF continued. Afterward, the central management of Akzo was exercised by Algemene Zaaken, a reduced executive body, on which only Ludwig Vaubel, the CEO of VGF since 1969, represented German interests.^{Footnote 72} The executive boards of Enka and VGF discussed relocating the headquarters of the fiber division to Arnhem, where Akzo had its home office, but German managers rejected this idea.^{Footnote 73}

The difficult negotiations on representation shows that nationality was still an important reference point in the thinking and actions of managers in the 1970s and 1980s, even if they were managers of multinational corporations. Although ownership of these large corporations became widely dispersed among countries through globalization, the boards of directors remained heavily biased toward home-country nationals.^{Footnote 74} Obviously, there was more confidence between German managers than between German and Dutch managers. This was not only an aftermath of WW II but also of trustful relationships among German manager created through their integration into the corporate network of Germany Inc. and West German consensus capitalism.^{Footnote 75}

In addition to the main production of man-made fibers in its two divisions—Enka Glanzstoff and Enka International (later Akzo International)—Akzo also produced chemicals, pharmaceuticals, and consumer products via Dutch subsidiary companies.^{Footnote 76} Beginning in the early 1970s, the European chemical fiber crisis created dramatic problems for Akzo, which remained heavily dependent on chemical fiber production despite strengthening its other business segments. Significant losses led to extensive job cuts in the second half of the 1970s.^{Footnote 77} As a result, in 1977 Akzo formed the Enka Group by pooling its remaining chemical fiber interests at Wuppertal, with the exception of American Enka Corporation. By doing this, Akzo ceased the national separation between the Netherlands and Germany in the fiber segment.^{Footnote 78} In 1988 Akzo changed its organizational structure again with the introduction of business units that were now expected to be profit-driven. This restructuring in a way prepared for the separation of the Akzo division fibers and polymers (Enka) in the late 1990s, whose 10 percent return on investment in 1988 was considered too low by management.^{Footnote 79} What were the implications of these strategical and organizational decisions on the Akzo workforce?

Between 1969 and 1992, the Akzo workforce experienced an enormous reduction, especially in the Netherlands and Germany. With a total of nearly 30,000 people, the Netherlands and West Germany had approximately an equal number of employees before the first oil price shock in 1973 (Germany: 28,500; the Netherlands: 29,700). The main reduction took place in both countries from 1974 to 1979. After that, the number of employees at German sites declined from about 20,000 in the early 1980s to fewer than 15,000 in 1991; meanwhile, in the same time period, the number of employees in the Netherlands fell only slightly, from 22,500 to 20,000. In North America the number of employees was about 15,000 after the first oil price shock, which declined between 1982 and 1985 to 5,400 (due to the divestment of American Enka), and then increased to more than 10,000 workers until 1989.^{Footnote 80} Whereas the number of employees increased and decreased in the United States in the 1970s and 1980s, Akzo only reduced its workforce in Western Europe for more than 20 years. In contrast to the management of other chemical companies, the executive board of VGF–Enka was in a completely defensive position during the 1970s: it had to shut down plants against the resistance of trade unions, and was forced to divest in that decade.^{Footnote 81} For employees, their experiences were even more dramatic. The Augsburg plant of the VGF subsidiary Bemberg AG was closed in 1970, even after DM 15 million had been invested for modernization only one year before. Management decommissioned the plant, even though sixteen of the planned thirty-two automatic power looms were already installed. Uncertainty among employees and distrust of management increased significantly, and a large number of VGF employees at its headquarters in Wuppertal had already undergone retraining, especially the shoemakers, craftsmen, and miners who wanted to escape the decline of their industries and hoped for secure employment in the chemical fiber industry. When in 1972 the VGF executive board presented a structure plan for production reduction and job cuts in Wuppertal (Germany), Breda (the Netherlands), Rorschach (Switzerland), and Zwijnaarde (Belgium), a worker explained his situation as follows: “I was miner for 20 years in Wattenscheid (Germany), and after the colliery had to shut down, I started here five years ago. At that time I was 45. That was my last chance.”^{Footnote 82}

Some of these cuts could have been achieved through hiring freezes and natural turnover of staff, but the final closures in Breda in 1981 and in Kassel in 1984 show that this reduction included collective redundancies. Even in the early 1970s, before the first oil price crisis and the economic crisis of 1974–1975, the managers of Enka and VGF and the executive spokesperson of Deutsche Bank, Franz Heinrich Ulrich (who was a member of the supervisory boards of Enka, VGF, and Akzo), agreed on the principle of location concentration rather than linear reduction of capacity. They calculated DM 70 million, including benefits in the context of social plans, for collective redundancies of whole plants. Analyzing the workforce by business sector demonstrates that the job cuts at Akzo occurred mostly because of the European chemical fiber crisis. In contrast to the fiber and polymer divisions of Enka, other divisions increased their staff. Thus, the reasons for job losses at Akzo were less about labor costs and more about overcapacities in the West European fiber industry starting in the 1960s.^{Footnote 83}

In reference to staffing policies, Akzo, and especially its division Enka Glanzstoff, was in trouble beginning in the 1970s. Mass layoffs and recruitment freezes were necessary to compensate for overcapacities, yet Akzo could not completely give up promoting young talent.^{Footnote 84} As with other German companies, in the 1970s the German arm of Akzo made use of short-term work and then opted for early retirement and part-time work for older employees in the 1980s. However, and similarly to Hoechst, the German arm of Akzo also simultaneously recruited young people to counteract the high average age of its workforce; and its Betriebsrat (work council) also admitted to the need of hiring if the necessary qualifications could not be achieved through employee retraining and continuing education.^{Footnote 85} Furthermore, in the case of closures of entire plants (as in Breda and Kassel), management looked for successor companies to safeguard jobs and—according to the German law—had to contract a Sozialplan (social plan) with the work council. The work councils of Enka Glanzstoff in Germany and the Netherlands were more willing than the trade unions to compromise because of the loss of DM 488 million in 1975, and agreed to cut jobs at the beginning of 1976. In addition to age-specific compensation, this social plan also included a hardship fund; however, the five hundred employees who were older than fifty-nine years old had enormous problems finding new jobs.^{Footnote 86}

The job losses at major European multinationals such as Akzo attracted public attention, and led to joint actions of different trade unions and involvement by the International Chemical and General Workers’ Federation. Akzo World Council was founded to install codetermination at the international level . Pressure on Akzo management reached its climax when Dutch workers occupied the factory in Breda in the early 1970s. As a result, the Akzo management withdrew its proposed reforms.^{Footnote 87} After the planned cuts failed, the executive board at German VGF decided not to enter into further negotiations with a delegation of international trade union representatives, and accused them of making Akzo a test case for international trade negotiations. Further steps were carried out via national law.

The attempt to establish bargaining power on an international level failed, not least because the Dutch Centrale Ondernemingsraad (Central Enterprise Council) negotiated an agreement to close a Dutch site without informing the Akzo World Council and because the Dutch unions competed with each other.^{Footnote 88} In the case of Breda in 1981, the Dutch Central Enterprise Council agreed to close the plant because of job employment at a successor company. At the same time, a violent labor dispute erupted in Kassel. Here, management also tried to find a successor company and to establish alternative jobs at other plants of the group, but without great success.^{Footnote 89} However, even though management refrained from international trade negotiations and executed hard social cuts from the late 1960s into the early 1980s, the search for successor companies and the social plans show that it still followed a cooperative model, in contrast to the competitive model of management that was typical for multinationals in the United States.^{Footnote 90}

Starting in the late 1960s, the activities of multinational enterprises forced intense discussions on creating international regulation instruments. In 1976 the Organisation for Economic Co-operation and Development (OECD) adopted the Declaration on International Investment and Multinational Enterprises, including the Guidelines for Multinational Enterprises. One year later, the International Labour Organization (ILO) followed with a Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy.^{Footnote 91} The ILO analyzed the socio-political realities of multinational companies, and integrated the German Enka AG and its Spanish subsidiary La Seda de Barcelona into its study in the early 1980s. According to the reported answers, Enka had a decentralized structure and often held only minority shares in foreign companies, and its foreign subsidiaries produced almost exclusively for the demand of the host country. As the chemical fiber industry was still relatively young in many countries, it also contributed to improving the level of training abroad; in addition, local management often participated in management courses offered by the parent company. Because multinationals like Akzo–Enka operated in different cultural and institutional environments, they were able to draw from a range of value systems and attitudinal perspectives in such training.^{Footnote 92}

In the case of La Seda, the questionnaire listed several problems of work organization. First, Spanish law gave little flexibility in personnel affairs; second, staff productivity was low; and third, workers would often simply not come to work. Furthermore, in contrast to West Germany, Spain lacked a governmental official plan for continuous qualification, making education and training issues at the company level.^{Footnote 93} The management wanted to counteract contemporary criticism that multinationals would exploit employees in foreign countries by offering training abroad. More important, however, was the question related to the difficult working conditions in Spain. Responses show that—similar to Hoechst—labor costs were not the only criterion for FDI decisions in the 1970s and 1980s. Infrastructure, industrial relations, levels of qualification, and market aspects were crucial as well.

Relations Between Rhône-Poulenc’s Subsidiaries and Parent Company and the Transition of Its Workforce

The enormous expansion of the French Rhône-Poulenc—in particular from restructuring in the 1960s—was a challenge for management. The informal structure of the recent Rhône-Poulenc holding was no longer sufficient, especially since the acquisition of Progil and Pechiney-Saint-Gobain. The question was: How should work be organized in such a huge company? The response was similar to that of Akzo and Hoechst: decentralization and divisional structural changes as recommended by an external consultancy. At the end of the 1960s, in addition to some central functions, management created a divisional structure for eight product lines that were subject to the comité exécutif (executive board). The large foreign subsidiaries took special positions since they were directly controlled by the executive board.^{Footnote 94} This reflected the importance of the foreign companies; it also showed that they could act more autonomously than other smaller subsidiaries, which was similar to the Enka Group within the Akzo corporation.^{Footnote 95}

Two cases exemplify this. This first is the German Deutsche Rhodiaceta AG (formerly known as Deutsche Acetatkunstseiden AG Rhodiaseta from 1927 to 1951). The Nazis had suspended the rights of the executive board and the general assembly, but after 1945 Deutsche Rhodiaceta once again became an integral part of the French group.^{Footnote 96} During the Nazi period and the early years of West Germany, Hermann Linnemann was the executive chairman of Deutsche Rhodiaceta, and the company continued with a German at the head of management up through the 1990s. In the 1970s and 1980s, the board comprised three to four Germans, whose chairmen (Hans Bechert and Gerhard Boos) became heads of the supervisory board after they left the executive board. Only the supervisory board was divided almost equally between Germans and French.^{Footnote 97}

The second example is May & Baker. Its autonomy was even more pronounced since it considered itself more as a British company and less as a French subsidiary. After World War II, Rhône-Poulenc and May & Baker came to a commercial arrangement that enabled Rhône-Poulenc to make technical information and advice available to May & Baker, and vice versa. Despite Rhône-Poulenc’s majority share ownership, the agreement was terminable by either side with six months’ notice, but it governed the relationship for the next three decades. This was the basis for an enormous expansion of May & Baker after World War II, at home and abroad—especially in India, South Africa, Canada, and Australia. May & Baker maintained its position in the pharmaceutical industry by a skillful combination of its own and Rhône-Poulenc’s R&D.^{Footnote 98} May & Baker had no French managing directors. Instead, it had T. B. Maxwell (1941–1968), an American who had come to May & Baker in 1924 and who was appointed managing director in 1941; he was followed by the British E. V. Thomas (1968–1974), Nigel Chancellor (1974–1980), L. B. Heath (1981–1983, who had been with the company for almost forty years), and K. W. Humphreys (since 1983). Similar to Deutsche Rhodiaceta, the board of directors had an equal number of French and British members. In 1983, for only the second time in May & Baker’s history, an outsider—Humphreys—was appointed as managing director of the executive board, whose position meant he was in charge of management. He announced several organizational changes; transferred the service functions to operational divisions; and gave those divisions more responsibility for their profitability, as was similar to the parent company. Up through the mid-1980s, the chairman of the board of directors has been traditionally a senior executive of Rhône-Poulenc. These included Jacques Borduge (1970–1977), Gaëtan G. A. Pirrone (1977–1980), and Jean-Marc Bruel (1980–1984). This principle ensured a close liaison with the senior executive level of the parent company. However, May & Baker still preserved its identity and image and particularly its function as the leading company for the whole group in certain countries and in some fields of pharmaceutical research. In 1984 this was ended when Humphreys became both the chairman and the managing director. The separation of the board of directors between British and French managers remained stable.^{Footnote 99}

Even though May & Baker pursued its own business policies, it still depended on the development of its parent company. When Rhône-Poulenc decided to merge with Hoechst at the end of the 1990s, May & Baker was split: pharmaceutical production in England at Dagenham became part of Aventis, and the Norwich site was acquired by Bayer Agrochemicals. Both Deutsche Rhodiaceta and May & Baker prove three points: the importance of nationality related to the composition and work of governing bodies; the possibility of independence of foreign subsidiaries in decentralized multinational companies, especially in the case of acquisitions; and the integration of foreign subsidiaries into the regulation framework of the host country, including the national labor market and national training system. The strong position of May & Baker in the former Sterling area—a group of countries that either pegged their currencies to the pound sterling or used the pound as their own currency—could only be explained by the UK’s colonial history.

The increasing importance of foreign production manifested in the workforce structure of Rhône-Poulenc as well. Due to restructurings and acquisitions, Rhône-Poulenc’s plants were more spread across France than were the factories of its competitors Hoechst, Bayer, or BASF in Germany. In the 1970s and 1980s, about 40 percent of Rhône-Poulenc’s domestic workforce was located in the Rhône-Alpes region and 24 percent worked in the region of Paris. Abroad, most of the Rhône-Poulenc workforce was employed in its major subsidiaries. In 1980 Rhodia S.A. (Brazil) had a workforce of 13,500 people; May & Baker (United Kingdom) had 8,000; Viscosuisse (Switzerland) had 3,600; Rhodia (Germany) had 2,500; SAFA (Spain) had 2,300; and Rhône-Poulenc Inc. (United States) had 1,300. These six foreign subsidiaries employed more than 31,000 employees of the total 34,600 workers abroad in the Rhône-Poulenc Group; at the same time, about 60,000 employees worked in France.^{Footnote 100} With the economic turbulences of the 1970s, Rhône-Poulenc imposed a hiring freeze and cut jobs, especially in the textile sector: in 1976 it cut 9.5 percent in the textile division as compared to 4.3 percent of the whole group. Similar to Hoechst and Akzo, Rhône-Poulenc was severely affected by the European chemical fiber crisis and reduced its workforce in this sector between 1976 and 1980 from 13,200 to 8,000. The social plan anticipated a further reduction of 3,000 people, which was nearly achieved in 1983 when the workforce was reduced to 5,900.^{Footnote 101} Natural turnover of staff and internal transfers also reduced the workforce. Simultaneously, management reduced recruiting, sought to provide employment for its core workforce, and used early retirement and short-term employment.^{Footnote 102} Thus, while jobs in the French (and the European) chemical fiber industry were plentiful during the European postwar boom, Rhône-Poulenc workers experienced great uncertainty with regard to the permanent preservation of their jobs in the 1970s.

In comparison to its German competitor Hoechst, the French workforce had greater differentiation: it had cadres, ingénieurs/techniciens, employés, agents de maîtrise, and ouvriers (managers, engineers/technicians, employees, supervisors, and workers, respectively). The proportion of workers decreased at Rhône-Poulenc from the mid-1970s to the mid-1980s; in 1979, workers and salaried employees represented 64 percent of Rhône-Poulenc’s workforce but five years later they represented only 57 percent. This shift in the workforce is related not only to changes in manufacturing and the scientification of production but also with divestments of business units to BP and Elf-Aquitaine/Total. The proportion of each social group within the divisions was unequally distributed. In 1980, the share of workers and salaried employees in the central functions was only at 30 percent (compared to managers at 25 percent); in the films and systems division 53 percent (compared to managers at 8 percent), whereas in the textile and the chemical-fertilizer division it was about 70 percent because production still needed manual work (compared to managers at 5 percent to 8 percent). Furthermore, the preponderance of male employees (76 percent to 78 percent in the 1970s and 1980s)—particularly the 45- to 54-year-old group—was characteristic of Rhône-Poulenc, as was the case at both Hoechst and Bayer. The proportion of women increased slightly (from 23 in 1980 to 23.8 percent in 1984).^{Footnote 103} As with Hoechst, the shift in the domestic workforce toward skilled workers and women was not only the result of increasing multi-nationalization staring in the late 1960s but also of the opening of (higher) education institutions offering degrees in science and computer technology for large segments of the population. The liberalization of the labor market for women also had an impact on this development.

Nevertheless, the expansion of foreign production capacities was not without consequences. For managers, the complexity of decisions increased. For the workforce, competition (on the market and within companies) and individual job requirements increased, leading to feelings of insecurity about the workplace with regard to rising unemployment in Western Europe.