2010: A year some companies would rather forget

By Shanaz Musafer
Business reporter, BBC News

  • Published
Tony Hayward testifies in front of US lawmakers
Image caption,
BP's former chief Tony Hayward faced a tough time in the wake of the oil spill

Have you ever played that game where someone says a word to you and you say the first thing that you associate with it?

If not, try these: Toyota, BP, Rolls-Royce, or perhaps even Heathrow Airport.

If the first words you thought of were along the lines of "car recalls", "oil spill", "exploded engine" and "snow delays", then you are probably not alone, given the year each of them has had.

2010 has seen all of these companies face crises, both on an operational level and from a public relations point of view.

They have all come in for criticism from one quarter or another for how they handled their respective situations, but have they emerged with their reputations intact?

BAA Heathrow: Snow, delays and only one runway

It's been quite a year for airports operator BAA. The spring brought with it strikes by British Airways cabin crew and the volcanic ash cloud, and now it's looking like a bleak winter, in particular for Heathrow.

Many airports were hit by the snow and severe weather, but it was the closure of Heathrow on Saturday, 18 December and the subsequent disruption that has caused the most outrage among passengers.

Three days after the snow stopped at the UK's biggest airport, one runway was still out of action and thousands of passengers were still queuing in the terminals, desperately hoping to jet off on their Christmas holidays or get home in time for Christmas.

But it was the poor communication and conditions within the airport that really got to some would-be travellers.

Image caption,
Some passengers spent days waiting at the airport

"Terminal 3 is a bit like a refugee camp," said Victoria Gardiner, who was delayed for more than two days at the airport. "My husband was in a queue for six hours, just trying to get information. It's absolute chaos."

BAA also drew criticism for not investing enough money to deal with the freezing conditions.

Back in October, BAA chief executive Colin Matthews said: "The outlook for the remaining months of the year is positive and we will continue to focus on raising customer service standards. Our capital investment programme remains one of the largest of its kind in Europe."

Yes its investment in snow and ice technology amounted to only £500,000 this year with 69 vehicles making up its "snow fleet", compared with a reported £1m investment and 150 vehicles at rival Gatwick.

But airline consultant John Strickland from JLS Consulting says that while in the short term, "it's a terrible position to be in", the company can recover.

"Provided they can be seen to come out of this with a clear focus on learning lessons, it won't ultimately have a long-term effect, simply because Heathrow is the key access point to the UK from a worldwide perspective," he says.

"The disastrous opening of Terminal 5 had worldwide coverage but that hasn't had an effect because a big improvement has been made."

And BAA is making all the right noises about how it is going to proceed. "When we've got every passenger where he wants to be and she wants to be, then we will crawl over every aspect of these last few days," Mr Matthews told the BBC. He has also said that he will forgo his bonus for this year.

But John Strickland warns that BAA must not become "complacent" just because Heathrow is London's main airport. For those passengers who are passing through in transit, there are many alternatives, he says.

Toyota: recalls, bows and more recalls

Cast your mind back to the autumn of 2009 when Toyota announced the recall of some four million vehicles around the world because of fears that accelerator pedals could become trapped in floormats.

If the Japanese carmaker thought that it could put the matter behind it in 2010, it was wrong.

More recalls were to follow - 14 this year - over a variety of safety concerns.

Image caption,
Akio Toyoda said he was "deeply sorry", but did his bow say the same?

The company's chief executive Akio Toyoda drew a barrage of criticism: for being too slow to react to the safety issues, for offering unclear explanations and for initially signalling that he would not face Congress in the US, where many of the recalls took place and there was anger over deaths that occurred in accidents caused by Toyota safety problems. (He eventually did appear before a congressional hearing after being formally asked to do so).

The Japanese media also slammed him for not bowing deeply enough during a news conference, which had been arranged for him to apologise for the recalls, leading to questions about exactly how sorry he really was.

Crisis communications consultant John Huntley, managing director of John Huntley Training, told the BBC in February that it would take some time for Toyota to recover from the series of recalls.

Looking back now, he is still critical of the company for being slow to respond.

"I still think [Toyota's response] was a bit too late. They waited and waited and waited instead of acting immediately," he says.

"When something goes wrong, even if it's not the company's fault, they should put out some sort of holding statement," he goes on. "The problem with Toyota was they were putting the onus on the drivers rather than them assuming responsibility."

But he admits that if you look at the company's financial performance, it appears to have weathered the storm.

"I think they've come out of it OK. People are still buying their cars and their sales figures seem to be fine."

BP: environmental disaster and PR gaffes

For BP, meanwhile, the date 20 April 2010 will last long in the memory of the oil giant.

That is when the BP-leased Deepwater Horizon drilling rig exploded, killing 11 workers and leading to the Gulf of Mexico oil spill.

The company's share price more than halved in the weeks that followed as it struggled to deal with the fall-out from the spill.

The disaster was made worse for BP by a series of public relation gaffes made by those at the helm.

Comments such as "the Gulf of Mexico is a very big ocean" and "there's no-one who wants this over more than I do - I would like my life back" from then chief executive Tony Hayward, and "we care about the small people" from chairman Carl-Henric Svanberg did not go down well with the public.

"BP works with a lot of scientists. Scientists see the world differently to the rest of us," says John Huntley as he attempts to explain the seemingly inexplicable.

Image caption,
Eight months after the Gulf of Mexico oil spill, work is still going on to clean up the area

"When Tony Hayward said, 'It's a very big ocean,' technically he was right! But the world reacts [differently] - what they want to hear is, 'This is a terrible incident, we're doing what we can.'"

Jane Wilson, chief executive of the Chartered Institute of Public Relations, admits that crisis management teams can plan their response as much as possible, but when it comes to a gaffe by a senior figure, "that often can't be controlled."

According to Ms Wilson, "It's not just how you handle the communication but how your operational team works. If the two teams work hand in glove then so much the better."

Mr Hayward has since been replaced by American Bob Dudley - who had already taken charge of the clean-up operation, and a man who grew up in Mississippi and knew the Gulf coast well - a move which Mr Huntley describes as "very sensible".

But how long will it take for people to be able to think of BP without automatically thinking of the Gulf of Mexico oil spill?

"Sometimes it's how long it takes you to fix the problem," Ms Wilson says.

Given that it took five months for BP to seal the leaking well completely, the company is now being sued by the US, compensation claims are still to be settled and the clean-up operation is continuing, for the people of the Gulf coast it is likely to be a long time before BP's reputation is fully restored, if at all.

Rolls-Royce: engine worries and silent communications

If you're an engine-maker, probably the biggest blow to your reputation would be if one of your engines were to fail.

Image caption,
Qantas temporarily grounded all their A380s after an engine exploded on a Singapore to Sydney flight

But that's exactly what happened to Rolls-Royce when one of its engines exploded on a Qantas Airbus A380 plane last month.

Since then, Qantas has begun legal action against the company in case the two cannot agree a compensation settlement.

That news came on the same day that the Australian Transport Safety Bureau identified a serious manufacturing fault with some of Rolls' Trent 900 engines.

Rolls said that this was consistent with its own findings, but did not release any new statement on the day, which drew criticism from many onlookers.

"That Rolls-Royce chose not to make any additional formal statement in response to the Australian Transport Safety Board or in response to what its customer Qantas has said is quite frankly a huge disappointment," commented Howard Wheeldon, senior strategist at BGC Partners.

In fact, much has been made of Rolls' lack of communication since the engine exploded.

Good, strong and regular communications could "really begin to work to the company's advantage", Mr Wheeldon says, "if only Rolls-Royce management but knew it."

The importance of acting quickly in a crisis is something stressed by both consultant John Huntley and the CIPR's Jane Wilson.

"It's so important to say something quickly, to show that you're doing something to stop it happening again and to keep the public up-to-date," says Mr Huntley.

"You have to be seen to be doing something," agrees Ms Wilson.

As for Rolls-Royce, BGC's Howard Wheeldon believes that while it may not suffer any lasting damage in terms of sales, its reputation may not be so lucky.

"One would be foolish to dismiss the potential of some permanent reputational damage having been done to Rolls-Royce."

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