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The Global Marketplace: Profit vs. Perception

Courtesy of Brett Jordan


Posted At: September 26, 2012, 17:34 P.M.
by Shelby Calambokidis

With the 2012 elections quickly approaching, the debate over domestic unemployment and exporting jobs is increasingly important. The U.S. is experiencing its longest period of high unemployment since the Great Depression, and there could be a PR problem looming for companies that export jobs overseas. How will Americans begin to perceive companies like Walmart and Apple, which export the majority of their manufacturing jobs to China?

The potential backlash against such companies should be of interest to those of us in the PR industry. This prospective trend affects our industry because PR practitioners will have to employ crisis management tactics as well as brainstorm new campaign strategies in order to save the companies’ reputations.

In order to analyze and predict how PR professionals will tackle the issue, it is imperative to note the U.S. unemployment rate and how it affects key publics in the market. In August 2012, the unemployment rate was 8.1 percent. Without a doubt, these numbers could affect companies that outsource, as many Americans struggle to find work.

Dick Damato, a member of U.S./China Economic and Security Review Commission, believes the economy will turn down again next year, which means there could be a larger number of people out of work.

“When it becomes clear to people who are unemployed in this country that the multinational companies have not only been giving their jobs away but giving American technology away to the Chinese who are using it to further this drain on our employed population, it could lead to organized backlash in this country,” he said.

Because our country is in a recession, multinationals stand to gain by taking advantage of cheap labor costs in other countries. On the other hand, these companies could also lose in the court of public opinion as people watch their jobs go to China.

Case studies

Walmart is a company that has received a lot of criticism for importing products from China because the goods are cheaper. It argues that these imports allow it to offer merchandise at lower prices. However, as the world’s largest retailer, Walmart has the ability to strongly influence the market.

Currently Walmart is receiving criticism for driving smaller companies out of business, depressing the wages of its own workers and displacing other American workers by importing goods from China. In the last few years, Walmart has chosen to make a difference in the area of sustainability. However, its most vulnerable area PR-wise and its biggest potential gain would be to shift its focus to bringing jobs back to America.

On the other hand, Apple is the world’s best-known consumer electronics company and has yet to fall under heavy criticism. Its products are incredibly popular, and it may take more for the public to shift an opinion to action. Recently, Apple has had to confront issues of worker exploitation in China by its subcontractor Foxconn. The poor safety conditions and long work hours at Foxconn’s plants caused a major global scandal. In attempts to evade renewed criticism, Foxconn made improvements in its working conditions.

An article in the New York Times quoted the Fair Labor Association, a group Apple hired to audit Foxconn, saying that such changes in Foxconn’s conditions would require the company to hire “tens of thousands of extra workers.”

A representative for Apple would not speak about the recent cases, which is another PR lesson we can take away. It is always worse to not comment than to confront the situation head on with a prepared strategy.

However, companies that outsource may be making a correct calculation in that they could stand to earn a greater profit if they ignore the potential PR problem and continue to produce goods at lower prices.

“The organized backlash probably is not big enough to counteract the benefits of cutting down costs for companies,” said Brad Erthal, a Ph.D. student in economics at The University of Alabama. “By and large, the companies will survive the PR backlash and will most likely find it profitable to continue outsourcing.”

Pillars of crisis management

There are major PR lessons we can take away from both Walmart and Apple’s situations. While the two companies are not currently in trouble, they should be prepared to utilize the pillars of crisis management in order to mitigate the consequences and counter the negative press.

Jason Vines, senior vice president of Fleishman-Hillard, pointed out three essential steps:

Preparation: The last thing you want to do when you are going into a crisis is not be prepared. “Every organization will go into a crisis at some point,” Vines said. “If you’re ready and have all of your people on the same page, you may even avoid a crisis.”

Principles: Vines said, “What you have to do is not put a crisis book together, but instead establish a set of guiding principles for your organization.” This way, no matter what happens, the organization is going to follow these one, two or 10 guiding principles in all decisions it makes when it gets into a tough spot.

Honesty: Truth has to be a part of the set of guiding principles. A company should vow to tell the truth every time it speaks and base all of its communication on facts. Vines said, “This is what can trip up an organization: when it either doesn’t deal with facts, or it lies.”

In situations where a crisis has not yet occurred or even where a business is flourishing, a company should be prepared, establish a set of guiding principles and vow to tell the truth. Vines pointed out from his experience in the industry, “A crisis isn’t a mistake that is made; it is how it is handled.”



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