Tactics differ for 2 firms in crises
As Tuesday dawned in Southern California, two huge local companies were about to unleash separate public relations firestorms.
Mattel Inc., the country’s biggest toy maker, was bracing for its second product recall in two weeks, this time of about 19 million playthings because of lead paint or magnets that could be swallowed and cause serious internal injuries.
Countrywide Financial Corp., the nation’s top mortgage lender, was about to disclose that its foreclosures and delinquencies had risen to the highest levels in at least five years.
El Segundo-based Mattel did everything it could to get its message out, earning high marks from consumers and retailers. Though upset by the situation, they were appreciative of the company’s response.
Countrywide, on the other hand, all but shuttered the doors at its Calabasas headquarters, offering scant public comment even as news turned worse and customers rushed to its bank branches to close their accounts.
A crisis can happen to any business. But how a company responds offers a glimpse into how executives craft a corporate image and the way they want their firms to move beyond a setback.
“You have two totally different leaders, two totally different companies, two totally different industries, but the responses tell you pretty much everything you need to know,” said Paul Argenti, a professor of corporate communications at Dartmouth’s Tuck School of Business.
“When you’re in a crisis, that’s when people really need you most,” he said. “You have to be the most visible and the most present, and you have to improvise a little bit from a strong foundation.”
Mattel and Countrywide were facing very different problems. Mattel was wrestling with its vendor factories, a problem within its control. Countrywide was facing a business downturn and a market whipsaw.
The other difference, Argenti said, is the two companies’ crisis experience.
Mattel, for better or worse, has had plenty of recalls -- 28 since 2000 -- during which to polish its public relations game.
On the other hand, neither Countrywide nor many other financial firms have faced the kind of woes Countrywide did this week, which included rumors of layoffs and bankruptcy amid a global credit crunch.
What both had in common, Argenti and other crisis public relations experts said, was the need for a disaster plan.
Mattel turned to its 100-page crisis plan five days before the recall, as soon as it notified the federal agency overseeing product safety of the toy problems.
Countrywide did not return calls for this story.
At Mattel, just after the 7 a.m. recall announcement by federal officials, a public relations staff of 16 was set to call reporters at the 40 biggest media outlets. They told each to check their e-mail for a news release outlining the recalls, invited them to a teleconference call with executives and scheduled TV appearances or phone conversations with Mattel’s chief executive.
In all, CEO Robert Eckert did 14 TV interviews Tuesday and about 20 calls with individual reporters.
By the week’s end, Mattel had responded to more than 300 media inquiries in the U.S. alone.
“I thought it was important for us to be transparent, to provide information openly and quickly,” Eckert said in an interview. “The alternative is to stick your head in the sand and hope it goes away. And it doesn’t.”
Mozilo has been mum.
At a Los Angeles Toys R Us on Friday, shoppers said they had heard about Mattel’s recall and appreciated the information. Some said they were still a bit wary of Mattel or its Fisher-Price brand, but all said they probably would be willing eventually to give the toys another try.
“They’re doing a good job in the sense that they’re telling people,” said Johanna Gutlay, 31, of Santa Monica, who was looking for a coloring book for her 20-month-old son. “Now I think they’re going to be careful and safer.”
At Countrywide on Tuesday, spokesman Rick Simon answered media calls with a few terse comments.
As news broke Wednesday that Countrywide was having trouble borrowing the money it needed to make loans, Simon said little beyond the company’s brief news releases.
Was it possible to talk to founder and CEO Angelo Mozilo? “No way,” Simon said.
Was there another executive who could talk about the liquidity crunch? Did anyone at the company want to say anything without being quoted that might help Countrywide get its story across? There would be no comment, Simon said.
“Management is completely focused on running the business in a changing environment,” he said.
On Thursday, as Countrywide Bank customers withdrew their deposits and Countrywide Financial drew down an $11.5-billion credit line from a group of banks to keep its operations going, Simon did not return repeated telephone calls.
He said in an e-mail late that day that he would reply only to e-mails, and only those that asked for “clarifications . . . of what is in the news release.” Calls to a Countrywide Bank representative went unreturned.
Friday morning, Rizelita Abeleda, a 59-year-old librarian at USC, went to the Beverly Hills Countrywide bank branch to withdraw $250,000 she had in a money market account.
“Because they don’t say anything, it’s like they’re holding back so they can keep people’s money,” Abeleda said, adding that she couldn’t get through on the bank’s phone lines and had grown more nervous because of the lack of information.
Finally on Friday, Countrywide Bank President Tim Wennes did a series of interviews intended to reassure depositors that their money was safe.
“It’s really been just the past couple of days that the bank has been more in the media -- yesterday in particular,” he said. “And that’s why I’m out here talking today.”
Jerry Swerling, director of public relations studies at USC’s Annenberg School for Communication, said he was inclined to give Countrywide a break.
“My guess is that they know they should be talking,” he said. “One can only conclude that they don’t know what to say. People might cut them a little slack for that, but that will pass.”
Times staff writer Annette Haddad contributed to this report.