Corporate reputation depends on how well or how badly crisis situations are handled.
The classic case is Johnson and Johnson and how it handled the Tylenol case. Tylenol was being contaminated by some homicidal nut case with some poison in drug store shelves in the US and a number of deaths were reported. J and J management took the situation under control by ordering a nationwide recall of Tylenol, a review of how they can better protect the consumer and assumed responsibility for helping the victims and their families. The recall was expensive but it saved the Tylenol brand and enhanced J and J’s reputation.
Another recent case is Dell computers. It recalled some four million computer batteries just to make sure the corporate reputation is not damaged by a few cases of exploding batteries. It was an expensive move but not doing it may even be more expensive in terms of damage to long term brand and corporate reputation.
Locally, in recent times, the tragic Wowowee stampede caused some 70 deaths and injuries to a few hundred. Within two hours, Gabby Lopez was at the scene, went on the air to express his regrets at the accident, assumed responsibility and assured victims that the company will provide all the assistance necessary. In the backroom, the lawyers were not sure Gabby should go out on a limb like that. But Gabby thought it was the only right and proper thing to do. And he did it.
In the aftermath of the Guimaras oil spill, the top guys from Petron were unaccountably invisible. I would have expected to see pictures of Nick Alcantara and the Petron president from Aramco at the scene. Even Virginia "Rui" Ruivivar, the PR manager who is always quick to justify Petron’s price hikes in television interviews was largely invisible. I sent Rui an e-mail to ask for a reaction but it remains unanswered to this day. It was so unlike Rui.
I imagine Rui is under management orders to minimize public exposure. I can only guess but it seems the lawyers and the bean counters in Petron have taken control of the situation. Their objective is to minimize the financial damage to Petron’s bottom line. Lawyers and bean counters rarely understand the value of corporate reputation. Neither are they conversant with Corporate Social Responsibility. That’s the work of the Petron Foundation and limited to "photogenic" activities that do not cost much.
I remember a similar maritime accident when I was still with PNOC. One of our tankers collided with a passenger vessel and a lot of people got killed. I was in some out of the way location in the Visayas at that time, inspecting Napocor facilities with then Napocor president, the late Gabby Itchon. It was amazing how in the days before cell phones, they were able to get through to me and I had to take the first available small planes out to get back to Manila.
But even before I got back, our crisis management plan was in effect. People and resources were mobilized for the search and rescue effort and an operations center was activated in Batangas to receive bodies of victims and air lift survivors to medical centers. We kept media informed of the latest developments and in sum, we made sure everything was taken care of. Of course there were problems too and not everyone could be pleased, but at least the massive effort was there and it was visible.
I am disappointed that Nick Alcantara, Petron top man, didn’t go out on television and even convene a press conference early in the day to assure everyone that Petron would take care of things. I finally heard Rui’s voice over a phone patch on ANC a couple of days afterwards on Crossroads, but she didn’t sound very clear on just how much responsibility Petron was going to assume for the damage. As someone commented, why should taxpayer money be used for a disaster that was clearly a private company responsibility?
And the damage to Petron’s reputation is as massive as all those television shots of oily sludge being scooped out of Guimaras beaches. It was so sad to me…. I was just in those Guimaras beaches a month ago, admiring the beautiful marine environment from the vantage point of Roca Encantada, the Lopez ancestral home that overlooks the sea lane from Negros to Iloilo. Some years ago, I also visited the marine research station in the area, carrageenan farms and the nice clean and clear waters near Isla Naburot.
While the tanker owner is legally responsible for the damage, we all know the local tanker industry can’t be described as world class. I doubt if the tanker owner has the financial muscle needed to address the massive damage to the environment and the livelihood of locals. It was hardly reassuring to hear early reports that the crew members of the tanker were not qualified to handle a vessel with such a dangerous load as fuel oil.
There is a standing joke I remember when I was at PNOC that the crew of local tankers get their licenses not from the Coast Guard but from the Department of Tourism… as boatmen in Pagsanjan. That’s because all the good sailors go abroad to work for international tanker companies, all we are left are those who are unable to get licenses to go abroad. It seems the joke’s still valid today and the joke’s on all of us.
It is no secret in the industry that our domestic oil tanker fleet is a disaster waiting to happen. Well… it happened in Guimaras… again. The real mystery is that how come such tragedies don’t happen even more often. In the end, the oil companies bear the responsibility for entrusting their products to vessels that do not normally operate on international safety standards.
That’s why Petron is guilty as sin. That’s why Petron is totally responsible for the tragedy at Guimaras, even if they insist they are not legally liable. At the first hour of the tragedy, Petron should have been out there helping out… the fishermen whose livelihood had been affected… mobilizing local experts and facilities from the local oil industry… getting foreign resources to come and help.
I say, Petron’s reaction or lack of timely reaction is a serious management failure. Now they belatedly tell us that Petron is negotiating with a Singaporean company to bring in advanced technology that would determine the exact location of the oil tanker that sank off Guimaras island and siphon off the remaining bunker oil still in the vessel.
Now they tell us, after a week, that Petron, will bring in deep-sea contractors who will use a side scan zoner to determine the wreck’s actual location on the seabed, a remotely piloted submersible to find the leak, and hot tap to siphon the oil that is still contained in the tanker’s hold. That’s nice but why only now… these are things that should have been done and announced within the first 24 hours… assuming they still have those crisis management manuals we used to have.
It should be easy to get the help of the oil industry, including competitors like Shell and Chevron in emergencies like this. Aramco should also have the technology and the clout to get the technology needed in such a situation. I simply cannot understand how Guimaras could have been handled this badly. Maybe, if there is any lesson learned here, it is the need to keep politics out of Petron. Malacañang should keep the top management of Petron in the hands of trained and experienced oil industry veterans, who also would not hide when disaster strikes.
The thing that worries me most is what if this happened in the sea lanes around Boracay… or busy Mactan and Bohol…. Should we ban tankers from passing those routes? The Coast Guard Commandant told ANC that’s a good idea but that would take political will to do.
We can either make the investments needed to modernize our domestic tanker fleet and impose strict manpower qualifications to those operating those vessels or get into a death watch of our tourism industry. Think about it… the next tanker oil spill could damage Boracay or Panglao to keep them off limits to tourists for a very long time. And that oil spill can happen any time.
How do oil companies usually deal with oil spills?
A) Containment booms and filtration pumps;
B) Slick lawyers
Boo Chanco’s e-mail address is bchanco@gmail.com