Where DP World Went Wrong
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Holmes Report

Where DP World Went Wrong

The lesson is clear: civil regulation—the restrictions on corporate behavior imposed by so-called “civil regulators” like environmental groups and other activists—can have as much impact on a company’s ability to do business as actual regulation.

Paul Holmes

When Shell Oil decided to sink the Brent Spar oil platform in the North Sea, it first and very sensibly secured the approval of the British government for its proposed disposal. But that approval counted very little when environmental groups got wind of the company’s plans and staged a protest. As the boycott spread across Europe, the company was forced to back down, and eventually consent to demands that it dispose of the platform on land.

 Similarly, when American biotech company Monsanto sought to introduce genetically-modified food products in Europe, it contacted regulators. They gave their approval, just as American authorities had years earlier. But again, citizens had other ideas. Unconvinced by their governments’ insistence that GM products were safe, they launched a series of protests against bioengineered products that cost Monsanto millions of dollars.

 The lesson is clear: civil regulation—the restrictions on corporate behavior imposed by so-called “civil regulators” like environmental groups and other activists—can have as much impact on a company’s ability to do business as actual regulation.

That was a lesson that DP World, the United Arab Emirates-based company that recently acquired Peninsula & Oriental Steam Navigation Co. of the U.K., and thus responsibility for the management of operations at six U.S. ports. That deal triggered a firestorm of criticism that united xenophobic Republicans with opportunistic Democrats and culminated last week with news that DP World would sell operations here to a U.S. entity.

The company outlined its plans—which averted a huge political embarrassment for President Bush—in a press release: “Because of the strong relationship between the United Arab Emirates and the United States, and to preserve that relationship, DP World has decided to transfer fully the US operation of P&O Operations North America to a United States entity.”

But prior to that announcement, public relations experts were generally unimpressed with the company’s handling of the issue.

“This is a classic case of contributing to one’s own crisis,” says Carreen Winters, who heads the crisis management practice at MWW Group. “The  failure to anticipate the public’s reaction—and the subsequent  failure to educate the public, establish benchmarks and shape the debate about the priorities, options and parameters of port security prior to this proposal being made—is the real reason that the administration is dealing with a crisis at this level.

“That’s not to say that the involvement of a company with an ownership structure like DP World would be an easy sell under any circumstances: emotions run high when it comes to security, terrorism and the Middle East in general. But universal understanding of the selection criteria, the pool of potential qualified candidates for the assignment and the proposed oversight procedures could have gone a long way to creating an environment where the proposal could be discussed on its merits and within the context of possible alternatives.”

The company should have been more proactive in countering efforts to “portray it as some type of shadowy Arab port security group,” says Ed Cafasso, a senior vice president at Manning Selvage & Lee “instead of a relatively well-run and well-managed public business that has a proven track record of delivering a cargo handling service that is important to the global supply chain and the global economy.”

The company should have been more aggressive about telling its story, Cafasso says, “being open about what it does and its expertise at doing it, and invite the media and policymakers to tour its operations and meet its executives. Except among a handful of international business reporters, DP World was a blank canvas that has been caught in what amounts to a political paintball contest whose sole purpose is to undermine the Bush administration national security credentials in a mid-term congressional election year.”

The company needed better messaging, and better messengers, says Barbara Shipley, who heads the Washington, D.C., office of Ruder Finn.

“Messaging is critically important,” she says. “Given the complexity of the issue and the political landscape, DPW needed a simple message platform that crystallizes its position clearly and concisely. Core messages should have emphasized DPW’s commitment to port and supply chain security as well as its ongoing partnership with the U.S. Because DPW is owned by the government of the United Arab Emirates, part of the messaging should have reinforced that the UAE is a strong ally of the United States.”

As for messengers, “DPW has tremendous assets in its U.S. leadership. Articulate, credible officers of the company—and who are U.S. Citizens—could help demystify the DPW and make it a real company Americans can relate to. Briefings and interviews with agenda-setting media inside and outside the beltway will help DPW consistently position itself as a trusted partner committed to U.S. and global economic security.  

“Third-party spokespeople could have been important in this effort. The kind of support coming from organizations like Israeli container line Zim Integrated Shipping Services, which according to the March 3 issue of American Shipper had come to the defense of DPW, was significant and could be leveraged. Additionally, former diplomats, especially if they served Democratic presidents, would be particularly effective voices.”

Others are critical of the company’s decision to rely on the Bush administration to tell its story.

“This was a critical mistake for all parties and placed the deal in jeopardy,” says Sam Singer, chief executive of Singer Associates, a San Francisco public affairs firm. “This is not a criticism of the Bush Administration, but a reflection of the fact that deals such as this have to be made with full knowledge of the public so as not to seem as if information is being hidden from the legislative arm of the government as well as the media and American citizens.

“Right now there is a solid reaction in the news media to bring balance to the initial criticisms of the deal. The media is researching and writing with great detail and balance about this story.  I would advise both the Arab Emirates and Dubai DP to provide as much background information as possible to the media right now.”

At the same time, a communication strategy is needed to address the broader issues raised by the reaction to the deal.

“I think there is a strong benefit in reminding the American public about the international nature of the world today and pointing out how many other Arab countries already have strong economic stakes and investments in the United States,” says Singer. “This information would shed light on the fact that there is an already substantial and positive economic tie between the U.S. and Arab countries that benefits all—and no more security risk than dealing with other countries.”

Rich Tauberman, senior vice president at MWW adds: “I think what has been missing in the debate is a true sense of what Dubai is all about. It is the most western, most progressive and most business oriented place in the mid-east. Dubai has consistently has championed putting economics before ideology. 
It has become the corporate, media, financial and aerospace center of the region not to mention a shopping and tourist Mecca for westerners. I would look to tell the story of Dubai’s commercial success, long relationships with top U.S. firms and enlist some global brands to go to bat for the emirate and what it stands for.”

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