Paul Holmes 19 Apr 2001 // 11:00PM GMT
The Armstrong Bankruptcy Communications campaign is worthy of a Gold SABRE award because it is an excellent model of how focused leadership and pro-active communications planning can positively position a company during a crisis and maintain its reputation throughout the crisis. Faced with mounting asbestos litigation costs, Armstrong World Industries (Armstrong) sought Chapter 11 protection in U.S. Bankruptcy Court on December 6, 2000. In preparation for the bankruptcy filing, Armstrong put an aggressive communications plan in to place that emphasized the message that Armstrong was “open for business”; employees’ jobs were secure; Armstrong valued it’s customers and vendor relationships; and products would continue to be available. A team from Burson-Marsteller was deployed to work around the clock to refine communications materials and be on site at Armstrong’s corporate headquarters the week of the filing. The result of this pro-active communications campaign was overwhelming support by Armstrong employees and positive media coverage. A New York Times headline the day after the filing read, “For Armstrong, bankruptcy is the lesser of two evils.”
The primary challenge was to preserve Armstrong’s reputation during the Chapter 11 filing process—a potentially damaging announcement. Armstrong executives wanted to clearly explain to its key stakeholders, including employees, vendors, suppliers, and customers, that the bankruptcy filing was a necessary business strategy that would contain the asbestos litigation issue once and for all. Armstrong also wanted to communicate that it was still the leading innovator in design and manufacturing of floors and ceilings, despite the filing. To communicate this, Armstrong needed to be able to communicate its key messages at a moment’s notice following the filing.
While Armstrong’s bankruptcy communications strategy was uniquely its own, prior to the filing, Burson-Marsteller drew upon its own bankruptcy experience and analyzed the announcement strategies of Armstrong’s industry competitors to glean best practices. The recent filings of industry competitors, Owens-Corning and Babcock-Wilcox also provided important lessons for Armstrong’s own communications strategy.
The primary objective for the filing of the communication strategy was to communicate to all audiences affected by Armstrong World Industries’ Chapter 11 filing the strategic reasons for seeking bankruptcy protection and the fact that the company’s businesses remain strong ($3.4 billion in total sales in 1999) and vibrant.
Rather than simply announce the news of the filing and respond to questions from reporters, employees, analysts and investors, Armstrong determined that it was important to take a pro-active stance in communicating with these essential groups. Underlying Armstrong’s strategic approach was an appreciation that if the company did not position itself in front of this issue from the beginning, they would lose control of the story and their ability to explain why the bankruptcy was necessary. Guiding principles for the communications strategy were:
- Communicate up front through a massive proactive, campaign touching all audiences through the broadest array of media.
- Activate communications channels simultaneously within minutes of confirmation of the filing;
- Create and deploy communications vehicles—i.e. 1-800 information hotline and “dark” web site—that were transparent and convenient—enabling audiences to access information targeted to their needs, when they wanted it.
- Focus on reassuring audiences that resolving Armstrong’s asbestos liability-the objective of the Chapter 11 filing—doesn’t impact the strength of the company’s core businesses.
- Emphasize the future—that Armstrong is “open for business” with employees continuing to focus on serving customers and with vendor and customer relationships preserved going forward.
The bankruptcy filing plan was set up to launch the moment filing was confirmed on the wire services. Implementation was spread out over two days, beginning on December 5, 2000 the day before the filing.
The day before the filing a Communications Center, which included Armstrong staff and Burson-Marsteller staff, was activated and became the hub for the announcement. Burson-Marsteller was charged with responding to all media and investor calls, while a specially trained cadre of 60 customer service representatives were charged with responding to employee, customer, vendor and supplier calls. A 200-page Chapter 11 Crisis Manual was distributed to all managers during advanced briefings
The day of the filing, December 6, 2000, a coordinated effort was launched that included national distribution of a press announcement to local, regional and trade and business media as soon as the filing was effective. Local media were invited to a press conference (accessible to national media via a dial-in toll free line) hosted by CEO Michael Lockhart to explain the reasons for the Chapter 11 filing.
Vendors, customers and employees received a letter from Lockhart explaining the company’s restructuring efforts. Managers were responsible for calling key accounts, while Human Resource managers made contact with employee union representatives.
The internal communications was equally rigorous with voicemail, Intranet and video announcements targeted to employees. CEO Mike Lockhart held employee briefing sessions and each employee received a brochure, the Armstrong Employee Guide to Chapter 11,explaining the mechanics of the Chapter 11 process, and providing answers to the most commonly anticipated questions. Specialized materials were developed in German, French, Swedish and Mandarin to explain to international audiences that Armstrong’s foreign subsidiaries are not a part of the Chapter 11 process. And a web-site devoted to Armstrong’s Chapter 11 filing, providing background information on Chapter 11 process, updated information of interest to specific audience groups.
There were several measurements for success for this campaign:
- Web site hits—There were approximately 184,000 hits to the web site on the day of the filing.
- Press conference attendance—the press conference was attended by all the major news outlets in the Lancaster, PA/Pennsylvania area
- Use of Chapter 11 visuals aids by local media—All local media featured the visuals that were created to explain the bankruptcy process including the employee brochure, charts of the bankruptcy process and the web site URL.
- Media hits—Media coverage indicated that Armstrong’s reputation remained intact despite the filing. The next morning’s headline in Lancaster’s daily read “Employees back firm’s decision”; Coverage was also secured in all major newspapers and wire services. National coverage appeared in The Wall Street Journal, AP, Dow Jones, Reuters, Bloomberg News. The New York Times headline read “For Armstrong, bankruptcy the lesser of two evils.”
- Call to the Communications Center—eight hundred (800) calls were logged by the Communications Center’s customer service representatives. This response indicates that that Armstrong was able to effectively reach out to its target audiences and contain the crisis by clearly communicating its key messages.