CAMPAIGNS: Bankruptcy PR - Armstrong rides out bankruptcy

Client: Armstrong Holdings (Lancaster, PA)

Client: Armstrong Holdings (Lancaster, PA)

Client: Armstrong Holdings (Lancaster, PA)

PR Team: Burson-Marsteller (New York, NY)

Campaign: Armstrong's Next Chapter

Time Frame: November 29 - present

Budget: Less than dollars 100,000

Floor and ceiling product manufacturer Armstrong Holdings filed for Chapter 11 bankruptcy protection on December 6, 2000, rather than succumb to the pressure of 173,000 lawsuits filed against it for damages allegedly caused by asbestos, which the company once produced.

Its main concern was preventing people from thinking that it was tanking.

To the contrary, the Armstrong companies, which employ 18,000 people, had sales of dollars 3.4 billion in 1999.


Armstrong put a crisis communication plan into action with agency of record Burson-Marsteller. 'Armstrong's Next Chapter is about using the bankruptcy code to move forward,' remarks Tony Herrling, client leader at Burson.

Armstrong wanted to assure customers that its products would be available and give vendors faith in their long-term relation ship. It also wanted employees to know their jobs were secure.

There were 25 different audiences, from employee unions to foreign companies, that had to be reached with targeted messages.


Getting Armstrong's spin to the press was vital, but prompt internal PR was also important.

A 200-page Chapter 11 crisis playbook was distributed and advance briefings with managers were held. Within 30 minutes of the filing, which was announced on PR Newswire, Armstrong put up a Web site and opened a toll-free telephone line. The site got 84,000 hits that day. Sixty people on two shifts took 800 calls that week.

Each vendor, customer and employee received a letter on the first day from CEO Michael D. Lockhart, explaining that the company was simply restructuring. Managers telephoned key accounts.

Human resource managers briefed union leaders personally by telephone.

Overnight packages were sent to managers, which included a Lockhart video presentation to help them explain the matter to their employees.

Each employee received a Burson-produced brochure (translated into four languages) that spelled out the filing process and explained that it could take five or six years to complete.

The bottom-line message was: 'We are open for business. The sole reason for the filing was to find a final resolution to our asbestos situation,' explains Stan Steinreich, VP of corporate relations at Armstrong.

Steinreich announced a noon press conference to 15 key local reporters.

The three local newspapers and TV stations, along with writers from AP and The Philadelphia Inquirer, took notes at the briefing and then inundated the Lancaster campus to gauge employees' reaction.


The next morning's headline in a Lancaster daily showed Armstrong had gotten the message across: 'Employees back firm's decision.' Because the filing was a national business story, hundreds of clips ran in all major newspapers and business outlets, including a piece in The New York Times headlined: 'For Armstrong, bankruptcy is the lesser of two evils.'

Steinreich says the company didn't lose any business because of the filing. 'The key was being ready in advance and being proactive, not reactive,' Herrling maintains.


The campaign will focus on maintaining momentum. At press time, 18 motions were approved by the court. A local TV station has asked to cover the court case live.

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