Keep calm and communicate on

High-profile developments such as GM's business transformation announcement on Monday call for strong and considered reactions from all concerned - especially the communications department.

GM is doubling down on its truck production to help it invest for the future.
GM is doubling down on its truck production to help it invest for the future.

One of my favorite activities during weekends is diving for the remote during NBC Sports’ Premier League soccer coverage and muting those awful Chevy Real people. Not actors. ads.

The spots typically open pretty much every ad break during the coverage and, presumably, play an effective part in GM’s overall marketing and communications strategy for some of its most prestigious marques.

Full disclosure: I’m definitely not the target audience for these spots. I live in Manhattan; haven’t owned a car for 10 years; don’t have kids; and principally use public transport, cabs, or ridesharing services.

But the clichéd portraits of modern consumers and barely believable "shock" outbursts of admiration and joy during the reveal, when the cars turn out to be Chevy brands, particularly push my annoyance button. They have also spawned some quite amusing spoof versions.

Anyway, clearly this is personal. According to Ad Age, in 2016 the automotive sector shelled out almost $51 billion globally on advertising, and GM’s data shows its slice of that spend definitely produces a return on investment. The repetition certainly gets into your head like a brain worm.

J.D. Power’s dependability ratings are regularly plastered over the ads, and Chevy typically does well in the SUV and truck categories where it’s now placing its bigger bets. In 2018, Chevy won awards in the most dependable compact SUV, midsize car, large light duty pickup, and midsize SUV categories. But the sedan/compact ranges are increasingly dominated by the likes of Toyota, Genesis, Kia, and Hyundai.

In light of GM’s decision to shutter 6 marques, "unallocate" (close) plants, reduce its workforce by 14,000, and save $6 billion by 2020 that will be added to its R&D war chest, you have to wonder how effective these ads are in the compact/sedan categories the iconic U.S. automaker is deprioritizing.

GM chairman and CEO Mary Barra said in a statement on Monday: "The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future. We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success."

GM is doubling the resources it will allocate to electric and autonomous vehicle programs in the next two years, prioritizing future vehicle investments in "next-generation battery-electric architectures." It expects more than three-quarters of its global sales volume to come from five "vehicle architectures" by early next decade.

It is saying goodbye to six brands: the Chevrolet Volt plug-in EV hybrid, Cadillac CT6 partially automated vehicle, Cadillac XTS large luxury sedan, Chevrolet Cruze small car, Chevrolet Impala large car, and Buick LaCrosse large luxury sedan.

Business in general, but the automotive sector in particular, is a long game. No matter how high profile certain short-term developments may be, you can’t crystallize a whole industry into one week of activity.

But you can be sure the GM communications team led by PRWeek Power Lister Tony Cervone has been on full alert all week as it deals with the fall-out from Monday’s announcement.

Some of the inevitable media and social storylines in the narrative that GM has had to deal with include:

  • The old chestnut about a company that was bailed out by the Government after it went bankrupt in 2009 now putting thousands of Americans out of work.
  • The perceived irony of focusing on "gas-guzzling" trucks and SUVs to support the investment in environmentally friendly electronic and self-drive vehicles.
  • The impact of impending trade tariffs on items like steel and aluminum that have driven up commodity costs of automotive raw materials across the globe.
  • A company saying it needs to increase its cash reserves when it has been the recipient of President Trump’s significant overall corporate tax reductions.
  • Japanese, Korean, and Chinese companies simply make better and more reliable cars, especially in the compact product categories.

From a communications point of view, one key stakeholder - the financial community - seems to have reacted well. Shares initially rose 4% when the restructuring plan was unveiled, flattening out during the week, but still ending higher than when it started.

The street bought the narrative about GM getting ahead of the business curve and investing in the future of automotive.

On the Government bailout issue, GM would point out that this was a decade ago and the Government sold the remainder of its stock in the automaker in December 2013.

It is certainly taking these steps in part to ensure the business is sustainable in the long term and that a bailout situation is never again necessary, but it would also highlight its record earnings in Q3 2018 and above-expectation financial results for the last 14 quarters.

GM is adamant that the economics of its industry remain strong and it is actually being bold in taking such actions when things are on the surface going well.

The communications team would also have expected reaction from the President, especially via his always-active Twitter feed.

Sure enough, Trump’s Twitter piped up on Tuesday with the following:

But the nature of this channel is there is always another story around the corner and the agenda moves on remarkably quickly, whether that is the Mueller investigation, G20 meeting in Argentina, Ivanka Trump’s emailing habits, or the migrant caravan on the border of Mexico and the U.S.

In this febrile environment, sometimes taking stock and adopting a watching brief is the best communications policy – and that seems to be what GM has done.

On the tax cut issue, GM points out that it hasn’t materially benefited from this because of deferred tax assets for the company having come out of bankruptcy. In January, it said it would take a $7 billion write-down to reflect the loss in value of those tax-deferred assets held on its balance sheet.

It added that the value of those credits against future taxes declined because the reduction in the corporate tax rate to 21%, from 35%. That’s a complex issue to explain to the ordinary citizen or consumer, and probably not a productive rabbit hole to go down so, again, it’s a communications topic best left alone unless prompted.

The overriding feeling I have when analyzing the complex elements playing into this matrix is that I’m glad I’m not the person either having to make the tough decisions or communicate around it and deal with the inevitable consequences.

It’s a reminder of the complex environment within which modern communications professionals operate and the need for high levels of skill, poise, business nous, and ability to remain calm under pressure.

Real people. Not actors. If you like.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in