August was a bumper month for product recalls and safety advisories as a raft of companies saw their crisis communications strategies put to the test. Most prominent was toy giant Mattel, hit successively by lead paint and magnet hazard fears that sparked the recall of two million toys in the UK alone.
Mobile phone handset manufacturer Nokia revealed a potential overheating problem relating to 46 million BL-5C batteries manufactured on its behalf by supplier Matsushita, with £500m immediately wiped off its market capitalisation as investors took fright.
Asda recalled 115,000 children’s bottles due to fears that the caps might break off. And proving that even the luxury end of the market is not immune, 550 owners of Bentleys, each priced at over £200,000, were asked to return their vehicles for checks amid fears that wheels might fall off due to the use of the wrong kind of retaining bolts.
The smart betting is that 2007 will set a new record for product recalls, just as 2006 did before it. European Commission figures show that in 2006 there were 92 reported recalls or safety notices in the UK – not including the 78 food-related recalls/withdrawals. This was more than double the number in 2005, which itself saw an increase of 44 per cent compared with 2004.
Last year the UK had the fourth highest number of notifications in the EU after Germany, Hungary and Greece.
Among last year’s headline grabbers were Dell’s recall of more than four million computers worldwide, costing an estimated $300m, while Cadbury’s recall of salmonella-infected chocolate in the UK was estimated at £2m.
New European Product Safety Legislation, which came into force in November 2005, is partly accountable for the scale of the increase, with manufacturers becoming responsible for informing the authorities and consumers of any potential risk to consumers.
Quality issues pertaining to some of the huge number of Chinese-made goods now on the market is also a factor. Nearly half (48 per cent) of all European recalls in 2006 involved goods from Chinese manufacturers. A survey earlier this year by the Chinese General Administration of Quality Supervision, Inspection and Quarantine (r) found that 19.1 per cent of products made for domestic consumption were ‘substandard’. Tragically, the Chinese factory owner involved in supplying Mattel with toys that contained impermissible levels of lead responded to his disgrace by committing suicide.
For brand owners, the nature of their response to a crisis is crucial to safeguarding reputation. For example, the bird ’flu outbreak that affected Bernard Matthews earlier this year was undoubtedly the primary reason for a 17 per cent fall in supermarket sales of its products over the year to 22 April, according to TNS Worldpanel.
‘In crisis communications a lot of brands try to avoid broadcast media,’ says Howard Kosky, managing director of broadcast consultancy Markettiers-4dc. ‘But I was impressed at how Mattel handled its recall using web TV.’
Certainly Mattel CEO Bob Eckert’s apparently candid response on a webcast and in interviews with media outlets seems to have prevented the crisis escalating into a major disaster.
‘There’s been surprisingly little coverage given the scale of the recalls,’ says Regester Larkin managing director Andrew Griffin. ‘Mattel has so far come across as doing the right thing. People will forgive a company for giving them a product that’s faulty. They won’t forgive companies that have failed to respond in the right way.’
Ear to the ground
Porter Novelli director Colin Shevills advises that companies need to have ‘good micro-monitoring’ systems to pick up on what consumers are saying about products on the web.
But there is also a danger, according to Martin Langford, a crisis comms veteran and managing director of Kissman Langford, that because recalls have become so commonplace, some companies will become complacent about communicating the details to consumers. Langford cautions that this could spell disaster and that companies must ‘over-communicate’, making it clear precisely what has happened and what action the public needs to take.
According to a BMRB poll of 1,000 people carried out in July for communications agency Razor, 67 per cent of people are either unaware of any product recall alerts in the past year, or are only aware of one or two. The most trusted sources of product safety advice are regulatory bodies or independent authorities like the Food Standards Agency (38 per cent), well ahead of manufacturers (17 per cent), the media (15 per cent) and retailers (13 per cent).
Razor managing director Chris Woodcock says she was surprised, given the record number of alerts, by the ‘degree of consumer ignorance or apathy’ indicated by the research. In her opinion, consumers are making the assumption that well-known brands are recalling products to cover themselves. But she adds: ‘Companies still have to convey the correct information.’
And that applies whether the imperfect product is an inexpensive toy car from Mattel, or a swish Bentley with a price tag well into six figures.
HOW RECENT CRISES WERE HANDLED...
Hit by impermissible use of lead paint and defective magnets, Mattel took no chances, recalling more than 18 million units worldwide and announcing a strengthened three-point check system. Chairman and CEO Bob Eckert apologised and clearly outlined Mattel’s response in a webcast and via media interviews.
‘We took a global approach,’ says Mattel PR manager Sarah Allen. ‘The CEO made himself available to US and UK media and that made a big difference.’
There was some minor criticism that Mattel did not take out press ads in the UK, but Allen says the coverage given to the story made this unnecessary.
Nokia’s share price dipped after it admitted 46 million of its mobile phones were at risk of overheating. Nokia made it clear that instances of overheating had occurred only a few hundred times and that in each case this was when batteries were being charged. New batteries were offered free to anyone with an affected BL-5C product, with Nokia recycling the old ones.
‘I did most of the spokesman work in the UK,’ says Nokia UK and Ireland communications director Mark Squires. ‘Our PR agency did a lot of ringing around to set things up. We made it clear no-one had been injured, no-one’s property had been damaged and gave reassurances.’