KEEPING THE ENGINE RUNNING: Anticipating crises and adopting PR strategies to avoid them is the route Mike Baunton has taken with industrial giant VarityPerkins. Danny Rogers investigates

Mike Baunton knows the value of crisis management. Just before we met he had put himself through a gruelling crisis training session with Regester Larkin. This interest is not so surprising. As head of an industrial engineering group producing diesel engines - one of the latest environmental hot potatoes - for over 4,000 distributors and dealers in 160 countries, he feels it pays to be prepared.

Mike Baunton knows the value of crisis management. Just before we

met he had put himself through a gruelling crisis training session with

Regester Larkin. This interest is not so surprising. As head of an

industrial engineering group producing diesel engines - one of the

latest environmental hot potatoes - for over 4,000 distributors and

dealers in 160 countries, he feels it pays to be prepared.



Recently environmental campaigners have increasingly focused on diesel

as a potentially deadly fuel. Although it is more fuel efficient than

petrol, and therefore produces less carbon dioxide, there is growing

concern that particle emissions may damage the lining of the lung or

worsen existing illnesses such as asthma and bronchitis. Friends of the

Earth reckon that heavy diesel lorries produce more than 70,000 of

particulates a year with a resulting annual death toll of 10,000.



New worldwide off-highway emissions control regulations are

progressively coming into force. The US has already established emission

guidelines and the first tranche of new regulations will hit the

European market later this year. On 19 June, the European Council of

Environment ministers agreed to tighten the European Commission’s

proposed directive on fuel quality and vehicle emission limits to come

into force by the year 2000.



Meanwhile, more aggressive local legislation on fuel content is also in

the pipeline. Germany and Britain, for example, are currently trying to

persuade the EU to cut the amount of sulphur in diesel to 50 ppm.



’We want to keep ahead of legislation and public opinion,’ says

Baunton.



’We know we have to conform to environmental legislation, but customers

are not prepared to pay extra for environmental engines, so we have to

market the better efficiency and lower noise.’



The company has already launched the 1000 series, a quieter engine, with

lower running costs which exceed anticipated emissions regulations, and

is also developing natural gas engines as an environmentally-friendly

alternative.



In February, several major players in the automotive diesel engineering

industry including VarityPerkin’s parent LucasVarity, Vauxhall and

Rover, formed The Diesel Industry Forum, an alliance designed to counter

what the industry perceives as ’misinformation’ about diesel. ’Vehicles

are a soft target because they’re visible but other forms of power, for

example electricity, require more power station generation, which

actually means more emissions,’ says Baunton.



With a global base of distributors and dealers, an equity stake in

manufacturing outputs in China, Mexico and Argentina, and plans to

expand VarityPerkins presence in India, Baunton is well aware of the

growing environmental awareness in developing economies.



’The question isn’t if, but when, countries such as China will follow

the example of the US and Europe in terms of legislation. As we move

into developing countries people are going to focus on emissions but

they forget about the emissions that come from power stations. When

people hear diesel they think dirtiness and forget about its thermal

efficiency,’ says Baunton.



Mike Baunton is no stranger to the vagaries of international industrial

markets. Formerly president of Walker Manufacturing based near Chicago

and European managing director of shock-absorber specialist Monroe,

Baunton worked in Australia and Brussels before taking the reins at

VarityPerkins.



He is keen to point out that his international management experience has

taught him to be sensitive to different cultures. ’I am a strong

believer that industrial tourism isn’t good enough. It’s important to

learn other ways of doing things and being sensitive to different

attitudes and approaches.’



He is also keen to build on the strength of the VarityPerkins brand and

heritage. ’It’s not just about selling your products, its more about

selling the image of the company and giving potential customers the

chance to learn about you. While I am a strong believer in

above-the-line marketing, there’s also a need to establish trust - to

convince customers that we are in for the long haul.’



The company is already represented by Manning Selvage and Lee network

partner Genesis in India, and Edelman PR Worldwide in Korea, two of its

major targets for growth. And last year VarityPerkins received a

commendation in the PR Week Awards for its campaign to win over the

Chinese market following the signing of a joint venture with Tainjin

Engine Works. From a recognition level of next to zero, VarityPerkin’s

team working together with local agency China Global to make

VarityPerkins the most prominent diesel engine brand in China, netted

pounds 50 million of new contracts in two years.



Previous investment in PR has also paid off for VarityPerkins in the US,

its most developed market. Previously sold under Detroit Diesel

Corporation branding, VarityPerkins’ products have recently been

relaunched in the US through a new distribution network. ’We started our

PR activity three years ago and have gradually won over the US trade

media,’ says Baunton.



But, while the company had established good lines of communication with

the automotive and engineering press, it neglected to address the

Washington-based defence industry media, with potentially disastrous

consequences.



When VarityPerkins won the contract to provide diesel engines to power

Crusader (the next generation of mobile artillery) 18 months ago, there

as an outcry about the choice of a UK supplier.



’We hadn’t oiled the wheels in PR terms and it became an issue,’ says

Baunton. The company kept the contract but forestalled any future

resistance by bringing in Detroit-based PR agency Stackig to focus on

the defence industry, supplementing the industrial sector work already

carried out by its Detroit agency National Editorial Services.



The company’s plans for world domination were significantly boosted by

last summer’s pounds 3.2 billion merger between its US parent company

Varity and the UK parts manufacturer Lucas, pushing the new LucasVarity

into the FTSE 100 index. Originally a family business, VarityPerkins has

grown into a global business with projected growth from dollars 1

billion to dollars 2 billion by the end of the decade.



Already, the communications department has felt the effect of the

merger, with an increasing decentralisation of responsibility to

LucasVarity’s seven business divisions and the departure of

VarityPerkins divisional communications director, Jon Chandler, to the

new post of group corporate relations manager at the parent company’s

head office. Chandler now reports to Nicholas Jones, who joined the

newly-merged LucasVarity as group communications director on 1 April,

and handles City relations and group corporate issues.



’Nick Jones will focus strongly on consistency of corporate message.

Perkins has not been listed in the UK since 1951 and there’s a lot of

work to be done in convincing people of the bright future that lies

ahead,’ says Baunton. In the meantime VarityPerkins is hunting for a new

head of communications to oversee its global communications team.



’Investment in PR is worth its weight in gold,’ says Baunton. ’It takes

a long time to build up trust and, if mishandled, can destroy you very

quickly.’



WORK PRACTICE: KEEPING EVERYONE HAPPY



Industrial engineering firm, VarityPerkins faces environmental pressure

on two fronts. In addition to the increasing scrutiny with regard to

diesel emissions, as one of the largest manufacturers in the

Peterborough region, VarityPerkins’s operating practices are also coming

under local scrutiny.



In 1995 the company published its environmental policy and has

subsequently invested in a variety of initiatives to improve the working

environment.



In 1996, for example, Baunton invested over pounds 700,000 to extract

dust from the working environment. At an internal communications level,

employees are encouraged to register ideas for improving the working

environment.



The in-house magazine Echo is used by the communications team to explain

VarityPerkins’ global and local environmental policies. Recent research

showed that 80 per cent of staff feel that the management do a good job

of keeping them informed about performance and 77 per cent of staff feel

they are kept up to speed in terms of plans and company objectives.



Last year, as part of a campaign to make the local community aware of

its good practice, VarityPerkins hosted a Business and Environmental

Conference in conjunction with Peterborough City Council, Cambridgeshire

Council and Greater Peterborough Partnership. To coincide with the

conference, the PR department also produced a publication entitled

VarityPerkins Business and Environment Review, featuring endorsements

from environmentalists such as Robert Swan of the company’s

environmental initiatives. As a direct result of this initiative,

representatives from 60 companies banded together last month to create

an as yet unnamed Peterborough environmental business partnership. ’It

has become a call for action, far beyond our original expectations,’

says Baunton.



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