GE's Damaged Image in Japanese Nuclear Crisis
As the world watches the series of cascading disasters in Japan, it's painfully obvious people cannot control Mother Nature. But they can control the man-made elements of the disaster -- not just managing the nuclear power plants that are at risk of melting down. The companies involved with designing and operating these nuclear power plants -- General Electric (GE) and Tokyo Electric Power Company (Tepco) -- can protect their image.
The biggest risk to GE is to their image since GE played a role in designing at least two of the offending nuclear reactors. Even though GE's financial exposure is contractually limited and its other business units (such as gas turbines) are likely to benefit from the disaster, shares of GE stock have taken a beating falling 3.5% and 2% on two consecutive days this week. The US has 23 reactors that employ the same GE design as in Fukashima. Some nuclear reactors that use other designs are on fault lines at Diablo Canyon and San Onofre in California. There may be increasing pressure to shut these down.
Tokyo Electric Power Company (Tepco) suffered the greatest damage, given that it runs and manages the plants in Japan. Its shares have plunged 42% over the past two days, it has lost $18 billion in market value, and it has become the world's most indebted utility.
Is there a fix?
What should the companies involved in this disaster do to mitigate the image fall-out? They should follow the fact procedure, which involves the following four steps.
- Admit. If they did anything wrong they should admit it, since the truth will come out after all the scrutiny and investigations.
- Apologize. They should apologize for making whatever mistakes. But Tepco has apologized to the people of Japan, but as BNET blogger Kimberly Weisul reports, many believe their apology was too little and too late.
- Limit the scope. In this case, they have the earthquake and tsunami as the causes, but they need to put in perspective their perceived slow reaction.
- Propose a solution. This obviously will be a big challenge. If possible, they need to propose a specific solution to prevent the man-made component of this disaster from happening again.
Even if the companies succeed in protecting their images, the damage to the image of the nuclear power industry will be extraordinarily difficult to repair. The nuclear accident at Three Mile Island (TMI) in Pennsylvania occurred 32 years ago, but 12 days earlier, a movie about such a disaster (The China Syndrome) was released. The one-two punch of the news coverage from the TMI accident and the popularity of the movie so harmed the industry that not a single new nuclear power plant has been built in the United States since. Whether this is good or bad is a matter of debate, but nobody can argue the damage to the image of nuclear power in the US. The meltdown at Chernobyl in the former Soviet Union put further nails on the coffin. How the latest tragedy in Fukashima will affect nuclear policy remains to be seen.
What would you do if a cascading natural disaster put your company in this predicament?
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Ira Kalb is president of Kalb & Associates, an international consulting and training firm, and professor of marketing at the Marshall School of Business at University of Southern California (USC). He has won numerous awards for marketing and teaching, authored ten books and over 30 articles, created marketing inventions that have made clients and students more successful. He is frequently interviewed by various media for his expertise in branding, crisis management and strategic marketing. Follow him on Twitter.