That was it. Hi, and welcome to Episode 7 of the WristCast, the official talk radio program of the Wrist Management Monitor blog, which is the official blog of Wrist Management Magazine, which is the official magazine of the Wrist Insurance Management Society. My name is Bill Coffin, publisher and editorial director of the magazine, and with me are my usual suspects, Jared Wade. Hello, we're going to work.
I like how you used talk radio instead of podcast, so you didn't say cast 67 times. Thank you very much. There were a lot of officials in there, though. There were officials, but that was on purpose.
That was by design. And last but not least, Emily Holbrook. Hello. Excellent.
We have a lot of stuff we're going to talk about. This is going to be right into it. Emily, what story have you brought to the table? I want to talk about the explosion in the mine in West Virginia that killed 25 people.
I blogged about this, actually, this morning, so you can check it out there, too. Found out that Massey Energy, the company that owns the mine, did not have business interruption insurance, and I think that's a huge mistake in an industry that has so many different disasters. Yeah, disasters have to it. I mean, these things happen to mine all the time, and they opted out of business interruption insurance.
Oh, they opted out of it? Yeah. So they had it at one point, and it's like going out of it? I think they had it passed in their annual report.
It said, you know, they have, like, workers' comp and all that stuff, but they said that they did not opt to take the business interruption insurance. So they got that against them. They got all the workers' comp liabilities that, you know, are against them right now, and, of course, lawsuits that will be filed by the victims' families. So now, do these guys have a history of emotional violation?
Yeah, they had a ton of violations. I actually quoted something from the New York Times that said that Massey is certainly one of the worst in the industry. This guy was talking about, you know, in terms of safety violations. Yeah.
The Massey record is without a doubt one of the most difficult in the industry from a safety standpoint. And I also talked in the blog about Don Blankenship, the Massey CEO. Yeah. He's one heck of a guy.
Do not use foul words. He sent out a memo, actually. It was dated October 19, 2005, to all deep-mind superintendents. That's terrible.
Yeah. This is word for word. It says, if you have been asked by your group presidents, your supervisors, engineers, or anyone else to do anything other than run coal, i.e. build overcasts, do construction jobs, or whatever, you need to ignore them and run coal.
This memo is necessary only because we seem not to understand that coal pays the bills. And overcasts are needed for proper ventilation in the mine. So, in other words, just keep working, and if they fall over, step over their body, make sure you get that coal up. Yes.
A lot of the violations they receive are about safety issues. Right. So, I think they were just starting to focus on that a little more. And, you know, people were saying, no, we need to be more safe in the company.
And he was like, no, no, we don't. We need to run coal. We need to run coal money. Safety doesn't be bills.
Coal pays bills. It seems kind of like, I mean, then to not get business interruptions in terms of your whole thing is based on money. That seems like a weird place to go, well, if we have a disaster, and we're part of an industry that has quite a few of them, let's not worry about that, about the one thing that will keep us going, keeping profits coming in. I mean, you think that somebody would cut, like, say, workers' comp, let's screw their employees by that memo's tone.
Or it just seems weird that that was the choice. I mean, maybe it's, well, to be honest, I'm a lot more trouble by the tone of that memo than I am by the lack of business interruptions. Oh, yeah, no, we're just saying, though, we think that it would be workers' comp that they would have saved up on. It seems like it's just managed by, God knows who, it just doesn't make the money for the whole industry.
He sent out another memo the next week saying, I think my first memo was construed wrong. I didn't mean that safety came second. You just said that in the memo, but I think he got some heat. So he had to send another memo trying to take everything back that he said.
Well, it's already sent out, so. Now, I'm guessing that Massey is not a unionized mind. No, he is very much against unions. Ah, okay.
And he's very much into politics, too, obviously, and he hates regulators, he hates environmentalists. Yeah. If you're in the cold business of West Virginia, the two, you know, that and politics would probably go hand in hand. Wasn't that funny that he got a judge fired?
Yes. He's got the bullet list. West Virginia State Supreme Court judge, he ran, he put in millions of dollars to have this, like, horrible advertising campaign run against this judge to have him, you know, thrown out. And the next appointed judge threw out, like, this $5 billion suit against Massey.
Billing with a B. Yeah, I think that's what I was going to say. Yeah, unless you have the actual suit. It's a $50 million jury verdict.
Yeah, you're right. Well, I mean, just out of cursory glance, the head of this mine, he seems like a CEO and more like the villain from Roadhouse. He's just like this guy's exploiting the town, and he's got to wait for, like, whatever A's action heroes available to come in. Yeah, exactly, you know, while the mine goes on fire, I think it was just Stephen Scamboy.
I think he joined the Rock Johnson show up there with a 2x4, and he's in charge of the mine. I know. Can I state a startling fact, though, in 2009, the company was fined a total of $382,000 for serious, unrepentant violations lacking, or lacking ventilation in proper equipment plans, as well as failing to utilize its safety plan property. Yeah, but here's the thing, though, this is the problem with OSHA.
Do you happen to know what that company's hanging revenue may be? I don't know, it's the sixth largest gold company, and it owns 56 mines. Right, so if you're looking at almost $400K in fines, that is, yeah, I mean, that's not even a slap in the ring. I mean, it's just a ridiculous amount, because there's no way that's really going to put enough hurt on any company of that size to stop doing what it's doing.
I mean, the regulatory reach there is just not sharp enough. Same thing, I mean, you know, we beat Toyota, and we've talked about Toyota quite a bit, but everybody made a big deal about the fact that the government was going to find them a record fine, 16.9 million, I think is what it is, 16.4 million. You know, when the last big fine was, the biggest fine previous was, like, $1 million. 16.4 million to Toyota, who made, I think, $8 billion last year?
$8 billion? That's nothing. So, I mean, while it sounds bad from a PR perspective, which is like any other fines, it's not really a financial hit. No, no.
I mean, it's something that's going to inspire you to all of a sudden go, oh, let me fix those, the ventilation in the coal mine, because it's $300,000, or fixing the ventilation, what if it costs $500,000 to fix the ventilation? The first one, I think, had gotten, had gotten, like, the world's heaviest speeding fine, because he was racing through some area in his sports car, and was, like, doing some, you know, he was doing that trouble speeding or something, but the point is that the law there in that canton was that the speeding ticket, that the fine of it is commensurate with your salary. So, you got hit for, like, a $1.2 million speeding ticket, right? Because they're making a huge amount of money.
The point is that the fine is that the fine is supposed to, is supposed to be, you know, that you feel the sting, you know? It's ridiculous, but if you look at it from a larger perspective, say, for worker safety and a mine, you know, the current levels for OSHA are just ridiculous, they're just ridiculous. I mean, they're not, and, they're not like anyone's portion of revenue. That would be a pretty, pretty good way to deal with fines, I mean, I don't know, seems like a good idea.
Read a few things about the Toyota fine, and some people are saying, you know, they should just pay that money and move on, you know, because they can't appeal at the decision and, you know, try to fight it, and, you know, it would, but the guy was suggesting reputationally that wouldn't be worth it for Toyota, because, you know, why have your name in his fault? Why have your name in the newspaper for the next six months while you're trying to fight it, what is just a slap on the wrist fine, essentially, monetize it. Yeah, sure. But then again, if you do just pay it and you don't fight it, then that can kind of, um, entice lawsuits, because it's almost like an admission, maybe you were, that the fine was valid.
So, and I don't know if the same rules apply in this mining instance, but, you know, if they're going to fight all those fines and try not to pay them, it, you know, may go on and on just so they're not admitting guilt type of thing. That's almost like, again, like, what is this really serving the purpose of this fine? Well, what would be interesting to see is, you know, the average wrongful death lawsuit settlement in the state of Western Union versus the other states. Let's get a rough idea of how much it would cost to make this whole thing go away.
We're probably about to find out, because, I mean, this is a case of a company that's got a history of guilt, for lack of a better, alleged guilt, if I have to be. Yeah, allegedly wrongdoing. Yeah, so, I mean, if there's ever going to be a good test case for how effective any of that is, this might be it. So, Emily, let me ask you a little bit about the disaster itself, because I didn't, you know, really read it, I just heard that, you know, there's a disaster in the mine.
Was there an explosion? Did the mine collapse? Yeah, there was some sort of explosion, but they don't know what triggered the explosion, and I think it might have been, you know, those, like, train, like, people to, like, carry the miners down and take them back up, might have created a spark, that's, because, in that mine, probably the levels of the toxic dooms were, you know, too high, as usual. We're recording this on Friday, as of yesterday, no one didn't get down there, so it was just a gas that you poisoned.
So, now, the body's been recovered, or the body's still down, down below, and they just, they recovered 11, and they're looking for stuff to get, well, they got the 14. Oh, really? Yeah, and there are still, it was four people, on the count of four, now it's three, and they are hoping that those three are in, you know, they have little rooms that have oxygen, actually, and food and water, you know, like, little safety rooms, but they still have a little hope that they actually made it to these safety rooms. Now, does this mine, this particular mine, have a history of similar scale accidents, or is this the first time that something this bad has happened at this particular location?
It's the first time something this bad has happened at this particular mine, but I think they've had smaller accidents in the past. Yeah. You guys remember the Sago mine explosion? I do, yeah.
What was that, do you remember? Oh, trivia. Oh, here we go. You only get one guess.
Oh, six. Yes, you get so five first. You only get one guess, so I'm going to guess, you only get so five first. And to this day, that's actually the year with the highest number of fatalities for the five mining industry.
Yeah, 192 people for the year, 2006. That was in Utah, this? Oh, yes, I believe it was. But if I recall correctly, at the same time, at roughly the same time, there's another mine disaster up in Canada, I believe.
I remember we were talking about around the, because that year there was a bunch of high profile ones. But the big difference I remember was that was Sago versus this other one's that it was almost like an alpha and omega way of handling a mine disaster. Because the other one had safe rooms down below, like what Emily was saying, and the guys were stuck there, they were actually, you know, they had communications, they were okay, they were actually less comfortable for being stuck in a cave in, whereas the Sago guys were, they were very much in very dire straits, and the company came off looking very unsapathetic, and they handled the communications of it, I remember, rather poorly, because there at one point a false report of deaths, no, the details are alluding me now, but at one point there was a false report of some kind, either they had all died or they had been rescued or something, had gotten out to the families, and of course there was this moment of terrible realization that the situation was still quite, quite bad. But yeah, Sago was a bad, bad disaster.
But I just want to say, I found in my research that between 2000 and 2009, two fatalities occurred at the specific, yeah, which is kind of average for mines, I think. Well, let anybody in the audience doubt how dangerous coal mining is, let me reveal you with a story of a friend I had in college whose father was a coal miner, a career coal miner from West Virginia, and this guy who was from a unionized mine, and had been a miner all his life, was going to be a miner all his life, was quite proud to be a coal miner, and the mine who worked at, the union had crafted this deal where you could have up to a certain percentage of your total lung capacity destroyed by black lung, I think it was like 15%, right? And above that, for each additional percentage of your lung capacity destroyed by black lung, you got a one-time cash payment of $10,000, and this guy was really proud of the fact that he had gotten like two or three payments so far. He was like a 17%, 18% destroyed.
Yeah, and he wasn't walking around like, wow, my job has ridden me of almost a fifth in my lung capacity, he's walking around like, wow, I took a company for like 30K, and I really made this guy feel it. I'm pretty steep now. Yeah, and he was really psyched about it, and I remember talking to his son about it, he said, you have to understand the mindset of guys who grew up in that kind of, you know, especially in certain areas where, and this is true in the coal country of Pennsylvania too, you know, where people grow up and they grow up expecting to be a miner, and that's all there is, and, you know, their willingness to accept what would be to us totally unacceptable amounts of risk, or just off the chart. Was your friend Derek Zouanner?
He may have been. Dad, I think I have a black lung. Dad, another movie reference, the coal country of New Jersey. Well, Emily, definitely keep us appraised as things continue to develop this Monday.
I doubt very much this is the last time anybody's heard about this. Right, I'll be blogging about it on the monitor as well. Outstanding, outstanding. Well, thanks for following that, and we'll get to something else right after the break.
Okay, and we're back. So, if you've been following the news recently, you may or may not have heard that Tiger Woods has been in a little spot of trouble with, oh, he's a golfer. He's a comeback. Oh, no.
Sorry, it's early. Apparently not for most of the civilized world. Everybody's been taking their, their, their, their, their. It's just misunderstood.
Oh, that's it. He had addiction. He had addiction. He had to go to treatment for it.
Let's go finish. So, who deserves a bigger punch in the nose, Jesse James or Tiger Woods? I don't really know. They both seem to be having a lot of, um.
Do Sandra and Will have kids? We'll leave that out. Have kids together? I don't know.
They do not, actually. Then Tiger. Perhaps we should pick up Jesse James and beat Tiger Woods with Jesse James. There you go.
I don't think that they don't. Well, what's going on this week, of course, is that Woods has finally come back to, I guess it's the Masters, but I don't want to follow golf at all, but I'm guessing it's the Masters. And, of course, he had a great big, he had his first press release before it, and he, I guess, did his first round of golf yesterday. And what's been interesting is that, at least in the New York press area, I mean, the press has been actually pretty favorable towards him.
I mean, his press release went on pretty well. People seem to be very willing. In a typical American fashion. It's because the redemptive, the redemption part of the hero story is, it's the final part of the story arc in America, most definitely.
You know, what I always find interesting about Tiger, I don't really care about Tiger personally, I mean, I don't follow him from a sports level or anything like that, but he's one of those guys where, you know, he is a one-man enterprise. I mean, Tiger Woods is as much a brand as he is a sports hero, as evidenced by the fact that, you know, after the scandal broke, he wasn't wearing his traditional Nike cap anymore, he was wearing his Tiger Woods logo cap for a while, you know, at a time when many of his other sponsors were playing him. So, I've been interested in watching him come back from a reputational risk standpoint, because, I mean, he does not, he needs the money. Well, he may have to swipe his own, but definitely, you know, he's going to want to somehow reclaim a lot of sponsors for revenue that he lost.
And, so, with that, I thought it was really interesting that Nike just aired a recent advertisement with him as a 30-second spot. I'm going to play it in the sound from it in just a minute. But it's a real basic thing where you just see a picture of Tiger looking at the camera looking very familiar and remorseful, and some words of his father playing on top of it. Take a listen.
Tiger, I am more prone to be inquisitive, to promote discussion. I want to find out what your thinking was, I want to find out what your feelings are, and did you learn anything? What we've got here is, you know, a lot of people have, you know, they consider this to be a controversial ad, they don't think it's in good taste, they're using his dead father to, you know, to brand him. It's just supposed to plug the heartstrings to make you feel, whatever.
It's really the easy way, it's like the easy road to, like, oh, yeah, you're so sorry, right? Yeah, it touches my heartstrings. Because Nike, good Nike commercials tend to, like, get that sort of, like, a little bit of emotional kick, because, I mean, this just seems to be, like, an easy way out for them to do it. Well, Nike's become one of those brands, like, say, Apple and Coca-Cola, where their advertisements aren't really about particular brands anymore, as much as they are about reminding you of this lifestyle and cultural force has become the brand.
But, so anyway, that was interesting that Nike chose to say, buy Tiger, and all that. But it got me thinking about reputation risk management on a broader level. And I was doing some research for a story about this week about a couple of companies in the past that have used really acute reputation risk management during times of crisis. And you can tell how in their age...
The stock price actually went up after the crisis was over because of how they handled the reputational risk, right? Let's talk about this first one. Back in 1993, do you guys remember there was a nationwide scare regarding hyperemonic needles showing up in Pepsi cans? Do you guys remember this at all?
Remember this? Sure. He wasn't bored. What are you talking about?
You're 15 years old. You can't drink Pepsi back in the day. I vaguely remember that. So check this out, okay?
I remember that Pepsi scare pretty well, actually. And it was by May 31st, 1993. Pepsi's share price was $31. By June 9th, okay?
That was the first trading day after the first report that a syringe had appeared in a can. And the price of stock had dropped down to $17.43 a share. So it had almost dropped down by half, okay? By June 16th, there were claims in at least 24 different states that there were foreign objects appearing in Pepsi cans.
They weren't that type of needles either. People were claiming to find lug nuts, screws, broken glass, all over the place. This epidemic of claims started coming from across the country. People were finding all sorts of stuff in Pepsi cans.
Now, by June 17th, Pepsi finally gets its lucky break. Now keep in mind, the FDA did not actually issue a recall or anything like that because, or even suggest that Pepsi do a voluntary recall because they did not find evidence that there was any tampering going on. So it was pretty clearly a reputational problem in this public perception situation. And Pepsi, by this time, it scrambled a crisis team to engage the media very openly.
They were getting their votes out as much as possible. I remember very much a front-page graphic on USA Today where they had this huge schematic of how their production line operates and how the cans move through the thing and how they turn upside down for like nine-tenths of a second and get filled up and turned over again. And basically, it was mechanically impossible for this many different kind of foreign objects to get involved in that many cans and that many different bottling facilities. It was just impossible.
It was like being hit by lightning while being eaten by a bear while driving a runaway Toyota all at the same time. It just wasn't going to happen, right? But it still had this perception. Like, 6-17, somebody gets opening and gillivin' gets caught in closed-circuit television actually inserting a syringe into a can of soda in a store.
So Pepsi gets this. They put that to me all over the place. So look, this is what we've been saying all along. Somebody's been putting this stuff in the cans.
And then it's kind of tail off. July 4th, Pepsi has a massive public marketing campaign. Oh, the 4th of July holiday. It's the whole Thanks, America campaign.
Which is basically, thank you for sticking with us. By July 19th, they declared that the scare was over. Their stock price was still about the same. $17.75.
But after that initial announcement, next trading day, the stock price was up about $2. By the end of the year, the stock had gone back up to about $21. Then it continued to rise from there. Well, that was by Crystal Pepsi, that wasn't it?
Yeah, right. Stuff was poisoned in the first place. Was that on the same time, though? I think so, yeah.
Yeah, because I knew a guy who actually, he loved cola. He had a very strange allergy to the syrup, the cola-colored syrup. Like, he had a potential fatal allergy to it, so he couldn't drink cola. And Chris Pepsi came out, he was buying a case of this stuff.
He was like, 7th heaven. Yeah, you're right. He was buying, like, extraordinary amounts of the cancer. And he was like, why?
So, such a case of Pepsi, I mean, I'm really, you know, they engaged. It was kind of like a Tylenol scare thing, you know, where they kind of had to because they were faced with destruction of the brand. But they didn't just weather the storm. They actually, you know, they restored some of the value by the time it was over.
Now, an even more interesting example is Martha Stewart Omnimedia. Right, now, we all know she had an incline thing, right? So, by in 2001, before the incline thing breaks, her stock is at $31 a share. By June 18, 2002, she makes her first public statement about this whole thing, because the incline thing comes out.
She basically told people to bug off. She wasn't going to be bothered by this. At that point, stock had dropped down at $7.25 a share. It tanked.
She's indicted a year later, stock's at $9.59. She's sentenced, she's found guilty on March 4th, the following year, and sentenced on July 4th, 04. Now, this is the interesting thing. She sentenced, the day before she sentenced, her stock price was at $8.70 a share.
Now, everybody widely expected her to appeal this, to fight it, to defend the kicking and screaming. If you guys remember the case, her defense was pretty lackluster. And once they accepted the verdict, she said, all right, I'm going to go to jail. I'm going to face it, I'm going to go to jail.
And I remember, a lot of media commentary was very surprised that she had actually decided to do this. Now, I don't know why she chose to just simply go to jail. Could this be a matter of, she was just going to put it behind me. Could this be, she figured, well, I'm just going to, at this point, there's no sense in playing the other ball.
I'm just going to do, essentially, what the right thing is to go to jail. Her stock price jumped for $4 after that. This is in an era, because by that time, we had had the Merck accounting scandal, the Maryland accounting scandal, the Quest accounting scandal, Tyco, WorldCom, Parmaline, and a little-known company, a little-known company named AIG, had just started with its first accounting scandal, too. So I want to imagine that by that time, the store just figured, you know what, if I just do my time, you know, I'm not going to be at least as bad as AIG.
I'm not going to be at least as bad as AIG. I'm not going to be at least as bad as AIG. They won't have to have my name with that list every time. They won't have to have my name with that list every time.
They won't have to have a story from here until the end of time. So she starts serving her time on October 8, 2004. She's out by March 4, 2005. She goes in, and her stock price is $16.55.
How much do you think her stock was worth by the time she gets out? $60. Not quite that much. $36.87.
But it was worth higher than it was before the stock started. It's all because she cultivated her reputation in a way that her fans rallied to her, and people actually, you know, figured out what we're going to live often, and they realized that she's still bringing the enterprise. That's the other part of the redemption cycle. See, it's not just the fact that you fall from grace.
It's people do, like, when you admit your failings. Right, right. Especially at a time when, you know, all those other accounting scandals I mentioned, there wasn't much accountability going on whatsoever, and people were trying to dodge blame left and right. So that worked.
So as soon as she admits everything, now she's even more identifiable. Or actually, she probably went from being unidentifiable because she was Martha Stewart, perfect living, or whatever. What is it? Martha Stewart living?
I mean, the whole idea is very, like, perfect, and, you know, just always, and, yeah, but then as she, you know, admits to wrongdoing, and actually pays the price for it in jail, it's like, oh, you're kind of just, like, a screw-up like the rest of us. So now your stuff looks good, and I kind of, like, identify, because I have a crazy brother who went to jail for some stupid parking tickets once, and now you're just like us. So you identify, and now she's got sweet neck tattoos in front of the room, right? I think so.
Isn't it around the same time she's appearing in, like, MTV Awards, like Busta Rhymes, and, like, she has a, like, street cred now. She actually does a whole different segment of the audience. She actually made a joke that when she was in jail, she called herself MDD. MDD.
Exactly. But, no, she kind of went to jail with some people. I mean, if you weren't a fan of her, she was kind of one of those people that they hate. And somehow, you know, she developed that amount of stuff that she came back, and it's not just, you know, personally, people feel better for her, it's that her enterprise, her company, actually, recovered as a result of that.
Well, her enterprise is very much depend upon what steward. The personnel, exactly. It's not taking that much risk. I mean, if you look at a lot of coverage now, it's borderline phoning over the fact that he even is back playing golf.
There was something, I forget, I was watching The Daily Show, whatever, and they were cracking jokes about it, but there was, like, 250 people covering the practice, like, earlier practice before the tournament started, which is not normally the press concentration for this sort of event. So they were covering it, like, news. I mean, every news story is probably leading off of what Tiger did in a golf tournament, which generally people don't care about unless Tiger Woods was involved in the first place. It's not that hard for Nike to go, oh, what do we have to lose?
People already kind of have voted and they've said, well, we want Tiger to do well even if he might be a jerk. Yeah. So you still like the athlete, maybe not the person. Yeah.
Well, there's a third example, which is kind of still ongoing, which is Walmart. Its reputation is, I mean, its position as a global retailer is completely unquestioned, but its reputation is a little, it's kind of a work in progress. I mean, it doesn't seem to have had as radical an effect on stock prices. I mean, her stock price really hit the floor.
But in 1999, Walmart trading 67-37. 2001, PBS runs the first of two documentaries about Walmart where they really kind of start questioning is the way Walmart does business good for America, right? The first one's called Store Wars, where that's where they really kind of start blowing the whole notion that Walmart runs into a small town, they put all the pop guys out of business, you know, they brand themselves as, you know, down-home Americana, but are they really, you know, a lot of things they manufacture are from overseas, you know, all that, all that stuff. So 2001, the PBS one thing airs, stock is down to 5635.
By 2002, it's down to 4650. Now it's up to 5549, and currently, what you've got is what appears to be a pretty sustained effort by Walmart to acknowledge the fact that the reputation is hurting them and to kind of rebuild it brick by brick. Yeah, those PBS ones are probably more mainstream, but there's another one on the high cost of low prices that really got into, you know, some of the conditions for some of the Chinese workers that were in their factories, the fact that they've had a few high-profile cases where they lock immigrant workers, like cleaners, in their stores at night, they have a huge class I can sue with women, you know, which is a pretty big element in that one. I mean, pretty much any retail thing that goes wrong usually has a Walmart, but that might be more trivial to the fact that everything is Walmart, so it's not necessarily them.
I did see like an old, a few years ago, the Penn & Teller used to have a show called, Yes, yes, you know, more colorful, and I just happened to run into an episode like as a repeat that happened to be about Walmart going through all like the pros and cons, and, you know, over the past few years, that's just been like a good go-to topic for, you know, is Walmart evil. Yeah, right, pretty much. Well, Walmart obviously has not taken this long down, and it seems to be, you know, acknowledging the impact of all this, and what's been interesting is that, you know, recently, they've done a lot of serious, you know, heavy lifting to rebuild their reputation, according to this one report I got here. They started telling their suppliers in China to improve social sustainability standards.
I guess in April of last year, they had a two-day press conference for members of the media, I guess, to field questions. They announced plans to revise pay and promotion programs, and as of February 1 of last year, their total community donations totaled $423 million, which is no small amount of money. In fact, I think we're doing something in the magazine, surely, about, you know, companies like Walmart and Home Depot and sort of thing, kind of getting on the front lines between public, private, disaster, and management. So, you know, Walmart has been very big into that.
But check this out, so by April of last year, all of the stuff finally starts to pay off, right? The Reputation Institute announced that Walmart has seen the largest gains in reputation amongst other companies they had surveyed, improving their reputation pulse scores by more than 12 points year-over-year. Same period of time, Harris Interactive noted that the only company with greater improvement in its actual reputation score was, wait, wait, wait, wait, sorry, I'm screwing that up. They mentioned that of their other study, the highest one was Walmart, and they decreased their reputation by five points.
So, I mean, so, I guess the point I'm trying to make here, with Walmart, they're grabbed well, so they kind of ignore lots of external circumstances. But what I find so interesting about this, and getting back to all Tiger Woods things, is that we talk about reputation risk a whole lot in this podcast. I mean, we often like poking fun at companies that seem to have done some horrible, their reputation is done. Oh, and we are done even today.
Yeah, yeah, yeah. But, right. Right, but what's interesting to note is that as bad and as easy as a reputation is to wreck, it's not that it's irrevocable. You can actually rebuild it if you're willing to put in the work.
And if you're willing also to address it as if you're getting bad, it's never too late to start managing your reputation risk. I think that's the big lesson here. Would obviously learn it a little too little late in the game, but I mean, any company that's facing your crisis can do it. So, that's why I was kind of interesting to share with all you guys.
If you have any comments out there in podcast land that you want to weigh in on this, by all means, drop by the monitor blog, and we encourage you to write comments on this. We'll probably do a post of all this podcast with some show notes, so you can take a look at the video clip of the ad. I'll see you next time. You can't just take them off the line.
There was coolers in the back, so it was all kind of organized. I think there was about three beers per day per person that were allotted in the break room. What an utterly civilized policy. Pretty good.
Very European. You know, let's try to get workers and not get drunk. I don't think you can really, I mean, unless you're lightweight. Yeah, they're just blue-collar guys, they're probably there.
I don't need to see the lightweight at 730. There's not lightweight working at breweries. Yeah, exactly. You're not worried about somebody getting hammered off and have a beer.
They're like, whoa, screw work. But this policy is now over. Over. Led to a strike.
Okay. Now, they're only allotted one beer per day during lunch. Now to one beer a day, which is a million times more than what you have in America. Well, you can have as many as you want.
Just don't tell your boss if you want to go out to have a beer with lunch, be frowned upon. But this is a comfy policy. Yeah, you can go out and drink if you wanted, but you can get your free Carlsberg beers. Yeah, all right.
So what the response was is 800 workers went on strike on Wednesday. Another 250 walked off their jobs on Thursday. What? And also on Thursday.
Those 250 were too drunk to one. Yeah, right. They slumped it off in the night. But then also on Thursday, Carlsberg's truck drivers joined the strike in sympathy, says the article.
Because, you know, drivers are like, what is this? Exactly. No, no, no. They just drove, I mean, they only joined it in sympathy, literally, quoting from the MSNBC article.
The truck drivers are permitted to bring three beers from the canteen because they often don't have time to have lunch while they're driving. So, wait, beer's lunch because it's more portable. Yeah. I've been saying for years, beer is just bread you can drink, man.
It is a million times. The truck driver, the truck, the truck, the pork chop, what kind of beer are you drinking? Pork chop, bro? I'd like you to drink Carlsberg beer.
A pork chop in every can. Wow. Can't wait to get some. The trucks do, for safety concerns, the trucks do have alcohol ignition locks.
All right. So, okay. You can drink, but if you blow over, we're not even going to give you the ability to drive. Or just say, hey, you're drivers, you can't drink.
Of course, you're allowed to drink. You're not allowed to be drunk when you drive. Of course, I will say the alcohol ignition locks don't do much. If you start off the ignition, get rolling, then have your beers on the 500 kiln, you know, 500 different Copernicus, you know, Prague.
You know, like, how many times have you seen an idling truck? Solid point. I bet some people thought about that. So, is the structure ongoing?
Well, today's Friday, so they haven't really had a lot. It says supplies were hit Friday after angry warehouse staff walked out, and there has been distribution problems. So, can you drink Carlsberg? I've never really done.
Is this going to affect us? I mean, I'm going to drink some Carlsberg today. Yes, of course. But I don't know if that's going to be in sympathy.
Like, will that be against the workers? What would be the worker-friendly thing to do? The worker-friendly thing to do would be for Jared to inform us about the story a little earlier in the day. We could have been drinking Carlsberg while doing this podcast.
I mean, that's true. I don't know. I just want to support them, so I'm not sure what would be the appropriate way to show my... I'm going on strike.
You're not going to drink Carlsberg? I'm just going on strike on this job. That's it. Bill, you have to pay for Carlsberg.
That's final. I mean, obviously, while Carlsberg is doing this, I don't think there's any reports of an uptick in... See, that would be the question. Was there something to prompt this, or did someone just figure this?
I don't know what it is. I've seen all the stories are pretty similar. They're all pretty AP-ish. I don't think it's safety.
To me, what it sounds like is, like, we're going to say it's safety. It's really generated by the fact that we don't want to spring for the beer. Yeah, trust me. You know, so...
I'm just saying, if there's no incident that precipitated this, then it's got to be based on budget. Well, that's not necessarily true either, because... Maybe it's proactive. Specifically, it says in an MSNBC article, Carlsberg had mulled a stricter drinking policy for years, and finally decided to impose new rules.
Yeah, well, then they just... Yeah, I can't be smart. So it seems like they probably, like, realized it was going to be... From a liability standpoint, probably.
It can't be from a budgetary because when you're producing beer on a scale like Carlsberg is producing beer for the amount of employees they have, even if they're giving free beer to everybody who lives in a town with a factory is, it's still pennies on the bottom. We talk about risk management and preventing these things from happening and be like, oh, you only did it because you wanted to save me. Obviously, this is a smart thing to do. People are having heavy machinery.
Maybe alcohol shouldn't really be something they're consuming. So how long has the policy been announced for? It's a really old brewery. I'm guessing that this isn't just a surly workers' use for free beer.
Could this also be a matter of tradition where people who work for the brewery think it's been this way for, well, potentially centuries? Carlsberg had been giving away free beer to its employees for, what, potentially decades? Centuries? Yeah, I mean, I don't have a date on when the brewery started, but I think it was like 1800s, really old.
So yeah, I think it's a lot of tradition, and that's why what I think goes back to this, they've been mulling instituting a structure policy. I think, you know, it's probably one of those things they kind of recognize today, 2010 or 2005, whatever, we can't really do this anymore. You know, even like, in the 80s, I feel like people have, like, three martini lunches in the U.S. Oh, yeah, sure.
But, you know, less than 20, 15 years of kind of putting into that, just socially and stuff. So I imagine they've been planning to do this for a while, and they realize how much of outrage is going to be by the staff. Ooh, their fathers' fathers and fathers have probably done that, so that was probably what kind of prevented them from doing that. So I'm worried if Carlsberg has a carry-home policy.
You know, a lot of other brewers, like Samuel Adams, I think Guinness as well, allow workers at the production facilities to bring home free brew and consume it off-premises, you know? That seems like it might be a pretty good middle ground. I mean, there's no problem giving away free beer, but, I mean, if they're drinking it off the premises, you don't have at least server liability. I mean, that's what would be in America.
I mean, I don't know in Denmark, I mean, I don't know in Denmark, where the legal ramifications are, but certainly in America, that would be one very easy way to sidestep, at least the worst part of the liability. That's a solution. Every employee is on strike? 800 employees, I don't know how many they have.
That's a lot. Yeah, that is a lot. That's a small thing. I wonder what Carlsberg's going to have to do to get them back.
I don't know, like you're saying, they can give away free beer, maybe they can time over, maybe they've already worked in away free beers, and then it's like, Entirely possible, yeah. It's hard to say when we do something for safety's sake. Everybody will just turn around and go, yeah, all right, fine. What a horrible lesson this is to teach, right?
It's like, essentially, you know, to do something on paper, it's obviously saying, what, they're drinking beer on the production line or whatever? Fine, don't do it. And then all of a sudden, you're not creating a potential worker's compensation situation or a liquor viability situation. We're now a very large business interruption and supply chain problem.
It's like, they can't win. They have to go hire a bunch of people that are willing to work for less beer. That might be enough. They're bringing in two beer scabs.
But hey, look, if that's your standard of work, this is the rules. Go to the US. Sorry. I don't know what you would do.
We can't just came in because people don't like it. If you thought about the policy, you would implement it. The average American would not be able to appreciate what goes into a Denmark beer. No.
It makes it sound like there's this world. I know that's what they're used to. That's what they've always gotten. But we will not work for less beer.
I mean, obviously, this is more contentious than history. It's pretty good for a working perk, you know, to have them. That's also a drinking work. No, absolutely.
I think it's fantastic. Many of the people like the construction industry is notorious. They're like, all they want is their employees who wear hard hats, which is preventing them from getting their heads smashed in. And guys are like, no, no way.
I'm not doing that. Yeah, exactly. Safety harness, that's for jerks. My dad didn't wear a safe harness.
I'm not wearing one either. I'll be off the building. Speaking of, I keep looking out the window of my office where they are deconstructing a skyscraper across the street from the room's headquarters. And floor by floor, they are jackhammering the concrete foundation of the floor.
And they're cutting through the I-beams. And it's just this extraordinarily loud and bothersome thing. And I'm constantly looking out my window, seeing how close to the ground they're getting. Because it is really distracting.
And I'll tell you what. Every day, I look over and I expect to see people dead. I mean, they're like forklifts driving on these big holes in the floor. They're guys walking with, I mean, on these very precarious ledges.
And they have no fall protection whatsoever. I mean, they're walking on wet surfaces. I'm like, it looks like the most unsafe work environment ever. And they're gone.
It's so amazing how, you know, that'll just be gone one day. Like, when you don't expect that it could have been gone that quickly. You know, they're going to have to build something to replace it, right? I'm like, oh, man.
It's lucky to be a park. Right in the heart of Manhattan. That's what we need. Some grassy's face to a park.
Yeah, exactly. Yeah, I guess, well, they have a few beers. And they shared them with you. All I know is that, you know, if the Carlsberg people really wanted to get some sympathy for the story, they would have held off on their strike until more like the Christmas season, when a lot of people have, you know, alcohol-fueled office parties.
Walk-off day and all else that everybody in the world is counting on the office parties. Oh, wait a minute. Where's our beer? Where's our beer?
Exactly, so. Well, I wish them luck and success. More beer. It was great.
One of the Danish health officials, he found it amazing that the brewery was still allowed to drink alcohol in this day and age at work. And his quote was, some employees may not think they're affected by three beers. But if you're not affected after three drinks, then you have a serious alcohol problem. Morgan.
Morgan! Hey, now. That's cold breakfast. Alright, so in our continuing spotlight on companies doing stupid things, let's talk about the airline industry, who, once again, made headlines for charging us for stupid stuff.
This time, Spirit Airlines has decided they're going to charge you not just for the check luggage, which everybody has decided to do, after I think they and American Airlines, like two or three years ago, said, oh, let's charge for check bags. They're like, oh, that's terrible. And then everybody does. Yeah.
Yeah. I don't know. I haven't followed it since that first. My first outrage from two years ago was like, oh, outrage, and now it's just like, I'm taking the train.
But now Spirit Airlines is charging for carry-on luggage. Anything that fits that you have to put in the overhead can charge up to $45 a bag. Oh. That's ridiculous.
Wait, wait, wait, wait. In fairness, though, ever since people started, ever since airlines started charging for baggage, people started putting ridiculous bags in overhead. They're putting entire suitcase in there. It is ridiculous when you're trying to get on and off the plane.
Oh, it's awful. It really gets on and off the plane. Yeah. The steamer trunk that you're trying to put up.
It's like, what are you doing? Grand Piano. Exactly. There's an even body in that.
And I'm putting the friggin' baggage check. Usually the excuse is like, oh, they lose luggage all the time. If they did anything, like if they lost luggage all the time, no one would fly. Exactly.
I had my luggage lost once. You know one showed up two hours later from when I got off the plane. Once. I've gone in quite my share of airline.
I lost my luggage once one time. United Airlines lost my luggage. And it actually ended up in Guam. I was coming from Puerto Rico back to home and somehow found its way to Guam.
It was still back to my house within 24 hours of my initial part of the state. They put that on a fast plane back home. It's a fairly easy process to check your bags. But all these people want to stuff their luggage in there.
And I actually have been one of those people that got on the plane a little late. Tried to go put something in the overhead and found the whole thing jammed. Even though there was open seats somehow. So then they had to take what I intended to be an overhead carry-on and chuck it on the bottom of the plane and stuff that was in there that I hadn't packed for the bottom of the plane broke.
And it's nothing that was valuable, but just kind of annoying. It was. I had a Voss collection. I usually bring with me.
Point is we got Spirit Air now charging for overheads. Now, it used to be I understood when they were charging for bags because that was when the gas prices were ridiculous a few years ago. And they were justifying it by saying, you know, hey, we've got to pay more to get the plane off the ground for fuel. So we're going to pass that savings on to you.
Yeah, right. This seems to me, though, with gas prices kind of leveling out, this is just one of those, like, what else can we charge them for? Yeah, exactly. Because, like, they've got a really fancy Spirit being a discount airline.
It's got this program. I guess if you sign on to whatever club they have, you can get penny flights. So the flights cost a penny. But you pay for fuel, which they've calculated how much fuel they're going to use per person for that flight.
You'll pay the taxes and fees. And if you pay the overhead, let's see, here's a breakdown. This is the most ridiculous take-to-go program I've ever heard. Spirit Air says they're discount, right?
So think about this. I got this. From Detroit to Vegas, say you decided you want to take Spirit. The ticket would cost a penny.
Pretty good deal. But then the fuel's going to cost $54. Taxes are about $20. You carry on, you got to carry on.
That's about $45. Now it's up to about $120 for the flight, which is pretty much standard to go from, I guess, you know, seems like an average flight. So really, thanks for nickling me with these little stupid glasses. You just put it on the ticket and stop pretending you're charging me a penny.
Plus you live in Detroit. Plus you live in Detroit. So you're going to Vegas, you're going to have no money. You live in Detroit, so you're getting a one-way ticket.
$45 seems a little crazy. They also raised their rates for checkbacks to $45, which is usually like $20 when it started. But it's kind of a nickel and dime thing that's interesting. On top of that, another one, Ryanair, which is an Irish.
Oh, yeah. Ryanair is always doing non-commercial stuff. They fly around Europe and they decided their new policy is going to be pay toilets. I heard about this, yeah.
Initially, it was initially the CEO who said something like, you know, we only fly like our flights. Screw you. What do you need all these bathrooms? Where was this?
Oh, so by charging for the toilets, we're hoping to change passenger behavior so they may use the bathroom before and after the flight. That will allow us to move the toilets and make way for at least six after seats. Which sounds like what your parents used to do when you were going on a trip. Did you go to the bathroom?
Make sure you go to the bathroom before you get home. I don't want to stop one way. See, where this seems to really venture into a looks good on paper territory is the fact that Ryanair made its market share by offering super cheap flights from London to Dublin. Mainly so that English people go to Ireland and drink their heads off for the weekend.
And so Irish people go to London and drink their heads off for the weekend. I can't see people in Jersey and Connecticut taking the train to New York and just getting blotto over the weekend and then going back home again and figuring it out. Are you sure you really want people who've been tying it on for a whole weekend to go to a plane that's got a shortage of bathrooms? I've got to figure that there's going to be some quote accidents.
I'm air quoting right now. You know, I would just be like, I don't got a dollar, but that's the hallway. I'm going to empty this bag up. I'm going to empty this bag up.
I'm going to empty this bag up. I'm going to empty this bag up. I'm going to empty this bag up. I'm going to empty this bag up.
I'm going to hang out in there for a while. That's horrible. That's a terrifying concept. But just like check bags, it started with the discounting lines and now it's everywhere.
This will catch on. Not necessarily the pay toilets because that seems ridiculous. But I can guarantee you, what they call the legacy carriers, the big ones, the United States and all the U.S. airs and all that.
And you will see this. It's going to happen. Which means you're going to get a lot of people who are going to be traveling with like 47 outfits on. And then they're going to get in trouble because they're going to fill up the seat too big and people are going to start getting mad because they're going to fall foul that one airline that was charging especially heavy people.
Kevin Smith. He almost got thrown off a plane because he was too big. And here's the thing. Now we all got to look and realize that's going to happen.
We're going to be charged more for these stupid little things and it's probably a money making thing, not a fuel thing or whatever. So Ray LaHood, who's the transportation secretary, he was interviewed on the blog of Christopher Elliott. He's like a travel blogger. He works for, he's the ombudsman for National Geographic Traveler and he writes a travel blog.
And he interviewed Ray LaHood and he happened to mention him, well, what's the story about this stuff. And he has some, do you think, spirits across the lines. And Ray LaHood responds, I don't think they care about their customers. And he goes, that's what I think.
And I think when you charge somebody to use the bathroom, you don't care about your customers. It's pretty clear. So later on he says, Ray LaHood's like, well, I want to hold their feet to the fire for this. What do you mean?
Well, we're going to start talking about some rulemaking and I think this is going to come up. To basically prevent you from nickel and diming passengers. Oh, does Ryanair even fly to America? Well, Ryanair wouldn't count.
This would be more for Spirit. They would have no real jurisdiction. Oh, so LaHood was talking about the carrying baggage. I didn't mention the bathrooms.
He doesn't like that. But the feet of the fire he mentioned about Spirit. Oh, the baggage. Obviously he personally doesn't like the idea of the bathrooms.
I think it's weird. Now, from Spirit's perspective, think about how badly this could backfire. All of a sudden, because they had to be a bunch of nickel and diming cheapos, they may or may not all of a sudden have government regulation thrown in their face. Because, oh, you know what?
Because what company wants more regulation? Well, now you got it because you didn't really make a head digit. Now you alienate your customers, but you sort of annoyed the transportation secretary. I have to wonder if LaHood's interested in this game because he took a Spirit flight and went too late that the grand piano he wished to put above his seat, A, wouldn't fit, and B, he didn't get charged.
You know, they recently, the Department of Transportation, they had a rule about delays on the tarmac. You know, when they'd be like, oh, it's over seven hours. And now they actually get fined if they go over a certain amount of time. And they're obligated by law to provide drinks and bathroom breaks and all this stuff.
Relief. Biological relief. No, it was a safety and health thing as far as that could be. Yeah, so, I mean, if they want to, I don't know how they extrapolate safety and health to charging for overhead baggage, but it might, you know, it could be something like, you're not actually telling people what the ticket price, you're misrepresenting the cost of the flight.
I mean, if an American company tried to ban bar bathrooms, I could see that falling under the safety and health sort of thing, you know? Well, apologies to all of our friends in the airline industry who may be listening to this podcast. I hear stories like this, and it makes me really glad that I'm taking the train to attend RIMS-2010 Boston and not the plane. Yeah, I mean, it's, the plane's bad enough.
If you start late, I just don't, it just strikes me as dumb to make it worse for us as consumers. I don't know where you would go, though, because obviously the plane's the only way to go from, you know, coast to coast if you need to. I hope the hood has the authority to do something about this. Yeah, I mean, I don't, I can't see how, like I said, it's hard to see how we would, but sometimes a company might need to be a little bit more aware of the fact that something that might seem good on the bottom line, might have some repercussions you didn't quite consider.
You know, that's the weird thing, you know, it's a free market. Right. You should be able to charge what you want for your service, but then again, I mean, it's, you know, quasi, it's a monopoly, but, you know, like, it's all the airlines start doing one procedure. Well, if they will.
If you put this thing into, like, you know, I guess the theme of this has been like a reputation, this podcast has a lot of reputation issues. At the very least, who's going to want to fly Spirit if you have a choice? I mean, other than the fact that, well, it's a cheaper airline, but if you start adding fees, like, you know, bag fees, it's no longer cheap. Yeah, you know, Spirit can find a particular region or is it truly an airline?
I fly to Florida. It's a crappy airline. Well, it's discounted airline. I think it's hubby's for a lot of airlines.