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Handling a Sensitive Communication Challenge
Handling a Sensitive Communication Challenge

Announcing a facilities closure via integrated communications

The Situation

Faced with a sales environment that created excess manufacturing capacity, a client made the decision to suspend operations at one of its plants and consolidate operations into its remaining two facilities. After exploring various alternatives, management determined that moth-balling one plant was the optimal path to improved gross margins, restored profitability, improved working capital and enhanced cash flows. While management expected Wall Street to respond favorably to the decision due to its financial benefits, they were concerned about potential negative reactions to the news from employees, the local media and other constituencies.

LHA’s Solution

LHA orchestrated the communications to all stakeholders impacted by the plant shutdown, including shareholders, sell-side analysts, creditors, employees, customers, suppliers, distributors/dealers, and state and local government agencies. Working in collaboration with the company’s attorneys, human resources department, finance staff and senior executives, LHA:

  • Conceived an integrated communications strategy, action plan and message set addressing all internal and external audiences. Considering the broad scope of stakeholders, our objectives were necessarily diverse and included:
    1. Contain adverse reactions by positioning the decision as a difficult, but necessary adjustment in production capacity due to weakened demand.
    2. Allay concerns about product availability.
    3. Positively influence the local media coverage.
    4. Ensure Wall Street credited management with making a smart business decision.
  • Drafted letters for customers, suppliers and distributors/dealers, and speeches to be given to multiple classes of employees including workforces at the two operational facilities, the suspended plant, field staff and corporate personnel.
  • Developed messaging and Q&A documents to support communications to each constituency and ensured that all spokespeople were properly prepared for the announcement.
  • Coached spokespeople on handling the media and prepared a memo for employees detailing instructions regarding in-bound media inquiries.
  • Crafted a press release with messaging attuned to the sensitivities of employees and state and local government agencies.
  • Authored prepared remarks for an investment-community conference call that made a strong case for the financial benefits to accrue from suspending operations at the plant and disclosed sufficient information for them to adjust their models and estimates.

LHA’s Results

The communications plan was well executed by all parties; the news was received without incident by employees at the affected plant; and the local media coverage was fair. Investors and sell-side analysts accepted management’s reasoning and supported its decision to suspend operations at the plant.

LHA Investor Relations is a leading strategic IR consulting agency. We partner with public and private companies to craft and implement effective, custom-designed IR programs that incorporate industry best practices. We are a leader in investor relations for small-cap companies for over 30 years. In implementing IR programs that build trust and transparency between our clients and Wall Street, we support capital market objectives by increasing awareness, managing expectations and enhancing reputations.

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