Absolutely. But first the culture of the industry has to change, says Benjamin
R. Schuster.

Like that famous comedian, chemical companies don't get much respect.

Despite the substantial sums of money the industry spends on research, safety, and environmental protection and the many benefits provided by chemicals and the products they go into, the sector continues to have a poor reputation with the public.

The decline in the industry's reputation has its roots in Rachel Carson's revelations about DDT and the controversy over Dow's Agent Orange during the war in Vietnam. The catastrophic accident at Union Carbide's Bhopal facility in 1984 lowered the reputation further and every subsequent plant explosion and employee death has made sure it stays low.

Almost everyone associated with the industry agrees its negative reputation has serious consequences. They range from subtle and hard to measure things like career de-selection to more overt manifestations like the resistance companies face when they try to build new facilities.

Probably the most burdensome consequence of the industry's poor reputation is the proliferation of restrictive and costly regulations that chemical companies are subject to here and in many other countries.

The cost of poor perception

After thirty years of continuous accumulation, these "non-productive" costs are finally taking their toll in an industry where traditionally non-capital expenditures were not a central factor affecting its competitiveness. The statistics are clear. From 1977 to 1997, the number of employees in the chemical and processing industries in the United States decreased by 7.6 percent. In the same period in New Jersey, a heavily regulated state, the number of chemical employees decreased by nearly 40 per cent. Even in Texas, which had been a growth location for the domestic chemical industry, there was a 2 per cent drop in chemical employees between 1992 and 1997. These downward trends will only intensify if natural gas prices stay high and become another incentive to move chemical manufacturing off shore.

Efforts to impose more regulations on the industry are ongoing. In Congress, a battle is raging over the Chemical Facilities Security Act. In Europe, two major pieces of legislation are making their way toward adoption - the Chemicals Policy and a Polluter Pays bill. All three laws would add considerable costs and restrictions (the EU estimate of the cost of complying with the Chemicals Policy exceeds $4 billion) to the companies operating in each geographic area.

Based on the usual dynamics of regulatory legislation, no matter how successful the industry's lobbyists are in Washington and Brussels the momentum for regulations passed in one legislative arena will eventually migrate to the other.

Responsible Care is not enough

Not surprisingly, the American Chemistry Council (ACC) concluded that something must be done about the industry's poor reputation. Last year ACC conducted an extensive review of Responsible Care, the industry's voluntary regime of safety, management and environmental codes that it adopted after Bhopal. The task force charged with the review did a thorough job. It called upon experts from inside and outside the industry. It listened to many different voices. Probably the most important input it received came from a set of "informed Americans," representatives of environmental and activist groups, government officials, customers and ordinary citizens.

The path to reputation repair that ACC has laid out for itself based upon the review is ambitious and costly. On the substantive side, Responsible Care will be reconstituted. On the public relations/communications side the organization is proposing a $120 million, multi-year public relations and communications program. By taking on both sides simultaneously, the organization hopes to be able to implement a key message of the external groups that participated in the review: the industry has to perform better and communicate its accomplishments more effectively. Only then will it be able to improve its reputation and begin to move out of the regulators' crosshairs. ACC's reform and communications efforts do put the industry on the right path, but unfortunately they miss the mark in several important ways.

First, the communications plan. For one thing, it was tried before.

You don't have to strain to hear the echoes of Du Pont's old slogan, "Better Living Through Chemistry." For another thing, it draws the wrong conclusion from the role model it seeks to emulate - the American Plastics Council's advertising and public relations campaign of the 1990s.

While that initiative is considered to be one of the most successful efforts to change the public's perception of an entire industry, its success did not come from reminding people about the benefits of plastics or about the industry's improved safety record or even the thousands of jobs it provided. Its success came from finding a solution to a problem.

The problem was trash. In the 1980s people in many parts of the country became very upset when their costs for trash disposal escalated dramatically. Many were already annoyed about trash littering their recreational areas and the roads they drove to get to them. For others trash implied personal and societal wastefulness. When the connection was made in people's minds between plastics and trash, it did not take long for a melding to take place. Trash became plastics and plastics became trash. The annoyance that people felt about the one transferred to the other.

The environmental movement with the support of the paper manufacturers came up with the policy that became the most favored solution to the trash problem - recycling. Recycling was attractive because it offered a way to reduce trash and the excessive consumption of natural resources at the same time. It was a hands-down winner over incineration, the solution initially
championed by the plastics industry. Eventually the public's widespread desire for recycling was heard. The industry established and paid for extensive plastics recycling programs and created public outreach and communications campaigns to announce their solution to the problem.

Recycling ain't what it ought to be

Ten years later, the fact that only HDPE and PET have established significant recycling rates among the many different kinds of plastics has gone largely unnoticed. Most people believe all plastics, along with newspapers, glass and aluminum cans, are being recycled. In the public's collective mind plastics' contribution to trash and trash disposal problems has been eliminated. It is that belief, not the benefits of the product, that has given plastic an improved reputation.

The public's biggest problem with chemicals is fear. People worry about the dangers inherent in the chemical manufacturing process. They are afraid for workers, plant neighbors and the environment. They are unsure about the health effects of making and using chemicals. Telling people about the benefits of chemicals or about improvements in the industry's environment and safety performance records, even if they are continuous improvements, overlooks those fears.

Since the media and the plaintiffs attorneys tell them that the dangers and the risks are still there, the problem doesn't go away.

That leads to the second and more important defect in ACC's reform efforts, the incomplete transformation of Responsible Care. The steps that the organizationhas announced to achieve that goal do not totally come to grips with the public's fears about chemicals. For example, the outside groups called for better industry metrics, the statistics that companies use to report environmental, health and safety performance. ACC's newly adopted metrics are all aggregate numbers. There will be no fence-line measurements of air, water and land releases.

Similarly, there will be no details provided about the injuries that make up OSHA reportable incident rates. Consequently plant neighbors will continue to be apprehensive about the exposure threats that they and their natural resources face. And they will not be reassured that companies are really protecting workers from the dangers that threaten them. Then there is the response to the outside groups' call for meaningful third-party verification of performance. ACC's new policy will have companies choose the verifiers. Even if the selections are made from a range of firms or organizations, that approach ignores the public's deep-seated suspicion about the foxes guarding the hen house.

The most glaring hole among ACC's reforms of Responsible Care is the absence of "teeth" for ensuring member company compliance. Until ACC is willing to fine or even expel members that do not to live up to Responsible Care or any other codes of conduct, trust in the industry will be next to nonexistent.

Government will continue to be the public's third-party of choice to ensure that its fears are being addressed. Doctors face the same problem. Until medical societies are willing to police their members and show real progress toward reducing medical mistakes, lawyers and the legal system will be the preferred mechanisms for accomplishing the job.

What's the magic formula?

So, can the chemical industry more fully address the public's fears, improve its performance and repair its reputation?

Absolutely. But first the culture of the industry has to change. The dominant mindset from the top to the bottom of every chemical company has to be "Yes." It can no longer be a qualified "Yes" or a "Yes, but." It needs to be a mindset that recognizes the public's fears and does not try to explain them away. It has to acknowledge that most people's fears about chemicals have some basis in fact despite having a low probability of occurring. It has to accept that science, even when the preponderance of the evidence is on its side, is almost never a sufficient argument for convincing most people about policy options. And, as much as possible, it has to respect the emotional side of people's reactions to the dangers that the industry represents.

The skeptics in the industry will ask, "Haven't we done enough? Hasn't there been a sufficient amount of human and financial resources invested by each company and ACC to ensure we are listening to the public and responding appropriately?" The clear answer is, "Obviously not."

But as each company gets closer to "Yes," those same investments will cumulatively become the foundations for building a better reputation for the industry. The thousands of compliance professionals, the hundreds of community advisory panels and the dozens of alliances with partner organizations that are already in place will be greatly reinforced by a culture that starts from a predisposition to agree rather than to argue. Those resources will then serve as the primary mechanisms through which the industry's performance improvements are communicated to the public. As a result, the reputation of the industry will gain a credibility that is lacking under the current "Yes, but" mindset.

The benefits that will accrue to the chemical industry as it gets to "Yes, have been proven by the experiences of a handful of companies. Plant neighbors and outside organizations can help select third-party verifiers without compromising security, proprietary processes or the very existence of the industry.

Existing relationships with environmental groups can become the basis for more collaborative legislative and regulatory initiatives. Ultimately, with more of the public's fears actually addressed, the industry can find itself with more allies than it had before. Demands for regulations can moderate. And another costly and ineffective public relations campaign can be avoided.

In a recent documentary about the decline and dissolution of Bethlehem Steel the most moving segments were the interviews with former employees, many of whom still live in the shadows of the company's mills. All of the interviewees expressed profound sadness over the demise of a company and an industry they dearly loved. None of them had predicted the way things eventually turned out. Most admitted they did not pay attention to the early warning signs and problems.

The chemical industry has been shown its warning signs. The ball is now in its court and its future is in its own hands.


Benjamin R. Schuster, Ph.D., is President of BRS Associates, a public affairs consulting firm. He has been responsible for guiding external relations in the chemical industry for more than fifteen years. He is completing a book on reputation management. He can be contacted at brsphd@aol.com