Case Study: Dabbagh Steel

Situation

You are the public relations manager for Dabbagh Steel. It has a massive steel mill with 14 open-hearth and four electric furnaces. The open-hearth furnaces present major technical difficulties in collecting and controlling air emissions. These emissions result in air pollution that is becoming a problem for the community and company. Dabbagh long has been aware of the potential pollution problem. The company’s first pollution control director was named 36 years ago and retired last month.

 

Steel industry economics establish certain parameters for the cost of furnace installation. Installing all new electric furnaces at once would be prohibitive because the work would require $40 to $50 million upfront.

 

Dabbagh has, despite the cost, made a policy decision to replace all the open-hearth furnaces with electric furnaces of equal or greater capacity. Two open-hearth furnaces have just been removed from production, and two new electric furnaces have been installed. At a cost of $2.5 million, new smoke control devices known as high-energy scrubbers have been added and are doing an excellent job. Scrubbers will be installed in the two older electric furnaces at an additional expenditure of $2 million. The company has set a 20-year timetable for replacing the remaining 12 open-hearth furnaces and has committed to reducing emissions for its furnaces if a new technology becomes available during that period.

 

Meanwhile, the company continues to test new technologies and is committed to investing in systems to control the pollution created by open-hearth furnaces. Because of this, testing, new overhead systems, including a $500,000 high-velocity centrifugal separator, were installed recently. However, the separator was found to be insufficient. Subsequently, additional equipment, including a bag house and spray chamber costing $1 million, was tried and found to help but not solve the pollution problem.

 

Local publicity about air pollution in daily print and electronic media has been increasing. Most is slanted and inaccurate. Until recently, reports had not specifically mentioned Dabbagh. Last month, the County Pollution Control Office named Dabbagh Steel “Polluter of the Month.” Much negative publicity followed. The situation was handled according to Dabbagh’s crisis communication plan.

 

Dabbagh’s mill manager is concerned about the adverse effects of publicity on the company’s future. In light of the overall situation and recent events, the mill manager has requested that you develop a comprehensive corporate communication plan for Dabbagh Steel.

:

• Dabbagh’s customers are sympathetic to the company.
• Most complaints come from a few people who moved into the area near the mill after it was built and operational.
• In the greater metropolitan area, the public-at-large is not aware of the exceptional effort and millions of dollars spent by the company to counter air pollution.
• A small majority (55 percent of those queried) believes the “Polluter of the Month” award is deserved and thinks that the company is concerned only with profits and not with the public welfare.
• Others realize that public incineration and automobile exhaust are responsible for much pollution.
• The mill is located adjacent to two smaller municipalities.
• County commissioners seem sympathetic to the company’s difficult problem but are also afraid of voter sentiment.

Individual Assignment

Write a memo (using your own name) addressed to Alva Alvarez, the CEO, outlining your plan to resolve these issues.

Remember, that your memo will be made available to others within the organization.  In your recommendations, you should state the ethical issues you feel need to be addressed. You should provide both long and short-term strategies that would solve this problem. To solve the problem you should note if additional resources or expenditures would be need to achieve the goals that you define.

When writing the memo you should provide a brief description of the problems, you have found.  What are the facts about major issues?  Identify facts about key players in the case, the business problem(s) and then rank order the critical issues.  Consider relevant information and underlying assumptions.  Finally provide your recommendations.

As you write your recommendations, think about the following;

• How do the cultural values at Dabbagh Steel relate to communication, technology, information flow and openness?
• As the company goes forward, should it stay with the espoused or practiced culture? How would you recommend that they change?
• How would you suggest that they resolve this disparity? In other words what should they do?
• Provide specific suggestions that will help the organization as they go forward.

In the closing, highlight benefits of your recommendations.  As a PR director, you need to be honest but tactful in your recommendations.

Overall, this assignment has five elements that are all inter-related.

• Carefully read the “case study” and type a letter that details your specific analysis and recommendations about how problem presented in case might be approached and solved.
• This document should be formatted for reading ease, not a page of text.  Make sure you use address it correctly, provide a date, headings, and bullet points as needed to make it easy to read.