Brain-Jockey

Bailouts Are Blarney

Written by Audrie Zettick on January 6, 2009

I’ve never been to the Emerald Isle, but I may have to plan a trip soon. 

 

With bailout mania still underway in the U.S. and Europe, I read about the recent financial troubles of Waterford Wedgwood PLC with more than a passing interest. Waterford Wedgewood, also the parent company to Royal Doulton recently was placed in receivership, after cutting jobs in Ireland and de-listing from the Irish stock exchange in December 2008.  

 

While the Irish government has said it will do all it can to keep Waterford in Ireland, they’ve also unequivocally said “no way” to a bailout in the form of underwriting the company’s bank loans.  The parallel to the problems with the U.S. auto industry are not obvious at first, but become more evident as you dig deeper.  In the past 12 years, Waterford’s management practices were questioned–everything from what they were producing (moving away from their celebrated hand-cut crystal to machine-produced items) to disputes with the union over work practices. 

 

In my opinion (remember I’m a marketing instructor), their paramount mistake was drifting from their decades-old competitive advantage: a niche providing high-end hand-cut class.  Instead, they muddied the Waterford brand with ancillary (machine-made) product lines until it’s hard to know just what it being made where–and consequently what the Waterford name stands for (apparently, low-cost overseas labor using machines somehow fits their target market—a trend that looks to continue).  Yes, they were trying to ride the trend of informal dining, but they did it at the cost of their core brand.  The response to cheaper competitors was to cheapen their own brand.  Rolex never responded to Timex that way.  And hard-core collectors of Waterford crystal willing to consider dropping $300 or more on a wine decanter will be hard-pressed to understand why the company touts links with Martha Stewart (whose brand is also found in Kmart).

 

(Of course, in weird sort of way, I’m reminded of how the Republicans muddied their “brand name” in the past decade or so…..)

 

But in all fairness, Waterford still touts its artisans and does use hand-cut techniques on the Waterford core crystal products.  But their higher union wages have forced them to look at how to compete with crystal products coming out of Eastern Europe at a lower cost.  

 

I commend the Irish government for sticking (so far) to their mid-2008 decision to avoid supporting a bailout. And I’m practicing for a trip to Ireland–even if it’s just a virtual one.  Here’s my first attempt:

 

Ni ceart go cur le cheile (there is no strength without unity).