Weymouth Steel Corporation

Weymouth Steel Corporation

In early September of 1990, Weymouth Steel Corporation found itself with both good news

and bad news to communicate to its salaried employees. The good news would affect all salaried

employees, the bad news only some. When Chairman of the Board Carl Weymouth and his staff

discussed the matter, they realized that they faced a familiar but difficult task in corporate

communication-a task, moreover, that seemed to encourage reappraisal of some of Weymouth's

traditional approaches to employee communication.

GOOD NEWS AND BAN NEWS

The good news was that nearly all salaried employees would be receiving salary increases

and improved benefits. Provisions for retirement, vacations, medical and dental care, lift insurance, and stock ownership were liberalized or improved in variety of ways. While some of the changes

derived from provisions of the most recent union contract, others resulted from Weymouth's

on-going adjustment of salaries and benefits. Ordinarily, such changes were communicated to

employees through personnel bulletins and regular issues of the appropriate Weymouth

publications-Metal News for salaried employees, The Open Hearth for hourly employees.

The bad news was that the company anticipated that it would have to terminate a sizable

number of its employees-salaried as well as hourly. Long recognized as a highly cyclical business,

the steel industry was enduring a long-term slump due largely to stiff competition from overseas

companies. In the next eighteen months, Weymouth's business was likely to fall off 25%. At the

same time, a variety of forces intensified the company's need for capital. To be come more

competitive with European and Japanese firms, Weymouth needed to purchase and install new

processing machines and to construct state-of-the art rolling and hot-strip mills.

In addition, their plants needed to satisfy increasingly stringent federal anti-pollution standard.

During the next five years, capital spending was expected to average $2 billion a year. Therefore,

all areas of the company urgently needed to reduce costs. In recent years, Weymouth has initiated several major cost-cutting measures.