PR lesson no 1: don't flash your stash at strikers

Investors get $3bn, workers offered 4%. BHP - what are you thinking of?
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Timing, as any comics plying their trade in Edinburgh will tell you, is everything. But BHP Billiton failed to realise that last week - and the upshot was destinctly unamusing.

The mining giant unveiled a surge in pre-tax profits - up 63 per cent to £5.6bn - and plans to return $3bn (£1.6bn) to shareholders. Which was fine - more than fine if you're an investor. But it coincided with an unseemly showdown with the unions over wages.

Workers at BHP's Escondida copper mine in Chile downed tools three weeks ago over the company's refusal to meet their pay demands. Their unions initially asked for 13 per cent. This has since been tempered to 8 per cent, although with a bonus payment to reflect the record surge in copper prices.

Management has offered them 4 per cent, a bonus package and reduced-rate loans.

It is not an entirely dire offer, but nor is it overly generous. BHP has a lot to juggle here. As commodity prices surge, the company and its investors have become rich. If management is forced into accepting the higher wages and bonuses that its miners at Escondida want, however, other mines might follow suit, forcing BHP to capitulate time and time again.

Don't get me wrong. There's a good argument for paying its workers more money: if investors and executives can benefit from the surge in commodity prices, why shouldn't the workers? But in a capitalist economy, it will take more than one strike to change the status quo.

But what on earth was BHP thinking by announcing the share buyback in the middle of this dispute? Do these people not realise how bad that must have looked, or indeed, just how important reputation is these days? Headlines detailing the billions being lavished on shareholders sat uneasily against pictures of striking Chilean miners, who I'm guessing, don't have much in the way of stock options.

Companies have a duty to act in the best interests of their owners, but owners also have a duty to act responsibly. The timing of this share buyback should leave a bad taste in investors' mouths. Even if they are rabidly right-wing and have not an ounce of sympathy for the strike, they should care about how crass management has made their company look.

What is more, while this strike continues, BHP loses $12m a day at the silent mine. I for one would be immensely unimpressed with anyone who, while looking after my business, managed to lose me millions a day. But then perhaps I'm just old-fashioned.

BHP needs to settle this dispute, and quickly. Its profits will soon recover. But its reputation could take considerably longer to bounce back, and that is something no company wants.

Ryanair's charity?

Another week, another Ryanair story. Michael O'Leary's carrier has, as threatened, submitted a claim against the Government for compensation, to the tune of £3m, which reflects the airline's "losses from cancellations and lost bookings" since the foiled terrorist plot.

Only he's going to give the money to charity if he wins. So is it compensation, a real need to get money back that Ryanair has lost through no fault of its own, or just a phoney excuse to attack the Government and get his airline on the front pages?

Mr O'Leary claims his ultimate intention is to get the country's airports back to normal, to not let the terrorists win.

OK, so the alleged terrorists have won a victory. They have caused chaos and misery for untold thousands of travellers. They have generated extra costs for businesses and taxpayers. The new measures introduced are a nightmare for any traveller.

But life has not been lost. So let's not follow Mr O'Leary's advice and merrily jump on planes without a backward glance. Let's instead be grateful that our security is taken seriously and is being handled by an organisation whose priority is human safety - and not something that looks disturbingly like publicity.

a.townsend@independent.co.uk

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