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Sidebar to Section 2:

Two Sides to the Story

The asbestos industry has aggressively sought to characterize the asbestos issue as a litigation crisis instead of a public health crisis, blaming 'trial lawyers' for creating the crisis instead of the culpable companies. The industry has relied heavily on its trade associations and the U.S. Chamber of Commerce to spread the idea of a 'litigation crisis' in order to deflect attention away from the companies responsible for the plight of people injured or killed by asbestos. The goal of this effort is to persuade Congress to pass legislation that will shield the companies from meaningful responsibility for the real asbestos health crisis. Central to this goal are the efforts of industry validators in portraying the companies' asbestos-related bankruptcies as a principle culprit behind the failing U.S. economy.

The U.S. Chamber of Commerce paid the National Economic Research Association (NERA) to prepare a report claiming the "secondary impacts of asbestos liabilities" are ruining the U.S. economy. NERA used Owens-Corning to exemplify the impact on a small town from the company's "bankruptcy," specifically asserting that layoffs at Owens-Corning's Granville, OH plant would cost the local community over $60 million a year in total output and 500 lost jobs. NERA suggests in its report that, as a result of financial burdens from the company's asbestos liabilities, "Owens-Corning laid off 275 workers from its Granville plant." In Congressional testimony in 2003, NERA asserted even more clearly that the 275 lost jobs were "asbestos-related layoffs." (Congressional Testimony Of Dr. Frederick C. Dunbar, June 4, 2003)

In fact, the 275 layoffs in Granville were not plant workers -- Owens-Corning's Granville operations consist of a Science and Technology research center -- and many of the layoffs were office workers with desk jobs at a division of Owens-Corning called Integrax, which processed the company's asbestos claims. Since Owens-Corning's Chapter 11 filing nullified the need for Integrax to process asbestos claims, those workers were laid off. An even larger number of Granville workers were contract workers, not full-time employees, and were let go due to slow business. A company spokesperson quoted at the time attributed the layoffs not to its asbestos liabilities, but to the sluggish U.S. economy and the company's shifting business priorities:

"Business is slowing, and we're also refocusing our business a bit," company spokesman Bill Hamilton said.

(Columbus Dispatch, 12/7/00)

Other layoffs (the 500 number that NERA references in its report) occurred at the company's Newark, Ohio fiberglass unit, which numerous news reports concluded had nothing to do with the company's asbestos-related bankruptcy, but were rather due to the company's shifting of its fiberglass operations to newer, more cost-efficient plants. The Columbus Dispatch noted that in the summer of 2000, months prior to the company's bankruptcy filing on October 5th, Owens-Corning had warned that it would cut hundreds of jobs at Newark as it phased out its residential insulation production there. The article in fact details how Owens-Corning was investing $56 million to upgrade the Newark plant, the company's oldest, to produce commercial insulation with a more efficient, leaner workforce. (Columbus Dispatch, 3/13/01. "NEWARK PLANT IN LINE FOR INVESTMENT," by Jim Weiker.)

More succinctly, an October 2000 Business First article begins by downplaying the impact of asbestos-related bankruptcy on the company's business:

"It's the economy, stupid, and not so much the bankruptcy. Although the term bankruptcy carries plenty of negative connotations, Owens Corning CEO Glen H. Hiner says the company's Oct. 5 Chapter 11 reorganization filing will have less effect on operations than overall economic conditions.

"The impact on the manufacturing segments of the company will be very small from the bankruptcy action," he said following a meeting with area employees Oct. 13. "Our fundamental businesses and their strengths will continue to be driven by how strong the economy is."

(Business First, 10/20/00. "CEO says Owens corning positioned to move ahead")

The article further explains Hiner's concerns about the weak economy's role in hurting the company, never once mentioning the company's asbestos-related bankruptcy as one of the reasons behind potential layoffs. Rather, high energy and materials costs, and a sluggish market for building materials are the reasons cited repeatedly by the chief executive.

"Our business has been slow this year and, from the building materials perspective, this is probably the slowest demand we've had in five years," he said.

(Business First, 10/20/00. "CEO says Owens corning positioned to move ahead")

In fact, several quotes from company spokespeople regarding layoffs at Owens-Corning plants throughout the U.S. and Canada specifically discount the company's recent Chapter 11 filing as the reason behind the pink slips.

A sampling follows:

Beset by asbestos lawsuits, Owens Corning filed for Chapter 11 bankruptcy protection in October 2000. But company officials gave other reasons for closing the Plant City facility.

An internal memo announcing the closing said, "The decision to close the facility is based on continued softening in market demand and the decision by a major customer to produce their own parts internally."

Hamilton said the Plant City facility's closing "is entirely separate from the Chapter 11 situation."

(Ledger [Lakeland, FL], 10/6/01. "OWENS CORNING PLANT CLOSING AFFECTS POLK," by George Graham.)

The head of Owens Corning vowed that filing for bankruptcy protection will not interrupt operations.

Speaking to employees at its headquarters in Toledo and others around the world via videotape on Thursday, Glen H. Hiner told them it was "day one of the new Owens Corning."

"We will conduct business as usual and we will emerge," Hiner said.

(Associated Press, 10/5/00. "Owens Corning chief says shake-up won't interrupt business.")

Owens Corning is laying off 70 people, about the same number the company hired last year.

The layoff is due to falling sales, said Guelph plant manager Mike McCaig.

"It's just business conditions. There is a global slow-down in our industry," he said.

McCaig said the layoffs have nothing to do with bankruptcy proceedings at Owens Corning's U.S. parent company.

(Guelph Mercury [Ontario, Canada], 4/12/01. "Owens Corning cutting 70 jobs; Slow economy means layoffs at plant," by Andrew Bruce)

Owens Corning plans to lay off up to 100 of the 350 workers at its plant here [Anderson, South Carolina], the plant manager says. The company, which makes fiberglass products for the automotive industry, has to let the workers go because of the downturn in the economy, manager Kim Alexander said.

(Associated Press. 11/7/01."Owens Corning to lay off up to 100 workers.")

Owens-Corning's website also paints a very different picture than NERA regarding the effects of its Chapter 11 filing on the company:

On Thursday, October 5, 2000, Owens Corning voluntarily filed a petition for reorganization under Chapter 11 bankruptcy protection in the United States Bankruptcy Court in Wilmington, Delaware.

The filing will enable the company to refocus on operating its business and serving its customers, while it develops a plan of reorganization that will resolve its asbestos and other liabilities and provide a suitable capital structure for long-term growth.

To enhance its liquidity, Owens Corning has obtained a $500 million debtor-in-possession financing commitment from Bank of America. Upon court approval, these funds will be available to the company to help meet its future needs and fulfill obligations associated with operating its business, including payment under normal terms to suppliers and vendors for all goods and services that are provided after today's filing. Employees will continue to be paid in the normal manner and their health benefits, as well as those of retirees, will not be disrupted. The company's pension plan for retirees and vested employees is fully funded and protected by federal law.

It is important for our customers and business partners to know that all Owens Corning operations are open and we are continuing to focus on serving our customers. Customer service and daily operations are our top priorities.

See www.owenscorning.com/financialreorganization/.

REFERENCES

Columbus Dispatch. (December 7, 2000). "MORE OWENS CORNING WORKERS LOSE THEIR JOBS" by Jim Weiker.

STATEMENT OF DR. FREDERICK C. DUNBAR BEFORE THE U.S. SENATE COMMITTEE ON THE JUDICIARY HEARING ON SOLVING THE ASBESTOS LITIGATION CRISIS: S.1125 ÁV THE FAIRNESS IN ASBESTOS INJURY RESOLUTION ACT OF 2003, ON WEDNESDAY JUNE 4, 2003 | weblink

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