Companies Look to Plug the Asbestos Drain
Proponents of a bill to rein in asbestos lawsuits say this could be the year legislation is finally approved on Capitol Hill. Court cases have cost companies billions of dollars, while also helping to push dozens of firms into bankruptcy. But given the mounting debate over the proposed legislation, it's clear that solving the asbestos problem won't be easy.
One company with a stake in the outcome is RPM International, with 30 subsidiaries including DAP caulking, Rust-Oleum paints and industrial waterproofing products. President and Chief Executive Officer Frank C. Sullivan says asbestos has cost RPM more than $200 million, "for a product line that had a one-percent market share, $500,000 a year, at its peak -- and was discontinued 28 years ago."
RPM got its asbestos liability the same way many defendant companies did, through an acquisition. As the number of asbestos court cases climbed and began bankrupting many bigger companies, RPM faced its first asbestos lawsuit in 1985.
Standing on the floor of his factory, Sullivan points to newly installed equipment and other improvements. He says all of that, plus employee benefits and other expenses, pales compared to what RPM spent last year on asbestos. "Last year we spent more on asbestos than capital spending, employee benefits, our dividends, all those items, for the first time."
The latest proposal to resolve conflicts over asbestos involves the creation of a $140 billion trust fund to compensate victims. Asbestos defendant companies and their insurers would bankroll the fund. Sen. Arlen Specter is circulating a draft proposal of a trust fund bill, but it has met with resistance amid concerns over future lawsuits.
However, supporters of a trust fund approach say exchanging the right to sue for compensation is exactly what a fund has to do if it is to provide a solution to the asbestos issue, including eliminating lawsuits filed on behalf of those who are not yet sick. RPM's Frank Sullivan supports the trust fund approach, saying he believes it restores fairness to an imbalanced system.
Those who favor a legislative solution to the asbestos issue say it's time to take asbestos cases out of the courts. They include President Bush, who has made asbestos a key issue in his second term. The president held an asbestos forum recently in Detroit, where he was joined by Sullivan and others pushing for a legislative solution to the asbestos problem.
Sullivan estimates his company would pay as much as $15 million a year for 30 years under a trust fund approach. At the least, he says, RPM's asbestos costs would be known. But there are already signs of dissent over an asbestos bill.
Questions have also arisen about the legislation since the announcement last week that W.R. Grace, one of the largest asbestos defendant companies, has been indicted on charges that the company sought to conceal health risks associated with asbestos.
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