By Roy Bernard
A brief encounter 40 years ago with an insulation business could bring a fatal blow to Crown Cork & Seal Inc. and its Bradley plant.
That insulation business made a product containing asbestos. Crown Cork's affiliation eventually resulted in the metal packaging company's paying hundreds of millions of dollars in asbestos claims. It still faces an undetermined number of potential claims.
Company officials are encouraging Bradley employees to contact U.S. Sens. Peter Fitzgerald and Richard Durbin to support legislation that would keep Crown Cork financially solvent by establishing a trust fund for asbestos claims.
Bradley Plant Manager Ed House explained that the company accepts the liability of adequately compensating victims of "asbestos-related illnesses."
What concerns Crown Cork most is that just 12.5 percent of what the company is paying actually is going to the victims. The rest is going to attorneys, medical firms and various social services.
House said Crown Cork already has paid nearly $500 million in asbestos claims. In fiscal year 2003, Crown paid more than $200 million in asbestos-related costs, of which only $25 million was received by the claimants.
With that type of small return, Crown Cork believes that settling pending cases could bankrupt the company.
A remedy being sought is to have Congress approve legislation in which asbestos companies and their insurers would pay $114 billion into a trust fund to compensate asbestos victims. Crown Cork has faced thousands of asbestos claims.
Under Senate Bill 1125, the Fairness in Asbestos Injury Resolution Act, those suffering from asbestos-related diseases would be compensated after meeting medical criteria, with the trust administered by the federal government.
Top compensation level would be $1 million for those with mesothelioma, which is an extremely aggressive abdominal or pelvic cancer directly attributed to asbestos exposure.
Lung cancer victims who also smoked could receive up to $400,000. A "mixed causation" category would include anyone with a lung problem. The plan also makes eligible spouses or children of asbestos workers who might have been exposed to fibers on the workers' clothes.
While Crown Cork each year sets aside money for asbestos claims, the open-ended aspect of future lawsuits is creating a significant financial burden.
House said both Fitzgerald's and Durbin's offices have been contacted regarding Senate Bill 1125, but neither has responded.
Crown Cork in Bradley is operating at full production, with 145 workers. Metal packaging for beverages, which is done at the Bradley facility, is Crown Cork's largest division. In Illinois, Crown Cork provides 700 jobs, with facilities in Aurora, Decatur and Alsip. The latter location also has a technology center.
By adding the potential liability cost for asbestos victims, Crown Cork is finding it difficult to be profitable and at the same time, remain competitive.
"This is just a strain on the company," House said. "If this doesn't get resolved, it could have dire consequences."
Crown Cork's dilemma stems from the November 1963 purchase of Mundet Cork Co. Mundet had an insulation business that made one product containing asbestos. Crown Cork sold the insulation division three months later to Baldwin-Ehret-Hill, which soon went bankrupt, leaving Crown Cork liable for all asbestos claims.
"The last company standing is taking the hit," House said.
Since the late '70s, Crown Cork has been settling those claims. From 1985-97, about 70,000 claims were resolved.
From the onset of asbestos litigation in the early 1970s, more than 550,000 claims have been filed, Credit Suisse First Boston estimated in a November 2001 report. At that time, the report further estimated 390,000 to 750,000 more claims remained to be filed by people who were exposed to asbestos.