ICS Magazine

Bush does not mention asbestos in speech

February 4, 2002
President George W. Bush made no mention of asbestos lawsuits in his State of the Union speech despite Wall Street speculation that the Bush administration might move to limit liability for asbestos lawsuits.

WASHINGTON -- President George W. Bush made no mention of asbestos lawsuits in his State of the Union speech despite Wall Street speculation that the Bush administration might move to limit liability for asbestos lawsuits.

An explosion of asbestos-related legal claims is battering many prominent manufacturers in the United States. Most recently, Moody's Investors Services downgraded Jan-San paper producer Georgia Pacific Corp.'s (NYSE:GP) credit rating.

The downgrade, based in part to the company's debt, weak profits and uncertainty about asbestos lawsuits, could result in costlier credit charges. This in turn could force Georgia Pacific (www.gp.com) to cut jobs and hike prices.

Midland, Mich.-based Dow Chemical Co. (NYSE:DOW), saddled with years of battling asbestos-related lawsuits, experienced a slide of 6 percent in sales, and a total drop of 72 percent in income.

Dow (www.dow.com) recently posted fourth quarter earnings, recording a net loss of $37 million, or 4 cents a share, compared with a profit of $149 million, or 16 cents a share, a year earlier. For the period ending Dec. 3, sales were $6.3 billion, down 12 percent from a year ago.

Construction materials maker USG Corp. (NYSE:USG) has filed for bankruptcy due to asbestos litigation costs. The company recently said that its fourth-quarter net loss narrowed.

USG (www.usg.com), which makes gypsum wallboard, ceiling tile and other building products, also said it was cautious in its outlook for 2002, citing a potential weakening of the housing market. It also said it would continue reorganizing under bankruptcy protection to resolve its asbestos liabilities.

USG reported a quarterly net loss of $9 million, or 21 cents per diluted share, compared with a net loss of $523 million, or $12.05 per diluted share, in the year-earlier period. Sales fell 2 percent to $822 million from $841 million a year ago.

USG said that its decision to reorganize under Chapter 11 of the Bankruptcy Code would allow it to conclusively resolve its asbestos liability while protecting the long-term value of the business, said Chief Executive William Foote. But it said that the recession, rising unemployment, and weak consumer confidence and spending threaten to weaken the housing market, the company's biggest market. Commercial construction, another important market, is expected to decline this year, said USG.