Monday, August 09, 2004

DuPont’s Teflon Armor Wears Thin

I wrote last month about DuPont allegedly covering up worker exposure and environmental contamination caused by a chemical used to make Teflon. The EPA is proposing millions of dollars in fines against the company for not notifying EPA that it had detected the chemical in the drinking water of communities surrounding its plants.

Yesterday, the New York Times carried an additional article about the problem. DuPont’s got several problems. First, the production of Teflon is extremely profitable:
For DuPont, the controversy could hamper plans by its chairman and chief executive, Charles O. Holliday Jr., to shed the company's slow-growing businesses - including the unit that makes nylon and Lycra, both of which it invented - and focus instead on faster-growing businesses like genetically engineered seeds, soy-based products and electronics. While the company invests in those areas, it is banking on steady profits from products like Teflon.

Teflon-related products contribute at least $100 million in profit annually, according to company reports and court documents - almost 10 percent of the company's 2003 total. DuPont has been pushing its Teflon-branded materials (known as fluoroproducts) for new uses - such as a built-in stain repellent for fabrics and a spray-on cleaning product - and has identified new markets, including China, for expansion. The company has invested $50 million to expand Teflon production and $20 million on an advertising campaign in the United State
Which is probably the reason that the company went to such lengths to cover it all up:

The class-action lawsuit, filed in Wood County, W.Va., the home of the Washington Works plant where DuPont has made Teflon for decades, has turned up a series of documents that DuPont had sought to shield as proprietary information. The latest came to light in May, when the West Virginia Supreme Court voted unanimously to unseal several DuPont memorandums from 2000 in which John R. Bowman, a company lawyer, warned two of his superiors - Thomas L. Sager, a vice president and assistant general counsel, and Martha L. Rees, an associate general counsel - that the company would "spend millions to defend these lawsuits and have the additional threat of punitive damages hanging over our head."

He added that other companies that had polluted drinking water supplies near their factories had warned him that it was cheaper and easier to replace those supplies and settle claims than to try to fight them in court. And those companies, he noted, had spilled chemicals that did not persist in the environment the way that PFOA does. "Our story is not a good one," he wrote in one memorandum. "We continued to increase our emissions into the river in spite of internal commitments to reduce or eliminate the release of this chemical into the community and environment because of our concern about the biopersistence of this chemical."

Another document summarizes the company's strategy for deflecting the PFOA issue and litigation. It offers various suggestions for improving credibility with employees, the community and regulators, such as "keep issue out of press as much as possible" and "do not create impression that DuPont did harm to the environment."

Local officials said the memorandums - with the E.P.A.'s action and recent tests that found increasing PFOA levels in their water - confirmed their fears.

"We've been exposed since at least 1984," said Robert Griffin, general manager of the Little Hocking Water Association, which serves about 4,000 homes in rural Washington County, Ohio, directly across the Ohio River from DuPont's Washington Works plant. "The community could have dealt with it back then, but DuPont saw fit not to inform us."

In June, Mr. Griffin included a warning in his annual water quality report to customers. It stated, in bold capital letters, that until the issue was resolved, "You are drinking this water at your own risk."

And like Starbucks (see below), DuPont has an image to protect:
At the very least, the Teflon flap could damage DuPont's well-polished image. The 200-year-old company, based in Wilmington, Del., prides itself on its corporate values, and Mr. Holliday is a high-profile advocate of socially responsible business. "In the chemical industry, the critical thing is not only investor perception, but consumer trust," Mr. Pisasale said. "That can be very hard to build back."
Guess they should have thought about that before they decided to cover up information like this:

In the 1980's, a DuPont study of female workers exposed to the substance found that two out of seven women gave birth to babies with facial defects similar to those observed in the offspring of rats that had been exposed to PFOA in another study. In its complaint, the E.P.A. charged that DuPont had also detected PFOA in the blood of at least one of the fetuses and in public drinking water in communities near DuPont plants, but did not report that it had done the tests.