Reborn Manville learns from mistakes

November 19, 1992|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- Ten years after waves of asbestos-related lawsuits forced the Manville Corp. into bankruptcy, the company is not only born-again financially but also in its attitude toward the environment.

That was the message brought to New York yesterday by Manville Chairman W. Thomas Stephens, who led the company out of bankruptcy in 1988, implemented a court-ordered trust fund for asbestos victims and now has re-established the company as a profitable producer of lumber, non-asbestos insulation and high-tech materials.

"The license that democratic capitalism gives to business is not just to make profits. What it all comes down to is public trust," Mr. Stephens said.

Trust was something that Manville desperately needed in the mid-1980s, when Fortune magazine ranked it as the least-trusted company for five straight years. Asbestos claims, and the company's sometimes ham-handed attempts to shirk responsibility for producing the cancer-causing insulator, combined to undermine public confidence and share prices. Its stock plummetedfrom $120 a share in 1980 to $20 two years later, when it filed for bankruptcy.

Since the 50-year-old Mr. Stephens took over the company in 1986, however, Manville has been able to boost profits, which analysts expect to double from last year's, to about $50 million this year.

The trust fund established to pay claimants -- several hundred of whom were Baltimore shipyard workers -- stands to gain by the company's turnaround because it owns 50 percent of the company'scommon stock, with convertible shares for another 30 percent. After hitting a low of $4 last year, the stock is trading at $9.

Manville, once the country's largest asbestos manufacturer, sold its asbestos business in 1985 and now concentrates on its lumber, fiberglass and industry-leading carton packaging technology.

Frank G. Castle, an analyst who follows Manville for Feeley & Willcox Securities, said the company is poised for 15 percent net profit margins in coming years, thanks to its dominance in carton packaging. As soon as a Brooklyn judge rules on several thousand claims stemming from the use of asbestos in the Brooklyn shipyards, investors should regain confidence that Manville will not be towed under again by asbestos claims, he said.

Nevertheless, the company has decided that simply following the law is not enough, Mr. Stephens said. He stressed that anticipating legal problems is a key to avoiding the sort of lawsuits that it faced 10 years ago.

The seemingly irreversible trend in environmental regulation is toward tougher standards, he said, adding that companies must find ways to stay a step ahead of regulations rather than fight pointless and costly rear-guard actions.

"Regulations are just a bureaucracy's knee-jerk reaction to yesterday's screw-up. Reacting to change is destructive. You have to anticipate it," Mr. Stephens said.

This new focus has led Manville to start printing warning labels on products even though they are not required by law. Manville's lumber products, for example, carry carcinogen warnings because of the risk of inhaling wood dust.

The company followed the same approach with fiberglass. When exporting its products to Japan, Mr. Stephens said, the company lost $25 million in business because of these labels, which other companies did not have. Now its caution has won respect, and it has regained its market share in Japan, he said.

Besides generating good publicity, staying ahead of the game in environmental protection can force a company to pioneer new technologies that can be marketable, he said.

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