James Hardie Industries

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James Hardie Industries
Public
Traded asASXJHX
NYSEJHX
ISINAU000000JHX1 Edit this on Wikidata
IndustryBuilding materials
Founded1888
FounderJames Hardie
HeadquartersDublin, Ireland
Area served
United States
Australia
Europe
New Zealand
Philippines
Key people
Jack Truong (CEO)
ProductsFencing & Lattice
Fibr3 Cement Building Materials
Residential & Commercial Facades
Siding & Weatherboards
Revenue$2.5 billion (2019) (2019)
Number of employees
5,000 (2019)
Websitewww.jameshardie.com

James Hardie Industries plc is a global building materials company and the largest global manufacturer of fibre cement products. Headquartered in Ireland, it is a dual-listed company, being listed on the Australian and New York Stock Exchanges. Its management team currently sits in Chicago, Illinois, United States.[1] James Hardie has been named America's 100 most trustworthy companies by Forbes.[2]

History[edit]

James Hardie immigrated to Australia in 1888 from Linlithgow, Scotland, and established a business importing oils and animal hides. Andrew Reid, also from Linlithgow, came to join Hardie in Melbourne, and became a full partner in 1895.[3] When Hardie retired in 1911, he sold his half of the business to Reid.[4]

The company was listed on the Sydney Stock Exchange in 1951.[5] At the time, the company manufactured products out of asbestos cement sheet and other related building material.[6] By the middle of the twentieth century, James Hardie had become the largest manufacturer and distributor of building products, insulation, pipes and brake linings containing asbestos. In Australia, it operated asbestos plants in New South Wales, Queensland, South Australia, Victoria and Western Australia. Working with the products containing asbestos - including asbestos cement - caused people to develop various pleural abnormalities such as asbestosis and malignant mesothelioma.[7] In 1961, it merged its brake lining division with Turner & Newall's Ferodo, taking a 60% shareholding in Hardie-Ferodo.[8] It purchased the remaining 40% in August 1980.[9]

By the mid 1980s, James Hardie invented the modern day asbestos-free fibre cement material and had transitioned production entirely to fibre cement, a product consisting largely of Portland cement, sand, and wood fibres.[10]

In December 2001, the company relocated its headquarters to the Netherlands.[11] While the move to the Netherlands resulted in tax savings of $86 million over seven years, in 2009 the Australian Taxation Office issued an amended assessment for $172 million plus interest and penalties.[12] James Hardie successfully appealed the assessment.[13] Also in 2009, the US Internal Revenue Service alleged that James Hardie had not been in compliance with the US-Dutch treaty since it had been implemented in 2006 and claimed $US37 million in unpaid taxes plus $US10 million in interest and penalties.[14]

In 2010 James Hardie moved its corporate domicile from The Netherlands to Ireland to take advantage of a lower corporation tax rate.[15]

James Hardie currently operates a corporate office in Chicago, Illinois, United States and operates more than a dozen manufacturing plants around the world.[16]

Sponsorships[edit]

James Hardie was the naming rights sponsor of the Bathurst 500/1000 from 1968 until 1987.[17] It was shirt sponsor for the Parramatta Eels from 1981 until 1995.

Asbestos[edit]

History[edit]

In 1978 the effects of pleural abnormalities and other asbestos-related diseases were beginning to show up in the former mine workers. While other companies were involved in similar asbestos-related activities, most notably CSR, more than 50% of claims made to the Dust Diseases Tribunal of New South Wales in 2002 were brought against companies in the James Hardie group.[18]

James Hardie and its subsidiaries had been providing compensation for victims of its operations since the 1980s. Though some earlier claims had arisen, the proliferation of cases from the 1980s onwards forced James Hardie to acknowledge that it had known asbestos to be dangerous. James Hardie nonetheless maintained that it had done everything possible to protect workers.[19][20] In 1978 the company began putting warning labels on its products explaining that inhalation of the dust could result in cancer.[21] In March 1987 James Hardie ceased all asbestos manufacturing activities.[22]

As concern grew about the serious adverse health effects of asbestos, in the mid-1980s James Hardie developed an asbestos-free fibre cement technology, without the dangers associated with asbestos.[23]

The MRCF and move to the Netherlands[edit]

James Hardie had been structured as a parent company operating through subsidiaries since the 1930s. All asbestos operations, including the provision of compensation, were undertaken by James Hardie's subsidiaries, principally James Hardie and Coy and Hardie-Ferodo (later known as Jsekarb).[24]:3 Between 1995 and 2000, James Hardie (the parent company) began to remove the assets of these subsidiaries (since renamed Amaca and Amaba respectively), whilst leaving them with most of the asbestos liabilities of the James Hardie group.[24]:3

In 2001 these two companies were separated from James Hardie and acquired by the Medical Research and Compensation Foundation (MRCF) which was essentially created in order to act as an administrator for Hardie's asbestos liabilities. Then CEO of James Hardie, Peter McDonald, made public announcements emphasising that the MRCF had sufficient funds to meet all future claims and that James Hardie would not give it any further substantial funds. Indeed, the net assets of the MRCF were $293 million, mostly in real estate and loans, and exceeded the 'best estimate' of $286 million in liabilities which had been estimated in an actuarial report commissioned by James Hardie.[25] The Jackson Report found that this 'best estimate' was 'wildly optimistic' and the estimates of future liabilities was 'far too low'.[26]

After this separation, James Hardie moved offshore to the Netherlands for what it claimed were significant tax advantages for the company and its shareholders. To make this move, the company had to assure Australian courts (as it was listed on the Australian Securities Exchange) that the MRCF would be able to meet future liabilities. The courts were assured of this and that more money would be made available to its Australian asbestos victims through the issue of partly paid shares to MRCF obliging the new Dutch parent company to meet a call for funds if it were needed. The value of the call at the time was $1.9 billion.[24]:3[27] The move to the Netherlands therefore proceeded. However, the tax benefits which James Hardie expected to receive as a result from its move did not eventuate following the revision of tax laws in the United States in 2001 and later with the United States signing a new trade agreement with the Netherlands in 2006.

Shortly after the move, an actuarial report found that James Hardie asbestos liabilities were likely to reach $574 million.[28] The MRCF sought extra funding from James Hardie and was offered $18 million in assets, an offer the MRCF rejected. The estimate of asbestos liabilities was promptly revised to $752 million in 2002 and then $1.58 billion in 2003.[29] The funding shortfall became of increasing concern in 2004 as it became clear that eligible victims would miss out on receiving compensation after it was revealed that in March 2003 James Hardie had cancelled the partly paid shares that were intended to be a safety net for the fund.[27][30] In discussing the shortfall with the MRCF, James Hardie refused to accept further responsibility for the liabilities on the basis that the MRCF and James Hardie were separate legal entities.[31]

Inquiry[edit]

On 12 February 2004, a judicial inquiry into the matter was commissioned by the Government of New South Wales. The findings were very critical of James Hardie and its management.[32] Amongst other findings, it found that the actuarial reports commissioned by James Hardie which estimated liabilities at $286 million were inadequate because they used a financial model which made unfounded predictions on the value of investments held by Amaca and Amaba, the figures were subject to numerous unspecified conditions and they did not account for the effect of separating Amaca and Amaba from James Hardie.[25] However, the inquiry found that James Hardie was under no legal obligation to provide compensation.[33] Despite this finding, there was immense political and social pressure on James Hardie to negotiate a compensation deal;[34] governments were boycotting James Hardie products[35] and unions were threatening to instigate a global union movement against the company based on refusing to handle James Hardie products.[36]

Following the results of the inquiry, James Hardie entered into negotiations with governments and trade unions in an effort to establish some sort of compensation system for eligible victims of James Hardie's products. In December 2004, James Hardie agreed to pay compensation to the victims of its products through a voluntary compensation fund. The details of the fund were to be legally determined by June 2005 but progress was stalled and the company refused to disclose the date the deal would be finalised.[37] Further conflicts between the company and the Federal Government over tax deductibility of donations to the voluntary fund saw finalisation of the deal further delayed. It was not until November 2006, after the federal government had created 'black hole' tax legislation,[38] which made the contributions of James Hardie into the voluntary fund tax deductible, and had granted the voluntary fund tax-exempt status, that James Hardie finalised the compensation deal. There was immense pressure on the Federal Government from state governments, union leaders and victims to remove the tax problem.[39] The final step in giving the voluntary fund a legal structure was approval of the scheme by James Hardie shareholders. In February 2007, 99.6% of shareholders voted in favour of the scheme and it began operating days later.[40]

Legal actions against management[edit]

After the inquiry in 2004, prosecutors were considering bringing civil and criminal charges against the CEO and other senior executives for making fraudulent statements as to the liquidity of the MRCF.[41] In February 2007 every member of the 2001 board and some members of senior management were charged by the Australian Securities & Investment Commission (ASIC) with a range of breaches of the Corporations Act 2001 including breach of director's duties by failing to act with care and diligence.[42]

ASIC also undertook investigations into possible criminal charges against the company's executives but in September 2008 the Commonwealth Director of Public Prosecutions decided there was insufficient evidence and charges were not pursued.[43]

In 2009, the Supreme Court of New South Wales found that directors had misled the stock exchange in relation to James Hardie's ability to fund claims. They were also banned from serving as board members for five years. Former chief executive Peter Macdonald was banned for 15 years and fined $350,000 for his role in forming the MRCF and publicising it.[44][45] The former directors, excepting Macdonald, appealed and the New South Wales Court of Appeal subsequently overturned the ruling against these directors in 2010.[46] ASIC appealed against the ruling in the High Court of Australia in October 2011. In May 2012 the High Court upheld the 2009 New South Wales court decision and found that seven former James Hardie non-executive directors did mislead the stock exchange over the asbestos victims compensation fund.[46]

In August 2019 Mathew Werfel, a DIY handyman from Adelaide, won $3 million in a compensation case against James Hardie. Werfel was exposed to asbestos while pulling down fences and renovating two homes between 1990-2000 and was diagnosed with testicle cancer in 2017. James Hardie's new products no longer contain asbestos, but Werfel's lawyer claimed the company should have done more to alert the public to the existence of asbestos in its old products which were used in old homes.[47]

Timeline[edit]

Timeline of key events from the Devil's Dust TV program:[48]

  • 2004: James Hardie CEO Peter MacDonald resigns, with a resignation payment of $9 million.
  • February 2007: ASIC files court proceedings against the James Hardie board as it "failed to act with requisite care and diligence" when they assured investors that the Medical Research and Compensation Foundation (MRCF) was fully funded.
  • February 2007: James Hardie shareholders, overwhelmingly approve a "compensation deal for asbestos victims worth $4 billion over the next 40 years". Meredith Hellicar, Chairwoman, resigns.
  • August 2007: Oncologist Professor Stephen Clarke diagnoses Banton with peritoneal mesothelioma, which is usually fatal within six months. Bernie files a new suit of exemplary damages against a former James Hardie subsidiary now part of the new Asbestos Injuries Compensation Fund. Judge John O'Meally (President of the Dust Diseases Tribunal) rules in favour of Banton, but the fund contests the judgement.
  • November 2007: Gravely ill, Banton gives court evidence from his bed at Concord Repatriation General Hospital. James Hardie make an offer of settlement. Compensation for Banton's "terminal mesothelioma is from the Asbestos Injuries Compensation Fund, the trust he fought to set up in 2004". Banton dies at home (on 27 November) aged 61 surrounded by his family and close friends.
  • September 2009: Journalist Matt Peacock releases his book Killer Company.
  • May 2012: The High Court of Australia finds that seven directors of the James Hardie breached their duties by approving the company's release of a misleading statement to the stock exchange that the MRCF was fully funded.

See also[edit]

References[edit]

  1. ^ https://www.jhcareercenter.com/Locations/Chicago,-IL-Corporate-Office
  2. ^ https://www.forbes.com/sites/kathryndill/2014/03/18/americas-100-most-trustworthy-companies/#683514e161e2
  3. ^ Hardie Asbestos on Change Sydney Morning Herald 12 December 1950 page 9
  4. ^ "James Hardie (1851-1920)". 150 Years: 150 Lives. Brighton General Cemetery (Vic). 1 September 2008. Retrieved 17 January 2012.
  5. ^ James Hardie consol profit £200,403 The Sun 2 June 1952 page 18
  6. ^ "James Hardie Asbestos Victims Compensation: Background Facts" (PDF). The City of Newcastle. Archived from the original (PDF) on 2 October 2013. Retrieved 11 November 2012.
  7. ^ Handen Zeren, E., Gurmurdulu, D, Roggli, V. et al. (2000). 'Environmental Malignant Mesothelioma in Southern Anatolia: A Study of Fifty Cases'. The National Institute of Environmental Health Sciences 108(11): 1047-1050.
  8. ^ Ferodo-Hardie Merger Railway Transportation November 1961 page 8
  9. ^ Deal to buy 40pc of Hardie-Ferodo Canberra Times 29 August 1980 page 18
  10. ^ "All About Fiber-Cement Siding". thisoldhouse.com. 9 February 2012. Retrieved 14 October 2019.
  11. ^ Corporate Restructure 2001 James Hardie
  12. ^ Amended tax assessment James Hardie
  13. ^ James Hardie wins $300m payout from ATO ABC News 10 February 2012
  14. ^ Lives in the Dust Sydney Morning Herald 14 March 2009
  15. ^ James Hardie confirms relocation to Ireland Irish Independent 25 June 2009
  16. ^ https://www.jhcareercenter.com/Locations
  17. ^ Hardie pulls out Canberra Times 29 March 1988 page 33
  18. ^ In the Shadow of the Corporate Veil: James Hardie and Asbestos Compensation Parliament of Australia 10 August 2004
  19. ^ Haigh (2006), pp. 137-138
  20. ^ Jarron (2009)
  21. ^ Lives in the Dust Sydney Morning Herald 25 September 2004 page 27
  22. ^ Haigh (2006), p. 130
  23. ^ "James Hardie Investor Relations - History". Retrieved 9 July 2012.
  24. ^ a b c Australian Council of Trade Unions (2007) James Hardie Asbestos Victims Compensation Background Facts Archived 7 October 2009 at the Wayback Machine
  25. ^ a b Jackson (2004), p. 9
  26. ^ Jackson (2004), p. 12
  27. ^ a b Sexton, Elisabeth (3 August 2004). "Lawyer's notes add to Hardie's asbestos saga". The Age. Retrieved 20 June 2013.
  28. ^ Jackson (2004), p. 30
  29. ^ Jackson (2004), p. 31
  30. ^ Ackland, Richard (30 July 2004). "Where the line of duty falls for legal advisers". Sydney Morning Herald. Retrieved 20 June 2013.
  31. ^ Jackson (2004), p. 461
  32. ^ Jackson (2004)
  33. ^ Jackson (2004), p. 37
  34. ^ Jarron (2009), pp. 57–62
  35. ^ Hardie Promises to Support Victims Sydney Morning Herald 26 October 2004 page 2
  36. ^ Building Unions Black-Ban Products Australian Financial Review 30 July 2004 page 8
  37. ^ Hardie Report Not End of Fight The Australian 21 September 2004 page 3
  38. ^ Tax Laws Amendment (2006 Measures No. 1) Act 2006 Cth.
  39. ^ James Hardie Compo Deal in Doubt After Tax Ruling Sydney Morning Herald 24 June 2006 page 5
  40. ^ James Hardie compensation deal approved Sydney Morning Herald 7 February 2007
  41. ^ Fresh go at Hardie Granted Sydney Morning Herald 21 November 2007 page 2
  42. ^ ASIC takes action against James Hardie 7:30 Report 15 February 2007
  43. ^ ASIC Drops Criminal Pursuit of James Hardie The World Today 5 September 2008
  44. ^ James Hardie appeals court rulings ABC News 23 September 2009
  45. ^ "James Hardie directors lose final appeal". Sydney Morning Herald. 12 November 2012.
  46. ^ a b "High Court rules against Hardie". Sky News. 3 May 2012. Retrieved 3 May 2012.
  47. ^ Donnellan, Angelique (6 August 2019). "'Home renovators beware': Handyman wins landmark $3m asbestos compo". ABC News. Retrieved 6 August 2019.
  48. ^ "Devil's Dust".

Bibliography[edit]

External links[edit]