In the year since the retirement of longtime Chief Executive Glen Hiner, Owens Corning officials have faced hard decisions about plant closings, the firm's future after Chapter 11, and the lavish headquarters Mr. Hiner built along Toledo's downtown riverfront.
“We've made solid progress the last 12 months,” said David Brown, who became chief executive when Mr. Hiner retired April 15 after 10 years. “I feel as good about the future of our company as I have in a long time.”
Still, the year has been far from problem-free.
The company, a top manufacturer of insulation, roofing shingles, vinyl siding, faux stone, and fiber glass, closed or sold seven of 97 factories in North America, employing about 500 people.
The moves were carried out as part of a three-year business plan aimed at improving profitability, stopping a slide in market share, and focusing on business lines with the most potential for making money.
The move laid to rest rumors of more drastic cuts, such as a possible sale of the firm's composites unit, which supplies Fiberglas to manufacturers of boats, cars, building materials, and other products.
The plant closings also reflect a new management attitude focusing on “exposing reality, owning it, and acting on it,” Mr. Brown said. In prior years, the company was sometimes too slow to recognize and respond to problems such as soaring operating costs and loss of business to competitors, the CEO explained.
The company suffered what may be its biggest loss ever in 2002. Red ink flowed to the tune of $2.8 billion, most of it the result of an accounting charge to cover asbestos liability expenses. The asbestos problem will disappear when the company emerges from Chapter 11, which company officials now say could happen as early as the first quarter of 2004.
Also contributing to the loss was $96 million in legal bills and other expenses related to the bankruptcy case.
But on a brighter note, sales rose to $4.9 billion last year from $4.8 billion in 2001.
Despite job cuts, the firm employs 17,500 people worldwide, including nearly 1,200 in Toledo.
OC submitted a proposed debt-restructuring plan Jan 17, more than two years after filing for Chapter 11 to gain relief from multibillion-dollar asbestos liability. The plan, which has not been approved by creditors or a bankruptcy judge, would give controlling interest in the company to a trust fund that would be set up to pay asbestos claimants.
Also, existing stock would be canceled and rendered worthless. Shares plunged from 50 cents to 7 cents and closed last week at 5 cents. Shortly before announcement of the restructuring plan, OC shares were relegated to the over-the-counter market after trading on the New York Stock Exchange for 50 years.
Prevented from suing OC because of the bankruptcy, some angry shareholders filed suit against Mr. Hiner and other executives, contending that the executives concealed the company's deteriorating financial situation in the months leading up to Chapter 11 on Oct. 5, 2000. The cases are pending in U.S. District Court in Toledo.
Legal chief Maura Abeln Smith, who received praise and criticism for a last-ditch attempt to solve the asbestos problem outside of Chapter 11 through a series of out-of-court settlements, resigned less than two months ago to become chief counsel at International Paper, Stamford, Conn.
Most recently, OC officials revealed that, in a review of property leases as part of Chapter 11, they were considering moving from the seven-year-old Casar Pelli-designed headquarters because lease payments were much higher than for other office space in downtown Toledo. The Fortune 500 company will stay if it can persuade bond holders who financed the $100 million office complex to reduce the firm's repayment obligations.
“Our intent is to stay here if we can,” Mr. Brown said in an interview late last week. “But we have a plan to move.” The firm has identified several alternative sites, all in metro Toledo, but none has been disclosed.
The building was designed for OC, and lease payments are geared to the amount needed to repay bonds and loans.
Asked if he thought the company made a mistake in building such lavish offices in the mid-1990s at a time when OC faced tens of thousands of asbestos liability claims that eventually drove the firm into bankruptcy, Mr. Brown replied: “When we built this building we had no inkling we were going to file Chapter 11. ... We were looking for a world headquarters that would help us attract world-class talent and create for them an environment to do world-class work.”
First Published March 30, 2003, 12:26 p.m.
