BorgWarner Inc., a Michigan-based company that supplies turborcharger and emissions systems to the auto industry, recently reported a one-time charge of $411 million, which it is setting aside for future asbestos exposure liability claims.
That’s according to Crain’s Detroit Business, which reports the charge resulted in a net loss in the company’s fourth quarter of $293 million.
Now of course, this might sound like a lot, but consider that the company’s revenue during that quarter rose by more than 6 percent to $2.3 billion, from $2.1 billion just a year earlier. A big part of that was owing to a 20 percent increase in drivetrain division sales. Net revenue for the year is up to $9.1 billion. When you consider this, that $411 million seems far less substantial, especially when noting how many thousands of asbestos injury claims are likely to arise in the coming years. The supplier figured the $411 million by calculating its estimated costs for indemnity and defense of pending and future asbestos-related claims, which could stretch into the next five decades.
That figure also reportedly factors in the amount that could be incurred based on liability for actions of some subsidiaries as well.
In explaining its decision to set aside that amount of money, the company noted in one of its recent filings that it has every year for some time been named as a defendant in a “significant” number of lawsuits every year. These asbestos exposure claims and mesothelioma lawsuits allege plaintiffs suffered injury as a result of exposure to certain “historical products.” The company said plainly that while the substance is not entirely outlawed in the U.S. even at this juncture, it no longer makes, distributes, sells or markets products that have asbestos in them.
The company memorandum went on to indicate that it vigorously defends asbestos-related claims, and that 8 in 10 claims of asbestos-related injury filed against the company have been resolved with no payment to the claimant.
Now, it should be noted first that we can’t independently verify that claim. But even if it’s true, most mesothelioma plaintiffs file lawsuits against numerous entities. It’s true that it can be difficult to assert causation and liability, particularly when we’re talking about exposure that occurred decades earlier. It’s not all that uncommon for several of the defendants to be dismissed from a case prior to trial. However, that does not mean the plaintiff ultimately walks away empty-handed. In many cases, there are viable claims, which are either settled prior to trial or result in successful verdicts after a jury has weighed them.
BorgWarner was incorporated as a manufacturer of automotive parts back in 1928. One of its early specialties were parts that connected to the transmission in order to help power the wheels. The company and its subsidiaries have also previously been top manufacturers of transmissions and turbochargers, and created the sprag clutch. Today, it has factories in more than 19 countries.
Most of the asbestos injury lawsuits against BorgWarner stem from the company’s brake pads and clutches. In 2005, the company resolved some 38,000 asbestos cases and in 2006, it resolved some 27,000. Currently, about 45,000 asbestos lawsuits are pending against the firm.
If you or a loved one is diagnosed with mesothelioma in Boston, call for a free and confidential appointment at 1-888-367-2900.
BorgWarner records $411 million charge to fight asbestos claims, Feb. 9, 2017, By Jack Walsworth, Automotive News, Crain’s Detroit Business
More Blog Entries:
Historic Mills in Massachusetts and Asbestos Problems, Feb. 11, 2017, Mesothelioma Lawyer Blog