PCC on way out of Chapter 11/By Martha Knight

PITTSBURGH—The longest Chapter 11 bankruptcy on record seems to be winding down, and Pittsburgh Corning Corporation (PCC) appears to be about to emerge from “protection” with a viable plan of reorganization, according to action by the U.S. Bankruptcy Court for the Western District of Pennsylvania.

Filed April 16, 2000, days after an adverse ruling in a Texas case pointed to even more claims against PCC’s owners based on harm from asbestos exposure, Chapter 11 status has allowed the company to fend off creditors and continue operating.

Judge Judith Fitzgerald, who has presided over the lengthy process, wanted to see it concluded on her watch, but had a retirement date in mind, and no wish to postpone either the reorganization decision or her departure from the bench. May 23’s omnibus hearing was looked to as D-Day for the Decision that could conclude the case, or at least the key provisions that must be in place for the company to emerge from bankruptcy protection—if not whole, at least viable.

Judge Fitzgerald blessed, in the main, a bulky filing of proposed Findings of Fact and Conclusions of Law filed earlier this month, which contained the rationale for settling the many intertwined issues before the court. There remain some details, some clarifications, some remaining issues, but those are not seen as deal-breakers. The meat of what the judge has approved is the company’s Third Amended Plan of Reorganization.

The A-word, asbestos, runs throughout the findings/conclusions document, and throughout the history of the otherwise successful company’s woes. Although early mentions of the bankruptcy by the company, and discussions of the required cost containment measures it took, did not embrace the facts concerning the chief cause of financial stress, current statements are frank to say it stemmed from asbestos used in manufacturing Unibestos for about a decade, now far in the past.

The latency of health damaging effects from asbestos proved to be a kind of tort torture, seemingly endless, with new personal injury claims being added 20, 30, 40 years or more after the incidents when various individuals inhaled or ingested amosite asbestos fibers.

PCC was defending itself from many asbestos related actions for years, in various jurisdictions in the country, as were its “shareholders,” two in number: PPG Industries, Inc. and Corning, Inc. Meanwhile there were actions in various directions among those entities, and their insurers, as they sought to deflect and to place responsibility. Legal proceedings played out like a protracted, high-stakes game of Chinese checkers.

Following multiple class actions, asbestos trusts were established, from which claims by various groups of asbestos disease sufferers, and their survivors, would be paid. The several companies and insurers litigated over which were responsible for what contributions to the trusts, and which were entitled to use the funds to help satisfy claims against them.

Even as the costs of litigation continued to mount, and claims came in by the thousands, PCC struggled to contend with increased competition from abroad for its iconic product, glass block. For a time the company experimented with importing blocks made to its design, from Asia, but later discontinued the practice.

One of the cost containment efforts, implemented in the past several years included a change to just-in-time production. Rather than keeping large quantities of product on hand, PCC now produces the types of blocks that are ordered, as they are ordered, and ships at once. Without a large inventory of product, the Port Allegany facility found that its cavernous warehouse was no longer needed, and removed it.

Even more dramatic downsizing affected the workforce. Where once local PCC employees numbered as many as 400, wave after wave of lay-offs and permanent job eliminations have left only 50 hourly (union) workers and 21 salaried employees at the Port Allegany facility. Recently the company and its union local agreed on a new contract and an immediate wage increase, which union members saw as a hopeful sign concerning the company’s prospects.

PCC has been in the insulation business almost from its birth, in 1937. The company won the coveted E (for war effort) award from the Department of Defense in World War II, when acres of Foamglas® was used in pontoons in the Pacific Theater, and elsewhere.

Foamglas® was produced in Port Allegany in those years, and intermittently later, as the material returned to peacetime use. Later it was produced by other PCC plants, and the local Foamglas® plant was razed several years ago after sitting idle. The cellular glass insulation is produced by PCC elsewhere, but glass block has been the emphasis locally for decades.

The company’s success in making and marketing insulation encouraged its owners to think in terms of insulation products. And that led to its diversifying into formable insulation, which could be produced in various shapes and sizes for use as pipe insulation.

In the early 1970s PCC acquired the product known as Unibestos from Union Asbestos and Rubber Company (UNARCO). PCC took over UNARCO’'s plant in Tyler, Texas, and built a new facility for Unibestos production in Port Allegany.

A recent statement by PCC indicates the company averaged less than $3 million annually from Unibestos. But there had been claims and resolutions numbering 200,000 or more by the time of the Chapter 11 filing, and some 250,000 more loomed.

The plan of reorganization calls for a trust valued at more than $3.5 billion, which is intended to cover current and future asbestos-related claims. The trust will be funded by PCC, PPG and Corning and participating insurance carriers.

Philip M. Martineau, chairman and CEO of PCC, is quoted as saying, “The trust is intended to help support the people and families who were harmed by asbestos.” He refers to the next step in the process as being the review and affirmation of the plan by the court.

News sources mention that there have been objections filed by some insurers.

Other creditors include vendors and lenders. But the creditors whose claims the company could not otherwise have contained had to do with asbestos-related torts.

Martineau also expressed thanks to PCC’s customers, employees, shareholders and business partners for their loyalty through the past 13 years.

Another way the company has supported many persons affected by Unibestos production’s aftermath is support of the Port Allegany Asbestos Health Program, located in the Port Allegany Community Health Center. Since its establishment in the 1980s, as the first such specialized health service of its kind, PAAHP has monitored many present and former PCC employees, their families and household members, and others thought to have been exposed to asbestos, for signs of asbestos-related disease. Its medical director for much of that time has been Dr. Edwin “Ned” Holstein.

PCC is owned half-and-half by PPG and Corning. Its board consists of two persons from each owner’s board plus the president of PCC.

The two glass companies chose Port Allegany as the site of their new venture, in 1937. Factors included the community’s warm welcome; its location between the owners’ locations; supplies of sand stone, limestone and natural gas; and rail and highway transportation arteries.

In early years the company produced Pyrex dishes locally, from custard cups to cookware. This was phased out with the switch to war effort and never resumed. It has also produced some decorative items and collectibles, such as horse head and Scottie dog bookends. Some customized glass block products have included banks, and even lamps and pavers.

The company was a mainstay of the local economy throughout most of its history. The Unibestos “experiment” proved to be so injurious to the company’s health, local observers have seen looked for emergence from Chapter 11 as being at least well enough to be taken off life support.

For now, there are three shifts a day, seven days a week. Glass blocks are still produced in Port Allegany, the Glass Block Capital of North America.