Category Archives: Uncategorized

Since Union Carbide is in the chemical manufacturing industry it is important for us to have information on the industry itself so that we are knowledgeable at every angle involving Union Carbide.

“The chemical manufacturing subsector is part of the manufacturing sector.

The chemical manufacturing subsector consists of these industry groups:

• Basic Chemical Manufacturing: NAICS 3251
• Resin, Synthetic Rubber, and Artificial Synthetic Fibers and Filaments Manufacturing: NAICS 3252
• Pesticide, Fertilizer, and Other Agricultural Chemical Manufacturing: NAICS 3253
• Pharmaceutical and Medicine Manufacturing: NAICS 3254
• Paint, Coating, and Adhesive Manufacturing: NAICS 3255
• Soap, Cleaning Compound, and Toilet Preparation Manufacturing: NAICS 3256
• Other Chemical Product and Preparation Manufacturing: NAICS 3259″

http://www.bls.gov/iag/tgs/iag325.htm

Since Union Carbide is most notable for the Bhopal Tragedy this article is definitely important to note.

“In a setback to the victims of the Bhopal gas tragedy, a US court has held that neither Union Carbide nor its former chairman Warren Anderson were liable for environmental remediation or pollution-related claims emanating from the world’s worst industrial accident.

US District Judge John Keena in Manhattan dismissed a lawsuit accusing the company of causing soil and water pollution around the Bhopal plant due to the disaster, and ruled that Union Carbide Corporation (UCC) and Anderson were not liable for remediation or pollution-related claims.

The court ruled that it was Union Carbide India Ltd, and not its parent company UCC that was responsible for the generation and disposal of the waste that polluted drinking water, and the liability rests with the state government.

Plaintiffs Janki Bai Sahu and others had alleged that “toxic substances seeped into a ground aquifer, polluting the soil and drinking water supply in residential communities surrounding the former Bhopal Plant site”.

They alleged that exposure to soil and drinking water polluted by hazardous waste produced Union Carbine India Ltd caused injuries.

“The summary judgement record certainly indicates that UCIL consulted with UCC about its waste disposal plans and on non-environmental business matter like its strategic plan. However, nothing in the evidence suggests the necessity of UCC’s approval for the actions about which plaintiffs complain,” the court said in its order.

“Moreover, there is no evidence in this extensive record indicating that UCIL manufactured pesticides on UCC’s behalf, entered into contracts or other business dealings on UCC’s behalf, or otherwise acted in UCC’s name,” it said.

In his written opinion, Judge Keenan concluded that – even when viewing the evidence in the most favourable light for the plaintiffs – UCC is not directly liable, nor liable as an agent of UCIL, nor liable under a veil-piercing analysis.

The world’s worst industrial accident led to the leak of poisonous methyl isocyanate, claiming thousands of lives in the Madhya Pradesh capital.

Over 3,000 people are believed to have died due to the immediate after effects of the tragedy. According to independent estimates, several thousands have subsequently died over the years due to ill-effects of the toxic waste in the environment.

Citing a 1998 court verdict in a case involving KFC, the court said that legally the mere assertion that a corporate parent is or was involved in the decision-making process of its subsidiary, or that it controlled the legitimate policies of its subsidiary, will not shift liabilities among distinct corporate entities.

“Moreover, there is no evidence to suggest that UCC’s approval power extended beyond the strategic plan to other areas of UCIL’s operations,” the court said.

The court observed that after the 1984 catastrophic gas leak claimed thousands of lives, the Government of India closed the Bhopal Plant.

In 1994, UCC sold its stake in Union Carbide India Ltd, after which time UCIL changed its name to Eveready Industries India Ltd (EIIL). In 1998, EIIL terminated its lease of the Bhopal Plant site and surrendered the property to the state government of Madhya Pradesh.

“As discussed in connection with the direct liability, the expanded summary judgement record demonstrates that UCC played a minimal role, if any, with respect to the decision to back-integrate the Bhopal Plant, the design of the plant’s waste disposal system, the choice and development of process technology used at the plant, and the burial of waste in a landfill.

“There is no need to pierce the corporate veil to prevent fraud or injustice because, even if there were evidence that UCC dominated UCIL, there is no allegation or evidence that UCC did so to commit a fraud or wrong that harmed Plaintiffs,” it said.

A statement from UCC following the verdict said: “In summary, yesterday’s court decision not only dismisses plaintiffs’ claims against UCC, but also clarifies that UCC has no liability related to the plant site and further acknowledges the matter of site ownership and liability as being the responsibility of the State Government of Madhya Pradesh”.”

http://news.outlookindia.com/items.aspx?artid=767127

According to my last post on long term objective, Union Carbide uses the strategy of divestment to reach its goal.

Divestment also known as divestiture is the reduction of some kind of asset for financial, ethical, or political objectives or sale of an existing business by a firm. A divestment is the opposite of an investment.

After the Bhopal incident, Union Carbide added diversification, simplification, and joint ventures to its strategy.

In the early 1990s, Union Carbide launched a “work simplification program.” This program had a cost reduction goal of $400 million a year by the end of 1994. Union Carbide acted on this goal by repurchasing 20 million shares, spinning off two small businesses and selling 50% of its carbon business in 1990.

“A New Union Carbide Is Slowly Starting to Gel,” Business Week, April 18, 1986, p. 68.

http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=tmsc000020011207dh8102ed8&pp=1&fcpil=en&napc=S&sa_from=

Union Carbide drew up a five year plan in 1979. It was intended that sales and earnings in 1983 should be respectively $14bn and $940m. In 1980 the group’s figures were $10bn and $673m. To reach its five-year goal, the group estimated that annual capital expenditure of $1.2bn would be required. It now expects actual capital expenditure to be running at $1.3bn-$1.4bn a year by 1983.

Recent activities have been characterised by a series of divestments. But now the group has a number of projects for expansion in hand. These include the building of a carbon fibres plant in California, consideration of a carbon fibres project in France, construction of a silicones plant in Italy, and expansion of battery operations in Europe.

http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=ftft000020011206de1500knz&pp=1&fcpil=en&napc=S&sa_from=

According to this http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=ftft000020011206dea400wwa&pp=1&fcpil=en&napc=S&sa_from=

Union Carbide has two different segments. Commodities and Specialties.

Thought this would be necessary information to have on hand especially for the environmental portion of the profile since a lot of these products are used in peoples everyday lives.

“Union Carbide both produces and purchases ethylene, a basic building-block chemical, from components of crude oil and natural gas. We convert ethylene to polyethylene or react it with oxygen to produce ethylene oxide, the precursor to many of the products we sell: ethylene glycol and hundreds of solvents, alcohols, surfactants, amines and specialty products.

http://www.unioncarbide.com/products

I’m gonna analyze the financial standings for the years before and after the crisis!

1981: http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=ftft000020011206de1q00mxk&pp=1&fcpil=en&napc=S&sa_from=
http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=ftft000020011206dd8f01azx&pp=1&fcpil=en&napc=S&sa_from=

1982: http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=ftft000020011206df1q005fc&pp=1&fcpil=en&napc=S&sa_from=
reason: http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=ftft000020011206debj012iq&pp=1&fcpil=en&napc=S&sa_from=

1983: http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=ftft000020011205dg2g00urp&pp=1&fcpil=en&napc=S&sa_from=

1984: http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=pr00000020011205dh2n002u9&pp=1&fcpil=en&napc=S&sa_from=

*Accident happened end of 1984 and S&P lowered their credit rating because of outstanding loans*
http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=FTFT000020070505dh190475k&pp=1&fcpil=en&napc=S&sa_from=

1985: http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=plrwbm0020011204di4a00810&pp=1&fcpil=en&napc=S&sa_from=

1986: many many debts and sells off many assets
http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=tmsc000020011207di4803aqx&pp=1&fcpil=en&napc=S&sa_from=
http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=chiabc0020011204di5l0079u&pp=1&fcpil=en&napc=S&sa_from=
Earnings: http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=ftft000020011204dj1t009b3&pp=1&fcpil=en&napc=S&sa_from=

1987: http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=FTFT000020070428dk1r00qdy&pp=1&fcpil=en&napc=S&sa_from=

1988: http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=ftft000020011129dl1o00fnw&pp=1&fcpil=en&napc=S&sa_from=

From 1981 to 1984, earnings per share rose steadily and Union Carbide is in good financial standings according to their annual reports. By 1985, the company’s market value dropped by 2/3 to less than $3 billion. Union Carbide’s debt stood at 63% of capital, and its equity was cut to a quarter of its former value. Income rose to 78% in 1987 to $232 million, but high debt service made it hard for the company to develop and introduce new products. In 1988, Union Carbide reduced its debt by more than $400 million and increase equity by almost $600 million.

Strengths

1. Technology leadership and innovation – Advanced process technologies have given them a leadership position in their large Basic Chemicals and Polymers businesses. “For nearly 80 years Union Carbide laboratories have been the source of a steady stream of innovation. Ethylene, ethylene oxide, ethylene glycol and the hundreds of other chemicals that became the building blocks of the chemical industry were developed in their laboratories.” They produce their product very quickly because of their knowledge of technology.
http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=FTFT000020070505dg6m02wic&pp=1&fcpil=en&napc=S&sa_from=

2. Cost efficiency. Union Carbide Corporation “operates some of the largest, most cost-efficient chemical plants in the world.” Union Carbide Corporation operates two business segments. Specialties & Intermediates converts basic chemicals into a diverse portfolio of chemicals and polymers for industrial customers. The Basic Chemicals & Polymers segment produces chemicals for use by both the Specialties & Intermediates segment and third party customers. Because Union Carbide Corporation does not further process chemicals into specific consumer products, their operations are of bulk scale and allow for planning and timing of production to maintain high efficiency goals.
http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=FTFT000020070505dea40104i&pp=1&fcpil=en&napc=S&sa_from=

3. Joint ventures. Union Carbide Corporation has built a number of joint ventures with foreign corporations. These joint ventures have increased the amount of potential customers in foreign markets, and introducing Union Carbide Corporation to many new international markets. Union Carbide Corporation has formed joint ventures with Petrochemical Industries Company of Kuwait to produce chemicals primarily for Asian markets. They have also formed a joint venture with Enichem of Italy, named Polimeri Europa, which “is poised to become Europe’s lowest-cost polyethylene producer.” These, and other strategic investments and alliances have promoted profitable growth globally.

4. Managerial strategy – “The new human resources policies now reflect shared responsibility with employees for Union Carbide’s success.” Union Carbide Corporation has trimmed its middle level management and implemented “Teams” in every department to facilitate these new policies. Each team member has a voice and is educated in his specific field such that the teams can collaborate on any issues and develop solutions without a Manager. Only decisions that are not supported in existing policies must be further approved. This grants employees a great amount of empowerment and “spares some of the red tape” formerly involved in addressing day to day issues within the chemical plants. “Given more responsibility and encouraged to redesign the way they work, our people slash plant downtime and overtime costs, sharply reduce costly inventories of products and raw materials, simplify organizational structures, eliminate bottlenecks and reduce paperwork.”
“Carbide Lays Out Its Strategy through 1983,” Chemical Week, September 19, 1979, p. 49.

Weaknesses

Mostly environmental issues. The process of making chemicals can be very hazardous to the environment and to the communities that surround them.

http://global.factiva.com.remote.baruch.cuny.edu/aa/?ref=FTFT000020070505de8j012ql&pp=1&fcpil=en&napc=S&sa_from=

“The tragedy of Bhopal continues to be a warning sign at once ignored and heeded. Bhopal and its aftermath were a warning that the path to industrialization, for developing countries in general and India in particular, is fraught with human, environmental and economic perils. Some moves by the Indian government, including the formation of the MoEF, have served to offer some protection of the public’s health from the harmful practices of local and multinational heavy industry and grassroots organizations that have also played a part in opposing rampant development. The Indian economy is growing at a tremendous rate but at significant cost in environmental health and public safety as large and small companies throughout the subcontinent continue to pollute. Far more remains to be done for public health in the context of industrialization to show that the lessons of the countless thousands dead in Bhopal have truly been heeded.”

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1142333/

A link we should all look over, a lot of useful information.

Just adding our proposal so that all our information is in one area and there’s easier access to it.

Union Carbide Corporation is a chemicals and polymers company. The company possesses some of the industry’s most advanced process and catalyst technologies, and operates some of the most cost-efficient, large-scale production facilities in the world. Union Carbide primarily produces chemicals and polymers that undergo one or more further conversions by customers before reaching consumers. Some of these materials are high-volume supplies, while others are specialty products meeting the needs of smaller market niches. The end-uses served include paints and coatings, packaging, wire and cable, household products, personal care, pharmaceuticals, automotive, textiles, agriculture and oil and gas. In August 4, 1999 Union Carbide became a subsidiary of The Dow Chemical Company (“TDCC”) as part of a transaction valued at $11.6 billion. This transaction was closed on February 6, 2001. Since Union Carbide’s attainment by TDCC, Union Carbide sells most of the products it manufactures to TDCC and is an essential part of the Dow family of companies.

On the night of December 2-3, 1984, there was a gas leak accident at the Union Carbide India Limited pesticide plant in Bhopal, Madhya Pradesh. Over 500,000 people were exposed to methyl isocyanate gas and other chemicals. The toxic substance made its way in and around the slums located near the plant.Estimates fluctuate on the death toll. The official immediate death toll was 2,259. The government of Madhya Pradesh confirmed a total of 3,787 deaths related to the gas release.Others estimate 8,000 died within two weeks and another 8,000 or more have since died from gas-related diseases.A government affidavit in 2006 stated the leak caused 558,125 injuries including 38,478 temporary partial injuries and approximately 3,900 severely and permanently disabling injuries.

On December 5, 1984, two days after the accident, the US chemical company imposed a worldwide ban on the production and shipment of methyl isocyanate, as the deaths caused by a leak of the highly toxic gas from the company’s plant at Bhopal. Union Carbide experienced a sharp fall in share price by Dollars 5 1/2 to Dollars 39 in the first few hours of trading on December 7 (four days after the accident) underlined deep uncertainty in the US about possible liability claims on the company over the Indian gas disaster and the extent of its insurance cover. Since the accident early Tuesday the company’s market capitalization has fallen by Dollars 740m to Dollars 2.7bn. On December 8, 1984, five days after the accident, Mr. Warren Anderson, chairman and chief executive of Union Carbide of the US, faces expulsion from India after his arrest yesterday on charges of ‘criminal and corporate liability’ for the pesticide gas leak at the Bhopal plant.

After a seven-week inquiry, it was found that the Bhopal gas leak that killed at least 2,000 people resulted from operating errors, design flaws, maintenance failures, training deficiencies and economy measures that endangered safety, according to present and former employees, company technical documents and the Indian Government’s chief scientist. According to a review by the New York Times of some company documents and interviews with chemical experts, plant workers, company officials and former officials disclosed the following irregularities at Bhopal:

• When employees discovered the initial leak of methyl isocyanate at 11:30 P.M. on Dec. 2, a supervisor – believing, he said later, that it was a water leak – decided to deal with it only after the next tea break, several workers said. In the next hour or more, the reaction taking place in a storage tank went out of control. ”Internal leaks never bothered us,” said one employee. Indeed, workers said that the reasons for leaks were rarely investigated. The problems were either fixed without further examination or ignored, they said.
• Several months before the accident, plant employees say, managers shut down a refrigeration unit designed to keep the methyl isocyanate cool and inhibit chemical reactions. The shutdown was a violation of plant procedures.
• The leak began, according to several employees, about two hours after a worker whose training did not meet the plant’s original standards was ordered by a novice supervisor to wash out a pipe that had not been properly sealed. That procedure is prohibited by plant rules. Workers think the most likely source of the contamination that started the reaction leading to the accident was water from this process.
• The three main safety systems, at least two of which, technical experts said, were built according to specifications drawn for a Union Carbide plant at Institute, W. Va., were unable to cope with conditions that existed on the night of the accident. Moreover, one of the systems had been inoperable for several days, and a second had been out of service for maintenance for several weeks.
• Plant operators failed to move some of the methyl isocyanate in the problem tank to a spare tank as required because, they said, the spare was not empty as it should have been. Workers said it was a common practice to leave methyl isocyanate in the spare tank, though standard procedures required that it be empty.
• Instruments at the plant were unreliable, according to Shakil Qureshi, the methyl isocyanate supervisor on duty at the time of the accident. For that reason, he said, he ignored the initial warning of the accident, a gauge’s indication that pressure in one of three methyl isocyanate storage tanks had risen fivefold in an hour.

1. http://global.factiva.com/aa/?ref=FTFT000020070505dgc4031wk&pp=1&fcpil=en&napc=S&sa_from=
2. http://global.factiva.com/aa/?ref=FTFT000020070505dgc7031gb&pp=1&fcpil=en&napc=S&sa_from=
3. http://global.factiva.com/aa/?ref=NYTF000020080612dh1s000b5&pp=1&fcpil=en&napc=S&sa_from=
4. http://global.factiva.com/aa/?ref=FTFT000020070505dgc5031rl&pp=1&fcpil=en&napc=S&sa_from=
5. http://global.factiva.com/aa/?ref=NYTF000020080722dh1s000jh&pp=1&fcpil=en&napc=S&sa_from=
6. http://www.mergentonline.com/companydetail.php?compnumber=8497
7. http://www.mp.gov.in/bgtrrdmp/relief.htm
8. http://www.webcitation.org/5qmWBEWcb