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Hercules- A Viable Company?

Will Hercules be another LCP Chemicals or Brunswick Wood Preserving Superfund Site?

Glynn County has watched as two companies have been run into the ground, quite literally, as the Georgia Environmental Protection Division watched, apparently unable to take any action to stop the free flow of toxic chemicals into our air, land, water, and estuaries.

Undoubtedly, Hercules will be another Superfund Site if the Plant closes, and will rival the worst in our Nation. The local media faithfully reports information released by company spokespeople. But can it be trusted? For the most accurate information, the Hercules filings with the Securities and Exchange Commission (SEC) provide a reasonably accurate portrayal of the financial health of the company and report company policy on environmental cleanups and liabilities, and other financial matters.

Is the Brunswick Hercules Plant Profitable?

In 2001, Hercules sold a significant portion of its hydrocarbon resins business to Eastman Chemicals. The following year, Hercules formed the Pinova Division, which includes the Brunswick, Savannah, and Hattiesburg, Mississippi facilities.  Profits from the Pinova Division have steadily declined.

2002 8 Million Dollar Profit

2003 4 Million Dollar Loss

2004 11 Million Dollar Loss

2005 - 13 Million Dollar Loss

Hercules noted in the SEC report that the Pinova Division has significant fixed costs that are not easily reduced. Following the resins sale to Eastman Chemicals, volumes were down approximately 65%.

Have Financial Assurances Been Made for Clean-up of the Brunswick Plant?

Hercules expenses an environmental liability and reports the liability to shareholders only when the cleanup is probable and the cost can be reasonably estimated. Since the Brunswick Hercules Plant has not completed investigating the extent of toxic contamination, nor developed a cleanup plan, cleanup costs have not been estimated or reported. In the case of the Brunswick plant, the investigation started in 1987 but has not been completed, nor have cleanup plans been completed for the 39 known toxic sites. Hercules estimates that, company wide, currently known environmental liability ranges from between 99 and 207 million dollars, or between 4 to 8 times the net profit reported for the entire company in 2004 of 27 million dollars. Over the past five years, Hercules has reported a net loss of around 492 million dollars.

Is Glynn County Protected From a Hercules Bankruptcy?

The Georgia Environmental Protection Division can require financial assurances for the cleanup of identified hazardous waste sites like the Hercules Plant and other toxic waste sites in Glynn County where Hercules has been identified as a Potentially Responsible Party. Adequacy of the financial assurance will be known only after the toxic sites are investigated and cleanup plans completed. So far, Hercules has demonstrated its mastery of delaying completion of toxic site investigations, just like LCP Chemicals and the Brunswick Wood Preserving Superfund Sites did before closing. Only the future will tell if Glynn County learned anything from our past experience of companies running their facilities into the ground and leaving our community health threatening toxic wastes and significant stumbling blocks to future economic development.

Glynn County would be well served to take a closer look at industries that are accruing significant environmental liabilities which could be a threat to a clean environment and healthy economy.

Hercules Net Profits Company Wide

Year

Net Profit (Loss)

in Millions $

1991

95

1992

167

1993

(33)

1994

274

1995

333

1996

325

1997

319

1998

9

1999

168

2000

100

2001

(53)

2002

(611)

2003

45

2004

27

 
   

See related article: Hercules: A Bad Neighbor?

 

 

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