Monday, July 19, 2010

BOILING OVER: Defective water pipe lawsuit dogs City-mandated supplier

COLUMBIA, 7/19/10  (Beat Byte) --  A whistle blower lawsuit filed in US District Court alleges that a City of Columbia-mandated manufacturer/supplier has knowingly sold defective water pipes to state and local governments around the country since 1996.
In this year of broken water mains and germ-killing boil orders, the suit could prompt city officials to take a closer look at their specified provider list, and may impact how the Water and Light Department handles pipe replacements and manufacturer guarantees.
PW Eagle, Johns-Manville (JM), and Extrusion Technologies, Inc., (ETI)  top the list of Columbia Water and Light's specified water pipe providers, last updated in March. 
For 4"-12" PVC (polyvinyl chloride) pipe used to make or replace water mains, "acceptable manufacturers are: Extrusion Tech Inc., PW Eagle, JM, Certainteed, Diamond, Ipex Blue Brute, Freedom Plastics, and Napco," reads the City of Columbia's Specifications for Water Main Construction, Section E, paragraph 1b.   
But the three companies -- merged into the world's largest plastic pipe manufacturer, Los Angeles-based JM Eagle -- are also at the center of a contentious lawsuit alleging the firm has sold faulty pipes and falsified product quality test results.    
Pipes that should last 50 years sometimes rupture in one year, according to state documents unsealed in February as part of a 2006 Federal lawsuit filed by former JM Eagle employee John Hendrix of Clifton, NJ.    The states of Delaware, Tennessee, Virginia, Nevada, and over 40 California water districts have joined the suit.
Company officials have vigorously denied the allegations and condemned Hendrix as "disgruntled" and non-credible.  "JM Eagle stands behind its products 100 percent," marketing vice president Neal Gordon told the New York Times (NYT) for one of two recent stories. 
Nonetheless, in April JM Eagle -- which has a Columbia-based manufacturing facility on Brown Station Road -- replaced its one-year product guarantee with a 50-year guarantee.   
Problem is, the new warranty only covers pipes that fail on or after April 1, 2010.  Municipalities that already have pipe problems may not qualify for no-cost replacement, Calleguas, Calif. municipal water district engineering manager Susan Mulligan told the NYT.   The 50-year guarantee also requires that claims come with independent test results showing substandard pipe-manufacturing materials, a requirement company critics find onerous. 
Honor system
Since 1999, Calleguas has suffered eight water main breaks along a two-mile section of JM Eagle pipe that brought water to golf courses, parks, schools, homes and highway medians.   Repair and replacement costs have run as high as six times the cost of installation, the water district reported. 
Also prior to April,  Nevada officials spent $5 million to replace three-quarter miles of JM Eagle water main supplying a Las Vegas-based prison. 
Product analyst and referee Underwriters Laboratories (UL) worked on an "honor system," relying on manufacturers to re-certify their products if they made significant production line changes.   But even as they made changes to ramp up production -- which included buying lower grades of raw materials -- JM Eagle, Hendrix claims, never re-certified.  
When he brought the problems to his superiors, Hendrix says they dismissed his concerns as "normal business risks" and later fired him. 
3-Way Merger
Born of a merger between pipe manufacturer PW Eagle, ETI, and bankrupt asbestos supplier Johns Manville, JM Eagle is a division of Formosa Plastics Group, Taiwan's largest diversified manufacturer.   
Formosa Plastic's founder, Wang Yung-ching, appointed his son Walter CEO of JM Eagle in 1990.  Walter Wang, Hendrix maintains, replaced long time employees with lower cost personnel who had less experience in engineering or failure analysis. 
Hendrix also claims JM Eagle trained him to tell customers that problems were caused by installation and use errors, not manufacturing.   Fielding at least one customer complaint per day, Hendrix attributed leaks and ruptures to governments and contractors, never the manufacturer. 
It's a story Nevada Public Works Board manager Gus Nuñez told the NYT he knows well.  The prison water main blew up an average of three times a year, spewing water like a geyser.  "We think some of the bedding may be defective," JM Eagle's specialists told Nunez.  "It looks like maybe when the contractor put the pipe together, they may have pushed it too far and caused a stress on the pipe that it wasn’t designed for." 
That explanation echoes Columbia Water and Light spokeswoman Connie Kacprowicz, who spoke to reporters after several recent water main breaks. 
"As far as we could tell, it was soil shifting," she said.  "Whenever we have big changes in moisture content or temperature, we see soil shifting and mains break." 
City of Columbia Specifications for Water Main Construction
JM Eagle, Columbia plant

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