Manufacturing - Industry Specific Risk Exposures - Rekerdres and Associates


Manufacturers need a clear understanding of industry-specific exposures.
Below are several major product sectors, and claims examples that illustrate risk-exposures for manufacturers producing for these industries.

Auto Industry

Products Liability An auto-repair mechanic working 8-10 hrs per day has a ‘favorite’ product he sues for oil changes. After decades of work, he develops a fatal health condition. After doing some internet research, he finds news that links a cancer-causing chemical to that product. The mechanic hires a lawyer specializing in toxic torts and brings the chemical manufacturer into a 7-figure suit.
Pollution Liability A petro-chemical manufacturer uses flammable liquids to produce their fuel additives. They utilize underground storage tanks to store the liquid product. A few tanks, in particular, are a bit older. Several miles away is a fracking operation, that is causing minor earth-movement. This causes the older tanks to crack and leak. The liquid chemicals seeps into the dirt, affecting the ground-water of a neighborhood nearby. Several residents band together and bring a class-action suit against the manufacturer, forcing the company to pay $15m in damages.


Paint / Coatings Industry

Products Liability A painting contractor wears a mask while going about his work. Nevertheless, after 30 years, he develops a health condition that costs hundreds of thousands in medical bills. He discovers that the brand he used during that 30-year career contains chemicals that have been linked to his illness. He brings allegations against the paint manufacturer and ultimately settles for $400,000.
Employee Injury Liability At a paint manufacturing plant, an old machine canning/bottling machine keeps breaking down. An assembly line worker, almost daily, must reach into the machine to adjust a gear. One day the machine kick-on while his arm is in there, and he loses his hand. This incident leads the worker into severe depression, and the family of the victim suffers a major loss. The family sues for ‘loss of consortium’ and the manufacturer ultimately settles for $750,000.


Janitorial Industry

Products Liability A janitor spends several hours each day handling concentrated cleaning chemicals. After 20-30 years of continual exposure (breathing in strong fumes and touching acidic chemicals), he/she can develop respiratory illness and a skin condition. He sues his employer (a public university), who subrogates against the chemical manufacturer for $1.2m.
Products Liability – Frivolous Suit A truck driver used a strong chemical to wash the truck’s exterior and then brought the opened product into the vehicle cab. The chemicals leaked and soaked the interior. At that time, he was driving constantly for weeks and disregarded the chemical’s fumes. Shortly thereafter, he returned home and developed a health condition. Remembering the leaked chemicals, he did some research and discovered that it contains chemicals that tie to his condition. He hired a lawyer to sue the product manufacturer. Even though the case was frivolous, the chemical company decided to settle for $250,0000.


Cosmetics Industry

Products Liability – Lead A health and safety coalition decided to investigate a lipstick manufacturer after receiving consumer reports of lead in the lipstick. The investigation found detectable levels of lead in more than half of 33 lipsticks it tested. While not declaring the products a health risk outright, the report claimed that “lead-containing lipstick applied several times a day could add up to significant exposure levels.” Several women with lead-related illnesses, after this report became public, brought a class-action suit against the manufacturer, eventually settling for a $10m payout.
Products Liability – 1 4 Dioxane A manufacturer of lotion, soaps, and shampoos has been in business for decades and has a tried / test formula for their product. One chemical compound they use is “1 4 Dioxane”. In the past few years, this chemical has been tested on animals and shown to cause cancer. In response, a personal injury attorney runs TV ads that attracts several cases of cancer-diagnosed product users. The class-action litigation doesn’t get to the courts, but settles at $137 million in damages and legal fees.


Pharmaceutical Industry

Products Liability – Weight Loss Drug A new drug targeting the weight loss market, contains ‘Chemical A’, which increases the levels of serotonin and suppresses appetite. However, prior reports had linked ‘Chemical A’ with cardiopulmonary disease. Several years later, a study found 24 cases of heart valve damage in ‘Chemical A’ users. Class action suits resulted in hundred of millions in damages and legal fees.
Products Liability – Cholesterol Drug A national pharmaceutical producer developed a new drug that lowered cholesterol by blocking a specific enzyme in the body. Several years later, the company announced they were pulling the drug because of reports of fatal conditions related to the enzyme-blocking process. In the years that followed, over 7,000 lawsuits were filed against the company, citing negligence in product liability and consumer fraud. To this date, roughly 4,500 cases have been settled for a sum of $2.4 billion.


Construction Industry

Products Liability – Chemical Additive A chemical manufacturer produces specialized additive for tractors and large construction equipment. One batch had a manufacturing defect that caused engine parts / gears to deteriorate and rendered the machines useless. Determining that the defective additive was the root issue, many of the construction companies banded and brought a class-action suit against the manufacturer.
Products Liability – Concrete Mix A concrete-mix manufacturer did not provide specific labeling instruction for mixing the powdered product with water. One concrete contractor, in particular, used the mix for a large property development and used an improper ratio. When the developer complained and demanded $250,000 refund, the contractor threatened to sue the manufacturer for failure to warn / instruct.


Agricultural Industry

Products Liability – Pesticide A manufacturer of insecticide spray uses the chemical ‘Carbamate’, which can cause muscle weakness, blurred vision, headache, nausea, and abdominal pain. In extreme cases, the chemical can cause high blood pressure, nervous system problems, and breathing problems. In one particular situation, a child had most of these symptoms and died of a seizure. The family brought action against the chemical producer and eventually came to a 7-figure settlement.
Property A fertilizer manufacturer in Texas was storing ammonium nitrate fertilizer inside the building instead of in an underground storage tank. When an unknown ignition source sparked nearby, the ammonium nitrate exploded and caused the plant facilities to catch on fire. The property claim came to $30 million.