Owens Corning defends use of “lifeline” corporate jets

Owens Corning, the US building materials company in Chapter 11 bankruptcy proceeding due to its asbestos liabilities, has taken criticism for its use of corporate jets while the company struggles to c…

Owens Corning, the US building materials company in Chapter 11 bankruptcy proceeding due to its asbestos liabilities, has taken criticism for its use of corporate jets while the company struggles to come out of bankruptcy. However, officials at the company have hit back at critics by claiming that their planes are so important to their operations that without them, the flagship Newark, Ohio plant and the nearby Granville Science and Technology Center might not exist. “We call it our lifeline to Newark and Granville,” said Dave Dimmer, the leader of corporate media relations at the company headquarters in Toledo. “I don“t think we“d be able to have the operations we have there, especially Granville, if it weren“t for the planes. It“s enabled us to keep jobs there. And we think our Newark shuttle is one of the reasons we“ve been able to reinvest in Newark and to keep the Granville facility located nearby,” Dimmer said. Owen Corning“s Newark plant that produces Fiberglas insulation is the company“s largest. Driving from Toledo, Ohio to Newark can take as much as three hours each way which is a waste of time, and hence of money, says Frank O“Brien-Bernini, the vice president of global science and technology at the Granville facility. “A lot of people have to drive, too, but when you consider it“s nearly a six-hour round trip in a car it“s much more impactful to be able to get up and back in half an hour,” he said. “We could get it done but people would not be able to do as much because they“d have to spend nights in Toledo instead of being able to get back and forth in a day. So it“s critical to the practicality of having an R&D organization that“s 150 miles from marketing.” The company started flying the route 1976 and used to make the trip five days a week until 1990, when it cut back to twice a week. In 2002, there were 586 flights from Toledo to Newark, carrying almost 2,700 Owens Corning employees and customers. This adds up to 18% of the company“s flights are from Toledo to Newark, making it by far the most traveled route within the company. When the weather is bad, another 4% of the flights go from Toledo to Columbus: passengers then drive to Newark and Granville. There are also unscheduled flights for both business and pleasure. Top executives sometimes use the planes for pleasure trips but, according to Dimmer, the executives must pay the equivalent of a first-class ticket and pay the income tax on the balance of the cost of the flight since the perk is considered added income. On the business side, the jets are available 24 hours a day in case of emergency — something which is often overlooked, according to O“Brien-Bernini. “When there“s a problem in the middle of the night, there“s no way you can get people there on commercial flights,” he said. “Sometimes we“ll get the plane, pick up scientists and engineers in Heath in the middle of the night and bring them directly to the plants instead of having to wait until the next day. That“s critical if we“ve got a major problem like an electrical problem or (a leak) that requires the level of skills that reside in Granville.” The three leased planes are based in Toledo and are maintained and operated by twenty full-time pilots and staff at an annual cost of an estimated USD 850,000. Additionally, each flight costs more than USD 1,000 per hour. But with annual sales of approximately USD 4.9 billion, Dimmer said the total spending for corporate aviation is less 0.25% of company sales. “Every year we test the business case for it, and every year the business case is more than compelling that this aviation department we have is valuable,” Dimmer said. “It“s a business value.” But Joan Claybrook, president of Washington, D.C.-based Public Citizen, “an independent voice for citizens in the halls of power” founded by consumer advocate Ralph Nader, argues the planes are simply an extravagance. “It“s a nice convenience, but these corporate jets cost a lot of money to maintain, and the cost per flight is huge compared to a commercial flight,” she said. “When you“re in bankruptcy you have to pull in your horns, and I think it“s an extravagance.” Owens Corning officials believe in their investment, in spite of the criticisms. The leases on the current fleet expire in 2005. After that, Dimmer said, “I think right now the plan is to lease two smaller planes.”