Here's an old news story and they no longer use propane but it's still interesting. Especially this part:
its product, which is in 80 percent of U.S. homes
http://articles.baltimoresun.com/1996-10-14/business/1996288113_1_wd-40-touched-live-wire
Propane in WD-40 gives rise to lawsuits Lubricant's maker faulted in explosions
Legal affairs
October 14, 1996|By BLOOMBERG BUSINESS NEWS
SAN DIEGO -- Leon Fields was squirting WD-40 under his Winnebago camper to stop corrosion, one of the advertised "1,000 uses" for the spray lubricant, when the can touched a live wire and another piece of metal and burst into a fiery ball of oil and propane.
"It just spread like napalm," said Fields, a 58-year-old mathematics teacher who was burned over 24 percent of his body in the accident in 1994.
Fields sued WD-40 Co., the lubricant's maker, and in December he walked away with a $5 million settlement.
Incidents like that are common for the company. Since the late 1970s, there have been dozens of claims and lawsuits. Many, like Fields', are by customers injured by exploding WD-40 cans that use propane as a propellant.
The San Diego-based company's strategy is to settle out of court -- as quietly as possible. In fact, WD-40 still hasn't mentioned the rash of injuries and suits in any securities filings. The most recent quarterly report says only: "The company is party to various claims, legal actions and complaints arising in the ordinary course of business."
Consumers haven't fared any better. The company didn't change the label on its flagship product to warn that its cans could blow up if they touched live wires or battery terminals until earlier this year.
It still doesn't test the safety of its products. And it made its product, which is in 80 percent of U.S. homes, safer only after a California environmental law forced the company to do so.
WD-40 says that it doesn't feel obligated to tell investors and consumers about the product's problems. "It's not known what the risk is," Chief Executive Gerald Schleif said.
Even if the company thinks it can prevail in court, some authorities say, the best policy is to be open with customers about the risks.
"You have to avoid being convinced by your own rhetoric," said Harvey Pitt, a former Securities and Exchange Commission general counsel. "You have to say, 'What if this were true, is there something more we should be doing?' "
Being taciturn hasn't hurt WD-40 yet. Net income reached a record $20.5 million in 1995, up from $15.3 million in 1991, and the stock has been trading at 47, not far off its all-time high of 50.
So far, insurance has covered almost all of the legal settlements. But if plaintiffs' lawyers succeed in winning punitive damages, California and some other states require the company to pay.
The most serious cases against WD-40 involved cans that exploded after touching electrical parts or wires, according to documents obtained by Bloomberg Business News through a Freedom of Information Act request.
These include:
In November 1988, Dan Horton of Ocean Springs, Miss., was lubricating a wall fan with WD-40 when the can touched a live wire. The container burst into flames, burning Horton's 18-month-old daughter, Lauren.
Three days later, in Jackson, Miss., William Sharp was spraying a speedometer cable in his truck when the can touched an amp meter. The can exploded, trapping his wife, Susie -- who survived -- in the flaming cab.
In April 1994, Toni McLane of Yreka, Calif., was using WD-40 to quiet a squeak in a dryer when the can touched a live switch. It blew up, burning her face and arms.
WD-40's problems with exploding cans began when the company switched in the late 1970s to propane as a propellant after federal environmental laws restricted use of Freon, according to testimony by WD-40 technical director Ray Miles in one lawsuit. While Freon doesn't burn, it damages the Earth's atmosphere.
Two months ago, WD-40 changed its propellant again -- this time to far safer carbon dioxide -- after California placed new restrictions on releasing volatile compounds into the atmosphere.
In August 1995 -- before the new state regulations took effect -- Miles said in a deposition that the company wasn't considering using other propellants because they wouldn't work. In a deposition in November, when the switch to carbon dioxide was almost completed, Miles shifted position and said WD-40 could have made the change years before.
The company also never researched coating its cans so that they wouldn't conduct electricity, executives said.
CEO Schleif defends the company's decision not to move faster in replacing propane by saying that the company depends on its suppliers and contractors for improving its technology.
"Research and development wouldn't have helped," he said. In fact, the company has no research and development budget.
WD-40 has just 145 employees, 30 of whom work in its one-story headquarters. They take 300 orders daily, buy advertising space and use a 12-foot metal vat to mix the concentrated "secret sauce" that fills a million cans weekly.
WD-40 keeps costs down by sending the concentrate to independently owned packagers, who dilute the concentrate with mineral spirits, put it in cans and add propellant.
This bare-bones approach resulted in profit margins last year of almost 30 percent of sales.
Unfortunately for WD-40's shareholders and consumers, there are millions of older cans filled with propane in circulation. It could be another two years before they're used up, CEO Schleif said.
That's why the company is seeing an "escalation in the number of lawsuits," Schleif said, which he expects "will probably continue for a year or two."
Pub Date: 10/14/96
