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Bonus Homework MECH 221 Materials
Science
Due: Friday. Apr. 25th;
Place to drop: EV.13.167
This assignment includes aspects of “self-learning”. This is a
“soft skill” that all engineers are
expected to be able to have as it is commonly required once you
are working as an engineer.
Problems will come up which require you to find out new
information and new skills in order to
solve them.
Materials have been used in engineering applications for
thousands of years. Even now some of these
materials are still being used for the similar applications (such
as stone and wood as building materials)
but many early materials have been replaced with newer
materials due to improvements in their
properties or to the discovery of previously unobtainable
properties. The advent of environmental
awareness and sustainable development also has a place in the
selection of engineering materials.
Prepare a report in your own words discussing 5 different
applications used to be made by metals and
ceramics and have recently been replaced by polymeric
materials such as solid polymers, polymer
composites, polymer foams, and etc. Two of the applications
must be related to aerospace and
automotive industries.
Your report should be between 1200-1500 words, should
include references and diagrams where
appropriate and should address the following points where
applicable:
What material(s) was used previously and why?
What is the problem with this material/system?
What is the proposed or new material/system?
Why is it an improvement and what, if any, are the
disadvantages?
BOOK REVIEW
Informed Consent: A Story of Personal Tragedy and Corporate
Betrayal . . . Inside the Silicone Breast Implant Crisis by John
A. Byrne, New York: McGraw-Hill, 1996.
If you've been following the news accounts about breast
implants, you might have started feeling sorry for the Dow
Coming Corporation some time last year. That's when the media
focus turned away from the injured women and the tide of
public opinion shifted in favor of the implant manufacturer.
In 1995, Dow Coming filed for Chapter 11 bankruptcy which
generated much anger about frivolous lawsuits and how they
stifle corporate innovation. The Wall Street Journal ran an
opinion article by Dow's CEO entitled, "The Tort Monster That
Ate Dow Coming," portraying plaintiff lawyers' criticism of
implant research as a ploy to make money from the implant
cases. ABC's Nightline moaned about the loss of jobs that
supposedly resulted from bankruptcy. (Note to Ted Koppel:
Filing for Chapter 11 merely means debt reorganization, not the
dissolution of a company.) Dow ran full-page ads in 19 major
newspapers ("Here's What Some People Don't Want You to
Know About Breast Implants"), which offered free information
packets of selectively quoted study results purportedly proving
no link between breast implants and disease.
All this, says Informed Consent author John A. Byrne, is part of
a defensive strategy by Dow Corning to portray itself as the
victim of greedy plaintiffs' attorneys--of a legal system out of
control. Rest assured that Dow Corning has used that same legal
system to evade its responsibility to women. A million dollar
law firm (along with a million dollar P.R. firm) has been
engaged by Dow to defend against the 400,000 women claiming
implant-related illness. Some received their implants to replace
a breast lost to cancer; the majority were implanted for breast
enlargement.
Byrne, a senior writer for Business Week, presents a behind-
the-scenes view of corporate irresponsibility, evasion, and
arrogance. His book is largely from the perspective of the
quintessential "company man," John E. Swanson, a 26-year
employee of Dow Corning and creator of its ethics program,
which is so renowned that it is used as the subject of three
Harvard Business School case studies. Over the years Swanson
had defended the safety of silicone breast implants . . . until he
realized that his own company's product was the cause his wife
Colleen's wide array of unexplained illnesses. She is one of the
one million women who had received breast implants since
1963.
Byrne described Swanson's odyssey as, "What happens when
you make a moral choice that separates you from the company's
official position and from your colleagues in a close-knit
organization." By the end of 1991 Swanson could no longer
abide by his employer's decision to continue making breast
implants. (He failed in his attempts to get Dow to call a
moratorium until adequate tests were performed.) Not only had
he learned, by then, of allegations that two company executives
were trying to destroy internal documents about the implants'
high complication rates, but thousands of women around the
country were accusing Dow Corning of injuring them. He
excused himself from making any further statements on the
Company's behalf about breast implants, but kept the secret of
his wife's experience until just before retirement.
Colleen Swanson had been ill for the 17 years since her breast
implant operation with a constellation of symptoms including
migraines, severe fatigue, joint pain, weight loss, and rashes.
Numerous doctors had examined her but could find no
explanation. Colleen Swanson never made the connection to her
implants until 1990, when her daughter called after seeing two
women on the Geraldo Rivera Show detailing the same
symptoms that followed their breast implant operations.
Dow insisted that its product was safe and thoroughly tested,
but evaded all requests to show proof on the grounds that a
company does not have to release proprietary information on its
products. Breast implants slipped through the cracks of the
FDA. Though the agency had long required testing for drugs, it
did not demand the same proof for medical devices until 1976.
By then, breast implants had been grandfathered.
Hardening of the breasts, or capsular contracture due to
formation of scar tissue, is the most commonly reported adverse
reaction. But some plastic surgeons, as early as the 1970s,
began to believe that the silicone gel leaking from implants
played some role in the hardening of the breasts. The surgeons
were falsely assured by Dow in 1977 that a contracture/gel
migration study was underway.
But, generally speaking, the surgeons don't fare well in this
story. Byrne says that the market for breast implant surgery was
expanded in 1982 when the American Society for Plastic and
Reconstructive Surgery decreed that small breasts be considered
deformities.
When Dow lost its first breast implant lawsuit in 1984 (the jury
found the company guilty of fraud and deceit), the most
damning information was found by the plaintiff's lawyers in the
company's own files. The lawyers found memos expressing
concern about the lack of long-term testing, memos from the
company's salesmen relaying complaints from doctors, and--the
most damaging to Dow's case--letters from plastic surgeons who
groused about Dow Corning implants that ruptured in the
operating room as they were being inserted in women's breasts.
Dow insisted that silicone was safe and inert based on animal
studies. But the corporation's case rested largely on a 1973
study of four dogs implanted with miniature silicone breast
implants. Dow quoted' satisfactory six month results, but one
expert for the plaintiff found that the company ignored its own
two-year follow-up, which told a different story. Three of the
animals suffered a varying degree of severe chronic
inflammation, and one had died.
The plaintiff in that lawsuit, Maria Stern, won $1.7 million after
showing that leaking silicone was found in her thyroid and
lymphatic system. This was the first case to allege that a woman
was suffering from systemic autoimmune disease as a result of
silicone.
But Dow ultimately lost on the issue of informed consent. The
jury decided that no woman could have made an informed
decision to undergo implantation based on the rosy picture
painted in Dow's brochure. The company's internal memos and
studies indicated far more risks than were revealed to women.
Among other things, women were told that implants would last
"a natural lifetime." (They don't.)
The question of whether silicone causes auto-immune illness,
such as lupus, scleroderma, rheumatoid arthritis, remains
unanswered despite negative findings from studies published
last year by the Harvard Medical School and the Mayo Clinic.
Neither is definitive. The latter, for example, included women
whose implants were in place as little as one month. The
average follow-up was 7.8 years, yet most autoimmune
symptoms don't show until 8 to 15 years following implantation.
As for Dow Corning's decision to file for bankruptcy protection,
one plaintiffs' attorney describes it as little more than a ploy to
buy more time in order to avoid compensating women for their
injuries.
Copyright of HealthFacts is the property of Center for Medical
Consumers, Inc. and its content may not be copied or emailed to
multiple sites or posted to a listserv without the copyright
holder's express written permission. However, users may print,
download, or email articles for individual use.
Copyright of Challenge (05775132) is the property of M.E.
Sharpe Inc. and its content may not be copied or
emailed to multiple sites or posted to a listserv without the
copyright holder's express written permission.
However, users may print, download, or email articles for
individual use.
People Scientists
A Chemist Heats Up
Dow Corning
CEO Bums is driving income gains and a
new focus on high-growth markets
I
N 1967, WHEN CHEMIST SHAILER
L. Bass retired as chief executive of
Dow Coming Corp., Stephanie A.
Bums was a seventii-grader in Ann
Arbor, Mich., who spent her days
dreaming about becoming a scien-
tist. After school. Bums dissected
frogs and snakes and did chemistry ex-
periments with her older brother. She
stuck wdth it, getting a doctorate in or-
ganic chemistry in 1982 and then a re-
search job at Dow Coming, the privately
held joint venture between Dow Chemical
98 I BusinessWeek I December 6, 2004
Co. and Coming Inc. She made her way
firom the lab to the rarücs of management,
and in January, 2004, was named CEO.
For the first time since Bass, a chemist is
heading Dow Corning once again.
The company needs Bums's scientific
brainpower. Dow Coming is the world's
biggest maker of süicones, a family of sü-
icone-based compounds used in sealants,
adhesives, cosmetics, and, most famously,
breast implants. In June, the Midland
(Mich.)-based company emerged fi-om
nine years of Chapter 11 bankruptcy pro-
BURNS Her goal: tection—its refuge
At least 20% from thousands of
of revenue from lawsuits filed hy
newpraducts women who believed
^ ^ ^ ^ " leaky implants made
them sick. Dow Coming wül spend the
next 15 years financing $3.3 bulion in set-
tiement payments. Meanwhue, the indus-
trial markets the company serves are
nearly saturated. To rev up profits. Bums
needs to pioneer new markets.
COOL UNDER FIRE
BURNS, 49, IS DRAWING ON her ovra ex-
perience in the lab to guide her company's
rebirth. As a young scientist her specialties
were inventing süicone compounds that
could withstand high temperatures, as
well as developing semiconductor materi-
als for autos. Now she's nudging scientists
to invent new compounds for other high-
growth markets such as electronics, phar-
maceuticais, and aerospace. Dow Com-
ing's chairman, Gary A. Anderson—who
handpicked. Bums to replace him as
CEO—says her abüity to assess ideas right
down to their chemical formulas "gives
her a definite advantage in judging where
we should devote our research efforts."
Bums is also speeding up Dow Coming's
expansion in China, India, and other mar-
kets where süicone use is a firaction of what
it is in the U.S.
The company is making progress. In
the nine months that ended on Sept. 30,
Bums's China initiatives helped drive net
income up 23% over the same period in
2003, to $167.8 mulion, whüe revenues
jumped 19%, to $2.5 biüion. Still, Bums
concedes that she's nowhere near achiev-
ing her ultimate goal: to derive at least
20% of annual sales from products that
are less than five years old. "Innovation is
a key priority for this company," she says.
Not that long ago, virtuaüy no one had
much faith in Dow Coming's ñiture.
Formed in 1943, the company hit on the
idea of making breast implants with süi-
cone in the 1960s. Originally designed for
women who had mastectomies, the im-
plant became a sensation as a cosmetic de-
vice. But some women developed autoim-
mune diseases such as lupus, which they
attributed to the implants. Although the al-
legations were never scientifically proven,
Dow Coming pulled the product in 1992.
A wave of injury lawsuits followed, forcing
the company into bankruptcy.
The firestorm over implants put Burns
on the path to the CEO suite. She had not
helped develop the product, but in 1994, as
the siege on the company intensified.
Bums was named director of women's
health. Personable and gregarious, she was
eople Scientists
given the tough j ob of acting as liaison be-
tween the Food & Dmg Administradon,
plaindffs, and Dow Coming, relaying re-
sults from independent research on the al-
leged side effects of implants. She even
appeai'ed on The Oprah Win-
frey Show, bravely rebutdng
pointed accusadons.
Anderson, who was then
CEO, was so impressed with
Burns's ability to explain
complex data whOe staying
cool under fire that he began
promodng her, first to direc-
tor of science and technolo-
gy in Europe, and then to
execudve vice-president.
"She calmed the waters," Anderson re-
calls. "That was the key to her ascent."
REVVED-UP RESEARCH
BURNS, A MOTHER AND grandmother
who is married to a Dow Corning
chemist, spends much of her off-hours
trying to get children excited about sci-
ence—especially girls. She preaches to in-
dustiy groups about the importance of
science educadon in schools, and she set
up a mentoring program that sends Dow
Corning sciendsts to local classrooms. As
one of the few women at the top of the
chemical industry. Bums sees herself as a
role model. "Science is no longer cool,"
she says. "That's really tragic."
Bums was always an enthusiasdc sci-
ence student, enjoying both the discovery
process and the camaraderie of most labs.
As a graduate student at Iowa State Uni-
versity, she often set off dry-ice bombs to
On deck:
New fabrics,
sldnpatches,
and better
solar panels
starde her classmates. "She was a heck of
a lot of fun," says her former adviser,
Thomas J. Barton, now director ofthe En-
ergy Dept.'s laboratory in Ames, Iowa.
While some might shy away from the
corporate-turnaround test
she faces today. Burns sa-
vors the challenge. Even be-
fore she moved into the top
job. Burns was steering the
company into new territory.
In 2003 she helped shep-
herd Dow Coming's $115
million acquisidon of Ster-
ling Semiconductor Inc.,
which makes silicon car-
bide microchips that are
used to power devices in the aerospace
and automodve markets. Dow Corning is
also making more efficient silicon wafers
for solar panels—a business that is grow-
ing 30% a year. In the lab, meanwhue, re-
searchers are mixing silicon with carbon-
based compounds to try to develop
newfangled fabrics, buuding materials,
and pharmaceudcal products such as skin
patches that emit drugs.
Burns's ex-lab partners understand
the immensity of the challenge at hand.
"She is giving us the responsibility to
change the face ofthe corporadon," says
Thomas H. Lane, a veteran Dow Corning
sciendst. If s no small task. But with a
chemist at the helm, Dow Coming's in-
novadon makeover is well under way. •
-By Michael Arndt in Midland, Mich.
HIGH-PURITY
SILICON WAFER
•I
Stephanie A. Bums
Many off-hours go to helping get children,
especially girls, excited about science
BORN Jan. 24,1955,
Torrington, Wyo.
EDUCATION BS, chemistry,
Florida International University,
1977; PhD, organic chemistry
Iowa State University, 1982.
CURRENT JOB President and
CEO, Dow Corning Corp.
CAREER PATH Started at
Dow Corning in 1983 as a
researcher. Promoted to
director of women's
health in 1994. Became
' director of science and
technology in Europe in 1997,
then executive vice-president
and director in 2000. Named
president and chief operating
officer in 2003. Promoted to
CEO in January, 2004.
FAMILY Married to Gary a
Dow Corning chemist. One
daughter, two grandchildren.
HOBBIES Golfing and
scuba diving.
CURRENT READING
Harry Potter and the Order
ofthe Phoenix.
Returns email accepting invitadon
to sales meeting.
Takes call using Bluetooth®
headset while updating calendar.
Emails photo of new office space
using Sprint PCS Picture Mail?"
Sends video message to kids
using Sprint PCS Video Mail.
SlipsTreo neatly into pocket
for boarding.
Email. Phone. Organizer.
Treo
Call 888-233-3538 or visit your
local Sprint Store to learn more
about an exclusive offer on the new
Sprint PCS Vision'" Smart Device
Treo 650 by palmOne.
December 6. 2004 I BusinessWeek 1101
Sprint
Copyright of BusinessWeek is the property of Bloomberg, L.P.
and its content may not be copied or emailed to
multiple sites or posted to a listserv without the copyright
holder's express written permission. However, users
may print, download, or email articles for individual use.
top of the week June 9, 2004
Apollo to Acquire a Chunk of
Eastman's CASPI Businesses
Pr i v a t e e q u i t y tirm A p u l l oManagement (New York)
says it hasagreed to pay $215 million to buy the
retnaining assets of Eastman
Chemical's coatings, adhesives,
specialty polymers, and inks
(CASPI) businesses that have
heen on t h e hlock since last
A u g u s t . T h e deal i n c l u d e s
Eastman's acryiate ester momimens,
inks and graphics arts raw mate-
rials, liquid resins, powder resins,
textile chemicals, and unsaturated
polyester resins composites, which
together employ 2,100. A small colorant
product line that was part of the original
CASPI assets for sale was sold to Sherwin-
Williams (SW) last Decemher.
T h e CASPI businesses being sold by
Eastman, including the colorant products
husiness, had sales of $600 million last year,
but reporred an operating loss of about
$70 million, says P.J. Juvekar, analyst at
Citigroup (New York). The entire CASPI
segment reported an operating profit ot
$49 million, on sales of $1.6 billion last
year, Eastman says. Apollo will pay $165 mil-
lion in cash at closing, plus a $50-million
n o t e payable to Eastman. T h e deal is
expected to close by the end of July, Apollo
says. Apollo will also obtain eight manu-
facturing sites in the U.S., and nine overseas.
A p o l l o is bullish on t h e business's
prospects. The coatings, comp<isites, inks,
and textile businesses "should exhibit attrac-
tive growth in the future," says Josh Harris,
founding partner at Apollo. The company
did not disclose any cost-cutting plans,
Apollo says it has not yet decided on a
management team or name for the opera-
tion. There are no plans to combine the
operation with any other chemicals entities
Apollo either owns or holds a stake in.
Ap(.)lio owns all of epoxies maker Resoluticm
Performance Polymers and United Agri.
Apollo previously owned Qimpass Minerals
and Quality Distribution, which were taken
public in August 2003.
The purchase price was well below ana-
lysts' expectations, which were hased on
sales multiples of other recent specialty
Harris: Attractive
growth prospects.
chemical deals. Citigroup says it expected
Eastman to receive $300 million-$400 mil-
lion for the businesses, although the offer fell
within J.P. Morgan's (New York)
e x p e c t a t i o n of $200 million-
$ 2 8 0 m i l l i o n , t h e firm says.
A p o l l o will fund the purchase
via a bank loan and equity, but did
not provide specifics.
Eastman announced plans in
August 2003 to restructure, divest,
or consolidate the money-losing
puns ot its CASPI businesses in an
effort to improve profitability
(CW, Aug 27ISept. 3, 2003, p . 9). T h e
sales to Apollo and SW brings the total pro-
ceeds from the divested CASPI businesses
to about $260 million, analysts say. J.P,
Morgan Securities ( N e w York) advised
Eastman on the Apollo deal.
Analysts expect Eastmsun's next divestment
to be its 4 2 % stake in Genencor, which is
valued at $ 4 5 0 m i l l i o n - $ 5 0 0 m i l l i o n .
Eastman's stake in Genencor was valued at
$221 million at the end of 2003, J.P. Morgan
says.
The Apollo announcement is the latest in
a string of private equity deals in the chem-
ical industry'. Platinum Equity (Los Angeles)
recently agreed to buy textile dyes pro-
ducer DyStar (Frankfurt) from Aventis.
Bayer, and B A S F {CW, }une 2, p . 6 ) .
Ripplewood Holdings (New York) offered
last m o n t h to acquire Akio Nobel's phos-
phorus chemicals business for €230 million
($272 m i l l i o n ) . Rockwood Specialties,
w h i c h is backed by private equity firm
Kohlberg Kravis Roberts &. C o . agreed to
acquire four of Dynamit Nobel's six chem-
ical businesses from Mg Technologies for
€2.25 billion ($2.7 billion). Blackstone
Group (New York) recently completed its
€1,6 billion ($2 billion) acquisition of
Celanese. —KERRI WALSH
Dow Coming Emerges from Bankmptcy
Dow Coming officially emerged from bankruptcy on June 1 ,
and the company says it will begin paying
creditors this month, including silicone breast implant
recipients who settled with the company for
$3.2 bitlion in 1998. A group of Nevada plaintiffs dropped their
lawsuit against Dow Coming in March,
eliminating the last substantial legal hurdle that had prevented
the company
from emerging from bankruptcy (CW. March 31. p. 9). The
plaintiffs had
sought to retain the ri^t to sue Dow Coming parent Dow
Chemtcai. an option
that is not permitted under the settlement plan.
The emeigence from banknjptcy marks the end of Dow Coming's
nineyear
struggle to settle claims with the breast implant recipients.
"Although breast
implants have never represented more than 1 % of our business,
our company
is often identified with them," says Dow Coming chaimnan Gary
Anderson. "We
are confident that the science shows a clear picture today—
through more than
30 independent studies, govemment and court-appointed panels,
and numer-
ous court decisions—that breast implants are not associated
with disease.
Nevertheless, we are pleased to be able to put this issue behind
us,"
Dow Corning has established an online system to expedite
payments to women v^o want to set-
tle their legal claims against the company. TTie comparfy s ^ «
the first checks to breast implant recipients
will go out June 15. Dow Coming's $3.2 billion settlement plan
will pay more than 300.000 breast
implant recipients $2,000-$250,000, depending on their medical
condition, TTie settlement trust cov-
ers women who received implants before 1994, because those
that had implants after 1994
presumably understood the potential health risks, say
representatives ofthe implant recipients,
Dow Coming stopped manufacturing breast implants in 1993,
and filed for Chapter 1 1 bankruptcy
protection in 1995. Tbe company past said that the number of
lawsuits became unman^eable in part
because of claims that the implants leaked and caused rare
autoimmune deficiencies and other dis-
eases.
Meanwhile, Dow Coming has continued to report strong
operating results. The company's first-quar-
ter net income jumped 45%, to $52,2 million, on sales up 24%,
to $814.3 million (CW. May 5. p. 4).
The company says sales growth was driven by "unusually strong
global volume growth and stronger
foreign cun-encies." —KARA SISSELL
Anderson: The issue
is behind us.
8 Chemicaf Week, June 9. 2004 www.chemweek.com

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  • 1. Bonus Homework MECH 221 Materials Science Due: Friday. Apr. 25th; Place to drop: EV.13.167 This assignment includes aspects of “self-learning”. This is a “soft skill” that all engineers are expected to be able to have as it is commonly required once you are working as an engineer. Problems will come up which require you to find out new information and new skills in order to solve them. Materials have been used in engineering applications for thousands of years. Even now some of these materials are still being used for the similar applications (such as stone and wood as building materials) but many early materials have been replaced with newer materials due to improvements in their properties or to the discovery of previously unobtainable properties. The advent of environmental awareness and sustainable development also has a place in the selection of engineering materials. Prepare a report in your own words discussing 5 different applications used to be made by metals and ceramics and have recently been replaced by polymeric materials such as solid polymers, polymer composites, polymer foams, and etc. Two of the applications must be related to aerospace and automotive industries.
  • 2. Your report should be between 1200-1500 words, should include references and diagrams where appropriate and should address the following points where applicable: What material(s) was used previously and why? What is the problem with this material/system? What is the proposed or new material/system? Why is it an improvement and what, if any, are the disadvantages? BOOK REVIEW Informed Consent: A Story of Personal Tragedy and Corporate Betrayal . . . Inside the Silicone Breast Implant Crisis by John A. Byrne, New York: McGraw-Hill, 1996. If you've been following the news accounts about breast implants, you might have started feeling sorry for the Dow Coming Corporation some time last year. That's when the media focus turned away from the injured women and the tide of public opinion shifted in favor of the implant manufacturer. In 1995, Dow Coming filed for Chapter 11 bankruptcy which generated much anger about frivolous lawsuits and how they stifle corporate innovation. The Wall Street Journal ran an opinion article by Dow's CEO entitled, "The Tort Monster That Ate Dow Coming," portraying plaintiff lawyers' criticism of implant research as a ploy to make money from the implant cases. ABC's Nightline moaned about the loss of jobs that supposedly resulted from bankruptcy. (Note to Ted Koppel: Filing for Chapter 11 merely means debt reorganization, not the dissolution of a company.) Dow ran full-page ads in 19 major newspapers ("Here's What Some People Don't Want You to Know About Breast Implants"), which offered free information packets of selectively quoted study results purportedly proving
  • 3. no link between breast implants and disease. All this, says Informed Consent author John A. Byrne, is part of a defensive strategy by Dow Corning to portray itself as the victim of greedy plaintiffs' attorneys--of a legal system out of control. Rest assured that Dow Corning has used that same legal system to evade its responsibility to women. A million dollar law firm (along with a million dollar P.R. firm) has been engaged by Dow to defend against the 400,000 women claiming implant-related illness. Some received their implants to replace a breast lost to cancer; the majority were implanted for breast enlargement. Byrne, a senior writer for Business Week, presents a behind- the-scenes view of corporate irresponsibility, evasion, and arrogance. His book is largely from the perspective of the quintessential "company man," John E. Swanson, a 26-year employee of Dow Corning and creator of its ethics program, which is so renowned that it is used as the subject of three Harvard Business School case studies. Over the years Swanson had defended the safety of silicone breast implants . . . until he realized that his own company's product was the cause his wife Colleen's wide array of unexplained illnesses. She is one of the one million women who had received breast implants since 1963. Byrne described Swanson's odyssey as, "What happens when you make a moral choice that separates you from the company's official position and from your colleagues in a close-knit organization." By the end of 1991 Swanson could no longer abide by his employer's decision to continue making breast implants. (He failed in his attempts to get Dow to call a moratorium until adequate tests were performed.) Not only had he learned, by then, of allegations that two company executives were trying to destroy internal documents about the implants' high complication rates, but thousands of women around the country were accusing Dow Corning of injuring them. He excused himself from making any further statements on the Company's behalf about breast implants, but kept the secret of
  • 4. his wife's experience until just before retirement. Colleen Swanson had been ill for the 17 years since her breast implant operation with a constellation of symptoms including migraines, severe fatigue, joint pain, weight loss, and rashes. Numerous doctors had examined her but could find no explanation. Colleen Swanson never made the connection to her implants until 1990, when her daughter called after seeing two women on the Geraldo Rivera Show detailing the same symptoms that followed their breast implant operations. Dow insisted that its product was safe and thoroughly tested, but evaded all requests to show proof on the grounds that a company does not have to release proprietary information on its products. Breast implants slipped through the cracks of the FDA. Though the agency had long required testing for drugs, it did not demand the same proof for medical devices until 1976. By then, breast implants had been grandfathered. Hardening of the breasts, or capsular contracture due to formation of scar tissue, is the most commonly reported adverse reaction. But some plastic surgeons, as early as the 1970s, began to believe that the silicone gel leaking from implants played some role in the hardening of the breasts. The surgeons were falsely assured by Dow in 1977 that a contracture/gel migration study was underway. But, generally speaking, the surgeons don't fare well in this story. Byrne says that the market for breast implant surgery was expanded in 1982 when the American Society for Plastic and Reconstructive Surgery decreed that small breasts be considered deformities. When Dow lost its first breast implant lawsuit in 1984 (the jury found the company guilty of fraud and deceit), the most damning information was found by the plaintiff's lawyers in the company's own files. The lawyers found memos expressing concern about the lack of long-term testing, memos from the company's salesmen relaying complaints from doctors, and--the most damaging to Dow's case--letters from plastic surgeons who groused about Dow Corning implants that ruptured in the
  • 5. operating room as they were being inserted in women's breasts. Dow insisted that silicone was safe and inert based on animal studies. But the corporation's case rested largely on a 1973 study of four dogs implanted with miniature silicone breast implants. Dow quoted' satisfactory six month results, but one expert for the plaintiff found that the company ignored its own two-year follow-up, which told a different story. Three of the animals suffered a varying degree of severe chronic inflammation, and one had died. The plaintiff in that lawsuit, Maria Stern, won $1.7 million after showing that leaking silicone was found in her thyroid and lymphatic system. This was the first case to allege that a woman was suffering from systemic autoimmune disease as a result of silicone. But Dow ultimately lost on the issue of informed consent. The jury decided that no woman could have made an informed decision to undergo implantation based on the rosy picture painted in Dow's brochure. The company's internal memos and studies indicated far more risks than were revealed to women. Among other things, women were told that implants would last "a natural lifetime." (They don't.) The question of whether silicone causes auto-immune illness, such as lupus, scleroderma, rheumatoid arthritis, remains unanswered despite negative findings from studies published last year by the Harvard Medical School and the Mayo Clinic. Neither is definitive. The latter, for example, included women whose implants were in place as little as one month. The average follow-up was 7.8 years, yet most autoimmune symptoms don't show until 8 to 15 years following implantation. As for Dow Corning's decision to file for bankruptcy protection, one plaintiffs' attorney describes it as little more than a ploy to buy more time in order to avoid compensating women for their injuries. Copyright of HealthFacts is the property of Center for Medical Consumers, Inc. and its content may not be copied or emailed to
  • 6. multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. Copyright of Challenge (05775132) is the property of M.E. Sharpe Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. People Scientists A Chemist Heats Up Dow Corning CEO Bums is driving income gains and a new focus on high-growth markets I N 1967, WHEN CHEMIST SHAILER
  • 7. L. Bass retired as chief executive of Dow Coming Corp., Stephanie A. Bums was a seventii-grader in Ann Arbor, Mich., who spent her days dreaming about becoming a scien- tist. After school. Bums dissected frogs and snakes and did chemistry ex- periments with her older brother. She stuck wdth it, getting a doctorate in or- ganic chemistry in 1982 and then a re- search job at Dow Coming, the privately held joint venture between Dow Chemical 98 I BusinessWeek I December 6, 2004 Co. and Coming Inc. She made her way firom the lab to the rarücs of management, and in January, 2004, was named CEO. For the first time since Bass, a chemist is heading Dow Corning once again. The company needs Bums's scientific brainpower. Dow Coming is the world's biggest maker of süicones, a family of sü- icone-based compounds used in sealants, adhesives, cosmetics, and, most famously, breast implants. In June, the Midland (Mich.)-based company emerged fi-om nine years of Chapter 11 bankruptcy pro- BURNS Her goal: tection—its refuge At least 20% from thousands of of revenue from lawsuits filed hy newpraducts women who believed ^ ^ ^ ^ " leaky implants made
  • 8. them sick. Dow Coming wül spend the next 15 years financing $3.3 bulion in set- tiement payments. Meanwhue, the indus- trial markets the company serves are nearly saturated. To rev up profits. Bums needs to pioneer new markets. COOL UNDER FIRE BURNS, 49, IS DRAWING ON her ovra ex- perience in the lab to guide her company's rebirth. As a young scientist her specialties were inventing süicone compounds that could withstand high temperatures, as well as developing semiconductor materi- als for autos. Now she's nudging scientists to invent new compounds for other high- growth markets such as electronics, phar- maceuticais, and aerospace. Dow Com- ing's chairman, Gary A. Anderson—who handpicked. Bums to replace him as CEO—says her abüity to assess ideas right down to their chemical formulas "gives her a definite advantage in judging where we should devote our research efforts." Bums is also speeding up Dow Coming's expansion in China, India, and other mar- kets where süicone use is a firaction of what it is in the U.S. The company is making progress. In the nine months that ended on Sept. 30, Bums's China initiatives helped drive net income up 23% over the same period in 2003, to $167.8 mulion, whüe revenues jumped 19%, to $2.5 biüion. Still, Bums concedes that she's nowhere near achiev-
  • 9. ing her ultimate goal: to derive at least 20% of annual sales from products that are less than five years old. "Innovation is a key priority for this company," she says. Not that long ago, virtuaüy no one had much faith in Dow Coming's ñiture. Formed in 1943, the company hit on the idea of making breast implants with süi- cone in the 1960s. Originally designed for women who had mastectomies, the im- plant became a sensation as a cosmetic de- vice. But some women developed autoim- mune diseases such as lupus, which they attributed to the implants. Although the al- legations were never scientifically proven, Dow Coming pulled the product in 1992. A wave of injury lawsuits followed, forcing the company into bankruptcy. The firestorm over implants put Burns on the path to the CEO suite. She had not helped develop the product, but in 1994, as the siege on the company intensified. Bums was named director of women's health. Personable and gregarious, she was eople Scientists given the tough j ob of acting as liaison be- tween the Food & Dmg Administradon, plaindffs, and Dow Coming, relaying re- sults from independent research on the al- leged side effects of implants. She even appeai'ed on The Oprah Win-
  • 10. frey Show, bravely rebutdng pointed accusadons. Anderson, who was then CEO, was so impressed with Burns's ability to explain complex data whOe staying cool under fire that he began promodng her, first to direc- tor of science and technolo- gy in Europe, and then to execudve vice-president. "She calmed the waters," Anderson re- calls. "That was the key to her ascent." REVVED-UP RESEARCH BURNS, A MOTHER AND grandmother who is married to a Dow Corning chemist, spends much of her off-hours trying to get children excited about sci- ence—especially girls. She preaches to in- dustiy groups about the importance of science educadon in schools, and she set up a mentoring program that sends Dow Corning sciendsts to local classrooms. As one of the few women at the top of the chemical industry. Bums sees herself as a role model. "Science is no longer cool," she says. "That's really tragic." Bums was always an enthusiasdc sci- ence student, enjoying both the discovery process and the camaraderie of most labs. As a graduate student at Iowa State Uni- versity, she often set off dry-ice bombs to
  • 11. On deck: New fabrics, sldnpatches, and better solar panels starde her classmates. "She was a heck of a lot of fun," says her former adviser, Thomas J. Barton, now director ofthe En- ergy Dept.'s laboratory in Ames, Iowa. While some might shy away from the corporate-turnaround test she faces today. Burns sa- vors the challenge. Even be- fore she moved into the top job. Burns was steering the company into new territory. In 2003 she helped shep- herd Dow Coming's $115 million acquisidon of Ster- ling Semiconductor Inc., which makes silicon car- bide microchips that are used to power devices in the aerospace and automodve markets. Dow Corning is also making more efficient silicon wafers for solar panels—a business that is grow- ing 30% a year. In the lab, meanwhue, re- searchers are mixing silicon with carbon- based compounds to try to develop newfangled fabrics, buuding materials, and pharmaceudcal products such as skin patches that emit drugs.
  • 12. Burns's ex-lab partners understand the immensity of the challenge at hand. "She is giving us the responsibility to change the face ofthe corporadon," says Thomas H. Lane, a veteran Dow Corning sciendst. If s no small task. But with a chemist at the helm, Dow Coming's in- novadon makeover is well under way. • -By Michael Arndt in Midland, Mich. HIGH-PURITY SILICON WAFER •I Stephanie A. Bums Many off-hours go to helping get children, especially girls, excited about science BORN Jan. 24,1955, Torrington, Wyo. EDUCATION BS, chemistry, Florida International University, 1977; PhD, organic chemistry Iowa State University, 1982. CURRENT JOB President and CEO, Dow Corning Corp. CAREER PATH Started at Dow Corning in 1983 as a researcher. Promoted to director of women's health in 1994. Became
  • 13. ' director of science and technology in Europe in 1997, then executive vice-president and director in 2000. Named president and chief operating officer in 2003. Promoted to CEO in January, 2004. FAMILY Married to Gary a Dow Corning chemist. One daughter, two grandchildren. HOBBIES Golfing and scuba diving. CURRENT READING Harry Potter and the Order ofthe Phoenix. Returns email accepting invitadon to sales meeting. Takes call using Bluetooth® headset while updating calendar. Emails photo of new office space using Sprint PCS Picture Mail?" Sends video message to kids using Sprint PCS Video Mail.
  • 14. SlipsTreo neatly into pocket for boarding. Email. Phone. Organizer. Treo Call 888-233-3538 or visit your local Sprint Store to learn more about an exclusive offer on the new Sprint PCS Vision'" Smart Device Treo 650 by palmOne. December 6. 2004 I BusinessWeek 1101 Sprint Copyright of BusinessWeek is the property of Bloomberg, L.P. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. top of the week June 9, 2004 Apollo to Acquire a Chunk of
  • 15. Eastman's CASPI Businesses Pr i v a t e e q u i t y tirm A p u l l oManagement (New York) says it hasagreed to pay $215 million to buy the retnaining assets of Eastman Chemical's coatings, adhesives, specialty polymers, and inks (CASPI) businesses that have heen on t h e hlock since last A u g u s t . T h e deal i n c l u d e s Eastman's acryiate ester momimens, inks and graphics arts raw mate- rials, liquid resins, powder resins, textile chemicals, and unsaturated polyester resins composites, which together employ 2,100. A small colorant product line that was part of the original CASPI assets for sale was sold to Sherwin- Williams (SW) last Decemher. T h e CASPI businesses being sold by Eastman, including the colorant products husiness, had sales of $600 million last year, but reporred an operating loss of about $70 million, says P.J. Juvekar, analyst at Citigroup (New York). The entire CASPI segment reported an operating profit ot $49 million, on sales of $1.6 billion last year, Eastman says. Apollo will pay $165 mil- lion in cash at closing, plus a $50-million n o t e payable to Eastman. T h e deal is expected to close by the end of July, Apollo says. Apollo will also obtain eight manu- facturing sites in the U.S., and nine overseas. A p o l l o is bullish on t h e business's prospects. The coatings, comp<isites, inks,
  • 16. and textile businesses "should exhibit attrac- tive growth in the future," says Josh Harris, founding partner at Apollo. The company did not disclose any cost-cutting plans, Apollo says it has not yet decided on a management team or name for the opera- tion. There are no plans to combine the operation with any other chemicals entities Apollo either owns or holds a stake in. Ap(.)lio owns all of epoxies maker Resoluticm Performance Polymers and United Agri. Apollo previously owned Qimpass Minerals and Quality Distribution, which were taken public in August 2003. The purchase price was well below ana- lysts' expectations, which were hased on sales multiples of other recent specialty Harris: Attractive growth prospects. chemical deals. Citigroup says it expected Eastman to receive $300 million-$400 mil- lion for the businesses, although the offer fell within J.P. Morgan's (New York) e x p e c t a t i o n of $200 million- $ 2 8 0 m i l l i o n , t h e firm says. A p o l l o will fund the purchase via a bank loan and equity, but did not provide specifics. Eastman announced plans in August 2003 to restructure, divest, or consolidate the money-losing
  • 17. puns ot its CASPI businesses in an effort to improve profitability (CW, Aug 27ISept. 3, 2003, p . 9). T h e sales to Apollo and SW brings the total pro- ceeds from the divested CASPI businesses to about $260 million, analysts say. J.P, Morgan Securities ( N e w York) advised Eastman on the Apollo deal. Analysts expect Eastmsun's next divestment to be its 4 2 % stake in Genencor, which is valued at $ 4 5 0 m i l l i o n - $ 5 0 0 m i l l i o n . Eastman's stake in Genencor was valued at $221 million at the end of 2003, J.P. Morgan says. The Apollo announcement is the latest in a string of private equity deals in the chem- ical industry'. Platinum Equity (Los Angeles) recently agreed to buy textile dyes pro- ducer DyStar (Frankfurt) from Aventis. Bayer, and B A S F {CW, }une 2, p . 6 ) . Ripplewood Holdings (New York) offered last m o n t h to acquire Akio Nobel's phos- phorus chemicals business for €230 million ($272 m i l l i o n ) . Rockwood Specialties, w h i c h is backed by private equity firm Kohlberg Kravis Roberts &. C o . agreed to acquire four of Dynamit Nobel's six chem- ical businesses from Mg Technologies for €2.25 billion ($2.7 billion). Blackstone Group (New York) recently completed its €1,6 billion ($2 billion) acquisition of Celanese. —KERRI WALSH
  • 18. Dow Coming Emerges from Bankmptcy Dow Coming officially emerged from bankruptcy on June 1 , and the company says it will begin paying creditors this month, including silicone breast implant recipients who settled with the company for $3.2 bitlion in 1998. A group of Nevada plaintiffs dropped their lawsuit against Dow Coming in March, eliminating the last substantial legal hurdle that had prevented the company from emerging from bankruptcy (CW. March 31. p. 9). The plaintiffs had sought to retain the ri^t to sue Dow Coming parent Dow Chemtcai. an option that is not permitted under the settlement plan. The emeigence from banknjptcy marks the end of Dow Coming's nineyear struggle to settle claims with the breast implant recipients. "Although breast implants have never represented more than 1 % of our business, our company is often identified with them," says Dow Coming chaimnan Gary Anderson. "We are confident that the science shows a clear picture today— through more than
  • 19. 30 independent studies, govemment and court-appointed panels, and numer- ous court decisions—that breast implants are not associated with disease. Nevertheless, we are pleased to be able to put this issue behind us," Dow Corning has established an online system to expedite payments to women v^o want to set- tle their legal claims against the company. TTie comparfy s ^ « the first checks to breast implant recipients will go out June 15. Dow Coming's $3.2 billion settlement plan will pay more than 300.000 breast implant recipients $2,000-$250,000, depending on their medical condition, TTie settlement trust cov- ers women who received implants before 1994, because those that had implants after 1994 presumably understood the potential health risks, say representatives ofthe implant recipients, Dow Coming stopped manufacturing breast implants in 1993, and filed for Chapter 1 1 bankruptcy protection in 1995. Tbe company past said that the number of lawsuits became unman^eable in part because of claims that the implants leaked and caused rare autoimmune deficiencies and other dis-
  • 20. eases. Meanwhile, Dow Coming has continued to report strong operating results. The company's first-quar- ter net income jumped 45%, to $52,2 million, on sales up 24%, to $814.3 million (CW. May 5. p. 4). The company says sales growth was driven by "unusually strong global volume growth and stronger foreign cun-encies." —KARA SISSELL Anderson: The issue is behind us. 8 Chemicaf Week, June 9. 2004 www.chemweek.com