James Hardie Industries

James Hardie Industries plc
Company type	Public
Industry	Building materials
Founded	1888 in Australia
Founder	James Hardie
Headquarters	Dublin (corporate), Chicago (executive leadership), Ireland, United States
Area served	Worldwide
Products	Fibre cement products, building materials

James Hardie Industries plc is a multinational building materials corporation with American and Irish roots, recognized as the world's leading producer of fibre cement products. Although its corporate headquarters are located in Ireland, the company is publicly traded on both the Australian and New York Stock Exchange. Its executive leadership operates out of Chicago, Illinois, United States. The firm encountered major controversies related to asbestos throughout the 20th century.

History

James Hardie (27 July 1851 – 20 November 1920) emigrated from Linlithgow, Scotland, to Australia in 1888, where he established a business importing oils and animal hides. Andrew Reid, also originating from Linlithgow, joined Hardie in Melbourne and became a full partner by 1895. Hardie retired in 1911, selling his ownership stake to Reid.

Listing on Sydney Stock Exchange and asbestos-containing products

The company was listed on the Sydney Stock Exchange in 1951. During this period, it manufactured asbestos cement sheets alongside other construction materials. By the mid-20th century, James Hardie had become Australia's largest producer and supplier of asbestos-containing products including building materials, insulation, pipes, and brake linings, with asbestos manufacturing facilities spread across several states. Prolonged exposure to these materials led to severe health conditions such as asbestosis and malignant mesothelioma. In 1961, James Hardie merged its brake lining operations with Turner & Newall's Ferodo division, acquiring a majority 60% stake in Hardie-Ferodo and purchasing the remaining shares in 1980.

Asbestos-free products

By the mid-1980s, James Hardie innovated by developing modern fibre cement products free of asbestos, composed mainly of Portland cement, sand, and wood fibers, marking a complete shift away from asbestos-containing materials.

Relocations to the Netherlands, Ireland and the U.S.

In December 2001, James Hardie shifted its headquarters to the Netherlands, resulting in tax savings of $86 million over seven years. However, in 2009 the Australian Taxation Office issued an amended assessment demanding $172 million plus penalties; James Hardie successfully contested this charge. That same year, the US Internal Revenue Service sought $47 million in unpaid taxes and penalties related to compliance with the US-Dutch tax treaty effective since 2006.

In 2010, James Hardie changed its corporate domicile to Ireland. As of November 2022, the company maintains a corporate office in Chicago, Illinois, while operating more than a dozen manufacturing facilities worldwide.

Sponsorship and Philanthropic Activities

From 1968 through 1987, James Hardie held the naming rights for the Bathurst 500/1000 event. The company served as the shirt sponsor for the Parramatta Eels rugby league team between 1981 and 1995, and it renewed this sponsorship in 2025.

In 1988, James Hardie made a landmark contribution to a public library in Australia by donating the Australian Library of Fine Art to the State Library of Queensland. This donation led to the creation of the James Hardie Library of Australian Fine Arts within the library’s Arts and Rare Books Unit.

Background

By 1978, illnesses related to asbestos exposure had begun to appear among former mine workers. In 2002, over half of all claims submitted to the Dust Diseases Tribunal of New South Wales involved companies within the James Hardie group, surpassing other corporations such as CSR Limited.

Protests arose close to the Aboriginal community of Baryulgil on New South Wales’ North Coast, where activists including Lyall Munro Snr and representatives from the NSW Aboriginal Legal Service challenged company operations.

Starting in the 1980s, James Hardie and its subsidiaries acknowledged the hazards of asbestos and compensated affected individuals, despite earlier denials. The company initiated product labeling with health warnings in 1978 and terminated asbestos production by March 1987.

Responding to increasing health concerns, James Hardie developed technology for asbestos-free fibre cement during the mid-1980s, thereby eliminating associated health risks.

The MRCF and Corporate Relocation to the Netherlands

Since the 1930s, James Hardie functioned as a parent corporation overseeing subsidiaries, with asbestos-related activities and compensation handled by entities such as James Hardie and Coy and Hardie-Ferodo (later renamed Jsekarb). Between 1995 and 2000, the parent company moved assets out of these subsidiaries—renamed Amaca and Amaba—leaving them responsible for most asbestos liabilities.

In 2001, these subsidiaries were separated from James Hardie and acquired by the Medical Research and Compensation Foundation (MRCF), created specifically to manage asbestos liabilities. At that time, CEO Peter McDonald publicly asserted that MRCF possessed sufficient funds for anticipated claims, reporting net assets of $293 million against an actuarial "best estimate" liability of $286 million. However, a subsequent Jackson Report criticized this estimate as "wildly optimistic," indicating a significant underestimation of liabilities.

Subsequently, James Hardie shifted its headquarters to the Netherlands, citing tax benefits for both the company and its shareholders. To gain approval from Australian courts—since it remained listed on the Australian Securities Exchange—James Hardie guaranteed that MRCF would be able to meet future claims by issuing partly paid shares valued at $1.9 billion. This arrangement required the new Dutch parent company to provide additional funding if necessary. Nevertheless, expected tax advantages failed to materialize following changes in U.S. tax legislation and trade agreements.

Shortly after relocating, revised actuarial evaluations projected asbestos liabilities increasing dramatically: $574 million initially, then $752 million in 2002, followed by $1.58 billion in 2003. The MRCF sought further funding but declined an $18 million asset offer from James Hardie. Concerns intensified in 2004 when it was revealed that James Hardie had canceled the partly paid shares intended as a financial safeguard in 2003. The company maintained it bore no further responsibility for liabilities due to its legal separation from MRCF.

Inquiry

On 12 February 2004, the Government of New South Wales initiated a judicial inquiry that delivered a strongly critical assessment of James Hardie and its leadership. The inquiry determined that the company's actuarial estimates of liabilities at $286 million were insufficient, citing flawed financial modeling, vague assumptions, and neglecting the impact of Amaca and Amaba's separation from James Hardie. Nevertheless, it found that James Hardie was under no legal duty to provide compensation.

Despite the absence of a legal obligation, intense political and societal pressure compelled James Hardie to engage in compensation discussions; governments imposed product boycotts, and unions threatened a worldwide refusal to handle their goods.

In the aftermath, James Hardie began talks with governmental bodies and unions to establish a compensation framework for affected individuals. By December 2004, the company agreed to set up a voluntary compensation fund. However, negotiations encountered delays over disagreements concerning the tax deductibility of contributions. The agreement was ultimately completed in November 2006 after federal legislation was passed to allow tax-deductible contributions and confer tax-exempt status on the fund.

Strong advocacy from state governments, union representatives, and victims influenced the federal government to resolve these taxation issues. The final legal endorsement came from shareholders in February 2007, with 99.6% approving the plan, enabling the compensation program to commence soon thereafter.

Legal action

Following the 2004 inquiry, prosecutors evaluated both civil and criminal charges against the CEO and senior executives for allegedly making fraudulent claims about the MRCF’s financial viability. In February 2007, the Australian Securities & Investments Commission (ASIC) filed charges against all board members from 2001 as well as certain senior managers for breaching the Corporations Act 2001, including failures to exercise care and diligence.

While ASIC explored potential criminal prosecutions, in September 2008 the Commonwealth Director of Public Prosecutions concluded there was insufficient evidence to proceed with charges.

In 2009, the Supreme Court of New South Wales ruled that directors had misled the stock exchange concerning James Hardie’s funding arrangements for asbestos claims. As a result, they received five-year bans from serving on boards; former CEO Peter Macdonald was prohibited for 15 years and fined $350,000 for establishing and publicizing the MRCF. Most directors appealed these decisions, and in 2010 the New South Wales Court of Appeal overturned several rulings against them. ASIC then appealed to the High Court of Australia, which in May 2012 affirmed the original judgment that seven former non-executive directors had misled the stock exchange regarding compensation for asbestos victims.

In August 2019, Mathew Werfel, an Adelaide-based DIY enthusiast, secured $3 million in damages after suffering asbestos exposure from James Hardie products used during home renovations between 1990 and 2000. Although James Hardie's products no longer contain asbestos, legal arguments contended that the company failed to sufficiently warn consumers about risks associated with older products.

In 2021, a New Zealand court rejected a lawsuit claiming that James Hardie's Harditex cladding caused weathertightness defects in homes, attributing these issues instead to substandard construction practices rather than flaws with the product itself.

Timeline

Significant milestones highlighted in the Devil's Dust television documentary include:

2004: Peter MacDonald, then CEO of James Hardie, steps down, receiving a compensation package amounting to $9 million.
February 2007: The Australian Securities and Investments Commission (ASIC) initiates legal action against the James Hardie board, accusing them of neglecting their duty of care by assuring investors that the Medical Research and Compensation Foundation (MRCF) was adequately funded.
February 2007: Shareholders endorse a $4 billion settlement plan intended to provide compensation to asbestos victims over a span of four decades. Meredith Hellicar resigns as chairwoman.
August 2007: Oncologist Professor Stephen Clarke confirms Bernie Banton’s diagnosis with peritoneal mesothelioma. Banton pursues legal action against a former James Hardie subsidiary associated with the Asbestos Injuries Compensation Fund. Judge John O'Meally rules favorably for Banton, although the fund disputes the ruling.
November 2007: Despite severe illness, Banton gives testimony from his hospital bed. James Hardie proposes a settlement offer. The compensation for his terminal mesothelioma is provided through the fund he helped create in 2004. Bernie Banton passes away on 27 November at age 61.
September 2009: Journalist Matt Peacock releases the book Killer Company.
May 2012: The High Court of Australia determines that seven directors of James Hardie breached their responsibilities by approving a misleading statement to the stock exchange asserting that the MRCF was fully financed.

External links