16 June 2011
Explosion at Hoeganaes facility, Gallatin, USA
On Friday 27 May 2011, there was an explosion at the GKN Hoeganaes Corporation
plant in Gallatin, Tennessee, USA. Gallatin produces atomized metal powders for
use in manufacturing sintered metal products and has revenues of around $250
million per year from sales to sinter metals customers.
Five employees were hurt in the incident, two of whom have sadly died of their
injuries and a third remains in a critical condition. Two employees were
slightly injured and were released from hospital the same day. The Company is
providing the families with every means of comfort and support at this
GKN has implemented a full plant safety review, supported by two independent
organisations, to ensure that it fully understands the cause of the incident
and implements appropriate measures to prevent a recurrence. We are also
co-operating with the relevant authorities (US Chemical Safety Board and
Tennessee OSHA) to establish the cause and, although investigations continue,
initial indications suggest a hydrogen gas leak.
Production at the Gallatin facility has been suspended since the incident on 27
May 2011. It is expected that limited production will recommence next week,
with the plant being brought back to full production over the next several
weeks as the safety review and any remedial works from the incident are
In the meantime, to ensure continuity of supply, customer orders are being met
from a combination of powder inventory and shipping of product from the
Company's other operations as well as product sourced from other metal powder
producers. We are working closely with customers to ensure as little disruption
as possible to their operations until activities at Gallatin return to normal.
We are grateful for the support we have received from Hoeganaes of Sweden and
QMP (Rio Tinto) and for the excellent co-operation of our customers as we work
through this difficult period.
In total, the additional costs of shipping, purchasing and plant closure and
remedial works costs are expected to lead to an exceptional one-off charge to
profits spread over June and July, of around £30 million prior to any potential
recovery from insurance claims. The Company carries business interruption
insurance and is in discussion with its insurance brokers about potential
claims, the first £10 million of which would be self insured through its
captive insurance arrangements.
Trading in the rest of the Group continues to be in line with expectations
expressed in the Interim Management Statement released on 11 April 2011.
The Group intends to issue its half year results announcement on 3 August 2011.
For further information:
Director, Investor Relations and External Communications
T: +44 (0)207 463 2382
M: +44 (0)7739 778 187
T: +44 (0)20 7269 7113
M: +44 (0)7775 641 807
This announcement contains forward looking statements which are made in good
faith based on the information available to the time of its approval. It is
believed that the expectations reflected in these statements are reasonable but
they may be affected by a number of risks and uncertainties that are inherent
in any forward looking statementwhich could cause actual results to differ
materially from those currently anticipated.
Notes to Editors
GKN plc is a global engineering business serving the automotive, aerospace and
land systems markets. It has operations in more than 30 countries, around
40,000 employees in subsidiaries and joint ventures and had sales of £5.4
billion in the year ended 31 December 2010. GKN plc is listed on the London
Stock Exchange (LSE: GKN).