Shanghai Halts Johnson Controls Lead Processing

February 27th, 2012 by Steve

By JAMES T. AREDDY

SHANGHAI—Shanghai authorities for the first time directly linked lead pollution that they said had sickened local children to emissions from a battery plant owned by Johnson Controls Inc., putting a further cloud over a facility that is already likely to be closed longer than initially expected.

The Shanghai Municipal Environmental Protection Bureau on Sunday said the Johnson Controls plant in an area of the city called Kangqiao had a role in lead pollution that sickened 49 children. “There is an obvious link between the excessive lead in those children’s blood in the Kangqiao area and the lead emission by Johnson Controls,” according to a summary of its findings published on an official government website.

In a statement, Milwaukee-based Johnson Controls rejected claims its plant can be tied to illness in local children. “Based on all available facts, Johnson Controls disagrees with any interpretation linking our plant’s operation to elevated lead exposure,” Johnson Controls said in its statement.

The bureau declined to make its full findings available or to answer questions about it.

The government says it discovered excessive lead-exposure in the 49 children—a higher number than previously reported—during routine back-to-school testing last September. It said three children remain hospitalized. The heavy metal is widely known to cause developmental problems in children, and its use is regulated in China.

The bureau’s summary reiterates a local government assertion last year that Johnson Controls had used more lead in its manufacturing than was allowed by a local quota. Johnson Controls executives have conceded that point but said emissions levels from the plant have been below local and national limits, and that in past years local officials focused on emissions levels, not the quota.

The accusation comes amid uncertainty over whether the plant, which has been closed since September, will reopen anytime soon. The agency had said it had ordered production suspended. In a November interview, Alex Molinaroli, the president of Johnson Controls’s battery division, described the plant closure as “voluntary.”

Mr. Molinaroli expressed confidence the plant would reopen in early 2012 after a Shanghai testing company determined that Johnson Controls had abided by local laws and wasn’t the source of the local lead pollution. In January, however, Johnson Controls executives warned investors the plant may not open this year and said earnings forecasts for 2012 would be reduced accordingly.

To satisfy auto makers that it supplies in China, Johnson Controls is relying in part on imported batteries, which executives say is a break-even strategy at best. “It’s been disruptive to move batteries around. It’s been costly,” Mr. Molinaroli said last year.

The Johnson Controls plant was the only prominent one among a number of factories closed after Shanghai authorities revealed the lead poisoning. In the new report, the bureau also cited lead pollution in the Kangqiao area from two other small companies that it said share the blame and have been closed.

—Yang Jie contributed to this article.

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