Arconic, the US company that manufactured a component used in the cladding of Grenfell Tower, is set to face a lawsuit from shareholders.
The litigation threat followed an article in the New York Times that alleged Arconic's safety warnings in the UK were inferior to those given to prospective customers elsewhere.
Arconic, formerly known as Alcoa, made the key component in the Grenfell Tower cladding known as Reynobond PE.
Bronstein, Gewirtz & Grossman, a litigation firm that specialises in class-action lawsuits, is among those considering mounting a claim on the grounds Arconic breached the 1934 Securities Exchange Act.
The firm was quick to issue a statement following the New York Times story, which by itself had prompted an 11% decline in the share price. Arconic´s shares have lost around 27% of their value since early June.
Since the tragic fire at Grenfell Tower on June 14, in which at least 80 people lost their lives, Arconic has ceased to supply its Reynobond PE product in “any high-rise applications, regardless of local codes and regulations.”
On its website, Arconic describes Reynobond PE as “flexible to the core,” adding that its polyethylene (PE) core content adds strength and rigidity to its coil-coated aluminium panels.
According to Arconic, another selling point is Reynobond PE´s “light weight for easy installation.”
Nevertheless, any lawsuit is likely to be fiercely opposed by Arconic. In a statement this week, the company stressed: “Our product is one component in the overall cladding system; we don’t control the overall system or its compliance.”
Brochure content and recently disclosed emails indicate that the company was aware of the potential fire risk posed by PE but that it left the final decision with customers.
This week´s New York Times article claimed that Arconic had instructed customers elsewhere in Europe to desist from using PE as soon as a building was “higher than the firefighters’ ladders.” In the UK though, the advice to customers boiled down to: “depends on local building codes.”
While an investigation is ongoing, it is believed that the fire started in a refrigerator that was next to a wall inside one of the apartments of the 24-floor building. The fire then rapidly spread up the outside of the structure via the cladding.
Building codes in the US-based firm´s domestic market have long since prohibited the use of flammable materials in high-rise building cladding.