Weyerhaeuser’s Smelly Wood Problem Will Cost Up to $250 Million


Weyerhaeuser’s problems with a formaldehyde-based product on some of its wood joists is turning out to be a much bigger issue than previously disclosed, and could ultimately cost up to a quarter-billion dollars.

In July, the Seattle-based company said some homebuilding customers had complained about an odor emitted by wooden I-joists outfitted with a new Flak Jacket coating, which prevents the wood from burning. Weyerhaeuser had switched its formula for the coating, using a formaldehyde-based resin that stunk up thousands of new-construction homes.

At the time, Weyerhaeuser said it would spend $50 million to $60 million to replace framing in the homes, which are mostly outside the Pacific Northwest and in various stages of construction.

But in an SEC filing Wednesday, the company said it now expects the fixes to cost $225 million to $250 million.

The number of homes affected has grown from 2,200 to 2,500. But most of the cost increases are the result of higher-than-expected prices to fix each home. That can involve payouts to homebuilders and homeowners, in addition to replacing the joists, the company said.

Weyerhaeuser said it expects a significant portion of the pretax expenses to be covered by insurance. The news had little impact on the company’s stock, which is trading around $33.

At least one law firm, Philadelphia-based Berger & Montague, has filed proposed class-action lawsuits against Weyerhaeuser in federal courts in Colorado, Delaware, New Jersey, New York and Minnesota.

Lawyers for the firm said some owners of affected homes have complained their houses are uninhabitable because of the pickle-like smell, and that others are concerned about potential health problems from the formaldehyde.