Kaiser Wants More Control Eliminating Union Constraints To Be Key Issue When Talks Resume Next Week, President Says

Kaiser and the Steelworkers will return to formal bargaining next week, and when they do, Kaiser will come to the table seeking deeper job cuts and much broader latitude in the management of plant operations.

The opportunity to operate the past 40 days without the constraints imposed by its labor contract with the United Steelworkers of America has convinced Kaiser Aluminum Corp. management that its U.S. plants can be far more productive without those constraints.

“The fact we were forced into doing this by this strike was a major opportunity,” Kaiser President Ray Milchovich said in Spokane Monday. “This is something we would never have had the opportunity to do in a non-strike situation.”

Milchovich said Kaiser’s plants at Mead, Trentwood and Tacoma are currently operating at or near their productivity averages for the first nine months of the year. And the reason that level of output can be achieved with an inexperienced, temporary work force is that the contract limitations on how management deploys its work forces have been removed, he added.

“Since the strike began,” Milchovich said, “we’ve modified our expectations in terms of what we think is possible in terms of full potential.

“What we’ve seen in the last 40 days is really a prototype of just exactly how we would run these plants without the rules of governance that have accumulated over the years, and our productivity expectations are much higher.”

Also in Spokane Monday was David Pryzbylski, Kaiser’s chief negotiator.

He said he is scheduled to meet with David Foster, his Steelworkers counterpart, Nov. 18 and 19, when he expects “substantive bargaining” to take place.

“During the past 40 days, there have been no serious negotiations,” Pryzbylski said. “There have been communications. We communicate every week. Unfortunately, sometimes the passage of time is a test of resolve. I think we’re beyond that now. And next week when we get to the table, we will be negotiating on substantive issues.”

The Steelworkers went on strike against Kaiser when the union’s four-year contract with the company expired on Sept. 30. Union negotiators rejected the final offer Kaiser put on the table, sending 3,000 Steelworkers - 2,100 of them at Mead and Trentwood - onto the picket lines.

They didn’t like the number of jobs Kaiser was proposing to eliminate, or the broader management prerogatives Kaiser was seeking. Now, Kaiser will be seeking more concessions in both areas.

The Steelworkers were replaced with temporary workers who have kept the plants running. Monday, Milchovich said for the first nine days of November, the Trentwood plant has achieved 99 percent of the plant’s average production rate for the first nine months of the year.

He said the existing potlines operating at Tacoma and Mead are running at 100 percent of output.

When the strike occurred, Kaiser shut down one potline at Tacoma and two at Mead. The company is now beginning the weeks-long process of restarting those lines. The final decision to restart will occur in late December or early January, he said, depending upon both Kaiser’s operational abilities at that time and the world price of aluminum.

Milchovich and Pryzbylski are in Spokane today to meet with managers of the Mead and Tacoma plants and go over the new operational and productivity plans for the plants based on their 40-days’ experience operating the plants without the contract restrictions on management’s ability to deploy its work force.

This experience is what prompted Kaiser Chairman George Haymaker to announce at the end of October that the company would seek to eliminate 600 to 900 jobs, rather than the 400 jobs it sought to eliminate before contract talks broke down.

Milchovich said the 600 to 900 figure is what Pryzbylski will take to the Steelworkers when talks resume next week. They would not offer a breakdown of how those layoffs would be distributed plant by plant.

Milchovich did say, however, that Trentwood has offered “the most remarkable example” of productivity increases under the less-restrictive management environment.

“People costs are 50 percent of Trentwood’s overall costs,” Milchovich said. “We’ve just seen remarkable productivity improvement there.”

He said the productivity gains would be even more dramatic if Kaiser’s experienced work force was operating in the less restrictive management environment.

Milchovich reiterated his determination to achieve a labor agreement that “is fair” but that allows the company to be competitive in a global environment.

“This company made labor agreements in the late 1970s and early 1980s that it couldn’t afford,” Milchovich said. “In 1985, as a result of that, we went to these very same union people and asked them for pay cuts - a situation they will never forget.

“Well, I don’t intend to do that. As president, if I make a deal I can’t live with, and later have to go back and ask them for pay cuts because it’s a bad deal, that’s a leadership failure.

“We are going to make a deal that is fair, and that we can afford. I don’t think that is a union-busting tactic. I think that’s responsible leadership.”

National Steelworkers officials could not be reached for comment late Monday.