Workers Seethe Over Old Stock Union Sees 1985 Stock Plan As Interest-Free Loan To Kaiser

On Tuesday, Spokane Steelworkers will again travel to Houston for the annual meeting of Kaiser’s principal subsidiary, Kaiser Aluminum and Chemical Corp.

The journey is part of the union’s strategy to take the fight from the picket line to the grocery store and corporate boardroom.

Hundreds made a similar pilgrimage to the annual shareholders meeting of Maxxam Inc. and Kaiser Aluminum last month.

Steelworkers had to purchase Maxxam stock to get into the May meeting.

Not this time. More than half of the current Steelworkers own stock in Kaiser Aluminum and Chemical Corp., according to Kathryn Genteman, vice president of human relations and environmental affairs at the rolling mill division. The employees have owned the stock since 1985 when they agreed to cuts in pay and benefits to keep the troubled aluminum company afloat.

A little-known but persistent rub between the company and the union is the Employee Stock Ownership Plan. It existed for just three years and paid no dividends, but it has sat like a $20 million gorilla in every labor negotiation since.

In the 1980s, Kaiser was a company in trouble, buffeted by aluminum’s entry into the commodity market; a drought affecting its plant in Ghana; a $200 million modernization program at Trentwood in Spokane; and a 300 percent power rate increase.

At that time, the Steelworkers agreed to substantial cuts in wages and benefits. In exchange for up to 80 percent of those concessions, Steelworkers were to receive stock in the company. Shares were valued at $50 apiece based on what the employees had given up. They were earned for each hour worked. Dividends of up to 10 percent a year were scheduled to eventually be paid after the contract ended.

But uncertainty over the company’s survival and anger over the concessions led many workers to believe the stock was worthless. Signs began to appear in plant restrooms identifying toilet paper as “Kaiser stock.”

In 1988 the company ended the stock ownership plan. The Steelworkers, who had voted out almost all the union officers who agreed to the concessions, also agreed to a package that they now consider a mistake. They chose to forgo any dividend on the stock earned between 1985 and 1988 in exchange for a 50-cent-an-hour increase plant-wide. Some were worried the company would go bankrupt before any earnings would be realized. Others believed that they would recoup the stock as soon as the company became profitable.

Instead, for the next 10 years of labor agreements, the stock produced no earnings for any employees and other than a few $1,000 to $4,000 payouts, was not redeemable until a worker retired, died or was laid off and experiencing hardship.

Company officials acknowledge that plan helped the company but they saw the ongoing arrangement as part of a fair-wage-and-benefit package that the union agreed to with each successive contract.

The union increasingly saw it as an interest-free loan.

Ed Irvine, Sr., of the Mead plant had $43,000 in stock, nearly $30,000 of which the company still holds. Stan White at Trentwood had $30,000. White figures had he invested that money it would have earned three times that amount.

Today, the company is proposing a $19.2 million payout to redeem all of the stock held by the hourly employees.

But that further angers Steelworkers who say it shouldn’t even be on the table. They think it divides older and younger union members who hold no stock and fear the payout is coming at the expense of their wages.

“The company wants to bargain over something that is already ours. It’s our money.” Beck said.

“They ought to do the honorable thing and redeem that stock today,” said chief union negotiator David Foster.

But Kaiser managers said that the stock has always been on the bargaining table and that nonunion salaried workers also have unredeemed stock under the “equality of sacrifice philosophy” that they were all in it together, Genteman said. There is no plan to pay off the salaried workers’ stock.

But while the company sees the 1980s agreements as the first in a series of steps back from the precipice, the union believes it was an anomaly that should be resolved.

“We were not a militant union. We worked things out for benefit of the company all the time,” Beck said. “We believed that when the company returned to profitability they’d pay it back. But we’ve had two record years (and) they want us to take concessions again.”

And so in 1999, the ghosts of the 1980s contracts and the 1990s corporate campaigns reappear.

“No labor dispute happens in the 30 days of bargaining beforehand,” Foster said. “It’s built on past history.”