Kaiser Set On Cutting Labor Costs Dispute Has Changed Way Firm Operates, Officials Say

Kaiser Aluminum and the United Steelworkers union will resume contract negotiations today in Denver.

But heading into the two-day talks, the gap between the company and its union work force remains wide. Whatever the outcome, this much appears certain: Kaiser Aluminum will employ far fewer people and at a wage more like the rest of Spokane’s work force than in the past.

In interviews after the company’s annual shareholders meeting last week, Chief Executive Officer George Haymaker and President Ray Milchovich said the dispute has changed the way Spokane’s Mead and Trentwood plants will operate.

Since the Sept. 30 strike and January lockout, officials said, they have experimented with job classifications and duties to make and roll aluminum with fewer people.

“We’ve had an eight-month laboratory,” said Milchovich. “We now have eight months’ experience doing it a completely different way.”

At the heat-treat area of the Trentwood plant, for instance, work done by 91 union workers is being done by only 57 people.

“We cannot afford to lose those productivity gains,” Haymaker said.

Union officials have claimed much of the Kaiser metal coming out of such experiments is so inferior, it’s being rejected by customers. The company counters that while there have been some flawed batches, the plants are working well.

It is just one of their many differences of opinion. Kaiser Aluminum has proposed cutting 700 jobs at its five plants currently locked out, or about one quarter of the Steelworker workforce. At least 250 of those jobs may be contracted out. Milchovich said the company’s proposal would increase wages about 2.6 percent each year for the five-year contract and pensions 15 percent.

The company’s proposal would set wages that reflect the prevailing pay in those communities - bad news for many in Spokane and Gramercy, La., where Kaiser has been seen as one of the few living-wage jobs. But Haymaker said the company is committed to cutting $120 million in costs regardless of aluminum prices.

The Steelworkers say they are willing to negotiate job losses and restructuring. But union officials say the company did not reveal which jobs would be cut or what the wage rate would be until well after the lockout. And because of proposed reclassifications, workers at higher skill levels would be paid more under the proposal, but many others, while getting annual raises, would actually earn less than they did before Sept. 30. The pension offered would also be significantly lower than elsewhere in the aluminum industry, union officials say.

As staunchly as the company defends its wage rate, the union defends its seniority system. The Steelworkers object to proposed competency tests that workers would have to take to keep their jobs. Chief negotiator David Foster said that a veteran worker could lose his classification after such a test, for instance, and end up retiring with a much lower pension.

Such arguments surfaced last week when nearly 300 Spokane Steelworkers and environmentalists traveled to Houston to demonstrate unity and put pressure on Kaiser and the company that controls it, Maxxam, Inc.

Steelworkers in T-shirts from Bloomsday and with the saying “The Labor Movement, From the People Who Brought you the Weekend” demonstrated outside Hurwitz’s penthouse home and corporate headquarters. They questioned Hurwitz directly at the Maxxam shareholder meeting Wednesday and at the Kaiser meeting immediately after, where Hurwitz appeared as a director.

Hurwitz directed Kaiser questions to CEO Haymaker, but maintained that Kaiser wants a labor agreement with the Steelworkers. Haymaker concurred. But he said the Houston happenings would not affect what happens in Denver one bit.

“They feel that by attacking Charles Hurwitz it will influence the situation in some way,” Haymaker said. “But really, it will only be resolved at the bargaining table.”

“There is so much smoke that takes away from the real issues,” Milchovich said.

The Steelworker demonstrations are part of a corporate campaign that included an attempt to elect independent candidates to the Maxxam board, which is closely held by Hurwitz and his associates.

Friday, results of the vote were still not final but the Committee For Concerned Maxxam Shareholders, the Steelworkers and the Rose Foundation for Communities and the Environment, said they had won about 18 percent of the vote supporting their candidates, which is about 44 percent of the common stock votes not controlled by Hurwitz.

“If you had 44 percent of the shareholders of General Motors voting against the direction of the board, there would be profound changes,” said Foster, District 11 Director of the Steelworkers. “In most publicly-held companies, if you had 18 percent of the shareholders express this level of dissatisfaction, they would be meeting with that shareholder group today.”

Foster said the vote and publicity surrounding it will linger and since Wall Street and investors generally don’t like confrontation, it’s likely to affect stock value or possibly the company’s ability to capture capital.

But Maxxam officials dismissed the impact of the union’s four-month campaign, especially since the company’s two incumbent candidates, both long-time board members, remain.

“The committee is claiming victory, but it’s like coming in second in the New Hampshire primary,” Maxxam spokesman Joshua Reiss said. “It might matter in New Hampshire, but it doesn’t matter here.”

Corporate campaigns such as this are part of a national union strategy that has been evolving over the last 12 years, said Mildred Blowen of PTI Labor Research Inc. a labor relations service bureau for labor and management attorneys. The campaigns have moved “from demonstrating outside the doors to getting control of the board.”

Joining forces with environmentalists is a tactic AFL-CIO head John Sweeney calls “streak heat” that capitalizes on existing activists. Some corporate campaigns have worked, others have failed, and still others have destroyed companies like Food Lion in Texas. And while they may not affect a company’s philosophy or managment decisions, they can affect the bottom line.

“I can tell you corporations take it very, very seriously when a corporate campaign is undertaken against it,” Blowen said.

The alliance formed between environmentalists and the Steelworkers in Houston resulted this week in a formal agreement calling for the education and protection of matters of public interest and the regulation of pollutants, waste disposal and labor laws. It seemed to inspire individuals on both sides.

But Blowen said such battles are not the individual worker or protecting the worker but about the political clout and financial stature of unions.

Spokane Steelworkers said the corporate campaign was one thing they could do in what increasingly feels like a powerless situation. They came to see Hurwitz in person. They called him, Haymaker and Milchovich by name, whether they were shaking hands or cursing. And they take each company action personally.

Leo Gerard, secretary-treasurer of the International said the company tried to insult and intimidate the workers by refusing to record the questions they asked and by hiring 40 armed Texas Rangers, sheriff deputies and security guards to secure the meeting.

“You’re acting as though you despise your work force,” Gerard said.”

“We have the security appropriate to the gathering,” Maxxam’s Reiss said later.

Yet without a labor agreement, there may be more such encounters in the future.

“This union and its officers have had more experience with adversity than anyone should have to tolerate. I will live long enough, and if not, my grandson or great grandson will live long enough to see an agreement,” Gerard

This sidebar appeared with the story: ISSUES Talks ahead Key issues to be discussed may include job reclassification, wages, retirement benefits and the union seniority system.