Sides Trade Blame For Lockout Kaiser Defends Actions; Steelworkers Share Tales Of Woe
FROM FOR THE RECORD (Saturday, May 27, 2000): Clarification: Kaiser Aluminum Corp. took a $60 million charge for expenses related to the labor dispute with the United Steelworkers of America in 1998, not 1999. A company official misstated the year in a question-and-answer session during Kaiser’s May 25 annual meeting in Houston.
Who pushed first?
Kaiser Aluminum Corp.’s annual meeting on Wednesday turned into an emotional debate about who was most responsible for the bitter 19-month labor dispute.
The strike and lockout have idled 2,900 union workers at five plants in Spokane, Tacoma, Ohio and Louisiana.
Kaiser chief executive officer Ray Milchovich defended the company’s decision to lock out Steelworkers on Jan. 14, 1999, after a 3-month strike while spending $10 million on strike preparation in 1998. The company took a $60 million hit in costs related to the labor turmoil in the last quarter of 1999.
“The labor dispute was not of our making. We requested an extension of the labor agreement. This union decided to strike this company,” Milchovich told a crowd that included more than 100 Steelworkers and their spouses. He also defended the 16-month lockout as a “prudent” response to keep the company operating as the two sides negotiate a new contract.
“We chose to stand our ground,” Milchovich said.
Locked-out Mead worker Cory McKinley wasn’t buying it. “I was in the plant when you were there to force us out on strike. That’s just a bald-faced lie that slaps me in the face,” McKinley said.
The face-off got even more personal when the formal meeting ended, and most of Kaiser’s directors filed out. Milchovich and retired Kaiser CEO George Haymaker lingered to talk with their former colleagues from the Trentwood rolling mill. Two corporate security guards stood nearby.
“You’re sitting in your tower in Houston, and this is not hurting you. You don’t care,” said a weeping Wendy Wise, wife of locked-out Trentwood worker Dean Wise.
Trentwood worker and union activist Carol Ford Duncan added: “I took the call at the union hall to take our people out. You started hiring (replacement) people in May (of 1998). It was a waste of money.”
“It was necessary,” Milchovich shot back.
During the annual meeting, Mil chovich said Kaiser’s prospects for generating better returns for its stockholders look good this year.
“Our 1999 performance was not good, but we’ve bounced back in the first quarter” this year, he said. Problems last year included weak metals prices, a downturn in aerospace and engineering industries and smaller-than-normal smelter operations, including the shutdown of three potlines in the Northwest due to the labor dispute, he said.
Milchovich said the Mead smelter has seen a 30 percent productivity increase since the strike and lockout, which is important because the plant has to compete globally against lower-cost smelters. And Trentwood is operating with 31 percent fewer workers than before the strike, he said.
But, several Steelworkers said, it’s unfair to justify cuts in worker benefits and staffing levels by citing global competition while U.S. aluminum company executives rake in big salary increases and bonuses even in years when their companies lose money.
During their two days in Houston, Steelworkers had closely read a May 21 Houston Chronicle article listing the 100 highest-compensated CEOs in the city.
Charles Hurwitz, CEO of Maxxam Inc., Kaiser’s parent company, ranked 13th with total compensation of $15.645 million, including $726,000 in salary, in 1999 - the same year Maxxam stock lost 50 percent of its value.
Milchovich, who hadn’t yet been named Kaiser CEO last year, earned $419,583 in salary, got a $250,000 bonus and had a total compensation package of $2.884 million. He ranked 86th.
Haymaker, who recently retired as Kaiser CEO, ranked 55th, with a salary of $563,583 and total compensation, including stock options, of $4.651 million. He is now Kaiser board chairman.
Kaiser executives earn far less than executives who run industry giants such as Alcoa, and the company has to compete for executive talent, Haymaker said “I get very, very well paid, and I like what I do. This company needs to survive in order to support jobs for you and also carry Kaiser retirees. The decisions we make here are for the long-term survival of this company,” Milchovich said.
That explanation rankled Dave Reid, a locked-out Mead worker. “You guys made decisions that put us in a lockout. You made us activists. The Steelworkers were only asking for a sliver of the pie. You constantly shove the globalized economy down our throats. It’s a race to the bottom,” Reid said to audience applause.
In the Maxxam meeting that preceded Kaiser’s, the Steelworkers and a coalition of environmental activists criticized the company’s poor performance last year. Maxxam, which gets 87 percent of its income from Kaiser operations, also owns real estate, timber and horse racing assets.
CEO Hurwitz, fielding questions, said 1999 was an “interesting year” for Maxxam, which included a precedent-setting deal with the Clinton administration to buy the company’s Headwaters Forest in California and Kaiser’s faltering performance.
“We are fully supportive of the significant work Kaiser has started to improve its core performance,” Hurwitz said.
The July 1999 explosion of Kaiser’s alumina plant in Louisiana didn’t help, he said. (Kaiser is spending $198 million to rebuild it.)
Neither did the “noise levels of certain groups,” Hurwitz added - a slam at his environmental critics in California and at the Steelworkers’ corporate campaign to call attention to Kaiser’s and Maxxam’s problems.
Late Wednesday it was apparent that the Steelworkerenvironmentalist alliance that formed the Committee of Concerned Maxxam Shareholders had failed in its bid to elect two independent Maxxam board members, former Sen. Paul Simon, D-Ill., and Abner Mikva, a former federal judge and lawyer for President Clinton.