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Kaiser, Steelworkers OK five-year contract

Kaiser Aluminum and the United Steelworkers of America have agreed to a new five-year contract.

The smooth negotiations were markedly different from the acrimony of the last labor pact, reached only after the company locked out Steelworkers for 20 months in one of the toughest union-company fights in recent memory.

The new contract, announced Tuesday, covers about 800 union members at four plants, including more than 500 Steelworkers at the Trentwood rolling mill in Spokane.

Pay raises, signing bonuses, a profit-sharing clause and benefits are included.

“Overall we think it’s good and it gives more increases that what we’ve seen in many years,” said Dave Carlson, president of Steelworkers Local 338.

Kaiser chief executive officer Jack Hockema called the agreement a key part of its strategy.

“Both parties share the same objective of having Kaiser emerge from Chapter 11 poised for long-term success,” Hockema said in a statement.

The contract awards a pay raise of 14 percent over the next five years. In each of the first two years workers will receive a pay bump of 2.5 percent, followed by a 3 percent boost in each of the last three years. On average, Kaiser Steelworkers earn about $16.43 an hour.

New in the contract is profit sharing. Using a complicated formula, Carlson said, Steelworkers might earn an average of 50 cents an hour on profit payments over the life of the contract.

The last time the sides attempted contract talks the effort collapsed. Steelworkers struck Kaiser for three months beginning in 1998 and then the company illegally locked out union members from factories and instead hired replacement workers. A contract finally was signed in 2000.

Kaiser asked the Steelworkers for speedy negotiations and ratification as a practical matter for its reorganization efforts. The contract passed the union by a 350-111 vote.

The company is negotiating with lenders, “and the bankers wanted to see a long-term labor deal in place before committing,” Carlson said.

Kaiser plans to emerge from Chapter 11 bankruptcy protection later this year, more than 3½ years after filing for protection from creditors.

The company is optimistic about its chances. Last week Kaiser announced a new supply contract with Airbus. The deal calls for Kaiser to provide special heat-treated aluminum sheet to the European aircraft maker through 2011.

Since Kaiser’s 2002 bankruptcy filing, it has sold its Mead smelter to a scrap company and its Tacoma smelter to the Tacoma Port Authority for demolition and to make room for expanded shipping operations.

To satisfy much of its debt, Kaiser also sold its assets in other countries that included bauxite mines, alumina refineries and aluminum smelters.

The newly reorganized Kaiser will not be controlled by Maxxam Corp., a company owned by Houston financier Charles Hurwitz. Though Maxxam still holds 62 percent of Kaiser’s common stock, the company has said those shares are virtually worthless and Maxxam has no day-to-day say in Kaiser decision-making. Instead, Steelworkers are set to have a much stronger say.

A 10-member board of directors will be appointed to oversee Kaiser – four members appointed by Steelworkers, four from management and two independent members.

A plan of reorganization has yet to be submitted by Kaiser. The company has said it envisions issuing new stock in the company, much of which would be held by a trust.

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