In all but name, Kaiser is a new company
Kaiser Aluminum Corp., a mainstay of the Spokane-area economy since shortly after World War II, will be four weeks old Thursday. So far, so good.
Kaiser emerged from bankruptcy July 6. Over the previous 4½ years, executives and legions of high-priced lawyers had negotiated away debts totaling $3.1 billion and100,000-plus health-related claims stemming from long-terminated businesses, notably asbestos. The weight of its obligations to banks and other creditors had crippled Kaiser for decades. Through good times and bad for the aluminum industry, Kaiser never seemed to get better.
Kaiser is better today, but the recovery involved numerous amputations. Operations from Australia to Ghana to Jamaica to Louisiana were sold off. The company’s Tacoma smelter was razed. The sprawling Mead smelter has been gutted. The pain was shared by thousands of former employees, many in the Spokane area, who lost their health care benefits.
Not a pretty picture, but at least Kaiser remains in the picture. Look around the Northwest. Reynolds Metals is gone. So is Vanalco. The region’s historically low electricity prices have increased to the point aluminum smelting is a marginal business. Only three of the 10 smelters that once dotted the landscape from Columbia Falls, Mont., to Ferndale, Wash., are running today, none at full capacity.
Kaiser now has a stake in but one smelter, in Wales. Otherwise, the company has retrenched into fabricated products, mainly for the automotive and aircraft industries. Trentwood is the centerpiece of the new strategy.
For once, the company’s timing is flawless. Airlines, mostly foreign, have ordered hundreds of new planes. Newly profitable domestic carriers could soon add to the production backlog. With long-term supply contracts with Boeing Co. and Airbus in hand, Kaiser is investing $75 million at Trentwood to increase the types of products available to those manufacturers and their suppliers. Dozens of employees count be added to the 600 already at work under the Spokane Valley plant’s 60 acres of roof.
Chief Executive Officer Jack Hockema has been justifiably effusive about the dedication of Trentwood’s work force, which has taken its share of punches over the last decade, from two strikes and a related lockout to the withdrawal from some product lines. You don’t, for example, drink Coors beer from Kaiser-made can stock anymore.
The corporate makeover has produced results. Kaiser earned $38.4 million during first-quarter 2006 on sales of $336.3 million. Second-quarter numbers should be out shortly.
Labor has a lot riding on Kaiser’s success. A trust formed on behalf of several unions, from Steelworkers to Food & Commercial, holds 43 percent of new Kaiser shares. Other trusts formed to help resolve numerous liability claims also own blocks of stock. Even the Pension Benefits Guaranty Corp., stuck with $555 million in Kaiser retirement obligations, has a substantial piece of the action.
Labor also has a seat, or seats, on the board of directors. Former United Steel Workers of America President George Becker occupies one of those seats. Carl Frankel, that union’s retired general counsel, is on the board, as well. They are the greybeards on a panel that, with Kaiser’s emergence from bankruptcy, replaced an old guard that included Houston financier Charles Hurwitz. The less said about that bunch, the better.
Hockema says Kaiser executives kicked around the idea of changing the company’s name to put the taint of recent history behind it. Fortunately, customers aware of the company’s post-WWII ascendancy under Henry Kaiser would have none of it. Lord knows we have enough consultant/focus group-concocted names that suggest a cheap imported car more than industrial muscle. Lightweight metal, yes. Lightweight names, no.
To paraphrase an old saying, Kaiser Aluminum is dead. Long live Kaiser Aluminum.