Kaiser might be selling
TACOMA PLANT: Operation has been on hold since summer
Al Gibbs and Barbara Clements; The News Tribune
Tacoma's Kaiser Aluminum plant, once described in newspaper articles as a dinosaur waiting for an Ice Age, may be up for sale.
The least efficient of Kaiser's plants in the Northwest has been closed since summer and is now reported to be the subject of negotiations between Kaiser's parent company and another aluminum manufacturer, reportedly the Franco-Canadian firm Pechiney Metals.
Kaiser officials couldn't be reached for comment, but the company conceded talks were going on in a press release announcing that the firm had windfall profits of $228 million in the first three months of this year by selling power rather than making aluminum.
"We are continuing in negotiations on five separate transactions involving a range of potential asset sales," Ray Milchovich, Kaiser's president and CEO, said in a press release.
"We will be in a position to announce something specific within 60 days," he said.
Two years ago, as Kaiser was embroiled in a strike by its steelworkers - which later turned into a lockout by the company - its Northwest plants in Tacoma and Spokane were visited by officials of Pechiney Metals and Alcan of Canada.
Pechiney at the time was the world's No. 2 aluminum maker. Alcan was the fifth-largest. The two have since merged, creating the planet's largest aluminum company.
Informed observers have indicated that Pechiney doesn't intend to operate the plants if a sale goes through but merely to acquire capacity and wait for aluminum prices to rise or electricity prices to fall to levels at which the plants can be operated profitably.
At full production, Kaiser employed about 370 workers in Tacoma and 2,000 at plants near Spokane.
Union leaders say they've heard rumblings of the sales, and speculated that the five properties on the block are the five plants that participated in the two-year strike.
"There's been rumblings, but they don't want to include us," said Bob Marsden, president of USWA, Local 7945, which represents the remaining workers at the Tacoma plant.
The sale, Marsden said, is probably a punishment for workers staying out so long.
"It's stuck in their craw much more than it has in ours," he said.
About 50 workers still remain at the Tacoma mill.
Aside from Pechiney, officials from another aluminum company, Niranda Aluminum out of Missouri, have toured the Tacoma facility, he said.
Pechiney apparently made an offer for the Trentwood plant, but Kaiser officials said if they took Trentwood, they also had to buy Mead, Marsden said.
That chilled the deal, Marsden added, since Mead will require a lot of environmental cleanup.
Port of Tacoma officials who have viewed the 70-acre site as a potential backup area for a new container terminal, were stunned by the news.
"We talk to them weekly, and the subject never came up," said Bob DeWald, the port's senior director for industrial development and real estate.
"I'm disappointed they didn't talk to us."
While it's considering selling off its Northwest plants, Kaiser is doing well selling the electricity they once used.
Kaiser on Wednesday reported profits of $119.6 million in the first quarter, entirely from resale of its cheap allotment of federally produced electricity from the Bonneville Power Administration. Electricity sales totaled $223 million in the quarter that ended March 31.
The profits increased tenfold from the $11.7 million reported for the same period last year.
But without the power sales, Kaiser would have had a first-quarter loss of $9.1 million, compared with net income of $4.1 million for the year-ago quarter.
Kaiser reported first-quarter sales of $480.3 million, down from $575.7 million a year ago, mostly because of idled production.
The low-cost electricity comes from a long-term contract with the BPA that expires in October.
Kaiser now pays BPA about $23.50 a megawatt hour - a price expected to increase many times under the new contracts, which would ban resale.
Power on the current market is selling for about $250 a megawatt hour, and prices are expected to reach $480 by the end of the summer.