Kaiser gets out of lids and tabs
Company to can 150 more workers as it narrows focus on aerospace market
Correction (4/10/02):Kaiser Aluminum Corp. will lay off up to 150 employees in June at its Trentwood rolling mill -- including hourly and salaried staff. This story mistakenly said all of the job cuts would be borne by Steelworkers.
Kaiser Aluminum Corp. will lay off up to 150 Steelworkers at its Trentwood rolling mill by June as it quits making lid and tab stock for the aluminum can market.
The move completes Kaiser's exit from the aluminum can business, for years a key Kaiser endeavor. Instead, the company will focus on rolling special heat-treated sheets of aluminum that are sold to aerospace firms such as the Boeing Co.
Kaiser spokesman Scott Lamb said the decision is unrelated to the company's Chapter 11 bankruptcy proceedings. Rather, Kaiser is focusing on a better product line for Trentwood.
"Lid and tab haven't been a big profit contributor," Lamb said.
Kaiser is a small player in the lid and tab market, capturing only a 4 percent market share. Competition is sharpening, Lamb said, as other companies use research to improve their products. Kaiser, he said, simply doesn't sell enough of the products to justify spending more money to keep pace.
"You wouldn't think that the technology that goes into lid and tab stock is pretty sophisticated, but it is," Lamb said. "It requires a fair amount of technical attention and development to stay current. Given that this is a relatively small market, though, we couldn't justify making those kinds of investments."
Instead, the company will sell its coating machine for about $15.5 million to an unnamed buyer. The machine is a 600-foot long piece of equipment that applies a special coating to the aluminum to prevent beverages from tasting like metal.
Lamb said the machine will be disassembled and moved.
Dave Carlson, president of Steelworkers Local 338, said the 100 to 150 layoffs is more bad news from an unraveling company.
"We're just hoping someone gets in here and buys (the plant)," he said.
Less than four years ago, Kaiser employed about 1,150 Steelworkers at Trentwood. Today, there are about 375. After the layoffs, there could be as few as 225.
Carlson said the affected workers will be eligible for federal assistance such as supplemental unemployment benefits and retraining dollars.
When workers installed the coating machine in 1990, it was state-of-the-art equipment. But Kaiser has since quit making can stock and has focused on the higher-priced aluminum used in aerospace.
The move away from can body stock began in about 1996 and accelerated in 1999 during the company's two-year labor struggle with Steelworkers. The union targeted Kaiser customers such as Anheuser-Busch, which decided not to buy from the company during the contentious labor problem.
Producing can body stock once made up about 40 percent of the rolling mill's volume.
Now that Kaiser's out of the can business, leaving lid and tab was a natural move, Lamb said.
"Heat-treated sheet is the core at Trentwood. Lid and tab was much smaller even than the body stock that we exited," he said.
The decision will need approval from the bankruptcy judge overseeing Kaiser's case.
Kaiser filed for bankruptcy protection Feb. 12, falling victim to about $3.1 billion in liabilities that included burdensome and maturing debts of $800 million.
At the same time, the company was struggling through a recession that depressed aluminum prices and led to an industry oversupply.
Last week, the New York Stock Exchange delisted Kaiser after its share price slumped below $1 for two months. Shares traded at 14.5 cents Monday in over-the-counter trading on Monday.
Carlson dismissed rumors that Kaiser is parting out the plant.
"Yeah, we've heard that. But we've also heard they're trying to buy things and bring them to Trentwood," he said. "What you hear just depends on the week.
"I think they're getting this rolling mill in order to make it a better sales target."
Kaiser doesn't comment on sales rumors as a matter of corporate policy.
Historically, Trentwood was supplied with molten metal from the Mead smelter. When surging electricity prices last year made selling power more lucrative than making metal, Kaiser shut down the Mead potlines and supplied Trentwood with aluminum ingot smelted elsewhere.
The rolling mill has operated at reduced capacity since.