Kaiser workers expect complication on benefit
Early-retirement stipends, due next February, could fall prey to reorganization
By Addy Hatch
Kaiser Aluminum Corp. faces a Feb. 1 deadline to begin paying early-retirement benefits to up to 300 members of the United Steelworks union here, but a union official says he’s not holding his breath that’ll happen.
“Jan. 31st is three or four months away, but it certainly won’t surprise any of us if they do something to get out of that,” says Dan Russell, president of United Steelworkers Local 329 here.
Union members believe Kaiser might try to reduce or suspend early-retirement payments in its effort to restructure and emerge from protection under Chapter 11 of the U.S. Bankruptcy Code.
If such an effort occurs, the union likely will listen to what Kaiser has to say because it won’t have much choice, Russell says.
While he says the “knee-jerk and emotional” response from the union would be to refuse outright any request to amend the early-retirement benefit, the union believes it’s likely that Kaiser could persuade the Bankruptcy Court it needs relief from the obligation, he says.
For its part, Kaiser has “not made any changes to existing pension plans at this point,” says Scott Lamb, the company’s Houston-based spokesman.
Steelworkers are eligible under their contract with Kaiser to begin collecting in February a $400-per-month early-retirement benefit if they had 20 or more years of service when the Mead smelter was idled, in late 2000. The early-retirement supplement would be paid on top of a worker’s pension, and would continue until he or she could begin collecting Social Security payments.
In its most recent quarterly filing with the U.S. Securities and Exchange Commission, Kaiser says it has set aside “a substantial portion” of the expected costs of the early-retirement benefit and certain other union benefits, but says it might need to earmark another $50 million to $60 million to cover those costs.
Mead smelter’s future
That SEC document also says Kaiser is reviewing “the long-term competitive position of the Mead and Tacoma” smelters, which it says have a combined value of $145 million. Kaiser expects to complete its review of the options for those facilities by the end of the year.
Lamb won’t say whether one of the options under consideration is to sell the smelters.
“You can draw inferences from the phrase ‘reviewing strategic options,’ but we haven’t gone any further down the road in speculating what those options might be,” he says.
The union’s Russell says the Steelworkers aren’t optimistic that a buyer for the smelters could be found, especially now that Kaiser has severed its long-term power contract with the Bonneville Power Administration. Whatever the company does with the Mead smelter, in particular, it will be responsible for years to come for environmental costs associated with the 1,200-acre property.
Kaiser currently is negotiating a consent decree with the state Department of Ecology that would dictate its responsibility for several cleanup projects at the idled facility, says Paul Skyllingstad, the department’s Olympia-based site manager for the Kaiser project.
The company is expected to construct next summer a groundwater treatment system there that would cost “several million” dollars, Skyllingstad says.
The consent decree will specify what kinds of new projects, and the extent of maintenance of already-completed work, must take place in the future, he says.
Even if Kaiser decides to let the plant sit idle, it can do that for several years before it would have to start cleaning up the facility, he says.