Arbitrator orders end of lockout

Kaiser Aluminum dispute dragged on nearly 2 years
By L.M. SIXEL
Houston Chronicle

A labor arbitrator on Monday ordered locked-out Kaiser Aluminum & Chemical Corp. workers back to work under a new five-year contract.

The employees, represented by the United Steelworkers of America, will be phased back into their jobs over the next four to six weeks. The temporary replacement workers will lose their jobs.

Employees will get a $3.42-an-hour raise over the five-year contract, a boost in monthly pension payments of 28 percent to 32 percent, removal of a company spending cap on health care for retirees, and $12 million in severance pay and supplemental unemployment benefits for 540 employees who were laid off as part of the agreement, according to the union.

Also, an additional 148 workers will permanently lose their jobs as Kaiser gets out of the beverage can business at its Washington mill, according to Scott Lamb, spokesman for Kaiser Aluminum in Houston. It will also temporarily lay off 356 workers at its two Washington smelter plants.

After failing to negotiate the terms of a new contract during the 20-month lockout, the union and Kaiser took the unusual step of giving the remaining unresolved issues to an arbitrator to decide. Both sides agreed to abide by the ruling made by Seymour Strongin, a Washington, D.C.-based arbitrator.

The lockout began Jan. 14, 1999, at five Kaiser plants: in Gramercy, La.; Newark, Ohio; Tacoma, Wash.; and two plants in Spokane, Wash.

It was the longest labor dispute last year as measured by lost work days, and it was marked by an intensive "corporate campaign" against Kaiser Aluminum and its parent company, Houston-based Maxxam. The union, which teamed up with several environmental groups, sought to name several members to Maxxam's board, blocked Kaiser shipments of alumina and led a boycott against Kaiser's products.

"It was a very long, involved struggle, and I think there are a lot of people who didn't expect to see this day," said John Duray, spokesman for the United Steelworkers in Pittsburgh.

"On balance, we believe this labor agreement is fair and reasonable for our employees -- and very good for Kaiser Aluminum," said Raymond J. Milchovich, president and chief executive officer of Kaiser Aluminum, in a written statement. He said the new agreement will create productivity gains that far surpassed its original expectations.

Part of the agreement calls for eliminating barriers in the contract that prevented some employees from working in other crafts. The company can use more temporary workers during peak times.

Kaiser said it expects its financial results for the third quarter will reflect a one-time pretax charge of $30 million to $40 million to reflect the incremental, nonrecurring impact of the labor settlement. The charge will be partly offset by a previously announced pretax net gain of $40 million associated with the sale of electrical power.

Employees went on strike Sept. 30, 1998, the day the contract expired, because Kaiser employees were earning $1.50 less an hour than their colleagues at Reynolds and Alcoa aluminum plants, Duray said.

And the pensions Kaiser offered were as much as $300 less per month for someone with 30 years of service compared with the other aluminum makers, Duray said. Other benefits, such as life insurance and weekly sickness and accident benefits, were lower too.

Employees also wanted job security protections if the plant was sold -- such as requiring the new employer to honor the existing labor contract, he said. That's a common agreement in the steel, mining, rubber and aluminum industries, he said.

But negotiations during the strike weren't going anywhere and the company hired replacement workers, Duray said. Four months later the employees offered to go back to work but the company refused, locking the employees out.

The union filed unfair labor practice charges with the National Labor Relations Board. In April, the NLRB general counsel, Leonard Page, charged that Kaiser's lockout violated federal labor law and subsequently sent the case to an administrative law judge. The trial is scheduled to begin Nov. 13.

If the NLRB eventually decides that Kaiser indeed locked out its workers illegally, it will owe 2,900 employees back pay from Jan. 14, 1999. The union estimates that Kaiser owes the employees $337 million.

Kaiser Aluminum was created after World War II to compete with Alcoa Aluminum, which was an aluminum powerhouse.

But the Kaiser empire fell on hard times in the 1980s and was sold to a British investor, Alan Clore, who renamed it KaiserTech. But Clore couldn't keep up the debt payments after the stock market crashed in 1987 and later sold it to Maxxam for $930 million.

Maxxam then took the company private in a leveraged buyout.

In 1988 and 1989, Maxxam sold several plants and used the money to pay down debt and pay dividends. Then in 1991, Maxxam took the company public, raising $93.2 million.