Kaiser Aluminum $39.2 Million Loss Much Larger Than Expected
20 October 1999
Kaiser Aluminum $39.2 Million Loss Much Larger Than Expected; Impact of Labor Dispute with the USWA Continues
MINNEAPOLIS, Oct. 20 -- Kaiser Aluminum's third quarter loss
shows that its lockout of employees represented by the United Steelworkers of
America at five facilities continues to hurt the company's operating and
financial performance, union representatives said today in response to
Kaiser's report that it had suffered a net loss of $39.2 million during the
third quarter of 1999.
"The company's claims that the labor dispute is having no impact and that
its plants are operating at record levels, are clearly not borne out by the
numbers," said David Foster, USWA District 11 Director and the union's chief
negotiator with Kaiser.
"The $12.1 million operating loss for the third quarter of 1999 shows
clearly that these plants are neither operating well, nor is the dispute
behind it," said Foster.
"The third quarter 1999 results bring Kaiser Aluminum's total losses in
the four quarters since the labor dispute began to $132.0 million, compared
with profits of $53.7 million during the previous four quarters," he added.
The results came as a surprise to Wall Street analysts, who earlier in the
week had forecast a loss of just $0.17 per share or $13.5 million for the
third quarter. "We hope that the Company will finally heed the messages from
its accountants and community leaders. Its time for Kaiser to end the lockout
and bargain a new labor agreement," Foster said.
Kaiser Aluminum's revenue was off 3.9% in the third quarter of 1999
compared to the same period in 1998, while shipments of flat-rolled aluminum
were off 4.7% and revenue on flat-rolled aluminum was down 15.3%.
While Kaiser blamed the reductions in revenues and shipments on the
market, Foster pointed out that the performance of other aluminum producers
has recently improved. Alcoa reported a 19% increase in earnings in the third
quarter of 1999 over the third quarter of 1998 on stable revenues and
shipments, while Reynolds Metals reported a 4.5% gain in aluminum shipments
and a 5.6% increase in aluminum revenue. The Aluminum Association said that
U.S. aluminum production rose 1% in the third quarter of 1999 from the third
quarter of 1998.
"Other producers are making money in this market," said Foster. "If
Kaiser is running as well as it claims, why isn't it?"
Workers familiar with operations at the five facilities affected by the
lockout report that Kaiser Aluminum continues to suffer from operating
problems despite company claims.
"We have reports that the Company is experimenting with shipping molten
aluminum by truck from its Mead smelter near Spokane to the rod mill at Tacoma
because of chronic problems running the Tacoma potlines," said Bob Marsden,
president of USWA Local 7945.
"Those problems are so bad that the company has only been able to restart
two of the three potlines, and it may have to shut down one of those," he
added.
According to reports received by the union, Kaiser is experiencing a high
turnover rate among its replacement workers, and the company "is having
serious problems finding replacements for its replacements," Foster said.
Plants staffed by inexperienced replacement workers have also suffered
from an epidemic of serious workplace accidents. Injuries severe enough to
force the injured workers to lose work increased 65% in the first three
quarters of the labor dispute compared to the average for the same period in
1998, according to the most recent data available from the Occupational Safety
and Health Administration.
In the worst such incident, an explosion destroyed the company's alumina
refinery in Gramercy, Louisiana, in July, injuring 20 employees. Kaiser has
refused to cooperate with an ongoing federal probe into the causes of the
blast, and the company's managers have challenged subpoenas by the Mine Safety
and Health Administration, citing the Fifth Amendment's protection against
self-incrimination.
USWA members struck Kaiser Aluminum in response to the company's unfair
labor practices and substandard contract offer on September 30, 1998, and
offered to return to work on January 13, 1999. On January 14, 1999, the
company locked out over 2,900 USWA members at its plants in Gramercy,
Louisiana, Newark, Ohio, and Tacoma and Spokane, Washington.