Kaiser Aluminum files for bankruptcy

Associated Press

SPOKANE — Kaiser Aluminum Corp. filed for bankruptcy Tuesday, but resident and CEO Jack Hockema said the move shouldn’t change the company’s operations.

Kaiser was once the largest private employer in Eastern Washington with some 2,000 workers at two sprawling Spokane plants. But a strike, coupled with skyrocketing electricity costs and low prices for aluminum, reduced that workforce to less than 700 in recent years.

The company also has an idled smelter in Tacoma.

Kaiser’s rolling mill at Trentwood, which employs about 650 people, will continue to operate, Kaiser officials said. The smelter at Mead has been idled for more than a year because of high electricity costs and low aluminum prices. Only a few people work there, maintaining the plant.

"We anticipate business as usual in Spokane, as well as the rest of the world, in our operations," Hockema said Tuesday.

The company has strong cash reserves and filed voluntary petitions under Chapter 11 of the Federal Bankruptcy Code to reorganize its finances, officials said.

Members of the United Steelworkers union met in their union hall here Tuesday trying to make sense of the bankruptcy filing.

"Right now they are saying it’s business as usual," said Steve Powers, a Steelworkers staff worker in Spokane. "But there is some concern about labor agreements."

It’s too soon to determine if the bankruptcy filing will continue to reduce the work force, Powers said.

"Obviously, our members are very nervous and concerned about what their future with the company is," Powers said. "If they keep running, that would be a good part."

Gene Midkiff, a laid-off Steelworker at the Mead smelter, said workers are worried about the future of the plants and the health of their pension funds. "We haven’t put any stock in what that company has said for a long time," Midkiff said. "They’ve lied to us so much."

Kaiser and its subsidiary Kaiser Aluminum &Chemical Corp. each filed bankruptcy petitions in a Delaware federal court. The company said it is facing significant near-term debt maturities at a time of unusually weak aluminum industry business conditions. Kaiser also cited the economic slowdown exacerbated by the events of Sept. 11.

In addition, the company has become increasingly burdened by asbestos litigation and growing obligations for retiree medical and pension costs. That has created the prospect of continued operating losses and negative cash flow, resulting in lower credit ratings and an inability to access capital markets, the company said.

Rolled aluminum from Trentwood is used in the aerospace, ground transportation and industrial markets.