Metal prices, power costs force Kaiser to cut staff

Associated Press

SPOKANE — Kaiser Aluminum Corp. began handing out job reduction notices Friday to 65 of 149 salaried employees at its smelters here and in Tacoma.

The layoff of management employees will be completed by Dec. 12, Kaiser spokesman Scott Lamb said from Houston. In addition, 53 of 65 hourly workers who were keeping the plants ready for a possible restart will be laid off beginning Dec. 10, he said.

The cutbacks are necessary because of uncertainty about restarting the smelters in the face of depressed metal prices and high power costs, Lamb said.

The employees were kept on even though the company’s only two smelters in the United States had been idled.

"We made an effort to maintain a salaried workforce through the past several months, when in fact, we were looking at the possibility of a restart," Lamb said. "But given what we see as this uncertainty over the prospects for a restart, we have elected to make this reduction."

The management notices follow the layoffs of more than 650 union employees at the smelters late last year, when the company concluded it was more profitable to sell its allotment of federal electricity than to make aluminum.

Kaiser made more than $450 million from the power sales without producing any aluminum.

A core group of management employees will be retained to continue to perform routine duties, Lamb said.

"At some point down the road, we are very hopeful we will be able to restart some capacity," Lamb said. "It’s unclear when that might be."

Salaried employees were being notified Friday by their department supervisors, Lamb said.

Depending on their length of service with the company, they are eligible for separation packages that could include severance pay, retirement benefits and continuation of medical benefits, Lamb said.

Union employees being laid off are eligible for payments equal to about 70 percent of their base wages, as determined by a contract with the United Steelworkers of America, he said.

Lamb said the job reductions have no connection with the resignation Thursday of Kaiser’s chairman and chief executive officer, Raymond Milchovich.

Lamb declined to say which company Milchovich left for, but said it is not in the metals industry.

Jack Hockema succeeds Milchovich as president and CEO. Hockema, 54, is an eight-year executive with the company, which is trying to retire or refinance $625 million in debt during the next 17 months.