The Los Angeles Times from Los Angeles, California • 64

Cos Angeles Slimes How the Former Kaiser Companies Have Fared Aluminum: Operations Are Cut Back in Hopes Move Will Stimulate Growth 2 Part VSunday, August 4, 1985 By DONNA K. H. WALTERS, Times Staff Writer After August, only two of four aluminum-smelting lines will be operating at the Kaiser plant in Ravenswood, W. Va. But to Maier, 60, the tough choices are being made for the company's future.

Like the decision to spend $230 million to modernize its Trentwood rolling mill, even though it pushed expenses through the roof and cost valuable production during the changeover. Unique Troubles "Yes, we had troubles, the industry had troubles. We had some troubles that were unique to Kaiser Aluminum because of where our facilities were located, but we've had a program and we think a very good one, and we're very confident we're going to succeed in it," he said. The aluminum company, the third largest integrated aluminum maker in the United States, from the beginning was one of the most successful ventures of industrialist Henry J. Kaiser.

Despite cyclical ups and downs of the market, its It made sense 30 years ago for Kaiser Aluminum to string its mills along the Mississippi River in Louisiana. They were close to the big Eastern markets, close to raw minerals from Jamaica and a crawfish's skitter away from a plentiful supply of water. But in the changed market of the 1980s, Kaiser thinks it makes sense to close down most of its primary aluminum-making operations, such as those at Chalmette, import most of its basic aluminum and finish, or fabricate it, at such places as its Trentwood, mill. "We've done some pretty tough things," Cornell C. Maier, chairman and chief executive of Oakland-based Kaiser Aluminum Chemical, said in an interview.

Pulling back at Chalmette and Baton Rouge were hard decisions because it cost thousands of Kaiser workers their jobs. The Chalmette Works alone used to employ about now less than 100 work there, and only 200 at Baton Rouge. KAISER STEEL AT A GLANCE TONY BARNARD Los Angeles Times The Kaiser Steel mill in Fonta-na is now operating at a fraction of the capacity it had during the company's heyday. Year ended Dec. 31 (in millions): 1984 1983 1982 Revenue $151.2 $226.9 $734.9 Net income (loss) 47jr (422.8) 2.6 growth continued steadily, reaching peak earnings of $247 million in 1980.

But the downward spin bgan the next year, when earnings dropped nearly 50. Losses in the past three years have nearly equaled 1980's profits. Kaiser Aluminum most likely will end 1985 in the red also. In the first half, it lost $33.8 million, mostly from its aluminum operations. Part of the cost-reduction program has been to make cuts in the pay and benefits of its unionized employees.

These cuts have been shared by the corporate and office staffs. Maier estimates that the cuts will save the company $150 million over the three-year span of the union contracts. The size of the payroll has been pared, too, to about 15,000, down from 17,000 in 1983 and more than 25,000 in 1976. Also, Kaiser has been selling off parts of the company to raise cash and lower expenses, and has increased its borrowing, 'torecord levels. Gone are its agriculture chemicals and refractories divisions.

Its trading and overseas sales subsidiary is being sold, and it is looking for a partner for Kaiser Energy, its oil and gas subsidiary. Will Supply GM It has shut down aluminum -making plants, and is operating its remaining primary aluminum facilities at 64 of capacity. "We are selling very little primary product, ingots," said Maier, "and are selling most of the production that we have through fabricated products." Just last week, Kaiser announced it would be a major supplier of fabricated products, such as aluminum reinforcement sheets for bumpers, to General Motors for use in its 1986 vehicles. Analysts believe that the U.S. aluminum industry still has tough times ahead, because of depressed prices and stiff foreign competition.

But Maier sees an aluminum lining in every cloud. Its aluminum-making plant in Ghana is coming back into operation after two years of drought-induced shutdown. In the Pacific North Steel: Fontana Mill Is Still Operating -but It's Only a Shell of Its Former Self make products more suited to today's Western economy. And Kaiser Steel, a company in metamorphosis, will have finished shedding yet another unneeded layer. The Fontana Works, built in 1942 and expanded several times since then, was part of a finely crocheted chain of Kaiser Steel holdings: land that provided the raw minerals and water power, plants and equipment that made steel plates, sheets and bars, other companies that turned the steel into pipes, girders, oil drilling platforms, bridges and buildings, and a subsidiary that shipped coal and iron ore.

But from the beginning, Kaiser Steel's big plant seemed to be struggling constantly to overcome hardships. The first two were built in: its location (55 miles inland, a wartime concession to fears of coastal attacks) and size (restricted to wartime needs by the lending governmental agency). The Fontana Works underwent several expansions and modernizations in coming years some to keep up with rapidly evolving technology, others to meet standards of air pollution control. But it always seemed to be a case of too little, too late. Additionally, through the years imported steel took an increasingly larger share of the West Coast market, and a cost-savings shar-ings plan for its workers became a cost burden itself.

As its problems grew, Kaiser Steel made attempts to get out of basic steel manufacturing. The first was reversed in 1975, when the company decided instead to begin a Please see STEEL, Page 22 The cavernous plant at Fontana is noisy again; steel is being rolled or pulled into usable shapes throughout a 400-acre section. But the droning of machines and the staccato of workers' shouts are mere echoes. More than 10,000 steelworkers used to draw Kaiser Steel paychecks; now, fewer than 700 employees of a new company called California Steel Industries work at the mill. In the rest of the facility, workers are ripping out the old steelmaking equipment in the plant that Henry J.

Kaiser built to meet the demand for steel on the West Coast during World War II. The old ovens, furnaces and ladles will be sold as scrap. The emptied part of the plant may be turned into an industrial park, where other companies would SUSAN GILBERT Cornell C. Maier, chairman of Kaiser Aluminum Chemical KAISER ALUMINUM AT A GLANCE 1983 1984 1982 Year ended Dec. 31 (in millions) $3,278 $2,617.5 $2,853.5 west, some of its power costs have dropped.

And a couple of product price hikes are giving the company "room for hope" that the "phenomenally low" aluminum prices may be on the way back up, he said. Revenue Net How) (S3.9) (74.9) 11 15) 'Includes loss on discontinued operations. Melifyfc Select Fbrtfolios OQIlMMeiiaTOllS Cement: Fighting a Battle to Stem the Increasing Flood of Low-Cost Imports Tbp5L AMERICA' SELECT SELECT SEltfft it's very expensive, it's very time-consuming and it doesn't work." The U.S. International Trade Commission determined that foreign cement makers, including Japan and Australia, "dumped" cementthat is, sold it in this country at prices below those charged in their own markets. But it ruled that the U.S.

makers, including Kaiser Cement, were not harmed by the dumping. The cement makers group has appealed, and still hopes duties will be imposed to help even out the prices. Orders Setting Records Industrywide, new orders for cement have been setting records, but with prices still depressed, the profits are more difficult to come by. Kaiser Cement has been reducing its costs even as its shipments increase. An expansion and modernization program begun in the late 1970s gave Kaiser Cement From the window of his 24th-floor office at the Kaiser Center, Walter E.

Ousterman can see downtown Oakland settling into middle-age spread and, in the distance, the pastel blush of San Francisco. In the buildings and in the highways and bridges that lace the cities together, he can see Kaiser cement. But Ousterman, the 55-year-old chairman, president and chief executive of Kaiser Cement knows that more and more construction, especially in the burgeoning cities of Southern California, is being done with cheaper imported cement. And he waits for the next decision in the costly and frustrating case against the foreign competition. "Our Commerce Department likes to tell everybody that all you have to do is use the laws of the United States if you're being injured" by imports, Ousterman said in an interview.

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"I don't think if you sat there for 10 minutes you could think of another product that was that cheap." Even at that price about $50 a ton Kaiser is undersold by the foreign cement makers. In their home markets, he said, the foreign makers sell cement for $55 to $60 ton, but in the United States they charge $29 a ton. Profits at Kaiser Cement peaked at $50.1 million in 1978, helped by the sale of its gypsum division. By 1983, the company was in the red, and its 1984 loss was $52.5 million, mostly the result of writing off its troubled Hong Kong joint venture. Analysts warily note that those losses came during a time of steady recovery in the primary markets for cement, including housing and general construction.

Kaiser and other cement companies face even tougher times as the economic recovery slows. Seen as Challenge Ousterman sees it as a challenge. "I think the rest of the (economic) cycle is going to be difficult," he said. "It will require all of our ingenuity to get the most out of our modernized plants. We think that that will carry us through the next trough." Analysts agree that problems in the industry generally are out of the producers' control.

Kaiser, they say, has been a well-managed company, and they call its current strategy of selling off assets and lowering debt sensible. Kaiser recently sold the Hawaiian plant built to suit company founder Henry J. Kaiser. And, Ousterman said, "There will be additional sales of assets that really aren't central to our business, taking place probably over the next year. After the loss of Hong Kong and the damage it did to our balance sheet, we would like to be able to improve our balance sheet in terms of less debt." I HO.

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3 1 (in millions): 1984 1982 1983 $213.4 $249.3 $215.7 Revenue 16.3 (5 2) mm Net income (loss) 1 For the 12 months ended 63085, according to Lipper Analytical Services, Inc. which monitors hundreds of mutual funds. Based on net sales from date of inception-71481 through 63085. Includes $59-million loss on Chins Cement.