August 13, 1999

Kaiser Steelworkers rally as merger talk heats up
Some wonder whether Kaiser is a takeover target

Hannelore Sudermann - The Spokesman-Review

Spokane -- While no word emerged from the closed-door negotiations between
Kaiser Aluminum Corp. and the United Steelworkers Union Thursday, there
were plenty of other developments.

About 200 members of the Pacfic Northwest Regional Council of Carpenters
rallied with Steelworkers in downtown Spokane Thursday morning to show
support for the locked-out Kaiser workers. The carpenters, in town for a
regional annual meeting, cheered the Steelworkers, who have been locked out
of Kaiser's two Spokane plants since January and off the job since Sept. 30.

Meanwhile, across the country, Wall Street was roiling with more news of
mergers and proposed mergers among the aluminum industry's biggest players.
With three of the largest foreign aluminum producers agreeing this week to
merge and two more in merger talks, investors speculated about who would be

Since news of the industry's merger talks broke Tuesday, Kaiser's stock has
gained $1 a share, closing Thursday at $9.25.

The news left some Steelworkers wondering whether Kaiser, considered a
mid-sized company in the world aluminum industry, is a merger or buyout

Last spring, both Alcan of Canada and Pechiney of France, the world's
second- and fifth-largest aluminum producers, respectively, were rumored to
have toured Kaiser's Spokane plants. The two companies this week announced
they would merge with Alusuisse of Switzerland to form the world's largest
aluminum company.

Alcoa, currently the largest aluminum company, responded with an offer to
acquire Reynolds Metals.

"They're out picking up little aluminum companies," said Ron Burke, a
Steelworker at Trentwood.

The prospect of someone taking over Kaiser is not altogether unpleasant to
the Steelworkers, who say they're holding out for pay and benefits that
workers at some of the larger aluminum companies have received.

"We want parity with Alcoa and Reynolds," said Cathy Gunderson, a Mead
worker who hopes Alcoa would be interested in Kaiser.

Kaiser officials declined to comment on the rumored visits. "We have people
in and out of the plant all the time," said spokeswoman Susan Ashe. The
company said last year that its plants weren't for sale.

Kaiser is ranked 10th in the world for production capacity.

Also on Thursday, the Steelworkers' international office said it was
calling for Washington Attorney General Christine Gregoire to investigate
Kaiser and its majority shareholder Maxxam for illegally using a third-
party firm to recruit replacement workers.

Earlier this week, the Washington Attorney General's Office filed a charge
in Spokane County Superior Court alleging Tacoma employment agency Labor
Ready illegally provided Kaiser with hundreds of out-of-state replacement

"Labor Ready's alleged violations of state law were performed in Kaiser's
service," David Foster, the union's chief negotiator said in a statement.
"At worst, Kaiser may have aided and abetted Labor Ready's conduct. We know
for a fact that Maxxam furnished out-of-state workers for Kaiser."

"We want to make sure that this isn't the end of the investigation," said
Jim McPhee, attorney for the Steelworkers. He claimed that two other
companies, International Management Assistance Corp. and Construction
Workforce Inc., also did recruiting for Kaiser.

The company maintains it has complied with the law and has done nothing wrong.

Meanwhile, unemployment benefits for the majority of the locked-out workers
in Washington run out this week.

Many of the Kaiser workers will rely on the support they get from the union
and on temporary jobs. "We have developed some very strong funds to support
our families," said Dave Locklin, a Mead worker. "Whatever it costs, we're
going to take care of it."

Negotiators for Kaiser and the union continue to meet in Denver. They're
discussing a new contract and a return to work for nearly 3,000 idled
Steelworkers at five plants.

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