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Kaiser Aluminum Corporation

Kaiser Aluminum Corporation

27422 Portola Parkway, Suite 350
Foothill Ranch, California 92610-2831
Telephone: (949) 614-1740
Fax: (949) 614-1930
Web site:

Public Subsidiary of MAXXAM Inc.
Employees: 2,400
Sales: $1.09 billion (2005)
Stock Exchanges: NASDAQ
Ticker Symbol: KALU
NAIC: 331312 Primary Aluminum Production

Kaiser Aluminum Corporation is one of the country's leaders in the production of aluminum for use by the aerospace, automotive, and defense industries. In mid-2006 Kaiser emerged from a lengthy Chapter 11 protection as a leaner, smaller company than the debt-ridden giant that had declared bankruptcy in 2002. Its new focus was on being a cost-competitive producer for specialized aluminum needs. Kaiser maintains 11 North American plants, as well as part ownership of a plant in Wales, and employs a workforce of over 2,000.


Henry J. Kaiser, the founder of Kaiser Aluminum and Chemical Corporation, worked his way up through numerous business ventures. In 1895 Kaiser left school at age 13 to work in a dry-goods store. Three years later Kaiser marched into a Sprout Brook, New York, photography studio and told the owner he would triple the store's profits in two months. Offering one-day photo service, the young Kaiser fulfilled his promise to the proprietor and became a partner by his third month on the job. Kaiser later bought out the original owner and eventually operated three photographic studio and supply stores on the East Coast.

Kaiser moved west in 1906, working in the hardware business until 1914 when he formed his own road-construction company. By 1923 Kaiser had ventured into the sand and gravel business. Kaiser established headquarters in the late 1920s in Oakland, California.

During the 1930s Kaiser helped found Six Companies, Inc., a loose grouping of builders and earth movers that between 1931 and 1936 built the Grand Coulee and Bonneville dams on the Columbia River, and piers for the Bay Bridge between San Francisco and Oakland, California. Later the group started speed work on the Boulder and Hoover dams. The unprecedented speed of the Hoover Dam constructiona project completed two years ahead of schedulewas Kaiser's doing. His hurry led him into a tangle with U.S. Secretary of the Interior Harold Ickes. Six Companies was charged with violations of the eight-hour work-day law; the fines reached $350,000. In a public-relations blitz, Kaiser sent documents dramatizing the company's effort to complete the project to high government officials and congress-men. Not only did Kaiser's tactic lead to a reduction of the fine to $100,000, but more importantly, Kaiser became known to the government and the public at large as a force to be reckoned with.


World War II prompted Six Companies to move into the shipbuilding, aircraft, steel, and magnesium industries. The Kaiser-led operation turned out 1,440 cargo ships and more than 50 aircraft carriers. The most significant of these ventures, which eventually led Kaiser into the aluminum business, was the 1940 formation of Todd Shipbuilding Corporation in northern California.

As early as year-end 1940, Kaiser and a colleague, Chad Calhoun, had barraged government officials in Washington, D.C., with proposals for an aluminum plant in the Northwest. From their experience in dam construction, the men knew that water was an inexpensive and abundant energy source available to power the plant. In May 1941 the U.S. government granted an extensive contract involving more than 30 plants to the leading industry producer, the competitor Aluminum Company of America (Alcoa). Undaunted, Kaiser's subsidiary, Permanente Metals Corporationestablished in 1941stepped up magnesium production, to meet heavy wartime demand. After the war, with an eye on rebuilding U.S. industry, Kaiser was convinced that private capital should take the place of government funds. Practicing what he preached, Kaiser announced his intentions to enter the aluminum industry. With a government surplus of 36 aluminum plants and Alcoa out of the running because of an antitrust injunction, the stage was set for Kaiser.

Another force that indirectly propelled Kaiser into aluminum was the Kaiser-Frazer Corporation, an automobile-producing business that he formed with Joseph Frazer, in 1945. As a new firm, Kaiser-Frazer was nearly last in line for steel allotment. This situation prompted Kaiser to consider manufacturing aluminum automobiles. The idea was too advanced at the time, however, to be considered.

In 1946 Kaiser-Frazer and Kaiser Cargo, Inc., another Kaiser-controlled company, leased two government-owned aluminum plants in the state of Washington. The metals market had fallen off following the war, surplus aluminum abounded, and bauxite, the chief raw material needed to produce aluminum, was hard to find. Kaiser had advantages in his favor. Because of the postwar drop in production, Alcoa had discharged knowledgeable employees. Kaiser snapped up the available talent, as well as an idle Baton Rouge, Louisiana, aluminum smelter. Consumer demand for aluminum pots and pans and the international need for building materials gave the fledgling company a market to supply.

To be an autonomous aluminum producer Kaiser needed to obtain a steady source of bauxite. With Calhoun, Kaiser approached Alcoa. One short meeting later, a five-year contract was worked out. By late 1946 Permanente bought an empty aluminum plant in Tacoma, Washington. To ensure the capital necessary for expansion, Permanente went public in July 1948. Within a year the company acquired a German aluminum foil mill, which it moved piece by piece from Germany and rebuilt at the Permanente site; and a Newark, Ohio, wire, bar, and cable mill. With the latter purchase, Permanente was in the electrical-conductor business.


In November 1949 Permanente Metals became Kaiser Aluminum and Chemical Corporation (KACC), the nation's third largest aluminum producer. Anticipating continued growth, KACC officials began scouting for additional bauxite deposits, which they located in Jamaica. The Kaiser Bauxite Company, a Bermuda mining operation, was organized in 1950 as a wholly owned subsidiary.

KACC had barely adjusted to a peacetime economy when the United States entered the Korean War. In response to the Federal Munitions Board order to increase aluminum production, KACC acquired a $115 million loan from the War Assets Administration and expanded operations. Chalmette, Louisiana, was chosen as the site for construction of the nation's largest aluminum plant; it was the first ever to use gas as a power source. To integrate its aluminum manufacturing with aircraft production, KACC leased war-surplus operations: an extrusion plant in Halethorpe, Maryland, in 1951; and a forgings plant in Erie, Pennsylvania, in 1954. The company bought the Erie plant outright within two years. Although the Korean War ended in 1952, the company's relationship with the government remained in place.


Headquartered in Foothill Ranch, California, Kaiser Aluminum is a leading producer of fabricated aluminum products for aerospace and high-strength, general engineering, automotive, and custom industrial applications.

In March 1952, KACC signed a contract with the U.S. Air Force to design, build, and operate an aircraft-parts plant near the existing Halethorpe operation. Although the company ran into some snags at the Chalmette construction site, KACC did not slow down. By August 1954 the company announced plans to build a foil and sheet mill in Ravenswood, West Virginia. With the Ravenswood plant, Kaiser would not only be closer to the East Coast market; it would cut freight costs by two-thirds. The company was currently shipping bauxite from Louisiana to Washington state and from Washington to California to complete the production into aluminum. Kaiser's product was traveling close to 8,000 miles before it ever reached a customer. When completed in the late 1950s, Kaiser's Ravenswood plant would house one of the world's largest aluminum smelters and mills.

By the mid-1950s the foil and automobile-parts markets opened up. KACC was the third largest U.S. aluminum producer, right on the heels of Alcoa and Reynolds Aluminum. In the basic metals market, aluminum was second only to steel. In stride with expanded business options, in 1955 Henry J. Kaiser broke ground for the Kaiser Center, in Oakland, California. From Oakland's largest new office complex, Kaiser was controlling a $1 billion industrial complex, employing 41,000 people in 96 plants.


KACC research during the 1950s was fruitful, pushing the company into new ventures. At the Halethorpe plant, KACC engineers invented a device known as a plate-stretcher, designed to keep hot sheet-aluminum from buckling. Based on the Newark plant's production of an all-aluminum electrical-conductor alloy, Kaiser moved into the electrical-power industry. In 1957 the company acquired a wire and cable plant in Bristol, Rhode Island, which produced a greater variety of conductors than any other plant in the United States. The same year a Kaiser chemist devised a method of manufacturing cryolite, a compound necessary to the aluminum-reduction process. Naturally occurring cryolite was found only in Greenland, and the synthetic product had been available only from European suppliers. After pilot projects, Kaiser built a successful cryolite-manufacturing plant in Mulberry, Florida, thus freeing itself from dependence on foreign suppliers. At a newly constructed alumina plant in Gramercy, Louisiana, Kaiser chemists produced chlorine in the aluminum reduction process. The company, therefore, moved into chlorine sales.

Other significant aluminum product developments were the production of an alloy used to manufacture automobile bumpers, and a malleable corrugated roofing material, both popular sellers. More importantly, Kaiser designed a two-piece aluminum can, an industry first, and copyrighted Kalcolor, an aluminum-coloring technique imparted by an electrochemical process during the production of the metal.

By 1955 after barely 15 years in business, KACC was budgeting more than $3 million for research in metallurgy, chemical products, and electrical products. The corporation was growing too quickly for Henry J. Kaiser to handpick candidates and promote them. On the advice of KACC president Donald Rhoades, KACC took on several development specialists to implement an internal promotion plan.


Henry J. Kaiser forms Todd Shipbuilding Corporation in northern California.
Kaiser establishes Permanente Metals Corporation.
Permanente Metals goes public.
Permanente Metals becomes Kaiser Aluminum and Chemical Corporation (KACC).
Henry J. Kaiser dies.
KACC is reorganized as a subsidiary of KaiserTech Ltd., a holding company.
KaiserTech is acquired by MAXXAM Group Inc., a subsidiary of MAXXAM Inc.
KaiserTech Ltd. is renamed Kaiser Aluminum Corporation.
Kaiser Aluminum Corporation becomes a publicly traded company.
Nearly 3,000 Kaiser workers go on strike in Washington, Louisiana, and Ohio.
An explosion takes place at a Kaiser plant in Gramercy, Louisiana.
The labor dispute ends and the employees return to work.
Kaiser Aluminum Corporation declares bankruptcy.
Kaiser emerges from bankruptcy protection.

After the boom of the 1950s, Kaiser reorganized, decentralizing into five major divisions: products, metals, industrial, electric conductor, and international. Separate sales teams worked to keep the growing supply of aluminum and related products moving.


With increased competition causing a drop in aluminum prices, overseas expansion seemed the next logical step. The Kaiser International division was organized to investigate aluminum opportunities worldwide; by 1959 it had launched offices in Zurich, London, and Buenos Aires. By year-end 1960 KACC announced completed negotiations for the purchase and construction of plants in London, South America, Central America, and Spain. In all of these international acquisitions, KACC maintained partnership relations.

Two significant partnerships were established at this time. In 1960 Kaiser teamed up with Consolidated Zinc to form Commonwealth Aluminum Corporation, Ltd. Commonwealth Aluminum began construction on fully integrated aluminum production facilities in New Zealand and Australia, site of the world's largest bauxite deposits. Kaiser also headed, with a 90 percent interest, the Volta Aluminum Company, Ltd., of Ghana. The massive project, which was first discussed in 1958, included construction of a port, a dam, a bauxite mine, an aluminum smelter, as well as transportation and housing facilities. By 1967, Volta's operations were in full swing and Kaiser had expanded, establishing aluminum fabricating plants in Canada; Europe, including Germany, France, Belgium, Switzerland, Norway, Turkey, and Sweden; and Thailand.


Thomas J. Ready, with KACC since 1946, was named president in 1963. On the domestic front, in 1965 Kaiser built a plant in Norco, Louisiana, to supply material for the aluminum reduction process, and a forgings plant in Oxnard, California. Through a separate division managing the manufacture and sales of highway products, KACC operated plants in Indiana, Florida, Washington, New York, California, and Utah. To manufacture its all-aluminum can, in 1968 KACC opened a plant in Union City, California. Immediate sales prompted construction of similar plants in Florida, New Jersey, and Texas.

To insulate Kaiser against the dramatic ups and downs of the aluminum market, Ready pushed to diversify. Kaiser's chemical division expanded into fluorocarbons, used to manufacture aerosol products, and urethane foamed plastics. By 1966 the company had secured the nation's largest aerosol account. Related acquisitions included the Standard Magnesium & Chemical Company of Oklahoma and Southern Nitrogen Company of Georgia. Through the Southern Nitrogen purchase, Kaiser moved into production and sales of agricultural chemicals such as fertilizer, pesticides, and cattle feed. KACC's 1967 purchase of Texada Mines, Ltd., further extended the company's holdings of phosphate deposits, iron, and other raw materials needed to keep Southern Nitrogen at the forefront in industrial chemicals.

When Henry J. Kaiser died in 1967, he left his son Edgar F. Kaiser as chairman of the board. At that time KACC controlled 196 plants in 34 states and 50 foreign countries. Employees numbered 90,000 while sales exceeded $2 billion.

With the formation of Kaiser Trading Company, in 1964, a wholly owned subsidiary, the firm entered the commodities business. Through a partnership with Aetna Life and Casualty Company, KACC bought real estate in the United States, Australia, and Guam. Both ventures realized profits by 1970. Other new markets entered under Ready were in the nickel, shipping, and refractories industries.

Cornell C. Maier, an electrical engineer with KACC since 1949, succeeded Ready in 1972. Maier tackled pricing, always a thorn in the aluminum industry's side. As reported in Business Week, February 5, 1972, Maier set forth a price escalation policy "designed to prevent further erosion of profits due to increasing costs." Before Maier's system, aluminum producers booked all orders for a given year at a fixed rate, regardless of price increases during that year.

Ready's decision to diversify into agricultural and industrial chemicals panned out in 1974; non-aluminum sales accounted for nearly half the company's pretax profits. The combination of a drop in aluminum prices and a recession, however, caused Kaiser profits to dwindle quickly. Maier acted fast, unloading the nickel, shipping, and some chemical holdings, as well as some real estate.


With energy costs high and opportunities low in the United States, Kaiser once again looked to Europe for possibilities. Several partnerships, initiated in the early 1970s, resulted in the 1979 formation of Kaiser Aluminum Europe, a wholly owned subsidiary, and the construction of a new fabricating plant in Wales. Kaiser announced plans to build a new smelter in Queensland, Australia.

By the early 1980s aluminum industry prices hit record lows; soaring energy bills nearly doubled production costs. To combat the energy crunch, Kaiser invested in energy-saving heat-recovery equipment in its Louisiana plants, and modernized its Newark, Ohio, bar and cable plant. New projects were energy related. Kaiser invested $40 million in an oil exploration subsidiary, Kaiser Energy, Inc., and bought an aluminum-scraps reclamation plant in Indiana. Kaiser's industrial-chemicals division bought Filtrol Corporation, a petroleum refining business, in the effort to move into specialized alumina.

During the 1980s aluminum prices continued to fall. With a backlog of supply and no expected increase in the automobile-consuming public, no increase in the demand for aluminum could be expected. In 1982 A. Steven Hutchcraft, Jr., was elected president, and Maier, then chairman of the board, wasted no time in responding to this downturn. KACC cut labor and production by 50 percent at the Mead, Washington, and Ravenswood, West Virginia, plants, and idled one-third of aluminum production in Louisiana.

By the mid-1980s KACC divested at every level: the company sold a 45 percent stake in Commonwealth; the refractories and fertilizer businesses; and Kaiser International, its trading firm. Blocking an attempted takeover, in first quarter 1987 KACC was reorganized as a subsidiary of KaiserTech Ltd., a holding company. KaiserTech divestitures included Kaiser Aluminum Europe to Hoogovens, and Kaiser Energy to Presidio Oil.

In October 1988 KaiserTech was acquired by MAXXAM Group Inc. MAXXAM was considerably smaller than KaiserTech, and following the acquisition MAXXAM's sales shot up. In 1987 MAXXAM's sales had been $34.6 million, primarily on sales of lumber and related products and real estate development. In 1988 sales jumped to $519.2 million, and in 1989, with KaiserTech fully acquired, sales were $2.4 billion. Kaiser Aluminum & Chemical remained a subsidiary of Kaiser-Tech Limited, the holding company. In 1990 Kaiser-Tech Limited was renamed Kaiser Aluminum Corporation. In 1989 KACC acquired a controlling interest in Alumina Partners of Jamaica (Alpart), while selling Filtrol Corporation.


The troubles that had plagued Kaiser during the 1980s continued into the 1990s. The price of aluminum remained low amid a weakened economy in the early 1990s. Kaiser maintained significant debt and encountered difficulty in attempting to raise funds and acquire new assets. After a failed attempt at an initial public offering early in 1991the asking price for the stock was set too high, analysts believedKaiser became a publicly traded company during the summer of that year. At that time, the company's operations were in Oakland, California, but the headquarters were in Houston, Texas, home of Charles Hurwitz, the man at the helm of Kaiser's parent company, MAXXAM. Hurwitz, who held a controlling interest in Kaiser, was a controversial business leader, described in press accounts as a corporate raider operating in his own interests at the expense of his company's shareholders.

In 1996 Kaiser attempted a hostile takeover of rival Alumax Inc.; the takeover was prevented by Alumax executives and shareholders. Alumax's chairman and CEO, Allen Born, cited Kaiser's debt load, its abundant lawsuits for asbestos exposure and environmental contamination, and the notorious CEO of its parent company as reasons for rebuffing Kaiser's bid. One year later, Kaiser did meet with success in acquiring property from a rival company, purchasing a plant from Reynolds Metals Company in Bellwood, Virginia.

Kaiser encountered an additional setback when, in September 1998, nearly 3,000 workers went on strike. The workers, represented by the United Steelworkers of America, worked at five different plants in three states: Washington, Louisiana, and Ohio. At issue, among other points, was job security, health benefits, and workplace safety. Employees balked at Kaiser's plans to contract out certain jobs. Kaiser claimed to have offered a fair contract and, within days of the strike, hired 1,000 replacement workers. A few months later, the union approached Kaiser with a plan for the workers to return to their jobs amidst continued negotiations. Kaiser refused, instituting a lockout until the employees agreed to all provisions of the offered contract. The lockout continued for 20 months. In September 2000, with both sides making some concessions, the factory employees returned to work. The workers would receive pay increases, but Kaiser announced that more than 500 jobs would be cut from the five plants.

During the lockout, on July 5, 1999, an accident took place at one of the plants involved in the labor dispute. At an alumina-aluminum hydrate plant in Gramercy, Louisianastaffed by replacement workersan explosion injured dozens of workers and caused extensive damage to the facility.


In late 2000, Kaiser became embroiled in yet another controversy. As California reeled from an electricity shortage that sent energy costs skyrocketing, Kaiser and other aluminum producers in the Northwest concluded that it would be good business for them to shut down production and sell back to the state of California the electricity that they were buying, under contract, at low prices. Kaiser had signed agreements with regional power companies years earlier that locked in low energy prices for a specified period. After purchasing electricity for $22 per kilowatt hour, Kaiser and two other companiesColumbia Falls Aluminum and Golden Northwest Aluminumsold back the electricity at $300 to $500 per kilowatt hour. While the aluminum producers were asked to return one-quarter of their profits from the electricity sales, Kaiser agreed to return only 2 percent. In addition, though other producers made plans to reinvest profits into their shuttered plants to make them more energy efficient, Kaiser simply added the profits to its bottom line, drawing fire from citizens' groups and lawmakers for benefiting from California's energy crisis.

Even the windfall from the electricity deal failed to pull Kaiser out of its mounting debt crisis, and in February 2002, the company declared bankruptcy. Kaiser cited extensive debt, a weak economy, a lengthy decline in aluminum prices, growing pension and benefits expenses for retirees, and significant expenses related to asbestos-related lawsuits as the primary reasons for seeking bankruptcy protection. Over the next few years, Kaiser sold off numerous assets in an attempt to reduce its debt and to shed its mining and refining holdings, including its interests in subsidiary companies in Ghana, Jamaica, and Australia. Kaiser also sold two smelters in the state of Washington and the plant in Louisiana where the explosion had taken place in 1999.

In 2004, Kaiser moved its headquarters from Houston to Foothill Ranch, in Southern California, where its fabricated products business was located. The company announced that, once it emerged from bankruptcy protection, fabricated aluminum products would be its core business. In July 2006, after more than four years of reorganization, Kaiser emerged from bankruptcy protection amid high aluminum prices and a particularly strong market for aluminum products in the aerospace and defense industries. Within a few months of ending its Chapter 11 protection, Kaiser had scored new long-term contracts to supply aluminum products to the makers of a military jet fighter plane and to Boeing Integrated Defense Systems.

Frances E. Norton

Updated, Judy Galens


Kaiser Aluminum and Chemical Corporation; Anglesey Aluminum Ltd. (United Kingdom; 49%); Kaiser Aluminum & Chemical of Canada Ltd.; Kaiser Bellwood Corporation; Kaiser Aluminum Technical Services, Inc.; Kaiser Aluminum International, Inc.


Alcan Inc.; Alcoa Inc.; Hydro Aluminum AS.


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, "Kaiser to Relocate HQ to California," American Metal Market, December 22, 2004, p. 6.

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