Kaiser wants to cut off benefits
Company says it can't afford pension, retirement programs
BY JOHN K. WILEY The Associated Press Jan. 13, 2004

  SPOKANE - Kaiser Aluminum Corp., which operated two aluminum plants here, asked a federal bankruptcy court yesterday for relief from obligations to pay medical and life insurance for thousands of retirees and dependents and to end its underfunded pension plans.
  The United Steelworkers of America, which represents employees at seven Kaiser facilities in the United States and Canada, criticized the move.
  The union estimates its retirees would lose health insurance benefits of about $800 million.
  The Houston-based company said it cannot afford the ongoing and future costs of retirement benefits, including $60 million a year in post-retirement medical plan payments.
The company said the court motions affect 4,000 salaried and 7,000 hourly retirees and their dependents enrolled in company sponsored retiree medical benefit programs.
  The union said more than 20,000 retirees would be affected. There was no explanation for the dissimilar figures.
  No court date has been set for hearing Kaiser's motions on the termination of its pension plans and the rejection of its labor and retiree agreements.
  'This is a difficult but essential step in order for Kaiser to complete its restructuring and emerge from Chapter 11 in mid-2004," Kaiser President and Chief Executive Jack Hockema said. "Unfortunately, the exhaustive analysis we've done in support of our business plan shows that the restructured Kaiser Aluminum will be unable to fund and other post-retirement  as they are presently offered."
  Last month, the government's pension insurance program said it would take control of a Kaiser retirement plan for salaried workers that has 5,000 participants and is underfunded by $268 million.
  The latest- move apparently extends that to hourly workers, a Steelworkers official said.
  "Almost two years after filing for Chapter 11 protection, Kaiser Aluminum is now forcing retirees - its most vulnerable stakeholders - to shoulder the greatest burden in reorganizing the company," said Steelworker District Director David Foster of Minneapolis.
  Yesterday's filing asks court approval for a distress termination of the company's retirement benefits, turning over the plans to the government's Pension Benefit Guaranty Corp.
  The federal corporation guarantees participants' vested pension benefits up to certain limits, typically less than originally offered by companies.
  The contracts cover collective-bargaining agreements with unions such as the United Steelworkers of America and the International Association of Machinists for plants in Trentwood and Mead; Gramercy, La.; Newark, Ohio; Sherman, Texas; Tulsa, Okla.; and Richmond, Va.
  Hockema and Kaiser will continue to discuss possible compromises with the unions.
  The motions address the defined benefit pension plan, and no other changes are anticipated in labor contracts, Hockema said.
  Kaiser filed for bankruptcy protection in 2002, and stopped making payments to its pension plans in 2003.
  Kaiser has a total of 25,000 retirees nationwide. Many live in the Spokane area, where Kaiser's two largest plants used to employ more than 2,000 people.
  Kaiser still employs about 300 Steelworkers at its Trentwood plant near here, where rolled aluminum is made for the aerospace industry. Smelters at Mead and, Tacoma have closed.
  The PBGC was created in 1974 to ensure payment of basic pension benefits for private sector workers. It is financed largely from insurance premiums paid by companies that sponsor pension plans and by the PBGC's investment returns.
  In seeking bankruptcy protection in February 2002 and January 2003, Kaiser blamed a weak economy, poor aluminum prices, expensive electricity and legacy costs such as asbestos litigation and pension plans. Kaiser is trying to sell some assets to settle creditor claims and emerge from bankruptcy later this year.