Steelworkers at the Kaiser Steel Corp. plant in Fontana, Calif., are considering acquiring the entire company through an employe stock ownership plan to head off further plant closings.
James Dembowski, a representative of United Steel Workers of America Local 2869 at Fontana said he and fellow workers fear that the company may be sold to outsiders who will shut it down along with Kaiser's remaining steelmaking facilities.
A spokesman for the Steelworkers regional headquarters said, however, that talk of a possible acquisition is "premature," and the plan must be studied in detail. "We aren't close to anything like that," the spokesman said. Union leaders have not supported such attempts in the past.
Kaiser Chairman Stephen A. Girard said the company also needs more information before taking a position on the idea. "We want to make it clear that we have not encouraged the union in its efforts," Girard said. But he welcomed the support from the steelworkers in Kaiser's fight against a takeover attempt by financier Stanley Hiller Jr.
Kaiser directors last week rejected the Hiller group's offer of $54 a share--or over $375 million in all--for the Kaiser stock.
Kaiser is a takeover target because of its coal reserves and its cash balances of some $400 million following sales of some of its properties.
"It's our position that anyone taking over Kaiser wouldn't be interested in making steel," said Dembowksi.
According to Dembowski, the union is preparing to form a non-profit company to study the possibility of an acquisition, with the help of Kelso & Co., of San Francisco, specialists in employe stock ownership plans. Assuming this step goes forward, Kaiser's 5,000 steelworkers would be asked to contribute $100 each to finance the study and other acquisition efforts, Dembowski said.
An acquisition by this route would presumably require the cooperation of the company and the union in arranging the purchase of the company's stock by the employes, the employe pension plan or outside investors supporting the employes.
Kaiser's steel operations have made profits this year after more than four years of losses. The company's announced strategy is to close its primary steelmaking facilities in Southern California rather than investing $400 million to modernize them. Instead, the company will concentrate on supplying finished and fabricated steel--specialized products that are not as vulnerable to foreign competition.
Under the company's plan, part of the Fontana plant that produces basic steel would be closed, but the rest would remain in operation as a steel-finishing facility.