August 2, 1999


How would Henry handle this?
Both sides claim Kaiser founder's legacy, but his labor relations record is
uneven

Julie Sullivan - The Spokesman-Review

Spokane -- One of worst faults the United Steelworkers find with Kaiser
Aluminum owner Charles Hurwitz doesn't concern who he is. But who he is not.

"Charles Hurwitz is no Henry J. Kaiser," Michael Ramos said on the Capitol
steps in Olympia last February.

"Henry J. Kaiser is turning over in his grave," Lu Broadsword wrote in a
letter to the editor in November.

"What would Henry J. Kaiser think?" asked Dean Wise in an October letter.

For 305 days since the walkout, the ghost of one man has walked the picket
line, sat at the bargaining table and drawn the biggest applause at union
rallies. To union members, he's the patron saint of labor relations whose
canonization was complete with the AFL-CIO's most prestigious award in 1964.

Corporate leaders claim him, too.

"I really think Henry J. Kaiser would recognize what needs to be done today
and think we are doing the right thing strategically," Ray Milchovich,
president of Kaiser Aluminum, said in Spokane last week.

Both union and corporate Web pages post Kaiser's biography. It is the
spectacular story of a grade school dropout who built the Bonneville,
Hungry Horse and Grand Coulee dams, led the partnership that built Hoover
Dam, hired the engineers who built a third of the Panama Canal, led the
equivalent of 20 military divisions building munitions, planes and ships
for World War II, and founded Kaiser Aluminum in 1946.

So vast is his shadow that writer Stephan A. Gilford said that in the
1950s, you could drive a Kaiser-built Willys Jeep on freeways built with
Kaiser cement, protected by guardrails made of Kaiser aluminum, across the
Oakland-San Francisco Bay Bridge, whose great piers were built by Kaiser.
You could then retire to your home, built with Kaiser wallboard and heated
by natural gas or oil carried by Kaiser-built pipelines.

Newspapers called him the Miracle Man. Kaiser CEO George Haymaker still
calls him a visionary.

But the memory of Henry J. Kaiser is more benevolent and simpler than the
reality. The master of labor relations oversaw one of the darkest hours of
labor history: construction of the Hoover Dam where working conditions were
so ghastly that 14 men died from the heat in a single day in 1931. When
1,400 men struck over unsafe conditions and the simple lack of water, they
were fired. Lawsuits filed on behalf of workers whose health was destroyed
showed the partnership that Kaiser led knowingly risked worker lives to
beat deadlines and improve profits, according to historian Mark S. Foster.

In the book ``Kaiser, Builder in the Modern American West,'' Foster
surmises that Kaiser's image as a friend of the worker was partly the work
of a well-oiled public relations machine that equated him with the little
guy. For the first several years of his remarkable career, Kaiser didn't
appear to consider worker rights, refusing to give his Washington state
construction crews American holidays off because they were building roads
in Canada.

His gradual shift was probably politically motivated, with the rise of
labor-friendly politicians such as his friend Franklin Roosevelt who
``enlightened his views on the labor movement,'' Foster wrote.

By the end of his life, the shift was complete. In his 60s, Kaiser broke
ranks with steel and aluminum companies in settling the first and best
contracts with unions. His efforts to extend health care to all working
Americans created the largest non-profit health maintenance organization in
the country, Kaiser Permanente. And he most certainly would have cared
about the current lockout between the United Steelworkers and Kaiser
Aluminum. The purchase of the Mead smelter and Trentwood rolling mill are
considered among his shrewdest business decisions. They were his greatest
moneymaker. And the city of Spokane was a special place. His entire career
began here, at age 24, at a fire sale.

No one knows why Kaiser chose Spokane. It was the summer of 1906 and he was
young and in love, and both he and the frontier city were full of
possibilities. Kaiser was born in upstate New York, the son of a German
immigrant shoemaker who was so old-fashioned that he made leather boots by
hand and delivered them on foot while the New York factories around him
mass-produced footwear.

Friends later thought that his father's failure to adapt to the 20th
century drove Kaiser to do more, for more people, faster, Foster wrote.

But at 24, Kaiser was too poor, too uneducated -- he'd left school at 13 --
and too unremarkable to win permission to marry the woman he loved. Her
father insisted he build a house, save $1,000 and earn $125 a month first.
So Kaiser came west on a train to Spokane.

Forty years later, Kaiser described his time in Spokane as one of the most
difficult of his life. He applied for work at more than 100 places and was
rejected. Finally he approached McGowan Brothers Hardware.

The McGowans had had a fire and weren't hiring, but Kaiser talked them into
giving him the inventory. Kaiser hired 24 women to clean and polish the
damaged goods and sold them. He was quickly hired and soon moved into
management. A year later, he retrieved his bride, Bess, from Boston and
they bought three lots at 1115 S. Grand where they hired W.W. Hyslop to
build their home. Kaiser was 26 and a hardware salesman, yet he was buying
and acting like the city's elite.

The couple's first son, Edgar, was born at home the following summer. A
second son, Henry Jr., followed. In 1910, Kaiser was loaned out to a fuel
company and eventually went to J.F. Hill, a general contractor. At Hill,
Kaiser learned the construction trade and oversaw, among other projects,
the $1 million paving of Browne's Addition.

At 32, he started his first company building highways in the West, Canada
and Cuba. A decade later, he began building dams. Kaiser was elected the
head of the unprecedented partnership of construction companies known as
the Six Companies that built Hoover Dam on the Colorado River. It was among
more than 1,000 projects his firm tackled.

Later, he would complete Bonneville Dam, 40 miles east of Portland, and
head to the Columbia River to build Grand Coulee. It was there his firm
started the non-profit, prepaid health plan that still exists today. His
initial push for health care was neither entirely voluntary nor altruistic.
In those days, employers had to share half the cost of workers injured on
the job.

The Six Companies had experimented with a pre-paid health plan to cut the
costs while building the Hoover Dam. In 1938, Edgar Kaiser convinced its
leading physician, Dr. Sidney R. Garfield, to set up such a plan for
Kaiser's 6,500 workers at Grand Coulee. It was so successful that Kaiser
carried the plan to the enormous Kaiser shipyards.

Kaiser had never built ships before. But tapped by the government in 1940,
his organization went on to run seven shipyards including three in Oregon
and Washington during World War II. They employed 200,000 and launched more
ships than any builder during the war. African-Americans and women enjoyed
unprecedented employment. Kaiser shipyards offered child care: 75 cents a
day per child with dinner prepared for parents to take home at night.

Kaiser's ideas about labor relations began to evolve during his road
building. Profit margins were narrow and the inability to hire and keep
good workers hampered many contractors. Kaiser learned the value of loyalty
and respect and he reciprocated, pouring money into the most modern
equipment, preferring to wear out machines rather than workers.

His basic managerial style was that he analyzed issues from the viewpoint
of the worker. It made him wildly popular. When Eleanor Roosevelt came to
christen 50 aircraft carriers at the shipyards, Kaiser got a bigger ovation.

But his ability to think strategically was also unique. Most people thought
the aluminum market would disappear after the war but Kaiser believed it
was the metal of the future to be used in cars, airplanes, ships, trucks
and home construction. Early in 1946, the War Assets Administration invited
300 companies to bid on several government-owned aluminum facilities. Only
Kaiser bid.

He chose Mead and Trentwood. They had been built by the government for $71
million in 1942 and had been idle since 1945. But Kaiser engineers rated
them in excellent shape and Kaiser leased them for five years, with an
option to buy, for $9.87 million.

In its first year, Mead posted sales of $45.4 million. And by 1948 he
bought the Spokane plants outright. A year later, the company called
Permanente Metals, changed its name to Kaiser Aluminum and Chemical
Corporation.

When Kaiser died in his sleep in 1967 at age 85, his legacy included 190
plants with 90,000 employees. Within 20 years, most of his holdings,
including the Spokane plants, were sold. Without the giant, the giant
organization he built was never the same.

Julie Sullivan can be reached at (509) 459-5497 or by e-mail at
julies@spokesman.com.




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