The seemingly endless rows of shiny aluminum coil are much shorter now. Huge expanses of factory floor are quiet and unlit. The trucks loaded with molten metal that once rumbled from Mead through Hillyard and the Spokane Valley to Trentwood are idle.


Much has changed at Kaiser Aluminum & Chemical Corp.s Trentwood rolling mill, now the last vestige of what used to be a powerhouse employer here.


Though Spokane has lived through the contentious labor dispute, the painful curtailment of Kaisers Mead smelter, the Chapter 11 filing, and the significant downsizing of Trentwood, what it didnt see was a dramatic, behind-the-scenes transformation at the sprawling Spokane Valley rolling mill.


That plant for years competed in the high-volume world of aluminum beverage-can stockan industry dominated by much bigger companieswhile producing smaller volumes of aerospace and automotive aluminum. Over the past three years, it has stopped producing aluminum for cans and cars and refocused on its roots mainly in the aerospace and industrial aluminum markets that use heat-treated products.


We went from many products to a few, says Keith Harvey, Kaisers Los Angeles-based vice president for sales and marketing. We went from a small player in a huge market to a leading player in a niche market.


Trentwood employs about 500 people today, well down from the 1,360 it employed five years ago. The plants revenues last year totaled just $184 million, compared with $733 million in 1998.


Much of that previous volume and employment, however, was tied to the aluminum-can business, which had ever-narrowing margins and pitted Kaiser against industry leaders in that niche that could out-produce and out-price Trentwood, says Peter Bunin, vice president and general manager of flat-rolled products for Kaiser.


It was always a matter of when we would leave the can and lid market, not if, Bunin says. Our competition focused on that (cans). We didnt. Our real competitive advantage was in heat treat. The risk was we would be too distracted with these other things to concentrate on that.


Adds Harvey, We were one of the last multifocused mills. The market was changing. In heat treat, he says, There are only a handful of companies in the world that can provide what we do here.


Heat treat refers to a process in which metal is heated to a high temperature then cooled, which results in harder aluminum with consistent metallurgical qualities. Aircraft makers and other industrial aluminum users demand such product. Beverage-can companies dont.


Trentwood, says Bunin, today is a very different operation. We have reconfigured and transformed the operation.


Kaiser exited the beverage-can body-stock business in 2000, and the following year stopped producing aluminum for automotive wheels and similar common-alloy products. Last year, it left the beverage-can lid- and tab-stock business, as well as brazed-sheet products for the automotive industry. It sold off for $15.8 million some of the equipment necessary to make and coat can lid and tab stock.


Today, large portions of Trentwood, which includes 60 acres of floor space under roof, are unusedand unlit to save energy. The complex occupies 500 acres along the north bank of the Spokane River west of Sullivan Road in Spokane Valley.


Another big change is the reduction in inventory. Trentwood used to produce and warehouse huge volumes of aluminum. It was common to see big coils of aluminum lined up in rows over the space of several football fields.


We used to fill up this plant with inventory, says plant manager Bill Fautch. Now, we only run (product) to an order.


Trentwood has slashed its inventory by 75 percent as one of a host of lean manufacturing efforts pushed by Bunin, a Harvard MBA who arrived at Trentwood in the spring of 2001.


Back in 1999, it took Trentwood about nine weeks between the time an order came in the door and product was shipped. Now, says Bunin, it takes just four to five weeks to fill an order. The industry average, he says, is eight to 12 weeks.


As a result, 98 percent of the plants deliveries are made on time, says Harvey, the sales and marketing executive. This is huge in our industry, he contends. The industry standard is 75 to 80 percent and some of our competitors are below 50 percent.


Adds Fautch, Our delivery times to European customers are as good as they can get from European suppliers.


Trentwood also has improved the quality of its products, Bunin says. In 1999, 0.81 percent of the plants shipments resulted in a customer claim due to a problem with the product. Today that percentage is 0.25 percent, Bunin says.


All this was done while we were doing a restructuring of the plants focus and a drastic reduction in workers, he says.


Says Fautch, The East Coast is littered with factories that gave up. This one didnt.


Bill Sales, executive vice president of Los Angeles-based Reliance Steel & Aluminum Co., a big Kaiser customer, says Trentwoods changes are well known in the industry.


From our point of view, the streamlining of their business to essentially a heat-treat facility has been a real plus. Today, their performance is phenomenal in on-time delivery and quality.


Without question, we have seen the changes and benefited from the changes there. I think you would find similar comments about Kaiser elsewhere in the industry. Trentwood is doing an excellent job, Sales says.


Reliance operates more than 100 metals processing and distribution centers worldwide and had 2002 revenues of $1.75 billion. It is a big supplier of aluminum to aircraft makers such as Boeing Co.


Bunin says Trentwood has been able to boost its production capacity in the lines it now focuses on by 25 percent due to efficiencies, and that the plant currently is operating at about 50 percent to 60 percent of capacity while it awaits a turnaround in the aluminum industry.


Says Harvey, We believe the industry is at or near the bottom of the trough. Based on signals from customers, the industry will be turning around in the next year or two.


Such signs are starting to make headlines. Alcoa Inc., the worlds biggest aluminum producer, recently posted a 45 percent jump in earnings for the third quarter, citing stronger prices and demand.


The Aluminum Association said in a recent report that net new orders at aluminum producers are up nearly 9 percent over a year ago.


Meanwhile, several U.S. airlines reported improved results this month, leading industry observers to suggest that the worst may finally be over for the airline industry, which has postponed or canceled many aircraft orders since the terrorist attacks of 2001.


The things weve done here have left us poised for when the markets come back, says Harvey.


Rolling aluminum


An aluminum rolling mill does pretty much what the name suggests. It melts new (primary) aluminum, scrap aluminum, and alloys together in specific portions to achieve specific metallurgical characteristics needed for certain applications, and then rolls the aluminum into various thicknesses of sheet, plate, and coil.


For decades Kaiser trucked molten primary aluminum from its Mead smelter, just north of Spokane, out to Trentwood, where it was processed along with aluminum slabs and alloys purchased from other sources. That ended when the Mead smelter was shuttered in 2000.


Bunin says, however, that the impact of that lost supply has been minimal, partly because the molten metal from Mead was used primarily for beverage-can stock, which Trentwood no longer produces. In addition, he says, primary aluminum, in the form of slabs, or sow, is an ample commodity that can be purchased from a variety of sources at competitive prices.


We can buy primary aluminum anywhere, says Bunin. It was great to get it down the street, but that hasnt been a big factor for us.


Kaiser pours its formulated aluminum alloys into molds that create big rectangular shaped bars called ingots, of varying shapes and sizes but weighing as much as 20,000 pounds each.


The ingots then are scalped to remove impurities and abnormalities on the surface, then heated to about 850 degrees for hot rolling. In the hot-rolling process, the ingots are run through a series of what basically are presses, which gradually flatten and lengthen the ingots into the aluminums final thickness.


Trentwood produces aluminum plate up to 4 inches thick, 8 feet wide, and 32 feet long, and sheet products of varying sizes down to 0.008 of an inch thick, or about the thickness of a razor blade. Some of the thinner stock is rolled into big coils.


The plants heat-treating equipment heats aluminum plate and stock up to about 900 degrees and then cools it with water in controlled environments to improve hardness and stability. Kaiser modernized much of its heat-treat capabilities in 2000.


Trentwoods products are shipped by truck to customers, though some of the production stops first at Alutek Inc. or Spur Industries Inc., two Spokane Valley companies that handle some finish packaging and sawing work for Kaiser.


Fautch says Trentwood has undergone a host of technological changes in the last 10 years, including adding all new electronic controls and systems for equipment maintenance, production scheduling and flow systems, and control systems that monitor and ensure the tight product specifications Kaisers customers demand.


Just within the past five years, Kaiser has spent over $50 million at the plant on various upgrades, says Kaiser spokesman Scott Lamb.


Lately, rumors have surfaced that a major customer of Kaisers had asked it to consider spending tens of millions of dollars on enhancements that would help it provide product the customer wants. Kaiser officials decline to respond to such speculation except to say that the company will continue to invest heavily in Trentwood and will listen carefully to what customers want from it in the future.


The plants most significant modernization in recent times took place in the mid-1980s, when Kaiser invested $250 million into the World War II era facility.


Were running unlike any aluminum facility of this vintage in the world, says Fautch.


He also credits the Steelworkers who work in the plant. The transition after that labor dispute was fast, he says, referring to the 1998 strike and subsequent lockout that, though settled in 2000, resulted in a prolonged legal battle that remains brewing at the National Labor Relations Board.


We have one of the best work forces in the world, he says now.


Bunin agrees. You cant do all these things unless you have high-quality people who are engaged, he says.


The union, however, isnt as pleased with how things have gone.


Dave Carlson, president of Local 338 of the United Steelworkers of America, says that although Steelworkers and Kaiser management can set aside differences to operate the machinery and make some money for the company, there is no hugs and kisses relationship at the plant.


He says grievances remain between labor and management at Trentwood, and the local has disagreed with some of the strategic moves the company has made there, including selling off the can-stock coating line.


They havent a clue how to manage there, says Carlson.


As to whether Kaiser will become an employment powerhouse here again, Bunin says its likely that employment will rebound along with the aluminum industry, but he says he doubts that if the plant gets back to previous revenue levels it will need the same number of workers it once had to achieve those levels. Efficiencies have reduced that employment need, he says.


Challenges ahead


Many challenges remain for Kaiser, which filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code back in early 2002. It has said that it hopes to emerge from bankruptcy protection next year.


Kaiser, which is based in Houston and has operations around the world, has struggled because of soft demand and prices for aluminum and growing power costs. Producing primary aluminum requires huge amounts of electricity. The company has been highly leveraged at times, and faces potential liabilitiesincluding unsettled claims from its labor dispute and the legacy of asbestos exposure from a long-defunct productthat total into the hundreds of millions of dollars.


Early this year, Kaiser announced the indefinite curtailment at its Mead smelter, and said that it likely wouldnt reopen the plant until power prices decline and aluminum prices rise. It also sold its shuttered smelter in Tacoma to the Port of Tacoma, which will use the property for other purposes. Recently, it sold some surplus land near its Mead smelter for about $2.6 million.


In all, Kaiser operates 18 major facilities in North America, Australia, Jamaica, Ghana, and Wales, and employs 5,000 people.


It consistently has said over the past couple of years that it might sell additional properties in its commodities businesses. The company mines bauxite and refines that into alumina, which it uses to produce primary aluminum.


In addition to its idled Mead smelter, Kaiser operates and has varying ownership interests in two bauxite mines and an alumina refining operation in Jamaica, aluminum smelters in Wales and Ghana, and alumina facilities in Australia and Louisiana.


Earlier this month, Kaiser filed papers in Bankruptcy Court that signal what could be the possible sale of its smelter in Wales, the bauxite mines and refinery in Jamaica, and the alumina refinery in Gramercy, La. Bids on those properties are expected in November, says Kaisers Lamb.


If those sales go ahead, Kaiser will emerge from bankruptcy much more focused on fabrication, he says.


In its most recent quarterly earnings report, for the second quarter ended June 30, the companys parent, Kaiser Aluminum Corp., reported a net loss of $61.4 million, compared with a $50.4 million loss in the year-earlier quarter. The company has been bleeding red ink since the third quarter of 2001, when net income included a sizable gain on the sale of a portion of Kaisers interest in the Australian refinery.


Company officials wont disclose current sales or profit figures for Trentwood. Earlier this year, Kaiser reorganized its business lines, putting Trentwood, which previously made up the companys flat-rolled products division, in with other manufacturing facilities under a new fabricated-products division. With the change, the mills production numbers no longer are broken out in financial disclosures.


That new division includes 11 facilities around the U.S. that make everything from extruded alloys to tube and rod products, to forgings. Trentwood is the only rolling mill.


Together, those plants account for about 42 percent of Kaisers revenues. The rest comes primarily from commodity businesses.


Bunin says Kaiser has done a good job of trying to isolate its production management from the companys bigger-picture bankruptcy reorganization.


We are focusing on the same things we would be focusing on if we werent in Chapter 11, Bunin says. From an operational standpoint, the Chapter 11 has been a non-issue.