Kaiser Aluminum Corp., a big but troubled company, has moved its headquarters to Foothill Ranch.
The company, which is working through bankruptcy reorganization, completed its move from Houston about a month ago after setting up shop here earlier this year.
Kaiser is one of the country’s older aluminum companies and had $940 million in sales last year. The company, which entered Chapter 11 bankruptcy in 2002, recently filed a reorganization plan and hopes to emerge by year’s end.
The Foothill Ranch headquarters, which employs about 40 people, handles financial, legal, administrative and some marketing duties for Kaiser. The company has about a dozen plants, including in Los Angeles, Arizona, Texas, Washington and Canada.
So why base an aluminum company in Orange County?
Laguna Niguel already was home to Kaiser’s fabricated products division. Jack Hockema, who became Kaiser’s chief executive around the time of the bankruptcy, led the division.
It made sense to move to OC, where Hockema and other executives had risen to the top of the company during the bankruptcy process, he said.
As part of the transition, the company moved from Laguna Niguel to the Foothill Ranch site, which is about three times as large.
“What we’re emerging with is basically a fabricated products business, which was headquartered here,” Hockema said.
During this bankruptcy process, Kaiser sold off most of its commodity businesses, including refineries and smelters. The moves shrunk the company’s yearly sales by about half.
Now Kaiser is focusing on more profitable fabricated aluminum products that go into commercial airlines, autos and industrial equipment, Hockema said.
Sales could grow at least 6% to $1 billion by the end of this year, according to Hockema.
Getting to this point has been hard, he said, not only because of Kaiser’s bankruptcy, but amid difficult times for the industry.
“This last recession went down more sharply than normally,” Hockema said. “It was a grueling, grinding recession in our business.”
Kaiser filed for bankruptcy as low prices and slow sales played out. The company also struggled under increasingly burdensome asbestos litigation and expanding pension and retiree costs.
Executives decided a bankruptcy would give the company some breathing room while they drew up a new plan.
The company had hoped to emerge from bankruptcy as early as the third quarter of last year. But last summer Kaiser pushed back the target to this year.
Negotiations to resolve pension and retiree benefits had dragged on longer than expected,as did the sale of some businesses.
The entire process was more complicated than expected, even to lawyers who had dealt with myriad bankruptcies in the past, Hockema said.
By spring, Kaiser wrapped up its last plant sale.
Late last month, the company said it had a reorganization plan that would hand shares to its creditors.
All former shareholders,including corporate raider Charles Hurwitz’s Maxxam Inc. of Houston, which has a 62% stake,will receive no compensation, according to Hockema.
Things are getting better. In the first quarter, Kaiser went from a net loss of $60 million a year ago to a profit of $8 million as sales jumped 25% to $281 million.
The company recently signed a pact to supply Airbus SAS with heat-treated aluminum sheet and plate through 2011.
