The Aluminum Curtain 

Out of the Foundry and Into the Fire?

Montana's largest industrial plant has a new owner. What you don't know about them may surprise you.


At the foot of Teakettle Mountain just west of Glacier National Park lies the Columbia Falls Aluminum Company, a remarkably large structure that houses a virtual portal back in time. To venture into its deep, cavernous halls is to draw a breath that tastes more than a century old; of the dark, fiery days of the Industrial Revolution, when smoldering cauldrons were hoisted skyward on chains, and sooty, muscle-bound workers forged liquid fire into the raw materials that powered a growing nation.

It's a beastly hot place where the extreme scales of size, temperature and energy simultaneously overwhelm and humble the senses. As you walk into the 40-acre facility, the largest building in Montana, you enter the first of 10 long rooms, or "pot lines," that run parallel to one another. Each pot line is like an enormous car battery three football fields long. Skirting their bases is a dirty white powder known as aluminum oxide, or alumina, which is electrically baked to a temperature of 900 degrees Celsius and reduced to pure aluminum.

To power these quarter-mile long cookers demands 230,000 volts of electricity, much of which flows from hydroelectric generators at Hungry Horse Dam less than seven miles upstream. The CFAC plant also draws energy from three other power grids across the region, gobbling up a full one-fifth of all the electricity consumed in Montana, more than the entire city of Spokane.

Thirty-six year CFAC employee Lyle Phillips: "The success of this place is in the workers. They're the ones that make it all happen. We've got a small-town work ethic in a world-class industry."

One consequence of such monstrous energy usage is that the interior of the plant is a veritable firestorm of magnetic disturbances, powerful enough to spin the second hand on your wristwatch backward, fry the inner workings of a 35 mm camera, or drop a man with a pacemaker to the floor literally in a heartbeat. During my tour through the building, the magnetic fields were strong enough to adhere a four-inch discarded steel bolt to the metal floor. Thankfully, I left my credit cards outside in the parking lot.

But the occasion for my visit into the belly of Montana's largest industrial beast was less for instruction on the finer points of aluminum smelting than it was to gain further insight into a business deal that closed just last month.

CFAC owners Brack Duker and Jerome Broussard agreed to sell the plant to former aluminum customer, Glencore AG, an international metals trading firm, for an undisclosed sum. The deal, finalized on May 28, purportedly ends any involvement Duker and Broussard have with CFAC, thus closing the book on the long and somewhat sordid relationship they had with the workers in Columbia Falls—a relationship that included an iron-fisted approach to labor relations and more than $90 million in alleged profit-skimming.

But like those invisible magnetic fields that will silently wreak havoc on the internal workings of your most valued possessions, more powerful forces may soon be altering the course of events at CFAC, with the potential for causing far greater disturbance and polarization than Duker or Broussard ever did. Having spent an afternoon with workers and management at CFAC, it was readily apparent that the people I spoke to knew little or nothing about Glencore's sketchy past.

There is, however, plenty to know. For starters, Glencore was founded 25 years ago by two multi-millionaires who have been international fugitives from justice since 1983 and are wanted by the FBI, U.S. Customs, the U.S. Marshals, and Interpol. More troubling, Glencore's current chairman, Willy R. Strothotte, once played a role in one of the worst labor disputes of this decade.

Although CFAC's union workers, like 31-year veteran Al Haag (above), received a cash settlement of $65 million from former plant owners Duker and Broussard, they took home less than half that amount. On June 18, rank-and-file members rejected the latest contract offer.

On June 18, rank-and-file members of the Aluminum Workers Trades Council, the collective bargaining unit that had negotiated a tentative, four-year labor contract with Glencore management, rejected the latest offer. While the vote was underway, I asked one long-time CFAC employee what he knew about Glencore.

"Not much," he said. "But anyone is better than Duker and Broussard."

Perhaps, but Glencore's track record tells a far different story.

Eyes Wide Shut

"We had a pretty favorable reaction to the deal," said CFAC external affairs manager Bob Brown, about the recent purchase by Glencore. Brown is a friendly and talkative fellow who seemed delighted—and proud—to show us around the plant.

"The sale [to Glencore] gave us a good feeling," Brown said. "It was sort of like a vote of confidence for us."

Brown's comments were echoed by Lyle Phillips, CFAC's manager of human resources, who led us on our tour. Both men spoke openly and off-the-cuff about their genuine relief that Glencore plans to keep CFAC in business.

This is hardly surprising, considering that CFAC is the most remote smelting facility in North America, resulting in some of the highest transportation costs in the industry. In a town the size of Columbia Falls, where CFAC provides some of the best paying union jobs in the state, there was legitimate cause for hand-wringing.

"Glencore's great. We know them. They know us. What a great match," said Phillips, who has been with CFAC for more than 36 years. "It's a real relief. We could have been bought out by guys who planned to suck us dry, sell us off and close us down."

To fully appreciate such sentiments, it's important to keep in mind the ordeals that CFAC employees have endured in recent years.

It all began in 1985, when ARCO sold the plant to Duker and Broussard for one dollar, and plant workers agreed to a 15 percent cut in wages and benefits in exchange for a 50 percent stake in the company's annual profits.

But in 1992, CFAC accountant Roberta "Bobbie" Gilmore began to notice discrepancies in the company's books and complained to her superiors, for which she was summarily fired. Gilmore sued the company for wrongful discharge, but despite being rehired into a different job at the plant in August 1995, she continued her lawsuit, alleging that Duker and Broussard had conspired to keep her from investigating where the workers' profit-sharing money had gone. In the meantime, CFAC employees had already brought a class-action suit against Duker and Broussard for breach of contract.

It was around this time that one of CFAC's customers—Norsk-Hydro Aluminum of Norway—issued a memo expressing "legal and ethical" concerns about doing business with CFAC, and elected not to renew its decade-old contracts. Shortly thereafter, CFAC entered into a new contract with Glencore.

In October 1995, still working under a contract unchanged since 1985, workers threatened to walk off the job. A strike was narrowly averted when state and federal negotiators, including Gov. Marc Racicot, stepped in and asked workers to remain on the job, but not before Duker had brought in a military-style security force in what union workers characterized as an effort to intimidate and harass workers and force the union to buckle.

The story gained national attention in December 1997 when a settlement between the plant's owners and workers was finally reached, and Duker and Broussard agreed to a lump sum payment of $97 million.

Although the settlement was labeled a victory for CFAC workers, the union received only $65 million, more than half of which went to cover lawyers' fees, and state and federal taxes. Several workers complained that they were not even permitted to put their settlement money into their 401(k) plans. Morale at the plant had suffered a severe blow, and the union's victory over Duker and Broussard was not nearly as sweet as many had envisioned.

"We wound up with less than one-third of what we had coming," said retired CFAC mill wright Keith Strohschein, who worked at the plant for 21 years. "What really bugged me about that whole deal was that it was set in stone and no one could change it."

The Men Behind Glencore

As we emerged from the dark, stifling air of the smelting facility and returned to the brighter, more temperate environs of CFAC's administrative offices, I casually asked Brown and Phillips what else they could tell me about Glencore. Brown seemed genuinely disappointed not to have more to say.

"I know they're based in Switzerland," said Brown, pointing to a photocopied picture of their corporate headquarters in Baar, Switzerland. "It's kind of sterile looking place, like it's made of aluminum."

Glencore International, the parent company of Glencore AG, is indeed made of aluminum—as well as nickel, lead, copper, and about a half-dozen other metals. According to the firm's own press release, Glencore is a privately held, diversified natural resources company with worldwide interests in mining, smelting, refining and trading in metal and minerals, energy and agricultural products. With offices in 50 countries, Glencore employs approximately 2,000 people worldwide, and is listed as the fourth largest company in Switzerland. Their U.S. offices are located in Stamford, Conn.

Since Glencore is a foreign, privately held firm, information about the company is difficult to come by, beyond what has already been published in the news media, or what little information exists in the public record. But as of press time, neither Glencore Ltd., nor Glencore International were registered with the Secretary of State to do business in Montana.

No newcomer to the metals industry, Glencore has been involved in aluminum dealings for more than 25 years, formerly having been known as Clarendon Ltd., and before that, Marc Rich and Co. Its founder, Marc Rich, is a 64-year-old billionaire commodities dealer born in Belgium. According to the FBI, Rich has been living in Zug, Switzerland since 1983, when he and company co-founder, Pincus "Pinky" Green, fled the United States shortly before being indicted on more than 50 counts of wire fraud, racketeering, and income tax evasion amounting to over $48 million.

According to an article in the May 13, 1993 Wall Street Journal, the U.S. government alleges that Rich purchased six million barrels of oil from Iran during the American hostage crisis in 1980, leading to charges of trading with the enemy. And Forbes magazine has reported that both Rich and Green had suspected links to the late Nigerian General Sani Abacha, an African dictator with a long history of human rights abuses.

In addition, the Wall Street Journal article further claims that Rich had significant dealings in the former Soviet republics, including allegations of bribery and drug money laundering in Russia and the Ukraine. The Journal went on to name Rich as the number one metals trader in Kazakhstan, with purported links to organized crime there.

Such history is politely shrugged off by Glencore spokesman Bill Tenner, who asserts that both Rich and Green sold out their entire financial holdings in Glencore in the early 1990s and have had no dealings with Glencore for five years. In a written statement from Glencore, obtained by the Independent from CFAC, as of September 1994, "all of Mark [sic] Rich's shares were bought, and relations with him, both as a legal and private agent were ceased."

But as Jim Bowen, a former United Steelworkers representative who has had ample experience with Rich and his various corporate aliases, described Glencore, "It's like a horse race. You never know who's scratched and who's going to be back in the running the next morning."

The Company You Keep

Oftentimes in life you are judged by the company you keep. In the case of Glencore's current chairman, Willy Strothotte, that rule also holds true for the companies you own.

Back in 1989, a Kaiser Aluminum plant in the small rural town of Ravenswood, West Virginia fell victim to a leveraged buy-out financed in part by Willy Strothotte's investment company, Rinoman Investment Co., which acquired 48 percent of the mill.

Soon after the plant was bought out, workers began to notice a marked change in working conditions. An investigative report published in The Progressive magazine in 1991 noted that jobs were combined, safety regulations were ignored, and an atmosphere of suspicion and hostility seemed to reign, as security guards and surveillance cameras were brought in to keep an eye on employees.

On Halloween night, 1990, union workers began showing up for the graveyard shift. Although their contract was due to expire Nov. 1, they were confident a settlement would be reached. After all, the plant had never in its history had a strike or work stoppage.

But literally minutes before midnight, all 1,700 union workers were illegally locked out, or effectively fired from their jobs and replaced by permanent, non-union workers who had been recruited in advance. The union, stunned by the management's methods, later concluded that since the average age of Ravenswood's employees was about 50, the lock-out was a way for the new owners to reduce their overhead costs and eliminate all their older workers who were nearing retirement.

The ensuing struggle lasted 20 months and gained international attention. Among the greatest challenges faced by the United Steelworkers of America—the union representing Ravenswood aluminum workers—was navigating through the labyrinth of corporate identities who owned the plant. Rolling Stone reported in 1992 that the USWA went so far as to hire a detective just to determine who owned Ravenswood Aluminum Corp.

What eventually came to light was that Rinoman Investment Co.—which had a 48 percent stake in Ravenswood—was owned by Willy Strothotte, who was also the president of Clarendon Ltd., a company 49 percent owned by Marc Rich and Co. In February 1992, The Nation identified Strothotte as "a longtime associate of Rich and reputed to be Rich's point man in the aluminum industry."

In a phone conversation with the Independent, Glencore spokesman Bob Prusak would not comment on Strothotte's relationship, if any, with Marc Rich, nor would he comment on Strothotte's past involvement in the labor dispute at the Ravenswood facility, except to say that "Today Mr. Strothotte has no ownership whatsoever in Ravenswood."

And according to the FBI office in New York handling the Marc Rich case, Strothotte has not been charged with any crimes, nor has his name appeared in any federal indictments in this country, related to Marc Rich or otherwise.

USWA went on to wage a successful global campaign against Rich and his businesses, getting Anheuser-Busch and Stroh Brewery to stop buying aluminum from Ravenswood, and enlisting the support of Czech unions to pressure their government into preventing Rich from buying the Slovak State Aluminum Co.

The union also enlisted the help of U.S. Rep. Bob Wise of West Virginia to stop the U.S. Mint from buying nickel, copper and zinc from Rich's companies. The National Labor Relations Board later found that the Ravenswood lock-out had been an illegal act and that management had not bargained in good faith. The plant's management was forced to fire its replacement workers and rehire union workers, but not before leaving indelible scars on the town of Ravenswood.

The woes of the workers at Ravenswood did not end there. The Occupational Safety and Health Administration repeatedly fined the company for safety violations throughout 1990 and '91, and by May 1994 an accident took the life of one worker. In 1995, the plant's owners agreed to pay $1.175 million in OSHA penalties.

Glencore has been the majority owner (nearly 40 percent) of the Ravenswood plant since 1992, according to Al Posti of Ravenswood's parent company, Century Aluminum. Nevertheless, he characterized the Ravenswood labor problems as "ancient history."

Forging the Future

The day I visited Columbia Falls, union workers were voting on a new contract and understandably, declined to comment on either the new contract or their new owners, for fear of influencing the vote. In a surprise vote, union employees eventually rejected that contract by a 3-to-2 margin.

Interestingly, in 44 years, CFAC has never experienced a strike, a sustained work stoppage or a shutdown. The plant, which exports 185,000 tons of aluminum a year, produces more aluminum per worker than anyone in the industry. The average worker at CFAC has devoted 18 years of service, and with an employee turnover rate of less than 2 percent, someone must be doing something right.

"The success of this place is in the workers," said CFAC's Lyle Phillips. "They're the ones that make it all happen. We've got a small-town work ethic in a world-class industry."

In the coming months, the Aluminum Workers Trades Council will attempt to forge another deal with the new management before their current contract expires Oct. 9. But in light of Glencore's history, navigating that course may prove disorienting and perhaps even treacherous, as though their compass were trapped in the midst of those invisible but dangerous magnetic fields.

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