Tools and dies for Kaiser cars were taken to South America, and in partnership with governments there, auto companies were set up in Argentina and Brazil, where Kaiser-body cars continued to be made into the 1970s, when Ford and Renault each bought out Kaiser interests. Kaiser continued to make Jeeps until 1967, when it sold the old Willys company to American Motors.
Suffered Heavy Losses
Even though the South American deals later helped recoup some of the losses, the car company had spilled about $120 million in red ink.
But Kaiser officials refused to admit failure. "We didn't want to have a bankruptcy in our records," Trefethen said. Instead, Kaiser Motors was merged with Henry J. Kaiser Co., the privately owned engineering and sand and gravel company.
The merged company was named Kaiser Industries, and into it went the Kaiser holdings in the steel, aluminum and cement companies. A public issue of stock was made, and shares of the defunct auto company were swapped for Kaiser Industries shares at the rate of about 6 cents on the dollar. The merger also permitted Kaiser to reduce its tax burden by balancing profits of its other companies against losses in auto making.
By the time of the reorganization in 1956, Henry J. Kaiser was semi-retired in Hawaii. His building spree there and his new-found interest in television drew almost $30 million from Kaiser Industries coffers before it started generating profits.
After years of slowly relinquishing his hold on the companies, Henry J. officially retired in 1959. That same year, the gracefully curved, 28-story Kaiser Center overlooking Lake Merritt in Oakland was completed, and Kaiser companies that once had been scattered in more than a dozen buildings moved into a showcase of Kaiser engineering and products.
Edgar Kaiser Sr. became chairman of Kaiser Industries and its affiliates; Gene Trefethen was president of Kaiser Industries and vice chairman of the other companies. The men who had been running the steel, aluminum and cement affiliates for years were finally named presidents of those companies.
Known for Integrity
Edgar Sr., as lean as his father was rotund, shared his father's interest in the companies' philanthropic activities and especially nurtured the health plan. Edgar was known for international diplomacy and his unflinching integrity. Henry Mead Kaiser said: "The leadership it took to create a very high moral and ethical standard in the companies was the really high priority issue for my father."
Although Edgar, who died in 1981, was a prominent figure in Washington as well as Oakland, he was a self-effacing man who as often as not credited his father for Kaiser accomplishments.
His former associates and his sons very carefully frame their praise of him, while freely expressing their love and admiration. But what they seem unable to say about him is that he was a good businessman.
The Kaiser companies were growing apart even as he took the helm. The structure of Kaiser Industries as a holding company with controlling interest in the three major companies was proving unwieldy. Although many of the companies expanded their primary businesses, there was little of the diversification that had marked Henry J.'s long career. Competition from foreign producers was beginning to erode markets for U.S. basic industries, and the West Coast-based Kaiser companies were squeezed especially hard by increasing imports, lead by those from a re-industrialized Japan.
Changes in the tax laws in 1969 further complicated the situation. In order to maintain tax-exempt status, foundations such as the Kaiser family's had to devote a certain percentage of funds to charitable purposes, rather than doing so only if good years yielded fat dividend checks. Securities laws dictated fewer cross-directorships among the affiliated companies, and independence among Kaiser companies--and their distance from the holding company--grew.
Hired an Outsider
Edgar Sr. made an attempt to rein in the companies in 1974, when he hired William Roesch from Jones & Laughlin Steel to be president of Kaiser Industries. Roesch was the first "outsider" to hold a top position at Kaiser, and Edgar Sr.'s advisers, his sons and the executives of the various companies are believed to have unanimously recommended against the hiring.
Roesch's job was to bring order to the Kaiser corporate structure. But during his tenure, bickering between the operating companies and headquarters intensified, and Roesch was soon presiding over the company funeral. Several proposals to reorganize Kaiser Industries were considered but never adopted.
By 1976 it had become painfully obvious to many, including Edgar Kaiser Sr., then 68 and ailing, that Kaiser Industries no longer worked and that the next generation of Kaisers would not be able to solve the problems.
Finally, in May, 1976, directors voted to liquidate the company.