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.., Wonder what's ailing U.S. capitalism in the last quarter of the 20th century? It's all here in the Kaiser Steel story. An Amc~ican trr~~edy By AILn 61oen pp end 1;'et>W FuLrman ENRY J. KAISER symbolized American capitalism at its best: builder of Boulder Dam, the man who launched a ship a day to help win World War lI, the visionary who established, against entrenched competition, an industrial empire based on steel, aluminum, cement, autos and coal. Then there's Monty H. Rial, whom you probably have never heazd of. Thanks to the ease with which other people's money can be lined up these days, Rial rhymes with smile) was transformed overnight from a small- time promoter a step ahead of his creditors into a takeover tycoon. Thus, he became owner of Kaiser Steel. Co., once a key part of Henry Kaiser's empire but now a stricken hulk that lives from day to day at the sufferance of its creditors. How Kaiser Steel arrived at this sor- rystate is anAmerican tragedy, show- ing how "restructuring" asick com- pany can turn it into a moribund one with remarkable speed. Monty Rial appeared on the take- over scene from nowhere in October 1983, negotiating Kaiser Steel's Eate as an equal with merger moguls Irwin Jacobs and Joseph Frates in $500-a-day New York City hotel suites. At the time, unknown to Jacobs and Frates, Rial's Perma Group couldn't even pay its copying bills. A local copy shop was pursuing the company to collect a past-due $1,200, which Perma paid in 12 monthly installments. Never .~.~~ mind, Rial talked a good game. Its parlous finances notwithstand- ing, the Perma Gmup became a 50-50 owner of Kaiser with the Frates Group in Febmary 1984 and sole owner in April 1985. Being shuffled to Frates and then to Rial was quite a comedown for "the steel mill that went to war." Henry Kaiser founded it in 1941 to supply his own shipyards, which were later to turn out Liberty-class vessels to help win World War II. Kaiser Steel became the West Coast's only fully integrated steel mill. It was based in Fontana, Calif., 65 miles from the ocean, to protect it from Japanese bombardment. In time, the Japanese did bomb the plant, but not in the way feared: Japanese steel- makers overran Kaiser's markets. But Henry Kaiser had endowed Kai- ser Steel with, among other things, iron ore in Australia, natural re- sources in Canada and a billion tons of high-grade coal in the western U.S. Henry J.'s successors sold the Austra- lian and Canadian holdings to help feed the money-gobbling steel opera- tion-"like selling your tiara to raise food money," says Stephen Girazd, a former Kaiser Steel chairman. Even though the steel business was chronically unprofitable, the com- pany's "undervalued assets" lured prospective buyers. Interest quick- ened when the company decided [o close the steel business. That cut the $12 million-a-month drain .caused by 30 FOREES, OCTOBER 20, 1986 Kaiser Sree[ Chairman Monry Ria! Who i~ thb gtryT