Western Building Empire Spawned Kaiser HMO

Long before Henry J. Kaiser’s name became associated with health care, his empire spanned North America on sturdy legs of steel, cement and aluminum. He almost single-handedly laid the foundation for the West’s industrial boom, along with one of the nation’s largest nonprofit health maintenance organizations.

Both ventures stemmed from his longtime motto: “Find a need and fill it.”

Kaiser helped construct some of the nation’s great bridges and dams -- Hoover, Bonneville, Shasta, Grand Coulee and the San Francisco-Oakland Bay Bridge. During World War II, he built Liberty ships and airplanes and conceived the idea for Howard Hughes’ fabled flying boat, the “Spruce Goose.” In the postwar years, he turned to manufacturing aluminum, building houses and Kaiser-Frazer sedans.

Kaiser gained a foothold in Southern California in 1942, when he broke ground in Fontana for the West Coast’s first steel mill. The mill provided steel for his wartime ship and airplane factories, as well as health care and a hospital for his employees. He empathized with his workers because he knew from his own tragic family circumstances the perils of poor health care.

Kaiser was born to German immigrants in Sprout Brook, N.Y., in 1882. His father was a cobbler, his mother a nurse. Although his family was not poor, young Kaiser quit school at 13 and began working as a store clerk and a photographer to help support his parents and three older sisters.

“I thought I was ready to lick the world single-handed, so I dropped out,” he said in a 1948 interview.

In 1906, at age 24, he accepted a challenge from his future father-in-law to go West and find his fortune. He chose the Pacific Northwest, where he became a salesman for a hardware company. Two years later, with a hefty bankroll, he returned to claim his bride, Bess Fosburgh.

The couple returned to Spokane, Wash., where his job as a salesman put him in contact with contractors. Soon, he went into the construction, sand and gravel business and, in 1913, he established his own firm, the Henry J. Kaiser Co.

By 1921, Model T Fords were rolling off the assembly line and California was becoming known for its car culture. Kaiser saw an opportunity; he moved to Northern California to build more roads. His predecessors had averaged two miles a month; Kaiser paved a mile a week.

He became known as “Hurry Up Henry.”

His speed and innovation also paved the way to build his Oakland headquarters. He won gigantic government contracts to construct roads and bridges in Cuba and to help electrify the West.The man who believed that “there is no such thing as a problem, only an opportunity” lost the contract to build Shasta Dam in 1938, but won the bid to supply 6 million barrels of cement for the project. He built a cement plant and a 9.6-mile-long conveyer belt -- then the world’s longest -- to carry materials for the dam through the mountains. An engineering marvel, it cost $1.5 million.

That same year, when Kaiser’s company was chosen to help finish Grand Coulee Dam in rural Washington, he teamed up with Dr. Sidney Garfield, a Los Angeles physician, to set up health care for 15,000 Kaiser construction workers. In 1933, Garfield had set up a prepaid health plan -- 5 cents per worker per day -- to care for 3,000 workers who were constructing the Colorado Aqueduct in the Mojave Desert.

That was a turning point for Kaiser: He ventured into a field in which he had no practical knowledge, only a vision. But he had been interested in health and medical care since he was 17, when his mother had died in his arms. She was 52; her health had deteriorated within months.

A few years later, his father would go blind because of improper medical care. His only daughter would die in childbirth because of poor care. His young son, Edgar, almost lost a foot at a construction site because the hospital was so far away. And he would spend a lifetime searching for a cure for his elder son, Henry Jr., who had multiple sclerosis.

The 1938 effort won his workers’ loyalty, which Kaiser remembered during World War II. Labor was in short supply; he offered health benefits to attract workers.

In 1942, he needed steel on the West Coast for war production. Frustrated by the problems of shipping steel from the East, he began to transform orchards and a hog farm in Fontana into the nation’s first West Coast steel plant. Near what is now the intersection of Interstates 10 and 15, it was far enough inland to be safe from Japanese attack.

For Southern California’s war-weary populace, the December 1942 dedication of Kaiser Steel’s 10-story, 1,200-ton blast furnace was a patriotic extravaganza, making the front page of The Los Angeles Times.

College students sang. A young radio reporter named Chet Huntley acted as master of ceremonies. And Kaiser watched as his wife, Bess -- generous both in spirit and size -- threw the switch to fire up the blast furnace that Kaiser sentimentally named after her. With that, the first complete steel mill west of the Rockies roared to life.

Within a year, Garfield had turned the plant’s administration building into Southern Permanente hospital, with 85 beds and six doctors serving 3,000 workers and their families. (There were two other Permanente hospitals, one in Northern California, the other in Vancouver.)

In 1953, the hospital names were changed to Kaiser Permanente. Two years later, the steel mill hospital was cut into sections and moved six miles on skids to the new downtown medical center, where it remains today.

The name Permanente came from a creek near a Kaiser plant in San Jose that flowed in all seasons. Spanish for lasting or stable, the name was also used for one of Kaiser’s cement brands.

To supply his steel mill during the war, Kaiser bought the Eagle Mountain iron mine in the Mojave Desert, between Indio and Blythe. Once one of the country’s 10 largest open-pit mining operations, it closed in 1983 because it ran out of customers, not ore. It remained a virtual ghost town for five years, until a minimum-security prison moved in. The prison is scheduled to close soon, leaving the town abandoned again.

In 1945, as the end of the war neared, Kaiser realized that returning GIs would need places to live and start families. He teamed up with real estate developer Fritz Burns to build whole towns with medical centers, including Panorama City.

Around the same time, Kaiser hooked up with a former mechanic named Joe Frazer to build cars. Kaiser-Frazer built more than 800,000 vehicles between 1946 and 1955.

One of the models was a genuine economy car for the masses, sold through Sears Roebuck. Called the Henry J, it was a mere 58 inches wide -- reputedly so that it could fit through Sears stores’ double doors. Its top speed: 30 mph.

By the early 1950s, Chrysler, Ford and General Motors began beefing up their models with V-8 engines. Popular muscle cars left sales of the underpowered Henry J in the dust.

Kaiser Steel Corp. prospered in the 1950s and ‘60s; with more than 13,000 workers, it was the largest employer in San Bernardino County. But after Kaiser retired in the late 1950s and died in 1967, at 85, the company lost some of its spark. The late 1970s saw the dismantling of the Kaiser empire.

The steel mill closed in 1983, done in by cheap imported steel and high labor costs. The corporation staggered into bankruptcy four years later, with little left but debts and bitterness. Today, only fragments of its business survive.

Half of the steel mill’s buildings were torn down, and the landmark, 300-foot smokestack was dynamited in 1988. The California Speedway was cobbled out of the ruins, with Kaiser’s landmark water tower in the center. California Steel Industries, an unrelated steel importer, occupies the remaining buildings.The ruins are famous in celluloid circles. Part of the steel mill property, and the Eagle Mountain mine pits, were used for hellish post-nuclear war scenes in the movies “Terminator,” in 1984, and “Terminator 2: Judgment Day,” in 1991.

Kaiser recognized that his greatest achievement would be the HMO, which today serves 8.4 million members in nine states and the District of Columbia, including 6.3 million in California.

“If I am remembered for anything,” he told a reporter on his 85th birthday, “it will be for my hospitals. They’re the things that are filling the people’s greatest need -- good health.”