Donald Trump will name Wilbur Ross Jr. as commerce secretary, a
transition official said Tuesday, selecting a fellow businessman
whose name rings out in the Rust Belt.
In 2001, with the steel industry in crisis and more than 30
steelmakers in bankruptcy, Mr. Ross swooped in and bought key
assets, such as LTV Corp., Bethlehem Steel and Weirton Steel
Corp.
By cutting jobs and legacy costs, as well as negotiating new
deals with unions, he was able to put mills back on their feet,
before selling them at a profit.
For some, this made the 79-year-old New Jersey native nothing
short of a savior of the steel industry—someone willing to risk his
money to save thousands of jobs. For others, he was a vulture who
cut jobs and pensions, and forced pain on a once proud
industry.
It's a role that Mr. Ross, in a storied and wide-ranging Wall
Street career, has played in other industries, including auto
parts, coal and textiles.
He even represented bondholders in Mr. Trump's Taj Mahal casino
in Atlantic City. The creditors were angry about a possible missed
payment and debated whether to seize control of the casino. Mr.
Ross argued that Mr. Trump's properties were worth more with the
man involved and helped negotiate a plan to keep him in charge.
Mr. Ross eventually became a key Trump ally, backing his
campaign for president and helping him raise money from Wall Street
executives.
But it's in the steel industry's consolidation that Mr. Ross
arguably made his largest mark. "He was the right person at the
right time," when steelmakers were struggling, said John Surma,
former CEO of U.S. Steel Corp., in an interview.
Even some former adversaries acknowledge that in addition to
cutting thousands of jobs, Mr. Ross played a major role in a
restructuring that preserved other jobs.
"There's no denying he saved thousands of jobs," says Charles
Bradford, now an independent analyst, who worked for banks and
investors that mounted competing restructuring proposals to those
of Mr. Ross in steel bankruptcy proceedings. "He doesn't like to be
called a vulture, but a vulture investor is somebody who finds a
distressed asset that still has good bones and turns it around and
flips it. And that is what he did."
In 2002, for example, Mr. Ross's company W.L. Ross & Co.
bought the assets of LTV Corp., once the nation's third-biggest
steel mill, for $125 million in cash and $200 million in
environmental and other liabilities. At the time, Mr. Ross said the
new company would employ about 3,000, less than half of the 7,500
LTV had employed.
In 2005, Mr. Ross sold his International Steel Group Inc., to
the world's largest steelmaker ArcelorMittal for $4.5 billion,
netting billions in profits. Mr. Ross is still an independent
director on ArcelorMittal's board, one of many business ties he
would have to sever if he joins the cabinet.
"He was the force assisting in the consolidation of the steel
sector," says John Packard, publisher of Steel Market Update. "He
managed to save mills that might have been shut down if they hadn't
been consolidated."
Mr. Bradford recalls that when he went up against Mr. Ross, the
latter usually won. "When we asked clients why he won, they said,
'He was nastier, he worked harder for whatever side he was on,' "
Mr. Bradford said.
Mr. Ross, the son of a lawyer, grew up in suburban New Jersey
and dreamed of being a writer. Instead, he went to Wall Street and
became a bankruptcy specialist at Rothschild Inc. in the 1970s,
working on high-profile bankruptcies and restructurings, including
Texaco, Continental Airlines and TWA.
His career as a Rust Belt investor hasn't been without blemish.
In 2006, an explosion at a mine in Sago, W.Va., under control of
his International Coal Group Inc., killed 12 workers, prompting
criticism of ICG's safety precautions.
Mr. Ross called it "the worst day of my life." In a statement,
he added, "I don't know what is harder—trying to get to sleep at
night with Sago hanging over me or getting up in the morning to
face another day of internal sorrow and external criticism."
Write to John W. Miller at john.miller@wsj.com
(END) Dow Jones Newswires
November 29, 2016 23:15 ET (04:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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