Trumpy-the-Clown Finds A Billionaire Murderer For His Cabinet-- Meet Wilbur
Exactly one week ago to the day, we warned that Trump was likely to appoint murderous billionaire Wilbur Ross to his cabinet as Commerce Secretary. The Wall Street Journal confirmed yesterday that that's exactly what's happening. Many steel workers and coal miners who hoped for a better deal from Trump and decided to roll the dice on his presidency, will remember Ross as a vicious predator who wrecked their lives in his business endearors. Like Trump, Ross plays fast and loose with the law and when his hopes for not being caught are dashed, he pays wrist-slap fines and moves on with his criminal strategies. Unlike Trumpanzee, though, if he takes the Commerce job, statutes would force him to divest himself of his holdings.
In the early 1990s, Mr. Ross represented bondholders unhappy with Donald Trump’s management of his struggling Taj Mahal casino business, a role in which Mr. Ross later said he interacted with Mr. Trump “quite aggressively in a very bad moment for him, and yet came away from it with great respect” for him. 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.That turned out very well for Trump but very badly for investors, who he eventually took to the cleaners (and referred to as "total killers" when he was questioned about it at a GOP debate), workers, contractors and Atlantic City.
Ross is the same kind of sleaze ball businessman, maybe even worse. As the NYTimes reported yesterday, "After choosing national security hard-liners for some of his earliest appointments, Mr. Trump is now turning to a group of ultrawealthy conservatives to help steer administration policy."
Ross, a vulture investor from Weehawken, New Jersey, is best known for buying distressed, failing companies, screwing everyone involved, but especially employees, as he "restructures," and then sells them on for big profits to himself. He's made around $3 billion doing that-- and destroyed the lives of many thousands of... Trump voters. New York Magazine dubbed his the bottom-feeder king in a 2 decade-old profile. They quote him as saying "Look at all the engineers China is graduating. If China marries its massive labor force to technology, things will be very bleak for this country. In industry after industry, wages are starting to get cut back, fringe benefits are getting cut back—look at the poor airline industry—we’re in danger of exporting our standard of living and importing our unemployment . . . You can’t have much of an economy if people are just flipping hamburgers, trading stocks, and suing each other . . . Are our grandchildren going to dive for coins from cruise ships in the East River?"
Bankruptcy is the Greyhound bus terminal of corporate America—a dimly lit hall peopled by hard-luck losers, duped lenders, congenital screwups, and, occasionally, powerless victims of vast global forces. And most professional investors regard bankrupt industrial firms as toxic piles; they flee before the crud can soil their Allen-Edmonds wingtips. But Chapter 11 allows those with an eye for damaged goods to gain control of assets on the cheap. Why? Busted companies can reject leases, walk away from debt, terminate health-care promises, and punt pension plans onto the federally sponsored Pension Benefit Guaranty Corporation. Such debt purges can suddenly make crappy business models seem brilliant.
In 2001, when LTV, a bankrupt steel company based in Cleveland, decided to liquidate, Ross was the only bidder. Ross suspected that President Bush, a free trader, would soon enact steel tariffs on foreign steel, the better to appeal to prospective voters in midwestern swing states. So in February 2002, Ross organized International Steel Group and agreed to buy LTV’s remnants for $325 million. A few weeks later, Bush slapped a 30 percent tariff on many types of imported steel—a huge gift. “I had read the International Trade Commission report, and it seemed like it was going to happen,” said Ross. “We talked to everyone in Washington.” (Ross is on the board of News Communications, which publishes The Hill in Washington, D.C.)
With the furnaces rekindled, LTV’s employees returned to the job, but under new work rules and with 401(k)s instead of pensions. A year later, Ross performed the same drill on busted behemoth Bethlehem Steel. Meanwhile, between the tariffs, China’s suddenly insatiable demand for steel, and the U.S. automakers’ zero-percent financing push, American steel was suddenly red hot. The price per ton of rolled steel soared, and in a career-making turnaround, Ross took ISG public in December 2003.
...In August 2003, Ross won an auction for the bankrupt Horizon coal company and has since made it the centerpiece of International Coal Group (sense a theme here?). ICG is now the nation’s fifth-largest coal company. “Coal is the cheapest source of energy for generating electric power,” he says. “We have more BTUs of coal than all the Arabs have of oil.” Again, the timing was impeccable. The spot price of coal has doubled since July 2003.
So long as companies fail-- and the government stands as a pension backer of last resort-- this genteel phoenix will keep on buying damaged goods that the market has given up on.
|"You thought Betsy DeVos was bad? Look what I found!"|
The press rarely talks about how Ross's arrangements in restructuring ICG (International Coal Group) meant no union, no health care and no pensions. No wonder Trump admires him. Oh, and no mine safety. Ever hear of the Sago Mine disaster? It should be called the Wilbur Ross Sago Mine disaster. The 2006 coal mine explosion killed 12 miners because Ross refused to address the safety problems at the mine (even though there had been a dozen roof collapses the year before and even though the mine had been been given over 200 citations by the Department of Labor for safety violations, including 21 for build-up of toxic gasses. By the way, the mine is in Upshur County, West Virginia, which went overwhelmingly for Trump-- 6,971 to 1,763. I wonder if they're celebtrating Ross' appointment.
Ross' p.r. tried to deny he was the mine's owner but the front companies were eventually unmasked. He also lied to the media and claimed the 12 dead miners had been rescued. What a guy! He had originally refused to buy the mine because it was unionized but once he was granted permission from a corrupt state court to throw out the contact and throw out the union, he grabbed the mine and slashed all the benefits the workers had won for decades-- including safety regulations. His company was cited for dozens of what is called "serious and substantive" safety violations, like "failure to follow the approved roof control and mine ventilation plans and problems concerning emergency escapeways and required pre-shift safety examinations."
In 2006 the Wall Street Journal gave Ross sympathetic coverage for his role-- ultimate responsibility-- in the mining disaster. They were certainly more concerned with his feelings than with the families of the dead miners he had killed.
Investor Wilbur Ross has had a golden touch, making money in unfashionable smokestack industries-- steel mills, auto parts, coal mining-- that have seen better days.
His strategy has been deceptively simple: Buy up often-struggling businesses on the cheap, assemble them into more-efficient operations, then sell them off at a premium.
Now he faces one of his biggest tests following the fatal mining disaster this month at the Sago mine in West Virginia. The mine is owned by the company Mr. Ross created, International Coal Group Inc. The Jan. 2 underground explosion captured the nation's attention for days, amid uncertainty about the fate of 13 men trapped underground by the blast. Ultimately, 12 miners died and a 13th is hospitalized in a coma.
"This is the worst day of my life," said Mr. Ross at the time, when he learned of the deaths. He has also said publicly that he identifies with the miners' grieving families, noting that he lost his own father at age 18. "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," he said on Friday in a statement responding to questions from a reporter.
Mr. Ross has been in the coal business only four years, but already his company, ICG -- which had a stock offering late last year -- is one of the 10 largest coal companies in the U.S. He is aggressively pushing into a gritty, treacherous industry that poses challenges that simply don't exist in other fields. "Coal mining, by its nature, is extremely dangerous," says Wayne Atwell, a metals and mining analyst with Morgan Stanley in New York. Indeed, on Thursday, a separate accident happened at a mine owned by Massey Energy Co. in West Virginia, where two miners are still missing.
The Sago mine accident is putting Mr. Ross under the type of intense scrutiny and criticism he never faced when buying steel mills. For instance, when Mr. Ross announced that ICG was creating a $2 million Sago Mine Fund for the miners' families, inviting others to donate, some observers quickly began questioning whether that was enough and whether he was contributing his own personal funds to the cause. He says he has been calling through his Rolodex to Wall Street banks and billionaire buddies pledging to match additional contributions dollar-for-dollar with his own money.
"My fervent hope is that we will learn something [from the disaster] that will reduce the risk the next time a miner is underground," he said Friday.
...The accident is likely to prove costly to ICG, which had a stock offering on the New York Stock Exchange two months ago. The firm faces the potential of stiff legal liabilities and government fines arising from the accident. Production at the affected mine will be nonexistent during the lengthy investigation into the cause of the explosion. Washington lawmakers from coal-mining states are also demanding investigations to question coal-mining practices. The disaster also provides an opportunity for the United Mineworkers union to make an effort to organize the company's nonunion workers. The company has made disparaging remarks about the efforts by the union, which could increase its labor costs.
ICG's shares began trading on the New York Stock Exchange Nov. 21, hitting an intraday high of $13.10 before closing at $12.45. But they dropped to less than $9 a share after the accident. They have since rebounded to about $10 a share. Mr. Ross's firm, W.L. Ross & Co., owns 13.7% of the company's shares, valued at about $200 million.
Mr. Ross explains that his firm's fundamental approach is unchanged and his company will continue expanding its coal reserves and mining operations. The Ashland, Ky., company, which is building a new headquarters in Teays Valley, W.Va., could be taking a more long-term approach to the coal business than Mr. Ross took in the steel industry. The company, with 100 headquarters staff and nearly 2,000 total employees, is planning to open and develop new mines in West Virginia in addition to the nearly one-billion tons of coal reserves it currently owns.
"We intend to remain in the coal business for a long, long time and have committed $1 billion in the 2005 to 2010 period for upgrading equipment and expansion of mines," says Mr. Ross. "That program is what will make us the low-cost producer."