Looking
north towards the Washington Square Arch. 1:00 PM. Photo:
JH.
The
man in news who had all in the New York-Palm Beach-Southampton
axis talking this past week was billionaire businessman Wilbur
Ross whose company International Coal Group (ICG) owns
the Sago mine facility in central West Virginia where 12 miners
were killed
after an explosion last Monday. The Sago Mine is only one of about
a dozen mining complexes belonging to ICG. With 145 miners, it
produces about 800,000 tons of coal annually and accounts for 2-3%
of the company’s total production.
Wilbur Ross has been in the business of rescuing bankrupt companies
for a long time. The sixty-nine year old native of Weehawken, New
Jersey (where his father was a lawyer and later a judge, and his
mother was a teacher), attended a Jesuit military school, graduated
from Yale and the Harvard Business School (with Distinction), worked
for a quarter century at Rothschild in New York directing those
activities.
Hilary
and Wilbur Ross
He’s a soft-spoken man with quiet but sunny demeanor. In
social company, he’s congenial and friendly, although never
boisterous, and always ready for a good laugh. In the years at
L.F. Rothschild on Wall Street he quietly accumulated his fortune.
In fact, he’s been regarded as a successful and prosperous
businessman for a long time. However, in the last four or five
years that “success” is now recognized as brilliant.
In 2004, he was named as one of 36 individuals (including Charles
Simonyi, Nelson Peltz, Roy Disney, William Clay Ford Sr. and one
of the Bass brothers) in 278th place (with assets
of $1 billion) on the Forbes 400 List.
He made his money over decades of hard work and focus. During and
after his second marriage (to former New York State Lieutenant
Governor Betsy McCaughey) that he also acquired something of a
social profile in New York. The marriage to McCaughey was short-lived
(he put more than $2 million of his own money her own ill-fated
candidacy for governor). After that he dated several socially connected
women in New York including Bostonian Laura Codman. Then in the
summer of 2004, he married Hilary Geary.
Mrs. Geary, who is about fifteen years younger than her husband,
hails from an old New York-Southampton family – the Murrays – on her mother’s side. She is a very popular member of
her set in New York, Southampton and Palm Beach. For years her
mother Pat Wood wrote the weekly social column for the Southampton
Press. Her sister Robin is married to former New York Islanders
owner John O. Pickett.
Hilary Geary Ross’ first husband, also a Wall Streeter, Jack
Geary, died young, leaving her a widow in her early forties.
For several years thereafter there was speculation as to whom she
would
marry next. It was assumed, judging from her position that the
man would be wealthy and socially prominent. In the late 1990s,
she married wealthy British businessman Peter Green but
it lasted no more than a year or two. She then dated former Senator
Alfonse
D’Amato for some time. A little more than three years ago
she took up with Mr. Ross who had, by that time, been a bachelor
for some time, dating a number of attractive women. Many assumed
he was apparently less-inclined to make another trip to the altar.
All that changed about a year and a half ago when in August of
2004, the couple surprised the talkers and exchanged vows at St.
Andrew’s Church on the Dunes, next to the Bathing Corporation
on Dune Road in Southampton. A few weeks later they celebrated
with hundreds of friends in a spectacular dinner dance with Bobby
Short entertaining at the Rainbow Room in New York.
The latest Ross marriage, like his business career, marked a crest
of the wave in the life of this man whose public profile theretofore
had been quiet and low-key. Hilary Geary Ross almost immediately
brought a glamour to her man’s life. They acquired a big
house in Palm Beach. She sold her apartment at the posh 580 Park
Avenue and moved to his newly redecorated (by Mario Buatta, and
photographed – cover also – for Architectural Digest)
digs in the Sherry Netherland overlooking Central Park and celebrated
with several cocktail parties entertaining hundreds of their friends.
(They retain the estate in Southampton that she inherited from
her first husband.) They appeared on the cover of Avenue magazine
(Hilary also writes a monthly social column for Quest).
With his new wife, Wilbur Ross has become active in two of the
most prestigious philanthropies in New York – the Boys Club
of New York and the Central Park Conservancy. Even in his “quieter” days,
he served on a variety of boards including the Smithsonian National
Board (he was chairman) and the Parrish Art Museum in Southampton.
During Bill Clinton’s Presidency, he was appointed to the
board of the US-Russia investment fund, and served as a privatization
adviser to former Mayor Giuliani.
He is also a member of the Yale School of Management Board
of Advisors – along with Wendy Deng (Mrs. Rupert) Murdoch – the Business
Round Table, and the Turnaround Management Association. None of
this is new to the tycoon. In 1999, President Kim Dae Jung awarded
Ross a medal for his help during Korea’s 1998 financial crisis.
After years of running the bankruptcy-restructuring advisory practice
at Rothschild, in early 2000 as the market bubble was about to
burst, Wilbur raised $450 million to invest in fallen companies
on his own. He was, and is, a man with a Glass Half Full Mentality.
Ignoring the high-techs or betting the farm on high-flyers, he
turned his attention to the companies that were the cradle of American
industry. These were companies in their late age regarded as victims
of excess capacity, global competition and generous union contracts.
In 2002, he formed International Steel Group and bought the bankrupt
Cleveland based steel company LTV for $325 million. A few weeks
later President Bush put a 30% tariff on many types of imported
steel – a bonanza for American steelmakers.
The main characteristic of these corporate bankruptcies such as
LTV, thanks to a Chapter 11 ruling, is that they can terminate
longtime health-care obligations and turn their pension plan obligations
over to the the government-sponsored Pension Benefit Guaranty Corporation.
In 2003, Ross acquired one of the granddaddies of the steel American
steel industry – Bethlehem Steel – but only after the
company had filed bankruptcy and eliminated workers benefits and
pensions. Shortly thereafter with China’s growing demand
for steel, the price per ton of rolled steel soared and so did
Bethlehem’s (and Wilbur Ross’) fortunes.
His International Steel Group went public the same year.
Last year, just five years after starting his investment fund,
it was
sold
to foreign steel investor Lakshmi Mittal. Ross reportedly personally
pocketed between a quarter to a half billion dollars. A year later
the rise in gasoline prices has profoundly affected steel sales
downward, once again proving his timing was impeccable.
This method of transforming businesses through bankruptcy remains
highly controversial. The through bankruptcy remains highly controversial.
The slimmed-down companies have a greater chance at survival. Conversely,
employees who have worked for decades
for a company, believing they had benefits waiting for them, have
often waked up to learn otherwise. Since 2002, for example, about
150,000 retirees in the steel industry alone have lost their promised
benefits.
In the meantime, Ross has also acquired the foundering Burlington
Industries (beating out Warren Buffett in the bidding) and also Cone
Mills. In 2004 he did the same in the coal-mining industry. His
funds now control 1.2 billion tons of coal reserves.
The method of acquisition has given rise to the term “bottom
feeders” or “vultures,” and Wilbur Ross is regarded
as the “king,” although … turning the “sow’s
ear” of the steel industry, the textile industry, the airline
industry and perhaps the auto parts (and maybe now even the giant
auto) industry into a “silk purse.”
He is a very intelligent man, and well aware of the downside of
decaying American industry. “I much sympathize,” he
was quoted as saying, “with the position of the UNWA (United
Mineworkers of America – who object to their loss of health-care
benefits and pensions due to bankruptcies). “It’s awful
that these people are displaced. Unfortunately, that’s our
system right now.”
There is nothing new about such inequities. The problem now is
that since the turn of the 19th/20th century, we now have three
generations of a workforce used to benefits and advantages that
have given them the opportunity (many would argue, the right) to
become the consumers of impact in the world. Cars, appliances,
real estate, clothing, travel and even health insurance was paid
for by this now decaying system of employment. With its breakdown,
and the squeezing out of his or her benefits, the Average Workers
are suddenly finding themselves with the possibility of having
nothing. That is the other side of the matter, the conundrum.
Wilbur Ross no doubt does see the facts clearly and also sees no
way to do anything about it. He didn’t create the system
nor can he change it to the advantage of the majority. Like all
efficient businessmen, he operates in a world of the opportunity
and the advantaged. Like his peers, with time he is used to that.
Just as the workers are, or were, used to their world. We were
all reminded of these stark and difficult differences last week
with the explosion in the Sago Mine in West Virginia.
