By Nick Timiraos, Andrew Browne and John W. Miller
If Wilbur Ross Jr. gets the nod as the next commerce secretary, as expected, he would be tasked with trying to bring home manufacturing jobs that have fled overseas, a key plank of President-elect Donald Trump's trade agenda.
The 79-year-old private-equity investor knows the issue cold, with major investments showing the potential upsides of increased trade for U.S. companies as well as potential downsides for American workers. In some old-line industries such as steel, he also has benefited from more protectionist policies and is credited by even some former adversaries with saving mills and retiree benefits that might have otherwise perished.
Over the past 15 years, the firm Mr. Ross founded has purchased bankrupt companies and rehabilitated them, often turning a profit by selling to overseas investors. In doing so, his firms and their suitors have relied at times on the very methods Mr. Trump has promised to crack down on, including building factories overseas. Other measures Mr. Trump has championed, including tariffs and quotas to revive companies in the steel, textiles and auto-parts industries, also have benefited Mr. Ross.
"There are lots of jobs that are here now that would have disappeared forever if not for his interventions," said Scott Paul, president of the Alliance for American Manufacturing, a coalition of steel industries and the United Steelworkers union. "But he's like dealing with a trauma surgeon: He can keep you alive, but it will cost you your leg."
Mr. Ross didn't respond to inquiries for this article. In an interview earlier this year, he cited Mr. Trump's more aggressive stance on trade negotiation and enforcement as a top reason for his support of the Republican businessman.
Pending Senate confirmation, Mr. Ross at Commerce would oversee a multitude of agencies with wide powers over trade, ranging from setting limits on textile imports to imposing duties on unfairly traded goods.
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.
Later, one of his biggest gambles involved the textile industry, where he combined two bankrupt Greensboro, N.C., companies, Burlington Industries and Cone Mills, in the early 2000s and looked for new domestic and international markets.
Part of the strategy of the new company, called International Textile Group, involved opening up a Chinese subsidiary to supply local and western apparel makers that set up in China after Beijing joined the World Trade Organization in 2001.
ITG launched a joint venture in 2005 in the Chinese city of Jiaxing, a traditional silk-making center on the Grand Canal, with a Hong Kong partner to produce denim. Mr. Ross was a regular visitor to China.
Cone Denim Jiaxing now has more than 800 employees, its website says, with loom workers earning $870 a month, about one-third the mean wage for textile workers in the U.S., according to the Bureau of Labor Statistics. Its customers include Gap, Converse and Levi's.
"There was a massive restructuring going on within the [U.S.] textile industry," said Auggie Tantillo, president of the National Council of Textile Organizations.
Import competition from China and the rest of Asia was battering U.S. textile makers with cheap imports. Mr. Ross's strategy in the U.S. was to look for protected markets, including sales to the military, and for high-tech products that are hard for overseas competitors to replicate, including fabrics for hot gas filtration.
Joe Gorga, who was ITG's chief executive from its founding until 2014, said the company "still has a lot of U.S.-based production," but wouldn't comment on the expansion in China. The company in 2014 employed 4,750 workers at factories in North Carolina, South Carolina, China and Mexico.
In 2004, ITG also announced plans to open a Cone plant in Guatemala, with Mr. Ross citing the eventual adoption of the Central American Free Trade Agreement, which the U.S. Congress ratified the following year. "This project will benefit from Guatemala's realistic wages," Mr. Ross said in a release at the time.
Guatemala delayed ratifying the free-trade accord, and in 2006, Mr. Ross moved the plant to Nicaragua. It opened in 2008 but closed a year later amid the global financial crisis, and it was later sold.
It is in the steel industry's consolidation over the past 15 years that Mr. Ross arguably made his largest mark. He benefited from steel tariffs imposed by President George W. Bush in 2002, announced just after his purchase of bankrupt steelmaker LTV Corp. Mr. Ross's company also acquired Bethlehem Steel, Weirton Steel and Acme Steel to form International Steel Group.
He took the company public in 2003 and sold it two years later for $4.5 billion to Lakshmi Mittal, the billionaire Indian who began putting together what is now the international steel conglomerate ArcelorMittal, and Mr. Ross has served ever since on the company's board. WL Ross & Co. made more than 12.5 times its money on the steel investments, The Wall Street Journal reported.
"Some of these bottom feeders milk whatever value is left there. To Wilbur's credit, he created a viable company," said Leo Gerard, president of the United Steelworkers. "It wasn't all peaches and cream, but in the end, we have got facilities that otherwise wouldn't be alive today."
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."
--Bob Davis contributed to this article.
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(END) Dow Jones Newswires
November 29, 2016 12:42 ET (17:42 GMT)
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