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Billionaire investor Wilbur Ross, President-elect Donald's Trump's pick to be Commerce Secretary, has a history with Northwest Indiana's steel industry and it's a divisive one.

"I think he's a figure about which there are strong opinions," said Scott Paul, president of the Alliance for American Manufacturing, a partnership between the United Steelworkers union and top employers to advance factory interests. "If you kept your job and he kept your plant from closing down, you probably like the guy. If you lost your job, you probably take a dimmer view."

Ross is known at the "king of bankruptcy" for his penchant for buying and selling off distressed companies in troubled sectors like coal at a profit. In the early 2000s, when more than 30 U.S. steel companies went bankrupt as a result of a recession and the Asian financial crisis, he formed International Steel Group by snapping up Acme Steel, LTV Steel Corp., Bethlehem Steel and the Gary Plate Mill of U.S. Steel.

Ross restarted idled steel mills in East Chicago, Burns Harbor and Riverdale but cut employment, wages and benefits. He for instance eliminated more than 500 jobs at the Acme strip mill in Riverdale, according to Times archives. ISG also eliminated thousands of jobs from Cleveland-based LTV and Pennsylvania-based Bethlehem.

But the mills stayed open and Ross sold them to ArcelorMittal precursor Mittal Steel for $4.5 billion, pocketing $300 million in the process.

"In real estate terms, he flipped the house," Paul said. "He made an investment and then sold. From the steelworker perspective, there was job preservation."

Tariffs in place at the time were only temporary, and Chinese industrial might was just coming online.

"The American economy was doing okay, but it wasn't booming," Paul said. "When he (Ross) entered into his intervention, the industry was in a crisis. There were 30 bankruptcies and overcapacity issues that were seen as an existential threat."

ISG ended up eliminating about half the jobs at LTV Steel, which had been around since 1961, and Bethlehem Steel, which was founded in 1857. Ross dumped pensions and cut retiree benefits for more than 190,000 retirees, arguing that one steelworker couldn't generate enough economic value to support 10 retirees in the radically scaled-back industry.

National Association of Manufacturers President and CEO Jay Timmons said Ross had a unique understanding of manufacturing enterprises.

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"As one of the savviest investors in the world who was once a member of the NAM while leading International Steel Group, Ross has a firsthand understanding of the challenges manufacturers face to remain globally competitive in today’s economy," Timmons said.

Timmons said to raise wages and put more people to work, manufacturers in America need fairer taxes and regulations as well as expanded trade and strong trade enforcement.

"We’re encouraged by Ross’ advocacy on many of these fronts and his extensive business experience," he said.

Paul likened the whole bankruptcy process to life-saving surgery.

"He was like a trauma surgeon," Paul said. "He could preserve a life, but there's also unpleasantness. There's also losing a limb to save the patient."

At the time of the restructuring, USW President Leo Gerard said Ross was receptive to ideas from union members, made the deepest cuts to management ranks and created a "lean and efficient structure."

ArcelorMittal currently employs more than 6,000 workers at Calumet Region mills that Ross acquired, according to company figures.

Industry officials are optimistic that Ross's background with heavy manufacturing will help a sector that has hemorrhaged more than 5 million jobs since 2000, according to the Economic Policy Institute. 

Paul said Ross could potentially spearhead reform of trade policy and accomplish something the USW has been lobbying for: a more aggressive role for the federal government in prosecuting trade cases against steel dumpers.

 

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.