The Stash

Meet the White House Manufacturing Czar

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I just wanted to highlight my latest print piece for readers who come straight to this blog rather than clicking through from the homepage. It's about White House manufacturing czar Ron Bloom, a longtime steelworkers union official and an investment banker before that. Just prior to his current gig, Bloom led the administration's restructuring of Chrysler as a deputy to Steve Rattner, then head of the auto task force.

There are details in the piece more relevant to Bloom's current job and the future of U.S. manufacturing, but I just wanted to highlight two nuggets that stuck with me from the Chrysler episode. First this:

It fell to Rattner and Bloom to broker the deal. Culturally, the two men were near opposites. Rattner had been a trustee of the Metropolitan Museum of Art; Bloom brought his cherished Mr. Potato Head collection to decorate his Treasury office. Bloom also had a reputation in management circles as a gadfly. “There have been a number of cases where company representatives simply refuse to engage him in debate,” says Jim Robinson, a former colleague at the United Steelworkers. During one negotiation early this decade, management kept insisting that its accountants wouldn’t sign off on a proposal to fund retiree health care. As it happened, the company’s accountant-a partner at a major firm--was on-site but not in the room. “Ron kept telling them to bring the partner in so they could debate the issue,” recalls Robinson. “But he wouldn’t come.”

And then:

[Bloom's] particular genius is to let an adversary win on an issue, then gradually, subtly reclaim it for his side. So, for example, Fiat might insist that a government loan be forgiven. Bloom would concede it, then offset the loss using the terms of a second loan later on. “Ron has what I refer to as ass power,” says Feldman. “He’ll continue to talk about things, explore them, work on them, not letting the other side see what’s really important to him. Even if it’s important, he’ll bargain it away early and work on getting it back.”

Also, there are two other things I need to mention here. First, toward the end of a piece I include an anecdote about a U.S. company called FormFactor that's been having trouble in Korea of late. The anecdote ends with the following paragraph:

A few years earlier, a government-backed company in Korea had hired some of Khandros’s [the company's founder's] engineers and cloned his technology. Soon Khandros noticed that they were vacuuming up his Asian market share. He sued for patent infringement but would eventually lose in the country’s Supreme Court. In 2007, he shared the whole sad story with Bush Under Secretary of Commerce Frank Lavin, who was not unsympathetic. But, when Khandros finished, recalls Clyde Prestowitz, a former Reagan Commerce official who has advised FormFactor, Lavin politely asked if he’d thought of opening a plant in … Singapore. This, again, was the U.S. Commerce Department. (Lavin stresses that he meant opening a new plant, not relocating.)

In fairness to Lavin, I should clarify that opening a new plant in Singapore wasn't the only suggestion he offered Khandros and FormFactor. The meeting lasted for close to an hour, and Lavin says they also discussed a range of diplomatic and legal responses to the problem, some of which his office followed up on with the U.S. embassy in Seoul.

Finally, I'd be remiss if I didn't at least briefly plug a book called America for Sale, co-written by Craig Bouchard. Craig and his brother Jim founded a steel distribution company called Esmark back in 2003, which eventually took over Wheeling-Pitt, a much larger steel manufacturer. Bloom, who was then still a top steelworkers official, helped engineer the takeover. I'd originally intended to describe the whole fascinating story but just didn't have room for it, so I only briefly alluded to it in a parenthetical. But if you're interested in corporate financial intrigue, by all means check out Craig's engaging book.

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