Treasury's Auto Adviser Led Other Rescues
Wednesday, February 18, 2009
Algoma Steel was in trouble in the early 1990s.
The company, which employed thousands of unionized workers in Sault Ste. Marie, just across the Canadian border from Michigan, was headed toward bankruptcy and needed a major restructuring to survive. Massive layoffs seemed inevitable.
An American whiz kid in his mid-30s -- bright, profane and passionate -- helped negotiate a deal that not only saved jobs, but broke new ground in Canadian labor circles. Ron Bloom told creditors that Algoma's union workers were willing to take a nearly 20 percent pay cut to save the company. But they deserved something in return: an ownership stake.
In the end, that's exactly what they got.
"Unions were usually deal takers; Ron helped make the union the deal maker in this case," said Ken Delaney, who worked with Bloom on the deal and now works for the top steelworkers union official in Canada. "It took some courage, and it took some persuasiveness."
Delaney said Bloom was a relentless advocate for the unions during the negotiations.
"He was brave and self-assured, and an excellent debater," he said. "He's extremely smart. He's very persistent and persuasive. And he's quite creative."
Now 53, Bloom climbed into his weathered Ford Taurus at 4 a.m. yesterday and drove from Pittsburgh to Washington to begin a new job that will demand all of those qualities: Senior adviser in the Treasury Department for U.S. auto industry restructuring. He will serve as a sort of point man on a presidential task force assigned to help overhaul troubled domestic automakers as they face a March 31 deadline to complete plans for a turnaround.
The task force includes full-time personnel based at the Treasury and the National Economic Council. Administration officials said the NEC group will be headed by Diana Ferrell, who previously worked for McKinsey & Co. and Goldman Sachs before joining the administration. Like Bloom, she holds a business degree from Harvard.
The administration appears to have settled on a broader, interagency effort rather than appointing a singular "car czar" to shoulder the day-to-day task of task of working with carmakers, their investors and labor unions. The group ultimately will answer to Treasury Secretary Timothy F. Geithner and White House economic aide Lawrence Summers.
White House spokesman Robert Gibbs this week said that Bloom's appointment brings "vast credibility" to the administration's efforts to save the auto industry.
Bloom, who could not be reached for comment, is no stranger to companies on the brink of extinction. Over the past two decades, he has helped restructure dozens mired in bankruptcy. With his lifelong union ties, a Harvard MBA and experience as a Wall Street investment banker, Bloom moves easily through white-collar and blue-collar worlds, friends and co-workers say.