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Treasury's Auto Adviser Led Other Rescues

By Brady Dennis
Washington Post Staff Writer
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.

A native New Yorker, Bloom had an aunt who was a teachers union leader and a great uncle who had been active in the bakers union.

"Growing up, the sort of issues of the day always included discussion of civil rights, social justice, the labor movement," he said in a 1996 interview with a Pittsburgh newspaper. Bloom graduated from Wesleyan University and worked for the Service Employees International Union before enrolling at Harvard Graduate School of Business Administration.

He spent the early part of his career working for the investment banking firm Lazard Freres, where he dealt with corporate mergers and acquisitions. In 1990, he and a colleague, Gene Keilin, founded Keilin & Bloom, a firm that focused almost exclusively on labor-related deals and corporate bankruptcies. Their negotiations spanned an array of industries, from steel to airlines.

"He's smart, and he is as good a financial analyst as I've ever met," Keilin said. "There are a lot of smart people and a lot of good analysts. But there is an intensity, and there is a passion [about Ron], and you don't have to spend much time with him to appreciate it. It's not something you learn in school."

Since 1996, Bloom has worked for the United Steelworkers union as an assistant to the president. He has served as lead negotiator during a tumultuous decade in which the imperiled American steel industry has faced bankruptcies and massive overhauls in labor contracts. Colleagues credit his efforts and negotiating savvy for helping to save thousands of jobs in the steel, rubber, aluminum and paper industries, and for preserving health-care benefits for workers and retirees alike.

"Ron is innovative, hardworking, creative, probably one of the smartest people I know," said Leo Gerard, president of United Steelworkers International. "He has a really, really deep commitment to manufacturing. He has a unique ability to take complex financial structures and make them understood to corporate types, but also to rank-and-file workers."

Gerard said it is hard to overestimate the challenge that lies ahead for the automakers.

"The Big Three are as important, if not more important, to America and to manufacturing in America, as Goldman Sachs and AIG are in the financial community," he said. "If the auto industry dies, a huge, huge part of America's manufacturing is going to go."

Gerard is not sure the problem is solvable, he said, but he feels sure that his longtime colleague is the right man to give it a try.

"I think he's as up to it as anyone in the country."

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