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Meet Obama's New Manufacturing Whiz, Ron Bloom
By Richard McCormack
richard@manufacturingnews.com
President Obama has done what many in the domestic manufacturing community had hoped he would do since the day he entered office: appoint a top-notch person to his White House staff to promote the interests of American manufacturing. Ron Bloom, Obama's new senior counselor for manufacturing policy, is not shy when it comes to expressing his views on the need for the U.S. government to foster a healthy industrial sector. In reading his speeches and talking to those who know him well (including his most recent former boss), it is apparent that President Obama has put a tough cookie on an economic team dominated by economists known to embrace outsourcing.
"Every other nation in the world has a specific and targeted strategy to preserve or expand its manufacturing base," Bloom wrote in 2006. "We, on the other hand, seem to think that empty platitudes will suffice."
Bloom, a graduate of Harvard Business School, worked for more than a decade as a special assistant to the president of the United Steelworkers, first for the recently deceased George Becker and then for current USW president Leo Gerard. Prior to that, he worked for Lazard Freres and then started his own investment firm specializing in restructuring North American manufacturing companies. He made money in the private sector, and then took a staff job with the Steelworkers union in Pittsburgh.
"He walked away from investment banking because of his values and his commitment to manufacturing," says Gerard. "There were no bonuses. He got paid just like any other staff person. He never asked for any special treatment. He really, really believes that you can't have a successful economy unless you have a strong manufacturing sector."
But not everyone in the manufacturing community cares for the appointment. The National Association of Manufacturers has repeatedly written in its daily blog that Bloom's appointment is a means to placate labor. NAM postulated that "having failed to put enough political muscle behind the Employee Free Choice Act to satisfy Big Labor, the White House offers Mr. Bloom as the consolation prize." Another NAM post questions whether the administration needs yet another czar. "You would think it would make sense to name someone like a manufacturer to help coordinate manufacturing policy," writes NAM. "Or let the Department of Commerce do its job…You'd also have to think the U.S. Trade Representative Ron Kirk, Commerce Secretary Locke and others who have made the case for trade and exports would also take note of a former Steelworkers official being put in charge of manufacturing policy." To NAM, the appointment is a guise for the government to pursue an "industrial policy," and the organization takes a swipe at the administration for "having just nationalized General Motors," an effort that was led by Bloom while he was on assignment with the Department of Treasury.
Bloom is used to controversy. In 2004, Bloom spoke at a steel industry conference in New York City. The speech, described as "truth-telling," was controversial and widely circulated. "People often tell us that [steel company management] antagonism toward us and our members is just business and that we should not take personally," he said. "I worked on Wall Street for 10 years so I understand this way of thinking. You screw me on Monday, I screw you on Tuesday, we both screw everyone else on Wednesday through Friday and we all meet for a round of golf on the weekend. But for us, it does not work that way. For us, it is always personal because -- newsflash -- we represent real persons, and the decisions you make impact real people with real husbands and wives and children trying to pay real mortgages and lead real lives. We do not seek confrontation and we never start a fight, but we cannot do our job if we retreat when challenged. If we conclude that your concerns are purely about personal aggrandizement, about making a quick hit and leaving us holding the bag, or if we conclude that you do not respect our members or their institutions, we will fight to protect ourselves with every weapon at our disposal. We may forgive, but we never forget, and it's always personal….The choice is yours."
Gerard says that Bloom was an invaluable resource to the USW because he knows finance "as well as anybody" and is the best person he has ever met at reading a corporate balance sheet. Bloom spent many days in manufacturing facilities. "He's been with workers when they lose their jobs and health care and he's stood there and fought for them," says Gerard. "He understands what it takes for a business to be successful because he has helped to restructure 50 of them." Through his knowledge of finance, Bloom has been able to preserve tens of thousands of U.S. jobs and between 350,000 and 500,000 retirees' pensions, says Gerard.
The Bloom appointment "is the best thing that could have happened for manufacturing," adds Robert Baugh, executive director of the AFL-CIO Industrial Union Council. Bloom has skills well beyond those involved in finance. He can cross lines between bankers, accountants, analysts, managers and workers. In working with him 20 years ago in the restructuring of Oremet, an Oregon producer of titanium sponge, Baugh, then on the economic development staff for the state of Oregon, says Bloom was able to reconcile differences between workers and a management team that "hated each other." Bloom, adds Baugh, "has done more to work with workers and companies than anybody I know. On the union side, we have to have people who can translate our interests and goals into economic reality with good information and smart financial analysis, and that is this exactly what he does."
Bloom is full of verve. Speaking at the Steel Success Strategies Conference at the Plaza Hotel in New York on June 22, 2004, he looked at the agenda and said, "There seems to be a good balance -- 47 speakers from companies and one from the union. Seems about fair."
He told the steel industry executives that their union was "not looking for love, or even particularly to be liked, but we do demand respect and not just in the morning or when you need us, but all day long."
Just as steelworkers accept the profit-oriented mission of the industry's owners, the industry needs to accept the mission of the union, which is to represent the interests of the workforce. "You need us to accept your mission in order for you to succeed and while it would be nice for you if we would accept your mission without you accepting ours, unfortunately for you, that deal is not available. And the deal that is available -- we accept you, you accept us -- is better than the real world alternative. So take the deal and let's move on."
Bloom told the industry to stop trying to lower the hourly cost of its workforce and start competing by improving technology, quality, strategy and management practices. If every company were successful at reducing wages to gain competitive advantage, nothing would remain of the industry. "The reality is, left to your own devices, you will eat each other up in a race to the bottom and in the process do nothing but make your customers rich," he said. "We are the glue that holds this industry together, that forces you to reach for those elusive better angels of your nature and you should thank us for it."
Bloom then bluntly told the executives: "These mills are ours." The Steelworkers union is committed to the industry more than any other stakeholder. Shareholders "have no memory and no future," he said. Management is almost in the same boat; it has "genuine mobility and can usually be expected to depart for greener pastures if the price is right." Workers, however, "are truly the one constant in the life of an enterprise," said Bloom. "The average turnover at most steel companies is about 3 percent per year. Many public companies have shareholder turnover of that amount in a morning. So when we say that these are our mills we say it in the truest sense of the word -- no one cares more about them or is more dedicated to their success than we."
The union, he continued, has "significant negative power….and we are not afraid to use that power." But that negative power may not lead to viable production enterprises. The union also has some positive power, though not much, and it requires partnership with management.
It is the union that has kept the industry viable, Bloom argued. "We all should be adult enough to admit that the fact that the active and retired members of the Steelworkers union reside at ground zero of the so-called battleground states and that our union has an incredibly sophisticated political organization is the only reason that our pipsqueak little industry, an old-economy dinosaur, many of whose participants can best be described as HMOs with steel company subsidiaries, representing less than one-half of one percent of the American economy has received the attention it has. It sure isn't our charm and good looks, ample though they are."
Then he closed with this story:
"There are three men walking through the forest -- an Englishman, a Frenchman and a steelworker. They are set upon by savages who capture them and take them to their leader. The leader announces that the men are to be killed and their skin used to make canoes, but because these savages are decent, they will allow their captives to both choose the method of their death and to have the honor of taking their own lives.
"The Englishman goes first. He requests a pistol, put it to his head, shouts ‘God Save the Queen,' and shoots himself.
"The Frenchman steps up next. He asks for a knife. ‘Viva La France,' he cries, and slits his throat.
"Finally, the steelworker steps forward. ‘I want a fork,' he says. The chief is a bit perplexed but agrees to honor the request. The steelworker then takes the fork and madly starts stabbing himself all over his body. ‘Screw your canoe.' "
Quotable: Bloom's Sense Of Humor
"Let me [tell you] a story about collective bargaining to help prepare you for your dealings with my union. It concerns the union representative who is assigned to work with a local union to help them negotiate a contract. He goes to the local union meeting to ask the members about their priorities and is told in no uncertain terms that because of the difficult and dangerous nature of the work, the highest priority is getting people more time off. Well, he goes into bargaining and does battle with the employer. Luckily, the market for the company's product is very hot and the company really cannot afford a strike. And so, after pounding away, the union rep comes back to the local union meeting to report a great victory. ‘Sisters and brothers,' he says, ‘I have great news. We really bent the company over. I am happy to report that under the new agreement we will only have to work on Mondays.'
"There is dead silence in the room and then a hand goes up. ‘Yes brother,' the rep says. The questioner stands, ‘Every Monday?' "
-- Ron Bloom before the INSOL International Annual Regional Conference, Scottsdale, Ariz., May 21, 2006.
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