The U.S. Senate confirmed Wilbur Ross to serve as President Trump’s Secretary of Commerce on a 72-27 vote Monday night — with U.S. Senator Joe Manchin, of West Virginia, voting against the billionaire businessman, citing Ross’ business dealings in the state.
“As a former governor, I understand how crucial it is for an executive leader to have his team in place, but as a senator it is my job to evaluate a nominee’s qualifications and determine if their vision aligns with the principles I have set forth in my years of work on behalf of West Virginians,” said Manchin in a statement issued Monday evening.
Manchin noted that Ross has wide experience in business dealings, including the Sago Mine just outside of Buckhannon, West Virginia — where 12 miners died in an explosion on January 2, 2006 — as well as Weirton Steel. Because of Ross’ dealings in West Virginia, Manchin said he felt compelled to conduct an “intense vetting.”
“Following my extensive vetting, meeting with him, watching his nomination and reaching out to West Virginians who have worked with him directly, I cannot in good conscience look the families of the fallen Sago miners or the Weirton Steel workers who lost their jobs in the eye knowing I voted to give Wilbur Ross a promotion,” Manchin added in his statement.
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Ross founded International Coal Group (ICG) in 2004, when he and other investors bought the non-union assets of Kentucky-based Horizon Natural Resources in a bankruptcy auction. The company acquired the Sago Mine in late 2005.
The Sago incident made national headlines as national news outlets initially reported that all miners involved in the incident had been found alive. In the end, only one of the 13 trapped miners, Randal L. McCloy, Jr., survived.
In the days following the explosion at Sago, Ross’ absence was “noticeable,” according to Davitt McAteer, a mine safety expert who lead an independent investigation into the Sago incident.
“He didn’t show up, though — being president of ICG — he was the ultimate responsible party,” said McAteer to the Ohio Valley ReSource.
Those on Ross’ team at ICG — including general counsel Roger Nicholson — have argued that Ross should not have been expected to be on the ground following the incident.
“I think it’s an unreasonable expectation that he be known perhaps in any of the areas where his portfolio companies operate,” Nicholson said in a December 2016 interview. “We don’t expect that of the chairman of McDonald’s Corporation, to be at every operation of everything that he might have an investment in.”
Manchin recently made headlines for his votes on other controversial Trump appointees, including his “no” vote for education secretary Betsy Devos and also being the only Democrat to vote to approve Attorney General Jeff Sessions.
Glynis Board of West Virginia Public Broadcasting / Ohio Valley ReSource contributed to this report.
Two nominees for the new administration who could have a lot of influence in our region will be on Capitol Hill this week. President-elect Donald Trump’s choices for secretary of commerce and the Environmental Protection Agency both have confirmation hearings in the Senate.
Ross & Commerce
The Senate Committee on Commerce, Science, and Transportation is questioning Wilbur Ross. Ross is a billionaire who made some of his fortune here in the Ohio Valley buying and selling assets of collapsed coal and steel companies. Ross has supported many democrats in the past, but this election cycle he’s been a close advisor to Trump.
Ross says increasing U.S. exports and reducing the trade deficit would be among his top priorities, as well as integrating more technology in the commerce department to increase efficiency.
Ross’s background is largely a financial advisor, specializing in bankruptcy. He bought up many collapsing coal and steel companies, repackaged and sold them for a major profit. His business dealings have gained him respect and some notoriety.
Pruitt & Environmental Protection
The Senate Committee on Environment and Public Works is interviewing Scott Pruitt — the attorney general from Oklahoma who’s been nominated to take over the Environmental Protection Agency. Pruitt has spent a lot of his time as attorney general fighting against many federal environmental regulations — including the current EPA’s Clean Power Plan, which is the first federal policy of its kind designed to slow greenhouse gas emissions. Pruitt says the extent of climate change and its connection to human activity is a debate that’s “far from settled.”
The billionaire Wilbur Ross is headed for Senate confirmation hearings as President-elect Donald Trump’s choice for Secretary of Commerce. Ross made it to ultra-rich status in part by salvaging coal and steel assets in Appalachia and the Rust Belt. His business dealings leave a mixed legacy in the Ohio Valley region, from rescued steel mills to the site of a searing workplace disaster, and raise questions about the leadership he would bring to the president’s cabinet.
Credit Senate Commerce Committee staff
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ommerce Secretary nominee Wilbur Ross meets Sen. John Thune (R-SD), who chairs the Senate Commerce Committee.
Leadership in the Mines
Wilbur Ross made his billions from bankruptcies. He specialized in scooping up troubled steel and coal companies with an eye toward reselling them later at a profit.
Ross founded International Coal Group (ICG) in 2004 when he and other investors bought the assets of Kentucky-based Horizon Natural Resources in a bankruptcy auction. The investors purchased only Horizon’s non-union operations. (A bankruptcy court later stripped the workers at Horizon’s unionized mines of many of their benefits.) ICG soon had more than a dozen mines in Kentucky, Ohio, and the Illinois coal basin and was looking to buy more.
Early in 2005 the company initiated the purchase of mines from the financially struggling Anker Coal Group in West Virginia. Anker would expand ICG’s holdings of “metallurgical” coal, used in steel production. One of the Anker mines, the Sago Mine in West Virginia’s Upshur County, had a particularly poor record of worker safety, with hundreds of violations on record. But ICG pushed ahead with the deal and owned Anker mines by October of that year.
On the second day of 2006, a lighting bolt somehow met methane gas underground sparking an explosion at the Sago Mine that would leave 12 miners dead.
Credit Aaron Shackelford / West Virginia Public Broadcasting
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West Virginia Public Broadcasting
Media at the scene of the explosion at the Sago Mine in January, 2006.
The Sago Disaster
The Sago disaster unfolded in dramatic and particularly bitter fashion. Miners trapped by the explosion had barricaded themselves in a sealed-off chamber deep in the mine to await rescue. But all but one had succumbed to carbon monoxide poisoning before rescuers could reach them.
As family members huddled in a nearby church, an error in communications led them to think the miners had been found alive. Even the state’s governor, Joe Manchin, burst out of the church to share with reporters news of a miraculous rescue, only to learn shortly after that a dozen men were dead. (Manchin, a Democrat, is now the state’s senior Senator and sits on the Commerce Committee, which will question Ross Wednesday. The ReSource asked Sen. Manchin and Mr. Ross for comment. Neither responded.)
An independent investigation found the disaster could have been prevented. An idled portion of the mine could have been more securely sealed. Authorities could have been notified sooner (more than an hour passed before federal officials were told of the explosion) and rescuers could have entered the mine earlier. Mine safety expert Davitt McAteer led that investigation.
“Mr. Ross was noticeable by his absence,” McAteer said, recalling the nearly two-day ordeal at the disaster scene. “He didn’t show up, though — being president of ICG — he was the ultimate responsible party.”
Ross later told New York magazine that he’s haunted by the deaths at Sago. The company set up funds for families of victims but also faced wrongful death suits and penalties and fines from mine safety regulators.
Now, a decade later, you’d be hard-pressed to find people in the region who even know who Ross is.
Roger Nicholson, general counsel at ICG when Sago exploded, said that’s normal.
“I think it’s an unreasonable expectation that he be known perhaps in any of the areas where his portfolio companies operate,” Nicholson said. “We don’t expect that of the chairman of McDonald’s Corporation to be at every operation of everything that he might have an investment in.”
Still, some remember him. Bill Hamilton, a West Virginia state legislator from the Sago region remembers Trump’s early announcement for secretary of commerce.
“My first thought was, if Wilbur Ross is going in there, well – he’s a businessman,” Hamilton said. “He buys companies that are bankrupt, tries to reorganize them, sells them for a profit and moves on.”
Hamilton said he was immediately concerned about potential influence of this shrewd businessman on the extension of the Miners Protection Act – a federal bill that provides health benefits for retired miners and their widows. The bill hasn’t yet been fully funded by Congress.
Fouled Water, Faked Records
Since those days Ross has earned several nicknames, including “King of Bankruptcy.” Some call him a phoenix that rises up from the ashes of burnt industries; others think of him as a vulture.
The social justice nonprofit Kentuckians for the Commonwealth was involved in litigation over water pollution caused by ICG mines. The mines were sending runoff into streams with high levels of selenium, which can be harmful to people at high levels and is toxic to much aquatic wildlife. The lawsuit not only pointed out the company’s pollution, it also presented evidence that ICG’s water discharge reports to state regulators were fraudulent.
Teri Blanton, a former chairperson for the citizens’ group, said Ross’ leadership of the company he formed was largely to blame. She worries about his nomination.
“If he would put [ICG] together and have total disregard for people’s lives he was operating around – how could we expect him to take such a high position and care about the people of the United States of America?” Blanton asked.
ICG ended up settling and paying $575,000 in penalties.
In 2011 the company was sold to Arch Coal for $3.4 billion, the largest acquisition in Arch’s history. It yielded a handsome profit for ICG’s owners that the New York Times “Dealbook” called a “vindication” for Ross. Five years later, Arch filed for bankruptcy.
Credit Bob Jagendorf/Flickr
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A Weirton Steel facility in the upper Ohio River valley. Ross’ International Steel Group purchased many of the financially struggling company’s assets.
Saving U.S. Steel?
“From my dealings with Wilbur, he was a believer in domestic manufacturing,” said longtime president of the United Steelworkers, Leo Gerard. Gerard was there more than a decade ago to see Ross buy up major failing steel companies when no one else would.
Ross bought assets from a dozen collapsing steel companies between 2002 and 2004, including Bethlehem Steel Corporation and Weirton Steel. By purchasing only certain assets but not the entire company, Ross avoided taking on some of the company’s more costly obligations, including some health and pension guarantees to steelworkers. He sold the companies in 2005 to a company overseas called Mittal for $4.5 billion — fourteen times what he initially invested. Today Luxembourg-based ArcelorMittal is the world’s largest steel producer.
Gerard points out that many of the assets Ross bought still exist as a result — including thousands of jobs.
He also says the demise of the steel industry in the U.S. has little to do with antiquated mills or labor costs.
“U.S. trade laws don’t work — period,” Gerard stated emphatically.
This is an area where labor finds common ground with the billionaire investor. When pressed for answers about national commerce priorities, Ross also focuses on the shortcomings of U.S. trade policy.
A month ago on Fox Business Network, Ross said addressing current U.S. trade policies was second only to putting a staff together.
“We’re going to go in a scheduled way through trade agreements,” Ross said, “through the [countries] we do have trade agreements with and [countries] we do not. Because we’re not anti-trade agreement, we’re anti ones-that-don’t-make-sense.”
Ross calls President Obama’s Trans-Pacific Partnership — a trade deal seven years in the making — a “figment of people’s imagination,” and he wants to totally rework NAFTA.
Ross also hopes to see ten percent of environmental regulations undone to make more comfortable business environments – not that the secretary of commerce controls many of those regulations.
Ohio Valley Implications
Gerard believes improved trade agreements will allow the steel industry to grow, and that, he says, would also mean more coal mining.
“You can’t make steel without coal,” Gerard said. “So if we grow the steel industry back by standing up for domestic manufacturing, then you’ll obviously have to have some expansion of the coal industry for metallurgical coke.”
Davitt McAteer is less optimistic about the “King of Bankruptcy” taking over the Commerce Department.
“From the standpoint of looking at how you might build the economy up through the creation of jobs – that’s not been the way he’s operated in the past,” McAteer said. “Mr. Ross is noted for his buying companies that are in trouble, selling off the good parts, and dropping the others.”
A confirmation hearing for Wilbur Ross is scheduled for January 18th in the Senate Committee on Commerce, Science, and Transportation.
***Editor’s note: Dave Mistich also contributed to the reporting in this story.
