Ross is one of the sharpest minds in finance.
HT: Investment Postcards from Cape Town who has the video.
I prefer transcripts, I read faster than folks talk and they're searchable.
From Charlie Rose:
CHARLIE ROSE: Wilbur Ross is here. He is the CEO and founder of WL Ross and Company. It has invested in textiles, auto parts, healthcare, and other industries. In 2002 he began purchasing financially stressed U.S. steel makers with initial investment of $325 million. Two years later he sold that for $4.5 billion. In the wake of the economic crisis he thinks there’s another opportunity to revive regional banks in states such as Michigan, Florida, New Jersey. I’m very pleased to have Wilbur Ross at the table to share his thoughts on what he does, bankruptcy, and also the idea of where the American economy is, and, since he’s investing in banks, what he thinks is the future of the financial sector. So, welcome. WILBUR ROSS: Thank you. CHARLIE ROSE: Let me just talk about you. You came out of Yale and then -- in Yale at the beginning, did you want to be something other than a financier? WILBUR ROSS: Yes, indeed. I wanted to be a creative writer. But Yale has course called "daily themes." You have to put in 1,500 words of original prose each day. By about the third week I was out of the course. So I dropped the course, and it saved me from the life of poverty. (LAUGHTER) CHARLIE ROSE: Then you got interested in business? Or you went to Harvard Business School because you didn’t have anything else you really wanted to do? WILBUR ROSS: No. What happened was the then treasurer of Yale left to go a money management firm. And instead of continuing to park cars on Plymouth Park Jockey Club, which had been my prior summer job, he dragged me down to Wall Street, and that’s what changed my whole career. CHARLIE ROSE: And then you went back to Harvard after that? WILBUR ROSS: Yes. CHARLIE ROSE: And then you worked for a number of years for Rothschild? WILBUR ROSS: Yes, for about 25 years. CHARLIE ROSE: And then what happened? What did you see that made you go in a different direction? WILBUR ROSS: Well, at Rothschild I had been running originally the restructuring advisory practice on the global basis, but in 1997 also started a fund, to invest in bankrupt companies. Between ‘97 and 2000 I had both responsibilities, and finally concluded I and actually my whole team liked the investing better than the advisory. So went to the management of Rothschild and said, we don’t want to do this anymore. I’d like to buy the fund from you, and then we’ll go out of the business. We won’t compete with you for advisory assignments. And that’s the deal that we worked out. So on April Fool’s Day, 2000, went in to business for myself. CHARLIE ROSE: And then you started when to start buying, looking at the steel business say, there’s opportunity here? WILBUR ROSS: Around late 2001. We had actually looked at steel before. I had done the first LTV bankruptcy have a dozen years before -----------------------------------------------------------------------------------------------------------------
CHARLIE ROSE: Here is what I’m leading up to. At a time that people are looking at the future of the American economy, does manufacturing in the United States have a future? WILBUR ROSS: Well, I think it does. But I think there are couple of caveats, there are a couple of things that have to be fixed to make it work. The union part I think is gradually fixing itself, I really do. We’ve made very reasonable contracts with the UAW, so did FM and Ford and Chrysler. But what I’m worried about is -- CHARLIE ROSE: Again, they had little choice, did they? WILBUR ROSS: Well, that’s true. But people don’t make hard decisions until they have little choices left. What I’m worried about is R&D. U.S. is graduating one-seventh as many engineers per year as China and India combined. CHARLIE ROSE: One-seventh as many? WILBUR ROSS: Yes. And not all of ours stay here, because many of them can’t get green cards. CHARLIE ROSE: They have huge, much larger populations than we do. WILBUR ROSS: They do. But in terms of brain power for technology, a multiple of seven is still a multiple of seven. Never mind what percentage. CHARLIE ROSE: Exactly, never mind how many people there -- WILBUR ROSS: It’s still very big. CHARLIE ROSE: Better to have seven engineers than one. WILBUR ROSS: Oh, yes. So what worries me, this roundtable of which I’m a part, thinks that within a few years if this trend continues, 90 percent of all the engineers working in the whole world will be working in Asia, 90 percent. CHARLIE ROSE: Ninety percent. WILBUR ROSS: And if that’s true, and you merge that with an inexhaustible supply of very well disciplined, very qualified labor, then there won’t be much room for U.S. manufacturing. CHARLIE ROSE: So what we have to do as a first step is graduate more engineers? WILBUR ROSS: Absolutely. One of the -- CHARLIE ROSE: And computer scientists. WILBUR ROSS: And all the other disciplines. One of the sad things, every year the Bush administration they cut federally funded R&D. CHARLIE ROSE: Why do they do that, other than just normal budgeting? WILBUR ROSS: I have no idea why they did it. I guess the political constituencies for R&D are not strong enough. But that contributed to the problem. And the reason that’s so important is you have to have new technologies, new growth industries to supplant the ones that don’t need to grow so fast any more. Like right now, China -- we think of China as a polluter. Let me tell you, China is the leader in wind technology, wind- power technology, and in solar. CHARLIE ROSE: But they are the leading polluter in the world. WILBUR ROSS: Yes, they are. CHARLIE ROSE: But you’re saying they’re looking to their future and spending heavy amounts of investment in terms of alternative sources of energy, knowing that this is an issue for them in the future. WILBUR ROSS: Not only that, but because they see it as a huge export market. They already are producing 40 percent of all the wind turbines in the entire world and exporting 80 percent of those. And they did it in typical Chinese fashion. They ordered the power grid that it must first take, alternative power, before it can take anything else. Second, it must do it under long term contract, and third, it must do it at a big premium price. That made all the utilities want to do the alternative power, the renewables, so then that created a demand for the equipment. Then when the foreign manufacturers wanted to come in, the Chinese said fine, 70 percent local content. So they got a technology transfer, so they managed to get technology and create a huge domestic market and now they’re beaming in on the exports. That’s how you have industrial policy. CHARLIE ROSE: OK, and we don’t have industrial policy at all in this country. WILBUR ROSS: Nor do we have energy policy. CHARLIE ROSE: Nor do we -- and energy in terms of climate change and alternative sources and weaning us off of imported oil? WILBUR ROSS: Yes. But we don’t even do easy things. For example, railroads -- there’s a bill languishing in Congress, and we’re invested in railroad equipment people, so I’m making a disclosure. Railroads use one- fourth as much fuel per ton mile as intercity freight. CHARLIE ROSE: Twenty-five -- WILBUR ROSS: Twenty-five percent as much as intercity freight by truck. Yet they keep spending -- CHARLIE ROSE: Trucks that go from city to city. WILBUR ROSS: Yes, from city to city. Local truck, they couldn’t do it by rail -- the intercity freight. Yet the highway lobby gets tens of billions of dollars spent on highways and the government doesn’t do an awful lot for railroads. So you don’t even need exotic solutions in order to cut pollution. But what you need is someone to say a policy and enunciate a reasonable policy. So there’s something that is right in front of us, wouldn’t be that hard to do. CHARLIE ROSE: Tom Friedman would love to hear this, he’d be saying this, because 90 percent of his columns are about just this, which is the idea that we have to invest in alternative sources. And b, if we don’t the Chinese are going to lead that market and they’re going be where the world has to beat path to in order to get your access to those kinds of technologies. WILBUR ROSS: Yes, and it’s not even just that. Biotech they’re making a big push in, they’re making a big push in all the technologies that they see as being the future of technology....MUCH MORE