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CNBC: A lot of people I think are sort of in awe of how you manage to step in and deal with the unions. Somehow you've managed to walk in and negotiate where other people haven't been able to,
WILBUR ROSS: Well, one of the big factors in any big industrial turn around is the relationship between labor and management. This may surprise your audience that the big union leaders are generally very knowledgeable about the true conditions in the industry, and about what's needed. However they are not pushovers because their job is to get the best possible deal they can for their workers. So we have developed a very good working relationship with unions in a lot of industries. The way we've done is first of all by being totally honest with them. We open all the books, not just when we're negotiating, but any time they decide to have their accountants come in, they're free to review anything. Second, because we don't use a lot of debt, they know that it's not that we're asking their workers to make a concession just to pay a high coupon on somebody's junk bond. Third and perhaps most importantly, we believe in incentive payments to blue-collar workers. For example at International Steel Group, we literally made production targets for each big machine for each shift and to the degree that shift hit the target. Everyone on it got a bonus in the next biweekly paycheck. We paid hundreds of millions of dollars per year out, more than any American company I think has ever paid. It was well worth it, because it meant to the unions that we were truly partners. Sure, they had their role and we had our goal and they were a little different, but they only had one employer, and we only had one entity in which we had the equity. So in that sense, we wanted to be the partners. As a result we became their partners, and it's worked very well in a variety of industries.
CNBC: Do you think by the time you arrive on the scene they're grateful to have somebody saving their business?
WILBUR ROSS: It certainly is the case that by the time we get to buy something, there is a way that perhaps the whole thing will shut down. That obviously is a factor in the receptivity to change. But I think there's another factor. They generally know that there were mistakes made by management, though frequently you have the situation. Management is still getting big bonuses while the workers are being laid off. Managers are flying around in corporate jets while workers are being laid off. Management's going to country clubs all the time and the workers know that. But we didn't do any of that stuff. When we hire a manager for one of our companies we never pay more than whatever the last salary was. We require the manager to put a substantial part of his or her net worth into the company, on the same basis we are, and then we supplement the amount the person can afford with a loan, so they really have skin in the game. Then we lay over on top of that, bonuses based on the success of the business. So nobody with us gets a big bonus, except in the context of real success
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