Part 23 (written 2004)

(Continued from last week)

The company had annual management retreats to which managers from all over the world came to give reports and to discuss policy. Frequently one of these meetings would be held in Holland due to its central location. The company leased a small hotel in Schreveningen, near Amsterdam, for a few days to put everyone up. All meals were kosher and catered from Amsterdam. I attended a few of these meetings.

The company eventually split off the minerals and chemicals division, and later also the Engelhard portions, and then purchased the famous Wall Street firm of Salomon Brothers. As the company continued to grow, the Salomon portion became dominant, until, in the 1980s, the breakup of what once was the world’s largest metal trading firm began. There are many reasons and theories for this breakup, but that is the subject of a different story.

In 1982, due to the changes taking place in the conduct of the business, management decided to decentralize traffic, and to have each trader handle traffic under his own jurisdiction. With no traffic department, there was no need for a department manager anymore. I transferred to the steel trading department, where I supervised the trading activities of a new commodity for PB, namely, Oil Well Steel Drilling Pipe. During those boom years for oil drilling in the early 1980s, it had become a new section in the steel department, at the time managed by my friend Menno Ratzker. It was eventually, like so many other new PB ventures, a disaster, and when the drilling boom died out, everybody was stuck with huge inventories. But while it lasted it gave me the opportunity to learn something new, to trade for the first time and to travel to Houston many times as well as to other places in the US and to Mexico, Venezuela, Spain, France, Italy, Greece, and Romania, among others.

Throughout the years I had been given the opportunity many times to go into trading. I had never accepted any of the offers, since I had felt I was better suited for traffic then for trading. A trader thinks in broad and general terms. For example, he would make a contract for a hundred tons of a commodity, whereas in traffic that commodity would be stipulated as a metric ton of 2204.62 or a long ton of 2240 pounds, or a short ton of 2000 pounds, depending on what type of ton was being traded. I felt more comfortable in the latter atmosphere of specifics. Also, a trader’s function was to buy cheap, meaning the seller was going to get the lowest possible price, and to sell high, meaning the buyer was going to pay the highest price. I felt more comfortable with having a cargo weighed, sampled and analyzed, and then paying the supplier, and getting paid by the customer on the same basis. This was not an anti-business attitude, but simply a matter of personal ethical preference.

During the 1980s, with business deteriorating in one area after another, PB started closing down some of their overseas offices. One of those offices was the one in La Paz, Bolivia, one of the very early overseas offices, dating back to 1928. In the process of closing that office in 1987, one of the managers there became dissatisfied with the severance pay he had received and got a local judge to attach all the remaining PB assets in Bolivia. In order to try to resolve the dispute, PB sent two representatives to La Paz. One of the two was our son Benjy, since he had been deeply involved in trading commodities (particularly tungsten concentrates) with Bolivian miners.

Upon arrival in La Paz they were both arrested and placed under house arrest in their hotel rooms while the negotiations continued. When Benjy informed us what had happened, and when after several days there was no progress, I mulled over in my mind what action I could take to get him out. After all Benjy had never been involved with the management of the La Paz office and was only being held a hostage as a pawn in the negotiations. I considered offering myself as a substitute, since after all I was an officer of the firm. But I knew Benjy would never agree to that.

My second thought was to lease a helicopter in Lima, Peru, fly legally into La Paz, and since I was sure the Bolivian Police were not very sophisticated, I would be able to drive into the city, pick up Benjy, get back to the airport and fly out before anyone would wake up. It is only about 100 miles from La Paz to the Peruvian boarder, and since I was flying legally I was not afraid of being shot down. Although I did talk to the manager of our Lima office, and he did start making inquiries about leasing a helicopter there, before fantasy had a chance to turn to reality, Benjy was released and came home, whereas the other man was still held for another few weeks before being released as well.

In the spring of 1985, I saw the handwriting on the wall, and notified management that I wanted to take early retirement at the end of the year. I was sure that by the end of the year the steel department as well as several other departments would be closed, with many employees laid off. Taking early retirement certainly had financial benefits, compared with being laid off.

Indeed, on December 31, 1985, the steel department and many other departments were closed, and for all practical purposes PB ceased to be a functioning entity. Various departments were continued for a number of years thereafter, but ultimately also closed or were sold off.

I left PB on December 31, 1985, after 36 1/2 years, having never in my life been fired, laid off or without a job.

P.S. In the timeline shown here, the unknown author uses Phibro and Philipp Brothers loosely. (see 1981). For all practical purposes, my employer, generally known as Phillip Brothers, ceased to exist in 1986/87. The oil trading operation originally was part of Phillip Brothers, but became a separate organization known as Phibro upon the liquidation of Philipp Brothers.

(To be continued next week)

By Norbert Strauss