Daniel K. Ludwig life and biography

Daniel K. Ludwig picture, image, poster

Daniel K. Ludwig biography

Date of birth : 1897-06-24
Date of death : 1992-08-27
Birthplace : South Haven, Michigan, U.S.
Nationality : American
Category : Arhitecture and Engineering
Last modified : 2011-02-16
Credited as : Entrepreneur and developer of tankers, magnate and billionaire, was the first on Forbes 400 Richest Americans 1982

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Daniel Keith Ludwig was an entrepreneur who amassed his fortune in shipping, building a fleet of tankers for government use during World War II and later a fleet of super tankers. Other endeavors included oil refining, saltwater conversion, agriculture, finance and banking, and an ambitious development project in the Amazon basin that eventually fell through.

Daniel K. Ludwig was born in South Haven, Michigan, on June 24, 1897, the only child of a real estate agent. Little is known of his early years, except that he left school after the eighth grade and at age 19 went into the chartering business with $5,000, raised mostly on his father's credit. With this money he bought an old steamer and converted it into a barge for hauling molasses on the Great Lakes. During the 1920s and 1930s Ludwig struggled to keep one old tanker after another running while searching for cargoes and charters. He moved into an office in New York City where, according to a friend, "he didn't have a desk; he was working from a windowsill."

Ludwig's persistence was finally rewarded in the late 1930s. At that time he developed a unique financing routine. Correctly foreseeing a great expansion in the world oil trade, Ludwig would line up a long-term charter with a major oil company, turn it over to a bank or insurance company as collateral for a loan, and then cover the entire cost of building a tanker without having put up a cent of his own money. Then, during World War II, Ludwig built a tiny shipyard near Norfolk, Virginia, where he developed a process for welding rather than riveting tankers. At these yards he built a fleet of tankers for the government, which was graciously returned to him after the war.

All of this served as a basis for the vast fortune Ludwig would build during the post-war years. He was one of the first to foresee the advantages of using inexpensive foreign labor, and in 1950 he rented the Kure naval yards from the Japanese government at bargain rates. Using this cheap labor source, Ludwig soon began building larger and larger ships, and when the closure of the Suez Canal in 1956 made these bigger ships a necessity, he became known as the "father of the supertanker." In a race with his Greek rivals, Onassis and Niarchos, Ludwig pulled ahead in 1968 with a fleet of six 335,000-ton crude carriers to transport oil from the Persian Gulf to Ireland. In the mid-1970s he had a deadweight tonnage of five to six million tons in the fifty odd tankers and bulk carriers operating under his Universe Tankships Subsidiary, flying the Liberian flag and registered in Panama. By 1980 he ranked third in tonnage, following Chinese shipowners Y. K. Pao and C. Y. Tung.

Ludwig's shipping base, constructed entirely on credit, served both as collateral and as a huge flow of cash for his other mammoth enterprises. Although he was largely unknown to the American public, the New York Times estimated in 1979 that he was, with the recent deaths of J. Paul Getty and Howard Hughes, the richest man in America. He had major interests in six areas: oil refining, coal mining, salt water conversion, agriculture, real estate, and finance and banking.

In oil refining, Ludwig until 1971 owned a 75,000 barrel a day refinery in Panama, and in 1973 he built a $300 million refinery in Scotland to process North Sea oil. He owned the United Pocahantas Coal Company in West Virginia, which had an annual output of one million tons of high grade, low sulfur coal, and his Australian Clutha Mines produced five million tons of high grade coking coal, mostly for Japan's steel industry. In 1973 he sold what was then the largest solar salt water plant in the world to Mitsubishi Industries. He developed large scale agricultural ventures and constructed more than 100,000 units of low-cost housing in Latin America, South Africa, and the United States under the patented Con-Tech System. Ludwig also developed a small empire of savings and loan companies in the American Southwest, which if combined would rank as the nation's ninth largest, with assets of nearly $4 billion. Ludwig also owned a luxury hotel chain, the Princess Hotels.

Ludwig's greatest adventure—and biggest disaster—was Jari Florestale Agropecuria, a massive project on the Jari River, some 48 hours by boat from the Amazon River port of Belem, deep in the Amazon jungle. The project, which ultimately cost him over one billion dollars, was said to be the largest and most costly entrepreneurial effort ever undertaken by one man. The project had its genesis in 1967, when Ludwig paid just $3 million to a group of Brazilian families for some 6,000 square miles of dense rain forest in the country's most remote Amazon region. He then set in motion a bold plan for developing the area to help meet anticipated world shortages of food, lumber, and wood pulp for papermaking.

In vast stretches of virtually unpopulated jungle, Ludwig built a string of airstrips, thousands of miles of roads, a private railway to haul freight, a deep water port, hospitals, schools, and a giant service depot stocked with spare parts and equipment. His original goal was to develop a 3.5 million acre tree plantation in the area, growing the so called gmelina or "super-trees" from Burma, which reach full height for timber purposes in just a fraction of the time of normal trees. He soon found, however, that this was not feasible and had to move into pine and eucalyptus. To mill this lumber, Ludwig built a 60,000 ton pulp mill in Japan which stood 17 stories high and three blocks long and cost $200 million. He floated it 17,000 miles across the Indian and Atlantic oceans and up the Amazon. But Ludwig misjudged the world pulp market. Pulp supplies turned out to be far more plentiful than he had estimated, and then the world-wide recession of the 1970s dealt a heavy blow to the project.

Then too, there were managerial and political problems. Ludwig was always somewhat of a loner and an eccentric. He insisted on making all the important practical decisions himself from his office in New York. He was also temperamental, which resulted in 30 changes in project directors in 14 years. Ludwig's penchant for secrecy ultimately created much public hostility toward the project in Brazil, making it—fairly or unfairly—a veritable symbol of "Yankee imperialism." Such backlash ultimately convinced Ludwig to turn the project over to a Brazilian consortium.

Finally, there was the jungle itself. Like Henry Ford, who attempted to grow rubber in the Amazon, Ludwig found his dreams sabotaged by the merciless climate and physical obstacles. As one American executive recalled: "From the time you arrived till you flew out again you worried about what kind of disease you'd get. You'd be brushing your teeth with Coke. In the guesthouse cockroaches and lizards crawled around. Ludwig showed us the riverside site for the pulp mill. It was nothing but jungle. That he could ever put a modern industrial complex in there boggled our minds." Ludwig brought in giant bulldozers, only to find that they damaged the topsoil. In 1981 he asked the Brazilian government for financial assistance to offset his infrastructure expenses, but was refused. This rejection caused Ludwig to refuse to repay loans given him by the country's National Economic Development Bank. Combined with his failing health, these difficulties put an end to his Jari project in early 1982.

Business success brought Ludwig everything he ever wanted, and he asked for no other recognition. Once, when the emperor of Japan wanted to award him Japan's highest national honor, the Order of the Chrysanthemum, Ludwig refused, asking that it be given to his shipyard manager instead. A secretive, reclusive man, Ludwig wore cheap suits, shoes, and eye glasses bought at bargain prices in department stores. He usually traveled alone, economy class, carrying his own baggage, arriving at tropical airports a few hours before dawn. All of his foreign assets, totaling some $1.5 billion, although run by Ludwig, were owned by his principal heir, his Zurich cancer institute. He retained in his own name some $500 million in U.S. assets. Despite the massive losses of the Jari project, Forbes magazine in 1984 estimated Ludwig's worth at $2 billion. However, six years later the magazine reported that the shipping operations of National Bulk Carriers, a New York-based shipping concern that was Ludwig's main corporate vehicle, had significantly diminished. When Ludwig died of heart failure on August 27, 1992, R. Palmer Baker, Jr., Ludwig's executor, estimated the endowment of the cancer institute at about $700 million but did not disclose the amount of Ludwig's own worth.




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