The Cost of Reliance: Machines vs. Human Labor in Business

What I learned from reading The Invisible Billionaire: Daniel Ludwig by Jerry Shields.

The cameraman was excited and more than a little nervous. In a matter of moments he would enjoy a unique opportunity: the chance to snap the first unposed picture ever taken of the richest man in the world. The strange thing was that most Americans had never even heard of Daniel Keith Ludwig.

How could a man in these days of mass media coverage and public obsession with world records, manage to accumulate a $3 billion fortune with hardly anyone becoming aware of it?

Obsessed with privacy, he reportedly pays a major public relations firm fat fees to keep his name out of the papers.

Daniel Ludwig is a man nobody knows yet his tanker fleet rivals those of the fabulous Greeks whose names are symbols of wealth. His empire began with shipping, grew big with shipbuilding, is branching out now into other fields.

With Ludwig, work is almost an obsession. Spartan in personal habits, business gets almost 100% of his attention. 

Once a project begins Ludwig doesn't rest easy until completion date. 

Ludwig’s most notable characteristic, besides his imagination and pertinacity, is a lifelong penchant for keeping his mouth shut.

He is interested in achievement, not fame.

I'm in this business because I like it. I have no hobbies.

D.K. was strictly a solo act. His zest for these operations is that of the lone wolf. He shares neither the rewards nor the risks with anyone.

Ludwig doesn't drink much, he doesn't smoke at all, he doesn't entertain lavishly. He counts cakories religiously. His only bad habit is work and that he can't stop.

Even as a boy Daniel exhibited a strong drive toward the acquisition of money.

During the mid-to-late-1920s Ludwig was more involved in buying and selling ships than he was in operating them.

The result was that hundreds of government-owned vessels, built at taxpayers' expense, were being sold off at well below cost both to legitimate shippers and to speculators who did the minimum required renovation work and then sold the ships for a quick profit.

He never liked spending money unless there was a good chance that it would make him more.

The advantage of bulk carriers was versatility; these ships were to be designed in such a way that they could haul either dry cargo (coal or metal ores) or liquids (petroleum or gasoline) without expensive, time-consuming structural conversion. If the oil market fell off, a bulk carrier could haul ore for a while. Or it could haul oil in one direction and coal or ore on the voyage home.

Ludwig needed a way to obtain ready money without either taking partners or assuming heavy mortgages. His early experiences with partnerships had been costly, and borrowing to finance ship renovation was no better. It was at this time that D.K. came up with the "two-name paper" arrangement he later said was the chief reason for his wealth. It all sounded so simple: go to an oil company; get it to sign a long-term charter to ship so much oil on a regular basis; take the charter to a bank and, using it as collateral, obtain a loan to build or renovate a ship to haul the oil to fulfill the charter. The plan was legal, logical, and ingenious.

He was able to start his climb toward being the world's biggest shipper mainly because he had finally managed to hook into the big time. He was now hauling oil for the Rockefeller empire.

One of the main reasons he had been buying old ships was to salvage and sell the parts removed during renovation. When he purchased a surplus ship he could recoup much of his investment by selling off the old engine and other machinery. Marine salvage was as familiar to D.K. as his own face in the mirror.

Some years later, the captain of a Ludwig ship made the extravagant mistake of mailing in a report of several pages held together by a paper clip. He received a sharp rebuke: "We do not pay to send ironmongery by air mail!"

D.K.'s tightfistedness, however, persisted after the Depression, putting him in sharp contrast to such free spenders as Onassis and Niarchos. It also was largely responsible for many of his innovations in the shipbuilding industry.

Most of Ludwig's shipbuilding innovations were aimed toward a single goal: increasing payload without increasing cost. He was ever on the lookout for ways to reduce tanker design to the bare-bones minimum. His ships had much thinner decks than the industry standard. A modification that meant less weight and a smaller fuel bill.

D.K.'s ridding his ships of any feature that did not contribute to profits pleased his own obsessive sense of economy and kept him a step ahead of the competition. When someone asked why he didn't put a grand piano aboard his ships, as Stavros Niarchos did, Ludwig snapped, "You can't carry oil in a grand piano."

He had learned something by now. Opportunities exist on the  frontiers where most men dare not venture, and it is often the case that the farther the frontier, the greater the opportunity.

Much of Ludwig's success was due to his willingness to venture where more timid entrepreneurs dared not go.
 

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Before starting construction, however, D.K. had a little chore to perform, one that he intended to do personally. Twice he had trusted the word of specialists, and twice he had been burned. He had believed them when they told him he could bring fully loaded 60,000 ton ore carriers down the Orinoco without running them aground.

And his geologists had failed to discover, until after considerable work was done, that the coral rock underlying Grand Bahama Island was too fragile to support giant supertankers.

These episodes had cost D.K. considerable time and expense, so before building a refinery in Panama, he decided to check out the site himself. Dressed in baggy work clothes, he caught a night flight out of New York to Panama City and arrived at Tocumen Airport just about dawn.

He sauntered into a little village store at the bay's edge just as it was opening, casual as any gringo tourist down for a holiday and a bit of fishing. Pulling a quarter out of his pocket, he paid for his purchases: a heavy bolt costing a nickel and a twenty-cent ball of string. As a few loiterers watched with amused curiosity, he unwound the string, measured it out in six-foot lengths, and tied a knot at each interval. Then he made a slip knot at one end and drew it tight around the bolt. 

This done, he went outside, made arrangements with the dock owner to rent a motorboat, and spent the rest of the morning and afternoon puttering around the bay, checking with his weighted line the accuracy of every sounding marked on a  nautical chart he had brought along. Only when he had satisfied himself that the water was as deep as the chart said did he fly back to New York and give the signal to begin construction.

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An engineer by training and temperament, he much preferred machines to men. Humans were unreliable and had far too many needs. With a machine, you only had to give it a little fuel and maintenance occasionally and it would perform faithfully and uncomplainingly until it wore out. It didn't ask for food, shelter, clothing, or higher wages.

I do not have anything to say to anybody. I do not give press interviews. To hell with you. I'm busy.

A clever, mechanically inventive mind committed to the principle of getting the maximum utility and profit from the minimum expenditure of time, space, energy, and money. Plus an ambition that seemingly knows no limits. Plus a decided preference for deeds over words, machines over men. Plus a high degree of ruthlessness.

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