Ray McGuire’s Billions in Deals Triggered Thousands of Layoffs

Ray McGuire’s mayoral campaign projects an urbane coolness none of his rivals can match. He’s the candidate who jogged through Times Square in his Spike Lee-narrated announcement video, has endorsements from Diddy and Jay-Z and brags good-naturedly about his crossover dribble. In McGuire’s well-argued policy plans, there’s substance along with the style.

But McGuire’s central rationale for running is that his 36-year career in finance proves he has the vision and values to navigate the city out of crisis. “Ray has personally originated and executed deals valued at over $650 billion while he also worked to make a difference,” his website trumpets. “[H]e’s very likely created more wealth than any of the other candidates combined for New Yorkers,” the candidate’s wife, Crystal McCrary McGuire, said in a recent interview.

“I have ran, led and managed businesses larger than all of the rest of them,” McGuire told the Daily News editorial board on May 3. “You take somebody who’s actually, one, never done anything, never run anything, other than his mouth, or somebody who says, ‘I don’t know how to manage, I’m going to get a team to manage’ — you look at that track record, and you look at mine.”

McGuire added, repeating a favorite line, “I got receipts.”

But the wealth McGuire created came at a cost to some people. Just ask Donald LeClair. He has receipts, too.

Back in 2001, LeClair was an employee of a plant in Niagara Falls that made Triscuits for Nabisco. He operated a machine that baked the crackers. He had worked at the factory since he was 20, his wife since she was 19.

One of the deals McGuire oversaw during his time at Morgan Stanley was the purchase of Nabisco by Philip Morris, owner of Kraft Foods. One consequence of the deal was the closure of the plant where LeClair and his wife had worked for a combined 53 years. “It was devastating in that for both of us—I was 46 at the time, and we had two kids in college and one in high school—that’s what we based our lifestyle on,” he says of the salaries they drew from making Triscuits. “And then it went to zero.”

LeClair was one of at least 7,500 workers nationwide who lost their jobs after the merger; 200 of them worked at the Niagara Falls plant. “Some of them went down a hard road. And there were some that were OK,” LeClair says of his former colleagues. He found a new job within a few days, but it paid half of what he’d been making, and his wife did not find new employment for a while. “We basically lost about 75 percent of our income. It took us a good seven years to get back on our feet. We drained and bled all our savings over that time. It was rough, but we made it through.”

McGuire’s candidacy is a call to embrace his life story—his childhood in a struggling Midwestern city, his fight to the height of U.S. finance—as a promise of the better day toward which he can steer a crisis-scarred New York. McGuire’s pioneering career, it is argued, proves he has the skills and experience to cut the deals and make the calls that the city needs to survive and thrive.

But many of those deals and decisions resulted in substantial numbers of people losing their jobs, sometimes with harsh effects on the towns in which they worked. “McGuire’s history as a banker reveals how he would govern as mayor,” says Jonathan Westin, the executive director of the progressive group New York Communities for Change, a group that endorsed McGuire’s opponent Scott Stringer before rescinding that endorsement after allegations of sexual abuse were levied against Stringer by a former campaign volunteer. “That history shows that [McGuire] may be predisposed to laying off workers, as opposed to raising revenue in order to retain workers and keep the city running.”

Lots of deals, lots of layoffs

As is generally true when big companies combine, layoffs were part of the collateral damage of many of the deals that press accounts and official biographies associate with McGuire, who began his finance career in 1984. After stints at First Boston and Wasserstein Perella, he was managing director in Merrill Lynch’s mergers and acquisitions group (1994-2000), and then co-head of the same division at Morgan Stanley (2000-2005), before beginning his long stint doing similar work for Citigroup, starting in 2005.

During McGuire’s Merrill days, he helped close a deal between the James River Corporation and the Fort Howard Corporation that forced some 2,500 employees out and shuttered mills in Ashland, Wis., and Carthage, N.Y.

In his first year as global co-head of investment banking at Citigroup, the company reported that it had facilitated a marriage between Ternium and Hylsamex S.A., which reportedly led to 400 layoffs before the year was out.

McGuire also represented Koch Industries in its 2005 purchase of Georgia Pacific, which put the squeeze on plants in at least six states. Nearly 400 people who worked at mills in Louisiana were laid off in the process. In Washington State, the company slashed 240 jobs over the next two years. At least 200 were offered buyouts in Florida, and in Oregon, one plant lost 9 percent of its workforce.

When SABIC (with McGuire as its representative) took over GE Plastics in 2007, it sparked nearly 200 layoffs in Mount Vernon, Ind., and 62 in Washington, W.V.—a town with fewer than 1,200 people.

Hewlett Packard’s 2008 purchase of EDS triggered the elimination of nearly 25,000 jobs. In 2009, when the mammoth drugmaker Pfizer took over Wyeth, for whom McGuire was a director, it led the newly enlarged firm to cut 15 percent of its workforce—about 19,500 people.

There were other significant layoffs sparked by mergers during McGuire’s tenure at Citigroup. In 2012, after Express Scripts bought Medco Health Solutions, a plant in Willingboro, N.J. lost 8 percent of its workforce. After the 2016 takeover of EMC by Dell, the company announced plans for more than 2,000 layoffs. A deal between Baxalta and Shire the same year led to 239 job cuts in California. And TD Ameritrade’s buying Scottrade Financial Services in 2017 led to 1,100 job cuts.

McGuire’s campaign says the candidate knows what it’s like to be from a company town struck down by plant closings and job losses. “Ray grew up in a neighborhood where factories polluted the air so badly that you had to stick your head in the refrigerator just to get some fresh air — only to see those factories shut down and no jobs come to replace them,” says Stu Loeser, a spokesman for McGuire. “That’s why Ray has spent his entire career extending ladders to those who come from communities that have historically been left out — and he has also supported nonprofits that prepare people for the 21st century.”

“But the issue for New York City — as it is for many companies — is how to transform for new realities. The last big deal Ray helped lead was the AT&T and TimeWarner merger, two companies with huge New York employee bases that were, like it or not, facing disruption from Netflix and other streaming services. The answer was not to stay the course and hope for the best, just as the answer for Pfizer when Ray advised them was not to keep doing what they’d been doing,” Loeser continues. “The answer is transformation that helps people and cities thrive as the rest of the world changes.”

Local impacts

Plattsburgh, N.Y., felt the effects of two of the deals McGuire was involved with: The Koch Industries purchase of Georgia-Pacific and the Pfizer-Wyeth marriage.

“The only reason why you ever have any merger is to economize on some sort of costs, create some sort of synergies,” says former Plattsburgh Mayor Colin Read. “That usually results in closing plants.”

The Georgia-Pacific plant did not close, but it did reduce its workforce considerably. “That’s hit hard. It was one of our biggest employers. Those were good-paying jobs,” Read says. The Wyeth plant, which was actually located in the nearby community of Rouses Point, closed completely. “That community of Rouses Point was really somewhat decimated by that closure,” he adds.

Certainly, not all the layoffs led to permanent economic damage. The mayor of Milford, Conn., told City Limits he was not aware of any lasting impact when a McGuire-brokered deal in 2003 led to layoffs at the Schick plant there. An economic development official in Stamford, Conn., said another McGuire merger, the 2009 fusion of UST and Altria, which caused as many as 350 jobs to move to Richmond, Va., did not leave a lasting mark, given the size of the local job base (though that merger also triggered layoffs in Longwood, Fla; Mooresville, N.C. and Richmond itself, according to press accounts.)

McGuire oversaw dozens of mergers during over the past two decades, and official records indicating whether layoffs occurred, which are kept by individual states, do not go back far enough to say for certain whether or not his other deals also led to job losses. At least one deal during his tenure as head of Citigroup’s investment bank, the 2013 acquisition of the Canadian firm Nexen by the Chinese firm CNOOC, did not trigger layoffs because the firms had to agree to a no-layoffs pledge to satisfy Canadian regulators.

It’s fair to note that in some cases, the layoffs that occurred after mergers reflected corporate dynamics that were already in motion. But the Georgia-Pacific deal, for one, certainly did not make things any better for the workers at a paper mill in Old Town, Maine.

“It was already in the works. They just went through with the plan to shut us down,” says Paul Randall, an electrician and former union leader at the plant, about Koch Industries and the layoff plan. The closure put at least 400 people out of work. “That’s pretty much the whole town,” Randall says.

“Running a city government isn’t about maximizing a bottom line. As a Wall Street executive, Ray McGuire put investor profit before the good of workers, and that resulted in countless people losing their jobs,” says Sochie Nnaemeka, the director of the New York Working Families Party, which, after withdrawing its earlier backing of Stringer as its #1 candidate, has endorsed Dianne Morales as its first choice for mayor. “We need our next mayor to be committed to an inclusive recovery that prioritizes working New Yorkers.”

Winners and losers

The question of who benefited and who suffered from the mergers and acquisitions McGuire facilitated is not one-dimensional. McGuire’s campaign says his advice helped many companies save jobs by striking deals that kept them afloat in challenging markets—like the 2018 merger of TimeWarner and AT&T, which helped shore up a New York-based company against the threat posed by streaming services (although it did contribute to tens of thousands of layoffs).

McGuire’s campaign embraces his past as a corporate dealmaker. “New York is at a crossroads today — the long era of millions of people coming to offices five days a week may be gone forever, just like the days of New York being America’s major shipping port are long over. New York needs a Mayor who can lead its greatest and most inclusive transformation — and that’s Ray McGuire,” Loeser says.

Some of McGuire’s deals probably did benefit workers, who were retained by companies that ended up better able to compete. They may have served the company towns that hosted those businesses and the consumers who enjoyed better integrated products. Of course, investors were also big beneficiaries. The Kraft-Nabisco deal that shuttered the Niagara Falls plant netted legendary financier Carl Icahn and his investors $600 million. Stocks rose on reports of the James River layoffs. As one would expect of a high-level financier, McGuire himself has become quite wealthy. He reports investments, deferred compensation and retirement accounts valued at more than $12 million and at least $1 million in income from interest, dividends, and capital gains. Citigroup will pay McGuire a total of $5.7 million in equal annual payments from 2022 through 2025.

Yet, even if the layoffs weren’t devastating for towns and regions, their ripple effects were significant.

Nearly 300 miles from the doomed Niagara Falls plant, the Kraft-Nabisco deal also led to the closure of a plant costing at least 60 jobs in Canton, N.Y. Canton is the county seat for St. Lawrence County, which covers more than twice as much territory as the state of Rhode Island but counts only 108,000 residents.

Canton is a college town, home to both St. Lawrence University and SUNY-Canton, so the layoffs didn’t tank the local economy, according to Patrick Kelly, a County economic development official. However, they certainly caused pain.

“Manufacturing is important. The agricultural community is important and the dairy chain is an important part of the regional economy. And when you lose a producer, the impact is not just on the direct workers but on the market for fluid milk. When outlets for milk disappear, then the product has to be shipped further for processing, and that has an impact on the producers, the farmers,” Kelly says. He also says it’s tough on a small town to lose an internationally recognized employer—there’s a prestige hit and the jobs that leave tend to be good ones.

New York City was forged in the tension between the creative destruction born of capitalism and the notion that humanity’s fate should not be determined by the market. Robber barons built some of our most treasured institutions, but public works and public space—existing outside the marketplace—are what make the city livable. Private ambition crafted our world-renowned skyline, and corporate machinations drained the city of industrial jobs and set the stage for a decade of crisis in the 1970s. Wall Street profits help fill our tax coffers, yet the excesses of international finance ravaged swaths of the city during the foreclosure crisis. The best mayors have figured out a way to maximize the benefits of high finance and minimize its sometimes devastating cost.

In about a month’s time, New York voters can decide whether McGuire or any of his colleagues will get that balance right. 

Jarrett Murphy is a 2021 Wayne Barrett fellow at Type Investigations and the editor-at-large at City Limits.