Ronald Morgan's plans to recycle paper raise eyebrows Is this man for real?

January 30, 1994|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- He sold hubcaps as a boy, Coors as a college student and mortgages as a young businessman. Now, 41-year-old Ronald J. Morgan wants to sell the Baltimore-Washington region on one of the biggest private investments in recent memory: a $1 billion paper recycling plant.

Like Mr. Morgan's other projects, the paper mill has been greeted with skepticism. Paper prices are said to be too low for a new mill and the competition too fierce.

Another question mark is Mr. Morgan's company: Evergreen Pulp and Paper Co., a one-man operation ("Evergreen is me") that he runs out of his Long Island home. Its track record is an unbuilt paper mill in Arizona.

And then there's Mr. Morgan. Although credited with a finely honed skill for putting together a complex deal, some potential partners have been quickly turned off by his smooth delivery of soothing solutions to his projects' problems.

When given the chance, Mr. Morgan will launch into a well-rehearsed sales pitch founded on some well-reasoned analysis but liberally sprinkled with hope and conjecture.

Competition? He'll undercut their prices. Environmental concerns? He's the original green man. Financing? Wall Street loves him. Experience? Look at Arizona.

"If it's meant to be, it's meant to be. If it'll work, it'll work. Anybody can do what I do. I see the opportunity, and I just plod away until I succeed," he said.

The current opportunity, as Mr. Morgan sees it, is in recycled paper, but in years past he has made money in mortgage spreads and renovating homes.

The way Ron Morgan sees it, he was made to make a deal. As a boy in the 1960s, he found hubcaps, polished them and sold them to car owners for 50 cents each.

Then came Vietnam. He lucked out and drew a high draft number but still did a tour with the Coast Guard. He says he chafed under the military's strong discipline, but in retrospect says the experience of patrolling the coast and picking up garbage from the water made him more conscious of the environment.

When he was discharged in 1972 and entered the University of California at Davis, he was more focused than many of his classmates, he says, because of the military experience.

"I wanted to get out of there and start my own business. I didn't want to serve anyone," he said.

While in school, he got his first taste of the real business world by putting himself through school by selling Coors for Capital Coors Co. in Sacramento. Owner Ted Adamson said he remembers Mr. Morgan as a hard-working, "aggressive" businessman -- a far cry from many of his classmates.

"We've had a lot of aggressive, pleasant young men come through here, but he certainly ranks in the top tier," Mr. Adamson said.

A few years later, when Mr. Morgan turned 30, he invited Mr. Adamson to a party and showed off his pride and joy, a Rolls-Royce with the license plate "B4THRTY." Several years brokering mortgages had earned him $10 million and allowed him to reach a goal he had set for himself: own a Rolls before age 30.

Later, though, he blew the money on homes, cars, trips to Europe and expensive clothes.

"When you grew up without any money, you didn't know what to do with money except spend it. That's exactly what I did," he said.

By the mid-1980s, he was in Connecticut renovating homes for a living. By 1989, however, he had hit on an idea he got from a girlfriend's grandfather: Big paper companies had a vested interest in snubbing the recycled paper movement because they owned vast tracts of forest. This was why they opposed recycling legislation. But the movement was still gaining ground, especially in California, and modern, efficient recycling mills could be profitable enough to undercut the established companies' mills.

He had a friend in Tucson, Ariz., and decided to head west and recoup his fortune by supplying the huge California paper market from business-friendly Arizona.

At first, everyone laughed at the idea: Large paper mills can use 10 million gallons of water a day. Tucson is in the desert.

Mr. Morgan came up with another idea. The city would pump its treated wastewater to his mill, where he would use it, retreat it and pump it into the Central Arizona Irrigation and Drainage Canal, where it would be diluted and used to water crops.

"I'm a believing environmentalist, and this covered all the bases," said Craig O'Hare, an aide to a Tucson City Council member who backed the project. "There is virtually no environmental opposition."

Another problem was power. Mr. Morgan solved that by linking himself with the Arizona Public Service Co., the state's utility.

"It's a viable project. It's a well-conceived project," APS spokesman Bruce Richardson said.

But the project took time to organize and was costing him his last pennies. In a tale he loves to tell, Mr. Morgan said he had to sell his jeans so he could eat.

"It's a great story. I was totally broke. I had gambled that the Red Rock mill would work, and it did. That's how I am," he said.

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