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For a time it seemed that Ludwig did have a business heir: William W. Wagner, vice president of National Bulk Carriers. But Wagner died unexpectedly in March. Said one insider: "Wagner must have had 40 people reporting to him directly. When he went, we were suddenly missing two full levels of management." With unexpected room at the top, there is now competition for power. The leading aspirant is John Notter, 35, president of American-Hawaiian Steamship. Notter, however, is not a shipping man, as Wagner was, but a real estate expert. "What Ludwig needs," says a banker who knows him well, "is another Wagner —a brilliant shipping executive who can see the broad picture, as well as remember the little details. Ludwig got his start in shipping, and everything else has been built on it."
Ships have fascinated Ludwig all his life. The son of a moderately successful real estate operator, he scraped together $25 to buy a sunken, 26-ft. boat lying in the lake off his home town of South Haven, Mich. At the time, he was nine years old. After raising the boat and working all winter on repairs, Ludwig chartered it for more than twice his investment. By the time he was 26, Ludwig had acquired an antique oil tanker, one of the first half-dozen ever built. The tanker business has brought him wealth, but it also nearly killed him. In 1926, he went below decks to rescue two sailors overcome by gasoline fumes. A flash explosion killed the sailors and hurled Ludwig 25 feet through the air, fusing three vertebrae in his back. Even today, after a risky operation, he suffers recurring pains.
Other People's Money. During most of those early years, Ludwig was short of cash; at times, he teetered on the verge of insolvency. But by the mid-19308, he had pioneered a financing technique that is now standard in the shipping business. Before buying or building a ship, Ludwig would arrange for a client to charter it for up to 20 years. He would then borrow the entire cost of the ship, and repay the loan, plus interest, out of the charter fees. The result: a fleet purchased with other people's money.
Over the years, Ludwig has added some profitable frills to the basic technique. His ships are owned by a bewildering tangle of companies incorporated in other countries, particularly Liberia and Panama. The reasons are simple. "Flag-of-convenience" countries like Liberia charge lower registration fees than others, impose few safety regulations and allow industry to hire foreign crews at low wages. In addition, by registering both his ships and the companies that own them in countries that levy no income tax, Ludwig saves millions of dollars each year.
Ludwig's standardization of ship design is legendary among rivals. Wherever the vessels are built, and whatever their size, Ludwig ships have many interchangeable parts. This standardization has two profitable results: construction and maintenance are cheaper and captains and crews can take over any ship without finding it unfamiliar. Ludwig cuts design and construction costs to the bone. Many Ludwig ships have exhaust pipes instead of funnels, which cost more. Few, if any, have air conditioning, and none has the swimming pool for the crew that is common on ships owned by less parsimonious men.