Stop everything. Let’s just focus on finances.
When we first heard of this deal, the Markell administration sold it like this. With this deal was are hopeful that a $500 million investment will be put into extending the port into the Delaware River.
That investment back into the port is currently pegged at $150 million. The deal is for 50 years. The exchange of $16 million up front seals the deal. The state gets a lease payment of just under $2 million a year. And the expansion into the Delaware River is not going forward.
A general rule of thumb is that any corporation doubles the amount they tell a state government when they make their investment. In order to get approval they make the verbal statement but are not legally contracted to spend what they promise. Consequently the force of stockholders and their unending demand for profit, deems these investments to become half of their usual stated amount.
So in-port investment will be close to $75 million if this general rule holds true in this case.
Delaware for their port, will receive over the 50 year lease, (50 yrs. X $2 mil) or $100 million, plus the $75 million that Kinder Morgan will actually spend for two cranes and a conveyor. This grand total of $175 million averaged per year, amounts to $3 1/2 million per year.
With no expansion into the river, the rate of cargo must be the same. There are only 4 berths and usually all are full. We will not grow jobs. Instead those working now at union wages, will decrease to non union wages. With 240 union jobs at stake, just with a $10 an hour deduction under Kinder Morgan, the states economy loses (240 X 40hrs/wk X 52wk/yr X $10/hr), or Delaware would suffer almost a $5 million hit to their local economy.
This alone would amount to a negative impact caused by the privatization of the port.
$3.5 million a year that is positive; $5 million a year that is negative. The good news is that within the confines of the state budget, there is a switch from a cost of minus $1.5 million, to a plus of $3.5 million. The bad news is that cost just got dumped on the laborers currently working at the port, who collectively will lose $5 million. They will still be putting in the same hours; just that the local economy will be making do on $5 million less…. That $5 million goes as profit to Kinder Morgan headquarters.
Furthermore, Wilmington’s port volume increased 25% this past year. Up from 4 million tons to 5 million tons. The dollar losses quoted by Alan Levin do not yet account for this increased activity. There is a chance the port actually did make money over 2012 and actually cost the state nothing.
I can understand why Kinder Morgan is interested in the port; it is obvious considering how cheap Markell and Levin are selling it. I would buy the port for that cheap.
The issue begs to be asked. If we are selling the port so cheap, why? Why are there not lines of people begging to pay more for an investment that becomes $1.5 million profitable with no change other than firing all the unions and rehiring non union labor?
Why do we only have one suitor, who was handpicked by a consulting firm, and don’t have open bidding?
I would venture, perhaps because “open bidding” is done in the “open”?
I can name two other deals done in the dark that did not end well for our state. Fisker and Bloom…. Both negotiated by Markell and Levin. I supported both myself because both made good sense on paper. Reality is different. Our in-expertise got us shunted to the bottom of the creditor pile causing us to not get money back from Fisker even though we specified that it was to be clearly promised to us in the deal. The tricky investment firm instead, is getting that money. Likewise Delawareans have already begun paying for the Bloom boxes that will save them money. Construction is behind and has not been started.
I have watched the Phillies long enough to know that two strikes can occur and on the third one, the ball can still get batted out of the park. But I also know, not to bet on it happening…. I’ll enjoy it when I see it, but I won’t mortgage my house on it…