The Matthew Moroun Interview: On Second Spans, Traffic Forecasts And Why The Ambassador Bridge Company Doesn't Want To Operate The NITC
July 19, 2011
Originally published on MLive.
My conversation with Matthew Moroun began on the topic of the Ambassador Bridge. Specifically, the Detroit International Bridge Company’s desire to build a second span, why they don’t believe the New International Trade Crossing is necessary, traffic trends at the crossing, and possible opportunities to resolve the bridge debate with compromises.
Jeff Wattrick: What’s the purpose of the second span? Is it intended to be a replacement for the current bridge, or an expansion of the service?
Matthew Moroun: The Ambassador Bridge second span was a commitment our company made which was the paramount reason that Congress authorized funding and support for the Ambassador Bridge Gateway Project. After the second span is open and traffic is relocated, the current span will be closed, maintenance and renovations are much faster, safer, and 50-70% less expensive. The cost of maintaining the bridge is much more expensive when you have traffic crossing concurrently. It makes more economic sense for us to invest $500 million to complete the second span and close the current span at a fraction of the cost. After it is refurbished, it can be used for emergency purposes, community uses such as marathons or ceremonial use, and if traffic in future years warrants the use of the additional span, it can be used for that purpose.
JW: To follow up to that on a couple points, one the issue with the Gateway Project. You describe it as part and parcel to a second bridge.
JW: When you were negotiating with MDOT initially, was that explicitly on the table?
MM: Yeah it was, most definitely. In fact, there were three Gateway agreements. I’ll just pull out the most important—not necessarily the most important one, but on page five of the Gateway Agreement, and I’ll show it to you in a second, it says item number two, “Agreement on Project Design Concept: The parties agree the project meets the objective as identified in the Gateway Study as follows:
A: Improve direct access between the bridge (and I’m paraphrasing) the highways.
B: Accommodate a potential future second span of the bridge.
C: Accommodate access to a proposed Welcome Center.”
There’s no D, E, or F. Those are the three main principals that they gave us.
JW: At the same time though, there seems to be no interest on Canada’s part to create a sort of Windsor Gateway Project. In fact, when the Consul General of Canada was at City Council last week, he talked about, as an issue of almost national importance, protecting the Sandwich community in Windsor because of its history. That it’s almost sacred land for Canada.
JW: There isn’t a traffic jam on the bridge so much as with the egress and ingress to the bridge. Absent expanded plazas on both sides, how does expanding the Ambassador Bridge with a second span improve traffic flow?
MM: Specific to the Canadian road, is that where you are headed?
JW: Well, specific to either side because I think the plaza on the Canadian side effects traffic on the American side and vice versa.
MM: Right, well the way the bridge works—because it’s an international bridge—the whole thing is passing through Customs when you get to the other side. So, do you have enough capacity at Customs at the other end of the bridge where you have to come to a stop no matter how you cross the river? You’re on the other side now you have to clear Customs.
There’s a few points here. The first one is neither the U.S. side (U.S. Customs) nor Canadian Customers are fully utilizing the existing capacity that they have. I can’t remember the exact number of primary inspection booths that we have in Canada, but on any given day there’s six or seven they aren’t using. They’re probably running at 65% capacity primary inspection. The secondary inspection building that we built for them in the early 90s, that is not at capacity. Some of it they’ve never used.
The other point is we have an off-site Canadian inspection center that’s like two kilometers down the road. That is down to next to nothing now.
A lot of that is due to a number of things. One is traffic is down. The other one is we’re not in the time of Fred and Wilma Flintstone. The trucking companies now are electronically sending their manifests to Customs hours before they arrive at the border. In fact, I think, you even get fined if you show up at the border and you haven’t sent your electronic manifest like an hour before you got there. They want to look over your electronic manifest long before you ever get there to decide if they want to do any further inspection.
It used to be that a few hundred trucks a day would have to go to the off-site Canadian inspection center. Now I think like 10 a day go there. That’s all do to electronics. So, if you think about it, the roadbed capacity of the bridge, the engineered capacity of the bridge, or the tunnel, or the Blue Water Bridge has really little to do with it. That roadbed for all three crossings could handle double or triple, quadruple the traffic. The whole thing is stopping on the other end. If you have enough capacity on that end it works.
Now, how can the roadbed be of some assistance? Well, you can help segregate the types of traffic that are going into the country and make the Customs process a little more efficient if you’ve got a wider roadbed. You can put the trucks that are empty and put them in one lane. You can take the cars with Nexus or Enhanced Driver’s License and put them in one lane from other folks with regular passports. You could put trucks that are automotive and fast-approved and put them in one lane. You can put those hauling eggs and farm animals in a different lane. Each one of those can be treated differently and more efficiently when the roll up to primary inspection.
As far as roadbed capacity, that’s not an issue in the US and there are three highways that meet at the bridge (94, 96 and 75). It’s not an issue for Canada and their single highway (401). The road is fine.
Now, Canada, the only hook they have to hang their hat on is there are stoplights on the road. Stoplights are a big deal. They should get rid of the stoplights. I think everyone has been through a section of a community where the highway department does a grade separation. You either go up and the perpendicular traffic goes under, or vice versa. That’s not big deal. Especially when you weigh that in comparison to building a two-billion-dollar bridge across the water, when that bridge will be one of the tenth largest cable-stay bridges in the world. That’s what they have to hide behind and that’s what they keep pounding the table with.
JW: With regards to traffic, obviously traffic is down—I think all sides agree on that—but is it fair to use the traffic numbers now as we’re coming out of this global recession that affected Michigan and probably Ontario in the same way (especially the auto industry) for more than a decade. Is this a fair assessment of long-term traffic or is this an anomaly that’s outside the trend?
MM: I believe that actual numbers are the best predictor of the future. At the same time, I agree with the some of the insinuation that you had in your question that “hey, we just went through a global recession” and maybe it’s unfair to use that global recession. Yeah, I agree with that.
It’s also probably unfair to use the little bit of a rebound that we had in 2010 versus 2009. Let’s not do that. Let’s use 2011 year-to-date. Let’s use 2010, 2009, 2008, 7, 6, 5, 4, 3, 2, 1. Let’s use the past 11 or 12 years. Then let’s look at the trends there, and apply those to the future. I’d be happy to do that to. They still come to little more than one to, top end, three per cent growth. The NITC numbers are based on Chinese style nine or 10 per cent growth. I mean, we haven’t seen that since the 1950s. I agree with you. You can’t take one or two years.
JW: But you wouldn’t say this entire decade, in terms of trade between US and Canada, and especially between Michigan and Ontario, and especially even more the auto industry, this entire decade was something of an outlier.
I ask the question not being a traffic expert, but just looking at the macroeconomic trends and saying are we better off looking at the 80s and 90s as a better predictor long-term than this last decade?
MM: Well, I guess I’d say this to that. You’ve got traffic of the last 10 or 12 years and then you’d have to say, separate from traffic, what outside economic influences are going to come to bear that’s going to change that? One of the biggest effects on traffic is the population decline in the state and the Detroit metro area. Right? The last Census since ten years ago?
MM: Detroit lost 25% of its population. If you just looked at that maybe you’d say, well traffic is just going to get worse. Hopefully not. But the first thing before we can grow population, to try to grow traffic, is you have to arrest the decline. So, unless you know of some outside influence that’s going to cause population to go up a lot, then I wouldn’t say that the last 10 or 12 years are bad numbers to look at. If the last 10 or 12 years are pretty consistent with what you think the population is going forward, then they are good [numbers]. If you think population is going to go up like a rocket, then you should throw out the last 10 or 12 years.
Same thing with manufacturing, right? If you’re reading in the newspaper that GM, Ford, Chrysler and the imports are going to really start ramping up manufacturing in Michigan, Ohio, Indiana and Ontario to the point where Pontiac East reopens, Moraine in Ohio reopens, Springview, Janesville. Ford is about to close St. Thomas near London Ontario. I think they shut down in August. If they say, we’re canceling plans we’re going to leave that barn open then I’d say, you know what, maybe the trend that shows manufacturing decline in the traffic numbers, we shouldn’t look at that. But if you don’t have those things, then the past is a good indicator of the future.
I’m not a traffic expert, either, but I’ve got to look at it as best I can to plan the future.
JW: What projects has this company done that could support that argument that DIBC could undertake a project like building a new bridge?
MM: Well, we’ve never built a giant bridge across the river before.
JW: Fair to say no one alive probably has. [ED: Just to clarify, obviously massive bridges are build relatively regularly across the globe, but no one has built a bridge across the Detroit River since the 1920s.]
MM: Right, it’s really a small club. We’ve taken care of one. We’ve improved one. We’ve got 30-some years of experience successfully operating one. We’ve been planning it for a long time and invested a lot of money in the preparation of it, so that would be the experience side of it.
The other side would be we can’t afford to lose. We can’t afford to fail. It’s all our money. It would be our reputation, our pride, our employees’ effort. It wouldn’t be an experiment for us, and we couldn’t run back to the taxpayers and say, well, it was a good idea when we floated it and I’m sorry the big dig didn’t come in under budget, in fact we were ten times over budget. I don’t think we could scream moral hazard like the government or an authority could.
JW: Is there a possible, sort of grand bargain—that there is this political will to build this new bridge, the NITC, you guys have run a bridge. Why not just go to Governor Snyder, go to Canada and say build your bridge, give us the concessionaires agreement, the controversy is solved. Is there a win-win in doing something like that?
MM: Not necessarily along those lines, but along different lines I’ve tried to talk to Governor Snyder basically along the lines of saying look, rather than fighting one another maybe there’s a better solution for the state. For our business interests, for everybody involved, would you care to talk about that. Without revealing the details of that conversation, I think the outcome has been obvious to you and any outsider: No, there hasn’t been any receptivity to that. I’d rather that we weren’t fighting City Hall, so to speak. If there was a good, reasonable resolution that protected our interests and everything we’ve worked for—or at least most of it—I’d be interested in exploring that, or at least trying.
[ED: Moroun later emailed me the following statement to put some meat on the bones of what he envisions a possible resolution looking like.]
MM: We are willing to meet and have reasonable discussions about trying to craft a better solution, if that’s possible. However, we will not bid on our own business that the government would take from us with taxpayer money, government powers and government resources. My point is—we will discuss solutions, to the extent they exist. We won’t watch the government take our business and then try to buy it back.
One solution that makes sense might be:
We bear the risk of building and owning a second span, Canada fixes its stoplight issues between the bridge and 401, and the governor proposes regulations over our business that give him confidence he needs. Result: No taxpayer money or risk at all, a new bridge, a good road in Canada, and Michigan’s money is used for its roads and not a new bridge.
[ED: Back to the interview.]
JW: This is off the top of my head, but if Canada or the United States, or some binational authority came to you and said: “Look, we really want to build this new bridge and we really want to build it where we want to build it, can we buy the Ambassador Bridge?” Would that be a conversation you’d be open to?
MM: Right now, we aren’t having what I’d call reasonable dialogue like you and I are having right now, so I’d be hesitant to foreclose any conversation. Selling the bridge is not something we’re trying to do.
MM: We’re planning for a long-term future. Always have been, but it’s not a religion. It’s still business, and if—I’m not going to say there isn’t a number that, I haven’t thought of it, but we’d say yes to and the government could clear us out of the way and dive into a commercial business that they’re girding to do well in, hopefully.