Kinder Morgan Deal is Dead Part II
Or we could call it Kinder Morgan Deal is Dead — The Fingerpointing. The NJ has another piece up this AM — Port lease efforts on hold, which has a few more details on this story, but mostly it is additional reaction from some stakeholders. Aaron Nathans gets a key bit wrong — there wasn’t a $200M investment on the table, it was more like $41M. The rest was lease payments to the state. But the more I hear about this, the more I wonder about what we don’t know about this deal. Was this lease payment meant to be funneled back to the Port for the automation upgrades talked about for the warehouses? Who knows. I have attached a copy of the letter so you can see it directly.
It is interesting that they would blame Julius Cephas for all of this. I’m not certain how much negotiating was involved here, but I’m wondering what was being negotiated when it wasn’t clear what KM was even offering overall. Still, Cephas asked a number of questions at a 7 December DSPC meeting that never got addressed by KM or the Board. So what happened to the other ILA Local out there? Were they negotiating too? Demonizing one person in the deal when there were so very many who were against it (and that KM didn’t really talk to) just seems odd and of a piece of this very murky story.
Here is ILA 1694-1 response to this deal going on ice:
Special Thanks to Senator Robert Marshall for Senate Bill #3 and his colleagues.
On March 7, 2012, Kinder Morgan announced ‘suspending’ its interest in the Port of Wilmington. International Longshoreman’s Association, 1694-1 wants to thank everyone in the community for their shared interest in protecting the Port of Wilmington against privatization to Kinder Morgan. Together with the support of the community, environmentalist, churches, bloggers and legislatures, we forged together a diverse coalition of community leaders and concerned citizens to keep the port an economic engine to our local economy. Our fight is not over, we must continue to work with Governor Markell and Alan Levin to develop a strategic plan to continue to make the port viable and sustainable for our future generation and create middle class jobs that help to grow a healthy, strong and local economy. If not for Senate Bill #3, sponsored by Senator Robert Marshall and the state legislatures, this unprecedented achievement would have not been possible.
Julius Cephas, ILA 1694-1 President.
Fighting for working families to live a decent quality of life
In my business we do After Action Reports to assess what we did well, what we did badly and what we need to do to move forward. Here’s what I want to suggest for the Port of Wilmington and the DSPC:
1. Public Teambuilding. This entire business has not sent a good message to Port customers or to Port businesses. Time to remind the world that this Port is important to the future of Delaware. One avenue to this would be to get the Port its Bond Bill request and make sure they have a plan to get its capital funds invested ASAP. Get the Governor and Levin to do a public event with some of the stakeholders to announce/endorse whatever work gets underway.
2. Strategic Planning. Instead of just banging off in a direction, it is crucial to examine what the short-term, medium-term and long-term goals are for this Port and their stakeholders. Come up with a strategy and timeframe to get there and make sure that all of the stakeholders are on board before going off on a wild goose chase.
3. Professionalize the DSPC Board. Think about adding a key stakeholder or two to the Board that aren’t beholden to who is in Dover or (even better) some outside expertise.
4. Address the Structural Weakness. This is something that the ILA guys ought to step up to and proactively address NOW, if they were smart. The port financials show (for FY12) approx $19M in wages/salaries and approx $12M in operating revenues. Previous years aren’t that much better. This is a pretty big red flag and something that can’t continue forever. Increasing operating revenues is certainly an option, and perhaps could be addressed in the Strategic Plan. But make no mistake that this imbalance has to be fixed and it is better to fix it now than wait for a crisis when lots of folks will get hurt.
From KM’s perspective, why not toss all of the blame on a labor leader? It probably fits with their long term strategy of demonizing organized labor, and it provides the shallow thinkers on the right with a villain. In fact, I can hear Rick Jensen already.
You can hear me, too. If this guy is working with another bidding group, his opposition was not honest.
In which case you need to explain how working with a *non-selected* bidding group could possibly derail this thing. Because they might have some collusion and restraint of trade legal issues to answer for.
Alan Levin is on WDEL right now talking about this.
Read the letter, Cassandra.
Julius Cephas has a duty as president of the union. If he was involved as a principal in a bid for the port operations, he has a conflict of interest.
I did read the letter. Did you? It doesn’t claim that Cephas was a principal in that bid — it just claims that he was working with the failed bidder to “publicly attack our company in the press”. And seriously, the only “press” on this I didn’t have access to on this was whatever happened on Channel 28 on Sunday. Otherwise, I can’t find this other bidder badmouthing KM in the NJ, Newsworks, WDEL or WDDE.
And thanks to Michelle M for the heads up. I did hear Levin and even he doesn’t know what to say about KM’s claim about Cephas working with a failed bidder.
I guess it depends on what “working with” means. I read that the other way — that he was part of the other bid.
Scuttling the deal is going to be the easy part. Now comes the hard part — getting funding through the General Assembly. It’s pretty clear the GOP isn’t interested, and I somehow doubt the administration is going to push for it — they’re trying to cut the budget, not add to it.
BTW, today’s Levin interview will be posted as a podcast within an hour or so.
Cephas, as president of local 1694-1 had no obligation to negotiate with Kinder Morgan until Kinder Morgan had a signed contract with the state. Until that time KM is just another company. Mr. Cephas’s only obligation is to negotiate with the Diamond State Port Corporation.
Whatever. Maybe he would have preferred to negotiate with Chris Coons.
Anyone who trusts Julius Cephas just because Kinder Morgan is untrustworthy gets what he deserves.
For those who missed it, the podcast of the Loudell interview with Levin has been posted at WDEL.com
I respect Julius Cephas. It’s easy to smear a violatile “angry union man” and bring up old Chirs Coons saga when capitalists, corporatists and republicans do not get what they want. Let’s take lessons from this to empower what’s left of the unions to re-organize them to increase the stagnation of living wages or else the US will get left in the dust. Kaviips mentions that Germany respects unionized labor and their wages are higher than the US.. Their country is socially and environmentally responsible and have invested millions in renewal energy and homes even in rural communities have solar panels.
I would agree with Kavips blog today, Julius Cephas should be nominated as “Delaware’s Man of the Year” He took on wallstreet and the Delaware plutocrats by increasing public-transparency and awareness about port privatization that has been read all over the country. Lets just imagine what we can do as a community when we organize with a shared sense of economic responsibility and not to maximize corporate profits.
Franklin D. Roosevelt once said, …..”the world will either move forward toward unity and widely shared prosperity – or it will move apart.”. Other local unions should be taking notes.
Thanks Norinda. I’m tired. I feel like we’ve won the Superbowl….
You are right. It was watched the world over, I was very surprised.
Let me get this straight: Kinder/Morgan misrepresents (lies about) its intent to invest huge sums to upgrade the Port; Markell and Levin repeat those misrepresentations, and seek to keep anybody outside their small coterie of dealmakers from getting info on the specifics of the deal; the General Assembly refuses to go along with this attempt to deny the public any information on the deal; once the parameters of the deal are made public, the deal dies b/c it bears no resemblance to what KM, Markell, and Levin claimed it would be.
So, of course, after the fact, it must be Julius Cephas’ fault. Because, when it comes right down to it, a predatory company like KM has bupkus, so it resorts to its ‘Blame the Union’ card. Which should tell you all you really need to know about Kinder Morgan.
Time for a reality check.
If it’s a reality check you want, you might start with the fact that the “predatory” KM was approached by the administration to make a bid, not the other way around.
This is a calculated risk. KM had money. Where do you see another entity eager to invest in the port? I hope you don’t think it’s the state, because I don’t see anywhere near enough General Assembly support to fund the port properly.
BTW, you have no idea whether KM “lied” about anything.
” capitalists, corporatists and republicans”
Good luck running a port without capitalists and corporatists.
Geezer, are you saying that there are no state or municipality run ports in the US, that they are all run by corporations and capitalists?
If KM was approached by the administration to bid on the Port, then I wonder if the other bidder(s) might have have cause to challenge the KM selection. Recruiting a bidder then selecting that bidder in a public RFP process has the whiff of an undermined procurement process.
And it seems pretty clear that somebody misrepresented what was going to happen at the Port. This started by Levin and the DSPC selling folks on building out into the Delaware. No one knew they were intending to lease the whole thing out — without a firm commitment to competitive upgrades until November. So clearly they were trying to hide the real nature of the deal they were making until that deal was done. Without a commitment to the competitive upgrades that the Administration was selling.
No, I’m saying that there isn’t much shipping done by entities that aren’t capitalist and corporatist. Or hadn’t you noticed?
“If KM was approached by the administration to bid on the Port, then I wonder if the other bidder(s) might have have cause to challenge the KM selection.”
Wonder away. What I wonder is why you think KM would be the only bidder whose proposal would be to modernize by replacing people with machines. My understanding is that this is going on at ports everywhere. So is our plan to be the last port on the East Coast to modernize? That doesn’t sound like it has much long-range potential for success.
“So clearly they were trying to hide the real nature of the deal they were making until that deal was done.”
I”m fascinated how you can say “clearly” what was happening when the problem was we weren’t sure what was happening. And I would propose that none of you who now are sure you know the motives of anyone in this truly knows anything.
Throughout this whole affair, opponents of the proposal have not hesitated to claim they “know” what Kinder Morgan was going to do — they were going to cut jobs, they were going to destroy the union, they were going to ship more coal through the port, they were going to put a LNG pipeline in…I could go on and on with what people asserted, with no trace of doubt, about exactly what Kinder Morgan was going to do.
Apparently, the goal of many people was to scuttle this deal. My goal was to get as many details as we could so we could fairly analyze it.
Hey Geezer,
The facts are out there. Bulk = very few jobs. KM is a bulk and liquid bulk handling company. They don’t do any reefer work. A lot of the money that the state has put into the port since 1995 has been to upgrade and add refridgerated warehouse space. Wilmington has the largest amount of dockside refrigerated warehouse space on the East coast (800,000 sq. Ft.). Bulk products are not allowed to be stored inside the port because they don’t mix very well with cars, containers and food products. There are businesses that are highly invested outside of the port who have worked hand in hand with the port admin to bring these products through the port, enabling the port to handle thousands and thousands of tons of cargo that they couldn’t otherwise handle. These businesses have competed with KM for cargoes before. So Mr. Levin and company decide, because they
so desperately want to get out from under the port, that they will give KM a 65 year lease and Monopoly on the Port of Wilmington. . Not immediately, but over several years, the bulk business moves iinside the port, the cargoes that provide the most jobs move to other ports on the Delaware.
This was all going to be done behind closed doors by the Diamond State Board of directors who are all political appointees of the Governor and have zero experience in the maritime industry. Do you remember when the Baltimore Colts left Baltimore in the middle of the night? This deal was done when senate bill 3 was passed. It
would have never passed the sniff test.
“Or hadn’t [I] noticed?” Geezer, don’t get flippant with me. I simply asked a question about something that, given your response, you might know more than me. That’s all there was to it. Relax.
Well, Geezer, you might well be accurate that I ‘have no idea’ whether Kinder Morgan lied or not. The alternative would be that Gov. Markell either lied, misrepresented, or did not understand the Kinder Morgan proposal. I see no other explanation as to why what was represented was so far from the truth.
I DO know that trying to deflect blame onto Julius Cephas is pretty pathetic, even by standards often used by public officials. These two brilliant businessmen and a predatory (yes, predatory, read the lawsuits) company like Kinder Morgan outmaneuvered by the local union guy?
For the record, I don’t think that I’ve ever met Julius Cephas, and I certainly wasn’t channeling him when I wrote about this deal. Like most of the other bloggers, I asked questions. The answers or, more accurately, the lack of credible answers, is what ultimately killed the deal.
The fact that Kinder Morgan, Gov. Markell, and Alan Levin would even float the idea that it was the union guy who killed the deal is just another argument against ‘trust(ing) the Governor’ and trusting Kinder Morgan.
What was accomplished by Delaware Senate Bill #3, sponsored by Senator Robert Marshall and supported by the legislatures, union, business community, environmentalists, bloggers and local community activists in regards to the proposed privatization of the Port of Wilmington. On March 7, 2012, Kinder Morgan announced ‘suspending’ its interest in the Port of Wilmington saved jobs not eliminate them – David beat Goliath. Our focus was to ensure the viability of the port long-term and not sacrifice 30 year mortgages of working families for a three year promise to protect the jobs for a select few. Our intent was to protect 30 year pensions and jobs and not accept a three year promise that would see at its end a potential elimination of local job opportunities for residents that invest in this community.
Our efforts in the state legislature and the heroic efforts made on behalf of working families was to ensure that promises and commitments would be kept and not subject to the changing whims of a corporation committed more to their own bottom line instead of understanding that if our futures and interest were tied together that we would all rise and prosper together. By Kinder Morgan’s refusal to keep their promise to submit a viable proposal for over a year may demonstrate that their intentions were not as stated. Their support of the legislatures recent actions to provide transparency in the process would have demonstrated their commitment to make this work not just for themselves but for the workers (union and non-union) business contractors and the community as well.
Oil energy giant Kinder Morgan took for granted that we were willing to deal with a company whose history and association with ex-Enron leadership would give any reasonable person cause for the need for transparency, clarity and understanding. We were unwilling to accept a temporary promise under these circumstances and wanted a relationship that provided for partnership without taking away the rights of a company to do business but instead protect the community from possible traumatic events that had been witnessed in the past by their former partners that resulted in lost pensions, elimination of jobs, lives destroyed, communities left in ruins, and an environment damaged by toxic chemicals and contaminated waste.
We did not refuse to meet with a partner willing to invest in the future of the city and the port. We refused to sell out the future generations of our children. We refused to endanger the lives the residents of the community. We refused to sacrifice a commitment of workforce safety for the immediate gratification of a promise for short-term gain and the expense of long-term sustainability. Kinder Morgan had a choice to work with the best workforce in the nation and deal fairly with a supportive community or continue to do business at the expense of others without regard to quality of life and well-being.
We are pleased with the outcome and stand ready to work with any company willing to invest its interest with the people of this community and region. But we expect transparency and a demonstrated commitment to the Port of Wilmington’s long-term success.
Julius Cephas, ILA President 1694-1
And I’m fascinated with this:
I”m fascinated how you can say “clearly” what was happening when the problem was we weren’t sure what was happening.
And yet here you are claiming that know that KM was the *only* bidder who would modernize by replacing people with machines. Really? You’ve seen the other bid? Or is this from the same Alan Levin who — a year earlier — was talking this deal up as a buildout to the Delaware River? Go back and look at the KM PowerPoint deck. There was no modernization that they were proposing other than adding capacity for their own products. NONE. They were proposing to use the current Delaware berth for their own products and would be adding equipment there to handle it. Why do you think the Autoport people were unhappy about this? The modernization that might make a difference is in the fruit warehouses — a clear benefit to the importers. If KM was going to modernize those spaces, those clients would have been behind this and (since they do the most business there) this deal would have happened. Levin and Markell would have been telling everyone for months that they’d found a way to make the lives of the Port’s biggest customers easier and cheaper rather than doubling down on the needed investments canard. The way that KM eliminates jobs is to convert the Port over to handling the bulk products that is the core KM terminal business. Which was certainly possible after leases ran out. Bulk product handling does not need as nearly as much manpower as the fruit and fruit juice business which is this Port’s current mainstay. The automation stuff was a last-minute try to make this more palatable and from everything available to me, it sure looks like vaporware.
That said, the imbalance between the wages and operating revenue line items at the port is still a genuine structural threat and needs to be dealt with sooner rather than later.
@ Abram-
“KM is a bulk and liquid bulk handling company. They don’t do any reefer work.”
Thank the Jeebus for that! Sussex Watcher will be so relieved that no REEFER work is going on at the port!
Ha, ha. we finally get to the truth. Kinder Morgan was against the reefer work because it does it’s work with pipes…
You guys are too quick for me.
The full Statement by Julius Cephas is pretty dang good.
I am glad Cassandra is staying with the notion that there is an imbalance in wages and operation expenditures for the port.
I noted the problem reading through the 2011 Martin Market Study. There is a very top heavy job count for administration (forget – either 97 or 67) and there is on-the-ground reporting that the perks for top people go to extremes like new cars etc.
@Jason AGREED