Rough Sailing

“There are none so blind as those who will not see.” – Anonymous

“When the Downturn Sailed Into Savannah” is the headline of a story appearing in the November 30th edition of The New York Times.

“‘We are battening down the hatches and being cautious,’ says Robert B. Briscoe, a local CFO. ‘Before the credit crunch we were not as cautious as we are now. We want our bankers to know that. They would be spooked by anyone who showed too much optimism today.’

“And so it goes, as a crisis born in the mortgage collapse and sent into overdrive by Wall Street’s financial disaster now spreads to the broader economy. In this port city, near the mouth of the Savannah River, the downturn is chipping away at expansion and prosperity, dimming a 20-year boom. The unemployment rate in Savannah has risen sharply, just as it has across the nation. And cutbacks in output in midsize cities like Savannah are contributing to an accelerating decline in the country’s gross domestic product.

“‘You are seeing a fairly widespread recession, with all major components of demand now in decline,’ said Brian Sack, an economist in Washington for Macroeconomic Advisers, L.L.C., a consulting and forecasting firm …

“No one has a greater stake in keeping the recession than Doug J. Marchand, executive director of the Georgia Ports Authority, which operates the port here, a mile upriver from the Atlantic Ocean. It is now the fifth-largest port on the East Coast, as measured by cargo tons …

“But the tonnage … has lately ‘flattened’, as Mr. Marchand put it, to almost no rise at all — the first time that has happened in his 13 years as port director.

“That unanticipated slowdown caught Savannah off guard. The city has four million square feet of newly built, never-occupied warehouse space, intended primarily as temporary quarters for the growing flow of imports. Big as hangars, these buildings sit shuttered and alone in industrial parks sprouting weeds.

“Mr. Marchand helped ignite the building boom. In a 2004 ‘call to action,’ a speech that business and government officials still cite here, he declared that Savannah had to make room for a vast new crop of warehouses to accommodate the cargo surge …

“Developers, caught up in the euphoria of the real estate bubble, responded quickly to Mr. Marchand’s invitation, buying and clearing land for new industrial parks and putting up giant warehouse and distribution centers on speculation. They were counting on companies to quickly occupy the completed buildings. That happened initially, but now demand has petered out.

“Mr. Marchand, saying the setback is temporary, has nevertheless frozen hiring at the port. He is going ahead, however, with an expansion of its facilities. In an interview, he ticked off the multi-million dollar projects underway: four new ship-to-shore cranes have been ordered, along with a dozen smaller ones; rail facilities along the dock are being upgraded; and work is progressing on a system for moving trucks through the port more quickly.

“‘I don’t know how long this downturn will last, but I don’t think it will be a protracted period of time,’ Mr. Marchand said. ‘So I think it makes sense to get ourselves ready for more strong growth once this recession ends.’

“While Mr. Marchand and many others await an upturn, Savannah’s economy deteriorates. The unemployment rate in the three-county metropolitan area has jumped to 5.7 percent from 3.9 percent a year earlier …

“With home sale down 24 percent, the local Coldwell Banker has watched its army of real estate brokers, the largest in the city, dwindle to 180 from 240 last year …

“Manufacturers still have a presence here, employing 15 percent of greater Savannah’s 171,000 workers, but factory employment is shrinking. Georgia-Pacific, for example … no longer hires dozens of contract workers …

“‘It is prudent not to bet on demand at this time,’ said Russ McCollister, a Georgia-Pacific vice president …

“And so it goes across the Savannah economy: falling retail sales, fewer hotel bookings, a cancelled invitation, layoffs at Memorial Hospital, an announcement late this month that Great Dane Trailers, a major manufacturer, would soon close its factory here, and weakened tourism in a city that over the last 15 years has built an industry out of visits to its historic downtown …

“Not surprisingly, the city’s tax revenues have fallen, particularly since August, because of slowdowns from sales and lodging taxes. With home prices and construction down, property tax revenue is no longer rising at its old, brisk pace, and state aid has been trimmed …

“But American cities depend heavily on corporate investment for expansion and new jobs, and that is dwindling here as capital spending grows more slowly everywhere. The Savannah Economic Development Authority, having signed up $ 360 million in new investment last year, has commitments this year for only $ 33 million.

“‘There aren’t that many deals in the country anymore,’ says Lynn Pitts, the development authority’s senior vice president. ‘Everyone has pulled in their horns big time.’”

Everyone, that is, except the officials at the Georgia Ports Authority and a number of misinformed lawmakers. Here are two reported statements, one from an official who should know better and the other from a misled legislator:

• “As the Panama Canal expands, the ships calling on our port will become larger and will require deeper water. At the current depth of 42 feet, the Port of Savannah accommodates ships carrying as many as 6,700 20-foot containers. By 2015, vessels carrying as many as 12,000 containers will be able to transit the Canal and we have to be ready for them.” – Robert Morris, director of external affairs, Georgia ports Authority.

• “The GPA (Georgia Ports Authority) will be getting a little help from Uncle Sam in preparation for the largest expansion project in history. The House Appropriations Committee on Wednesday approved $ 700,000 in federal funding for the Savannah Harbor Expansion Project, which will deepen the Savannah seaport from 42 feet to 48 feet to accommodate the larger ships expected to come calling when the Panama Canal expansion is completed in 2014. ‘The project is critical. If Savannah is not prepared, ships will go elsewhere and jobs will be lost. While this funding is just a start, it will go a long way to getting this project underway.’” – Rep. Jack Kingston, R-Ga.

In our Vol. XVI, Art. 7 commentary we included a mid-July Letter to the Editor from a Savannah taxpayer who, obviously, was much more aware of the world’s economic failings than officials at the port authority seem to be.

“River deepening bad for the economy,” the writer began.

“The Georgia Ports Authority would like to convince you to pay to have the Savannah River dredged to 48 feet. Yeah, remember that part, you pay for it, not them. And the deepening will help guarantee jobs in Georgia, theirs, not yours.

“Here’s how it works. You (Georgians) pay $ 235 million in taxes so bigger ships, for which the Panama Canal is being expanded, can come into Savannah. Bigger ships coming through the Panama Canal are coming from Asia (mostly China).

“The river deepening allows larger ships to come into Savannah, and larger ships reduce the cost for Chinese products. The container ships will bring in products like pond raised shrimp and fish, lumber, paper and other products that are also produced here in Georgia.

“In other words, the Port Authority is asking Georgians to pay a tax to subsidize imports from other countries; imports that will help put local businesses out of business; imports that will help put many of Savannah’s taxpayers out of work.

“And what do the folks in Savannah get, besides a $ 235 million bill? An environmental disaster that will negatively affect tourism and property values, not to mention the irrevocable destruction of local wetlands and wildlife.

“We sometimes wonder why American businesses can’t compete with foreign businesses. The answer is that your taxes subsidize those foreign businesses.

(Signed) “Jack Simmons” [… and we couldn’t have said it more clearly.]