Ports Use U.S. Grants, Import Cranes Free of Buy-American Rules

Carol Wolf, Bloomberg News (Bloomberg) -- U.S. ports are using as much as $48.1 million in federal grants carrying “Buy American” provisions to buy cranes made in China, Finland and Germany. Ports in Maine, California, Rhode Island and Ohio have won Buy American waivers in the past two years to purchase specialized cranes used to remove cargo containers and items such as wind turbine blades from ships at harbor. The cranes, which sell for as much as $11.8 million each, aren’t made in the U.S., according to the U.S. Maritime Administration, which granted the waivers. The ports are using money from President Barack Obama’s 2009 stimulus package to rebuild docks and obtain equipment allowing them to handle container cargo, some for the first time. Smaller ports in the East want to capitalize on the Panama Canal’s widening, which will increase the number and size of cargo ships reaching the Atlantic coast, while West Coast ports are upgrading to retain business. “Some American companies at one time or another have dabbled in port cranes, but because of weak demand an industry didn’t develop here,” said Walter Kemmsies, chief economist for Long Beach, California-based Moffatt & Nichol, a marine engineering firm. “Now because of the Panama Canal widening demand for port cranes is on the rise from the Gulf Coast around the tip of Florida up the East Coast.” Terex, Demag Terex Corp. sees the market for port equipment including cranes and container handlers at as much as $7 billion through 2015, according to Steve Filipov, head of the Westport, Connecticut-based company’s developing market segment. The heavy-equipment manufacturer on May 2 made an 883.9 million-euro ($1.25 billion) takeover offer for Dusseldorf-based Demag Cranes AG, the world’s largest maker of mobile harbor cranes. Terex is uncertain whether its acquisition would allow Demag’s cranes to qualify for preferred treatment under Buy- American rules, said Michael Bazinet, a company spokesman. Manitowoc Co., based in the Wisconsin city of the same name, specializes in cranes used in heavy construction and doesn’t expect to expand its product line to include port cranes, said Steve Khail, a company spokesman. The Port of Providence in Rhode Island was awarded $10.5 million in stimulus money to help purchase two port cranes. It received its Buy-American waiver from the Maritime Administration on March 16. The port hasn’t granted a contract for the cranes so the actual cost isn’t known, said Joshua Fenton, chief executive officer of Providence-based Fenton Group, an outside spokesman for the Port of Providence. Buy-American Waivers The Quonset Development Corp. at Port Davisville in North Kingston, Rhode Island, expects to spend about $4 million of stimulus money it was awarded for its crane, according to its application. It received its Buy-American waiver Nov. 8. The crane and harbor improvements would help support construction of an offshore wind farm, according to Steven King, Quonset’s managing director. In Ohio, the Port of Toledo spent $6.8 million in stimulus funds to purchase two cranes and received its waiver Oct. 6, 2009. The cranes, named Muddy and Spike after the mascots of the Toledo Mud Hens and Walleye minor league baseball and hockey teams, replaced ones made before World War II, according to the Toledo-Lucas County Port Authority’s website. Carla Firestone Nowak, a spokeswoman for the Port of Toledo, didn’t respond to a voice mail and e-mail requesting comment. Crane Demand In Maine, the Port of Searsport received about $7 million to purchase a crane and was granted a Buy-American waiver Nov. 8. The ports of West Sacramento and Stockton in California received a joint grant and bought three cranes for a total of $19.8 million, according to Bill Lewicki, director of marketing at the Port of Stockton and by a report provided by Amy Cameron, an analyst for the City of West Sacramento. The Port of Toledo spent $6.8 million in stimulus funds to purchase two cranes and received its waiver Oct. 6, 2009. Source: EPA To receive stimulus money, applicants had to agree to use products made in the U.S. The Maritime Administration looks at all waiver requests on a case by case basis, said Cheron Wicker, a spokeswoman for the agency. “We do not issue blanket waivers,” she said. “We look for domestic manufacturers in every instance.” Sales of cranes worldwide are seen at about $4.6 billion through 2015 as port capacity increases about 11.5 percent, according to London-based Drewry Maritime Research. Port capacity in North America will increase by 10.2 percent during that time period, Drewry said. Europe’s Head Start There are about 185 public ports in the U.S., according to the Alexandria, Virginia-based American Association of Port Authorities. Information on why a Buy-American waiver was granted in a particular situation is difficult to come by, said Scott Paul, executive director for the Alliance for American Manufacturing, a Washington-based advocacy group for U.S. manufacturers. Proposed waivers are sometimes issued with little or no notice, when there is a domestic supplier available or one willing to expand into the product area, he said. “Enforcement of Buy American is spotty, transparency is spotty and public exposure is spotty,” he said. He wouldn’t comment on the waivers granted by the Maritime Administration, saying he wasn’t familiar with them. Netherlands, France, Belgium and Germany have built harbor cranes since at least 1225, according to the New World Encyclopedia. U.S. companies didn’t try to compete because of the expertise developed in Europe, the specialized nature of the equipment and weak demand, Hal Vandiver, managing director of the Charlotte, North Carolina-based Crane Manufacturers Association of America Inc., said in an interview. Crane Costs The cost of mobile harbor cranes, automated stacking cranes and floating cranes can range from $2.2 million to $11.8 million each, said Nikolai Juchem, a Demag spokesman. Other major port crane makers are Hyvinkaa, Finland-based Konecranes Oyj, Liebherr-International SA of Bulle, Switzerland and China’s Shanghai Zhenhua Heavy Industry Co. Port cranes are generally used at container terminals, where cargo carrying everything from clothing to grain is moved from ship to shore. Each container is sized to fit exactly on a tractor trailer truck or railroad flatbed. “The crane is essentially handling a truckload of material every time it picks something up and down,” Vandiver of the crane association said. “The cargo has to be pulled off a container ship in a very methodical way, very quickly,” Vandiver said. “There’s also safety, visibility and accuracy issues plus the risk in the value of the load,” “It’s not like you can just make a container crane tomorrow.”