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"C. Alvin Bertel Award" A presentation by David P. Schulingkamp March 2, 2004
I am deeply honored to be receiving this award. I have been attending Bertel Award ceremonies since 1976 and I feel truly humbled and honored to follow as an awardee in light of the previous recipients. I want to give my thanks to the nominating organizations because I am further humbled by the fact that the other nominees of this award are indeed very worthy and accomplished individuals. Additionally, as I look in the audience I can notice what a distinguished group is present today and thank you for taking the time from your busy schedule. C. Alvin Bertel, for whom this award was made, performed a very important piece of lobbying for this state. It was his proposal that established the present legislative machinery for selecting Board members for the Dock Board for the Port of New Orleans. Up to the establishment of this legislative machine in the late ‘40’s the nomination and operation of the Port of New Orleans had been marked by corruption and dishonesty. To correct this and to remove Board members from corrupt or non-independent influences of the governor and other politicians, the legislature established three nominating councils. For Orleans Parish of which there are 13 nominating members for 4 seats, for Jefferson Parish of which there are 7 nominating members for 2 seats, and for St. Bernard Parish of which there are 5 nominating members for 1 seat. These nominating councils through a process of voting select three names from which the governor must select one. Additionally, a most important, but lesser know feature is that Board members cannot be removed at the pleasure of the governor and can only be removed with cause and due process. Most other state boards allow replacement at the pleasure of the governor. This process has resulted in diversity in backgrounds of Board members, diversity of business and personal affiliations, differences in sex, race, philosophy, and affiliation. Think of this diversity by recalling a few of the past and present members of the Board: Joe Knecht Jimmy Baldwin Alma Young Boysie Bollinger Mark Delesdernier John Kallenborn Charles Teamer Angus Cooper Sharon Perlis Sammy Nunez Business, labor, African American, white, male, female, democrat, republican, maritime, banker, educator, politician, pilot. This system has served well and could be a model for nominating and creating other Boards. Again, I am very excited and humbled to receive this award. Ronald Reagan kept a plaque on the credenza behind his desk that read, "There is no limit to the amount of success a person can achieve if he is willing to give credit to those who help." A corollary to that rule says that, "Few accomplish much without the assistance of others." With regard to activities surrounding the 201 issue and the other things I have accomplished in my career, that is especially true. In truth this award should be more of a "we" award than an "I" award. To single out individuals is a dangerous enterprise because it is impossible to name all of those who help, but I would be remiss if I did not mention, thank and acknowledge the following: The first is Paula Maher, who with her late husband founded M.G. Maher & Co., Inc. I guess some will do anything to miss the Bertel Luncheon, but seriously my aunt has broken her knee and is unable to attend, but what a grand lady, business partner and aunt. By the way she is in great shape mentally and physically, and missing the office. When I took a right hard turn on career paths in 1975 deviating from a life of toil as a trial attorney, it was my aunt who opened the door to what has been an interesting and exciting road. A person with a grasp of the big picture, but an interest in details, a person who believes in the empowerment of her team members and the accomplishments this can create. There has been developed a wonderful company, more like a family, going from a small city business to a company with over 150 employees serving the customs brokerage and freight forwarding industries throughout the U.S. and internationally, as well as the development of the barge logistics components, MBLX and BargeLink. We have a small group of that team here today and I am proud to be a member thereof. Secondly, a big thanks and acknowledgement should go to the Board of Commissioners and to Gary LaGrange and his staff as Port Director. This Board backed a policy of intervention and engagement in the issue of 201 and had the courage to potentially draw criticism from a few ports in the country that chose a non-committal stance at the beginning and were afraid to offend the administration. Thanks to Gary, who on many trips to Washington D.C. was my great traveling companion and compatriot and to the staff who tirelessly cranked, analyzed and crunched numbers for myself, our congressional delegation and the administration leaders who seemed to have an insatiable appetite for looking at cargo numbers. We even got Dave Wagner in the picture when he ambushed George Bush while he ostensibly explained the operation of a container ship he inserted comments concerning the importance of steel to the port. Also, if there was any success and achievement in this effort it could not have been done without the efforts of one person. The political maze of Washington D.C. should never be encountered without the professional assistance of someone who knows the players and the plays. His quick action in terms of meetings with congressmen, meetings with administrative officials, and guidance and strategy ramped us up quickly and projected us a great distance. This effort would never have gotten as far and as fast as it did but for Chris Johnsen of the Jones, Walker law firm. Chris was our key go to guy in making it all happen. Chris, on the steel issue, as on our more routine dredging and funding issues, you were superb and I am indebted to you. Our entire Congressional delegation signed letters to the White House asking for the rescission of the tariffs of 201. Of course I would have to single out in particular Congressman David Vitter and Congressman William Jefferson, both of whom dropped what they were doing amidst the stress and responsibilities they faced. When we had our first meeting it was only 10 days after 9/11. Both gentlemen went above and beyond, establishing meetings with Robert Zoellick, the USTR and Don Evans, the Secretary of Commerce, as well as numerous other high-ranking officials at the Department of Commerce, labor and even members of the President’s Council of Economic Advisors. A special thanks also to Governor Foster and Boysie Bollinger. After meeting with Gary, Boysie and myself the Governor made immediate contact with Andrew Card, the President’s Chief of Staff and obtained a meeting with the President and Commerce Secretary Don Evans at a dinner at Antoine’s. This meeting was highly publicized in a front-page article in the Wall Street Journal, at which the Governor pressed the issue on our behalf. Boysie not only helped with this meeting, but with discussions at the highest levels of our government and for that we are grateful. Often Unions are seen as a monolithic unit standing together on all issues. The Steel Workers Union and most others were most strident in this matter. However in this case, James Campbell and leadership of ILA, as well as local Teamsters parted company on this issue with their brother unions and stood firm with the rest of the shipping industry and its management. James was eloquent in meetings with Robert Zoellick, Don Evans and others. I witnessed a conversation he had with Leo Gerard, the nationally known president of the Steel Workers during a recess of testimony during a hearing we both testified before the House Ways and Means Sub-Committee on trade, in which James stated strongly his position. Much of the work done on 201 issue involved information about the steel industry and related matters. Two guys extremely helpful to me personally in brainstorming ideas and in providing information are Mike Kearney and Angus Cooper. You guys were invaluable to me and others as a resource during this entire time. Many other groups were represented here – pilots, steamship association, customs brokers, freight forwarders, International Freight Forwarders and Customs Brokers Association of New Orleans, Inc., World Trade Center, and Board of Trade. It is not really important to discuss the details of what occurred, although many of the non-confidential ones would make for an interesting discussion elsewhere. Only two points – all were shocked when the President imposed tariffs 50% higher than that recommended by the ITC. Secondly, I felt it was important to fight the tariffs for our own good and also as a debt of gratitude to our customers, who built the port with steel for over 50 years. What I will discuss is a few comments on the direction of steel. As most of you know, steel has been roughly 40% of the business of the Port of New Orleans. It’s volume went from a high of over 8 million tons in 1998, declining to less than 3.2 million in the year before 201 and to end up in 2003 where steel barely reached 2 million tons. What is the future for steel? The domestic industries still enjoy a holiday from import steel due to some natural occurring factors. One is the increase in our freight rates of 30-60%, driven primarily by large purchases of products of many types into China. Second is a dollar that is lower by approximately 30% from most foreign currencies from a year ago, making the purchase of foreign steel that much more expensive for domestic users. Third is the extraordinarily high consumption of steel by China. Domestic producers have been able to raise prices in the last three to six months 15-40% in part due to the conditions above and also due to large increases in the cost of scrap, pig iron and iron ore. Helping prices further is the expected increase in U.S. demand as the economy improves. Slowly we are seeing quotations made and orders placed and confirmed. It would appear that the second half of the year will be the time when significant quantities of imports return. One reason is ramp up of the U.S. economy and expected in the last half of 2004 is the coming on-line of modern and efficient Chinese production, which is expected to significantly reduce Chinese purchases of steel. To a large extent steel built the modern Port of New Orleans and almost as much as cotton was king in the 19th century, steel was the cargo ruler of the 20th century and due to New Orleans’ geographic position with its great barge waterway access to middle America, it is likely to continue in that role to the next century. Even with growth of cruise ships and expected growth of container shipping with the opening of the new container terminal tomorrow, steel will continue to be the bread and butter of the lower Mississippi River ports. The sooner it returns, the sooner will improve the health and economic growth of the Mississippi Region and the companies performing services for steel in our region. Most importantly what are the lessons of the saga of 201? The first is to understand there is no constitutional right to free trade. We saw how quickly tariffs of up to 30% were imposed by one person, choking off a vital commodity. No provisions in our constitution guarantee access for either imports or exports to or from the U.S. All power regulating trade is vested in congress and it has established much of our trade policies, delegating the rest to our executive branch. Understanding this makes us understand that trade policy is almost strictly political. Every president since World War II has built upon a policy of free trade and it is one of the few consistent bi-partisan policies of all administrations. When President Kennedy dedicated the Nashville Avenue Wharf in May of 1962 he stated in his speech: "as much as any port city, trade has built New Orleans". This policy has been embraced by every president since. The actions of President Bush in 201 gave pause to wonder if our trade policy is changing. We saw with 201 that the work and investments of several generations could be virtually wiped out by executive fiat. The U.S. steel industry has been lobbying for over 50 years and we were 50 years behind the time. We cannot take free trade for granted. One has only to glance at the present presidential campaign to realize it is going to be a key issue. John Edwards has accused John Kerry of being too supportive of free trade, NAFTA in particular. Kerry’s response is that Edwards’ record is virtually the same as his. The President stumbled on the steel issue. Is this our new leadership for free trade? Another lesson, a correlation of the first, is that engaging ordinary business people and citizens does make a difference. The steel lobbyists and other one-product special interest groups have been organized for many years. The Port of New Orleans was virtually alone in raising efforts when it first started. We gained the support of 30 other ports. In particular the domestic auto industry began to feel the effects. All mobilized to contact their congressmen and senators and the day was changing. Prior to 201 I had never been in the office of a Senator or Congressman. On the day we met with Robert Zoellick the second time, with the coalition of 30 ports, over 25,000 steel workers were demonstrating down the street in front of the White House, but by the end of the day the, at first, silent majority gained the upper hand. Many politicians today have picked free trade as the whipping boy for unemployment and job loss. Without the engagement of people like you, there are those that would push back the lifetime of advancement we have enjoyed in the port and related businesses. Ironically some say that 201 and the resulting lack of access to internationally priced steel to U.S. manufacturers caused the displacement of more jobs overseas than any single event. A third lesson is that people of diverse political agendas, normally opposed to each other, can join together in a common cause. On this issue we had democrats, republicans, laborers and management, pilots and ship operators, the Port of New Orleans and the Port of Houston, along with serious business competitors worked together. We developed friendships and alliances we can use in the future. Will we need those alliances for other issues? Let’s talk something simple. What about joining together to seek speedier funding for the completion of the inner harbor lock project while we still have John Breaux and Billy Tauzin in Congress. Many observers understand that the great port of Los Angeles/Long Beach was the product of three factors. The first was containerization and intermodalism, which allowed Los Angeles/Long Beach to be the major port of entry and export for trade with the Far East. The second factor was the growing economies of both the Far East and the U.S., particularly in the 1960’s. However, the third but less recognized factor was the Trade Act of 1974. This act established the generalization system of preference (GSP). GSP allowed most products made in the Far East in major producing countries of Korea, Taiwan, Hong Kong, Singapore, Indonesia, and others to arrive duty free into the U.S. For those of us in the customs brokerage business we observed the direct effects of the GSP program in 1976 when our customers, in checking the new duty rates, found economic benefits from duty free treatment of a broad array of products. Additionally our general trade policy and specific treaties continually reduced general duty rates. In 1962 when I joined M.G. Maher in the summer between 9th and 10th grade as a messenger, the average rate of duty was in the 15-20% range. Today the average rate is around 3%. More recently NAFTA greatly increased trade for both imports and exports between Mexico and the U.S. Those of us in the port business benefited little from NAFTA, however, as most of this business is executed by truck and rail. However, since the passage of the trade promotion authority act two years ago, recent bilateral trade agreements have been approved with among others, Chile and Singapore. Just as the trade act of 1974 and the GSP benefited greatly the port of Los Angeles and Long Beach because of geography, the great hope for a growth spurt to the Port of New Orleans will come from any agreements executed with Latin America. One only has to look at the map and our prior trade practices to see this reality. CAFTA has been signed between Central America and the U.S. Unlike many trade agreements this agreement will lop sided in favor of Louisiana and U.S. producers and manufacturers and those in other states who will use the port of New Orleans. Most products produced by CAFTA countries are already duty free. There is a large group of products suffering 10-20% or more duties imposed on American goods imported into Louisiana. Eight percent of these tariffs will go to zero on implementation of CAFTA. A recent economic study commissioned by the Port of New Orleans, the mayor’s office and Greater New Orleans, Inc. and performed by Dr. Jim Richardson of LSU shows the benefits of CAFTA. Increased exports are expected to be up to $165 million based on Louisiana companies only and increased employment of up to nearly 3,000 jobs. CAFTA would be an economic recovery bill benefiting employment in this state and it does not cost the state any money. We in Louisiana cannot be unmindful of the concerns of sugar growers over CAFTA. CAFTA will increase the amount of sugar imported to the U.S. by 1% in year one and up to 1.6%, the maximum, in year five. Many contend this will have little, if any, affect on the price of sugar. The fear of sugar growers is that CAFTA is the first of many of free trade agreements that will allow more sugar into the U.S. seem not to be well founded. When one looks at the subsequent agreement signed between Australia and the U.S. the U.S. resisted the demands of Australia and sugar is not a part of this agreement. Recently the U.S. Rice Production Group has announced its support of CAFTA. All those who make their living by international trade should study and understand the competing issues. If we were members of Don Frampton’s church he would call us disciples of free trade. While the prospects of CAFTA are exciting for those in the Mississippi River and in the ports business, they are only an appetizer compared to the prospect of increased business we could expect with a free trade agreement of the Americas. Even a bilateral agreement with only Brazil would dwarf the benefits of CAFTA as the economy in Brazil is bigger than that of the rest of South America put together. Thank you again for the award. I am very honored and excited to receive it and I appreciate the many kind thoughts and support that all of you have given. |
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