Moroun Bridge for Biggest Trade Skirts Canada, U.S. (Update1)

By Bill Koenig


May 12 (Bloomberg) -- The octogenarian who beat out Warren Buffett three decades ago for control of the busiest bridge between the U.S. and Canada is racing the two governments to build a new span.

Both sides see a need to replace the Ambassador Bridge between Detroit and Windsor, Ontario. The 79-year-old structure carries about a third of commerce between the two nations, including 6,200 truckloads daily of vehicles made by General Motors Corp., Ford Motor Co., Honda Motor Co., Toyota Motor Corp. and Chrysler LLC.

Manuel ``Matty'' Moroun, 80, owns the four-lane Ambassador and plans to erect a $1 billion bridge right next to it. The Detroit River International Crossing, a joint project of the U.S., Canadian, Michigan and Ontario governments, is working on plans to build about a mile downstream. The quarrel over adding a crossing could end in two being built, or none.

``Matty doesn't want to give up his dominance to the market, and why should he?'' said Gregg Ward, vice president of Detroit-Windsor Truck Ferry Inc., which relies on cross-border business for customers. ``It's a golden chalice for him. The government is going to plow ahead no matter what for their own reasons.''

The trade relationship between the U.S. and Canada is the largest in the world, and Detroit-Windsor is the busiest crossing point along the border, said Mark Butler, a spokesman for Transport Canada. Of $489 billion in annual trade between the two nations, about $122 billion moves there, most over the Ambassador and some via ferry or tunnel, according to the agency.

Job, Time Costs

Congestion at the border could cost as many as 150,000 future and existing jobs in the region by 2035 unless a new bridge is built, according to DRIC, the government coalition. Traffic is slowed not only by the volume of vehicles but also by security inspections following the 2001 terrorist attacks.

Moroun has spent about $500 million to buy houses and land at the site for a six-lane replacement bridge, said Dan Stamper, president of his Detroit International Bridge Co.

``We believe we will be complete long before DRIC could even get a shovel in the ground,'' Stamper said. Moroun also owns CenTra Inc., a Warren, Michigan, trucking company, as well as real estate, banking, insurance and duty-free businesses in the Detroit area. He declined to comment, Stamper said.

DRIC still must buy and demolish hundreds of homes on the Detroit side, according to its Web site. It puts the cost of its bridge at $1.28 billion to $1.49 billion.

Toll Revenue

The group plans to start construction in 2010 and open the span in 2013. DRIC, which still has to arrange funding, said bridge debt will be repaid with tolls ``competitive with the market.'' Fees for using the Ambassador are $4 for cars and $2.75 to $4.50 an axle for commercial trucks, based on vehicle weight.

DRIC aims to build far enough from the Ambassador that a single terrorist act couldn't destroy both crossings. The governments also want a larger supervisory role than they have over the private operation.

Moroun got the Ambassador by outmaneuvering Berkshire Hathaway Inc. Chairman Buffett in 1979. The Canadian government had blocked Buffett's attempt to gain control of Detroit International Bridge, then a public company. Moroun borrowed money to buy out Buffett, fought off the Canadian challenge and took the company private.

Longest Bridge

The 7,490-foot (2,283-meter) Ambassador began its life as the longest suspension bridge in the world. Banker Joseph Bower financed the $23.5 million construction by selling bonds, later converted to shares, in Detroit International Bridge. The Bower family continued to operate the span for five decades.

Bower's project won support of everyone from President Calvin Coolidge to the Canadian Parliament to maritime agencies to local authorities. Detroit Mayor John W. Smith was voted out of office for opposing it.

Today's proposals require approval not just of governments but by their agencies overseeing compliance with navigation, wetlands, conservation, environmental, Indian rights, civil rights, archeology, solid waste disposal, endangered species and other laws.

That's why it's unlikely either bridge will be built, said Robin Boyle, a professor of urban planning at Wayne State University in Detroit.

One, Two, Three

Or two bridges may be built: Both sides say they will pursue their goals regardless of what the other does. Moroun's new span wouldn't be big enough to accommodate future traffic, leaving a need for at least four more lanes, DRIC says on its Web site.

Adding two crossings would make a total of three, because Moroun doesn't plan to decommission the Ambassador. It will be renovated for use during emergencies and special events, such as traffic for international fireworks displays, Stamper said.

Alan Cropsey, a Michigan state senator, questioned whether altering the highway system to reach a new bridge would be the best use of tax dollars when infrastructure is already in place near the Ambassador and governments have other needs.

``The more I look at this, the nuttier it becomes'' for governments to pay for it, Cropsey told the Detroit Free Press in February.

The region can't stand pat with only the Ambassador Bridge, Windsor Mayor Eddie Francis said in an interview.

``From my perspective, it's an unacceptable risk,'' Francis said.

To contact the reporter on this story: Bill Koenig in Detroit, at wkoenig@bloomberg.net

Last Updated: May 12, 2008 09:54 EDT





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