S.C.'s Big Dig

By Dick Hughes  

FEBRUARY 3, 2011 3:44 p.m. (0)

No one is watching the battle over funding for deepening the Port at Charleston with more vested interest than the Upstate and the manufacturers here that are the port’s heaviest users.

Plans for dredging are being held up by refusal of South Carolina’s junior senator, Jim DeMint, to sign off on an appropriation of $379,000 for the Corps of Engineers to continue with the study phase of the project.

A tea party purist, DeMint says he does not oppose deepening the port only the appropriation as an earmark.  Sen. Lindsey Graham enthusiastically supports it.

The business community has rallied around the Port Authority’s plans and wants Washington’s politicians to resolve the matter so the project can move forward.

The Charleston harbor is the deepest on the southeast coast at 45 feet at low tide and 50-51 feet at high tide, but needs to be deepened to 50 feet to handle at any time of the day the super ships already on the seas and which will be commonplace when the Panama Canal’s $5-billion expansion is complete in 2014.

Charleston can and does take in some of the super ships but only at high tide and a minimum of three feet of water under ship bottom.

Nowhere are the stakes higher than in Greenville and Spartanburg counties, where the 400 companies engaged in global commerce represent the highest concentration of international shippers in the state.

“It is important that we in South Carolina realize that the Port of Charleston is a key player for this state in terms of the global economy and future global growth,” said R. Carter Smith, vice president of the Economic Futures Group of Spartanburg County.

“It is extremely important for attracting companies to the area, and it is important for our existing companies to continue to grow,” Smith said.

An economic impact study by the South Carolina State Ports Authority found that Upstate counties “hold the greatest stake in the Port Authority’s success.”

The relationship, the study says, is “truly a symbiotic one -- the Upstate benefits from immediate access to world markets and the port benefits with a healthy, growing cargo base.”

The study identifies the region as comprising Abbeville, Anderson, Cherokee, Chester, Greenville, Greenwood, Lancaster, Laurens, McCormick, Oconee, Pickens, Spartanburg, Union and York.

The study found that more than two-thirds of employees of manufacturing companies in the region work for companies that import and export internationally.

More than 112,700 jobs with an annual payroll of $5.3 billion are port-related, the study says. That’s 40 percent of all 260,00 jobs across South Carolina that are in some form dependent on port use for global trade.

Of Charleston’s in-state cargo, 60 percent originates from or is destined for Upstate companies.

All of the international manufacturers in the Upstate – notably BMW, Michelin and GE – are major customers of the port and are eager to see the port deepened.

Seventy percent of BMW’s Spartanburg annual production of 240,000 vehicles is exported to 130 markets and “deepening the port is important to us in our long-term need to be able to export to markets and where the ships will call,” said Max Metcalf, corporate communications manager.

Metcalf said accessibility to the port at Charleston was critical in BMW’s decision to build its plant in Greer and that dependency grows stronger as “we have gone from having two models produced here to three, and as we see our growth being not just in North America but in exports globally.”

The port is of critical importance to GE’s turbine factory in Greenville, said Mark Reilly, communications manager.

“There are several heavy duty gas turbine models we manufacture that due to their weight can only travel specific rail lines, and the only such lines available run to the Port of Charleston,” he said.

All of GE’s Greenville production this year – an estimated 16,000 tons – is being exported to world markets, and Reilly said the company sees global energy demands continuing to increase and with it “our production and export shipments will rise accordingly.”

The more accessible the port is to shippers, Reilly said, the more shippers there will be that are “interested in competing for our business.”

Of the 3,100 GE Energy employees in Greenville, some 1,400 are engaged in the manufacture of gas turbines.

Smaller companies are no less dependent on the port and the port on them.

One such company is SEW Eurodrive, which has been in Lyman for nearly three decades and is a global leader in producing industrial motor drives, gears and assemblies of sizes ranging from a piece that can be held in the hand to one weighing 75 tons. Eighty percent is sold overseas.

Coming out of the recession, SEW’s production is 65 percent higher than it was in 2009, and the company is exporting 14 containers a week from Charleston or Savannah.  More than 80 percent goes to Antwerp for Europe, 20 percent to China, 7 percent to Brazil and 3 percent elsewhere.

China is SEW’s fastest growing market and “everything we ship there goes through the Panama Canal,” said Karin Lovin, manufacturing assistant. The other option, she said, is to go by rail to Long Beach, Calif., and link up with a freighter there, an approach SEW rejected after trying it with one container.

While Lovin’s day-in, day-out concern is more with availability than with ship size and what port a shipper uses, she wants Charleston to be ready so SEW benefits from the economy of scale larger vessels can offer when they can traverse the canal.

The dispute over funding the Corps study poses risks of delaying dredging or at worst scuttling it, but most backers believe – or at least hope – the political differences will give way to the practical need to dredge the harbor to stay competitive in the decades ahead.

“It is essential to get it done,” said Lewis F. Gossett, president of the South Carolina Manufacturers Alliance.

“Why in the world wouldn’t we do everything we can to grab that advantage?  We can be the port of choice.  The climate already is extremely good to make us the state of choice for manufacturers, why wouldn’t we give them another reason.”

On the East Coast, only ports at New York/New Jersey and Norfolk, Va., are at 50 feet to allow 24/7 access of the largest ships.  Georgia is moving forward with plans to deepen channels at Savannah that would match where Charleston is today.

The cost of dredging of Charleston is estimated at $300 million, which would be shared by the Corps of Engineers and the Port Authority.

The Port Authority cites a Corps conclusion that Charleston “would probably be the cheapest South Atlantic harbor to deepen to 50 feet.”