Building a Stronger Economy: The Neglected Role of Ports

The TraPac Terminal Automation Project was part of a planned $1 billion capital improvement including automated stacker cranes and fully automated straddle carriers.

In July Random length messages reported on the Economic Roundtable report “Someone Else’s Ocean”, which critically questioned the long-standing neglect of the broad public interest, taking into account the interests of shipping companies and foreign manufacturers. “The ports are public property, and their legal obligation is to provide benefits to California residents,” report co-author Daniel Flaming told us at the time. One facet of her report was recommendations to support increased exports and encourage high-wage manufacturing both locally and statewide and in the broader US. At the end of August we interviewed Flaming again, specifically focusing on this aspect of her concerns.

“The biggest problem is how we see the ports. Do we see the ports as a conveyor belt or as a control tower?” The flaming began. “My argument is that at the moment they essentially work like a conveyor belt. Whatever is unloaded is transported onto a truck and wagon and retrieved from there, or vice versa onto an empty container.”

But there is another way of looking at them: “Ports are transportation networks, they are the basis of the network of national land transportation facilities.” Another such network is pipeline systems, which highlight a different way of thinking: “If you’re transporting natural gas or oil or water, you have pumping stations, You have valves, you can move things this way, you can move things this way, you can turn it off. You control the volume. And the ports also have a set of levers or valves that they can regulate or favor in terms of speed, in terms of entry and exit costs.”

Ports are also income-generating departments that can acquire land, build infrastructure, etc. “I think it starts with whether you see the ports as passive entities or agents with the ability to act in the local and national interest,” Flaming said. “Our argument is that it’s time to wake up, smell the coffee, and be more actively involved in what’s catching on, rather than just pushing things through. So, certainly the fee structure for exports versus imports or empty containers versus loaded containers – that would be the most obvious,” he said.

As an example, Flaming pointed to the Economic Roundtable’s experience with the city of Long Beach after the aerospace collapse. “At this point, 54% of Long Beach businesses said they wished they were located somewhere else, and the city sent people out to meet with businesses one-on-one to see what they could do to be helpful.” Similarly, ports could act “as agents of a stronger economy,” such as in climate change-related technologies.

“California’s clean air regulations and clean air goals have spawned a range of technologies in industries that, in many cases, have gone overseas,” Flaming said. But it doesn’t have to stay that way. “We are now leading the way, the state of California, in requiring electric vehicles or pure hydrogen vehicles, but vehicles with zero emissions,” he said. “We see it at the state level as in our interest to manufacture these things and not just acquire them… The state through grants, through tax structure, through state land use regulation, state infrastructure regulation, could be an active player in supporting these industries, just as it could.” could be the port.”

In short, it is not just the ports, but the ports as active partners that Flaming is envisaging along with other government bodies. At the state legislative level, “Taxes and land use regulation are probably the biggest issues,” Flaming said. “What we’ve found in the past is that growing companies have often been unable to get additional land to expand. Therefore, supporting expedited rezoning applications and also site and site site acquisitions for growing manufacturing industries – particularly sites close to transportation infrastructure, typically ports would be ideal – would be valuable at both the state and local levels.”

Getting this right without repeating past mistakes, ruthlessly treating the basic health and well-being of low-income and minority communities requires sensitive collaboration, but can be done better with a coherent overall vision.

“We should definitely encourage these high-value manufacturing activities, which we can do through our tax law. These industries, which have created family-support jobs for workers, are in pitiful and tragic decline in the state, and we should reverse these trends,” he said. “It’s not just dock jobs that support a family, it should be a growing manufacturing sector, road transport jobs… The state should be proactive to support the growth of living wage jobs.”

While many people could benefit from it, there is not necessarily a comprehensive organization of political will and action to bring about the needed change. Or is there?

“Well, I think it’s a prolabor state. California is one of the most pro-worker states there is,” Flaming said. “Governments in general tend to be pretty laissez-faire about any kind of industrial policy,” although “the federal government’s mission on clean energy is a change of direction, but we need a little more courage at the state and local levels.” , says he said.

It’s wise not to micromanage and pick specific winners and losers, “but if you look at broad sectors and broad issues and say, ‘This is in our vital interest. It is in our vital interest to have good clean energy workers jobs, this is vital to the state. And so the state will be an actor to facilitate the growth of the industries that provide those jobs,” and “it’s particularly effective to do this at the industry level, not the company level.”

In short: “When you’re dealing with a collection of 100 or 1,000 companies in an industry, don’t put all your eggs in one basket. You put your eggs in 1,000 baskets. You make the industry grow, not that particular squeaky-wheeled business that happens to be knocking on your door.”

Another historical example addressed by the Economic Roundtable was “the national work to retool defenses after the aerospace collapse,” Flaming recalled. “That was a time when we saw these huge manufacturing plants just scattered to the four winds, things that were filled with billions of dollars in defense subsidies, very sophisticated manufacturing plants.”

What happened next was a very mixed thing. “Some of them have completely adapted themselves, like Hughes Electronics, which spun off Dish TV, satellite television and commercial satellite operations,” Flaming said. “But with sensible public sector support, more of this could have happened. For example, aerospace products that had commercial applications centered around aircraft, such as ceramic brakes and advanced aircraft engine systems that had potential for commercialization. We’ve identified a few of these and there has never been a catch-up from the public sector. So you don’t want to leave the money on the stump and run away. You don’t want to be stupid.” Again, this shouldn’t mean picking individual winners and losers.

“A lot of it is recognizing strengths and building on them. In manufacturing, moving goods is a big deal. These high-quality manufactured products, many of which are heavy, are transported by truck or ship. And recognize strengths in those industries – look at what’s growing and what were quality jobs and what aligns with national priorities and building on those things, you can be both sensible and proactive in supporting industries that are have a national and state interest.”

There is potential not only in clean, renewable energy, but also in adapting to climate change.

“Climate change has many impacts. We have a lot of biomass in the state that is fuel for these terrible wildfires that are just uncontrollable. There are biochar technologies where you generate heat from biomass with minimal carbon release and use that heat to generate electricity and use the biochar for agriculture. So in terms of reducing the fuel load on the soils of our forests, that would be a possibility,” he said.

Also: “We have a lot to do with water – water reclamation, water conversion. Water is a scarce commodity,” he continued. “So it takes a lot of manufacturing effort to develop these new systems. For example, filtration systems – filtering systems, either seawater or wastewater from households and businesses, so it can be reused.”

Flaming concluded, “I think the biggest thing is the mindset. Authorities are always a challenge, walking and chewing gum at the same time, doing two things and not just one thing. So ports have a responsibility to move goods, but they also have a responsibility to act proactively for their communities, for the public that owns them… We have to deal with complexity. We need to both move goods efficiently and be careful how we prioritize that.”

In short, “I think that’s a mindset that requires new skills to think about and engage with high-export industries, to talk to them and make sensible decisions about how to intelligently support and value change in the economy that we need to move towards in the future, as well as this immediate task of getting a container off the ship today.”

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