Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Tracy Alloway and I'm Joe wisn't thal Joe? Do
Speaker 1: you remember when you said you were going to base
Speaker 1: your entire identity on repealing the Foreign Dredge Act of
Speaker 1: nineteen o six, Right, yeah, I do so. I remember
Speaker 1: we did an episode very recently about your cargo that's
Speaker 1: still stuck on this ship outside Baltimore, and one of
Speaker 1: the things that came up was that there is this
Speaker 1: law from nineteen o six that prevents foreign dredging equipment
Speaker 1: from operating in the United States. The United States doesn't
Speaker 1: have a whole lot of high power dredging equipment. And
Speaker 1: I found that really wild, and so I jokingly said, hey,
Speaker 1: I was going to make that my whole identity, and
Speaker 1: only half jokingly said, now we have to do an
Speaker 1: episode on the Foreign Drudging Act of nineteen sex. I mean,
Speaker 1: I don't think any of those should be jokes anymore.
Speaker 1: I mean, I'm into it. Let's start. And this is
Speaker 1: not a joke to you at all. No, I stuff
Speaker 1: absolutely so. I have a personal interest in the health
Speaker 1: of the US dredging industry. Let's put it that way.
Speaker 1: Because all of my belongings are currently stuck on ever Forward,
Speaker 1: this giant container ship that ran into the mud bank
Speaker 1: in the Chesapeake Bay, it's still stuck there. There are
Speaker 1: dredgers at work. They're going to unload all the containers
Speaker 1: and see if they can refloat it. But again, one
Speaker 1: of the things that's emerged from this entire incident is,
Speaker 1: I guess years decades of under investment in the US
Speaker 1: dredging industry, so that we actually don't have a lot
Speaker 1: of dredging capacity. And our previous guest who was talking
Speaker 1: about this, cell Mercogliano. Again, he has a great YouTube
Speaker 1: channel if you're interested in what's going on with the
Speaker 1: ever Forward, But he was saying that the dredgers that
Speaker 1: are on the scene of the ever Forward right now
Speaker 1: can move about sixty cubic yards of mud in each
Speaker 1: you know, every time they sort of drudge the bottom,
Speaker 1: whereas other types of drudgers, international judgers, the kind that
Speaker 1: they had on scene with the Ever Given when it
Speaker 1: was stuck in the Suez Canal, those can move seventy
Speaker 1: thousand cubic yards of material in one hour. So that
Speaker 1: gives you an insight into the different levels of drudging capacity.
Speaker 1: We're talking about the other thing, and that is just
Speaker 1: a wild divergence. That was the aspect that blew my mind.
Speaker 1: And the fact that maybe a contributing factor to the
Speaker 1: lack of drudging capacity as a law that was over
Speaker 1: a century year old, that blew my mind. But you know,
Speaker 1: as we've sort of looked into this, and we have
Speaker 1: been talking about dudging within the context of freeing the
Speaker 1: ship and the one in the Suez last year. The
Speaker 1: other thing that is, it may be that a lot
Speaker 1: of infrastructure issues in the United States, when we talk
Speaker 1: about constrained capacity at the ports, when we talk about
Speaker 1: the fact that US ports don't necessarily have the capacity
Speaker 1: to handle easily the world's biggest ships, part of that
Speaker 1: may have to do with dredging. Absolutely. And you know,
Speaker 1: we've been building these ships bigger and bigger, and at
Speaker 1: the same time, the poor infrastructure hasn't grown alongside it.
Speaker 1: The dredging infrastructure hasn't grown alongside it either. So it
Speaker 1: is not just a problem of particular interest to me.
Speaker 1: It's a problem that we should all be focused on.
Speaker 1: And so here is an episode dedicated to the Foreign
Speaker 1: Dredge Act of nineteen o six, and I can't wait. Yeah,
Speaker 1: we we really do have the perfect guest for this one.
Speaker 1: So we are going to be speaking with Howard Gutman.
Speaker 1: He is the managing director of the Gutman Group consultancy
Speaker 1: and also the former US Ambassador to Belgium. We're also
Speaker 1: going to be speaking with Andrew Durant. He is a
Speaker 1: managing director at Samuel's International Associates, another consultancy. But they're
Speaker 1: going to be able to give us, you know, the
Speaker 1: the pro repealing the Foreign Dredge Act. We're going to
Speaker 1: have to do afterward, probably like keep the Foreign Dredge
Speaker 1: Jack just out of fairness. But yeah, I'm very excited about. Okay,
Speaker 1: let's do it. Howard and Andrew, welcome to the show.
Speaker 1: Pleas for me here, So why don't we begin with
Speaker 1: the very basic stuff? What is the Foreign Dudge Act
Speaker 1: of nineteen o six and what happened in nineteen o
Speaker 1: six or earlier to make the US think that it
Speaker 1: only wants to have dredgers that are built and crewed
Speaker 1: by Americans. And so what happened in nineteen o six
Speaker 1: actually starts with what happened in and that is that
Speaker 1: there was a huge storm that hit Galveston, Texas directly.
Speaker 1: Galveston at that time was, if I'm not mistaken, the
Speaker 1: largest city in Texas. It was a thriving port town,
Speaker 1: and the flood that ensued essentially wiped the town out,
Speaker 1: killed and it maybe e to sixteen thousand people and
Speaker 1: was an absolute catastrophe. So the town fathers decided that
Speaker 1: what they needed to do was rebuilt. But they weren't
Speaker 1: going to rebuild at the current elevation because they knew
Speaker 1: it would just be a matter of time before another
Speaker 1: storm would hit Galveston and do the same thing all
Speaker 1: over again. So they decided they were going to raise
Speaker 1: the town by ten ft. And so in order to
Speaker 1: do that, they needed a massive drudging capacity that did
Speaker 1: not exist in the United States. They put they put
Speaker 1: this job up forbid. There were two bidders. The winning
Speaker 1: bidder designed and built hopper drudges, which what we can
Speaker 1: talk about in a little bit about the distinction between
Speaker 1: the different kinds of drudges. But they designed and began
Speaker 1: to build hopper drudges that would be able to carry
Speaker 1: this job out. And so as that project got started,
Speaker 1: uh in nineteen in nineteen o three, you know, for
Speaker 1: Eventually there was a concern not from the shipbuilders themselves,
Speaker 1: but from the Commissioner of Customs that hey, maybe this
Speaker 1: is somehow gonna this is going to create a problem
Speaker 1: for US. We need to put in place restrictions that
Speaker 1: say that these stretches can only be built in U
Speaker 1: S shipyards. And so by nineteen o six, the protectionist
Speaker 1: argument that this has to be these ships have to
Speaker 1: be built in the United States had one the day,
Speaker 1: and that legislation was signed into law by Theodore Roosevelt.
Speaker 1: Can you just explain that a little bit for the
Speaker 1: What specifically was the concern was that there is this
Speaker 1: investment in domestic dredging, and the concern was that the
Speaker 1: foreign competition to domestic dredging would undercut the market. Like
Speaker 1: what was the I'm trying to wrap my head around
Speaker 1: the perceived threat that this law addresses. So the concern
Speaker 1: was that somehow in in dredging up the sand, that
Speaker 1: they were going to put it on barges and they
Speaker 1: might take those barges somewhere else and use the sand
Speaker 1: in another port or another location in the US. So
Speaker 1: they were stealing US sand. Was the stealing US sand
Speaker 1: became game kind of the concern, But as it evolved,
Speaker 1: what really carried the day was that we should be
Speaker 1: building these these US brudges in the United States. What
Speaker 1: is the state of the U S dredging industry now
Speaker 1: and how does it compare with the rest of the world.
Speaker 1: So we had decades of protectionism and this law in
Speaker 1: place mandating that dredgers be built in the U S
Speaker 1: and crewed by Americans. What has been the result? So
Speaker 1: today the thirty one largest dredgers in the world are
Speaker 1: owned by two Belgian and two Dutch companies, the subsidiaries
Speaker 1: of which the U S subsidiaries of which already are
Speaker 1: major American companies. They build all the off shore wind mills,
Speaker 1: so those same companies are allowed to work in these
Speaker 1: waters in the US waters building the offshore windmills, but
Speaker 1: they also own the thirty one largest dredgers in the world,
Speaker 1: many over forty thod cubic meters, so four times as
Speaker 1: large as any vessel that exists in the US. The
Speaker 1: US is trying to meet the dredge demand, to dredge
Speaker 1: it sports and to do coastal protection. When it has
Speaker 1: of the top fifty dredgers in the world, it has
Speaker 1: three of them. It has number thirty two and then
Speaker 1: two others in the top fifty. The rest are by
Speaker 1: these large companies that are already American companies. They're allowed
Speaker 1: to build the off shore wind mills. They create a
Speaker 1: lot of jobs in America. They just can't alongside dig
Speaker 1: in the sand because of this nineteen oh six law,
Speaker 1: and it caused America millions or tens of millions of
Speaker 1: dollars of jobs and billions of dollars. If you are
Speaker 1: in Savannah, you spent over a billion dollars for report
Speaker 1: deepening project that would have cost under five hundred million.
Speaker 1: And if you are in Virginia right now, you are
Speaker 1: spending it was supposed to be three d and fifty million,
Speaker 1: it's now four hundred and fifty million for a project
Speaker 1: that should cost hundreds of millions less. So what do
Speaker 1: you actually walk us through the math here? A little
Speaker 1: bit more specifically, because we've talked on this show a
Speaker 1: number of times about the ports and pork bottlenecks and
Speaker 1: pork capacity and the issue and we talked about this
Speaker 1: in the intro, the issue of these very large ships
Speaker 1: that are getting bigger and bigger and the difficulty that
Speaker 1: they have entering U s ports, and we see at
Speaker 1: the Port of Los Angeles, but obviously otherwise when you
Speaker 1: throw out these numbers at US, explain why constrained US
Speaker 1: dredge capacity adds so much more to the cost of
Speaker 1: port expansions and thus makes it such that our ports
Speaker 1: aren't as big, high capacity as they could be. So
Speaker 1: let's take Houston for example. Houston should be the most
Speaker 1: important port for America because producing oil and gas in
Speaker 1: Houston is cheaper than producing it in the country of Georgia,
Speaker 1: for example. But Boston right now is getting its gas
Speaker 1: from the country of Georgia than it is from Houston
Speaker 1: because delivered the greatest country in the world cannot get
Speaker 1: its gas delivered to Boston cheaper than it can get
Speaker 1: it delivered from the country of Georgia because the port
Speaker 1: in Houston is broken. What happened was they had two lanes.
Speaker 1: At one time. Container ships would pass, tankers going in,
Speaker 1: containers going out Andy. And I went to the port
Speaker 1: and said, you've got less than a year left before
Speaker 1: it's gonna get so narrow and so shallow that ships
Speaker 1: will no longer be able to pass over two years
Speaker 1: ago that came true. One of the ships containers coming
Speaker 1: in refused to pass a tanker coming out. The port
Speaker 1: of Houston was reduced to one wane and we said
Speaker 1: this could be dredged in a year to the capacities
Speaker 1: to allow the deepest tankers, the post Panamax tankers and
Speaker 1: containers to go freely into Houston. That would reduce export
Speaker 1: costs more than it would make our manufacturing goods and
Speaker 1: agricultural goods going out of Houston competitive by more than
Speaker 1: competitive by fient, and it would make our oil and
Speaker 1: gas exports, let's say the Europe when you needed for
Speaker 1: the Ukraine and Russia, way cheaper. It would make us
Speaker 1: a major energy exporter. All you have to do is
Speaker 1: dredge Houston. There's enough money right now because if you
Speaker 1: use one of the state of the art dredgers that
Speaker 1: dredge the rest of the world, the cost is less
Speaker 1: than half and the time to do it is less
Speaker 1: than a third. So this can be done right right now.
Speaker 1: And in support Director favored us doing that, the fight
Speaker 1: men to protect the the Dredge Act of nineteen o six.
Speaker 1: So instead of doing that, the Texas legislature met and
Speaker 1: passed the law restricting contain large container ships from entering
Speaker 1: the port of Houston to one a week so they
Speaker 1: don't block the oil ships coming out. So now the
Speaker 1: greatest country in the world has a law preventing container
Speaker 1: ships from entering one of its greatest ports because they
Speaker 1: cannot get them in. So if we just dredged Euston
Speaker 1: at half the cost in the third time, that would
Speaker 1: create and support over one point six million new American
Speaker 1: jobs by lowering the costs of exports by over fifteen percent,
Speaker 1: it would change our energy security picture. And by the way,
Speaker 1: since we know Houston is gonna flood anyway, we've seen
Speaker 1: what happens in Houston. These dredges that the state of
Speaker 1: the art dredges. When they do a dredge project, they
Speaker 1: would do the coastal protection project that would also protect Euston.
Speaker 1: It's called the Kelike project. But there's no way that
Speaker 1: could ever be done with US dredgers, not in the
Speaker 1: next twenty or thirty years. Is the issue this law
Speaker 1: and the restrictions around who can dredge, or is the
Speaker 1: issue under investment in that particular industry. So, you know,
Speaker 1: we do have an American dredging industry, but it seems
Speaker 1: like it hasn't actually grown that much, even though it
Speaker 1: is mandated to do all this work and doesn't necessarily
Speaker 1: have competition to do it. It's who can dredge. It's
Speaker 1: not under investment that these ships that we're talking about,
Speaker 1: they're not built in China. They're built in the Netherlands,
Speaker 1: where the cost of labor and the cost of energy
Speaker 1: is higher. These aren't Chief ships or the like. We
Speaker 1: don't have a shipyard in the US that could build
Speaker 1: one of these dredges. We don't have the technology to
Speaker 1: know how, and we don't have the investment because there's
Speaker 1: only three companies that own basically three vessels that or
Speaker 1: even can do a port dredging. So those three get
Speaker 1: all the business. They're happy if we have to wait
Speaker 1: twenty five years for report to be done, it's still
Speaker 1: their work. So the three company protection is m is
Speaker 1: what's swimmiting it if in fact you open the dredge
Speaker 1: law and allow these big ships to come in and
Speaker 1: join the all the marine work they're doing for off
Speaker 1: shore wind these companies work all union, they have signed
Speaker 1: project labor agreements. The foreign companies, it would be all
Speaker 1: union of American employment with the same exact workers, but
Speaker 1: we would have coastal protection projects and poort deepning projects
Speaker 1: being done for half the cost, So we could actually
Speaker 1: have dredges available to do Houston and Corpus and Browns.
Speaker 1: Will eliminate the supply chain problem that we have that
Speaker 1: we can't get ships into our ports. We were the
Speaker 1: costs of energy and our exports, and we would still
Speaker 1: have ships to do coastal protection. There is a plan
Speaker 1: right now, as I mentioned, According to center Schumer, ninety
Speaker 1: thousand New Yorkers have to be relocated from south of
Speaker 1: Wall Street by twenty fifty, that's twenty eight years. In
Speaker 1: the next twenty eight years, Wall Street will be flooded.
Speaker 1: There are two proposals to address that. A ten billion
Speaker 1: dollar project wall and building sevent dred acres onto Lower Manhattan.
Speaker 1: We would have Manhattan become fifteen percent larger. Both projects
Speaker 1: are routine for the rest of the world. There have
Speaker 1: been projects adding acres, so projects that are four times
Speaker 1: larger in the rest of the world done by these dredgers.
Speaker 1: Can you imagine the value of adding fifteen percent to
Speaker 1: Lower Manhattan the value of that project, It's the money
Speaker 1: would pays for itself. Center Schumer was told when he
Speaker 1: went to the U. S. Army Corps of Engineers, we
Speaker 1: will not have the dredging capacity nor the money to
Speaker 1: build the wall, let alone the additional acreage onto Lower Manhattan.
Speaker 1: We don't have a coastal protection policy. I so, you know,
Speaker 1: I've I've I've read about and heard about some of
Speaker 1: these ideas to add land to Manhattan, and I was like, Oh,
Speaker 1: that's fanciful. That's never gonna happen. It's just like something
Speaker 1: that people like to think about. But hey, it is
Speaker 1: interesting that I guess it could actually happen. But be
Speaker 1: it comes back to this Act of six, the lack
Speaker 1: of dredging capacity. Now, before we move on, I want
Speaker 1: to ask one more question. You mentioned the fact that
Speaker 1: cheap oil and gas from Houston isn't making its way
Speaker 1: by ship to Boston, where they're instead important gas from
Speaker 1: the country of Georgia. I was under the impression that
Speaker 1: that had something to do with the Jones Act. And
Speaker 1: that's like, it seems like the two laws often are
Speaker 1: associated with each other, but hey, can you sort of
Speaker 1: talk about how the two laws relate, And you also
Speaker 1: say that that one is more well known. It seems
Speaker 1: to be a little bit more controversial. You say that
Speaker 1: you could we could get value from repealing the Dredge
Speaker 1: Act without necessarily repealing the Jones Act. In fact, appealing
Speaker 1: the Dredge Act protects the Jones Act. The companies were
Speaker 1: talking about, our construction companies, they don't own a transportation ship,
Speaker 1: so the Jones Act protects transportation of goods and people
Speaker 1: in US waters. That's a transportation issue, and that's very
Speaker 1: important in this country, and nobody is arguing to touch
Speaker 1: that in the least. We can build the ships to
Speaker 1: transport people and goods if they can get in and
Speaker 1: out of our ports. We're not talking about touching the
Speaker 1: transportation industry, and the law currently proposed to repeal the
Speaker 1: Dredge Act would not touch the Jones Act if that
Speaker 1: law passed. What we're talking about is the construction industry.
Speaker 1: We're talking about port contractors. The issue is getting ships
Speaker 1: that are the right size into our port. Obviously, we
Speaker 1: can't get them in at being three times larger than
Speaker 1: the standard ship if they're going to get stuck in
Speaker 1: Baltimore on the bottom of the port. So what we
Speaker 1: need to is get it deeper once they're there. That
Speaker 1: will make up most of the cost. The Dredge Act
Speaker 1: can be amended, and the proposal to do so that's
Speaker 1: currently in front of the Senate would do so without
Speaker 1: touching the Jones Act. But what happens here is the
Speaker 1: three or four companies that are the small you know,
Speaker 1: companies to five thousand people who work in dredging in
Speaker 1: the US, almost all of whom would continue to work
Speaker 1: in dredging, just on a lot larger projects with the
Speaker 1: same project labor agreements. The owners of those companies say, oh,
Speaker 1: they're really seeking to attack the Jones Act, and they
Speaker 1: bring in all the shipping interests to protect the Dredge
Speaker 1: Act when they have nothing to do with one another.
Speaker 1: M what are the other impediments to amending or repealing
Speaker 1: the Dredge Act? I mean, I imagine environmental concerns must
Speaker 1: figure in their one way or another, and for instance,
Speaker 1: the situation with the ever forward. I know people are
Speaker 1: starting to worry about the impact on on crabbing season,
Speaker 1: which is coming up in Maryland. And look, I've already
Speaker 1: declared my interest in higher dredging capacity because I love
Speaker 1: my couch, but I also love Maryland crab cakes. And
Speaker 1: you know, ideally I would have both. Ideally I would
Speaker 1: sit on my couch while eating crab cakes. But you know,
Speaker 1: what are the environmental concerns around dredging and how would
Speaker 1: repealing the act affect the health of US coasts? Andy,
Speaker 1: why do you tell them about Miami? Sure? Well, so
Speaker 1: a few a few things, Tracy. The first is that, yeah,
Speaker 1: if you look at actually the modern drudges that are
Speaker 1: that are being built in in UH and European shipyards
Speaker 1: that are being used around the world, unfortunately just not
Speaker 1: in the United States, you see a couple of differences
Speaker 1: that actually make them more environmentally friendly. The first is
Speaker 1: that the newest than most modern dredges are using l
Speaker 1: n G as opposed to marine diesels, so they're they're
Speaker 1: a manting a lot a lot less emissions as they're working.
Speaker 1: The second issue, and this was a real tragedy in Miami,
Speaker 1: is is because the dredges that we use are so
Speaker 1: called cutter drudges, but they weren't powerful enough to to
Speaker 1: chew basically through some of the rock that they needed
Speaker 1: to remove in order to create a deeper channel for
Speaker 1: cruise ships. They had to use blastic and so in
Speaker 1: blasting that creates a lot of turbidity. That's you know,
Speaker 1: a lot of sand, a lot of debris kind of
Speaker 1: gets moved around that wound up on coral and it
Speaker 1: actually wound up bleaching and killing a lot of the
Speaker 1: coral and creating a huge environmental disaster. If you have
Speaker 1: again the new state of the art Hopper dredges, you
Speaker 1: can control much more for to a bidity. You can
Speaker 1: therefore do it without disturbing the vegetation and the coral
Speaker 1: that's around it. And so that's why you can see,
Speaker 1: for example, that that the companies that were taught that
Speaker 1: we'd like to be able to bring into the US
Speaker 1: do very sensitive environmental projects, say along ports in Australia
Speaker 1: that are adjacent to the Great Barrier reef with with
Speaker 1: very intensive environmental monitoring done by the Australian government, by
Speaker 1: mng O S and by the companies that are doing
Speaker 1: the work themselves. So um, the other point that I make,
Speaker 1: as long as we're on the environment, is that in
Speaker 1: a lot of cases, uh, these same dredges are actually
Speaker 1: very important if you're going to create coastal features or
Speaker 1: if you're going to try to restore wetlands, that will
Speaker 1: do a couple of things. One, it will serve as
Speaker 1: a barrier with when you have major storms that are
Speaker 1: that are heading or population centers. But the second and
Speaker 1: more pervasive is that they will create barriers from salt
Speaker 1: water incursion, like the kind of incursion that we're seeing
Speaker 1: in Louisiana, which you know, once you get salt water
Speaker 1: into an environment, it's it's gonna it's gonna devastate the
Speaker 1: natural environment that was there. Can you talk a little
Speaker 1: bit more about the two types of dredgers and the
Speaker 1: different technologies, because I think there's interesting. You know, our
Speaker 1: our listeners definitely are interested in the law and investment
Speaker 1: and stuff, but actually hearing the two different approaches to
Speaker 1: dredging would be really helpful. And then these new dredges
Speaker 1: or the state of the art dredges, what do they
Speaker 1: you know, what do they have? What what makes them unique?
Speaker 1: So I would say the easiest way to look think
Speaker 1: about it is is you've got hopper dredges, which is
Speaker 1: essentially state of the art, which is used again in
Speaker 1: the rest of the world. That's that's what most people
Speaker 1: will have in their main fleet. I think of them
Speaker 1: as very large vacuum cleaners. So they're gonna they're gonna
Speaker 1: vacuum material up that needs to be moved. They're going
Speaker 1: to store that material in the hull of the ship,
Speaker 1: and then they're gonna sail off with that material and
Speaker 1: they're either going to go to a deposit site that's
Speaker 1: off shore and the bottom of the hull is going
Speaker 1: to open up and that material is going to fall
Speaker 1: down into into the place that the coast guard has
Speaker 1: has said it should be put, or they're going to
Speaker 1: use that material and they're going to use it to
Speaker 1: create They're going to replenish your beach, or they're gonna
Speaker 1: they're gonna build a barrier island, or they'll do something
Speaker 1: else that's called beneficially used. So those are hopper dredges. Again,
Speaker 1: if you look around at the rest of the world
Speaker 1: and see what they're using for their for their jobs,
Speaker 1: most of the most of that work is going to
Speaker 1: be done using hopper dredge. The other type, and the
Speaker 1: type that the US industry is very reliant upon, are
Speaker 1: called counter suction dredges. Think of them as kind of
Speaker 1: big grinders that are just sort of chewing through the
Speaker 1: soil and chewing through the rock. They're they're sucking it
Speaker 1: up but they're sucking it up and putting it onto barges.
Speaker 1: So then you've got to move. Just like we're talking
Speaker 1: about with the ever forward right now, that material is
Speaker 1: going up onto barges, then those barges have to be
Speaker 1: have to be towed away, and you have to It's
Speaker 1: just a longer, more laborious, and more expensive process. But Joe,
Speaker 1: don't get confused that this is a difference in approach
Speaker 1: and what regardless of whether it's cutters or hoppers, if
Speaker 1: there's if you don't have if you only have three
Speaker 1: dredges in your country that the world would even consider
Speaker 1: to use for a project like this, and you are
Speaker 1: using things that are meant for small rivers. The issue
Speaker 1: is what difference would it mean for America if you
Speaker 1: wet these thirty one dredgers that are bigger than anything
Speaker 1: we have, that are more environmentally friendly than anything we
Speaker 1: have crewed by American labor, the same America who crew
Speaker 1: who cruise the construction vessels for these same companies when
Speaker 1: they build off shore wind the project labor agreements with
Speaker 1: American labor, What difference would it be whether it's cutter
Speaker 1: or hopper to the to what we could achieve in America,
Speaker 1: we could fix the supply chain by opening up these
Speaker 1: ports that are long awaiting each of the projects. If
Speaker 1: I were in Virginia and I just waste wasting two
Speaker 1: hundred million dollars of my taxpayer money because the same
Speaker 1: union people could be doing the same exact job for
Speaker 1: two hundred million less in the same waters by the
Speaker 1: company that's already building my offshore wind project anyway, So
Speaker 1: it's the same labor in the same orders, it's just
Speaker 1: a different and who owns the company and I that's
Speaker 1: cost me two hundred million more, I'd be upset or
Speaker 1: or the est it is doing really more ivy upset um.
Speaker 1: And so the question is whether it's cutter or it's hopper.
Speaker 1: We need more capacity. We have endless projects, and we
Speaker 1: have projects for that will keep all of the US
Speaker 1: register in existence now busy. It's just we can we
Speaker 1: can get to these other projects. We can do coastal
Speaker 1: protection in Virginia. When they are done with that project
Speaker 1: of dredging the port, they will still have to relocate
Speaker 1: the naval base in Norfolk because they did not have
Speaker 1: the capacity nor the money to come up with the
Speaker 1: project that would deepen the port in Virginia and save
Speaker 1: the naval base from flooding. Right now, the policy is
Speaker 1: where boots the naval base and Norfolk floods, so they
Speaker 1: are going to still have to move it. That project
Speaker 1: could be done in a way, presumably we have to
Speaker 1: have be designed in a way that the naval base
Speaker 1: wouldn't have to be relocated because we would be able
Speaker 1: to do coastal protection when we did our our poor drection.
Speaker 1: I still don't quite understand, you know. So I take
Speaker 1: the point that by far the most advanced judges that
Speaker 1: we have available are made and owned by companies in
Speaker 1: Belgium or in the Netherlands. But I don't understand why
Speaker 1: the US can't compete on this. And I guess you know,
Speaker 1: clearly the Netherlands has a long history of building canals
Speaker 1: and dredging and a lot of expertise in this kind
Speaker 1: of thing, and so does Belgium. But why can't the
Speaker 1: US catch up with its domestic industry. What's the sort
Speaker 1: of the issue there are the roadblock? That's a great question,
Speaker 1: and I think I think the answer really kind of
Speaker 1: comes back to what do you see your market as? Right?
Speaker 1: So the US dredging market right now, maybe it's a
Speaker 1: billion dollars. Maybe with with coastal protection becoming more urgent,
Speaker 1: and you know, even beach replenishment becoming a much more
Speaker 1: are of kind of an every year thing if you're
Speaker 1: going to save your tourist season in North Carolina. The
Speaker 1: markets may be more than a billion, but it's not
Speaker 1: a huge market. And in fact, the global drudging market
Speaker 1: is probably about twenty billion dollars. So if you're only
Speaker 1: looking at the US market and you're saying it's a
Speaker 1: billion dollars a year um, then you make investment decisions
Speaker 1: based on a billion dollar market. If, on the other hand,
Speaker 1: you're saying we are we the the European dredging companies
Speaker 1: look at it and say, this is a global market.
Speaker 1: We can work in any country in the world except
Speaker 1: for the United States. Right now, while plenty of countries
Speaker 1: have various restrictions on maritime shipping that are akin to
Speaker 1: address the Jones Act, no country in the world, except
Speaker 1: for China, which has its own massive dredging fleet, has
Speaker 1: any restrictions at all on allowing foreign dredgers to come
Speaker 1: in and clean up their harbors deep in them. Modern
Speaker 1: uners them allow that economy to be more competitive. The
Speaker 1: US is the only one that has that kind of restriction.
Speaker 1: So for for the European companies, they look at a
Speaker 1: world market and say, okay, it's about a twenty billion
Speaker 1: dollar a year market, it's going to be growing. We're
Speaker 1: going to invest to be able to compete and win
Speaker 1: projects all around the world. And in fact, that's what
Speaker 1: they're doing. And that's why between these four European dredging
Speaker 1: companies that want to be allowed to work in the US,
Speaker 1: if you look at global open bid dredging projects, they're
Speaker 1: going to be winning of all the projects year after year.
Speaker 1: They compete a lot with each other. It's a very
Speaker 1: competitive global market. That's what they're looking at. They're looking
Speaker 1: at it as a world market and so their rights
Speaker 1: eising their investment and right sizing their fleet. Whereas here
Speaker 1: in the US, and you really have to ask, you know,
Speaker 1: you have to go back thirty years to basically try
Speaker 1: to figure out why did the US industry stop investing
Speaker 1: in its streateging industry and why do we have not
Speaker 1: only ships that are really very small, but also ships
Speaker 1: that are really very old as well, So why have
Speaker 1: we underinvested? I think The answer is because they're looking
Speaker 1: at a protected market. They're saying it's one billion dollars.
Speaker 1: They're saying of the U. S. Army Corps dredging bids
Speaker 1: are are single bid contracts or so therefore, of all
Speaker 1: the jobs, it's either nobody else bids or one other
Speaker 1: company bids. So it's a very small market. There are
Speaker 1: only really three companies that compete for projects here in
Speaker 1: the US, and so you know, for them, maybe it's
Speaker 1: not this isn't such a big deal. They can continue
Speaker 1: to kind of plug along with with what they have
Speaker 1: built a new drudge every four or five years or so.
Speaker 1: Eventually you have to retire the old dredges so that
Speaker 1: the capacity doesn't really change. But that's why, in my opinion,
Speaker 1: they haven't kept up. And now that they're thirty or
Speaker 1: forty years behind, and they don't have any experience in
Speaker 1: bidding for international projects anywhere outside the United States, you know,
Speaker 1: it's very tough for them to suddenly say that they're
Speaker 1: going to catch up. And Joe and Tracy to think, now, well,
Speaker 1: why doesn't Blackrock or Blackstone or Apollo just started investing
Speaker 1: in forty thou cubic meter ships UM we build a
Speaker 1: dredge every three or four years, there is not to
Speaker 1: qualify under the Dredge Act. It has to be built
Speaker 1: in the US. There is not a shipyard that could
Speaker 1: repair right now a forty six thousand cubic metership. When, if, if,
Speaker 1: and when the Dredge Act is finally amended to let
Speaker 1: these ships in, these Belgian means who have invested a
Speaker 1: ton in the US series will start investing into these
Speaker 1: shipyards so they can do little construction work needed to
Speaker 1: allow these shipyards to repair these ships, which would be
Speaker 1: part of what we would which would happen if the
Speaker 1: legislation opened, So the boom to the U. S shipyards
Speaker 1: would be massive from opening the dredging market. The repair
Speaker 1: and maintenance work would produce far more work than the
Speaker 1: new dredgers and the ancillary vessel work, the tugs, the
Speaker 1: barges that you need to surround you would be a
Speaker 1: boon for U. S shipyards. That's what's happened with the
Speaker 1: US windmill industry. The one ship that actually puts the
Speaker 1: monopy the foundation and the monopyle on the foundation to
Speaker 1: build the windmill that we don't have the capacity to do.
Speaker 1: It's being done by the Europeans, but now the ship
Speaker 1: orders have increased to do all the ancillary services. One
Speaker 1: of the American dredge companies is building a new ship
Speaker 1: to drop rocks at windmill sites where the windmills themselves
Speaker 1: are built by these European companies. Dominion is building a
Speaker 1: five million dollars ship that will put the install the
Speaker 1: turbines on monopause, the last step in it. Because we
Speaker 1: now have a windmill industry. The windmill itself will be
Speaker 1: built by one of these four Belgian companies, but the
Speaker 1: last step the turbine installation. So just in the last
Speaker 1: two years, the U s shipbuilding industry has had a
Speaker 1: boom from the ancillary vessels needed to support the offshore
Speaker 1: wind industry, which is anchored by the same four companies.
Speaker 1: The same exact thing would happen if you repealed the
Speaker 1: Foreign Tredge Act and had them do the main work
Speaker 1: with the ancillary American vessels. But I'm curious, from the
Speaker 1: perspective of either repealing or amending the nineteen o six
Speaker 1: Act and your experience, how much is the difficulty domestic
Speaker 1: opposition from the existing US dredging industry, which I think
Speaker 1: you mentioned is about five thousand employees, so it's not huge.
Speaker 1: How much is opposition versus how much is indifference because
Speaker 1: it doesn't look like much gets done these days in
Speaker 1: d C regardless, and so how much should The challenge
Speaker 1: is just most people in d C probably do not
Speaker 1: have that much appetite given everything else that's going on
Speaker 1: to address. It's opposition because they make two arguments that
Speaker 1: this is going to repeal the Jones Act. We've already
Speaker 1: addressed that it has nothing to do with the transportation sector.
Speaker 1: It's the construction sector. And they threaten the unions that
Speaker 1: these companies will come in, they'll do they'll do the
Speaker 1: Port of Houston and corpus them, they'll leave, and then
Speaker 1: you'll be without us the American dredging companies. But in
Speaker 1: fact we now know that there will be offstra windmill
Speaker 1: projects at least through so these companies have become big
Speaker 1: US subsidiaries with US offices, US labor agreements. Of the
Speaker 1: five thousand people you said are in the industry, almost
Speaker 1: all continue to work on the same exact projects of
Speaker 1: the Virginia. At the end of the Virginia project were
Speaker 1: open bid and that last seventy million were bid for
Speaker 1: thirty million, not seventy million, for example, and we save
Speaker 1: forty million in Virginia, the same people would do the job.
Speaker 1: It's the same labor agreement, the same unions. It would
Speaker 1: just be on the vessel that was much more efficient
Speaker 1: for it, and we could take that and use the
Speaker 1: savings to design how to save the Port of Norfolk.
Speaker 1: So it's purely it appears to be truly the domestic
Speaker 1: because if there was indifference, a project that will save
Speaker 1: ninety thousand New Yorkers from having to relocate by building
Speaker 1: seven ftent more to Manhattan, that is of interest to
Speaker 1: the unions, It is of interest to every real estate developer.
Speaker 1: Can you imagine if Manhattan had fifteen percent more real
Speaker 1: estate to to have commerce on what that would be
Speaker 1: Just the World Trade Center rebuilding was a massive boom
Speaker 1: for the construction unions and for New York. Think about
Speaker 1: that at of New Manhattan, what that would be valued.
Speaker 1: That project is eminently doable. There are eight projects in
Speaker 1: the world bigger than that project that have already been
Speaker 1: done in less than three years UM. So that project
Speaker 1: is doable. But there's not a chance that could be
Speaker 1: done in the next forty years with the dredging capacity
Speaker 1: of the dredging technology that currently exists. Uh, and therefore,
Speaker 1: without changing the Foreign Dredge Act, can I just ask
Speaker 1: on the Jones Act my understanding, And you know, I
Speaker 1: fully admit my understanding is only just developing right now,
Speaker 1: so it's probably not worth much. But my understanding is
Speaker 1: that hopper judges do have to be Jones Act compliance
Speaker 1: since they end up transporting you know, sound and mud
Speaker 1: from their dredging activities, which then falls under the Jones Act.
Speaker 1: So here's you, well, yes and no. So the proposals
Speaker 1: to amend the Dredge Act simply say, for purposes of
Speaker 1: this Act, the movement of sand in the construction project
Speaker 1: is not transportation. Sure, if you wanted to ship new
Speaker 1: bags of sand from New York to Savannah and put
Speaker 1: it on a barge and ship him, that's transportation. This
Speaker 1: is construction. It's like saying when a kid plays in
Speaker 1: a sandbox, he's engaging in transportation. Digging is not transportation.
Speaker 1: So it's this easy to fix. You just have to
Speaker 1: on the legislation that amends the Dredge Act, you just
Speaker 1: have to say, for purpose of any other legislation named
Speaker 1: with the Jones Act. If sand happens to move because
Speaker 1: you dig it's in construction, that's not considered transportation. So
Speaker 1: when we're talking about construction, sand moving because you're digging
Speaker 1: it in construction, if you just say that's not transportation,
Speaker 1: that's construction, that leads to Jones Act perfectly in place
Speaker 1: while amending the Dredge Act. How much you know. Another
Speaker 1: thing you're talking about wind, But another big energy story
Speaker 1: in the United States is ellen Gy and in particular
Speaker 1: Ellergy exports. In particular, they're Llergy exports to Europe to
Speaker 1: theoretically allow Germany and other countries to wean themselves off
Speaker 1: of Russian natural gas. To what degree is lack of
Speaker 1: dredging capacity a contributor to lack of export capacity for
Speaker 1: ellen Gy? Joe? You know, as you know, there are
Speaker 1: a couple of things, and I think for Ellergy, one
Speaker 1: of the bigger concerns right now is just how many
Speaker 1: Ellergy character carriers exist that are not under long term
Speaker 1: contract that could mobilize to carry that supply chain. That
Speaker 1: huge difference in supply chain. And you also get into
Speaker 1: export terminals. If we go back to Houston right for example, again,
Speaker 1: you know what's what's happened in Baltimore right now is
Speaker 1: obviously we should see not just as a tragedy for
Speaker 1: Tracy's and belongings, we should also see that as a
Speaker 1: real cautionary tale. Okay, because if that happens in Houston,
Speaker 1: where again, as we mentioned, you know you had can
Speaker 1: you imagine we're the greatest country in the world. Texas
Speaker 1: takes pride. Everything is bigger in Texas. And what are
Speaker 1: they doing in Texas two years ago? They're they're essentially saying,
Speaker 1: here's how we're going to divide up a shrinking pie
Speaker 1: in the port of Houston because we can't we can't
Speaker 1: deepen and expand the shipping chain helm to allow modern
Speaker 1: container ships and and modern tankers right L and G tankers,
Speaker 1: oil tankers to pass each other safely in the shipping channel.
Speaker 1: So the fact that we have to do that, right
Speaker 1: that we have to pass the law that regulates how
Speaker 1: much of this this resource can be used when the
Speaker 1: rest of the world. By the way, while we're trying
Speaker 1: to get to fifty feet as as we've discussed container ships,
Speaker 1: tanker ships, everything is getting bigger because the economics support
Speaker 1: being bigger as opposed to being smaller. Other ports are
Speaker 1: getting down to sixty five feet, they're getting down to
Speaker 1: seventy ft. I mean, we're trying to get to fifty
Speaker 1: ft and it's a herculean task and Houston is probably
Speaker 1: gonna be you know, Houston's gonna be years before they
Speaker 1: can get there. Meanwhile, the rest of the world is
Speaker 1: moving forward. So so I think it does have an
Speaker 1: impact and how we're going to supply Europe going forward
Speaker 1: to help it meet its energy needs. But I don't
Speaker 1: think it is that's not the leading issue. I think
Speaker 1: that's you know, that's about the Corpus, the project and
Speaker 1: Corpus that's even deeper than the fifty well in in Corpus,
Speaker 1: what what they wanted to do is to build a
Speaker 1: loading facility for the largest crude carriers. The largest crude
Speaker 1: carriers in the world require a hundred feet of draft.
Speaker 1: The only way you're ever going to get down to
Speaker 1: a hundred feet in the US is if you have
Speaker 1: if you allow these these European dredging companies to come
Speaker 1: in and work on projects. There's absolutely no way that
Speaker 1: we can use all of the resources that we have
Speaker 1: to deal with to get that one large crude carrier bill.
Speaker 1: Because keep in mind, because the US industry is so small,
Speaker 1: anytime there's a major storm and a poor gets blocked
Speaker 1: in by by silts, right that's washed down safe from
Speaker 1: the Mississippi. This happens in the Port of New Orleans
Speaker 1: all the time. They will have to that the Army
Speaker 1: Corps has the right to call the U S. Dredgers
Speaker 1: away from so called capital dredging right where you're actually
Speaker 1: trying to deepen afford to get it down to fifty.
Speaker 1: They will say, we have an emergency. We have what
Speaker 1: they call showing, So we have sholing that's taken place
Speaker 1: that's reducing the clearance in New Orleans. So we're calling
Speaker 1: you off the project in Savannah. You've now got a
Speaker 1: sail over to New Orleans. You've got to deal with
Speaker 1: this urgent problem. And then if there's time before we
Speaker 1: get into turtle season, then you can go back to
Speaker 1: Savannah and you can get back to that project. But
Speaker 1: if if if the timing doesn't work out, then that's
Speaker 1: another year that's lost. So that's that's that's the situation
Speaker 1: that we're dealing with, that we have such limited resources
Speaker 1: that we can't do aintenance dredging. We can't respond to
Speaker 1: natural huge disasters like Hurricane Harvey, which was a huge disaster,
Speaker 1: not only certainly for the people of Houston and of Texas,
Speaker 1: also brought a lot of debris and a lot of
Speaker 1: material into the Port of Houston. We just don't have
Speaker 1: the capacity to deal with natural disasters. At the same time,
Speaker 1: we tried to do capital dredging to improve and modernize
Speaker 1: our ports. Van it was bid. It was supposed to
Speaker 1: be a seven hundred million dollar project. Was the lowest
Speaker 1: did the Europeans that said they would do it for
Speaker 1: guaranteed four million because of the difference in their capacity.
Speaker 1: But it was supposed to be seven hundred million, and
Speaker 1: the project came in and over a billion one. Some
Speaker 1: of the dredges have been called off to go do
Speaker 1: shoaling elsewhere, and by the time they come back costs
Speaker 1: sir rup, so we end up spending I believe it
Speaker 1: was a billion one for a project that should have
Speaker 1: been four hundred million and took three times as long
Speaker 1: Savannah got done. But taking all that time and money,
Speaker 1: that prevents us using those resources elsewhere. There is plenty
Speaker 1: to keep The major American dredging companies busy and to
Speaker 1: greatly increase the labor that's working for them, and continues
Speaker 1: under the same exact project labor agreements, the same unions,
Speaker 1: under the same project labor agreements doing the rest of
Speaker 1: the dredging on ships that are built, you know, meant
Speaker 1: to do these kinds of projects while our shipyards boom
Speaker 1: from the ancillary vessels. Can I just ask totally hypothetical
Speaker 1: question here, But if I were to call up a
Speaker 1: company like van Ord and say I want to hire
Speaker 1: your your very best dredger, your hopper dredger or whatever,
Speaker 1: and I wanted to dig out the ever forward, Let's
Speaker 1: let's pretend that they said yes. Um, I assume they
Speaker 1: would say no, mostly because I wouldn't be able to
Speaker 1: pay them, but for other reasons too. What would happen,
Speaker 1: Like what happens if you actually end up in contravention
Speaker 1: of the six Judging Act the dredge, Yeah, the dredge,
Speaker 1: They seize the drudge, yea okay, and forfeit you forfeit
Speaker 1: the dredge unless unless they get a waiver, they're not
Speaker 1: going to work here. And Tracy, we're willing to play
Speaker 1: a good word in with you for you with the
Speaker 1: Van Nords, but I don't think your household is worth
Speaker 1: the dredge. No, no, they probably want to keep that. Well,
Speaker 1: Howard and Andrew, that was a great recap of the
Speaker 1: H six Drudge Act, and we really appreciate you coming
Speaker 1: on to explain not to us. Thank you, thanks so much.
Speaker 1: Stay says, all right, well, Joe, are you prepared to
Speaker 1: make repealing the Drudge Act of six the center of
Speaker 1: your new identity? You know? Original I just thought it
Speaker 1: was this sort of like amusing little law, kind of
Speaker 1: a quasi irrelevancy. But I thought they made a pretty
Speaker 1: compelling case that it's actually pretty important, and I do
Speaker 1: think it's very interesting, even setting aside dredges. This tension
Speaker 1: of how do you nurture a domestic industry? This is
Speaker 1: like actually really important beyond dredges, like and it comes
Speaker 1: up in the semiconductor conversation, So how do you nurture
Speaker 1: a domestic industry without making it so that it's uncompetitive
Speaker 1: and weak? And so you could imagine a sort of
Speaker 1: effort to say, yeah again, semi conductors or something. You
Speaker 1: boost domestic players, but if there's sort of a market
Speaker 1: that's some competitive, they can fall behind it's a very
Speaker 1: separate question, but it does raise some really interesting things
Speaker 1: about this broader project of building up domestic industry well totally,
Speaker 1: and also the idea that Howard and Andrew they touched
Speaker 1: on this, but this idea that US dredgers view it
Speaker 1: as this sort of one note market, right, It's just
Speaker 1: a mary that they can dredge in and that's a
Speaker 1: limited pool of money, whereas someone who's over in Belgium
Speaker 1: or the Netherlands is going to see it as this
Speaker 1: global market. The other thing that's kind of crazy to
Speaker 1: me is just the idea in general that because a
Speaker 1: customs official was worried about foreign dredgers taking away Texans
Speaker 1: sand in the early nineteen hundreds, that more than a
Speaker 1: hundred years later, it's like how the world works, right, yeah, yeah,
Speaker 1: but it's sort of it's an interesting cause and effect,
Speaker 1: you know, even like I went on YouTube before this
Speaker 1: and I will watch some videos of like the two
Speaker 1: different types of dredgers. But it's interesting to think about,
Speaker 1: like even something that kind of doesn't seem that high tech,
Speaker 1: like a big vacuum cleaner, it's like there is a
Speaker 1: level of know how that exists at European companies, at
Speaker 1: least so they claim. But it may be true, especially
Speaker 1: if they're calling on them for technical support that doesn't exist.
Speaker 1: So again, you know, semi conductors are one thing, but
Speaker 1: even just something like digging up sand, there's technical knowledge
Speaker 1: and compartmentalized knowledge. If that is not a globally diffused right,
Speaker 1: Also kind of amazing that the foreign dredgers can't actually
Speaker 1: dig anything up here, but they can be consulted for
Speaker 1: their knowledge and expertise. All right, um, well here is
Speaker 1: full of them. I wouldn't I wouldn't take the call, Okay,
Speaker 1: but we do have to do another one. We have
Speaker 1: to get the domestic perspective. I mean, look, I fully
Speaker 1: declared my interest on this topic, but yes we should.
Speaker 1: Can I just say one more thing, Tracy, I am
Speaker 1: very sorry that you don't have your coach, but I
Speaker 1: am very happy that we're getting lots of content. So
Speaker 1: I'm I'm like secretly kind of happy about you know,
Speaker 1: it's all fun in games until they start on loading
Speaker 1: the containers and my one like drops into the sea. Yeah. Alright,
Speaker 1: fingers crossed. Everyone. Shall we leave it there? Let's leave
Speaker 1: it there. This has been another episode of the all
Speaker 1: thoughts podcast. I'm Tracy Alloway. You can follow me on
Speaker 1: Twitter at Tracy Alloway and I'm Joe Hasn't Thought. You
Speaker 1: can follow me on Twitter at the Stalwarts. Follow our
Speaker 1: producer Carmen Rodriguez on Twitter at Carmen Arman. Followed the
Speaker 1: Bloomberg Kind Of podcast Francesco Levi at Francesco Today, and
Speaker 1: check out all of our podcasts at Bloomberg under the
Speaker 1: handle at podcasts. Thanks for listening. Hey, there are All
Speaker 1: Thoughts listeners. We are very excited to let you know
Speaker 1: that All Thoughts is nominated for a Webby Award. You know, Tracy,
Speaker 1: I'm not normally like a big awards person or get
Speaker 1: excited about that, but now that I saw that we
Speaker 1: were nominated for the Webby for Best Business Podcast, and
Speaker 1: suddenly I'm feeling very competitive and I want you really
Speaker 1: want it? Yeah? Okay, Well, on that note, listeners, if
Speaker 1: you enjoy a lots, if you like what we do,
Speaker 1: we would really appreciate it. If you take two minutes
Speaker 1: of your time and head over to vote dot Webby
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Speaker 1: Business Podcast category. Three years it