Legislature: Heal Thyself

John R. McLaurin
President of the Pacific Merchant Shipping Association

With an approval rating of nine percent, the California Legislature is more unpopular than Richard Nixon during the depths of the Watergate scandal. Yet there is no scandal in Sacramento prompting such low numbers – rather it is a function of an ongoing political malaise that has settled upon the Capitol.

The institution’s dysfunction is well documented and acknowledged by all – including by the members of the Legislature itself. Frustration is found throughout the Capitol – yet this frustration is outweighed by the ongoing failure to implement any type of minor, but important, committee process changes that potentially could make both Legislative houses more deliberative, encourage more debate, and increase the focus on addressing some of the fundamental problems facing the state.

In years past, the Legislature successfully grappled with complex issues and problems – it was an institution that fostered opportunities for California residents. The work of the Legislature in crafting legislation involved a mixture of politics and policy. It was part art, science and process. It wasn’t always pretty, but the State was able to create the basic foundations for our society to function and flourish.

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Port of Deadwood

John R. McLaurin
President of the Pacific Merchant Shipping Association

The Port of Los Angeles is not only swimming against the tide with regard to depressed cargo volumes and port revenues, it is also about to be penalized by the City of Los Angeles for its inability to balance its budget.

The Port dutifully followed the Mayor’s “Shared Sacrifice” initiative by leaving multiple staff positions unfilled and encouraging early retirement by dozens of employees – all in an effort to reduce costs. In return, the Port is about to become the dumping ground for dozens upon dozens of city employees, adding millions of unanticipated costs because of the LA City Council’s unwillingness to cut back 1,500 positions as part of an effort to reduce the City’s half a billion dollar budget deficit.

All of the Port’s good faith efforts over the past year to reduce its staffing levels and payroll expenses are for naught. The shifting of unwanted and surplus employees by the City to the Port increases the Port’s operating costs at a time when its revenue continues to decline. It penalizes the Port for exercising due diligence in following the Mayor’s policy directives to reduce costs, and it sacrifices the Port’s tideland trust responsibilities to the State because of the lack of political courage by the LA City Council.

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An Open Letter To My Children….

John R. McLaurin
President of the Pacific Merchant Shipping Association

To my wonderful, bright and beautiful daughters, I feel I owe you an apology. It is actually an apology from my generation to yours. Because we have lost the willingness to honestly look at the reality before us, my generation has created a California with very limited opportunities for you.

I want to be optimistic. I want you to have choices. I want you to be able to dream and reach for what could be. But instead my generation has accepted a governance process that takes pride in mediocrity. It is reflected in a state budget that only gets bleaker, a function of years of political deal-making that is anything but a “Profile in Courage.” As a result, opportunities enjoyed by my generation will be nothing more than unfulfilled dreams for your generation. We have created an accelerating downward spiral of limited educational and job opportunities.

There is a lot of talk and multiple proposals to change our political system, ranging from a constitutional convention to instituting a part time Legislature. Ironically, the dozens upon dozens of competing and conflicting ballot measures that propose to “fix” California’s problems are actually a continuation of the dysfunctional politics in the state. What is missing from all of these proposals is one key requirement for success – leadership.

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California: No Love for Jobs

John R. McLaurin
President of the Pacific Merchant Shipping Association

Politics, like romance, involves interest, commitment, and an active pursuit. Unfortunately, for California, there seems to be no love for private sector jobs. If California intends to recover from its own economic and fiscal problems, problems that started before the national recession, then the California Legislature needs to show some interest and action to retain employers and encourage new employers to come to the state.

The advertising campaigns by other states are gaining a lot of attention and even generating responses from our elected officials. These states are clearly interested in luring California companies to relocate to their state. They use the national surveys of business leaders that rate California as one of the worst states for business. California leaders are responding to this perception problem by denying that quality jobs are leaving the state and claiming that once the national recession is over, California will once again become the magnet for companies that want to build and produce. However, the facts just do not support that contention.

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Self-Inflicted Wounds

John R. McLaurin
President of the Pacific Merchant Shipping Association

It has to be tough to work in the marketing department of one of California’s container ports. While California’s container volumes continue to decline dramatically, new capacity continues to come on-line at Atlantic, Gulf coast, Canadian and Mexican ports. Combine the competitive pressures of these new facilities with the downturn in overall trade volumes, historic decline in freight rates and massive losses for ocean carriers and it’s clear why the competition to attract trade through West Coast gateways has become particularly intense. But the ports’ marketing departments have an additional challenge, perhaps their greatest one – the ports themselves.

Case in point, it was recently reported that the Port of Los Angeles is lobbying Congress to amend the federal act which preempts any local governmental regulation of the trucking industry with regard to the price, route or service of a motor carrier. As this federal preemption was the basis of a forceful ruling issued by the Ninth Circuit Court of Appeals in a successful action brought by the American Trucking Association against the Ports of Los Angeles and Long Beach, the attempt to get around the Ninth Circuit ruling is the Port of LA’s attempt to impose “employee mandates” on port trucking firms.

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Where Have All the Jobs Gone?

John R. McLaurin
President of the Pacific Merchant Shipping Association

Congratulations are in order to members of the California Legislature, California Air Resources Board, no growth advocates and others. According to a study released this week, the tourism industry is Los Angeles County’s number one job generator. This follows news of earlier this week from the Milkin Institute about the continuing loss of manufacturing jobs in California.

According to the Los Angeles Times, “Trade and manufacturing generally pay higher wages than tourism” and that “…economists have long worried that the region’s employment base is in danger of getting too many low-paying jobs.’ But don’t fret, in addition to the good news about California’s newest growth industry (prior to the closure of all state parks), it should be noted that sweeping up garbage at Southern California amusement parks can be classified as some of the “green jobs” we have all been promised.

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Five Stages of CEQA

John R. McLaurin
President of the Pacific Merchant Shipping Association

With apologies to my Psych 1 professor at UC Davis.

The California Environmental Quality Act (CEQA) is well known to those pursuing projects in California. At our commercial ports, the CEQA process for a marine terminal project is taking up to ten years to complete – not including the subsequent litigation. With term limits at the local level, the environmental impact review (EIR) process currently outlasts the political lives of mayors, city council members and harbor commissioners. Combined, the last two EIR’s at the Ports of Los Angeles and Long Beach were approximately 6,000 pages in length. Both projects were appealed before their respective City Councils – and both still face years of litigation, a reflection of the "can do" spirit of California.

While listening to a local public official lamenting the fact that EIR’s have become a multigenerational process in which people are married, have children, divorce, wars declared and ended, pandemic’s (or at least pandemic panic) come and go – it struck me. For those pursuing a construction project in California, the CEQA process has become something similar to the five stages of grief. Tell me if you agree.

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Being Wrong Is Never Having To Say You’re Sorry

John R. McLaurin
President of the Pacific Merchant Shipping Association

Back in 2007, after the Long Beach and Los Angeles port commissioners unveiled their Clean Truck Program, they stated repeatedly that the “finest legal minds in the nation” had reviewed the program. In a strongly worded opinion issued last Friday by a unanimous three judge panel of the Ninth Circuit Court of Appeals, it appears the ports plan was so off-base even the best of attorney’s couldn’t save it.

The Ninth Circuit ruled in favor of the American Trucking Association (ATA) in an action they brought against the two ports for their attempts to regulate the trucking industry. The Court focused on the ports “concession agreements” and did not address the environmental components of the program – something never challenged by the American Trucking Association.

Events leading up to the Ninth Circuit decision highlighted some of the worst and most vicious qualities about California’s political process. Proponents of the truck program vilified the ATA for filing their lawsuit – calling the action “immoral.” Full page ads were taken out in local newspapers by a coalition of labor and environmental groups, attacking the Mayor of Long Beach for not including an “employee mandate” provision in the Long Beach plan. Readers were provided the phone number of the Mayor’s office, urging them to call and tell the Mayor to “Get Back on Track.” In light of the Ninth Circuit ruling, perhaps those folks will call back to apologize to the Mayor.

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Ports in Peril

John R. McLaurin
President of the Pacific Merchant Shipping Association

The situation at California’s ports remains grim. Cargo volumes continue to drop at alarming rates. The Port of Long Beach reported the other day a 43% decline of imported cargo for February when compared to the same time period last year. The Port of Los Angeles experienced a similar decrease, continuing their downward spiral with a reported decline for imports of 36%.

The declines in volume translate into a massive drop off in work for longshoremen, truckers, railroads, warehouse workers and others in the supply chain. With close to 500 container ships now idle and not in use, predictions for cargo volumes for the rest of 2009 remain extremely pessimistic.

In addition to the negative impacts of the worldwide recession, Southern California ports have been experiencing a backlash from cargo owners for the development of container fee proposals along with attempts at re-regulating the port trucking industry. This rejection has manifested itself in the diversion of cargo from California ports prior to the economic collapse – something which continues to this day.

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Situation Bleak for California’s Ports

John R. McLaurin
President of the Pacific Merchant Shipping Association

No water for showers. Government in chaos and broke. Schools being shut down. Roads and bridges falling apart and in disrepair. All that is missing in California is an occupying force.

The bleak political news out of Sacramento is only surpassed by the continued worsening of the global economy and massive decreases in cargo volumes through California’s ports. The Port of Long Beach suffered an incredible 25% drop in volume for the month of December – and the numbers look like they will be worse in 2009. One shipowner recently took delivery of six new containerships – and immediately parked them off the coast of China. Layoffs continue. Longshoremen are without work. Over 200 vessels are idle around the world and at anchor due to the recession and the lack of cargo. For more information about the dire condition at California’s ports, take a look at CalTrade for a complete picture.

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