Kinder Morgan deal with Port of Wilmington dead

By Amy Cherry 6:42pm, March 7, 2013 - Updated 2:17pm, March 8, 2013
Kinder Morgan suspends interest in the Port of Wilmington.

Despite controversy in the General Assembly, in a letter, obtained by WDEL, the Houston company cites a dispute with the local longshoremen's union leader as the reason for pulling any offer to lease operations at the Port.

Kinder Morgan President John Schlosser calls Julius Cephas of Local 1694 "volatile" and unwilling to negotiation, saying a productive working relationship involving Cephas and Kinder Morgan is absolutely impossible.

The $100 billion company says current union leadership at the Port of Wilmington doesn't make a Delaware a good choice for them to invest substantial capital and resources.

WDEL's call to the Longshoremen's union hasn't been returned.

In a statement, provided to WDEL, Governor Markell calls the failed deal "unfortunate," adding that the Port of Wilmington won't be able to capitalize on an opportunity for increased jobs and a capital investment beyond what the state can afford.

Alan Levin, Director of the Delaware Economic Development Office, tells WDEL the state has no other deals in the works to privatize operations at the Port of Wilmington, despite a local group showing interest before the state chose to explore the possibility with Kinder Morgan.

"It provided no job security to the workforce at the port, in fact, they contemplated cuts to the workforce and changes to the work rules. And number two, financially, it was totally inadequate in comparison to Kinder Morgan."

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When WDEL broke the news to state lawmaker Rep. John Kowalko he says he wasn't dancing for joy, but he certainly wasn't unhappy either.

"The deal that I saw and the worries that I felt, the anxiety that I had over whether this deal was fulfilled what would be the threat to the existing business, I would say I'm not unhappy at all that the deal fell through," says Kowalko.

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Rich Heffron, Senior Vice President of the Delaware State Chamber of Commerce, tells WDEL he wasn't surprised at all that the deal had fallen through.

"The company, Kinder Morgan, has other options both on the Delaware River and other parts of this country, and obviously, the deal was taking too long and wasn't heading in the direction they felt was worth the investment," he says.

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Democrat Kowalko tells WDEL Kinder Morgan's proposed deal was never any good to begin.

"They were saying we're going to continue the contract for three years, well, that's the length of the contract that was left on there, so the they weren't making any promises, and quite frankly, I felt, thought it was somewhat threatening, the attitude that they would only guarantee the three years, that, and then they would have an open door to do whatever they wanted with the workforce that was there," Kowalko says.

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As for that workforce, in particular, the local union leader implicated in Kinder Morgan's withdrawal letter, Kowalko says he didn't see any problem there.

"These unions are really hard working people, and these unions had nothing but the best interest of the State of Delaware in the back of their minds. Kinder Morgan is a for-profit company, they're not going to have the same allegiance. They have allegiance to the bottom line," says Kowalko.

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That reason for Kinder Morgan's withdrawal did surprise Heffron.

"Yeah, I'm a little bit surprised at that. I mean, obviously, there were other people, who had problems with the deal too. I wouldn't just blame it on the union. There were other factors there," he said.

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Kowalko tells WDEL lawmakers have a lot of work cut out for them because not being able to afford a capital investment in the Port of Wilmington is not an option.

"I think that's shortsighted to say we just can't afford to have any kind of investment into this Port. This Port is a very, very successful business; it generates a lot of tax revenue," Kowalko says.

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But Heffron agrees with Governor Markell, in that Delaware can't afford the kind of capital investment the port needs to stay competitive.

"Cause if investments aren't made in that port, at least in my opinion, the port will not exist in 10 years," says Heffron.

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