Bloomberg News

Michigan, Canada Strike $3.4 Billion Detroit Bridge Deal

June 15, 2012

Michigan and Canada agreed to build a second bridge between Detroit and Windsor, Ontario, to compete with the Ambassador crossing that has connected the two cities since 1929.

The New International Trade Crossing will bolster Michigan’s $70 billion-a-year trade with Canada, Prime Minister Stephen Harper and Governor Rick Snyder said today at a press conference in Windsor. Construction costs are estimated to be between C$3.5 billion ($3.4 billion) and C$4 billion, and the project will create 10,000 to 15,000 jobs in Ontario and Michigan, according to documents provided to reporters.

“This is a great act of confidence in the future of the North American economy at a critical time,” Harper told reporters. “This is the single most important piece of international infrastructure that this government will complete while I’m prime minister.”

The bridge will ease congestion at the busiest crossing in the world’s largest two-way trading relationship, Harper said, and will take four to five years to build. While Canada will help finance the project, Michigan won’t contribute any money, Snyder told reporters.

Michigan has “gone through many difficult years,” Snyder said. “We weren’t in a position to do this. They’re reaching out to help us,” he said of Canada.

Busiest Crossing

A second span connecting Detroit and Windsor would supplement the Ambassador Bridge about 2 miles north of the planned crossing. More than C$130 billion ($127 billion) in shipments and 8,000 trucks crossing the border at Detroit- Windsor each day, according to Canadian government data. Manuel Moroun, the billionaire owner and operator of the existing bridge, has opposed a publicly financed competitor.

Canada’s transport department forecasts that truck traffic will triple over the next 30 years. Canadian officials and Snyder have been championing construction of a second bridge amid resistance from some Michigan lawmakers and Moroun, 85, who wants to build his own adjoining six-lane span.

Further design work and “property acquisition” on the U.S. side is needed before construction can begin, according to a statement from Harper’s office.

Construction will provide about 12,000 jobs annually for each of the four years it will take for the structure to be built, the Ann Arbor, Michigan-based Center for Automotive Research said in a study released yesterday.

‘Economic Stimulus’

“The construction of the bridge itself will serve as an economic stimulus, providing jobs and state revenues,” Kim Hill, the center’s director of sustainability and economic development, said yesterday in an e-mailed statement.

“The region’s additional freight-shipping capability could attract private-sector investment, augmenting the gross regional product and creating more employment opportunities,” Hill wrote.

The span’s private builder will be chosen by an international agency consisting of three Michigan members and three from Canada. Canada will make so-called annual availability payments to the concessionaire to pay for financing the design and construction of the bridge as well as operation and maintenance.

While no tolls would be charged in Michigan for the use of the New International Trade Crossing, Canada will levy charges on drivers and revenues will be used to reimburse the Canadian government, according to the statement from Snyder’s office.

No Cost

The Canadian government will pay all costs of land acquisition in Canada and Michigan, and will pay as much as $500 million of the cost of an interchange to connect the bridge to I-75 in Detroit. That sum can be used by Michigan as matching funds for U.S. highway money.

Neither Michigan nor any of its communities would be obliged to pay any costs under the plan, Snyder said. “We’re not asking for an appropriation; we’re not asking for taxpayer money,” he told reporters.

Mickey Blashfield, director of The People Should Decide, a Warren, Michigan-based group that seeks a statewide vote on the bridge, said, “at long last, we welcome Governor Snyder out into the public debate.”

“Beyond a press event, the governor needs to make his best case for his government bridge,” Blashfield, who is also head of government relations for the company that runs the Ambassador Bridge, said in an e-mailed press release.

The Michigan Manufacturers Association in Lansing, the Consulate General of Canada in Detroit and the Detroit Regional Chamber helped fund the study, according to the Ann Arbor, Michigan-based researcher.

‘Tremendous Opportunity’

Sergio Marchionne, chairman and chief executive officer of Chrysler Group LLC, said in a statement the bridge “represents a tremendous opportunity to further strengthen the economies of the U.S. and Canada, the future of our company and many other businesses.”

“Ensuring a smooth crossing for both commerce and people is essential to our just-in-time manufacturing process,” the company said in the statement. “Delays at the border add cost to each of our vehicles.”

The Canadian government expects Moroun’s company, Detroit International Bridge Co., to sue to stop construction, the Globe and Mail newspaper reported June 12. The company is also behind a signature-gathering effort to put a referendum on the November ballot for a constitutional amendment requiring voter approval for such a project, the newspaper reported.

Lobbied Lawmakers

Moroun has lobbied lawmakers and funded television ads labeling a publicly funded bridge a boondoggle. Moroun bought the controlling interest in the bridge company in 1979, outbidding Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc. (A:US)

The four-lane Ambassador was completed in 1929 by banker Joseph Bower. At 7,490 feet (2,283 meters), it was the world’s longest suspension bridge at the time, according to the bridge’s website. The crossing carries one-quarter of the truck commerce between the U.S. and Canada and more than 7 million vehicles a year, according to the Public Border Operators Association.

To contact the reporters on this story: Craig Trudell in Windsor, Ontario at ctrudell1@bloomberg.net; Chris Christoff in Lansing at cchristoff@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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