Death of Coos Bay's Coal Export Plan: An interview with Wim de Vriend

Wim de Vriend, is the author of “The JOB Messiahs”

QUESTION: Let’s start off with the latest news from the Port, the expiration of the coal export “contract”. Were you surprised at all that the project derailed? And if
not, why not?
WIM DE VRIEND: I don’t claim to be clairvoyant, but if we study history we’re less doomed to repeat it; and I have studied history. The Port’s latest publicity stunt – because that’s all they are, publicity stunts to convince the public they are doing something – was born with a death sentence. It would never work, and I’ve said so many times. It first came up in July 2011, when I was getting the first edition of my book ready for publication. A great big article with a great big headline appeared in The World – I even reproduced it in the book, it was so weirdly déjà vu: “CB COULD BECOME COAL PORT AGAIN – Port officials say 100 ships per year could take fuel deliveries.” Be sure to notice the word “COULD” being used twice. Let’s see, here it is, on page 19-19 of the second edition, which was 18-18 in the first one, in case someone is looking for it.
Anyhow, instead of making the 2011 coal plan a late addition to the book, I simply dismissed it on that page, and I wrote that it “. . . could make one a believer in the oriental concept that history doesn’t really progress. It just goes around in circles.” In other words, it was much ado about nothing all over again, and I was confident of my opinion because I had devoted an entire chapter to an earlier coal export mania that had come to naught. Chapter 7 – The Coal Promoters documents a coal export plan in 1980, one or two generations ago, depending on which part of Coos Bay you live in.
In other words, we should, all of us, remember the past, or we will keep spinning our wheels. In this case, the wheels of the never-appearing coal trains. And this need, the need to remember the past, is why I wrote my book.
QUESTION: I take it you saw a lot of similarities between the two coal plans, of 1980 and now?

WIM DE VRIEND: Oh yes I did, even though history never repeats itself exactly. But at the heart of both coal export plans was the fact that nobody had done their homework. It’s standard procedure with the Port of course, but also with the promoters that blow into town from time to time. In the recent plan, the overseas partners in the Port’s contract admitted they had not come to a definite decision yet, but would do so by the end of 2012. And that turned out to be the time they withdrew from the deal, which cannot be a coincidence; they had finally put on their green eyeshades and sharpened their pencils and decided it would not pan out. The contract had three more months to run, until March 31, but its death was a foregone conclusion because the only surviving partner was Metro Ports, which is a stevedoring company. Without overseas partners, Metro Ports could do nothing.
In 1980 the coal export promoter was a Canadian who presented himself as the president of Canasia Coal, a new, uncapitalized company, and received the customary adoration of The World. All the big, blaring headlines and gushing editorials, along with scathing condemnations by editor Jerry Baron of the State of Oregon and of Portland, both of whom he accused of trying to rob Coos Bay of its precious coal export terminal. Now you have to realize, back then we were having another energy crisis, and the price of oil had skyrocketed. The Canadian promoter’s story was that power plants in the Far East were looking to switch from oil to coal because the increase in oil prices had made coal more cost-effective, and there’d been a lot of claims by politicians, including Jimmy Carter, that America had a lot of coal to sell. The way they put it, America was the Saudi-Arabia of coal. So this promoter, Marvin Judd, wanted to lease a big piece of North Spit land owned by the Port, to build a coal export terminal. And he made a lot of wild statements that should have raised eyebrows. But that’s what promoters do, I guess. For instance, he boasted that he would deepen the channel for the coal ships, at his own expense. Why any businessman in his right mind would do that is hard to understand; that’s the government’s job, and it’s a very expensive one. And there was a great deal more that didn’t add up. Judd said that Coos Bay was the perfect place for exporting coal because the Asian power plants needed coal of a specific BTU content, no more, no less.
QUESTION: Please explain to our readers what BTUs are.
WIM DE VRIEND: BTU stands for British Thermal Unit. It’s the amount of heat produced by a certain amount of fuel to raise the temperature of a pound of water by one degree F. Provided there are no other factors to consider, power plants or other big energy users don’t care which fuel they use as long as it does the job, producing the required BTUs at the cheapest price. So anyway, Judd was going to bring in high-BTU coal from Utah, as in the latest plan that just died, by 100-car trains to the North Spit. And there it would be “custom-mixed” with low-quality coal from a mine at Eden Ridge, past Powers. But of course, the Powers railroad had been torn up ten years earlier, so Judd said he’d bring the Eden Ridge coal in on the Powers Road, in triple-truck trailers.
QUESTION: The local truckers must have liked that.

WIM DE VRIEND: Oh yes, at least one of them did, who had been promised the contract, and he acted as a promoter for Judd. But think about that trucking job for a second. The Powers Road is curvy and so narrow in places, it can barely handle single trucks. But Judd was going to truck all that coal to the North Spit, at least 90 minutes one-way, maybe two hours. And trucking is a very expensive mode of transportation, especially for a low-value product like coal.
See, one thing you always have to keep in mind about any kind of transportation problem is its cost. It’s absolutely essential. Starting way back in the Middle Ages, Northern Europe blossomed because it had abundant waterways. There were rivers everywhere, and canals connecting them, and canals criss-crossing many of the harbor cities. In the Low Countries every major city had canals; Amsterdam, Rotterdam, Delft, Brugge, Gent. All that was because water transportation was the cheapest way to move merchandise, and it still is. In this country similar things happened in the 19th century. The construction of the Erie Canal was an immense benefit to New York City. With cheap water-transportation, bulk products like grain could reach the city at much lower cost, boosting the economy of the Midwest and of New York at the same time. In cost, the next available transportation mode at the time was horse-drawn wagons. But they didn’t even come close to water in price.
Then, in the 19th century railroads came, and they were a big improvement. Hauling stuff by rail was a great deal cheaper than horse-drawn wagons or, in our day, trucks. But still, the price of hauling stuff by railroad can’t come close to the much lower cost of water transportation.
You’ll have to pardon this digression, but it’s very important. It’s the key to understanding why the Coos Bay coal export idea was always doomed. You see, the mines in Utah and Montana are some 1,200 to 1,500 miles from West Coast harbors. So before shipping the coal overseas, we’re talking about hauling it for very long distances by train. That’s going to greatly increase the price of that coal, and even more so in the case of Coos Bay, because it’s not only further away from the coal mines than the Columbia River ports are, but the local railroad is unsuitable for that kind of traffic. It could be upgraded, of course, but that means spending hundreds of millions of dollars, which would raise the price of that coal even further.
QUESTION: I thought domestic coal prices had softened, and demand overseas was up. Wouldn’t that make up for some of those problems?
WIM DE VRIEND: There’s a kernel of truth in that, but global markets can turn on a dime. That’s another thing that history teaches us. Anybody who thinks present trends will last forever needs some serious reality therapy. The 1980 coal export mania, for instance, was fed by the fact that oil prices peaked in February 1981, at $37 a barrel, which was unprecedented. So you see, that added a lot of fuel to Marvin Judd’s fire. But then oil prices started to slide, and a few years they sat at $10 a barrel. So, coming back to coal, even if some is exported from the West Coast, the economic basis for such ventures is shaky. Coal is a commodity that is found all over the world, and there are other countries that have big coal mines much closer to their shipping harbors. The Australian Newcastle mine, for example, is only some sixty miles from port. Indonesia is a formidable competitor also, partly for the same reason. Colombia is developing a big, well-located coal mine too. And people don’t buy one country’s coal because it’s prettier than another country’s coal. It has to do a job, and price is the key. There may be other factors, the main one being reliability of supply. That could be the case if the coal comes from a country with political instability that could interrupt shipping. But that’s about it.
And by the way, after Marvin Judd’s plan imploded, it was learned that the alleged coal buyers in the Far East already had all the coal under contract that they needed. Judd had told people he already had sold the coal from his future terminal, but he was lying. And yet, the Japanese had been encouraging West Coast ports and shippers and politicians to build coal export terminals. It was concluded, once the dust had settled, that the Japanese, shrewd traders that they are, had been encouraging the coal export mania simply to have a fall-back coal supply from other sources if their present supply were ever interrupted.
QUESTION: So, did other West Coast ports build coal terminals back then?
WIM DE VRIEND: There’s a great 19th century classic that deals with mass psychology. Its title is a mouthful: “Extraordinary Popular Delusions or the Madness of Crowds”, and it was written by a man named Mackay. The 1980 coal mania came well after his time, but Mackay would have recognized it for what it was: a bubble. Just like today, in 1980 Coos Bay was not the only port enamored of coal exports. Judd never built his coal terminal, but some shifty promoters built one in Portland, on land that belonged to the Port of Portland. They paid themselves big salaries, never exported even one pound of coal, ruined an investment bank that had been foolish enough to finance the venture, and they left the Port of Portland with a white elephant that obstructed other developments. The Port of Kalama lost a lot of money too, on account of a coal terminal promoter.
QUESTION: So, was the Port of Coos Bay’s latest coal plan an exercise in futility?
WIM DE VRIEND: Most everything the Port does is an exercise in futility, and often an expensive one. I could go through the list again, from the Crosline to the container terminal and coal, but my book does that well enough. One thing all those futile plans had in common, though, is that the Port never did its homework, it was always acting on the latest popular mania of the day, it didn’t understand markets or the free enterprise system and, most important, it has never understood the real assets of this area. It has not respected them either: anybody who studies my book will agree that the Port obstructs and prevents real, sustainable re-development of the Coos Bay area.
QUESTION: What’s your take on the editorial The World wrote about the demise of the coal export plan?
WIM DE VRIEND: I thought The World was disgustingly deep in bed with the Port back in the eighties, and that the romance might have cooled a bit by now, but I was wrong; it has only gotten hotter. When Jerry Baron was editor he fervently advocated every boondoggle the Port wanted to waste our money on. And in 1985, when a total lying crook by the name of P. J. Wooding came to town promoting a chromium smelter for the North Spit, Baron declared that big business was Coos Bay’s destiny. People who favored small enterprises were “all wet”, he said, because entrepreneurs like Wooding “sweep aside the little thinkers and they guarantee a future in jobs and security.” That was Jerry Baron for you, and he was lavishing his devotion on a guy who told so many lies, it was pathetic. But nobody checked on him, least of all Jerry Baron or, for that matter, the Port. Like Judd, Wooding was just a promoter with no funds and a mythical plan “guaranteed to produce no pollution.” He was finally exposed for what he was when he threw out his bait up in Nanaimo, British Columbia. So now we have Clark Walworth on the editorial throne. Like Baron, he recommends that the Port should be “shrugging off setbacks and relentlessly chasing leads — even though most of them lead nowhere.”
Excuse me, which ones HAVE led somewhere? I suppose we should define “somewhere”. In the case of the Port, which was officially charged with generating “economic development” for this area back in the seventies, it meant bringing in new industries that provided the high wages and generous benefits that the lumber mills used to pay. This the Port has never accomplished, not in about forty years. The only jobs it may be credited with producing are the ones inside the Port office.
And here’s another one from Clark, a real corker: “Some people will interpret this week’s news about Project Mainstay as confirmation that local officials are inept, or that industrial redevelopment of the Bay Area is a permanent pipe dream. The cynics are wrong on both counts.”
Really? The one who is wrong here is Clark Walworth, and it would do him a World of good to read the copy of The JOB Messiahs I gave to his underling Gail Elber in December 2011, in exchange for one of the most superficial book reviews The World has ever published.
But wait! I should give Clark a smidgen of recognition. Because he also wrote: “Economic development is always challenging, especially in remote, largely rural communities. . . . Local officials have to believe the glass slipper is out there. They have to keep looking.” I suppose so, if they are living in a fairy tale, which may well be the case. But if we recognize, as Clark does, that we ARE “remote”, then maybe reality will finally kick in, telling us to forget about the glass slippers and get real. I sure hope so.
QUESTION: The port has resigned from SCDC to save the $30,000 membership fee. How do you think this bodes for economic development agencies in and around
Coos County?
WIM DE VRIEND: Ah, this is fascinating. One economic development agency dissing another one: is there no honor among thieves? SCDC was founded in 2000, as an offshoot of FONSI, perhaps a natural development because both organizations have accomplished exactly nothing worthwhile. Knowing what had happened before they came on the scene, I even had trouble believing that people could believe in them, but I guess they did.
This doesn’t exactly answer your question, but my HOPE is that we can get rid of all the economic development agencies, which together total about a dozen and a half. They are an irritating, unproductive bunch of overpaid meddlers, and a total waste of public money. But it’s worse than that, because they have set this area back, and are still doing it. When I drew the conclusion, in my final chapter, that these agencies, with the Port out front, had erected obstacles to true development of this area, I was not kidding. Nearly all of the Port’s plans – the failed ones including the chromium smelter, the pulp mill, the steel mill, and so on, along with those that seemed to pan out but are unviable economically, like the railroad – have discouraged new people from settling here, and people is what we need the worst. Instead, we’ve been the only part of all of booming Western Oregon whose population has declined these past thirty years. But maybe we should leave this for another interview.
Your question was: how do you think this bodes for economic development agencies? And the answer to THAT is, I don’t know. Sometimes the political process is unable to come to grips with a useless, counterproductive government activity, and it takes some sort of calamity to force the politicians’ hand.
QUESTION: What do you think would happen if the port just ceased to exist as an
entity or state sanctioned economic development agency?
WIM DE VRIEND: Those are really two questions. It may well be possible to disband the Port, and to dispose of its properties or give them to a local municipality to manage. I’m thinking here of the Port’s land on the North Spit and in Charleston, as well as the railroad property, which could be profitably re-developed for private use that would spruce up and benefit this community. But an alternative course of action could be to simply trim the Port’s sails to reduce it to its traditional role, which it fulfilled successfully for years until big ideas overpowered it. I’m talking about making sure that the harbor is dredged. That used to be the Port’s main concern, for many decades. Having said that, I can’t for the life of me believe that we need to keep dredging the channel all the way to the GP dock, when no ocean vessels have been in the upper bay for years and years.
And then there are the multiple gimmicks the Port has created to bribe industries into coming here, or to benefit itself. I’m talking about the Urban Renewal District on the North Spit, about the Enterprise Zones, and all such things. They have achieved nothing; they’re a total waste. They should all be abolished, and the taxpayers should be grateful.
But if we’re going to put the trimming shears to the Port, let’s not forget to also get the voters their ballot rights back, that were stolen from them by the very same Port, back in 1986, by blatant election fraud. We really need a change of direction around here, and without elected Port Commissioners we’ll never get it. The Governor simply approves whomever the local “development” clique proposes; and as a result we’re saddled with a rogue agency, answerable to nobody and still attempting to enter the future while walking backwards.