The planned construction of a new border crossing between Canada and the USA at Windsor-Detroit is welcome news to supply chain practitioners, tradesmen, labourers, and communities on both sides of the border.
Canada and the United States are huge trading partners. The United States is by far Canada’s biggest trading partner, accounting for between 62% and 69% of Canada’s total trade, depending on the measurement used.
About half of all Canada-US trade moves across the Ontario Michigan border. And most of that volume flows between Detroit, Michigan and Windsor, Ontario. As such, the region of South Western Ontario, and in particular the Windsor-Detroit area, is of enormous significance to bilateral trade.
Only one bridge, the Ambassador Bridge, and one tunnel, the Detroit-Windsor Tunnel, connect the two cities.
The tunnel, whose construction was completed in 1930, is the second-busiest border crossing between Canada and the USA, to the Ambassador Bridge which ranks first. The tunnel carries no commercial trucks beyond van-size except for armored cars and a municipal bus company.
As such, the Ambassador Bridge carries the brunt of commercial traffic. It is the busiest international border crossing in North America in terms of trade volume. In a strange twist of history, the Ambassador Bridge itself is owned privately, by a billionaire named Manuel “Matty” Maroun. Maroun purchased the bridge from the Bower family in 1979, and it is estimated to be worth between $1.5 and $3 billion.
The bridge holds a monopoly on commercial traffic, and the Maroun-owned Ammex Duty Free Store holds a monopoly on duty-free fuel.
Delays in getting goods across the border, caused by gridlock are commonplace.
It is estimated that 150,000 jobs in the region are dependent upon the Windsor-Detroit international border crossing.
The regions on both sides of the border have been hit hard by downturns in local economies. The post 2008 financial crisis only begins to tell the story. Heavily dependent upon the auto sector, employment numbers in both Windsor and Detroit have fallen victim to foreign competition, increased influences of technology such as robotics, and re-positioning of production operations over the past few years.
So, the agreement to invest in infrastructure is welcome news to tradesmen and other workers in both countries.
The following video produced by Canada’s Global News summarizes the agreement:
An excellent review of the new arrangement appeared in the most recent edition of Canada’s MM&D Magazine:
A long-awaited new bridge at Canada’s busiest border crossing will ease traffic gridlock and encourage trade, according to Prime Minister Stephen Harper.
Harper’s comments came as he announced an agreement to construct a $1-billion link between Windsor, Ontario, and Detroit, Michigan.
“This new bridge, the second across the Detroit River, is an investment in the future — in the future of the North American economy, in North American trade and North American manufacturing,” he said.
“This is the most important piece of national and international infrastructure that this government will complete while I am prime minister,” he said.
Under terms of an agreement in principle with Michigan, Canada is financing the construction, and will recover the state’s share of the cost through tolls on the American side of the Detroit River.
The addition of custom plazas and highways—coupled with the costs of land expropriation—will see the total bill swell to $3.5 to $4 billion.
The work is also expected to create thousands of jobs on both sides of the border. It will also ensure sales for North American steel companies and other manufacturers—at least for the bridge itself.
“We are particularly pleased that the project will require that all steel and other construction materials must be of either US or Canadian origin, a provision that will ensure the bridge is constructed from quality materials while supporting high-value US and Canadian jobs. The New International Trade Crossing will greatly enhance industry competitiveness and facilitate intra-NAFTA trade,” said American Iron and Steel Institute (AISI) president and CEO Thomas Gibson.
According to the United Steel Workers union, while there are sourcing rules in place concerning construction materials for the bridge and the approaches and customs plaza on the American side, sourcing rules for the Canadians customs plaza and approaches have not yet been clarified.
“Now we need Ottawa and Ontario to proudly say they are standing up for Canada. Now that there’s a deal to build the bridge, we call on Stephen Harper and Dalton McGuinty to clearly say the Canadian-side infrastructure will be built with Canadian jobs and materials,” said Ken Neumann, United Steelworkers national director
The new span will be a few kilometres south of the existing Ambassador Bridge, which has become a serious bottleneck for trucks moving between the two countries.
Canada, the US, auto makers and other industries have argued for years that another crossing is desperately needed to end truck gridlock and provide an alternative if the existing bridge is shut down in the event of a terrorist attack. (Read more…)
A key aspect of the agreement is are the rules stipulating the source of the material to build the bridge and associated U.S. infrastructure. Of course, Michigan favored a “buy American” rule, while Canada preferred a somewhat more open approach. Michigan residents had further been warned that steel used to build the bridge could come from cheaper foreign sources in Asia.
By ensuring that all iron and steel for any component of the bridge, or the approaches and customs plaza on the U.S. side, must originate from Canada or the United States, the concerns of Michiganders were allayed.
Steven Chase and Greg Keenan write for the Globe and Mail:
The agreement requires Canada and the United States to compromise on a hot-button subject: the rules stipulating where the material to build the bridge and associated U.S. infrastructure must come from. Canada would have preferred a no-restrictions approach to steel and other materials, while Michigan had favoured a “buy American” rule.
The tradeoff is that all iron and steel for any component of the bridge, or the approaches and customs plaza on the U.S. side, must originate from Canada or the United States. The measure is an attempt to reassure Michiganders who were warned by bridge opponents that the steel might come from cheaper overseas suppliers in China or South Korea.
Canadian steel mills produce the plate and concrete reinforcing bar that will be used in the bridge, but the main structural support beams will likely come from U.S. mills.
The fact that Canada even gets a say on the origin of materials for the U.S. infrastructure reflects the financial burden Ottawa is assuming.
The bridge will be financed and built by a private contractor – yet to be selected – but Canada is shouldering the majority of the upfront costs to build related infrastructure, such as extension roads approaching the bridge, on both sides.
This reflects the fact the deal is being conducted over the wishes of the Michigan legislature. Ambassador Bridge supporters in the legislature have repeatedly opposed the project and taken action to ensure the government of Michigan cannot spend money on the project or collect tolls.
To get around this, Ottawa is stepping in with a cheque. The Canadian government will pay $550-million to build Michigan’s share of the road approaching the new bridge on the Detroit side – an amount to be repaid in toll revenue.
Plus, the toll collection booths for travellers heading either way will both be located on the Canadian side of the span because Michigan does not have the legislative authority to accept fees for bridge crossings. (Read more…)
Chris Vander Doelen wrote a really entertaining article today about the possibility that the new bridge might encounter even more challenges to construction. It appeared originally in The Windsor Star, and was picked up by The Ottawa Citizen newspaper:
Pay no attention to the worrywarts who warn that some kind of legal threat might derail the new bridge between Windsor and Detroit. That’s not going to happen.
The new truck and trade crossing announced by Prime Minister Stephen Harper and Mich. Gov. Rick Snyder on Friday is now officially a Monster Government Steamroller.
Windsor’s new bridge has started inching toward its inevitable destination and nothing but planetary dislocation or Toronto winning the Stanley Cup will stop it now.
You can bet your brightest child on this outcome: there will be two bridge crossings between Canada and Detroit, probably in six years, max. Resistance is futile.
As you may have read 10 months ago it was “just a matter of time” before a new bridge was going to be built once governments on both sides of the border figured out their respective economies and tax receipts depended on it.
Why oh why does anyone ever think they can stand between a government and the taxes that feed it — much less six hungry governments, on three levels, on two sides of an international border?
All our politicians in Ontario and Michigan had to do was spend five minutes each listening to General Motors, Ford and Chrysler, and they knew they had to act as quickly as possible to fix the border. Sure it took 10 years, but that’s pretty fast for six independent bureaucracies.
“It’s hugely important,” Ford Chairman William Clay Ford Jr. said Friday, minutes after Harper and Snyder signed the legal agreements at Cobo Hall that will lead to construction of a second trade span between the two countries.
“We send 600 trucks a day across the (Ambassador) Bridge. We have 18 major manufacturing facilities in this region. Every delay costs us time and money.” (Read more…)
I say, bring it on.
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