Cruz Says Crane Deal Is a Bad Deal, Calls on Port to Buy 2 New Ones Instead of 3 Old Ones There Now

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Guam – Vice Speaker B.J. Cruz is reiterating his objections over the Port of Guam’s decision to buy the 3 used cranes now at the Port which are owned by Matson and Horizon.

The purchase is scheduled to be sealed on December 14th in Honolulu when the Port will sign the deal  agreeing to buy the 3 cranes for $12 million and pay another $9 million to refurbish them. The money is coming from a U.S. Department of Agriculture loan and the USDA has signed off on the deal.

But the Vice Speaker believes its a bad deal. He argues that 2 new cranes could be purchased, with warranties, for $19 million, less than the $21 million the Port will pay for the 3 old cranes which will require extensive repair and maintenance,  and whose service life is in doubt.

Senator Cruz also argues that the Port’s initial cost savings claim is no longer true. The Port said the deal would allow them to lower the per-container off-loading fee by $20-dollars, to $105 dollars per container from $125-dollars now.

But a consultant’s report submitted to the PUC Monday night revealed that would put the Port in debt and not allow the Port to put aside funds to purchase new cranes in the future.

Port Board Chairman Dan Tydingco acknowledged that the Port could not afford to lower the per-container fee anymore, but he argued that the Vice-Speaker’s scenario did not take into account multiple factors like the cost of shipping new cranes to Guam, the availability of the 2 new cranes the Senator wants to buy new, and the likely need to change the track on the wharf to accommodate any new cranes.

He also emphasised that a wide range of experts have looked at the deal and approved it including MARAD and USDA as well as the Port’s independent consultants.

In addition, Port General Manager Mary Torres told PNC:

“This is the first time in the history of the Port that we will own so many assets to serve our community and this is a proud matter for the Port and the people of Guam. Owning and controlling our own assets is critical to the successful operations of the Port and is essential to ensuring the uninterrupted flow of goods into our island.”

“This purchase resulted from a unique opportunity that came before us and we were authorized by Public Law 30-57 to negotiate with Matson and Horizon for the purchase of the cranes. We believe that the cranes will serve the needs of our island and our region for many years to come.”

READ Senator Cruz’s release in FULL below:

FOR IMMEDIATE RELEASE
CRUZ CRITICIZES PORT PURCHASE OF OLD CRANES IN INT’L MAGAZINE

Hagatna, GUAM — Vice Speaker Cruz has reiterated his concerns with the Port Authority of Guam’s (“PAG”) recent purchase of three ship-to-shore rail-mounted Gantry cranes from Matson Navigation Company and Horizon Lines (“Matson-Horizon”). The controversy over the Gantry cranes–which had been discarded by the Port of Los Angeles (“POLA”) in 2006, considering them unfit for use–was recently featured in Hoist Magazine, an industry-leading international publication.

“Vice Speaker of the 31st Guam legislature, Benjamin Cruz, explained that the cranes’ current five-year expected lifespan could only be extended to 20 years if the USD 9M repair and upgrade program is followed,” according to the article. “Furthermore, he highlighted downtime currently experienced due to intermittent problems with the aging cranes, which the report said included periods of between three and five months where cranes had been out of order over the last few years.”

http://www.hoistmagazine.com/features/money-for-old-cranes

The Gantry cranes were sold by POLA to Matson-Horizon in 2008 for US$50,000 each. PAG later purchased the cranes from Matson-Horizon as part of a US$12 million deal. An independent report issued by structural engineering firm Casper, Phillips and Associates claims that the estimated cost of repairs and maintenance for all three cranes could reach US$9 million.

Cruz has been a vocal critic of the purchase, arguing that “buying two new cranes under warranty for US$18 million would be a better value than paying US$12 million for the three cranes plus the remainder of the US$9 million repair costs outstanding.” The Hoist article echoes Cruz’s sentiments, claiming that “the cost of repairs and maintenance could far exceed the cost of purchasing three new cranes.”

The three Gantry cranes were sold by POLA as part of a salvage auction to get rid of its aging fleet. Matson and Horizon were the only bidders.

According to its website, Hoist Magazine is “the only international factory crane magazine, and the only title which truly represents overhead lifting equipment.”