Coup de Superferry

The authors of the Superferry Chronicles wrote this excellent analysis for the Hawaii Independent on the demise of the Hawai’i Superferry.  Their conclusion:  in the end, the Superferry won.  If we assume that the Superferry was meant to primarily be a proof of concept, then it accomplished its purpose.   Their venture was underwritten by Hawai’i residents to the tune of $40 million in harbor upgrades and by U.S. tax payers to the tune of a $140 million loan guarantee.

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http://www.thehawaiiindependent.com/opinion/2009/03/20/coup-de-superferry/

Coup de Superferry

Posted March 20th, 2009 in Opinion by Koohan Paik and Jerry Mander

When the Superferry set sail on its last roundtrip voyage across the channel between Honolulu and Maui, Oahu grieved. CEO Tom Fargo gave his swan-song statement as the ship pulled out of the harbor, announcing soberly that the company would seek contracts for its two boats elsewhere. Tearful passengers lamented the end of this “alternative mode of transportation” that enabled FedEx and Love’s Bakery to ply their wares on Maui. At Kahului Harbor, on Maui, a tugboat tributed the final run by spraying seawater skyward. The evening newscasts were filled with images of many of the 236 employees who had been laid off, victims of a seemingly unfair (and unanimous) state Supreme Court ruling. “It’s like a death,” uttered port utility operator Corrine Dutro-Ponce.

Superferry is the supposed “victim” in the latest ruling that determined that “Act 2,” the bill that Lingle and the Legislature rushed into law, was unconstitutional, on the grounds that it was custom-tailored for one company: Hawaii Superferry. It cannot continue to operate, unless it first conducts an Environmental Impact Statement (EIS).

Economically speaking, this ruling gives the company a golden opportunity to cut their losses and bow out gracefully. Though Fargo and the media have been repeating like a mantra the phrase “over 250,000 customers” (as if this cumulative passenger count somehow justified the company’s existence), nonetheless, it has been operating at a loss since it arrived on our shores. According to figures presented in a March 18, 2009 Honolulu Advertiser story, for the three months of November through January, the company never attracted more than 25% capacity, far below the ridership necessary to break even. Figures revealed monthly at the Oversight Task Force meetings showed similar public disinterest in ridership.

In addition to staunching the fiscal hemmorhaging, the ruling enables the company to recoup more money through legal actions should they choose, now that Act 2 has been struck down. Act 2 had included a provision prohibiting the company from suing the state. Not only that, shutting down operations frees up the two vessels, which cost $180 million, to be leased or sold.

This, along with the cushy federal loan guarantee for $140 million issued by the U.S. Maritime Administration, leaves the departing company in much better financial shape than if they were to continue in Hawaii, running at a loss.

But the biggest coup of all for the Superferry corporation is that it got what it needed out of the deal: to prove the boat’s seaworthiness as a demo model in competition to build the Navy’s Joint High-Speed Vessel (JHSV). Austal USA, an investor in Superferry as well as its builder, won the contract worth $1.6 billion last September to build ten JHSVs.

That’s why conducting an EIS has been anathema to Superferry from the very start. Doing so would have kept the boat out of the water, and unable to prove itself against Austal USA’s competitors for the lucrative Navy contract.

That’s also very likely why Hawaii Superferry ignored Alan Lerchbacker, former CEO of Austal USA when he suggested to the company that it build a vessel smaller than 340 feet, concerned that the company would never break even on fuel costs. Lerchbacker was Austal USA’s outgoing CEO when he advised Hawaii Superferry in mid-2003, several months before the boatbuilder and Superferry sealed the deal in 2004 to build two 340-foot catamarans. A smaller vessel, as recommended by Lerchbacker, would not have been considered in the running for the JHSV contract. Cost-effectiveness as a civilian ferry ship did not seem to factor into the final decision. Building the largest high-speed aluminum-hulled catamaran in the United States seemed to be paramount, and certainly a premium in a competition for a Navy contract.

As it now stands from Superferry’s point of view, its job in Hawaii is pau already.

While the big winner in this fiasco is Hawaii Superferry, the losers are clearly the 236 workers who have lost their jobs during these rough economic times. If the company ever really cared about them, they would have done things right from the start, complied with state environmental law, conducted a proper EIS, and encouraged community participation in shaping what could have been a great public service.

Koohan Paik and Jerry Mander are the authors of The Superferry Chronicles: Hawaii’s Uprising Against Militarism, Commercialism, and the Desecration of the Earth.