Port of Olympia commission mulls sale of money-losing crane

angel may

The Port of Olympia has been here before. Years ago, the port had two container cranes that jutted into Olympia’s skyline — two cranes that were rarely used and expensive to maintain and ultimately sold for scrap. Now the commission is mulling the possible sale of the crane that was […]

The Port of Olympia has been here before.

Years ago, the port had two container cranes that jutted into Olympia’s skyline — two cranes that were rarely used and expensive to maintain and ultimately sold for scrap.

Now the commission is mulling the possible sale of the crane that was purchased to replace those earlier cranes.

At a Port of Olympia work session Thursday, marine terminal director Len Faucher provided the background on the crane.

The crane, which has a lift capacity of 140 metric tons, was made in 2005 and purchased by the port in 2013 for $3.25 million. The port used a combination of bond money and cash reserves to pay for it, Faucher said. After the port paid $225,000 to assemble the crane, it became operational in 2015.

The port thought its heavy-lift capacity would make it ideal to attract cargo from the oil industry and wind power generation business, but the price of oil collapsed and the wind power blades are now much larger than they used to be. The port can’t accommodate the larger size, Faucher said.

The result is that the crane has seen only occasional use, such as lifting the hay and feed needed for the cattle shipments that pass through the port.

When the port combines the occasional use with the expense of maintaining the crane, including debt service on the bond payments, it has lost $2.21 million on the crane so far, according port financial data.

Faucher said if the port were to sell the crane, it could either rent a crane or buy a smaller crane for about $200,000. A sale could bring $1.3 million to the port, he said.

Commissioner Joe Downing was blunt in his assessment of the situation.

“I have to say flat out it’s pretty dismal,” he said, adding that in five years the crane hasn’t lifted anything close to its rated range of 140 metric tons.

He said the ships that call on the port have their own cranes and the port hasn’t secured any heavy-lift cargoes.

“If we don’t see any good use for the crane over the next year, I say we contemplate selling it,” Downing said.

Commissioner E.J. Zita was in agreement, saying the port could use $1.3 million.

“These are tight times,” she said. “We should be looking at a financially stable model for the port.”

Port Executive Director Sam Gibboney cautioned the commission on a sale of the crane, however, explaining that a sale would not eliminate the principal and interest payments on the bond.

“The sale of the asset would not cover those bond costs,” she said, suggesting that it would be best to wait until the crane is paid for and the port is not underwater on it.

If the crane is sold, Downing said he would not be in favor of replacing it again with another crane. He favors renting, or partnering with a company that would supply the port with a crane when needed.

Zita called for more financial analysis of the crane situation.

Gibboney said port staff could provide more analysis in the first quarter of 2021.

But Zita said the sooner, the better. “The crane is hemorrhaging cash,” she said.

Rolf has worked at The Olympian since August 2005. He covers breaking news, the city of Lacey and business for the paper. Rolf graduated from The Evergreen State College in 1990.

Source Article

Next Post

California gambles with stopgap legislation with AB 1436

The severe recession that has engulfed California as the state battles the COVID-19 pandemic presents the state’s dominant Democrats with a very large dilemma. As businesses closed their doors and unemployment skyrocketed, the natural inclination of Gov. Gavin Newsom and Democratic legislators was to spend money to relieve the economic […]