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Panama Canal expansion could have economic impact on Western Kentucky

The expansion of the Panama Canal is nearly two years behind schedule but officials say it will open June 26. This photo was taken in May.
The expansion of the Panama Canal is nearly two years behind schedule but officials say it will open June 26. This photo was taken in May. Canal de Panama

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Jonathan Miller, former state treasurer and a principal of CivicPoint, the public affairs affiliate of the law firm Frost Brown Todd, is working to determine what economic implications the expansion of the Panama Canal could have for Western Kentucky.

Four Western Kentucky river counties — Ballard, Carlisle, Hickman, and Fulton — are working on a strategy to harness those implications in ways that could bring big change to the region.

The canal expansion — scheduled to open June 26 — will create a new lane of traffic through the construction of a new set of locks, doubling the waterway’s capacity.

Miller talked with Tom Martin about the implications. Click here to hear the audio version of the interview: http://www.kentucky.com/news/business/article45076461.html

Q: Give us some background that brings us to that connection.

A: One of the clichés that I hate most from Kentucky politicians is when they’re talking about crisscrossing the state, they say “I’ve been from Pikeville to Paducah.”

Paducah is not the most western part of the state. Not only do Kentuckians, particularly in this part of the state, forget about most of Western Kentucky, but when it comes to far Western Kentucky, or as they call it out there, ‘the real Western Kentucky,’ it gets even worse.

Q: The expansion of the Panama Canal is near completion. What does this imply for river traffic in general and for these four Western Kentucky river counties in particular?

A: It’s a $5 billion expansion. It will double the number and triple the size of the ships that will go through. Right now, most Chinese goods are imported into ports near Los Angeles and then taken by truck or train to the rest of the country.

This will change the economics so that folks are going to decide instead to import much of this cargo through the Panama Canal, up the Mississippi and then up the Ohio to points Midwest and in Northeast. The four river counties are not only all on the Mississippi, but the northern most river county, Ballard, and the city of Wickliffe are right at the confluence of the Mississippi and the Ohio.

Meanwhile, from New Orleans to Wickliffe, there are no roadblocks, no obstacles, no physical barriers, locks and dams. So, it’s smooth sailing. And as a result, putting a port authority right at these four counties could create a tremendous economic opportunity for that area. That is at the heart of what we’re doing in this economic development initiative.

Q: You recently led focus group sessions, one for each of the four counties. Who was involved?

A: This project was started by the judge-executives in each of these four counties. For those less familiar with Kentucky politics, outside of Lexington, the county judge is like the mayor of the county. Three of them are Democrats. One is a Republican. There has been a history of county rivalries whether it’s basketball or politics. This is the first time the four of them have gathered together in a bipartisan way to try to work on a coordinated regional plan, anticipating that they’ve got this great opportunity.

They asked me to start the process of putting together a report. And the first step was facilitating focus groups in each of these counties. We invited community, political, education, church and business leaders. And from that, we are preparing a strategic plan that will culminate in a summit to take place this fall.

Q: This sounds like SOAR, the “Shaping our Appalachian Region” initiative in Eastern Kentucky. Is there a sense in Western Kentucky that they’ve been left out?

A: There is a sense in Western Kentucky that Frankfort ignores them, that policymakers just don’t care about them. They’re not out there that much. It takes longer to drive there. And that sense is even more exacerbated in the river counties, which are even more remote.

They saw what was going on in Eastern Kentucky — and definitely Eastern Kentucky deserves the attention, particularly with the decline of the coal economy — but they saw what was going on out there and they said, ‘Well, what about us?’

Q: What are some key takeaways from the focus group discussions?

A: I started off these sessions by asking some very simple and basic questions such as, why do you live here? If the answer is ‘because I was born here,’ then why did you stay and what would you say to someone who would be looking to move their family or move their business to the region? And what’s interesting, it came down to loving the small town community life.

And while they are very eager to have economic growth, they also don’t want to see that small town feel go away. So, that will be a balance that we will be struggling with throughout this process: how do we keep that small town feel and yet promote the economy?

Q: It’s a fragile balance, isn’t it? Is there any fear of development going too far and losing that rural sensitivity?

A: Yeah. There’s no doubt that we’re going to have to continue to struggle with that and sometimes have to say no. But you know, perhaps the most famous thing about the river counties is the extraordinary natural beauty. The scenery is spectacular.

And obviously, they’re not going to want to have tremendous construction and manufacturing development in these beautiful areas and yet there will be opportunities through this Mississippi River traffic to be able to say to businesses that are looking to relocate here, ‘hey, if you’re into fishing, hunting, hiking, this is a great area for you to travel through, to be a tourist, and to move your family.’

Q: What would have to be done to develop those riverside communities to accommodate increased river barge traffic?

A: Well, the one significant river port is in Fulton County in the town of Hickman. There are challenges to that river port due to the way the water comes in and goes out. It will be impossible to have a huge river port there, but we do believe that there will be opportunities to expand that and help the folks in Fulton County take advantage of this opportunity.

The greatest opportunity though in terms of a port is going be at Wickliffe because it’s not only at the confluence of the Mississippi and the Ohio, but the way the water is constituted, it will create extraordinary opportunities for these really huge ships that are now going to be built because of the increased width and depth of the Panama Canal to be able to come through there on their way either up North to Chicago or east up the Ohio.

And so, one of the most important projects will be the creation of a four-county port authority. That’s the number one infrastructure, but then you have to figure out how you get there. There will be a need to further develop I-69, the interstate that’s being brought through that area, and to further develop rail traffic.

Q: What about the river itself? Can it accommodate these increased loads in its current state? Would there have to be dredging, expansion of any sort, and what are the environmental implications?

A: The way Wickliffe is constituted it will be able to accommodate a dramatic increase in river traffic both in number and in size without any dredging or any significant changes. The challenge will be to keep the traffic from getting too congested. We’re going to need to build ships that are bigger in size and in volume.

I’m hopeful that one of the projects we’ll look at is where those ships are built. They could potentially be built anywhere on the Mississippi. Why not in our region where labor costs are generally lower and where we have a really well-educated population?

Q: How might private-public cooperation and partnership work for this project?

A: Well, the timing is great because we just passed public-private partnerships legislation in Kentucky that is seen as some of the most expansive and innovative P3 legislation in the country. We hope this will encourage the private sector to get involved in these projects.

The number one P3 project would be this port authority. But we’re also looking at P3 initiatives within our communities. That includes broadband and promoting energy efficiency. We’d love to see the four counties become a model test area for P3 as Kentucky hopefully emerges as a national leader.

Q: Are there similar initiatives underway in neighboring riverside states?

A: New Orleans and St. Louis have been getting ready for this, but we are unaware of any other effort like this. No matter what else happens on this river, no one can beat our location.

About 70 percent of the nation’s population is within a day’s drive of the area. It really is a great place for such an initiative to happen.

Tom Martin’s Q&A appears every two weeks in the Herald-Leader’s Business Monday section. This is an edited version of the interview. To listen to the interview, find the podcast on Kentucky.com. The interview also will air on WEKU-88.9 FM on Mondays at 7:35 a.m. during Morning Edition and at 5:45 p.m. during All Things Considered.

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