Michigan is getting a swanky new international bridge. Canada is paying
The governor of Michigan, Republican Rick Snyder, will happily admit to being “one tough nerd”. The former accountant needs to be, as he has been waging a battle to push ahead with a new bridge between the United States and Canada. Called the New International Trade Crossing (NITC), it will connect Detroit and the town of Windsor in Ontario.
A quarter of all cross-border trade between the two countries, worth about $680 billion annually, travels over the Detroit river, mainly via the 83-year-old, four-lane Ambassador Bridge (pictured above) but also through some ageing tunnels. The bridge alone is the busiest commercial crossing in North America, and congestion at peak times is a problem.
Some are worried that this set-up is hampering investment in the region, as well as causing problems for cross-border industries such as car manufacturing. Others worry about the economic and security implications of relying so heavily on one piece of infrastructure, particularly one that is in private hands. And the Canadians particularly dislike the way the existing bridge sends lorries through downtown Windsor.
The NITC will create many jobs in Michigan and give the economy a much-needed shot in the arm. According to a recent study by the Centre for Automotive Research, the bridge will create 6,800 permanent jobs and contribute $630m each year to Michigan’s gross state product.
The car industry is strongly behind a new bridge, as are the state’s three largest employers’ organisations. Few people realise how important the bridge is to the car business. The Canadian industry is highly concentrated in Ontario. Bill Anderson, of the University of Windsor, argues that America and Ontario don’t so much trade cars as produce them together. Complex cross-border supply chains mean that some components of a car may cross the border up to seven times, and one study found that about one-third of Canada’s exports to America are composed of goods that were previously imported from it. The two largest employers in Windsor are Chrysler and Ford.
So the proposed new six-lane bridge, with special lanes for preapproved traders, will be a great boon to the industry. And a more reliable crossing could also attract new investment. Moreover, the NITC also follows a better route. Instead of dumping traffic into central Windsor, it will be integrated seamlessly into motorways on either side of the border.
The campaign against the NITC is being waged, unsurprisingly, by the owner of the present Ambassador Bridge, Manuel Maroun. Mr Maroun has spent almost $5m on a campaign to sour public opinion on the deal in Michigan, with some success. Mr Maroun is not entirely against a new bridge; it is simply that his preferred option is to build a second span alongside his existing one. It would be cheaper, and it would be privately financed and owned. It would also prevent a new public bridge from eating away at his toll revenues.
Mr Maroun’s opposition has made the NITC such a hot potato that the governor has been unable to win the legislative approval he needs to pay for Michigan’s contribution to the bridge. So the Canadians have decided to pay for the whole bridge themselves, in a deal that has become amazingly sweet for Michiganders.
In June Mr Snyder signed an “interlocal agreement” with the Canadian government that will allow the $2.3 billion crossing to go ahead—something Mr Snyder says is within his constitutional authority. But the state has no authority to pay a single cent for the bridge. So not only will Canada pay for building the bridge by itself, it will also finance Michigan’s $550m portion of the project, which includes the costs of acquiring the necessary land on Michigan’s side of the border. Canada will collect its money back in tolls.
Even better, the American federal government has agreed that the $550m the Canadians are spending on the Michigan portion of the bridge qualifies as state “matching funds”, and can therefore be invoked to release federal highway funding investment to the tune of about $2.2 billion. This can be spent on road improvements not just in Detroit but across Michigan—and will create another 6,600 jobs a year over four years.
Still, Mr Maroun has not given up, and has managed to force the question of the new river crossing on to the state ballot this November. Mr Snyder, despite all his apparent victories, will have to continue to tough it out.