State salt bill pits docks against Detroit company
Lansing – At a time when White House rhetoric focuses on putting “America First,” GOP state lawmakers are discovering the complexities of putting “Michigan first” when bidding on international commodities.
Salt and dock companies along Michigan’s shores are caught up in a debate about whether the state should give the Detroit Salt Co. an edge over Canadian competition for state contracts.
A House panel listeneed to 90 minutes of Tuesday on a bill that would give Michigan’s only salt mining company – based in Detroit – a leg up over Canadian salt imports amid concern that state money is going to foreign companies instead of boosting in-state companies and jobs. But Detroit Salt Co. is owned by an Ontario-based company, of which it is a subsidiary.
The Commerce and Trade Committee did not vote on the Senate-approved measure and plans to hear more testimony.
Canadian salt companies can undercut Michigan’s sole salt company by lowballing their bid prices and then ratcheting them up later, bill supporters said. Detroit Salt Co. would have an advantage under the legislation, which would factor in an 8 percent increase in state contract prices for salt companies based outside of Michigan and the United States.
“Well, I’d love to make (Michigan) great again,” Rep. Klint Kesto, R-Commerce Township, said during the hearing, suggesting his support for the legislation.
But dockyard owners said the state’s docks – which pay workers to help import Canadian salt for state roads – employ more Michigan workers than Detroit’s salt mine. They argue that the bill wouldn’t put “Michigan first” at all; it would simply favor one state company over others, a point that resonated with some lawmakers.
Rob Matthews, president of the Verplank Dock Co., which has its mailing address in Ferrysberg, Michigan, said the bill would result in his company laying off workers who help take in salt along the dockyards in the winter.
“When they don’t make money, they don’t spend money,” Matthews said.
Critics said they fear the legislation would mean that one company would corner the Michigan salt market, at least for state contracts. Some truckers also argued that they’re concerned that shipping salt only to and from Detroit would end up hurting their business.
Committee Chairman, Rep. Eric Leutheuser, R-Hillsdale, said he hasn’t taken a stance on the bill and is interested in hearing more testimony.
State officials argue the legislation would increase salt costs. If Detroit Salt hiked its contract 1 percent for the same amount of salt the state bought last year, that’s about 10,000 fewer potholes the department would be able to fill that year, according to the Michigan Department of Transportation, which uses salt from such bids to melt ice on state roads.
Detroit Salt has about $20.1 million worth of contracts with Michigan, about one-fifth of the state’s total, according to a House Fiscal Agency analysis.
In 2016, Detroit got about $6 million of $17.9 million worth of salt deliveries split among four companies, the agency said. Michigan would lose about $480,000 per year if the bill were enacted, according to the agency analysis.
James Colangelo, who’s in charge of procuring state contracts for the Transportation Department, said the cheapest thing for state taxpayers is to have more competition.
The bill could lead to a smaller pool of people competing for state contracts, Colangelo said, “and in my opinion, the more people you have bidding, the better competition you have, the more negotiating leverage you have.
“So that’s a scenario where the prices could potentially go up,” he said.