Eddie's Tunnel Super-Vision

It just does not make any sense to me at all. There has to be more to it but I just do not get it.

The guy was "Young Entrepreneur of the year" so we thought he was a successful business person. He is a Lawyer (although he really went almost immediately from his Bar Admission course to running for office) so we thought he knew how to dot the "I's" and cross the "T's." He is the head of a Corporation now with thousands of employees, hundreds of millions in assets and a budget of over a quarter of a billion dollars so we thought he could manage. Were we all wrong?

The Detroit-Windsor Tunnel was going to be his big success that would allow him to achieve amazing things in his second term as Mayor. Instead, it may symbolize his failure as the border and arena debates are doing now.

What do we know about the Tunnel already that has taken place under the Eddie Francis watch:

1. Its value as an asset that can generate funds for the City may be decreasing rapidly as more negative information about it comes out
2. Its traffic volume has continued to decrease from 1999 to the end of 2005 from 9.6 million vehicles per year to 6 million and it sinking fast this year too.
3. Revenues have continued to decrease by a third in that time period, declining every year from about $18M to $12M with no end to the decrease in sight even with increased tolls.
4. The $6.6 million Tunnel dividend, will be reduced drastically this year and may completely disappear next year thereby increasing our tax load
5. The Tunnel’s low tolls policy, designed to take traffic away from the Ambassador Bridge, failed as the recent increases demonstrate
6. Cost overruns on the Tunnel Ventilation Building renovations have increased the price from $13M to over $20M.
7. The Tunnel Plaza Improvement project costing $30M, ten million of which will be borne by City taxpayers, will not move one single vehicle through the Tunnel any more quickly and may now not be necessary (see Point #9).
8. The Windsor Tunnel Commission may have to borrow up to $15 million from the City, reducing our already fast shrinking reserves.
9. Downtown traffic jams have become so bad because of Tunnel backups that we are now going to allow vehicles to queue inside the Tunnel to take the pressure off of City streets.
10. In a recent article in the Journal of Commerce, the Tunnel was described as a “unique security risk” that does not meet US Customs requirements.

We know that, as much as he wants to dodge it, he was a member of the Windsor Tunnel Commission and a Councillor, and so has to take the responsibility for the Park 'N Go fiasco which will cost the City millions as it went into Receivership. The Star reported that "Francis said the agreement should have contained other legal protections for the city. It didn't..." The responsibility must be that of the Mayor since "In April 2001, then-councillor Francis made the motion at a tunnel commission meeting to approve the partnership agreement." While he says "All I know today is when agreements come on my desk, before I sign them I read through those agreements," it would seem that yesterday this was not his practice resulting in the loss to the City. Eddie failed to ensure that the City had protection.

As a business person and manager, he should know how to run a business profitably. After all, didn't he have a successful Pita business that he expanded and was able to sell. Yet look at how he has run the Tunnel

Years ago in relation to the Tunnel Eddie "acknowledged that "our traffic has gone to the bridge and we have to do a better job of convincing people that the tunnel should be their crossing of choice." One of his Board colleagues stated "We have tried in the past to keep fares low to encourage usage, but it appears our patrons are not being supportive of that position because we are losing business to the (Ambassador) bridge." Councillor Cassivi, another member of the Commission, made the point that "painful as it may be to consider, we may have to look at a rate increase because it is a business."

Eddie's toll pricing actions were an abysmal failure as can be seen by the fact that the tolls finally had to be increased to stop the revenue bleeding. It seems that the tolls were kept low. DCTC as an example, had to increase the tolls coming into Windsor to pay for costs such as rising health care costs for U.S. employees and high insurance premiums. The Tunnel experienced revenue losses in the millions. Yet, until recently, the DCTC toll into Windsor was $4.75 while the WTC's toll into Detroit was $3.50. Of course, this does not even consider the US$2 per toll if Tunnel tokens were bought in bulk.

Eddie was quoted in the Windsor Star saying, "Francis countered there hasn't been a noticeable increase in traffic numbers despite the Windsor side of the tunnel providing the cheapest cross- border tolls at either the bridge or tunnel in recent years."

Over 18 months ago, the Mayor said "I think it's time to assign a specific individual or individuals to better manage the affairs of our greatest revenue-producing asset...We need to find a person or persons who will live and breathe tunnel business," said Francis. "We shouldn't be merely interested in preserving our market share at the tunnel, we need to improve it and we need to develop a comprehensive strategy that will allow us to do that. "And the only way to do that is to give the tunnel more attention."

So what was done? Who is that person or are those persons? If no one was hired, no wonder the Tunnel is in a mess. If he/she was hired, then why is that person in the job still. Finally we learn today that someone will be hired by Christmas. What a joke. No wonder Windsor and the Tunnel burn as Eddie procrastinates. And he uses the same line that he used so long ago, "The tunnel is a strategic asset for us and requires somebody living and breathing its interests seven days a week."

Am I being unfair? I do not think so. I am told that the Tunnel volumes for this year in comparison with last year's volumes are down by about 220,000 vehicles

If the trend continues downwards as it is and the loss numbers are as large each month, the Tunnel could lose 10% of its volume in one year or about a loss of around $2 million in revenues. The reduction in volumes alone after the tolls were increased is about 170,000 vehicles in July and August alone I have heard.

The Tunnel is bleeding red ink by the bucket.

Is Eddie is too busy dreaming the dream of Tunnel infrastructure deals, outsmarting the Bridge Co. and fooling the Senior Levels to worry about the mundane maters like operating a successful border operation? We know running a family Pita business is not running a multi-hundred million dollar cross-border transportation corridor. If Eddie cannot succeed today, think of what competition he will have to face when the Bridge Co. completes its enhancement project and if a new bridge is built. Think of the competiton from a 200-booth border crossing and a new state of the art one with the cramped Tunnel sandwiched in the downtowns of Detroit and Windsor.

Yet Eddie is a micro-manager; none of this would escape him. He hates being criticized and taking blame. He is success-driven, success-oriented. So what is behind this seeming failure? Is he trying to run down the value of the Tunnel? Is he trying to discourage other investors away from the Tunnel including the Bridge Co.? Is it to be able to buy out Detroit's interest and DCTC's at a low cost to scoop the profits later? Is this a short-term pain ploy to get more money from the Senior Levels for the Tunnel to "save" it from ruin for a long-term gain?

My guess is that it's probably all of that but it is the really the fall-back plan because the Bridge Co. beat him in Round 1 of the Tunnel battle--the 200 booths and then the potential deal with Detroit wrecked Eddie's PLAN. So now there is a need to start all over but this time around make sure the Bridge Co., and any other investor, is discouraged or chased away. It almost seems like a pre-emptive strike on his part.

Think of it, control the whole Tunnel at a low cost, get the Feds to pay for improvements and buying out DCTC who will be thrilled not to suffer more losses, use the DCTC plans to fix up the US side. Once Reverse Customs is in, start building up traffic and near the middle of the Mayor's second term as volumes are increasing, do what he wanted to do now--sell or lease the Tunnel or securitize the revenues. What I am saying is that the Tunnel is being allowed to suffer short-term to fix it up long-term as astounding as that may seem.

It is a big gamble. If Eddie loses, why his assets are not at risk. Windsor taxpayers foot the bill for his lack of entrepreneurial skills.

The other alternative, is it simply being in a situation that he cannot get out of, something over his head? Is he sinking fast but afraid to tell us he failed as with the Schwartz Report and the border?

It's time the Windsor Tunnel Commission Board intervened. Do they know what is going on? If not, they had better find out. They have a legal obligation in this matter too. It may well come down to agreeing with the Mayor/WTC Chair or giving him the ultimatum: to resign or be fired.