Thoughts and Opinions On Today's Important Issues

Tuesday, April 08, 2008

DesRosiers Slams DRIC

DRIC has been so wrong on predicting border traffic volumes that it is laughable. It looks like they are wrong again. If they are, the consequences the taxpayers would be wasting billions of dollars to meet a need that is absolutely not there.

If DRIC can be so wrong, then the argument has to be made that before a decision is made, their work must be carefully scrutinized to make sure that their assumptions are valid and the conclusions are supportable.

Of course, the only real justification for building another bridge in the area is because the existing crossings cannot handle the volume. DRIC predicted that the volumes would increase dramatically but in fact that has not been the case. In fact, based on the material that the Bridge Company provided at the Senate hearings, one wonders if there will be any growth all. Volumes have certainly decreased since their highs. It is not a mere temporary blip either given the job situation on both sides of the border and the lack of tourist traffic.

It is amusing that the Bridge Company was able to virtually eliminate the backup into United States by adding a few Customs booths. They did not create new lanes in the sky as DRIC would do at a cost of billions. It is also amusing to see that the Budget of the Federal Government provided for $75 million for a new Customs officers across Canada to ease congestion. I did not see the Federal Government putting huge monies aside for the building of new border crossings across the country.

However, in order to justify the building of the bridge, and to be able to give Wilbur Smith some ammunition for saying that the volumes would increase, US DRIC in their report wrote the following:
  • "It is expected that local businesses may develop or expand in several sectors related to a new border crossing. Such change would be associated with an increase in local jobs. This would then help the local tax base grow. But, it is recognized that much of the cross-border trade in the Detroit-Windsor area is tied to the auto industry. While American auto companies are struggling now, the U.S. demand in 2035 for new automotive vehicles is forecast at 26 million. This is a 53 percent increase from the 16 to 17 million current annual U.S. consumption of autos/trucks. This growth is similar to that which occurred over the last 20 years, when 15 new auto plants were built in North America, eight of which were built in “northern” locations (e.g., Ohio, Indiana, and Ontario, Canada). The implication is that another dozen auto manufacturing plants will be built in the U.S. and Canada in the next 20 to 30 years."

Well Hallelujah brother! All this doom and gloom about the auto industry is all wrong according to the prognosticators from DRIC. Wow, we are going to see some new auto plants up north going alone with this huge increase in automotive demand. Our future is secure, no one needs to be sent out West, we can splurge with Eddie's Jobs Today Fund hundred million dollars on all kind of circuses.

It seems however that there may be a contrary point of view. If this view is correct, then this rosy picture painted by DRIC isn't worth anything and the justification for new bridge goes into the toilet.

Apparently, Dennis DesRosiers had a chance to read this part of the DRIC report and here is the blistering response that he sent out"

  • "They are smoking something. The 20 year growth between 1987 and 2007 was 9.1 percent ... they are forecasting a 20 year growth starting in 2007 at 58 percent some 5 times the historical achievement. Impossible. But the 26 million is actually forecast for 2035 which is a 28 year forecast not a 20 year forecast. Over the last 28 years the market has grown by 19 percent and they are forecast it to grow by an additional 58 percent by 2035 ... also highly unlikely.

    A better way to look at his is to examine annual average growth rather than total growth. Average annual growth over the last 28 years has been 0.6 percent and they are forecasting it to be 1.7 percent about 3 times what was achieved historically. Also impossible.

    And remember the last 30 years has seen auto sales grow substantially but of the baby boomer reaching driving age. The boomers will be shedding vehicles over the next 30 years as they reach retirement rather than adding vehicles to their driveway.

    A more realistic forecast for US auto sales to 2035 would be somewhere in the 20-21 million range NOT 26 million range.

    They are also missing a critical point. Americans each and every year buy more and more product from overseas and Mexico which requires Port infrastructure and Mexican border infrastructure NOT Canada US infrastructure. See attach table for 2000 to 2007. Vehicles sourced from Canada dropped by 500,000 units. This may stabilize but it certainly won't go up.

    Look carefully at the two attached tables .. they tell the story."