Art Chance: Those boondoggle fast ferry boats sold for a dime-on-the-dollar

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By ART CHANCE

I returned to the Executive Branch from the Legislature in December of 1999. It wasn’t a particularly happy reunion; I still disliked and distrusted the Administration, but I was tired of being bored and broke, and the commissioner of Administration had been forced out and replaced by someone who was tolerable, at least by the standards applied to Democrat appointees.   

My deal with the new commissioner was that I would try to rebuild the credibility of the State’s contract administration, and I wanted nothing to do with the Administration’s bargaining relations with the unions. You can’t have delicate sensibilities and do public sector labor relations work, but the corruption inherent in Democrat relations with unions was more than I wanted anything to do with. There’s no need for a formal process for labor relations when the union goons have all the direct line numbers in the commissioner’s office and don’t need an appointment.   

Anything that was politically important to them got handled in the commissioner’s office and we only learned about it after the fact, unless it was something they didn’t want to do openly and could hide behind collective bargaining or the grievance/arbitration process. It is very easy for an advocate to “throw” an arbitration or labor board hearing and only another advocate would even see it. 

The real difficulty in supervising such staff is that you have a lot of trouble being sure if your subordinate is just doing the case differently from the way you’d do it, made a mistake, or if something nefarious is going on. It is complicated by the fact that even the most conscientious advocate is at the mercy of the operating department for the information and witnesses necessary to sustain a position.

It doesn’t take long in labor relations to learn the advocate’s prayer: “Please, God, don’t let me believe a word they tell me today.”

Soon after my return to Labor Relations, a grievance came up. The Marine Engineers alleged that the State was violating their “guaranteed manning provisions” by not employing enough engineers.   

The guarantee should never have been in the contract, as manning is either a permissive or illegal subject of bargaining, but was a gift from a former director for the union’s support in keeping the appointment over a change of administration; yes, that sort of thing does happen.   

I never had a governor or attorney general who wanted to duke it out with them, and the Engineers never give anything back, but I was able to buy some of the guarantee back when I was director. 

I smelled a rat with this one, and while I would have been the logical choice to carry the case, I refused to do it or supervise the person assigned to it. A young man hired during the diaspora of senior staff got it. He hadn’t been around long enough to know what he didn’t know, and was a perfect choice.   

I believed that the Department of Transportation and the Marine Highway System were hiding engineers by double-filling positions, but I can be maliciously obedient with the best of them, and it wasn’t my job.

Remedies in arbitration are almost exclusively to redress a specific loss to a specific individual(s). Remedies for lost opportunities are almost unheard of, but in this case the union was asking for compensation for people who didn’t get the jobs that they alleged weren’t filled, and wanted the money to go directly to the union. I don’t know if higher-ups at DOT were in on it or whether the right questions just weren’t asked.   

The State predictably lost the arbitration and over a quarter million dollars went to the union to spend as it chose.   A responsible employer would have paid up when it ran out of courts to appeal the arbitrator’s decision to, but we were working for Democrats, so there was no use in even asking.   

That money became the Engineers’ “walking around money” to defeat the Juneau Access (“The Road”) initiative.  A cynical person might think the whole thing was just a money laundering scheme.

The Juneau Access initiative was narrowly defeated and an unholy alliance emerged between the “Citizens Against Virtually Everything,” the marine unions, and the Gov. Tony Knowles Administration. The bleeding edge solution to Juneau Access was fast ferries, the sort that had just failed miserably in British Columbia.   

The deal to build them was worked out between a Democrat Administration in Juneau and likewise in Washington, DC, so it went in a sweetheart deal to a bankrupt shipyard in Bridgeport, CT, a Democrat-run state whose congressional delegation has never done a thing for Alaska. But they had friends in high places.   

The advertised price was $36 million each for two vessels, but they cost more than that. We had ferry system employees, including a couple of chief engineers, assigned to temporary duty with the shipyard.  The usual assortment of Department of Transportation/Alaska Marine Highway luminaries wore a rut in the sky between Juneau, Alaska and Bridgeport, Conn.   

I knew as little about it as possible and stayed as far from it as possible but I was aware of a steady stream of special deals being worked out for employees assigned to the shipyard. That all changed when Gov. Frank Murkowski took office and shortly thereafter I became the manager and later director of Labor Relations.

The first thing on my dance card was coming up with a labor agreement to run a high-speed craft code vessel under US maritime and labor laws, something that had never been done before.

Frankly, I knew little about the Alaska Marine Highway System; dealing with the marine unions was not good for your career health.  

But, I assumed that the Alaska Marine Highway System had at least given some thought to how they wanted the new fast ferries to operate, so if I had an operating scheme, I knew how to write, or copy, contract language.   

We’d left the Knowles Administration managers in place, so I made an appointment with them to talk fast boats. I quickly learned that I wasn’t the only one who didn’t have a clue about how they were going to be run beyond vague notions of a single crew dayboat operation with overnight maintenance at the homeport, and no more crew than the Coast Guard mandated minimum manning.   

I also learned quickly that despite their touted support for fast ferries as a road antidote, the unions had precisely zero interest in operating them in any economical manner.   

My boss and I bent the governor’s rule about making the unions come to Juneau and slipped off to Seattle to meet with the licensed unions, the deck officers and engineers.   

I did a “what if” and suggested that I could see giving them a 25% raise if they would become salaried employees and get away from the draconian work rules in the contracts for the conventional vessels.   

Of course, that got our private meeting leaked to the media and a bunch of noise about how I’d promised them a 25% raise as a fast boat premium. It also got me a good munch of Gov. Murkowski’s carpet.

We played hardball with them, at least hardball short of provoking a strike. We tied M/V Fairweather up and laid off the crew assigned to her and sent them back to the fleet.   Delivery of M/V Chenega was looming, and we had neither a dock or crew accommodations in Cordova, Whittier, or Valdez.  Cordova was supposed to be her homeport and Cordova was painted on her stern. The good people of Cordova couldn’t be bothered about the fact that we had no labor agreement, no dock, and no crew accommodations in Cordova; they wanted “their” boat, and we could add the Cordova newspaper to the newspapers in Coastal Alaska that hated us over those damned fast boats.

We had negotiations with them coming up again for the umpteenth time. I’d had my usual dose of the Marine Engineers’ attorney, Joe Geldhof, holding forth on the Juneau version of Radio Moscow about how greedy, uncaring, and incompetent the State was.  Radio Juneau couldn’t be bothered to talk to me much.   

I was sitting home contemplating that I had to go meet with them the next day and I had no airspeed, altitude, or ideas.   I wrote an email to the Governor’s Office telling them that and saying something like, “oil’s been above $50/bbl. for a couple of months; let’s throw some money at the “fine gentlemen” and get out of the news.”   

The response was something like “don’t ask, but if you can shape a deal bring it to us.”   

I did shape a deal, the Administration bought it, and the unions were tired of it too, so we settled. It didn’t resemble what a legitimate agreement for a fast ferry should look like, and the unions made it impossible to run the vessels in any economical manner.   

They were a bad idea and a bad design to begin with; too small for peak traffic in Northern Lynn Canal or Prince William Sound and too expensive to operate at any time other than peak traffic, but their small size meant you had to put another vessel on with them, which meant neither ran efficiently.  They were always over-manned and were maintenance nightmares.   

Only the fact that the Citizens Against Virtually Everything people had backed them kept them from raising a hue and cry about how often they pureed seals, sea lions, and otters.

DOT&PF announced this week that they had sold the ferries to a Spanish company for maybe a dime on the dollar for what we foolishly paid for them.  The Fairweather and Chenega went for $5.17 million.

Everyone who has ever done anything consequential has had their failures, and that is my big one, but I had a lot of company in making it.

Art Chance is a retired Director of Labor Relations for the State of Alaska, formerly of Juneau and now living in Anchorage. He is the author of the book, “Red on Blue, Establishing a Republican Governance,” available at Amazon. 

38 COMMENTS

  1. That ranks right up with the King Cove ferry that ran one time. I wonder why the state budget swims in red ink?

  2. I don’t get why Southeast is complaining losing this iconic feature except that they are losing a historic southeast and coastal icon; awhile I watched passengers and businesses change from Ferry to Air service all my life! I mean southeast friends and family didnt even encourage one another sorely use the AMHS when they can use Air travel. I grew up in a time right at the end period of the when I can remember getting on any AMHS ferry and it was PACKED! That was an energy pack time when people still had social skills. then oneday i got on years later as a teen the ferry was practically vacant only to see at the same time period the Airline was packed. It remains that way to this day.
    The ferry fate is the nature of business if there is no high demand the business folds without its customers or passengers. Customers want to keep a business around they need to spend money for it buying its service.

  3. TY Who would have thought things could be so complicated? Oh, I forgot, we are turning into a blue piece of sht state, where nothing is simple or straightforward. Leave it to the gov. to bend over for the minority at the expense of everyone.
    Wanting and earning apparrently do not go hand in hand. Instead they go hand to hand.

  4. With some fleshing out, that tale would rank right along with “Through The Looking Glass”. Whatever the unions an administration were smoking must have been some pretty good stuff.

    • Yeah, except this isn’t some opium fantasy. Democrats, while most of them do smoke something, don’t need to smoke anything to do crazy things.

  5. Art, Isn’t “manning” (ie, workload, scheduling, featherbedding) a mandatory subject of bargaining?

    • No, not manning per se, nor workload, or featherbedding really. Scheduling is a mandatory and manning as it relates to safety is mandatory, but that one is iffy. The AKSC has imposed something of a balancing test on bargaining under PERA. Take a look at the old Kenai Cases under the teacher law that were adopted in my case that let to APEA v. State/

  6. Art, I appreciate your personal involvement and insight. I personally loved getting from Juneau to Haines in 2 hours cruising at 33 knots, wow. I also personally felt the downside when my foolish skipper took the wake of the Fairweather broadside and sunk my boat. Unions, what are we to do?

    • I loved riding them too; was on the maiden run with our own crew shortly after M/V Fairweather was delivered. Went to Haines and Skagway several times, and since I returned to Anchorage have taken M/V Chenega to Valdez a couple of times. Were I a billionaire, I might have one for my private toy. They made a lot of noise in the design and construction stage about how they were avoiding the wake problems that were instrumental in the failure of the BC fast boats; they might have lessened the problem, but they sure didn’t fix it. There were two fundamental problems; they were too small for the peak season traffic and too expensive to operate any other time, and the unions are still stuck in the Nineteenth Century trading ship pattern of running on crew shares and live off confiscatory premium pay and featherbedding. All you have to do is watch a 1000′ Panamax dock and watch 200′ Fairweather dock. The Panamax has on skinny Indonesian guy on each line and the Fairweather has the whole crew other than the Master, Helmsman, and Engineer on the lines. At least since the Fairweathers were more or less day boats, half the people on the lines weren’t off watch and getting paid overtime for standing around near a line. If the fast boats were to have any hope of success they had to be run like an airliner, the unions simply wouldn’t accept it, and nobody had the political courage to make them. If any sort of ferry system is to survive, and I think it should, there has to be an existential battle between the State and the marine unions.

  7. What I don’t get is how the AMHS can service communities in the southern part of Alaska, but the rest of Alaska hasn’t gotten the subsidized help on the same scale? What makes the southern communities so entitled?
    Is there any type of Marine Highway for the rest of Alaska’s coastal communities that have no road access? What about all of the inland communities along the rivers? Is there any subsidized help for them on an equal scale that the AMHS provides the communities is services?
    I think the communities that the AMHS services have landing strips or runways. Since the State “helps” pay for those, and a couple hundred others around Alaska, maybe its time to shut the AMHS down totally and those communities can experience what the rest of Alaska is dealing with for transportation related issues.

  8. Thank you for the interesting and intelligent historical article. I find it amazing that senator Murkowski is now talking about “green” electric boats. Will history repeat itself? I wonder.

    • Just for the record, Gov. Murkowski had nothing to do with buying the Fairweathers. We just inherited the things and had to get them running.

  9. ……..if only we could have Art as labor director for teacher’s unions or public employee unions……..even for a day.
    Please God, just one more Chance.

    • The Dunleavy Administration had me in such a role for one day. Then they soiled their pants when somebody pointed out that I had used some bad language to Vinny the Goon, head of the AFL-CIO. I they thought that was bad, they should see how actual labor relations professionals deal with each other.

      • I once sat through a deposition involving a dispute between two union bosses. Everyone in the room was wearing a gun, including the attorneys. Every other word was f*** or s***. Even the court reporter had to leave.

        • I’ve sat across the table from one of the marine unions and all of the union bargaining team was carrying. I went home at lunch and came back carrying; it wouldn’t have been approved of if I had asked, but the State had no explicit rule about it.

          At the first break I called the head of the union team aside and told him that if they did it tomorrow, my bargaining team would consist or armed State Troopers. And tomorrow, peace reigned.

          Really, though, if it isn’t a rough and tumble business, somebody isn’t doing their job. I was pretty good at publicly saying how pleased and proud I was to have the opportunity to work together to obtain mutually satisfactory solutions … and crap like that. Then I closed the door and gave them a rundown on their ancestry and sexual proclivities.

          • Ha ha ha…….love it! Your writing is full of great adventures, peppered with humor. So glad you are still with MRAK.

  10. Once again, a scintillating recount of “stranger than fiction” happenings. One day, I wish you would write a piece about a rumored encounter with a “demon-extractor.”

  11. I’m not going to go digging in the Budget since nobody is paying me, but the State does spend a lot of money on building and maintaining airports throughout the State. Replacing vandalized landing lights at rural airports is a constant maintenance problem and quite expensive.

    The truly unwarranted subsidy to the communities on the AMHS system is subsidized shipping of freight on the ferries. The reply to that, of course, is that bypass mail to rural Alaska is a federal subsidy for a lot of commodities shipped to rural Alaska. So, you pay your money and take your chances.

  12. This essay reads like a Solzhenitsyn novel; an insider’s heartbreaking and sobering introspective into a corrupt system run by corrupt tyrants. Jefferson warned us in writing 230-yrs ago that this debacle would eventualize if we were not vigilant. Whoever suggested state government should engage in operating a fleet of ocean-liners with union crews should have been whipped in public the moment they uttered it from their mouth. We need more outspoken patriots like Art Chance.

  13. Alan, you answered your own question. The southern communities are entitled because they have always been entitled. If you have raised children you realize it is far more difficult to un-spoil a child than to avoid spoiling him in the first place. There are many cases where the state (you) would be dollars ahead to charter aircraft at no charge to the passengers rather than transporting them by AMHS vessel. The entire system needs to be dismantled.
    .
    Footnote: I have lived in Southeast since 1957; Juneau since 1958; I see your point.

  14. I think privatizing the AMHS might be worth considering. I do believe a coastal ferry system is justified even necessary but not not at the cost of an arm and a leg for either party; the state or the passengers. Without a doubt the attraction of putting your vehicle on a ferry versus driving it out thru CANADA ( especially with the COVID closures) should be a major selling point not to mention getting out on the Aleutians without an airplane ride. I worked as a junior engineer for the AMHS briefly in 02 or 03 and if you think fixing broken toilets at nite or unclogging urinals and running the ships ( human) waste treatment and disposal system is worth anything I believe I earned my pay!! But , I soon decided it wasn’t the kind of job I preferred so back to the electricians union I went!!

    • Privatizing the AMHS is completely unrealistic. The only truly private American bottoms with American crews hauling passengers are a few luxury or near-luxury small cruise ships. There are a fair number of quite small sight-seeing, whale watching, diving inspected US Flag passenger vessels, but as far as I know none of them are union.

      I believe it is a necessary transportation utility for some of coastal and island Alaska, but it can’t be run like a 19th Century trading vessel trading brass keys, rusty muskets, and rum with the Natives and provenance that their government couldn’t provide them with the Russians for sea otter fur. Nor can it run like a monopoly shipper like Northern Steam relying on good connections in DC and WA to keep the competition at bay.

      If I were offered a choice between Hell and running the AMHS, I’d probably take AMHS because I think Hell might be tougher than dealing with MEBA and MM&P. So, if I were running it, I would privatize the management and put the AMHS under an independent board appointed by the Governor and confirmed by the Legislature and who would serve for a term unless removed for just cause, so the unions couldn’t just put the board on the auction block at every election.

      There are plenty of Ship Management contractors who know how to run a shipping line efficiently under US law. The fundamental problem with the AMHS is its management employees have been exclusively recruited from Jones Act shippers, the Navy, and the Coast Guard, none of which have any idea what economically efficient operation looks like.

    • John, there are many variables so numbers can never be exact. However, the cost per mile to transport an automobile on ferry is about 20X to 30X the cost per mile to drive the auto upon a road. It makes zero economic sense to transport anything on a ship parallel to a road…. which is precisely what is happening on a voyage to/from Prince Rupert. It is unreasonable for Southeastern Alaskans to expect the majority of Alaskans to pay for such economic foolishness. Northern southeast traffic must be ferried to Haines/Skagway to the continental highway system; similarly, southern southeast must be ferried through Hyder. Moreover, this is merely one of countless feasibility problems inherent to AMHS.

      • There is a good argument that the primary ticket sellers for the cross-Gulf and Bellingham routes are the Alaska State Troopers and the various police departments. So many Alaskans have either DUIs or criminal convictions that make travel through Canada difficult and expensive or outright impossible, so the only way they can get Outside with a vehicle is the mainline ferries.

        Even living in Juneau, the last time I rode a mainline ferry was from Seattle, the old Pier 48, to Juneau in 1986. A friend and I were bringing some things up from the Lower 48 in a big U-Haul. For any personal/pleasure travel it was both easier and cheaper to fly and rent a car.

        Even within Southeast, most of the demand for ferry service is for moving sports teams around or for travel to Juneau or Ketchikan for shopping so people want to take their vehicle. Any time ferry service comes up for discussion there is always a hue and cry about how necessary it is for access to medical care for people in the smaller communities, which is bull. There is no place in Alaska that isn’t accessible by air and even bad weather isn’t much of an excuse. In twenty-five years of flying in and out of Juneau and all around Alaska including Southeast, I can count on one finger the times I was delayed for more than one day, and that took a volcano closing Anchorage, heavy fog and snow in Sitka and Juneau, combined with heavy holiday traffic. If people have a medical appointment in Juneau, Sitka, or Ketchikan, they want to take the ferry so they can bring their vehicle and get in some shopping.

        • Art, I respectfully take exception to your facts on these points. A DUI convict can transport their vehicle to Seattle by barge then fly to receive it. The cost is actually far less than ferry if the subsidy portion is included (it should be). As to ferrying autos between communities for sporting events, it is far more feasible to merely rent an auto (again, subsidy must be included in the equation). Moreover, these issues are just more manifestations of the spoiled entitlement attitude which controls the totally dysfunctional ferry system.

          • Shipping your vehicle by barge and flying down to meet it in Seattle is only a viable option in Southeast. I’ve never done if for my own travel but when the oldest stepson was in college in the Lower 48 we shipped his a couple of times and he drove back once just to say he’d done it.

        • I had to ship my truck from Anchorage to Tacoma and fly down to pick it up. It was way less expensive than the ferry would have been, by over a thousand dollars. It’s the best option until the Canadian border is open again.

          • I’ve never shipped a vehicle from ANC, but the ferry drill from ANC is the infrequent Cross-Gulf and then a mainliner to Bellingham and that is tres expensive.

            I never went straight to the ship and barge lines but when I was car-shopping a year or so ago the auto shippers to and from Seattle/Tacoma were very proud of their service.

  15. Ancient history. War stories from a disgruntled old State employee. Suzanne, please give Mr. Chance a more pertinent homework assignment next time.

    These were wonderful boats that made the eastern PWS much more accessible. It’s a shame to see them gone.

    • They were the archetypal “hole in the water the State poured money into,” a complete waste of money bought to please Greenies and the marine unions.

      I’m not the least bit disgruntled. I hated working for the Communists, excuse me, Democrats and they promised the marine unions they would fire all the senior staff in labor relations because we had investigated the residency pay cheaters and disciplined and dismissed a bunch of them. The State was prosecuting old people for staying South too long and still claiming a $250/mt. Longevity Bonus or a $1000 PFD; these people were stealing a PFD a pay period.

      Anyway, they didn’t get to fire us but you can’t work for people you hate for very long so we all found other places in government. I went to work for the Legislature with the Administration’s misery as my mission. By 2000 they’d hired us all back into labor relations to clean up the mess they and their union friends had made. Then in early 2003, the unions got to look at the 10th Floor of the Juneau SOB and see that the people they had tried to destroy were in charge of the wages, hours, and conditions of all of the State’s unionized employees. I found that quite satisfying. In the spring of ’06, I had my 120 days in for the year’s service credit, it was obvious Murkowski wasn’t going to get re-elected, and the only way I could get another year’s service credit was to return to the classified service and have a Democrat boss if Knowles won or find a way to get along with Sarah Palin. Neither seemed a pleasant prospect and July 1, 2006, seemed a good day to take up fulltime fishing and muddling about with a boat. And I’m not at all disgruntled when my retirement check gets deposited.

    • Art,
      Whidbey is an old, retired fart who rocks on his chair all day and smokes a lot of marijuana while reading MRAK. Between periods of picking food out of his grey beard or tugging his grey ponytail, he is able to punch in a few Lefty comments. He needs more medical marijuana to defuse the effects of recreational marijuana. ie…..
      harmless old idiot.

      • I once lost a very expensive arbitration based on the testimony of the union’s business manager. I knew him well, we’d once worked together, and I knew his whole history in labor relations in Alaska. He told a fanciful story about the history of the contract language at issue which would have been worthy of a Pulitzer Prize for fiction. I was still pretty much the FNG, so my supervisor was second chairing me. I wanted to challenge his competence to testify because I knew he had nothing to do with the language and had no knowledge of the history. In fact, she wouldn’t let me object to anything he said or to cross-examine him. Her response was you will just fight with him and the arbitrator won’t give his testimony any credence anyway. Little did I know at the time that she was getting ready to leave the State and go to Law School at Williamette, where the arbitrator was a professor and dean whose favor she was courting.

        In a while, the decision came back with an award to the union based on “the unrebutted testimony” of the business manager. On that day I swore that the words “the unrebutted testimony of..” would never again appear in any matter I had anything to do with. I told my staff that if they encountered dispositive testimony or evidence that they couldn’t rebut, they needed to find a way out and not pursue the case.

        I don’t respond to trolls like Whidbey because I care what they think; I respond because somebody who doesn’t know the facts or the players might believe him and I don’t want to leave him unrebutted.

    • Whidbey, name-calling is a classic logical fallacy: argumentum ad hominem (attack the man). It demonstrates your inability to engage in factual debate. Moreover, you have ironically used the same fallacy upon yourself (THEDOG). Surreal.

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