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Competition on Lake Michigan

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  • B
    So now we have a likely resolution to the coal ash issue, and all the players have their cards on the table - at least as much as we ll ever see. That leads me
    Message 1 of 8 , Apr 2 7:29 AM
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      So now we have a likely resolution to the coal ash issue, and all the players have their cards on the table - at least as much as we'll ever see.

      That leads me to the next question. Both LMC and LeakExpress are private companies, meaning they don't report much financial data. Given the amount of vitriol between the two, has one got the other backed into a corner? Is one suffering poor ticket sales? If both players were fat and happy, I don't think this would be happening. I'm curious if one has put a serious dent in the other's business.
    • Allan Bigelow
      While you can never be 100% sure what is on either companies books as far as profitability, Lake Express has in the past dropped several hints on their
      Message 2 of 8 , Apr 2 10:24 AM
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        While you can never be 100% sure what is on either companies books as far as profitability, Lake Express has in the past dropped several hints on their situation. The most telling article was from the Muskegon Chronicle dated February 15, 2007. It is no longer in the MLive archives but you can still find it on Boatnerd. The title of the article is Cross-Lake Ferry Aims for Year of Profitability. In the opening paragraph Ken Szallai says

        "We are in year No. 4 and we need to show profitability but we feel very good about what we are seeing for this year."

        If they were not profitable in those early years when there was lower fuel cost, peak interest in the service, and it when it was difficult to get a reservation, it probably never made a profit. In a few, Journal-Sentinel articles about the coal ash issue they have complained about the Badger having lower overhead because of the use of coal, which says to me fuel costs are a big issue. When that service was in its planning stage fuel was about a $1.40 a gallon on the high side. The service was supposed to run until the end of December and I am sure they did not expect the Lake Express to have the engine issues and missed crossings due to waves and weather.

        Also, the owners of the Lake Express are a private equity venture capital firm. What is telling is that after nine years, they have not been more aggressive in expanding the company so they can take it public. There are other markets to expand, and not just on Lake Michigan or the Great Lakes they could have expanded. Something else that suggests Lake Express is not doing well, is the fact that with their lobbying they sought to destroy LMC. If they were a healthy firm LMC should have been a take over target to expand their company. Also, by attacking LMC the way they did, they threw out a viable exit strategy of selling Lake Express to them.

        There is something else telling about the RO/RO Fast Ferry industry in the United States and Canada. To their credit, Lake Express is the last private sector operator of that type of service. All the other private sector operators closed or sold off those type of ferries. The Alaska Highway Department is the only other service like it and judging by the problems they have had with the two fast ferries they have, who knows how long they will keep them.

        As far as LMC goes, I think a couple of things that keep them in the game is their ability to carry large freight like wind towers and the fact that they have an excellent and reliable service.

        --- In carferry@yahoogroups.com, "B" <tdunville@...> wrote:
        >
        > So now we have a likely resolution to the coal ash issue, and all the players have their cards on the table - at least as much as we'll ever see.
        >
        > That leads me to the next question. Both LMC and LeakExpress are private companies, meaning they don't report much financial data. Given the amount of vitriol between the two, has one got the other backed into a corner? Is one suffering poor ticket sales? If both players were fat and happy, I don't think this would be happening. I'm curious if one has put a serious dent in the other's business.
        >
      • Robert Strauss
        You would think that the lower crew costs (I believe the LE has 12-15 crew on board, LMC employs some 50-60, that s ship crew only, neither numbers include
        Message 3 of 8 , Apr 2 7:05 PM
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          You would think that the lower crew costs (I believe the LE has 12-15 crew on board, LMC employs some 50-60, that's ship crew only, neither numbers include dock & office employees) for the LE would off-set their claim that the Badger has a price advantage. When LE first started up, they had planned service thru December and were already talking of adding a 2nd vessel. Haven't heard of plans for a running mate for a while now, and would be shear folly if they ran thru December-their vessel can't handle a summer storm, let alone a good November blow- and I have to wonder how the LE would handle when it gets iced up. The coal ash was just the first battle in this little war. Read the comments in articles quoting the anti-Badger crowd: they are talking more now about soot & smoke than ash; watch for them to attack the coal smoke issue next. Bob S
          To: carferry@yahoogroups.com
          From: allanbigelow@...
          Date: Tue, 2 Apr 2013 17:24:12 +0000
          Subject: [carferry] Re: Competition on Lake Michigan


























          While you can never be 100% sure what is on either companies books as far as profitability, Lake Express has in the past dropped several hints on their situation. The most telling article was from the Muskegon Chronicle dated February 15, 2007. It is no longer in the MLive archives but you can still find it on Boatnerd. The title of the article is Cross-Lake Ferry Aims for Year of Profitability. In the opening paragraph Ken Szallai says



          "We are in year No. 4 and we need to show profitability but we feel very good about what we are seeing for this year."



          If they were not profitable in those early years when there was lower fuel cost, peak interest in the service, and it when it was difficult to get a reservation, it probably never made a profit. In a few, Journal-Sentinel articles about the coal ash issue they have complained about the Badger having lower overhead because of the use of coal, which says to me fuel costs are a big issue. When that service was in its planning stage fuel was about a $1.40 a gallon on the high side. The service was supposed to run until the end of December and I am sure they did not expect the Lake Express to have the engine issues and missed crossings due to waves and weather.



          Also, the owners of the Lake Express are a private equity venture capital firm. What is telling is that after nine years, they have not been more aggressive in expanding the company so they can take it public. There are other markets to expand, and not just on Lake Michigan or the Great Lakes they could have expanded. Something else that suggests Lake Express is not doing well, is the fact that with their lobbying they sought to destroy LMC. If they were a healthy firm LMC should have been a take over target to expand their company. Also, by attacking LMC the way they did, they threw out a viable exit strategy of selling Lake Express to them.



          There is something else telling about the RO/RO Fast Ferry industry in the United States and Canada. To their credit, Lake Express is the last private sector operator of that type of service. All the other private sector operators closed or sold off those type of ferries. The Alaska Highway Department is the only other service like it and judging by the problems they have had with the two fast ferries they have, who knows how long they will keep them.



          As far as LMC goes, I think a couple of things that keep them in the game is their ability to carry large freight like wind towers and the fact that they have an excellent and reliable service.



          --- In carferry@yahoogroups.com, "B" <tdunville@...> wrote:

          >

          > So now we have a likely resolution to the coal ash issue, and all the players have their cards on the table - at least as much as we'll ever see.

          >

          > That leads me to the next question. Both LMC and LeakExpress are private companies, meaning they don't report much financial data. Given the amount of vitriol between the two, has one got the other backed into a corner? Is one suffering poor ticket sales? If both players were fat and happy, I don't think this would be happening. I'm curious if one has put a serious dent in the other's business.

          >


















          [Non-text portions of this message have been removed]
        • Allan Bigelow
          Lake Express has a much smaller work force than LMC. I have seen in various places that Lake Express has an employee count is anywhere from 65 to 85 employees.
          Message 4 of 8 , Apr 3 8:14 PM
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            Lake Express has a much smaller work force than LMC. I have seen in various places that Lake Express has an employee count is anywhere from 65 to 85 employees. While LMC has been reported as 200. Another factor could be that Lake Express has a much higher debt load which could be possible from when they started up the service.

            While it might be possible one of the actual environmental groups try to go after the Badger's stack emissions, I don't think it will happen. They would have to change the Clean Air act to do it because there were special exemptions (some I think specific to the Badger) for coal burning ships, locomotives and steam engines. Changes could also bring in power companies and mining companies and their lobbyists. While the Sierra Club might welcome the fight, I don't think the EPA wants a much larger protracted fight as evidenced the consent decree they made with LMC from a much smaller issue.

            I also doubt if the owners/management of Lake Express would go after LMC on another environmental issue. For starters, a new one would not catch anyone off guard like the coal ash issue did and further motivate and strengthen the people and groups that worked against that one. Also this last campaign cost a lot of money, failed in the goal shutting down the Badger, revealed Lubar's political influence,it also did some embarrassing things like having facebook likes from Egypt and used evidence that backfired or that was so blatantly false, it was easy to discredit. I just don't see them continuing to throw good money after bad. If the Consent Decree goes through and I think it will, we will find out who's idea lobbying up the coal issue was. If nothing happens, it was Lubar himself. If there is a management reshuffle at Lake Express, then we know it was management and possibly who it was.

            Something else that I have noticed that is interesting is that the Joe Serwach, Organik Consulting, Stop Dumping Coal crowd seems to be declaring that they won this issue. That the consent decree was a victory for them. A creative way to exit the issue?
            --- In carferry@yahoogroups.com, Robert Strauss <ss43bob@...> wrote:
            >
            > You would think that the lower crew costs (I believe the LE has 12-15 crew on board, LMC employs some 50-60, that's ship crew only, neither numbers include dock & office employees) for the LE would off-set their claim that the Badger has a price advantage. When LE first started up, they had planned service thru December and were already talking of adding a 2nd vessel. Haven't heard of plans for a running mate for a while now, and would be shear folly if they ran thru December-their vessel can't handle a summer storm, let alone a good November blow- and I have to wonder how the LE would handle when it gets iced up. The coal ash was just the first battle in this little war. Read the comments in articles quoting the anti-Badger crowd: they are talking more now about soot & smoke than ash; watch for them to attack the coal smoke issue next. Bob S
            > To: carferry@yahoogroups.com
            > From: allanbigelow@...
            > Date: Tue, 2 Apr 2013 17:24:12 +0000
            > Subject: [carferry] Re: Competition on Lake Michigan
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            > While you can never be 100% sure what is on either companies books as far as profitability, Lake Express has in the past dropped several hints on their situation. The most telling article was from the Muskegon Chronicle dated February 15, 2007. It is no longer in the MLive archives but you can still find it on Boatnerd. The title of the article is Cross-Lake Ferry Aims for Year of Profitability. In the opening paragraph Ken Szallai says
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            > If they were not profitable in those early years when there was lower fuel cost, peak interest in the service, and it when it was difficult to get a reservation, it probably never made a profit. In a few, Journal-Sentinel articles about the coal ash issue they have complained about the Badger having lower overhead because of the use of coal, which says to me fuel costs are a big issue. When that service was in its planning stage fuel was about a $1.40 a gallon on the high side. The service was supposed to run until the end of December and I am sure they did not expect the Lake Express to have the engine issues and missed crossings due to waves and weather.
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            > Also, the owners of the Lake Express are a private equity venture capital firm. What is telling is that after nine years, they have not been more aggressive in expanding the company so they can take it public. There are other markets to expand, and not just on Lake Michigan or the Great Lakes they could have expanded. Something else that suggests Lake Express is not doing well, is the fact that with their lobbying they sought to destroy LMC. If they were a healthy firm LMC should have been a take over target to expand their company. Also, by attacking LMC the way they did, they threw out a viable exit strategy of selling Lake Express to them.
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            > There is something else telling about the RO/RO Fast Ferry industry in the United States and Canada. To their credit, Lake Express is the last private sector operator of that type of service. All the other private sector operators closed or sold off those type of ferries. The Alaska Highway Department is the only other service like it and judging by the problems they have had with the two fast ferries they have, who knows how long they will keep them.
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            > As far as LMC goes, I think a couple of things that keep them in the game is their ability to carry large freight like wind towers and the fact that they have an excellent and reliable service.
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            > --- In carferry@yahoogroups.com, "B" <tdunville@> wrote:
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            > > So now we have a likely resolution to the coal ash issue, and all the players have their cards on the table - at least as much as we'll ever see.
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            > > That leads me to the next question. Both LMC and LeakExpress are private companies, meaning they don't report much financial data. Given the amount of vitriol between the two, has one got the other backed into a corner? Is one suffering poor ticket sales? If both players were fat and happy, I don't think this would be happening. I'm curious if one has put a serious dent in the other's business.
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          • Don Leistikow
            Group: Actually, I don t see that the two surviving cross lake ventures are in competition with each other. Each vessel serves different origins,
            Message 5 of 8 , Apr 3 10:00 PM
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              Group: Actually, I don't see that the two surviving cross lake
              ventures are in competition with each other. Each vessel serves
              different origins, destinatons and purposes. All in all, this sabre
              rattling is nothing more than that.


              Lake Express is a relatively new concept that serves passengers who
              prefer to cross Lake Michigan for business and pleasure purposes in
              Michigan or Wisconsin, and beyond destinations.

              Badger provides services for business and pleasure in a different
              marketplace. Its age alone, launched in 1953, suggests passage as an
              experience from the past that is remembered and replicated, each annual
              season. They cater to the Round Trip passenger. Ask any Historian!

              As for the Ash dropping issue (four tons per crossing)? I can see 4
              tons of coal burned up on a crossing but, ashes? Four tons of coal does
              not generate four tons of ashes. Back in the 1930's and 40's, I
              shoveled coal into our furnace at home. I know that I did not shovel an
              equal amount of ashes, out of that furnace. IIRC, the ashes amounted to
              a few metal ash buckets that were put at the curb for the City truck to
              pick-up weekly. In winter, ashes, which were free, were commonly spread
              on driveways and sidewalks against ice. Today we purchase Ice Melt,
              salts by the bag full, to keep our walks and driveways open.

              Another issue seldom remembered, is that there are many people who do
              not wish to fly, for any purpose. That's why local and long distance
              passenger trains and interstate motor coaches still operate.

              Obviously, ashes have been dropped into our Great Lakes for well over a
              Century. This brings up a question, are any foreign vessels, plying the
              Great Lakes, coal burners? Well, fish still swim in our Great Lakes so,
              the water appears to be safe for our purposes.

              Don L .
            • B
              Don, I don t think much of anything burns coal anymore. The leading navies of the world quit burning coal around 1920 because it hampered battle operations - a
              Message 6 of 8 , Apr 4 6:46 AM
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                Don, I don't think much of anything burns coal anymore. The leading navies of the world quit burning coal around 1920 because it hampered battle operations - a battleship could only steam a few days at full speed on a load of coal before it needed to take a refueling day. This really crippled the fighting ability of a coal-fired man of war. The rest of steamships followed suit.

                At the time the 42 and 43 were built, basically nothing in the civilized world was new-built for coal firing, unless the parent company was the king of coal. Ergo, the C&O built coal-fired ferries and N&W built steam locomotives long after the others dieselized.

                I have no doubt that the next generation Chessie management wished they would've dropped four EMD 567's into their steamers rather than a few Unaflows, but that's ancient history. Doing so today would incur a large debt load that has to be serviced, just like LakeExpress has.

                --- In carferry@yahoogroups.com, Don Leistikow <DLeistikow@...> wrote:
                This brings up a question, are any foreign vessels, plying the
                > Great Lakes, coal burners? Well, fish still swim in our Great Lakes so,
                > the water appears to be safe for our purposes.
                >
                > Don L .
                >
              • Don Leistikow
                TDunville: I agree... my point was (and has been) to allow the Badger to continue sailing until the fuel changeover takes place. That program is in the
                Message 7 of 8 , Apr 4 10:51 AM
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                  TDunville: I agree... my point was (and has been) to allow the Badger
                  to continue sailing until the fuel changeover takes place. That program
                  is 'in the works' but requires some patience to fulfill.

                  Meanwhile, I don't see that the two crosslake services are in
                  competition with each other.


                  I dislike scare tactics employed by some to stop what they deem
                  competition to be, between the two services. In example, the supposed
                  discharge of four tons of ashes, from four tons of coal, dumped in one
                  crossing of Lake Michigan.

                  It ain't necessarily so!

                  Don L .
                • Bill Christopher
                  I seem to recall reading in several sources that the Badger burns about 35 tons of coal per crossing. Usually I ve seen the coal truck dump a couple of loads
                  Message 8 of 8 , Apr 5 4:49 AM
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                    I seem to recall reading in several sources that the Badger burns about 35 tons of coal per crossing. Usually I've seen the coal truck dump a couple of loads at Manitowoc. And her coal capacity, IIRC, is 700 tons. Given this, four tons of ash per crossing sounds reasonable.

                    Can anybody supply coal consumption figures more reliable than my 57 year old memory?

                    BC

                    "Living in fear is just another way of dying before your time."
                    The Drive-By Truckers
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