Hyundai imports a plus for region's economy

It's impressive to see the mass of cars near the waterfront, but what does all that metal bring to the region?

For the Port of Philadelphia, snaring car imports away from Baltimore and Newark, N.J., was a major coup. It has created 180 Teamster jobs, along with work for as many as 150 longshoremen. It has brought revenue to the terminal operator, and to the port where the ships dock.

And it has added work for river pilots and tugboat operators.

But is the economic windfall to the region as staggering as the sight of all those cars? Probably not, but those involved say automobiles are a valuable cargo, and are putting people to work in a slow economy.

The logistics affiliate for Hyundai Motor Co., which is rapidly expanding its market share in the United States, is also pleased, and it would like to bring even more cars here.

"There's no question it's an absolute positive for the region," said transportation economist Paul Bingham. "The real value is those 180 new Teamster jobs that weren't there before."

And jobs have a multiplier effect - the auto processor makes purchases to operate, and workers spend money locally.

Still, 180 is not a large number in the scope of the metropolitan Philadelphia workforce, said Bingham, formerly of IHS Global Insight Inc. and now at Wilbur Smith Associates Inc.

"The economic impact is probably not as great as it seems when people look at all these cars and go 'Wow!' " said Philip Hopkins, vice president of research at Select Greater Philadelphia. "That's because of the nature of the operation. The cars are coming in here already largely manufactured."

Hopkins projected that the car facility will create 511 total jobs in the region, $24.3 million in wages, $56.3 million in sales and business activity, and $8.4 million in total taxes, including $5.2 million in state and local taxes.

"Hyundai Kia was a terrific account. To see them leave hurt, quite honestly," said Jim White, the executive director of the Maryland Port Administration. "We were with them in their start-up year on the East Coast about eight years ago."

Baltimore now brings BMW cars through its port, 50,000 a year. "That basically was a wash with what we lost from Hyundai Kia, but you never want to lose any business."

With shipping down because of the economy, Delaware River ports lost 300 ship arrivals a year between 2008 and 2009, said Dennis Rochford, president of the Maritime Exchange for the Delaware River and Bay.

Now with the cars, and a second new steamship line, Sea Star Line L.L.C., 100 additional ships a year will come to Philadelphia. "It's significant," Rochford said.

Automobile cargo is less lucrative than big containers filled with goods because of weight. Wharfage rates are based on weight, and a ship with 1,000 20-ton containers weighs far more than one with 1,000 cars.

Wages are also higher for Philadelphia union longshoremen who handle containers that require sophisticated cranes and equipment: $31 an hour compared with $23 to off-load cars.

The auto-processing jobs pay about $12 an hour, with a core group earning $18 to $20 an hour.

"Container cargo brings in more money to a port, and higher salaries for longshoremen. It's more labor-intensive work," said Robert Palaima, president of the Delaware River Stevedores, which runs Tioga Marine Terminal in Port Richmond. "On the other hand, having automobiles is better than not having automobiles. It's still an important cargo type. I'd love to have it."

The port authority receives $1.50 for each car coming off a ship paid by the terminal operator, plus 30 cents a car from Philly Ro-Ro, a developer that scouted for land for Hyundai.

Ro-Ro, which pays the port $660,000 annually for rent and security, has spent $4.4 million to install a car wash, fueling station, lighting, paint booths and a paint room, and build two parking lots with fences, lights and guardrails, said Ro-Ro partner Gerard McHugh.

Hyundai and logistics affiliate Glovis America Inc. would like to send more cars.

"If we can find more land, there are more opportunities for us in the automobile business," said Robert Blackburn, the Philadelphia port authority's senior deputy executive director.