hmmm...this is getting more and more interesting, but whats up with the Post-Dispatch. I know this deal is an uphill battle, but it always seems like the Post has a pessimistic tone. Its getting better and better regardless.
St. Louis places a trade bet on China
By Tim Logan
ST. LOUIS POST-DISPATCH
Monday, Apr. 28 2008
They call it "the big idea."
It is a plan, hatched by local business leaders, to hitch this city to the
world's fastest-growing economy. To use our underutilized airport, our rivers,
roads and rails, and our location smack in the middle of the heartland to build
St. Louis into something like a gateway to the Far East. To build an air
freight hub connecting the Midwest and China.
It is an ambitious idea, to say the least, and one that is a long way from
reality. But it is an idea that, if it ever flies, could create hundreds, maybe
thousands, of jobs here and reposition St. Louis as an essential link in the
ever-more-global economy.
It began a couple of years ago, with conversations between Paul McKee, whose
McEagle Properties is developing a 550-acre site just east of Lambert-St. Louis
International Airport, and Steve Stone, a Clayton lawyer whose cousin is a
leading British expert on trade with China.
They approached the cousin, Steve Perry, about the prospects of luring Chinese
cargo flights to Lambert, and of building a portal here for the entire Midwest.
"I said, 'Is this a serious question?'" Perry recalled in an interview last
week. "(Stone) said, 'Yeah.'" So they began studying it and enlisting local
business support. They developed a lengthy study on markets here and across the
Midwest, on weather patterns, distribution networks, and the costs of St. Louis
compared with Chicago and Columbus, Ohio. They began reaching out to the
Chinese government, which is trying to develop more air freight to the U.S.,
and they found interest.
"This idea is real," McKee said.
MISSOURI DELEGATION
It became a lot more real last month when a delegation led by Missouri's two
senators, Gov. Matt Blunt and a congressman traveled to Beijing to meet with
Chinese aviation and economic authorities. After two days of talks, the group
came away with a deal to spend six months studying closer economic ties and the
potential of a St. Louis air freight hub and, perhaps, passenger flights.
Those studies are beginning now, gathering data on what kind of goods from
Missouri and surrounding states might be shipped to China, what competitive
advantages St. Louis offers and what kind of facilities would be needed here.
The studies are being funded on this end by Lambert, the Regional Chamber and
Growth Association, the World Trade Center-St. Louis and the Missouri
Partnership, and also by the Chinese government. They should be complete by
October.
"We have a long way to go," said RCGA President Richard Fleming. "But the pace
at which this has moved so far indicates that this is being taken very
seriously."
Indeed, the Chinese are moving quickly. Just this weekend, Li Zhaoxing, who
heads the foreign affairs committee of the National People's Congress, visited
St. Louis and discussed the air cargo proposal at a dinner with local business
leaders Friday night.
In an interview Saturday, Ping Huang, China's Midwestern consul general, said
there is great opportunity for better links between his country and this region
of the U.S., including St. Louis. And while a lot of work needs to be done, an
air hub here would help that a lot.
"It's not just a big plan, a big dream," Huang said. "We'd like to see it
become reality."
Of course, it's not just St. Louis that wants to be China's gateway to the
Midwest. Much of the region's air freight today goes through Chicago, with all
of its global business infrastructure and direct overseas flights.
Nashville, Tenn., Dallas and Columbus also have regular Asian cargo flights,
with planeloads of laptops and clothing flown in every week and trucked across
the country. And mega cargo hubs already exist in Memphis, Tenn., home of
FedEx, and Louisville, Ky., where UPS has its international sorting center.
St. Louis shares those cities' central location and favorable weather patterns.
But it lost out on the domestic air freight boom of the 1980s, when Lambert was
jammed with TWA flights and the big shippers chose to locate farther east.
Now those TWA flights are gone and Lambert has a new third runway, with
capacity to spare. And the Chinese are looking.
McKee and others hope to persuade them to bypass Chicago traffic and O'Hare
delays and bring their own U.S. flights into St. Louis, a relatively easy drive
from much of the Midwest.
But this takes more than a good airport, says Panos Kouvelis, a logistics
expert and business professor at Washington University. If St. Louis hopes to
be a freight hub, it also must develop the industry to get goods where they
need to go from here.
"Our location is as good as any," he said. "But it's a matter of not only
having the airport but having the businesses around the airport that are going
to provide services this industry needs."
Indeed, that might be the single biggest challenge, said Ned Laird, a
consultant with Air Cargo Management Group in Seattle. The companies that
specialize in this tend to be based at the big gateway airports on the coasts,
where most air freight comes in.
TWO-WAY TRADE
Just as important down the road, experts say, will be two-way trade. Empty
planes going back to China are not economically feasible, which has been a
problem for cargo routes to other U.S. cities.
"What we've got to convince the Chinese is that, if they bring in Air China,
the plane is going to come in pretty full and go out pretty full," Perry said.
There's hope for that. Perry points to rising exports from the U.S. to China,
and hunger amid the growing Chinese middle class for high-quality goods made
overseas.
While U.S. imports from China still dwarf exports to it, the exports are
growing faster, and that may accelerate if the dollar continues its slide. Last
year, China bought $65.2 billion in U.S. goods, according to the U.S.-China
Business Council, up 300 percent since 2000, the year before it joined the
World Trade Organization. In Missouri, the growth is even faster, to $1 billion
last year, up 12-fold from 2000.
Much of that trade now is in heavy goods — waste and scrap metals, minerals and
ores — things much more likely to be shipped than flown. But as China's economy
matures, demand is growing for high-value items like semiconductors and complex
machinery, and for just-in-time delivery of the most basic of needs: food.
That's where the breadbasket of America can really benefit from a direct link,
Perry said.
"The U.S. has the most efficient agricultural production system in the world,"
he said. "And there you've got 1.4 billion people who need to be fed."
So whether it's Monsanto seeds, Caterpillar tractor parts or Omaha steaks,
which McKee saw selling at a Beijing restaurant for $95 per 10-ounce filet,
there is, they say, a market across the Pacific for what's made in the Midwest.
Throw in industrial equipment and advanced manufacturing, and that market only
grows.
Being a gateway for this kind of global trade could be a big deal for St.
Louis, say several who are involved in the effort.
It could help replace at least some of the manufacturing jobs that have gone
overseas and attract investment here from Chinese companies looking for a
foothold in the Midwest. It would help St. Louis thrive in a business world
that, increasingly, is about China and India just as much as Chicago and
Atlanta, said former Gov. Bob Holden, who went on the trip and is vice chairman
of the Midwest U.S.-China Association.
"We can't stop globalization," Holden said. "What we can try to do is shape it
so it benefits us as well as others."
But there are many hurdles between here and there. The first is the feasibility
study under way now. If that pans out, it will become important to make sure
both sides know what they're getting into, Laird said, and that St. Louis has a
firm commitment in hand.
"The Chinese are really good at joint ventures that never lead to anything," he
said. "It's important to get some realism as to exactly what Air China would be
hauling and to what destinations, what kind of facilities Air China is going to
demand? What do those things really cost?"
Then there is competition. While China doesn't appear to have this kind of
study under way anywhere else, that could change as more U.S. cities chase a
tighter relationship. All St. Louis has is a head start.
But that's an important thing in this kind of relationship, Perry said. And
while he admitted to being "a bit biased" about the deal he helped pull
together, he was optimistic that this "big idea" may one day become a reality.
"I'm hopeful," he said. "It's more than a 50-50, I'd say."
tlogan@post-dispatch.com | 314-340-8291
http://www.stltoday.com/stltoday/busine ... enDocument
Leave it to Panos to provide a solid dose of logic and cold, hard reality.