Christensen: Hodges says state ports should be operated as a business

Published May 21, 2014

by Rob Christensen, News and Observer, May 20, 2014

While the Republican legislature has been been providing a fresh look at state government, one area that appears to have escaped their gaze is the N.C. State Ports.

One member of the Ports Authority, Luther Hodges Jr., thinks the legislature is missing an opportunity by not moving toward privatization like the port operations in other states.

Hodges thinks the state should create a public/private corporation to run the state ports in Wilmington and Morehead City, so it could operate more like a business, hiring top-level professional managers, and operate outside the normal politics of state government.

“Such a major corporation, operating outside of the State Personnel Act, and with a highly competent and respected Board of Directors, could make a great contribution to the success of transportation in 21st century North Carolina,” Hodges wrote in a memo.

Hodges, a resident of Blowing Rock, is not just any Ports Authority member. He was U.S. under commerce (and acting) secretary under Jimmy Carter, was once chairman of North Carolina National Bank (now Bank of America) and in 1978 was a Democratic Senate candidate. Hodges is now a Republican. His father was a North Carolina governor and John F. Kennedy’s commerce secretary.

While the Republican legislature is considering privatization in other areas, such as industrial recruiting and schools, it has not seriously looked at the ports.

Tata takeover

The nine-member State Ports Authority supposedly oversees the ports, but Hodges said it has been reduced to an advisory capacity and is now being run by state Transportation Secretary Tony Tata.

That wasn’t always the case. The State Ports Authority used to run the ports. That changed in 2011, when the ports were moved by the legislature from being a semi-autonomous agency under the state Department of Commerce to the control of the state Department of Transportation.

Gene Conti, the DOT secretary under Democratic Gov. Bev Perdue, interpreted the new law as giving him hiring and firing power over the ports staff. Tata has followed that policy.

When I asked Tata about this several months ago, he said the arrangement makes sense because the ports are closely tied to highways and railroads. At the time, he had recently met with executives of Shuanghui Holdings, the Chinese company that purchased pork producer Smithfield Foods, to discuss using North Carolina ports for their shipping.

“The current law and structure under the NCDOT is necessary to efficiently manage the ports in a way that maximizes the growth and efficiency, aligning them with the governor’s strategic 25 year vision,” Tata said in a statement to the Wilmington Star News recently.

Ports-railroad merger

But Hodges thinks that making the state ports more of a state government agency – rather than less so – is 180 degrees wrong. Hodges likes the idea of merging the State Ports Authority with the N.C. Railroad Company into a separate entity. He noted that the N.C. Railroad has the financial resources to provide innovations in the ports.

A corporation could provide expertise and stability needed for the ports, Hodges argues. Right now ports directors often change when administrations turn over, and port authority board members are appointed by the legislature for two-year periods – not enough time to develop expertise.

In short, it is no way to run a business, Hodges said.

Which is why Hodges recently sent a letter to House Speaker Thom Tillis saying he did not wish to be reappointed to the State Ports Authority board when his term ends this month. In the letter, Hodges said that while the Ports Authority board had legal liability, it no longer had any real decision-making ability.

“During my brief tenure, dating from my appointment to the board by you in 2012, we have seen four resignations of experienced, highly qualified members of the board, all disagreeing with the current situation, which leaves the Secretary of Transportation in total control,” Hodges wrote to Tillis.

Among the resignations was the chairman, former Rep. Danny McComas, the owner of a Wilmington shipping company who was appointed to the post by Perdue even though he is a longtime Republican.

“International trade and the future of our State’s ports simply require an active, conscientious board of directors with business backgrounds, not another ‘political’ Advisory Board!” Hodges wrote.