Economic Reality Clouding Dreams for Canal’s Impact

It has been a long time since this rural western Alabama community of 2,450, Greene County’s seat of government, has seen such excitement.

Oceans of billowing red-white-and-blue bunting are being prepared to drape the outdoor dais. The town’s two high school bands are getting their uniforms pressed and are practicing their routines. County officials and other dignitaries are rehearsing their speeches.

The occasion is the official dedication and grand opening Saturday of the Tennessee-Tombigbee Waterway, a $2-billion, 234-mile-long canal connecting the Tennessee and Tombigbee rivers to form a new inland water route to the Gulf of Mexico.

The largest public works project ever attempted by the U.S. Army Corps of Engineers, the waterway is often described as “the ditch that could change the course of the country.”

Just as the opening of the Erie Canal in 1825 ushered in a new era of growth and prosperity for New York City, Buffalo and many other communities in New York state, so the inauguration of the Tenn-Tom may stimulate a much-needed burst of development for this economically depressed region.

But whether the Tenn-Tom lives up to its vaunted economic promise and all the hoopla surrounding its dedication remains to be seen. The hard realities of economic life are beginning to dim the rosy scenario painted by the project’s boosters, who were frequently forced to defend the staggering congressional appropriations required to keep the project alive during its 12 years of construction.

No ‘Flood of Liquid Gold’

“A lot of people are waking up to the fact that this waterway doesn’t mean a flood of liquid gold is going to just come crashing down the river and all you have to do is get a pail and head for the bank,” said Robert J. Lager, director of the Alabama Center for International Trade and Commerce in Mobile.

The chief advantage of the waterway, which was first proposed to Congress during Ulysses S. Grant’s Administration in the 1870s but not authorized until 1946 under President Harry S. Truman, is that it provides a shortcut from the American heartland to the gulf.

Cuts Shipping Distances

Linking more than 16,000 miles of navigable inland rivers and waterways in 14 states, the Tenn-Tom cuts shipping distances by as much as 875 miles over the traditional Mississippi River route.

Such shorter distances generally mean cheaper shipping costs. In fact, a 1975 study prepared for the Army Corps of Engineers estimated that Tenn-Tom shippers could save an average of $135 million in transportation costs per year over the next half-century.

New industry is also expected to build in the region and make use of the shorter routes--a much-anticipated boon in the impoverished areas of eastern Mississippi and western Alabama through which the Tenn-Tom arcs. Increased recreational and tourism opportunities along the canal, which created a massive chain of lakes and furnishes 13,000 acres of land for outdoor pleasure, are expected to boost jobs and wages.

Overall, according to a study sponsored by the U.S. departments of Commerce and Housing and Urban Development in 1978, about 135,000 new jobs would be created by the year 2000 as a result of Tenn-Tom’s construction--with Alabama capturing the lion’s share of 55,000.

Variety of Factors

But Alabama vividly illustrates the variety of factors clouding the Tenn-Tom’s future. For example, the Alabama State Docks Department has spent more than $230 million over the last dozen years to expand and modernize its water facilities at Mobile--the southern terminus of the entire Tenn-Tom system and the only deep-water port on the route.

More than half that amount was spent to boost the operating capacity of the coal terminal from 7 million tons to 23 million tons annually.

The worldwide oil glut, however, has depressed demand for coal, the chief commodity expected to roll through the Tenn-Tom and out of the port of Mobile into international markets. Today, the coal terminal is operating at less than half its capacity--and when the pace might quicken is anybody’s guess.

A similar fate has befallen the grain elevator operation there as a still-lingering consequence of the loss of overseas grain markets in the wake of former President Jimmy Carter’s grain embargo in 1980.

Economic Conditions

In another sign of the dampening effect of current national and international economic conditions, the Army Corps of Engineers is sharply scaling back projections for shipping tonnage in the first full year of the waterway’s life.

Originally projected to exceed 27 million tons, a draft corps study now being reviewed cuts that number by almost half, to 14.5 million tons.

Coal Slump Cited

“The slump in coal is the primary cause,” said Samuel R. Green, public affairs director for the corps’ Mobile district office, in explaining the downward revision of the tonnage figure. “But we’re also being hurt by the hard dollar and the slump in exports in general.”

Like the ports it serves, the Tenn-Tom’s barge towing industry has been badly hurt by a combination of the strong dollar, sagging exports and the region’s general underdevelopment. These factors have combined to offset any price advantage that the shorter new canal might have had over the lower Mississippi route.

“Our industry always has its peaks and valleys, but right now we’re in a severe depression,” said Tim Parker Jr., president of the Tuscaloosa, Ala.-based Parker Towing Co. However, he hopes that Tenn-Tom shipping may become more cost-advantageous as the waterway goes through its buildup phase and the national and international economies continue to improve.

User-Fee Proposal

But any gains in that direction may be offset by a user-fee proposal being considered by the Reagan Administration that would almost double the tax on marine diesel fuel.

“That would be a catastrophic tax increase for an industry already on its death bed,” Parker said. “It will force more companies out of business and shut down many marginal river routes, making the industry less competitive with railroads and trucks.”

Perhaps more important, the amount of industrial growth in the Tenn-Tom region itself also seems uncertain.

State and local governments have invested more than $300 million in barge ports and related facilities to help attract new plants and jobs.

But some states and communities are going to find the sledding rougher than they may have been led to believe.

State’s Image

“A state’s image has a lot to do with whether industry locates there,” said William A. Frederick, senior business location consultant with the New York firm of Moran, Stahl & Boyer Inc. “Alabama, unfortunately, is misperceived as a backward sort of place with a racist governor. The state has a tremendous selling job to do if it wants to overcome such a handicap.”

Frederick added that Mississippi and Arkansas too suffer from similar “backward” images. However, the Carolinas, Georgia and Tennessee are generally viewed as relatively progressive states with healthy business climates, he said.

David Cheng, a research economist with the University of Alabama’s Center for Business and Economic Research, says the estimate that Alabama would gain 55,000 jobs over the next 15 years is “way out of line.”

“That figure is off by at least 50%,” he said. To reach it, he explained, the Tenn-Tom would have to generate more than twice the total number of new jobs created in the state from all other sources over the last 15 years.

“There’s no justification for being that optimistic,” he said. “But even a 50% increase in jobs would be pretty good for Alabama and Mississippi, two of the poorest states in the region.”

High Jobless Rates

The latest monthly unemployment statistics show a jobless rate of 11.1% in Alabama and 10.8% in Mississippi, compared to a national average of 7.4%. Only West Virginia and Michigan have higher unemployment rates.

In addition, Mississippi’s per capita income is $8,857 annually--the lowest in the nation--and Alabama’s is $9,981--fifth from the bottom.

Thus, with all the doubts surrounding the anticipated payoffs from Tenn-Tom, enthusiasm for the waterway remains high among its boosters. They have held the project against lawsuits by environmentalists and railroad interests and the fickleness of congressional appropriators. On one occasion during its construction, for instance, the project survived by a narrow 10-vote margin in the House--a victory made possible only by the votes of the Congressional Black Caucus.

Another Obstacle

The uncertain economic scene is viewed as just another obstacle to overcome.

In Greene County, which has sunk more than $10 million in a new barge-loading facility and an adjacent 2,000-acre industrial park, Luther Howell put it this way: “We’ve got an unemployment rate of more than 20% in this county and a per capita income of around $7,000. Yes, we’re optimistic. But we’ve learned to temper our expectations with patience. Whatever comes is not going to come overnight.”

Mobile Mayor Lambert C. Mims was even more ebullient. “I think the Tenn-Tom Waterway will go down in history as being the greatest thing that’s happened to the South since the Tennessee Valley Authority. It will change the lives of millions of people and cause them to have bread on their table and have an opportunity in life.”