LEONARD GRAY / L’Observateur / May 27, 2000

LAPLACE – By all accounts, it was a sweet deal. Louisiana Sugar CaneProducts Inc. needed a sugar warehouse with port access. The Port ofSouth Louisiana’s Globalplex facility was perfected sited, with unrivaled rail, highway and river access.

It was in the bag.

Then the bag began to leak, the deal went sour and Louisiana Sugar Cane Products Inc. signed with the Port of Baton Rouge, scuttling plans for a $7million warehouse two years in development.

Instead, the Port of Baton Rouge will build it for $2 million less and provide lower dockage and wharf fees.

“We felt that we were going to go forward, then they stopped talking to us,” said Joseph Accardo Jr., executive director for the port. “They keptputting us off.”Finally, after a confrontation in which Accardo asked, “When are you going to have the courtesy to tell us the deal is off?” it was off.

It all began two years ago when the company, which processes 60 percent of the state’s cane sugar, wanted a warehouse site accessible to port facilities to ease shipping and trim costs.

Louisiana Sugar Cane Products Inc., based in Baldwin (between Jeaneretteand Franklin), represents 11 of Louisiana’s 18 sugar mills.

At first they approached Morgan City, but that port was too small to meet their needs.

“They didn’t have enough draft at Morgan City, and we felt the freight expenses were too high,” Brother LeBourgeois, general manager of the sugar cane group, commented.

Then, according to former port director Gary LaGrange, the company was passed along to the Port of South Louisiana and its Globalplex facility in Reserve.

Here, port officials leaped at the opportunity and work began toward development, the plans dovetailing with Globalplex’s own master plan for future growth, especially located in the midst of the sugar belt on the site of a former sugar refinery. It was positioned on the 1998 Capital OutlayBill in the Legislature to acquire seed money.

Originally, the plans were to have a $1.5 million site. However, withfurther study and design review, the cost was bumped up and up, as the cost of conveyors hadn’t been factored in at the outset.

“They couldn’t have bought a warehouse, much less added conveyors at that price,” Accardo observed.

Then, it began to make sense to the port to find additional uses for the facility since sugar is a six-month crop and the warehouse and dock facilities would be unused for half the year. That prompted the port topush for larger conveyors, from 42 to 60 inches, a truck dump and a centerline reclaimer. All these items continued to bump up the cost of thewarehouse.

Louisiana Sugar Cane also wanted to change the contract duration terms, not being locked into a 25-year contract, but make it possible to leave at five-year increments with a two-year notice.

Additionally, conflicts arose between the Globalplex engineers, River Consulting Inc., and Louisiana Sugar Products’ own engineering firm, ArkelEngineering of Baton Rouge.

“We calculated it was a bad deal for us,” Accardo said.

Negotiations soon opened with the Port of Baton Rouge, unknown to the local port officials, and a deal was cut with lower dockage and wharf fees which the Port of South Louisiana couldn’t match.

“We saw in the paper that the Port of Baton Rouge had lost its wood-chip facility,” LeBourgeois said, and they saw the chance to take advantage of an existing facility to meet their needs at a lower cost.

However, that picture wasn’t apparent in December 1999, in which agreements were made on most business issues between the company and the South Louisiana Port. At that time, the South Louisiana PortCommission voted to spend up to $150,000 toward the engineering and design. Of that, $131,200 was spent by the port, with the balance pickedup by the state Department of Agriculture.

In January, an expert opinion of probable cost for the warehouse, as designed with modifications apparently agreed upon was made for $7 million. “We thought we were going to move forward,” said Accardo,adding a good lead on lining up a second cargo for the open six months of the warehouse’s projected use.

Finally, after the sweetheart deal was cut with Baton Rouge, the Reserve- based port got the sour news two weeks ago.

“We dealt in good faith,” Accardo said. “Are we sorry we lost the deal?Yes. Did we have any choice? No. We weren’t going to make a lot of moneyon this.”LeBourgeois said if a third party had come in to share the warehouse facility for the rest of the year and the development expense had been split three ways, “We might still be dealing with the Port of South Louisiana.”He added, “They did a wonderful job putting this deal together, but there’s no hard feelings at all. I’m not blaming the Port of South Louisiana. Theyhad special needs to satisfy themselves.”LaGrange commented, “I don’t know how they lost it. I don’t know why theylost it, but it’s a shame. That’s a heck of a note.”

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