π The Ambassador Bridge Linking the USA and Canada is a Secret Monopoly Few Know About
*It's privately owned!
A Bridge as a Moat
A company's moat refers to its ability to maintain the competitive advantages that are expected to help it fend off competition and maintain profitability into the future.
All the talk about the current supply chain problems, brought to life the idea of this article. It has to do with how the trucks move from country to country transporting all the things.
Border City: A Tunnel and a Bridge
π I grew up in the southern Ontario city named Windsor. Windsor is the auto manufacturing capital of Canada.
βWindsor-Essex is the perfect place for this work because it is home to the busiest commercial border crossing between Canada and the U.S, accounting for more than one-third of all Canada-U.S. trade,β said Stephen MacKenzie, President and CEO of WE EDC. (β¦source - March 19, 2021)
Detroit is not quite 2 miles to the north of Windsor. North? Of Canada?
The Detroit River is a natural international border between Canada and the States.
As a teen, we used to go to Detroit all the time. I saw all my favorite rock bands at Cobo Hall and the Ford Auditorium. Queen, David Bowie, Yes, Johnny Winter, Ted Nugent, Journey, ZZ Top and so on.
We would hop on the Windsor/Detroit Tunnel bus. The concert venues were just a couple of blocks from the Detroit side tunnel exit.
The Detroit Windsor Tunnel
The Detroit-Windsor Tunnel was finished and formally dedicated on Saturday, November 1, 1930. President Herbert Hoover turned a "golden key" in Washington that rang bells in both Detroit and Windsor to mark the opening of the tunnel. The Tunnel is jointly owned by the Cities of Windsor, Ontario and Detroit, Michigan.
The Ambassador Bridge
There was a need to build a route for trucks and larger vehicles to cross what would become the busiest international border in the world.
βIts name evokes diplomacy and etiquette. But when the idea of the Ambassador Bridge was first conceived, things weren't exactly genteel.β
At the end of the 19th century, the Great Lakes region was trying to capitalize on the fur trade. Railroads and steamboat companies clashed. Cities fought with businesses. Should the building of an international bridge be municipal or private?
In 1903, the Detroit Board of Commerce formed an International Bridge Committee to try to find consensus.
In the end it was a paint guy, John Austin, and a banker, New York financier Joseph Bower, who saw a way to made it all happen. In 1924 Bower privately funded the $23.5 million project, and got the approval from Congress. The paint guy got the contract to paint the bridge. All the stakeholders β railroads, waterways, towns and cities agreed and came on board.
But after the Detroit Common Council approved the deal, Mayor Johnny Smith cast a veto β he had envisioned a bridge financed by the cities of Detroit and Windsor, Ontario. In response, Bower funded a $50,000 referendum to put the question to voters.
On June 28, 1927, voters backed private construction of the bridge by a margin of eight to one.
Construction finished nine months ahead of schedule, using 21,000 tons of steel to produce a 7,490-foot bridge with a center span of 1,850 feet.
It was finished and opened on Armistice Day β Nov. 11, 1929. Exactly 92 years ago today:
βThe opening of the worldβs longest suspension bridge had been preceded, just 21 days before, by the beginning of the crash of the New York Stock Exchange and the onslaught of the Great Depression.β
βThe bridge faced financial difficulties during the Depression, but Bower weathered the storm by issuing public stock in his company, Detroit International Bridge Co.β
βOver the decades, the Ambassador Bridge has become a crucial link between the United States and Canada, the main transit point for one-quarter of the trade (2007) between the two countries β worth $100 billion a year.β (β¦source)
Warren Buffett and Matty Moroun
We know that Warren Buffett likes to play bridge. But did you know that he owned 25% of the shares of a bridge?
In 1979, Warren Buffett sold all of that stake in the Bridge Company to a trucking company magnate named Manuel "Matty" Moroun.
Moroun already owned 25% of the shares in the bridge company. He then purchased the remaining public shares until he had full ownership of the Ambassador Bridge Co. He then privatized the company!
So this one guy now controls an international bridge. And not just any international bridge. But the busiest international border crossing in North America. It carries a third of the trade between Canada and the United States.
Talk about a moat business, Warren! Residual income every day.
The Bridge is a toll bridge. That means every car and truck that goes over it has to pay $5.65 per trip on average.
14,000 vehicles per day go over the bridge. Every day. Plus Morounβs company owns the border duty shops. Estimates are that the Bridge provides Moroun and his family business $60 million a year. With a βheftyβ profit margin.
Moroun was a controversial person. A lot of people didnβt like him. Heβs been called recalcitrant:
reΒ·calΒ·ciΒ·trant
/rΙΛkalsΙtrΙnt/
adjective
having an obstinately uncooperative attitude toward authority or discipline.
He bought up 100s of houses around the Windsor side (in a neighborhood called Sandwich) of the bridge with hopes of building a twin bridge himself to improve wait times. (and increase his income).
Matty Moroun Property Purchases: By The Numbers
182: Total number of Windsor real estate purchases made by Moroun, or a company or individual with ties to Moroun, that The Star was able to identify. Some of the purchases were for more than one property. Since he often makes the purchases through a numbered company or a lawyer who holds the property in trust, itβs possible he owns even more.
139: The number of houses, apartment buildings and residential vacant lots Moroun owns in Sandwich.
$52 million: Total amount Moroun has spent on property in Windsor that The Windsor Star was able to identify.
$31.9 million: Total amount Moroun has spent on houses and apartment buildings in Sandwich.* Thatβs slightly more than the $30 million he spent to purchase the Ambassador Bridge in 1979.
$12.9 million: The amount those houses and apartment buildings in Sandwich are worth today.**
14: The number of Indian Road homes Moroun bought on May 21, 1996 β his first property purchases on the street.
60: The number of Sandwich properties Moroun bought 10 years later throughout 2006 β his second big wave of property purchases in the neighbourhood.
5: The number of Sandwich properties Moroun bought in 2013, between Oct. 3 and Oct. 18.
$333,000: Morounβs 2013 tax bill for his residential properties in Windsor.**
$3.8 million: The most money Moroun has ever spent on a single Windsor property. This was the purchase price for 747 Huron Church Rd., a commercial building, in 2002. (β¦source - December 13, 2013)
Moroun opposed plans by Michigan and Canada to build a publicly owned commuter bridge across the Detroit River. No kidding!
The new Gordie Howe International Bridge is currently under construction and is expected to open 2024 (projected cost is $5.7 Billion) September 2025 (new cost projection is $6.4 Billion) a couple of miles South West of the current bridge:
The Canadian Government says that Ambassador Bridge is to be demolished 5 years after the new one opens. It is a legal battle that will take a long time to resolve. The Moroun family still wants to upgrade the current bridge.
The family also owns and operates Central Transport International, a trucking and logistics company, and Crown Enterprises.
Manuel died in July 2020. He was 93. He was one of the 500 richest Americans at one time. Forbes estimates Moroun's net worth at $1.6 billion.
A couple of other Moat businesses which are public companies:
I learned that one guy owned this landmark bridge in my hometown long after I moved away from the area. I wrote about moving in August 2, 1980.
More about the Bridge and Moroun:
https://www.ambassadorbridge.com/bridge-facts/
https://en.wikipedia.org/wiki/Ambassador_Bridge
https://learn.saylor.org/mod/book/view.php?id=31084&chapterid=7192
https://windsorstar.com/news/local-news/forster-high-school-belongs-to-bridge-company
https://windsorstar.com/news/local-news/your-neighbour-the-billionaire
https://www.ttnews.com/articles/manuel-matty-moroun-owner-ambassador-bridge-dies-93
I hope you enjoyed this issue of the Deplatformable Newsletter.
As I aggregate and synthesize the articles, books, podcasts, interviews, and videos about a particular subject, I learn more than I knew before. My aim is that you have learned also!
Iβd love to hear your comments on any of my blogs, and truly appreciateπ my subscribers.
Not to be contrarian, but I see the need for two bridges, and I am not understanding why they want to demolish the Ambassador Bridge. (Or maybe they have by now?) Isn't that just replacing one monopoly with another, but this time owned by government(s)? And am wondering if that is better.
This article has a lot of spicy food for thought