Business Beyond the Reef

The Deep Sea Quest for Amelia Earhart

The search for Amelia Earhart’s airplane is the ultimate in Business Beyond the Reef – and my friend Dave Jourdan is doing exactly that.  Dave heads up a deepsea exploration company called Nauticos that operates out of Cape Porpoise, Maine.  These are the guys who found the lost Israeli submarine Dakar and salvaged her in 10,000 feet of water.  They also discovered 2,000 year-old Mediterranean shipwrecks at the same extreme depths.  Dave and his Nauticos team found the wreckage of one of the Japanese aircraft carriers that went down in the Battle of Midway, and they worked with the National Geographic Society to photograph the wreckage of the I-52, a Japanese submarine sunk in the mid-Atlantic while carrying a cargo of gold on a secret World War II mission.

Dave, Nauticos and our friend Elgen Long have put years of research and ocean exploration into their search for Amelia Earhart’s long-lost aircraft, hoping to find the site where Amelia and Fred Noonan went down in the vast Pacific, and to solve the mysteries and rumors of their fates.  Nauticos has based its searches on Elgen’s exhaustive research, written up in Elgen’s 1999 book, Amelia Earhart: The Mystery Solved.  But research only gets you so far.

Dave and his Nauticos team now have to find the wreckage in thousands of feet of water in a huge ocean.  Elgen’s work narrowed their search to waters near remote Howland Island, but still leaves an area the size of Rhode Island to sift through.  A search for such a small target in deep water tasks modern ocean technologies to the fullest and demands extreme ingenuity, pushing technology beyond its designed limits.  Deep-towed sonar mapping is the primary tool.  Nauticos has produced undersea charts of this part of the Pacific that surpass any previous surveys, yielding one-meter accuracy and the discovery of underwater features – such as volcanoes – never known before.  It has also led them to several targets that match the shape and size of Amelia’s Lockheed Electra.  Read about the search in Dave Jourdan’s new book, The Deep Sea Quest for Amelia Earhart, being published in the next few days.

This is an adventure, but it is also a business.  Ocean exploration is expensive.  Dave estimates that the search for Amelia costs about a dollar a second, and requires millions of dollars worth of equipment, not to mention the costs of keeping vessels and crews at sea for weeks or months in a remote location.  There’s romance, sure, and the chance to solve mysteries, but there is also calculated risk.  Finding, perhaps even salvaging Amelia Earhart’s aircraft, could lead to immense commercial possibilities.  Imagine the excitement, the films, the books, the exhibitions.  Every airshow and aviation museum in the world would want to show her Electra.  And I can’t even imagine the return from Amelia-based fashions.  The return may be incredible – or it may be nothing.  This is truly Business Beyond the Reef.

• Europe’s prospects have rarely seemed so important for the world, what with the Greek drama and associated fears of contagion.  So take a look at this neat interactive map of the European Union that shows all kinds of growth forecasting data for every EU member.  Judge the danger spots for yourselves.
• I have posted a few times about the U.S. military build-up on Guam, making room and building facilities for 8,000 Marines and 1,000 U.S. Army personnel, plus their families and support staff.  Contractors are salivating over the prospects, but the local community is having doubts.  Read about in detail here.
• For your weekend entertainment: the New York Times collection of strange and wonderful signs from around the world.

'Nuff said

I thought of Cannonball Adderley’s title when we were climbing about ten decks on Saturday to the bridge of USNS Mercy, one of the U.S. Navy’s two giant hospital ships.  You may wonder why this is in a blog that is normally about international business, but it is Business Beyond the Reef and a great opportunity for medical equipment suppliers.  So read on.

Mercy departs San Diego for Pacific Partnership 2010 (U.S. Navy photo)

Mercy made a brief stop at Pearl Harbor this weekend on her way to a multi-month humanitarian mission (Pacific Partnership 2010) in the Western Pacific and South East Asia.  Her combined military and civilian crew and medical staff will provide health care and training in Vietnam, Cambodia, Indonesia, Timor-Leste and Palau.  Home-ported in San Diego, Mercy is one of two hospital ships under the U.S. flag, the other being her sister-ship USNS Comfort that scored headlines and praise for her work as a first-responder after the Haiti earthquake.  Mercy did similar work after the Indonesian earthquake and tsunami.

She is a remarkable ship, built as a 69,000 DWT tanker, but converted in the 1980s to a new career as a complete floating hospital.  Normally operating as a 250-bed hospital, she can quickly be configured for 900 beds.  She needs that ability in a humanitarian crisis or for wartime.  Mercy boasts all the services that a well-equipped hospital offers: complete operating rooms, recovery, x-ray and advanced imaging, a dental suite, an optometry laboratory, physical therapy, a huge pharmacy and much more.  She is even carrying a veterinary team on this mission.  Mercy’s mission is strongly supported by medical NGOs, who bring their own expertise, including provision of many of the interpreters needed during this voyage.

During the Pacific Partnership mission, Mercy will be the centerpiece of humanitarian programs that include not only operations and care on board Mercy, but construction and repair of clinics and other medical facilities, training for local medical personnel who will have the chance to work alongside Mercy’s professionals.  And the ship carries a full medical equipment repair shop that will fix broken gear, including advanced electronics, and providing training at all her stops.

This is where the business angle comes in.  It’s not just host country medical personnel who will be on board Mercy and seeing the equipment and supplies she uses.  Hospital administrators and Health Ministry officials will also be on board, working with Mercy’s hospital administrators.  These are the people who make decisions on what to procure for their own hospitals and clinics.  As I gazed around Mercy’s surgical suites, recovery rooms and medical labs, I saw equipment from General Electric, Welch Allyn, Stryker, Allied Healthcare, Beckman Coulter and Johnson & Johnson – all outstanding U.S. competitors.  Of course, there was equipment from other countries, too.  The star of the show was a brand new GE CAT scanner that looks like something right out of Star Trek.

Foreign administrators and officials are likely to pay attention when they see this equipment in action, and see their own medical personnel using it, in a non-commercial situation.  This is soft-sell, no salesmen present – but none are needed if your equipment is good enough to be selected for Mercy or Comfort.  We are not likely to be able to quantify the results, but medical equipment manufacturers should think of missions like Pacific Partnership 2010 as a floating trade show for their products.  You don’t need to pay for a booth or a trade show staff, but you do need to bid on Mercy’s future needs.  Offer the winning bid and your company can do well by doing good.

• CT&T, a South Korean electric car producer, and Hawaii Governor Linda Lingle announced yesterday that CT&T plans to invest $200 million in an electric automobile assembly plant on the island of Oahu.  The plant will produce two-seater electric cars, designed for use on Honolulu’s urban streets and fitted for the rental car trade in Waikiki.  The plant may employ as many as 400 workers and will include a plant-side dealership.  They plan to produce 10,000 vehicles a year, so this can’t just be for the Hawaii market.  For more details, see the Honolulu Advertiser article.
• It’s not too late to sign up for the May 14 U.S.-Hong Kong Business Forum at Waikiki’s Hilton Hawaiian Village.  Great speakers from the United States, Hong Kong and China.  And I’m moderating a session on U.S. Government assistance to exporters.  Take a look and register at www.ushkforum.org.
• In Hawaii, we pay attention to our far flung neighbors, the American Pacific territories of Guam, American Samoa and the Northern Marianas.  While data is pretty good coming out of Guam, it is sometimes tough to get a feel for what is happening economically in American Samoa and the Northern Marianas.  The U.S. Department of Commerce this week released new GDP estimates for all the U.S. insular territories, including the Pacific territories and the U.S. Virgin Islands.  These are small markets, but they have been lucrative for many.  Guam faces an economic boom from the expanded military bases on the island, American Samoa sees a downturn due to its declining tuna industry, and the Northern Marianas (e.g., Saipan and Tinian) are looking to growing tourism traffic from China and Russia.
• I posted a couple weeks back about China’s control of trade in rare earths.  This week the U.S. Department of Energy issued a press release saying it wants industry input on the use of rare earths in the energy sector, particularly clean energy technologies.

Business in American Samoa?

You may have grown up watching “Adventures in Paradise” or “Gilligan’s Island“, or reading Michener’s “Tales of the South Pacific“.  You certainly know the music.

The Pacific isn’t really like that, you know.  It’s hard to live on some of these islands, and it can be tough to do business out there.  You need to be prepared to deal in small quantities, cope with logistics issues, and be creative on payments terms.  Still, there are companies that do well in the Pacific, and I know many businesspeople who have become so enchanted, they have moved themselves, their businesses and their families to islands in the Pacific.  It can be a heady brew of beauty, ugliness, firm friendships, backstabbing … hmmm, maybe it is something like those old stories after all.

Marshall Islands - Not What You Think

It is hard to know where to begin if you want to find business in the Pacific islands.  A good starting place may elude you, because few international marketing sites or companies know anything about these tiny markets.  A good place to start, one that may surprise you, is with the U.S. Department of the Interior.  Check out Island Business Opportunities for market analyses and some business opportunities in American Samoa, Guam, the Commonwealth of the Northern Marianas Islands, Palau, the Federated States of Micronesia and the Marshall Islands.  (They also cover the U.S. Virgin islands.)  Why Interior?  It may seem counter-intuitive, but Interior is the prime U.S. agency dealing with the American Pacific territories (American Samoa, Guam, CNMI) and they used to have much of the responsibility for the former Trust Territories, now independent (Palau, Micronesia, Marshalls).  Interior is currently advertising procurements in Guam, the CNMI, Micronesia and the U.S. Virgins.

Micronesia - Deals to be Done?

The big business story in the Pacific right now is the move of about 8,000 Marines and their families from Okinawa to Guam.  These contracts are hotly contested and can mean big money.  The total cost of the move, and expansion of bases on Guam, is something above $10 billion.  One of my earliest posts was about Hooter’s and others opening up shop on Guam to cater to the young Marines.  There is still business to be done and niches to be found.

You have to think outside the box to do business out here.  One Japanese company made a killing by giving away its ice makers to fishing co-ops, but charging them high prices for refrigerants.  Then, there was the circus I helped to make a tour of the Pacific islands.  The giraffes couldn’t make the trip (too tall for airplane holds), but they did manage a small elephant.  It was the dog acts they should have left behind, but that’s another story …

• Lest you think that all trade disputes are between the United States and China, Washington filed a case against the Philippines last week, protesting that the Philippines’ excise tax on distilled spirits discriminate against imports.  The Philippines levies a lower tax on spirits made from local products, such as sugar or palm, than it does if the same spirit is made from non-tropical products, such as wheat.  The Americans argue that the differential tax rates illegally protect local spirits producers, while Manila will say – with an innocent look – that foreign spirits made from sugar or palm get the same low rate, so there is no discrimination.  I expect the European Union and perhaps Japan will join the United States’ filing.
• Micronesians are trying out their muscles in Europe in what could prove a landmark case in the environmental business.  A Czech power company has applied for approval to renovate an old coal-fired power plant to extend its life, but the Federated States of Micronesia has filed a motion with the Czech review body to deny the power company’s request.  The Micronesian argument is that anything that will raise or extend the growth of greenhouse gasses is a danger to the very existence of some Micronesian islands.
• I was so excited about the new China-ASEAN free trade agreement that I totally missed the January 1 start of the Russia, Kazakhstan and Belarus customs union.  A customs union isn’t the same as an FTA, generally requiring that its members have identical customs duty structures as well as free trade.  The European Union is a customs union, and there are a few others, but I am skeptical that that the new one will work.  It just seems so lopsided, it is hard to imagine that Moscow isn’t calling all the shots.  I expect that Kazakhstan and Belarus will see a surge of Russian products, but that shoppers in their big neighbor won’t notice much.  Kyrgyzstan and Tajikistan are said to be considering joining.
• This is for my real estate friends, who are always looking for new sources of business.  Realtors in Scotland are reporting a surge in interested buyers from Georgia (no, not the one in the United States).  Russia, China and India, too.
• The United States is dropping in the freedom standings.  The Heritage Foundation and the Wall Street Journal have released their 2010 Index of Economic Freedom, which purports to measure things such as freedom to trade, invest, establish a business, own property and other good stuff.  The winners are Hong Kong and Singapore, so one reflects that the index has nothing to do with political freedom.  Still, it is disappointing that the United States has fallen to #7, reflecting tighter regulation of business during the recession backlash.  Who is last on the list?  Coming in at #179, drum roll, please – North Korea.
• I’m late on this, but it got so little notice that I didn’t notice it.  On December 28, President Obama signed a bill that extends the life of the Generalized System of Preferences for another year.  Now GSP expires December 21, 2010.  So we have to get the attention of the Congress again next fall.

We knew that 2009 was bad for economies all over the world, but the foreign direct investment numbers posted by Vietnam on December 28 are an eye-opener.  FDI in Vietnam for 2009 plummeted by an astonishing 66% from 2008 – to $21.48 billion.  There were 839 new investment projects in 2009, a drop of 73% from 2008.  The hospitality industry was the most popular investment target, followed by real estate development.

Seychelles: Is This Where The Money Comes From?

The top foreign investor in the country remains the United States, followed by the tax havens of the Cayman Islands and Samoa – which looks a bit peculiar.  Vietnam Briefing carried an article last Thursday that details the top ten investment projects in Vietnam during 2009, which adds a bit more color to the sources of the investments.  The third largest project on the list, for example, is a housing development projected to provide 90,000 apartments, for whom the partners are Smart Dragon Development from Samoa and Tuster Development from the Seychelles.  It appears that neither of these companies has ever done another project anywhere.  When I Googled the names, all references came back to the apartment project at Binh Duong.  Nor was I able to confirm that they are actually incorporated in the Seychelles or Samoa, which doesn’t mean they aren’t.  Curious.  I wonder where the money really comes from.

At first glance, it looks good.  Especially if you are running for Governor of Hawaii.  Congressman Neil Abercrombie (D-Hawaii) took a look at the move of 8,000 U.S. Marines and 9,000 dependents from Okinawa to Guam – and glommed on to the fact that there are big contracts available for construction on Guam.  The total cost of the move adds up to $15 billion!  The construction industry is hurting in Hawaii, so this is a natural for a guy running for office.

Guam

Using his position on the House Armed Services Committee, Abercrombie inserted a few changes in the defense authorization bill for 2010.  These require contractors for the work on Guam to advertise for and recruit U.S. workers before they can hire foreign workers; and open the door to making Guam “align” its pay scales with those on the U.S. mainland.  Abercrombie says his changes put “some genuine competition back into play.  This makes sure the Marines and their families can count on the quality of the housing they’ll be moving into.  Feudal exploitation is on the way out.” Anybody see any problems with this?

Guam is way out there in the western Pacific and there is no way we should expect local wages to approximate those on the U.S. mainland.  Japan is paying for most of the move from Okinawa (they want their island back) and thought they had a done deal.  Now, Abercrombie is potentially throwing the deal open – to a new Japanese government that may want to lower its spending.  And the Philippines, the likely source of much of the construction labor, is likely to lose millions in workers’ earnings.  To be fair, what was passed merely requires that contractors prove that American construction workers don’t want to move to Guam.  The challenge and expense of convincing hundreds or thousands of construction workers to move 3820 miles from Honolulu to Guam (or 6238 miles from Las Vegas) will be huge.  The Filipinos only have to cope with 1599 miles from Manila.

Abercrombie’s rhetoric is fascinating.  It’s curious how restricting competition puts “genuine competition back into play.”  It must be “genuine” only if our guys win.  I also don’t see Abercrombie’s beef with the quality of construction.  I have seen good and bad construction all over the world (even on Guam), and paying more money for labor doesn’t guarantee good quality.  Perhaps the Congressman should take a look at the specification and inspection process if he is really concerned.  And is it “feudal exploitation” for Filipino construction workers to get (by their lights) good paying jobs on Guam?

Finally, what if the reverse were happening somewhere?  What if some country excluded or hindered hiring U.S. construction firms and workers in favor of their own, making the same arguments that Abercrombie makes?  I suspect, given his abysmal voting record on trade issues, he might be among those who advocate retaliation for treating American labor unfairly.  You can’t have it both ways – except in populist politics.

Mercifully, only a watered-down version of Abercrombie’s proposals got into the bill.  A good thing: the Congressional Budget Office says his original proposal would have cost the U.S. taxpayer an extra $10 billion.  So he wants to run for Governor by raising taxes?

They brought the mess on themselves, but Washington is doing its best to make the punishment exceed the crime.

The Commonwealth of the Northern Mariana Islands is a U.S. territory, but is not always governed under the same rules as the rest of us.  One of the exceptions was to allow the local government to control its own immigration, the theory being that what happens on small islands in the western Pacific likely won’t hurt the United States.  That resulted in untold numbers of improper visas and lots of stories of corruption involving high officials in the CNMI.  The Feds, rightly, cracked down and required that anyone who traveled from the Northern Marianas to Guam had to go through Immigration again.  (There are no direct flights from the CNMI to either Hawaii or the U.S. Mainland, so anyone trying to enter the United States proper had to either fly through Guam or go back to Asia and start over.)

Tinian's Future?

The travel industry in the Northern Marianas has been dominated by Japanese tourism companies providing a quick, cheap holiday in the tropics, usually on Saipan.  Steady income, but not much growth there.  But things have been picking up with the advent of casino resorts on Tinian and Rota, which are proving attractive to visitors from China and Russia’s Far East looking to try their luck.  Since the local sweatshop apparel industry died, the CNMI has been looking for a viable industry and many thought that Tinian could be the Vegas of the western Pacific.

“Not so!” says the U.S. Congress, which passed P.L. 110-229 last year to extend full U.S. Immigration law to Guam and the Northern Marianas.  The law comes into effect November 28, imposing tougher rules about which Chinese and Russians can come throw their money at a roulette wheel.  To make matters worse, the Department of Homeland Security isn’t ready to enforce the law.  The CNMI has six ports of entry and DHS hasn’t been able to put enough immigration officers in place, and likely won’t be able to fully staff the Northern Marianas until sometime in 2011.  Their solution?  Close the airports on Rota and Tinian to foreign flights, forcing the Russians and Chinese to fly to Saipan first, clear Immigration and then change planes.    So, we make it tougher to get visas, then add inconvenience on top of that.  Talk about ways to kill a tourism industry.

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You may have heard about the move of more than 8,000 U.S. Marines from Okinawa to Guam.  There are scads of business opportunities arising from this for architects, engineers, building contractors and more – but there is one opportunity I haven’t heard publicized.  All those Marines, not to mention the contractors and support personnel, and their families, are going to get thirsty.  And there are no microbreweries on Guam so far as I can tell.  Guam has about 175,000 people and is about to get a large influx of young drinkers.  Hmmm … perhaps this is why Hooters opened its first Guam franchise in May.  Ya think?