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Owensboro Port Prospers Despite Recession

October 8, 2012

Waterways Journal

by David Murray

When Owensboro (Ky.) Riverport Authority chief executive officer and president Ed Riney presented a report to his board in late August on the port's performance since 2007—a period that includes the recession that started in 2008—it caused much local satisfaction.

According to local news sources, since 2007, the port has realized $9.6 million in net income before dividends. That equals half of all the port's net income since 1976. The port has about $4.5 million in the bank, even after paying about $1.36 million to the city of Owensboro in dividends since Riney took over.

When Riney was hired, he had no experience managing a riverport, although his business and accounting experience is extensive. Riney believes management skills are transferrable.

"There are certainly advantages in changing one's career to different industries," he told The Waterways Journal.

Increasing Productivity

Some of the port's revenue results came from allowing the number of employees to shrink from 51 to 31—all through retirements and normal attrition rather than layoffs, he said. He told The Waterways Journal, "We had to evaluate our processes and determine more cost-effective ways to handle products. Accordingly, we had to convince employees that productivity gains were necessary, and in their long-term best interest."

But the port also made some strategic purchases. In 2007, it bought three warehouses totaling 92,500 square feet from Tom Poland, according to the Owensboro Messenger-Inquirer's story on the report.

In 2009, it bought 106 acres from Ohio Valley Terminal for $5 million that included a rail loop that Riney said would only increase in value. The port contributed $350,0000 to help build a tank farm next to the rail loop, in which a port tenant, Southern Indiana Growers, invested $3.5 million and uses to store liquid fertilizer. In 2025, the port will own the tank farm outright.

Long-Term View

Riney told The Waterways Journal, "We evaluated market segments and determined we wanted agribusiness products to represents about one-third of our throughput. We set about recruiting three different ag-related businesses to the port with approximately 90 percent private investment and 10 percent public port investments.

"The private/public investment partnerships are good for both parties, along with the long-term multi-year product handling agreements. Customers understand that public ports will be around for the long haul."

That long-term view seems to guide many of Riney's decisions. The port bought a material handler last year for about $1.8 million, replacing a 1972 model that had served since the late 1970s. Riney said, "The new material handler has not been the impetus for new products [yet], although it does make us more efficient with the 7.8-cubic-yard bucket for unloading barges. It is simpler to operate than our old friction crane, thus it will be easier to recruit operators in the future."

Knowing When To Fold 'Em

Expansion hasn't been the only contributor to the port's results; Riney canceled a previously approved decision to add a second floor to the port's administrative office building, thereby saving $750,000.

He also persuaded the board to abandon the idea of expanding the port to a second property at the site of Green River Steel. The old steel mills were torn down and sold for scrap, generating another $750,000. The property is for sale for $4 million.

Riney is cautiously optimistic about such trends as container-on-barge, for which he believes the port would be well-positioned.

In the end, he said, his decisions have been guided by efficiency and transparency.

Riney began his career at Green River Steel (whose land is now owned by the Owensboro Riverport Authority), working in the rolling mill. He progressed to the accounting department, and eventually was promoted to corporate headquarters in Parsippany, N.J.

He came back to Green River Steel in 1983 as vice president of finance and administration. When the steel mill closed in 2005, Riney was offered the opportunity of moving to Washington, Pa., with Athlone Industries Inc., the new owner of GRS. He declined, instead taking the chief financial officer position with the locally owned Messenger Inquirer newspaper. Later he became general manager and then was promoted to president and publisher of Owensboro Publishing Company.

In 2003, Riney left the newspaper to become president of Lingate Hospitality Group, an Owensboro company that owns and/or manages 21 Marriott and Hilton branded hotels around the country.

In early 2007, Riney was encouraged by board members of the Owensboro Riverport Board of Directors to apply for the president/chief executive officer position.

"I am nearing the end of my career; however, I have always endorsed the idea that 'change' is necessary for people and companies to be successful," Riney said.

"I am obsessed with the idea that public entities can and must operate efficiently as determined by objective measurements. Our success is about understanding the processes, getting buy-in from the employees and motivating management to have high expectations. It is not rocket science, especially if you have worked in the private sector, as I have most of my career.

"Anyone can manage with unlimited resources. Good managers take limited resources and achieve extraordinary results.
Leaders motivate managers to achieve extraordinary results with limited resources."

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