That Sinking Feeling

The cruise industry has been hard hit by COVID-19, which is bad news for any port that has put all its eggs in that particular basket, like the Port of Sydney which counts on the industry for up to 85% of its revenues and has funneled $20 million in public money into a second berth that was supposed to make its triumphant debut this season.

You knew it was serious when, having first tried to soldier on — sailing bravely into the teeth of the pandemic, as it were — even a company as bone-greedy as Carnival Corp had to bow to the virus and, as of March 12, suspend all new cruises for 60 days. On March 13, the rest of the North American cruise fleet followed suit, suspending sailings for 30 days. Then on March 14, the US Centers for Disease Controls (CDC) issued a No Sail order for cruise ships, which it has extended to July 24.

The vessels are barred from Canadian ports until the end of June, but Port of Sydney CEO Marlene Usher told the CBC last week that Holland America and Princess Cruises, both owned by Carnival:

…issued notices this week saying they are extending the pause on trips for the rest of the year, citing global health concerns.

Both Holland America and Princess vessels have been at the center of high-profile COVID-19 outbreaks, including the Zaandam, a regular visitor to the Port of Sydney, which was on a South American voyage in March when nine passengers tested positive for COVID-19 and four died (two of the virus, one of a heart attack and one of a pre-existing illness). The vessel cut its journey short on March 14 but was refused permission to dock in multiple jurisdictions before finally being permitted to anchor and disembark passengers in Fort Lauderdale on April 2.

 

The suspension of Holland America and Princess cruises has meant the loss of 52 calls to the Port of Sydney which, according to Usher, has “decimated” the Port’s budget. Speaking to the CBC’s Main Street Cape Breton on May 8, she estimated the hit to revenues at over $1 million and said they have laid off “approximately 10 people.” (I’m sorry, but I find approximations unnerving when the actual numbers are barely in the double digits. How many people were laid off?). The Port now has a staff of five.

Asked if she worried the workers they’d let go would find other jobs, Usher allowed as how she was concerned, but added, in a comment sure to warm the hearts of her laid-off employees, that the jobs were “not highly skilled” and the people could be replaced.

I think there are a number of things to be said about this situation.

 

Usher’s salary

Usher was seconded from the Atlantic Canada Opportunities Agency (ACOA) to head the Port of Sydney Development Corporation before that corporation even existed. I have written about this extensively — voluminously even — since it happened in February 2015 to absolutely no purpose, but old habits die hard, so here we go again.

When Usher, who has no qualifications making her the obvious choice to oversee a port, was hired, her salary was set at $200,000 because as head of the Port Corporation, she was to oversee both the existing operations — the Marine Terminal and the Cruise Pavilion — and the development of the “greenfield site,” land created from materials dredged from Sydney harbor that was supposed to be turned into an international trans-shipment hub for ultra-large container vessels (ULCV).

A salary of $200,000 a year might even have made sense for an executive overseeing the transformation of a sleepy, eastern Canadian port into a $1.5 billion container terminal funded and constructed by the Chinese but, if you’ve looked across the harbor from Sydney to Sydport recently, you’ll know the container terminal is conspicuous only by its absence.

Moreover, in January 2017, responsibility for the container port was removed from Usher’s purview.

Initially, half of Usher’s salary was paid by the CBRM (out of the CAO’s budget) and half by ACOA. When she completed her first three-year term in February 2018, council renewed her for a second, but the Port was told to take over paying the CBRM’s portion of the salary. (Which is just a shell game, really  — the CBRM owns the Port Corporation.)

According to the Port’s 2018/19 audited financials (the most recent available), salaries and benefits there totaled $752,174, so the $100,000 paid Usher represents 13% of the total. But I think a better way to show how outsized her compensation is is to compare her full salary (regardless of who pays it) to the surplus recorded by the Port in 2018/19, which was $196,488. You don’t even have to do any math to recognize that she’s paid more than the Port earned in a good year.

During her appearance on Main Street, Usher explained that the sum total of her job right now is “keeping the port open” to “welcome” oil tankers and Coast Guard vessels and “preparing for next year’s cruise season” which she reckons is going to be “robust.”

She seems content to continue to accept her full salary for that reduced workload, unimpressed by the example of, say, Halifax Mayor Mike Savage, who actually earns less than Usher, at $190,000 and has taken a pay cut in solidarity with the province’s thousands of laid-off workers.

Usher’s second three-year term as Port CEO doesn’t officially end until February 2021, but her job at ACOA will presumably be there waiting whenever she wants it. The Port of Sydney built up its cruise business without benefit of a CEO and it has a general manager and a cruise manager to oversee operations.

Does it really make sense to continue paying $200,000 to a CEO while laying off 10 other port employees?

I guess it did to the person doing the laying off, i.e., Usher.

 

Jumping ship

Another survivor of the shipwreck that is the 2020 cruise season at the Port of Sydney is Christina Lamey — former spokesperson for CBRM Mayor Cecil Clarke turned interim manager of cruise marketing and development at the Port of Sydney turned head of marketing and business development at the Port of Sydney — who has been “seconded” to the CBRM to serve as municipal spokesperson until such time as a replacement for former spokesperson Jillian Moore can be hired.

CAO Marie Walsh told me in an email that Lamey had been brought on “around” March 23 “as with COVID we needed someone right away.”

You might think the CBRM, during a literal State of Emergency, would have announced the secondment of an interim pandemic spokesperson and provided her contact information to the media outlets on the municipal clerk’s media list but you would be very, very wrong. I only knew Lamey was serving as municipal spokesperson because I saw her quoted in the media.

And it gets even more farcical, because on April 8, I wrote Municipal Clerk Deborah Campbell Ryan to ask who would be serving as municipal spokesperson in the absence of Moore and rather than pointing me to Lamey — who had been taken on “around” March 23 — she sent me to John MacKinnon, the deputy CAO, who also didn’t mention that Lamey was now acting as municipal spokesperson.

Were they hoping I wouldn’t find out?

This story is so fantastical in so many ways, starting with the fact that Lamey has been seconded by one sister, Walsh, from a corporation headed by another sister, Usher. (It’s like having our very own House of Windsor.)

Lamey transitioned from Clarke’s office to the Port of Sydney in May of 2018 — a timely move, given that Clarke was running for the leadership of the provincial Tories at that point and had he won, her days as his spokesperson would have ended abruptly.

Now, she’s transitioned from the Port back to the CBRM just as the Port has laid off 10 employees.

Would anybody be surprised if this latest move translated into her permanently replacing Jillian Moore?

As for the sort of urgent, COVID-19-related communications you might imagine Lamey has been “seconded” to handle, I have seen little that would fit the description, unless you count Mayor Clarke’s daily COVID-19 “proclamations,” which see him dedicate each day to a local individual or group. The designation has no prize attached, just the honor of sharing in the tens of likes the posts are garnering on Twitter and Facebook and the chance to attach your name to the slogan #CBRMProud with all its subtle, alt-right connotations.

 

Heritage Minute

I can’t resist taking a moment to put these latest Port developments in historical context:

• In 2011, Cecil Clarke made an unsuccessful run for federal politics in Sydney-Victoria, after which Eileen Lannon Oldford hired him at the Cape Breton County Economic Development Authority (CBCEDA) without a job competition on a three-year contract at an annual salary of $139,000. He was hired as a “senior executive adviser on economic development issues.” Lannon Oldford got the funding for the position from Enterprise Cape Breton Corporation (ECBC).
• In 2011, Marlene Usher was executive director general of ECBC, in which position she was responsible for “oversee[ing] and coordinat[ing] the complete range of community economic development programs and services on CB Island and Mulgrave…”
• In 2012, having been in his economic development post for a year, Clarke left to run, successfully, for mayor of the CBRM.
• In 2014 ECBC CEO John Lynn was fired for patronage hires and the organization was absorbed into ACOA.
• In 2015, Clarke oversaw the machinations that put Usher at the helm of the Port of Sydney Development Corporation (without a job competition) and hired Lamey as his personal spokesperson (without a job competition).
• In February 2018, Clarke announced he was running for leader of the provincial PCs and three months later, Usher hired Lamey as interim cruise and marketing manager at the Port of Sydney (there was a job competition, but somehow the best qualified person for the job of marketing and developing the cruise business was the mayor’s erstwhile spokesperson).
• In May 2020, Usher is one of only five employees at the Port of Sydney to survive the COVID-19 bloodbath and Lamey has been miraculously “seconded” the CBRM to serve as municipal spokesperson.

 

Future

Strangely, to my mind anyway, because I thought it was toast after the Diamond Princess, the future of the cruise industry is hard to call.

Yahoo Finance reported on Monday that Carnival Cruise is “enjoying a surge in cruise bookings, indicating that demand remains strong despite the coronavirus pandemic.”

Carnival’s announcement that it hoped to restart some cruises in August triggered a 200% year/year increase in bookings (and a 600% spike over previous days):

Carnival Cruise Line plans to resume its North American service from August 1 with a total of eight ships from Miami, Port Canaveral and Galveston.

In connection with this plan, the pause in operations will be extended in all other North American and Australian markets through August 31, the company said.

Mind you, Carnival is not guaranteeing that August 1 return, saying:

We continue to work with various government agencies, including the CDC, as we introduce new onboard protocols, but there is no assurance of a return on August 1.

What makes this all the more incredible is the backdrop against which this surge in bookings and flirtation with restarting in August has taken place.

Carnival faces a Congressional investigation in the United States over its handling of multiple COVID-19 outbreaks on its ships, a class action lawsuit for “negligence and gross negligence based on an outbreak of COVID-10 on the Diamond Princess” and a Commission of Inquiry and a criminal investigation in New South Wales (NSW), Australia where the NSW Homicide Squad is investigating “the 21 deaths and hundreds of coronavirus infections connected to the ill-fated Ruby Princess cruise ship.”

In the UK, Carnival has let go the presidents of its Holland America Line and Seabourn subsidiaries and the BBC is reporting the company has fired 450 employees at its Southampton headquarters (those who remain have been asked to take a 20% pay cut.)

Meanwhile, in Miami, some crew on Royal Caribbean International’s Navigator of the Seas are staging a hunger strike to protest the company’s delays in repatriating them. Reports the Miami Herald:

The crew of Romanian citizens on the Royal Caribbean International ship, which has been at sea for about two months, has grown so weary of waiting to see proof that they’ll be sent home that on Sunday morning, at least one crew member called 911 regarding arrangements for him to return home, said a spokesperson for Miami-Dade Police.

Royal Caribbean also faces a wrongful death law suit in that city, filed by the family of a crew member who died after testing positive for COVID-19.

If you prefer to judge companies by their share prices, rather than their homicide investigations, Yahoo Finance says in the last three months analysts have given Carnival Corp two buy ratings, seven hold ratings and three sell ratings — the consensus being “hold.” (Although I tend to interpret that information through the lens of a recent description I heard of the stock market — “a graph of rich people’s feelings.”)

My suspicion is that people will book cruises, ships will set sail — and then coronavirus will break out. This is based on this excellent article (which I quoted yesterday) on where and how the virus spreads, which suggests to me that there is no safe way to cruise unless you spent the entire voyage locked in your cabin except for the cruise equivalent of a daily walk around the block.

But what do I know? Maybe the 2021 cruise season will be “robust” and we’ll welcome thousands of (largely elderly) visitors from all over the world despite the ongoing existence of a highly transmissable, not infrequently deadly virus for which we have no vaccine.