The search for Trans Mountain’s 15,000 construction jobs

Why would elected officials promote a construction jobs figure six times Kinder Morgan’s actual number?

BY ROBYN ALLAN

When Prime Minister Justin Trudeau announced approval of the Trans Mountain pipeline expansion project, he said it “will create 15,000 new, middle class jobs – the majority of them in the trades.”

Natural Resources Minister Jim Carr repeatedly points to this figure to justify the federal government’s approval. He says, “the project is expected to create 15,000 new jobs during construction.”

Robyn Allan
Robyn Allan

Alberta Premier Rachel Notley also relies on it: “Initially we’re looking at about 15,000 jobs. …” Former B.C. premier Christy Clark said, “And then there’s Kinder Morgan, 15,000 new jobs. …”

When the figure of 15,000 for new construction jobs emerged, I was confused. Kinder Morgan told the National Energy Board (NEB) that construction employment for the project would average 2,500 workers a year, for two years. It was laid out in detail in Volume 5B of the proponent’s application.

Why would elected officials promote a construction jobs figure six times Kinder Morgan’s actual number?

I asked the prime minister’s staff to explain how the figure their boss relies on was developed. They didn’t. I even wrote the prime minister directly. I received no reply. Natural Resources Canada said, “The numbers are from the proponent” and “believed” they were based on Conference Board of Canada estimates, while Notley’s office said it came from the industry and directed me to Trans Mountain’s website.

There it was: “During construction, the anticipated workforce will reach the equivalent of 15,000 jobs per year.” Kinder Morgan provided no insight on how that figure was derived. I inquired directly and was told, “the figures come from two Conference Board of Canada reports.” Links to those reports were provided.

I read both reports. Neither included reference to 15,000 construction jobs. What they did provide was a figure of 58,037 person years of project development employment, over seven years beginning in 2012.

I knew the 58,037 figure to be the same as that provided in a Conference Board of Canada report authored in 2013 and filed by Kinder Morgan as part of the discredited National Energy Board hearing. The conference board based its estimate on an input-output model that – because of its many design flaws – delivers highly exaggerated results.

I was still at a loss as to how the 15,000 construction workforce figure was derived. I wrote Kinder Morgan again. The company responded: “person years of employment during Project development is 58,037. This figure has been divided by three years and 10 months resulting in an equivalent of 15,000 jobs.” I asked Kinder Morgan why almost four years was chosen as the time horizon for construction when the project will take two. This is when the company stopped answering my questions on construction employment.

The conference board didn’t estimate construction jobs, Kinder Morgan did. Kinder Morgan divided 48 months into the board project development figure, then multiplied it by 12 months to arrive at 15,000 jobs a year. Inappropriately, the figure was renamed as construction workforce.

That’s an unbelievable misuse of input-output model results and a deceptive relabelling.

Even if the conference board’s figure of 58,037 person years of development employment was reliable – which it’s not – that number can’t arbitrarily be divided by 48 months of a longer project timetable and then the result annualized so the proponent can claim there will be 15,000 construction jobs.

Kinder Morgan had no business altering the time horizon or renaming the nature of the employment to characterize it as something it’s not. The company’s 15,000 construction workforce figure is meaningless.

The absurdity of Kinder Morgan’s 15,000 construction jobs claim is readily illustrated. The company says its schedule will begin in September 2017 with completion slated for December 2019 – 28 months. Using Kinder Morgan’s formula and the conference board figure it abused (58,037 divided by 28, times 12), Trans Mountain’s construction workforce catapults from 15,000 a year to 25,000 a year – a figure larger than the entire heavy and civil engineering construction workforce in B.C. That’s how outrageous Kinder Morgan’s logic is.

Why would Kinder Morgan pay the Conference Board of Canada for an employment estimate derived from an expensive modelling approach and inappropriately turn it into a construction workforce estimate when it has its own more reliable one of an average of 2,500 workers over two years?

Trans Mountain’s 15,000 construction jobs are a scam. The more realistic figure is less than 20 per cent that size. It’s a betrayal of the public trust that Trudeau, Carr and Notley so eagerly got behind Kinder Morgan’s manipulated jobs figure without checking to make sure it made any sense.

Robyn Allan is an independent economist and was a qualified expert intervenor at the Trans Mountain Expansion Project review.

© 2017 Distributed by Troy Media




  • chickenbus

    Good report Robyn. Please stay on top of these issues and keep us informed.

  • Jo G

    This opinion column starts with the following words:

    “When Prime Minister Justin Trudeau announced approval of the Trans Mountain pipeline expansion project, he said it “will create 15,000 new, middle class jobs – the majority of them in the trades.””

    The column’s headline is: “The search for Trans Mountain’s 15,000 construction jobs”

    Anyone who can read and write, and most certainly anyone who is used to dealing with such job indicators, understands that the two are different. There are direct construction jobs as well as indirect and induced jobs.

    Re-reading Trudeau’s quoted words, it is obvious that he spoke about the total of jobs created due to the investment. That is the usual way we hear about such investments these days. It shows a better understanding of the actual impact of such mega project capital investments.

    Anyone who wants to do some research on this via the world wide web can start by reading documents such as “Alberta-Economic-Multipliers-2011.pdf”

    This column is much ado about nothing.

    More research is required by the author to write a far clearer column about her concerns. There are some much more complex economic discussions which can be had about the veracity of using direct, indirect and induced job creation as THE indicator of regional economic impact.

    A start would be to actually show which economic regions will benefit from such projects. The USA is far more advanced in keeping such records for economic regions. BC is very poorly set up for that kind of detail.

    I notice that every time the City promotes the economic impact of building larger buildings such as the RCMP station, the recent new hotels construction, the WIDC, etc. We do not make most construction materials, provide most design services for such buildings, and often do not have enough experienced local general contractors and trades.

    The local economic construction impact of direct, indirect and induced economic activity of a $30 million project is easily only half of that construction construction cost. The rest gets spent in BC’s lower mainland, Alberta, Canada and in foreign countries.