AFL celebrates Dow expansion, but contract controversy signals that more work needs to be done to protect the interests of Alberta workers on future projects

The Alberta Federation of Labour (AFL) and its affiliate unions are celebrating the official confirmation that Dow Chemicals will soon begin construction on what the company describes as the first “net zero” ethylene cracker in the world.

Ethylene crackers separate ethane from natural gas and turn it into ethylene, the building block for plastics and other industrial products.

The $11.5 billion project will be built next door to Dow’s existing facility in Fort Saskatchewan and is expected to employ as many as 8,000 construction tradespeople during its six-year construction phase. Between 400 and 500 people will get permanent jobs at the facility once construction is completed.

The AFL and a group of private-sector unions played an important role in getting the project off the ground. They formed a group called the Alberta Industrial Policy Coalition which lobbied the federal government to support projects that could help the Alberta economy continue to thrive in a lower-carbon future.

The AFL-led coalition released an economic blueprint, called “Skate to Where the Puck is Going”, that helped convince the federal government to follow the lead of the United States’ Biden Administration’s Industrial Policy Act (IRA) by introducing Investment Tax Credits (ITCs) worth as much as $80 billion over ten years.

These ITCs – announced in the Liberal government’s 2023 budget – will be used to incentivize investment in clean tech projects (wind, solar, geothermal), hydrogen projects and Carbon Capture, Utilization and Storage (CCUS) projects.

The union coalition’s involvement in negotiations over the introduction of IRA-style industrial policy was significant because Alberta’s UCP government refused to come to the table with the federal government – leaving Alberta unions and Alberta businesses to do all the heavy lifting.

In addition to winning commitments for the investment tax credits, the AFL-led union coalition also convinced the federal government to attach “labour conditions” to the money.

Specifically, companies will only be eligible for the full measure of the ITCs if they commit to paying their workers prevailing wages (defined as union wages) and if they also commit to having 10 per cent of their workforces composed of apprentices (so we can take advantage of large construction projects to train the next generation of skilled tradespeople).

The Dow Net-Zero Expansion is the first project to receive the newly-approved federal Investment Tax Credits. The project will also receive incentives from the provincial government – but, significantly, the provincial incentives do NOT come with labour conditions, or any other “community benefit” requirements.

In a tweet, Deputy Prime Minister Chrystia Freeland praised AFL president Gil McGowan for the instrumental role he and the AFL Industrial Policy Coalition played in convincing the federal government to embrace the idea of IRA-style industrial policy and the associated labour conditions.

It was great to see you again this week, @gilmcgowan. Investments like the one Dow announced in Fort Saskatchewan this week happen because of people like you, who led the way to ensure workers benefit from our major ITCs. Let’s create more great union jobs in Alberta & across 🇨🇦! pic.twitter.com/fFWNJPyR3H

— Chrystia Freeland (@cafreeland) December 1, 2023

In an earlier statement, federal Labour Minister Seamus O’Regan also praised McGowan and the AFL, saying that when it came to the investment tax credits and labour conditions, “He (Gil) didn’t quit. He kept after me. He persisted. These are ideas that he and his team brought to the table and insisted we take seriously.”

For his part, McGowan praised the federal government for working collaboratively with Alberta unions and for embracing both investment tax credits and labour conditions.

“The global economy is changing as the world gets more serious about dealing with climate change,” says McGowan. “Alberta workers don’t want pity and they don’t want handouts – they want jobs and reassurance that the economy will continue to be strong even as the world moves away from fossil fuels. That’s why we called for the Investment Tax Credits and the labour conditions. We want to see more jobs created. But if these big companies are going receive big public dollars, we need to demand that they do more than just create jobs – they have to be good jobs. And that means union jobs. We also have to demand that they do more to train the next generation of skilled workers. The labour conditions allow us to do both of these things.”

Despite being pleased with the Dow announcement, McGowan says there’s more work to be done before the next group of big projects – most likely big CCUS projects – are given access to the new suite of Investment Tax Credits.

“Specifically, there are three problems that need to be addressed,” says McGowan. “First, we have to shine a light on Division 8 of the Alberta Labour Code. For years now, it’s been used by successive provincial governments to help big corporations undermine freely negotiated collective agreements in Alberta’s construction sector. This runs entirely counter to the goal of the federal labour conditions, which are intended to improve earnings for construction tradespeople, not reduce them. The provincial government needs to stop enabling this loophole which allows for the watering down of protections for workers and tipping the playing field against them in favour of big corporations.

“Second, we need to have a public discussion about the use of project labour agreements on major projects in Alberta. To put it simply, companies shouldn’t be allowed to qualify for federal ITCs if they use Division 8 as a means to strong arm unions into accepting project labour agreements that are inferior to their provincial agreements. This is how Dow managed to strip double-time from the PLAs covering the tradespeople who will work on the company’s new Net-Zero project. Dow is not the first company to use this strategy, and it won’t be the last until we remove the loopholes that make these practices legal. Other provinces don’t allow these kinds of practices – and they should be outlawed in Alberta, too.”

“Third, and finally, the building trades unions in Alberta have to stop accepting all of this. The boom in construction associated with unfolding global energy transition and associated government spending and labour shortages means that Alberta construction workers no longer have to settle for less. They have bargaining power – and they should use it. If that means firing some of the people who have been giving them bad advice, so be it.”

McGowan continued by asking “what’s the point of negotiating provincial agreements if you water them down for major projects? And, for the federal government, what’s the point of attaching labour conditions to public incentives, if you know employers and conservative provincial governments are just going to undermine them?”

McGowan concluded by saying: “We need to learn lessons from what has happened with the Dow project and do better next time.”