March 31, 2005

Critics say construction costs will rise

Manitoba imposes union rules on floodway project contractors

The Manitoba government has come under fire for its treatment of non-union contractors wishing to work on the $660-million Manitoba Floodway Expansion Project.

Critics have accused the government of discrimination and squandering tax dollars by requiring contractors to meet onerous employment equity quotas and adopt union wage rates and union practices.

Under terms of an agreement announced March 9, successful contractors will be required to pay up to $2.91 an hour in union fees for their employees, even if those workers are not members of a union.

They will also be required to hire a portion of new employees from union halls, make payments to union trust funds, disclose the names and addresses of employees to the Manitoba Floodway Authority (MFA) and have their workplans approved by unions.

“Nothing is normal about this agreement. No concessions were made except to common sense by the Floodway Authority directed by the provincial government,” says Chris Lorenc, president of the Manitoba Heavy Construction Association (MHCA).

Chris Lorenc

“No one is eager to bid on this project with a disturbingly intrusive Project Management Agreement that distorts the workplace and economic realities with stunning stupidity.”

Much of the criticism has been directed at the Project Management Agreement, which sets up a labour framework for contractors working on the project. The agreement was negotiated between the Floodway Authority and the Manitoba Building and Construction Trades Council, but did not include direct representation from business and industry associations.

In addition to hiring union workers and paying union dues for all of their employees, at least 20 per cent of a contractor’s workforce must belong to groups generally under represented in the Manitoba workforce, including aboriginals, women, visible minorities and disabled people.

According to Lorenc, the employment quotas and restrictive labour rules could drive up construction costs by $30 million and make construction delays more likely.

“Instead of efficiencies and economic benefits to our province, our citizens will watch as their hard-earned money is wasted and costs substantially increase because of the uncertainties and lost productivity directly related to imposing this Project Management Agreement,” says Lorenc.

“We can’t even begin to quantify the costs or risks associated with the agreement. Those will not become apparent until the work is tendered and until Manitoba companies decide that the project is even worth the risk of bidding on.”

Work on the project, which could take five years to complete, is expected to begin as early as this July, pending the outcome of an environmental review.

Once completed, the project will give added flood protection to more than 450,000 people, 140,000 homes, 8,000 businesses and prevent more than $12 billion in damage should the Winnipeg region be hit with a one-in-700-year flood.

Although the $660-million pricetag is sure to spark interest from construction companies in Manitoba and across the country, the restrictions could effectively reduce the number of companies capable of even submitting a bid for the project, which will choke competition and drive up costs.

“You scratch your head and wonder why they would do something like this. Any time you restrict competition for anything, you’re going to drive up the costs because there’s going to be fewer bidders,” says Jeff Morrison, a spokesman for the Canadian Construction Association (CCA).

“You hope governments will get the best value for their dollar, but when you put policies like this in you drive away competition. That’s not getting best value.”

The CCA has long advocated that all publicly-funded projects be tendered in an open, public and non-preferential manner.

“Governments shouldn’t prefer unions, shouldn’t prefer non-union contractors, shouldn’t prefer a company in one region over another region, shouldn’t prefer left-handed contractors over right-handed contractors,” says Morrison.

“What the Manitoba government appears to be doing is in violation of that principle. They are essentially telling contractors that if you want to bid you have to enact all these union-friendly practices.”

Lorenc makes no attempt to hide his contempt for the provincial government. He calls the Project Management Agreement thinly-veiled payback for unions that have supported Manitoba Premier Gary Doer during the last two provincial elections.

“This is a comrade Doer government, ideologically driven, hell bent to support the union bosses. This is ultimately the responsibility of the premier. We took this to him and appealed to him directly to inject equity and fairness and he completely ignored our appeals.

“They did an about face on virtually every undertaking and position that was consistent with what we recommended. We were effectively pushed away from the table. They had no intention of listening to anything we had to say or act on any of the advice that was given by our association.”

According to Lorenc, no one will benefit from the agreement except for unions, which represent only a fraction of Manitoba workers.

Most employees working on the project will not reach the qualifying period for health benefits, RSP contributions and pension benefits.

“Less than 30 per cent of the economy is unionized. In the case of our sector, there’s only one unionized contractor out of 700.

“There have been a number of applications for union certification over the last few years and each of them have been defeated by the workers. And in a couple cases, there have been decertification applications that have been successful.”

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