Gov. Paul LePage, along with two of Maine’s major construction trade groups, on Thursday criticized Summit Natural Gas of Maine for requiring contractors that want to bid on a portion of company’s project to install a natural gas pipeline in central Maine to abide by collective bargaining labor contracts.
The Associated Builders and Contractors of Maine and the Associated General Contractors of Maine both say the natural gas company’s plan to utilize a Project Labor Agreement, or PLA, on the roughly 88-mile, $100 million steel-pipeline portion of the project will discriminate against the vast majority of Maine’s construction workers. The groups say 98.6 percent of Maine workers in the private construction industry are nonunion and, accordingly, will be excluded from working on this project.
Summit Natural Gas of Maine, which is owned by Summit Utilities in Colorado, plans to install 88 miles of steel pipeline in central Maine, between Richmond and Madison, along with 1,600 miles of polyethylene pipeline that would reach out to cover 80 percent of the communities the pipeline company will service, according to Michael Duguay, director of business development for the company.
Duguay on Thursday distanced himself from the phrase “Project Labor Agreement.”
“I don’t classify it as a PLA,” he said.
Duguay confirmed, though, that contractors — whether union or nonunion — who are interested in bidding on the steel portion of the contract would have to abide by a National Pipe Line Agreement, which is administered by the National Pipe Line Contractors Association.
“Same difference,” says Hope Perkins, CEO of the Associated Builders and Contractors of Maine. “It’s a PLA in effect. In order to bid on that work, you do have to sign onto that National Pipe Line Agreement. That is a signatory agreement to the unions.”
The National Pipe Line Contractors Association describes the National Pipe Line Agreements on its website as “collective bargaining labor contracts” that it negotiates with the international unions representing the different tradespeople who work on pipeline construction: the Laborers International Union of North America, the International Brotherhood of Teamsters, United Association of Plumbers and Pipefitters and the International Union of Operating Engineers.
Contractors interested in bidding on the polyethylene side of Summit’s project, which will be worth at least $200 million and consist of installing 1,600 miles of polyethylene pipe during the next four to five years, will not be subject to the National Pipe Line Agreement, Duguay said.
LePage on Thursday afternoon issued a statement to express his disappointment in Summit’s plans.
“While I appreciate Summit’s commitment and investment in Maine to help reduce our cost of energy, I am extremely disappointed that they have chosen to implement a PLA on this project,” the governor said in the statement. “This action not only increases the cost of the project, but more importantly, it shuts out Maine’s construction workers and their families from good job opportunities.”
In the end, however, it doesn’t matter whether one side calls it a Project Labor Agreement or a National Pipe Line Agreement. What’s true is that Maine contractors will have to decide whether they are willing to abide by the National Pipe Line Agreements.
A scenario Perkins says will not happen.
“Absolutely not. I don’t think they will [sign such an agreement]. I know the ones I represent will absolutely not,” she said. “We’re fighting this because they all oppose this. It doesn’t belong in Maine, with 26 percent of Maine’s construction workers out of work. They deserve a chance to work on this project.”
Perkins said contractors, if they chose to abide by the National Pipe Line Agreement, would be forced to change the way they do business, “from work rules to hiring practices, their wages and benefits,” she said. “All that changes, and suddenly all their employees have to pay union dues and at the end of the project they’re not going to see that money back.”
Matthew Marks, CEO of the Associated General Contractors of Maine, said when his organization met with Summit officials in the past, there had been no indication any labor agreements would involved with the project. The first he heard about the National Pipe Line Agreement was last week at a pre-bid meeting, and it was a shock, he said.
“This blocks out the majority of contractors from participating unless they sign on to that National Pipe Line Agreement,” said Marks. “That’s not going to happen. You’re going to get out-of-state workers here on this steel portion.”
Duguay said Summit adopted the National Pipe Line Agreement requirement when it acquired Kennebec Valley Gas Co. in the fall of 2012.
“At the inception of the project there had been a conversation and tacit arrangement to have that pipeline agreement in place,” he said.
Marks and Perkins argue that PLAs create a cost environment that favors union contractors, restricting competition and driving up costs. But Matt Schlobohm, executive director of the Maine AFL-CIO, argues that PLAs are a fairly common business model used in both private and public construction projects.
“Scores of Fortune 500 companies, Toyota, Walt Disney, ConocoPhillips, the World Trade Center, have used these as agreements because they’re a cost-effective and efficient business model to ensure a project gets done on time and in the highest-quality manner,” Schlobohm said Thursday.
PLAs have been used in Maine before, including in the 1999 construction of the Maritimes & Northeast Pipeline, which carries natural gas from the Canadian Maritime Provinces through Maine to the rest of New England, according to the Bureau of Labor Education at the University of Maine.
Schlobohm also took LePage to task for making public statements criticizing a company that wants to invest hundreds of millions of dollars to improve Maine’s energy infrastructure.
“It’s disappointing that a governor who says Maine is open for business would play politics when a company is planning to invest over $100 million in Maine, create hundreds of good-paying jobs for Maine people and lower our energy costs,” Schlobohm said. “We for one applaud this company for investing in Maine and using a high-road business model that ensures efficiency and good wages and benefits for Maine workers.”
When asked how the project would benefit Maine workers if, as Perkins and Marks maintain, 98.6 percent of the workers in the state’s construction industry chose to be nonunion and would, therefore, be ineligible to work on the steel portion of project unless they became signatories to collective bargaining labor contracts, Schlobohm said he was confident Maine workers would be chosen to work on this project.
“This project will employ Maine people, period,” he said.
Schlobohm also challenged the 98.6 percent figure. “I don’t know where they got that, but it does not sound correct at all,” he said.
Perkins at the Associated Builders and Contractors of Maine said the 98.6 percent figure came from Ken Simonson, chief economist for the Arlington, Va.-based Associated General Contractors of America.
Reached on the phone Thursday, Simonson told the Bangor Daily News the figure came from a database of labor union information sourced from the Bureau of Labor Statistics, compiled by professors at Georgia State University and Trinity University and available at unionstats.com.
The 1.4 percent of Maine construction workers who are in unions, according to the data, is “extremely low compared to some states,” Simonson said.
Maine ranks as the state with the fourth-lowest percentage of union membership in the construction industry, according to website, placing it only behind North Carolina with 1.2 percent, Arkansas with 1 percent and South Carolina with 0.9 percent.
Simonson said Maine’s low union participation in the construction industry is likely a result of its rural nature, the overall strength, or lack thereof, of organized labor in the state, and the fact that many construction workers probably work in residential construction, where unionization is “almost nonexistent.”
Marks and Perkins say they don’t have anything against contractors who choose to be union shops. In fact, both represent unionized contractors. But it’s a fairness issue, they say.
“I’ll tell you what I wish happened: [Summit] had an open and fair bid process. If they chose a union company after a fair bid process. Fine,” Marks said. “That’s just how it should work. That’s what we believe pretty strongly.”