Gil McGowan: A Union Vision For The Future Oilpatch
By Mike Byfield
[from: Dob Magazine: "on online source for the oil and gas industry"
Gil McGowan has a simple test for an economy: Can a semi-skilled worker afford to buy a home? "By that measure and many others, the energy boom has failed a lot of Albertans," says the president of the Alberta Federation of Labour (AFL). To transform petroleum into a true benefit for a far greater number of people, the union strategist would like to see a deep partnership between capital, labour and government in the oilsands, which he calls "the real future of Alberta's oil industry." Although his vision is likely to find many adversaries and few supporters among senior management, McGowan (shown at left and below) believes that organized labour is well-positioned to win a big role in the future oilpatch.
The AFL currently counts 31 unions from both the public and private sectors in its membership, with nearly 125,000 workers in total. McGowan, 40, previously a reporter with the Edmonton Journal and Canadian Press, was elected for his second two-year presidential term in May. (Coincidentally, the current president of the British Columbia Federation of Labour is also a former reporter.) Between 1996 and 2003, the father of three acted as lead strategist for Friends of Medicare. In that role, he organized some of the largest rallies in Alberta history, successfully opposing several proposed provincial measures in favour of for-profit medical care.
At first glance, the union federation's plans for petroleum might seem implausible. Organized labour has never made any headway in the upstream conventional industry, whose drilling and production crews proved too mobile, well-paid and small-scale to recruit. And across North America the non-union sector continues to gain ground, largely due to superior operating flexibility. For example, productive individuals and plants get more money while their weaker counterparts are laid off or shut down as more profitable opportunities arise.
McGowan takes heart from recent opinion polling that indicates massive popular support for higher provincial oil and gas royalties. Leger Marketing found that two-thirds of Albertans support the $2 billion annual increase recommended by the Alberta Royalty Review Panel. "People recognize that the big oil companies are not poor and they're not going to pull out of the province even if reasonable royalty hikes are implemented," the labour chief comments. "We know from long experience that producers will cry poverty when they're asked for the slightest concession at the bargaining table. They've always done it and they're doing it now."
Taking a hard-edged stance, the AFL president suggests that major oil producers have few places to transfer their capital and expertise. "About 80% of the world's reserves now belong to state-owned entities, and those nationalized assets are pretty much off-limits to the likes of Exxon and Shell. Exploration elsewhere in the world is not going well. Meanwhile, global oil demand and prices are very strong," McGowan says "[Alberta Premier Ed] Stelmach is bargaining from a very strong position as long as he has enough nerve to withstand the huge propaganda campaign coming from the producers."
Historically, Albertans are capable of leaning left. The province's coal mining industry, arguably the predecessor of today's oilsands, spawned powerful union drives throughout the twentieth century. The AFL itself was launched in 1912 from Lethbridge, a coal centre. Labour allied itself with agriculture within the United Farmers of Alberta, which governed the province from 1921 to 1935. Calgarians elected Alberta's first socialist Member of Parliament in 1921. Nine years later, a pivotal conference of Canadian socialists met in Calgary's Grain Exchange Building (a landmark still standing across from the Palliser Hotel). From that initiative would emerge the Co-operative Commonwealth Federation (CCF), later renamed the New Democratic Party (NDP).
The Leduc oil strike in 1947 tugged Alberta to the right. As conventional petroleum production soared through a string of new discoveries, the prospering province grew keener on free markets. Organized labour did have its achievements, though. Its grip strengthened over federal, provincial and municipal services. In the private sector, energy became a focal point. Of Alberta's five crude refineries (including the heavy oil facility at Lloydminster), four are union shops. In Fort McMurray, Suncor's oilsands operations are fully unionized while Syncrude remains resolutely non-union.
[Figure 2]
The labour battles in bitumen country now centre on construction. McGowan says Canadian Natural Resources Limited made a determined effort to build its Horizon mining project with contractors which are non-union or affiliated with the Christian Labour Association of Canada (see How Canadian Natural Manages Costs And Unions At Horizon). "That attempt has failed abysmally," claims the AFL strategist. He's equally confident that his members will be able to organize oilsands operating employees when newly-constructed facilities come onstream in future.
The labour federation wants Stelmach to maximize bitumen upgrading and other value-added processes in Alberta, appealing to a precedent set by former Conservative premier Peter Lougheed. "His government mandated that gas liquids would be made available as feedstock to petrochemical producers, and thereby established an important industry for Albertans," McGowan says. "The Alberta review panel report recommends using financial incentives to encourage bitumen upgrading in Alberta. We'd go much further. If anyone wants to produce bitumen here, it should normally be a regulatory condition that the oil be upgraded here to synthetic crude."
Just who speaks for oil and gas workers sparked a few headlines last week. On Wednesday, more than 500 hard-hatted petroleum service hands rallied before the Alberta legislature, opposing the proposed royalty increases. Their protest was organized by Derrick Jacobson, president of Quattro Energy Services Inc. "High costs and low gas prices have already caused many layoffs in our industry," says Jacobson, whose payroll totals 22. The crowd repeatedly cheered speakers who warned that a heavier provincial royalty burden would trigger a service sector catastrophe.
The AFL criticised Jacobson's rally as a company-organized affair that did not speak for "real" oil workers. The federation's own counter-rally to support higher royalties, which took place the following evening in Fort McMurray, only drew 30 people. The meeting took place during a shift change and a payday, McGowan points out. "We knew the timing was poor but it was important to make a statement before the premier announces his decisions, which could happen any time."
The labour leader acknowledges that the two rallies actually spoke for two different businesses, namely natural gas and bitumen. "The communication could have been better - neither camp talked to the other beforehand. I actually sympathize with small service companies and their workers who are worried about losing their livelihoods," he says. "We wouldn't have used the big publicity gun against Jacobson if he hadn't called his meeting a 'grassroots oil workers' protest. Our members [i.e. unions] represent the oil workers of Alberta."
McGowan advocates that both foreign and Canadian oil producers can play a positive role within Alberta, with a few major conditions. First, producers must give a more realistic revenue share to the province. In addition, the union veteran sees a need for better scheduling of new projects. In practice, that would mean slower development. "The gold-rush approach taken by the provincial government over the past five years has led to unnecessarily inflated costs, labour shortages and many social problems in both the cities and the oilfields," McGowan contends.
Ideally, the AFL president would like to see Alberta implement European-style collaboration between oilsands producers, labour unions and provincial bureaucrats. "As unions, we often take an adversarial approach because we have no choice. It's different in Europe. Their unions can focus on stewardship because their representatives sit on corporate boards, they see all of the relevant information, and they have meaningful input into training, human resources and other policy decisions that affect their members."
Not that the labour federation expects to win ground-breaking concessions like that from oilsands companies in the immediate future, if ever. That's why the AFL endorses a new royalty report from the Parkland Institute. The Edmonton-based leftist think tank proposes that the province capture 90% of the economic rent from oil and gas, enforce bitumen upgrading in Alberta, and seriously study public ownership as a means of maximizing its revenue and leadership role in the petroleum industry. "I often get along with senior oil and gas managers as individuals but you can't just wine and dine with those guys," McGowan says. "You've got to negotiate with some clout."
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