Unanswered Questions on GPT and Local Jobs

GPT would be about 20 percent bigger than the proposed Millennium coal port, but project developer SSA Marine says it would create four times as many jobs.

When a developer is working to sell a big project to the public, a standard exercise is followed: identify any new “direct jobs” that the project may actually create and then multiply that number by the job ripple effect (also called the “multiplier”) associated with the business model. The result is a “total job” projection that becomes the job promise sold to the community.

Why then are GPT’s job promises significantly greater than those made by the proposed Millennium Bulk Terminals coal port in Longview, WA?

Millennium would be a similarly sized operation. It says it would create 300 jobs at full build out. GPT, on the other hand, says it would create 1,250 jobs—more than four times as many jobs as Millennium.

How can GPT, which expects to export only 23 percent more than Millennium, create four times the number of jobs in our community? The short answer is, it can’t.

There are two main reasons why GPT’s job promises are so much larger than Millennium’s. First, GPT project developer SSA Marine arbitrarily specified a wider range of jobs in its “direct job” claim than Millennium did. We take a close look at these numbers in this post.

The second reason is that SSA Marine’s specified business model multiplier is based on a multi-pier, multi-commodity port with a complex set of independent businesses. Some ninety percent of GPT’s single-pier single company operations, however, would be a highly automated coal operation. We will examine the problems with using a business model like those of the Seattle waterfront, New Orleans or Houston for GPT job projections in a subsequent post.

What Counts as a Direct Job?

SSA Marine’s larger job numbers start with an unverified and expansive statement of “direct jobs.” Millennium specifies 135 direct jobs at full build out based on exporting 44 million metric tons of coal a year. GPT specifies 430 direct jobs based on exporting 54 MMT of exports a year.

Even small errors in “direct jobs” can create large distortions in “total jobs” (because of the multiplier step discussed in the next blog), so what is behind this significant difference?

A portion of the differing job projections could be warranted due to the difference in export volumes each facility hopes to handle. GPT anticipates a 23 percent higher annual export tonnage than Millennium at full build out (including the possible 6 MMT of multi-commodity exports). All things being equal, it makes sense for GPT’s job numbers to be proportionally larger than Millennium’s.

Yet GPT’s direct job projections aren’t simply proportionally larger; they are several times larger. Millennium only counts local, onsite jobs as “direct jobs.” Millennium’s economic impact report is very clear on this point: Pilot, tug and railroad jobs will provide little if any new local employment.[i]

GPT, on the other hand, includes offsite, regional and out-of-state jobs in its specification of direct jobs:

Table 1: Direct Jobs Projected at Millennium and Gateway Pacific Terminal
Millennium full build out – 44 MMTA GPT full build out – 54 MMTA  
Terminal Admin Staff 25 Terminal Operators 44
Waterfront Staff 30 ILWU 213
Terminal Upland Staff 80 Railroads 66
    Pilots, Tugs 36
    Maritime Services 71
Total Direct Employees 135 Total Direct Employees 430

[Data sources and calculation breakdown provided at the end.]

As the table indicates, SSA Marine includes railroad operators, vessel pilots, tug crews and a substantial number of maritime services in their GPT direct jobs. It is worth noting that none of these off-site jobs have been independently verified. An official EIS vessel traffic study, for example, suggested that new pilot and tug jobs may not be required if GPT is built.[ii]

Marketing materials from SSA Marine and its support organization Alliance for Northwest Jobs & Exports read as though GPT’s jobs would all be local. They definitely would not.

Knowing which jobs would be local is essential in weighing the pros and cons of the project for our community.[iii] Unfortunately, SSA Marine’s jobs data doesn’t differentiate among local, regional or out-of-state locations.

However, we can disaggregate SSA Marine’s stated direct jobs to some degree by looking just at onsite employment. SSA Marine’s numbers indicates that GPT would create 257 onsite direct jobs. Here is the breakdown compared to Millennium:

Table 2: On-site Jobs Projected at Millennium and Gateway Pacific Terminal
Millennium full build out – 44 MMTA GPT full build out – 54 MMTA  
   Terminal Admin Staff 25    Terminal Operators 44
   Waterfront Staff 30    ILWU 213
   Terminal Upland Staff 80
Total Onsite Direct Jobs 135 Total Onsite Direct Jobs 257

[Data sources and calculation breakdown provided at the end.]

It is worth noting above that SSA Marine projects 257 onsite jobs compared to Millennium’s 135 jobs—that is nearly twice as many jobs for GPT as Millennium for only exporting 23 percent more volume.

Why the significant discrepancy in onsite employment numbers for the two proposed terminals? SSA Marine has yet to offer any explanation or to disclose supporting information for review.

High Efficiency or High Employment?

GPT’s on-site job numbers compared to Millennium’s are unexpected, in particular given Cherry Point is a deep-water port that can receive the larger Capesize Bulkers which Longview cannot. Ship turnarounds are one the most job-intensive part of operations, and GPT would require far fewer. Indeed, GPT project documents indicate it would require about half the number of ships per year as Millennium. Given this competitive advantage, it follows that GPT would have a relatively higher employment efficiency—and therefore need fewer employees for equivalent tonnage—than Millennium.

But the exact opposite is the case, according to SSA Marine’s numbers. When we adjust for the two terminals’ relative export volumes and break down employment by “coal” versus “non-coal, multi-commodity” exports, we find unexpected results: (See Table 3 at the end for details.)

  1. For its 54 MMT combined operations, GPT shows 4.8 employees per MMT of export compared to Millennium’s 3.1 employees. That is 50 percent more employees needed at GPT per MMT of export.
  2. For its 48 MMT coal operations, GPT data indicates that in spite of its competitive advantages (e.g. far fewer ships to load) it would field 23 percent more employees per MMT of export than Millennium would.
  3. For the 6 MMT multi-commodity export proposal, GPT plans to add 12 to 13 employees per MMT of exports. This appears to be an unrealistically high estimate, for any commodity.

GPT’s higher jobs per MMT of export numbers contradict the expected and heavily publicized economic advantages of the proposed Cherry Point location.[iv]

In 2011, CWB first asked SSA Marine to disclose the assumptions behind these direct job projections so that third party, independent review could be accomplished. It is our hope that SSA Marine will move towards greater transparency on this issue.

In the meantime, GPT’s direct job numbers raise several concerns for our community:

  • Many jobs wouldn’t be based here: SSA Marine counts jobs that are off site, out-of-county or out-of-state.
  • Many jobs may never materialize: SSA Marine includes some jobs that official studies indicate won’t be needed.
  • Many jobs may not be necessary: Even though it would require far fewer ships, GPT calculates jobs per MMT of coal exports at a higher rate than Millennium does, for reasons that SSA Marine has not explained.

The bottom line: If GPT were built, there are good reasons to believe SSA Marine would have a hard time fulfilling its job promises in Whatcom County.

 

# # #

 

[i] According to the BERK economic study —see full source below—on Millennium, “the MBTL project will be served by about 300 ships annually, resulting in 600 new trips. This 16% increase in traffic will likely result in additional Pilot jobs, though these jobs may not be located in Cowlitz County or even Washington State….New [railroad] traffic of about 3,000 unit trains annually will increase employment, wages, and tax revenue from rail companies serving the MBTL site. However, these impacts will occur both in and out of Washington State, and mostly outside of the Cowlitz County impact area.” [CWB’s emphasis.] From BERK, “Economic & Fiscal Impacts of Millennium Bulk Terminals Longview,” 2012, pg. 24. Note that the number of ships that would serve Millennium has since been revised to 840. See news release from WA Department of Ecology: http://www.ecy.wa.gov/news/2015/155.html

[i] Glosten Associates, Vessel Traffic & Risk Assessment–Gateway Pacific Terminal. See full citation below.

[ii] For example, GPT doesn’t distinguish between which of these jobs are based locally and which are regional, such as employment based in Seattle (vessel pilots), Anacortes (some tug operators), or out-of-state.

[iv] Millennium would use Panamax bulkers, as the larger Capesize bulkers are too deep for the Columbia River. This means Millennium would export 44 MMT using some 840 vessels a year compare to GPT’s 457 vessels for 54 MMT/year. More vessels trips would translate into greater employment needs, not lower. SSA Marine has long pointed to the competitive advantage of using the Capesize that cannot service Columbia River ports. GPT’s Project Information Document indicates it would use a mix of the ship sizes. It is worth noting that GPT’s comparatively high job numbers appear contradictory to SSA Marine’s positioning within the industry. The corporation runs state-of-the-art ports around the globe, and the GPT website and project literature promises a “highly efficient portal for American producers to export dry bulk commodities such as grain, potash and coal to Asian markets.”

Data sources

  1. BERK, Economic & Fiscal Impacts of the Millennium Bulk Terminals Longview, April 12, 2012, Seattle, WA.
  2. Martin Associates, The Projected Economic Impacts for the Development of a Bulk Terminal at Cherry Point, July 2011, Lancaster, PA.
  3. Pacific International Terminals, Inc., “Revised Project Information Document—Gateway Pacific Terminal,” March 2012, Whatcom County, WA.
  4. The Glosten Associates, “Vessel Traffic and Risk Assessment Study—Gateway Pacific Terminal,” November 2014, Seattle, WA.

 

Table 3: GPT On-site Jobs per Million Metric Ton of Export at Full Build Out  
Millennium – 44 MMTA (all coal)   GPT – 54 MMTA (48 coal, 6 multi-commodity)
Total Onsite Direct Jobs 135   Total Onsite Direct Jobs 257
Onsite Direct Jobs Per MMT 3.1 Onsite Direct Jobs Per MMT 4.9
Onsite Direct Jobs Per MMT Multi-C N/A Onsite Direct Jobs Per MMT Multi-C 12.7
Onsite Direct Jobs Per MMT Coal 3.1   Onsite Direct Jobs Per MMT Coal 3.8

 

Source Data for Table 3: GPT On-site Jobs per Million Metric Ton of Export
A B C C D E
GPT Build-out Phases GPT total capacity in MTT Added Capacity in Phase Total Terminal Employees at Phase Added Employees by Phase Employees per MTT [D ÷ B]
1 25 25 118 118  
2 31 6 194 76
3 45 14 201 51  
4 54 9 257 12  
   
Full build out [1-4] 54 54 257 257 4.8
Just Coal [1,3 & 4] 48 48 181 181 3.8
Non-coal, multi [2] 6 6 194 76 12.7
Data Sources and Notes:
Columns B from PIT’s Revised PID, Table 4-3. Column C from same PID table and Martin Associates’ GPT report, Exhibit 2, page 6.
Phase 2 constitutes the additional of West Loop for non-coal commodities.
SSA Marine revised the phasing plan since the PID was submitted; job claims were altered.
Please contact CWB for additional data breakdown by source.

 

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