Last week SSA Marine announced it is temporarily suspending the Gateway Pacific Terminal’s environmental review process, pending the Army Corps’ decision on the Lummi Nation’s treaty rights. Whether the project review process restarts or not, one point is clear: GPT’s job promises have always been on shaky ground.
Over the last five years, SSA Marine and joint PR efforts with the railroad and mining companies have cast GPT job promises in many variants. Estimates have varied from 430 jobs to 1,250 jobs – most recently claimed at 5,680 jobs in a PR piece backed by the corporation and other project proponents last year.
Unfortunately, this flow of claims often leaves our community and important decision makers with misleading and unverified approximations that are presented as “facts”. Behind these numbers lie both flawed methodologies and outdated data, seriously inflating these rough “estimates” on how many jobs GPT would help support or potentially create.[i]
In our last GPT Fact Check post we examined how SSA Marine calculated GPT’s “direct jobs” and documented several serious problems with that data. In this post we take a look at a different part of the equation in SSA Marine’s job promises: GPT’s “multiplier” — the job ripple effect assumed to magnify those numbers.[ii]
The ripple effect is what it sounds like—it indicates how far out jobs from a project will “ripple” through a geographic area, creating some new employment and supporting existing other jobs.[iii] The greater the ripple effect, the greater total jobs.[iv] If you are selling a controversial project to a community, a strong ripple effect is a good selling point.
There are several major red flags around SSA Marine’s chosen job “ripple effect”—and therefore the job numbers the corporation advertises.
First, back in 2012, SSA Marine directed their consultants to model 100 percent of GPT job projections based on a large, multi-commodity port rather than an automated coal port. At least 90 percent of GPT would be a coal port. SSA Marine required its consultants, the national firm Martin Associates and the local firm Financial & Resource Management Consultants, Inc., to calculate all of GPT jobs modeled on a “multi-product bulk cargo export terminal”.
Because of this, the consultants used specific sources, such as ports of Seattle, Houston, and New Orleans as a basis of their GPT analysis. These are complex operations importing and exporting many commodities. They include a large array of companies, warehousing operations, modes of product transportation, maintenance facilities, shipping agents, vendors, etc. As such, these “multi-product bulk cargo export terminals” are very poor proxies for GPT’s actual business model: a single owner export-only facility with a single mode of product delivery, a single pier and at least 90% single commodity business. It is in essence a self-contained, highly integrated and automated coal export facility. Ten percent of GPT supposedly could be dedicated to other rail delivered commodities, if they ever find a viable market.
WWU economists Hart Hodges and James McCafferty explored this issue in a Bellingham Herald piece last year.[v] They noted that Martin and Associates, the firm SSA Marine contracted to assess GPT’s job numbers, “estimated the impacts of a multi-product bulk cargo export facility,” (our emphasis) because that was the business plan SSA Marine gave them, even though it only describes, in the most general terms, the plan for an iffy 10 percent of the facility.
Automated coal ports produce a smaller job ripple effect than more complex, multi-commodity ports. This is the second problem with SSA Marine’s chosen job ripple. From a public relations perspective, it is advantageous for SSA Marine to apply the higher job ripple effect to the whole GPT operation—it results in higher job projections. But it is not accurate. As Hodges and McCafferty point out on the differing ripple effects, “the lower estimates…are for a more highly automated, coal oriented business plan.” GPT would largely be just that. Applying the higher ripple effect then to all of GPT produces an inaccurate—and inflated—job number.
A final red flag on this issue: The ripple effect of 2.9 that SSA Marine uses to calculate its job numbers is not actually for Whatcom County but is an average of other counties in the west.[vii] Instead, the Bureau of Economic Analysis’ most recent estimate for the ripple effect in Whatcom County in the closest category to a coal port—according to BEA—is 1.8.[viii] This ripple effect is an unbiased government estimate. Even the ripple effect used by the proposed Millennium coal port in Longview–whose project backers have the same interest in presenting their project in the best possible light–is much lower (at 2.2) than SSA Marine’s.[vi] This is a significant discrepancy in ripple effects which has gone unquestioned despite its big implications for GPT’s actual potential for job creation.
The problem is that even a small difference in the ripple effect results in very different job projections. For example, compared to Millennium, GPT’s larger ripple effect and notably larger “direct job” numbers yield very different results: Millennium promises 400 jobs while GPT promises 1,250.[ix]
Despite these shaky job numbers, SSA Marine continues to promote GPT as a singular silver bullet economic solution for our area. Meanwhile, established employers in our county are adding new employees at increasing rates. Data released in March 2015 showed Whatcom County added some 4,200 new jobs in just one year–ten times the direct jobs SSA Marine says GPT would create over the life of the terminal’s operations (using their seemingly high estimates and assuming the coal market rebounds).[x]
Our county welcomes good employment opportunities—we can all agree on this. In judging potential benefit or loss from this high risk project, however, due caution is warranted in accepting job numbers that just don’t weather close scrutiny. To date, GPT has only offered inflated and unsupported job claims to offset the predictable, long-term negative impacts that the largest coal terminal in North America would have on our quality of life and local economy. These facts remain, whether GPT’s environmental review restarts or the project is put on hold indefinitely.
[i] The official environmental review due out this fall will not tackle this important jobs question. This is a glaring gap in information and the permitting processes.
[ii] The size of the ripple effect depends on the project’s specific business model—the salary levels, outside purchases and use of service providers, etc. Indirect jobs are those supported [not necessarily created] by expenditures from the firm. Induced jobs are those supported [also not necessarily created] by expenditures by the firm’s employees. The sum of direct, induced and indirect jobs equals the total jobs.
[iii] Every project “ripples” but this impact does not necessarily result in any “new” jobs, though SSA Marine promotes it as such.
[iv] Direct Jobs x Ripple Effect or Multiplier = Total Jobs
[v] Hodges, Hart and James Maccafferty, “Whatcom County: job estimates can be useful,” Bellingham Herald, September 26, 2015.
[vi] BERK, Economic & Fiscal Impacts of the Millennium Bulk Terminals Longview, April 12, 2012, Seattle, WA, page 24.
[vii] SSA Marine’s consultants did not have a recent set of multipliers for Whatcom County from the Bureau of Economic Analysis for the category “for the operation of something like a marine terminal,” that is listed as category “48A000”. They used numbers for other counties in the west, and those averaged about 2.8. Per email communication with FRMC, the areas used were: a) Chelan and Douglas Counties in Washington; b) most of San Bernadino County, eastern LA County, and parts of Riverside County; and c) parts of San Bernadino County, LA County, Riverside County, and eastern Kern County.
[viii] It is possible that 1.8 is not the appropriate number to calculate GPT’s job ripple effect either. And, the category “48000” from the Bureau of Economic Analysis the consultants used as an approximation, under BEA’s advisement, appears to not accurately reflect the GPT business model. Whatcom County doesn’t have a coal port designation, nor does the BEA in general. And that is the point—the easy categories at hand don’t fit. They don’t tell the story. Ultimately, they are approximations. For this reason a thorough, third party, net job assessment is needed.
[ix] Despite community requests, SSA Marine has declined to provide any meaningful explanation of these shaky job numbers. Instead, SSA Marine routinely choses to personalize and attack any questioners (regularly stating that they have a lack of concern for working families).
[x] Whatcom County added 4,170 new employees in one year as of March 2015. Local unemployment dropped to 5.9%. Bellingham Herald, “Whatcom unemployment rate drops with job growth in construction, transportation,” April 21, 2015.
- BERK, Economic & Fiscal Impacts of the Millennium Bulk Terminals Longview, April 12, 2012, Seattle, WA.
- Martin Associates, The Projected Economic Impacts for the Development of a Bulk Terminal at Cherry Point, July 2011, Lancaster, PA.
- Finance & Resource Management Consultants, Inc., “Review of Martin Associates Economic Impact Study,” October 24, 2011, Bellingham, WA.
- Bureaus of Economic Analysis, RIMS II Multipliers (2002/2010), Table 1.5 Total Multipliers for Output, Earnings, Employment, and Value Added by Detailed Industry, Whatcom County (Type II).