Penn Unions Eagerly Support GOP’s Proposed $1.7 Billion Gift to Shell Oil

Bruce Vail

Shell made $31 billion in profits in 2011.

This political season, organized labor seems to be rallying around Democratic Party candidates across the country – except in Pennsylvania. There, unions are lining up behind a plan by anti-union Republican Gov. Tom Corbett to generate new jobs by offering enormous tax giveaways to one of the world’s richest oil companies.

Corbett is courting a U.S. subsidiary of Royal Dutch Shell that is considering construction of a new petrochemical refinery in the small town of Monaca, about 30 miles north of Pittsburgh. The refinery project would create jobs in an economically distressed region, leading a long list of the state’s top labor organizations to put aside any other disagreements with Corbett and back the effort.

Yes, we’re pushing this project,” says Frank Sirianni, president of the Pennsylvania State Building & Construction Trades Council, AFL-CIO. My feeling is that if you are going to have a project of this magnitude, it ought to be built by union workers who live and work and pay taxes here in Pennsylvania.”

Also supporting the project is the broader Pennsylvania AFL-CIO, a statewide federation representing some 900,000 union members in all sectors of the economy. Additional key support comes from the United Steelworkers (USW), which has been historically very strong in the state, and maintains its international headquarters in downtown Pittsburgh.

The project is indeed significant in size, as Sirianni suggests. Construction would take several years and require Shell to invest more than $1 billion, according to press reports by StateImpact Pennsylvania, a collaborative news-gathering effort by National Public Radio and local public radio stations. Some Shell estimates for the number of jobs created reach as high as 20,000, although critics have charged that the 20,000 figure is a gross exaggeration, StateImpact reports.

Even if job figures touted by Corbett appear over-optimistic, that doesn’t necessarily diminish the value of the project, says Sirianni. The refinery – known as an ethane cracker” in oil industry terminology – will gather natural gas from fracking wells drilled across the Marcellus Shale formation in Pennsylvania and in neighboring states. That will require the construction, maintenance and renewal of an extensive network of pipelines over a period of decades, he said.

I don’t really feel qualified to say whether the job creation numbers are right or not, or whether the exact amount of tax breaks is right or not, but it’s important to remember that the jobs created are good jobs….They are not some crappy big-box jobs where the stock clerks need food stamps to feed their families,” added Jim Savage, president of USW Local 10 – 1.

Much of the controversy over the proposed ethane cracker has centered around Corbett’s proposed tax breaks to induce Shell to build in Pennsylvania, rather than neighboring Ohio or West Virginia. Estimated at $1.7 billion over 25 years, the package is thought to be one of the largest economic development subsidy packages – if not the largest – ever offered to a for-profit corporation.

I understand the controversy over giving these kinds of tax breaks at a time when the state is cutting the money for Medicaid and for public schools,” Savage remarked in reference to Corbett’s latest budget, which cut total state outlay by about $1 billion, including cuts to Medicaid and public education. But the fact is the state is going to give out subsidies for job creation no matter what. I would rather see them give out the subsidies for something like this, instead of giving it to WalMart.”

But Savage also admitted he was unaware of any commitment from Shell to use union labor in the new jobs. Likewise, Sirianni conceded he had no knowledge of any binding commitment by Shell to hire union workers. Corbett’s office has been silent on the matter.

Sirianni was quick to add, however, that he wasn’t concerned about the use of non-union labor because, as a practical matter, a project of this size will inevitably hire large numbers of union workers. Listen, if you are going to build a refinery in western Pennsylvania and you need 300 highly skilled welders, the only way you can do it is with a union (contractor), ” he said.

Furthermore, Shell already has collective bargaining agreements with USW to cover workers at some of its refineries in other parts of the country, Savage said, so there is reason to expect that the daily production workers at the proposed ethane cracker will be unionized.

Although large oil companies are notorious for their antipathy to organized labor, Shell is not among the worst offenders in this regard, he said. He added with a laugh that a union-friendly oil company stands out in the same way as the tallest midget in the circus.”

Discussion of the new refinery is still at a speculative stage, Corbett said as recently as last week. Shell is currently engaged in detailed economic and environmental analysis of the project and has yet to firmly commit itself to going forward, he said. If Shell does commit, there would then inevitably be a long, drawn-out public debate on the economics and environmental impact, the union leaders added.

In effect, the unions are playing the long game. Their gamble is that any new jobs to be created won’t materialize until after Corbett leaves office and the most vociferous anti-union Republicans in the state legislature have passed from the scene. 

Full disclosure: United Steelworkers is a sponsor of In These Times.

Bruce Vail is a Baltimore-based freelance writer with decades of experience covering labor and business stories for newspapers, magazines and new media. He was a reporter for Bloomberg BNA’s Daily Labor Report, covering collective bargaining issues in a wide range of industries, and a maritime industry reporter and editor for the Journal of Commerce, serving both in the newspaper’s New York City headquarters and in the Washington, D.C. bureau.
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