Maine contractors fear labor agreement will shut them out of offshore wind work - Press Herald

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Maine’s largest construction contractors say they fear being shut out of work in the state’s nascent offshore wind industry because of a pending labor agreement between the lead project developer and trade unions.

At issue is an agreement being negotiated between New England Aqua Ventus and the Maine Building and Construction Trades Council on the role of skilled labor in building a demonstration floating offshore wind turbine near Monhegan Island. That arrangement, called a project labor agreement, would set terms and conditions for employing workers from trade unions on the project. But more broadly, it could set a precedent for work and hiring rules for hundreds of future jobs that clean-energy advocates hope will emerge in offshore wind.

Peter G. Vigue, chairman of The Cianbro Companies Photo courtesy of Cianbro

The union collaboration was announced earlier this month at a news conference, and it caught leaders of some of the state’s top construction firms off guard. One of them was Peter Vigue, chairman of The Cianbro Companies.

Cianbro is an employee-owned firm and Maine’s largest contractor, with 4,000 workers. Like an estimated 90 percent of the general contracting companies in Maine, Cianbro’s workers aren’t members of organized labor unions. They work in a so-called “open shop.”

“The pending labor agreement will preclude all open-shop contractors from involvement with the project,” Vigue said. “That would be very unfortunate.”

Cianbro has been at the vanguard of Maine’s offshore wind aspirations. It built a one-eighth-scale prototype of the Monhegan turbine platform, a University of Maine-patented design that was tested off Castine in 2013. The company has been positioning itself to be a major player – and employer – in the evolving ocean wind power industry.

“I’ve invested over 10 years in this project, but that’s irrelevant,” Vigue said. “It’s not about me. It has everything to do with our state.”

But Vigue’s concerns may be overblown, according to Chris Wissemann, the chief executive of New England Aqua Ventus. Wissemann said project labor agreements, or PLAs, are individually negotiated and can be tailored to accommodate a range of work considerations. The final language of the PLA in question is still several months away, he said.

“We’re frankly just finding our way to figure out the best way to build it,” Wissemann said about the project. “And that helps us figure out who can build it. Our intention is to have a really well-thought-out PLA. It’s not an all-or-nothing thing.”

CLIMATE VS. LABOR CONDITIONS

Confusion over the impact of PLAs isn’t limited to offshore wind. A bill meant to elevate the pay and benefits of workers on big renewable energy projects is currently being debated in the Legislature. It contains language that seeks to reward developers that enter into such labor agreements.

Vigue and other construction interests, including the Associated General Contractors of Maine, testified against the bill at a recent public hearing. The bill’s lead sponsor, however, said an amended version should ease their concerns.

The bigger issue, said Rep. Scott Cuddy, D-Winterport, is how to fulfill the dual promise of a clean-energy economy: fighting climate change impacts while creating well-paying jobs.

Project labor agreements aren’t uncommon on large construction projects, notably in places where organized labor is influential. They are widely used in Europe and are familiar to the global wind power firms now setting up shop in the United States. They have become a cornerstone of the emerging ocean wind industry on the East Coast and are being negotiated from Virginia to Massachusetts.

Policymakers and politicians see them as a tool to encourage diversity and minority hiring in a growing sector. For unions, they create long-term demand for their members. Developers count on partnerships with unions to set up training programs that can provide a reliable supply of skilled workers. That helps close the so-called labor gap, Wissemann said, on big infrastructure projects that take years to complete.

“We reached out to the trades,” Wissemann said about seeking a PLA. “We didn’t expect anything other than that.”

Wissemann was the former managing director of Deepwater Wind, which built the 30-megawatt Block Island wind farm off Rhode Island in 2016. The project, now owned by Danish wind developer Orsted, was built largely with organized labor through a PLA. Wissemann said he expects the Block Island agreement to serve as a template for the Monhegan project.

Aqua Ventus is a joint venture between a subsidiary of Mitsubishi Corp., Diamond Offshore Wind, and German energy giant RWE Renewables. It’s currently developing the $100 million project 14 miles off the coast. The Monhegan project will consist of a single, semi-submersible concrete platform supporting a full-scale, 11-megawatt wind turbine. It would send power to the electric grid via an undersea cable, enough to meet the annual needs of more than 5,000 homes.

The demonstration project is expected to kick off more than $125 million in total economic activity, according to the developer, along with hundreds of Maine-based jobs. Construction is slated for 2022 and 2023.

Beyond that, the administration of Gov. Janet Mills is seeking to create the nation’s first floating offshore wind farm dedicated to research. The project could include as many as a dozen turbines floating 20 to 40 miles offshore in the Gulf of Maine.

Taken together, the two projects could employ several hundred workers for at least a couple of years, Wissemann said. The floating concrete base of each turbine platform will weigh roughly 10,000 tons and be fabricated on land. They will require teams of carpenters to build the forms, iron workers to install thousands of reinforcing bars, engineers to operate massive cranes and electricians to handle the power cables.

Union wages for those trades range from $50,000 to $80,000 a year, Wissemann estimated.

REQUIREMENTS VS. INCENTIVES

But how that work gets done and by whom is still being decided, Wissemann said. A PLA could be developed that creates a division of labor for various elements of the project, he suggested, and leaves room for open-shop companies to participate.

That doesn’t make sense to Jackson Parker, chief executive and chairman of Reed & Reed, a nonunion general contractor in Woolwich that specializes in wind energy. The employee-owned company has a wind power services division that helped build most of Maine’s land-based wind farms.

The University of Maine’s 9,000-pound prototype floating wind turbine off the coast of Castine in 2013. Robert F. Bukaty/Associated Press, file

But Parker said he doesn’t understand how some workers could agree to rules, pay and benefits that are different from those at their own company. In his view, a PLA would force the company’s employee owners to join unions in order to participate in offshore wind projects.

The broader application of PLAs on large renewable energy projects is now under scrutiny in the Legislature.

A union electrician, Cuddy said he sponsored L.D. 1231 so the men and women who will be building the surging number of solar and other renewable projects can benefit appropriately. The bill specifically mentions “disadvantaged communities” and Mainers not well represented in construction, such as people of color.

Cuddy’s bill calls for using registered apprenticeship programs to build a workforce in the trades. The recently amended version drops a requirement for PLAs on big projects. Instead, it specifies that a developer who signs one will receive “a beneficial consideration” by the Maine Public Utilities Commission during a procurement process in which the agency ranks and selects new projects for power contracts.

In testimony at the public hearing, Cuddy stressed that any contractor could bid on a PLA.

“Every contractor who bids knows the terms before the bid and has to agree to live up to them,” Cuddy said. “But PLAs do not limit participation to union contractors or unionized employees.”

Despite that intention, the bill was widely panned by Maine contractors. Besides Vigue and Parker, opponents included representatives from the Associated Builders and Contractors of Maine, Sargent Corp. and Maine Drilling & Blasting.

Cuddy said he was “blown away” by the claims those critics made around the PLA provision.

“It’s the same opposition you hear any time you try to improve the lives of people who actually perform the work,” he said.

The bill has yet to have a work session scheduled before the committee that handles labor issues.

Whatever happens with the Aqua Ventus labor agreement and L.D. 1231, a third document may influence who works on offshore wind.

In 2019, the PUC approved a long-term contract for the Aqua Ventus project to sell power to Central Maine Power Co. The 45-page contract has many specific provisions that must be met, including those contained in a section titled “Economic Benefits to Maine.”

Throughout this section, the power seller commits to using “Maine-based entities” during various stages of the project, including development, construction, operations and maintenance. During construction, for instance, the seller must use “commercially reasonable efforts to ensure that all or substantially all, but in no event less than 50 percent of contract expenditures for the project’s construction period activities, be performed by Maine-based entities that create and/or retain jobs in Maine.”

Wissemann said Aqua Ventus intends to honor the economic benefits provisions in the power contract, but that details need to be worked out.

“The core issue for me, regardless of what the power purchase agreement says, is we need to build this with labor from Maine,” he said. “It can’t be labor brought in from other states. It has to create local jobs, or we won’t go on to project No. 2.”

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