With the party over, how big is the hangover?
Unemployment at home and in other provinces, pay cuts for remaining oil sands workers, and lean times for certain Fort McMurray businesses are all pieces of that puzzle.
The oil sands boom brought with it a culture of big spending and decadence. It also brought tens of thousands of workers to the Fort McMurray region in northern Alberta. A century ago, writers like Jack London and the poet Robert Service immortalized the adventure-seeking gold stampeders of the Klondike. Likewise, there have been Wild West stories emanating from Fort McMurray these past years: roughnecks sharing a basement with seven others, their bed-spaces separated by sheets for walls, working 12-hour days for 21 days straight, earning $150,000 or more in manual labour.
With oil prices soaring since 2003, development in the oil sands had taken off at breakneck speed. With tens of billions of dollars being spent, and up to 45 per cent of Canada's oil now produced there, the oil sands were called the engine of Canada's growth.
Then, the engine stalled.
In 2008, the price for a barrel of crude went down by two-thirds: from a peak of $148 U.S. per barrel, to a low of $38, all within a few months. As quickly, billions of dollars were dropped from oil sands investment projections, major expansion projects were delayed, and thousands were laid off. Spending projections over the next 11 years have been cut by more than $100 billion.
Between July 2008 and July 2009, Alberta shed almost 64,000 full-time jobs and the province's unemployment rate hit 7.2 per cent in July, the highest in 13 years. Many of those who kept their oil sands jobs were forced to take pay cuts, often 15-20 per cent.
During the boom, the population of Wood Buffalo/Fort McMurray had mushroomed to 103,334, up 141 per cent over nine years. The population of the work camps built on or near the oil sands grew an eye-popping 637 per cent to 26,284 during that period.
Temporary foreign workers were recruited from countries like China, Russia, Venezuela and the Philippines. The Alberta Federation of Labour estimates that the number of temporary foreign workers in the province increased from 13,000 in 2004 to 57,000 in 2008, with many of those destined for the oil sands work camps.
They were joined at the camps by many more from out of province: Canadian shift-workers on rotations (for example, working 14 days then taking 14 days off) flew in to work and flew home for their days off, often at their employer's expense.
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Fort McMurray has been called Little Newfoundland. No wonder: In 2006, Newfoundlanders made up 17 per cent of the population of Fort McMurray's population. In 2007, oil companies set up their own charter flights to ferry workers directly from St. John's to their own private airstrips in northern Alberta. This year, oil sands flights to Newfoundland and Nova Scotia have been cancelled.
The 20,000 Newfoundlanders who had found work in the oil sands represented a major chunk of the labour force of their home province, which has a population of about 509,000. With many of those workers returning, even with Newfoundland's own oil boom ramping up, unemployment there jumped by a Canada-high 3.6 per cent between July 2008 and July 2009, to 17.1 per cent.
To make matters worse, Newfoundland newspapers have reported on hard drug habits making the trip back home with oil sands workers.
Diane Keough is a hotel bartender in Fort McMurray, newly arrived from Newfoundland. Her husband has been working here for two years. When asked whether she knows many Newfoundlanders who have been laid off, Keough does some quick mental tabulations: "At least 28," she says.
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A survey of the work camps showed a population drop from 26,284 to 22,000 from 2008 to 2009.
The camps shrank for three reasons: First, residents mainly worked on expansion projects, which have stalled while existing operations have, for the most part, kept pace. Second, foreign workers are given permits based on local worker shortages. With the recession, those permits have dried up. Finally, flying workers in and out from all corners of Canada is an expense the oil sands operators could cut while maintaining a locally based work force.
As the return migrations began, the cuts have not always been clean.
Workers who had been sending money to families in their home countries found themselves now needing return airfare.
Ramazan Nassery, who works at Fort McMurray's YMCA Immigration Settlement Services, dealt with many of the foreign workers on their way out. "There were lots of problems. They sent their cheques home, so they didn't have any savings.
"When they were laid off they'd be forced out of the work camps, so they had nothing, no dishes or blankets even. There were some cases where people woke up with a job, and by the end of the day didn't even have a place to stay that night and we'd have to find places for them to stay in the community."
Nassery says that almost half of his clients were from the Philippines.
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During the the oil sands boom, stories came out about the rowdy antics of the roughnecks, young men making more money than they'd ever seen before and learning ways to spend it.
One study found that in the past three years, the number of energy industry employees seeking counselling for drinking problems was up 481 per cent.
Constable Sean Sexsmith, of the Fort McMurray RCMP detachment, confirms that cocaine is the drug of choice. All the companies have mandatory drug testing as a condition of employment, but there are always ways to cheat the drug tests - "clean" urine is available for purchase in Fort McMurray.
Industry insiders (who asked not to be named in this article) tell of parallel oil-drunk behaviour within the business itself: the wastefulness of the oil companies, inefficiencies, outrageously priced contractors, all taken in stride while the money flowed.
Because the cuts targeted the work camps, the city of Fort McMurray itself actually managed the downturn quite well. Beautiful new subdivisions ring the city, and the building continues apace. The effects are obvious here nonetheless. Everyone feels the tightening of the money taps, the euphoria is gone. On Franklin St., the once rowdy strip is near empty; bars are quiet, and the prostitutes have gone on sabbatical.
Earl's is a trendy watering hole and eatery chain in Western Canada. At any other location, patrons are dressed to the nines, metrosexuals and high-heeled women. At Fort McMurray, the metrosexuals mix with the muscle shirts and mullets. The crowd is three quarters male. The bartender says things slowed down just around Christmas, and it has been the slowest year in ages.
The Globe and Mail recently reported on the drop in sales in Fort McMurray liquor stores, particularly among the high-end liquors. Patron Tequila and Grey Goose vodka now gather dust on the shelves. Liquor Stores Income Fund, the largest private retailer of liquor, reported some store sales down 4.8 per cent in the first half of 2009.
There's a "vice" associated with the boom that wasn't as well reported.
"Chris," a manager with a technology and equipment suppliers to the oil companies who asked not to have his name published, noted: "Every guy who works here has new trucks, sleds, quads, boats. The toys are non-stop. I've never seen anything like it. It's not normal when you drive to a guy's house and he's got a trailer and he's got a quad, a snow machine and a boat and they're all brand new."
During the bust, the toy dealers have felt the pinch, too. At Four Seasons Power Sports, sales staff tell of years of 10-per-cent-plus growth - and then 2009 came, and things slowed immensely.
Now, the party has morphed into a new twist on the key party. "The banks were getting keys turned in for houses, boats, trucks, everything," Chris says. "Everything was bought on credit."
Sharon Pritchett, a co-ordinator at Fort McMurray's Salvation Army, hears of laid-off workers handing the keys to their new homes back to the bank.
"I remember there were five stories in one Friday afternoon we heard about."
Keough, the bartender from Newfoundland, says an in-law had just bought a $500,000 house in Fort McMurray before losing his job, while city councilor Sonny Flett tells of a man who had gone all-out, buying a new house, new truck, two snowmobiles and two ATVs. All lost with his job.
The business culture is changing, too. Oil companies are tightening their belts and reining in costs. Shifts are being shortened to cut overtime pay, fewer workers are flown in for their rotations, fewer consultants given free rein. According to insiders, the feel is very different now, and if the companies ramp up projects again, they will do so in a far more cautious way. Many camps are now going "dry," banning alcohol altogether and increasing the dog-aided drug searches.
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The Fort McMurray area is known for its Northern Lights, which illuminate the night sky. On my visit, the skies were cloudy, and my first glimpse of lights in the sky were the flames at the Suncor plant, Canada's first oil sands facility.
There, and at the many surrounding plants, the immense industrial tangle of metal silos and chutes are crowned by these flames, burning atop their stacks 24 hours a day, seven days a week: a beacon for workers and an ignition spark for this engine of Canada's economy, as well as a sulfurous symbol of the environmental degradation of the region.
The environment is the giant elephant in the room. It was ducks that reminded the world of the problem in April 2008 - 500 died after landing in a Syncrude tailings pond, an image that resonated worldwide.
The extraction of oil from the sands requires massive quantities of water, diverted from the Athabasca River, and natural gas to provide energy for the process. This on such a large scale that the burning of that natural gas represents a major component of Canada's greenhouse gas emissions. The mining itself digs up vast swaths of boreal forest and ancient peat; although oil sands companies are required to "restore" the land, and impressive efforts are under way, this local environment will never return to its pre-mining state. The tailings ponds are kilometres-long lakes of sludge, actually visible from outer space. On top of all this, there are now questions whether contaminated water is leading to higher rates of cancer among the native community of nearby Fort Chipewyan.
With discussions in Washington on boycotting such "dirty" energy sources, and Canada's own greenhouse-emissions plan still a work in progress, this elephant might, to twist a metaphor, stomp the golden goose.
But already, the industry is gearing up for the next revival. With the combination of the recession and the industry's own efforts to rein in costs and slash contractor salaries, expenses for materials and staffing have been lowered dramatically. The twinning of Alberta's Highway 63, plans for new continental oil pipelines, and the reworking, again, of Alberta's royalty fees have all improved the investment climate.
At the same time, the price of oil has inched back up towards $70 U.S. per barrel. A rash of deals has signalled new investment coming to the sands: There was the merger of industry giants Suncor and Petro-Canada; a newly formalized relationship between Alberta and OPEC; and a multi-billion dollar investment from PetroChina.
Over the summer, plans have been announced to proceed again with several stalled expansion projects - Connacher's Algar sands, CNRL's Kirby project, and Imperial Oil's Kearl sands. But with proposals for a Clean Energy and Security Act in the United States that could severely handicap the industry, there are new concerns for the future.
Still, those concerns are overshadowed by confidence that the economic might of the region will continue to earn it a free pass from political interference.
Insiders say business will be handled more soberly this time around. But a drunk always believes that until the bottle is within reach.
Montreal Gazette, Sat Sept 26 2009
Byline: David Sachs
The Alberta Federation of Labour is slamming the federal government for shortchanging Albertans when it comes to EI benefits.
Gil McGowan says Albertans have to work more hours to qualify compared to workers in other provinces.
Workers in Calgary and Edmonton must work 665 hours before becoming eligible for EI benefits compared to 560 hours in Montreal and Toronto and 420 for Newfoundland.
A new analysis from the AFL says our province has the lowest percentage of jobless workers receiving EI with just 39 percent of workers here getting benefits, compared to over 50 percent in Quebec.
660AM, Tues Sept 8 2009
CALGARY -- Union leaders marking Labour Day with a downtown barbecue lamented the recession's toll on Alberta's workforce.
And they accused the federal government of shortchanging the province's residents by imposing stricter qualifications for employment insurance.
Workers in Calgary and Edmonton must work 665 hours before becoming eligible for EI benefits compared to 560 hours in Montreal and Toronto and 420 for Newfoundland and Labrador, said Gil McGowan, president of the Alberta Federation of Labour.
The official number of unemployed Albertans has grown from 73,000 a year ago to 160,000 today, added the union chief.
"There's no other province that's lost jobs like Alberta," said McGowan.
"Only 40% of those people are eligible for benefits."
That's due to Alberta's traditional status as an economic powerhouse, which no longer holds true, he said.
The situation amounts to a betrayal on the part of Prime Minister Stephen Harper who hails from Calgary, said McGowan.
"Stephen Harper should be ashamed of himself for not reforming a system that discriminates against his constituents," he said, adding Albertans receive a maximum of 43 weeks of EI compared to 50 weeks in Ontario and Quebec.
Barbecue organizers handed out free hamburgers and hot dogs supplied by unionists to hundreds of people -- many of them clearly needy, said McGowan.
"The story of this Labour Day is not about working, it's unemployment," he said.
Edmonton Sun, Mon Sept 7 2009
Byline: Bill Kaufmann
On this Labour Day, one of Alberta's largest union groups is adding its voice to calls to shorten wait times for employment insurance benefits in the province.
The Alberta Federation of Labor says Albertans are being short-changed because they have to work more hours to qualify for benefits when compared to workers in other provinces. AFL President Gil McGowan says laid off workers are getting hit hard by the recession, and it's up to government to make sure they can continue to pay the rent and feed their families.
Analysis by the union group finds Alberta with the lowest percentage of jobless workers receiving E-I benefits at 39 per cent, compared to 55 per cent of jobless people in Quebec collecting E-I cheques.
CHQR Newsroom, Mon Sept 7 2009
A new report suggests Canada's employment insurance program is failing jobless Albertans the most.
The Alberta Federation of Labour in partnership with the Calgary and Edmonton labour councils, say Alberta's unemployed are the worst off in Canada.
The number of jobless in our province has doubled since last year to almost 154,000 and only 39 percent of those have qualified for EI.
Experts blame the fact that Alberta has the longest qualifying hours requirement in the country. Those lucky enough to receive EI say the benefits just aren't enough.
Officials are calling for drastic changes to Alberta's employment insurance program.
Those changes include establishing a standard 360 hour eligibility period extending the benefit period to two years and increasing funding for training.
Radio 660, Sun Sept 6 2009
Byline: Mike Judson
EDMONTON - The Alberta Federation of Labour has released an analysis that supports its push to shorten waiting times for federal Employment Insurance benefits in Alberta.
The labour group says Albertans are being short-changed because they have to work more hours to qualify for benefits compared to workers in other provinces.
"The ranks of the unemployed in Alberta swell each month as layoffs continue," AFL President Gil McGowan said Sunday. "But the safety net we pay into is failing to stop their fall."
The labour group's analysis found that the number of unemployed in Alberta has doubled since October of last year to almost 154,000. The report also found that only 15 per cent of young Alberta workers are eligible of employment insurance when they lose their job.
The analysis calls for drastic changes to the employment insurance program, including a standard 360-hour eligibility period, elimination of the two-week waiting period and extending the benefit period to two years.
"Laid-off workers are getting hit hard by the recession," said McGowan. "It is the responsibility of the government to make sure they can continue to pay the rent and feed their families."
The report found most of the lost jobs have been full-time positions, while the number of people being forced to take part-time work in Alberta has increased significantly since last fall.
The analysis also found Alberta with the lowest percentage of jobless workers receiving unemployment benefits at 39 per cent, compared to 55 percentage of Quebec's jobless getting E-I benefits.
"But even workers who are lucky to get EI benefits find it simply isn't enough," said Tom Olenuk, President of the Edmonton and District Labour Council. "Rates are too low and for too many, their benefits get cut off too quickly."
The AFL said the federal government uses a complicated formula to set E-I criteria in each region.
In Alberta, the rules reflect the boom times that the province had been experiencing up to about a year ago - not the spike in employment that occurred after markets crashed last fall and energy prices began to plummet.
"The government's arbitrary rate setting did not take into account Alberta's resource-driven economy," says the nine-page report.
Alberta's labour federation is also calling for increased funding for training programs for the jobless.
Canadian Press, Sun Sept 6 2009
Byline: Jim Macdonald
The Alberta Federation of Labour, in partnership with the Calgary and Edmonton Labour Councils, has released a new analysis (EI: It Should Be There When You Need It!) that shows that Canada's Employment Insurance (EI) program is failing unemployed workers at the very time they need it the most.
"The ranks of the unemployed in Alberta swell each month as layoffs continue," says AFL President Gil McGowan. "But the safety net we pay into is failing to stop their fall."
"The EI program is not doing what it is supposed to do - offer income protection and training support for unemployed workers. And its failure is worst here in Alberta."
Only 39% of unemployed in Alberta receive EI benefits. Alberta workers are the least likely in the country to be eligible for EI when they lose their job. This is due, in large part, to the fact that Alberta has the longest qualifying-hours requirement in the country.
"But even workers who are lucky to get EI benefits find it simply isn't enough," says Tom Olenuk, President of the Edmonton and District Labour Council. "Rates are too low and for too many, their benefits get cut off too quickly."
"We are in the midst of the worst economic crisis in 50 years, and Prime Minister Harper has done nothing to make EI more accessible to Canadians," says Collin Anderson of the Calgary and District Labour Council.
Highlights of the analysis include:
- The number of unemployed in Alberta has doubled since October 2008, to almost 154,000;
- Only 15% of young workers are eligible for EI when they lose their job;
- Albertans only receive $1,591 a month in EI benefits on average; and
- Albertans have to work the longest number of hours to be eligible for the shortest periods of coverage in Canada.
The analysis calls for drastic changes to the EI program to make it more responsive to unemployed Albertans. Changes recommended include: establishing a standard 360-hour eligibility period; elimination of the two-week waiting period; extending the benefit period to two years; and increasing funding for training.
"Laid-off workers are getting hit hard by the recession. It is the responsibility of the government to make sure they can continue to pay the rent and feed their families. And the failure to do so rests firmly at the feet of the Harper government," concludes McGowan.
Note: Gil McGowan (cell 780-218-9888) and Collin Anderson (403-819-6677) will be available for comment on the report on Monday, September 7th at the Calgary and District Labour Council Labour Day Barbeque (Calgary Olympic Plaza, 228 - 8 Avenue SE, 11:00 a.m. - 2:00 p.m.) Tom Olenuk (780-940-6797) will be available for comment on September 7th at the Edmonton and District Labour Council Barbeque (Giovanni Caboto Park, 95 Street and 109 Avenue, Edmonton, 11:30 a.m. - 3:30 p.m.).
For more information call: Gil McGowan, AFL President @ (780) 218-9888
As the current recession continues, Canadians across the country are discovering that their insurance system - Canada's Employment Insurance (EI) system - isn't delivering on its promise. Significant changes must be made to EI to make it into the insurance plan it should be - one that protects those workers who pay into it from suffering the temporary deprivations that come with layoffs.
So-called "green jobs" are growing at more than twice the rate of traditional jobs in Canada--9.1 per cent over the last decade compared with the average of 3.7 per cent--but it's the skilled trades that could stand to reap some of the biggest gains as new green initiatives in sustainable energy and construction get underway across North America.
When U.S. President Barack Obama earmarked $98 billion as part of the economic stimulus package for environmental and sustainable energy projects, it gave an important boost for the emerging field, a trend that has been slowly gaining steam in Canada in the past 10 years.
"I don't think there's any doubt that companies are certainly looking at green jobs as a mechanism to increase sales, increase share price . . . and we now need to get some good definition of what these green jobs are," says Grant Trump, president of the Environmental Careers Organization of Canada (ECO).
Careers in science and engineering will be one focus area of these green jobs as new technologies and processes are developed, but the skilled trades will also play an important role and provide new career opportunities for trades workers.
Green energy and construction projects will open up new careers in manufacturing, construction, operation and maintenance of projects such as wind turbine farms, building retrofits, solar panel installation and transit-line building, for example.
"It definitely increases the job prospects for people in the skilled trades because a lot of the skills they're acquiring in the current process of apprenticeship programs . . . are definitely transferable to some of the things that are on the horizon," says Shaun Thorson, executive director of Skills Canada.
Mechanical CAD designers, fabrication workers, sheet metal workers and construction trades are all among jobs that will be affected by the trend toward green and sustainable projects in a variety of sectors, he says.
"It's important for people to start to think about the skills they have and how those skills are applied to occupations they might not have considered before," says Thorson.
Many wind farm projects, according to Skills Canada, have been stymied because of a lack of qualified people to construct towers and service the turbines. Existing homes are being retrofitted to become more efficient and some are even installing solar panels or cogeneration systems to sell power back into the grid.
Skilled trade workers have a role to play in all of these examples, requiring Red Seal journeymen in about 50 trades to keep up to date with emerging technology.
There are about 8,000 parts that go into the production of a wind turbine tower, for example, and trades workers and manufacturers need to be on top of the latest processes used in various green initiatives, says Thorson.
How a job gets classified as a "green job" is still something that's very much up for debate, however.
On Sept. 1, the first day of the WorldSkills Calgary 2009 competition, ECO will be hosting international delegates from organizations similar to ECO from around the world to discuss how to define a green job and how they fit into the real job market.
The WorldSkills competition will also be a good opportunity for young people to think not only about a career in the skilled trades, but how the environment could play a greater role in where they end up working if they decide to pursue a career in the trades.
In 2008, there were 530,000 jobs in Canada related to the environment, a number that is predicted to grow by 8.8 per cent in the next five years, according to ECO data.
The Alberta Federation of Labour, Greenpeace and the Sierra Club of Canada issued a joint report this year called, Green Jobs: It's Time to Build Alberta's Future, which showed the trend toward developing more sustainable energy sources could provide jobs for electricians, computer and electrical engineers, iron and steel workers, welders, construction workers and sheet metal workers.
The green movement is certainly landing on the radar screen of more and more executives.
"We certainly know that on the health and safety side, and environmental considerations, that for industry in general this is at the top of their priority list," says Trump.
Calgary Herald, Mon Aug 31 2009
Byline: Derek Sankey
Employment Insolence in Ottawa: Politicians should stop obsessing with power play as Canadians lose jobs
In other words, same song, different day.
Ottawa has been all but paralyzed since the 2004 federal election, which marked the beginning of a streak of ineffectual minority governments.
The business of governing Canada has nearly stalled as political parties focus on Machiavellian backroom plots to tighten their grip on power.
This time, Ignatieff is threatening to topple Harper over changes to Employment Insurance benefits and force a fall election.
Last spring, he forced Harper to form a committee made up of Grits and Tories to examine what to do with EI to help the 250,000 Canadians who've lost their jobs.
But instead of coming up with quick solutions that both sides can agree on, the committee degenerated into partisan bickering and back stabbing.
The Liberals want to level the playing field by removing all regional differences to EI eligibility. Up to now, claimants in places like Quebec and the Maritimes haven't had to work as many weeks as westerners or Ontarians -- where jobs are more plentiful -- in order to qualify for benefits.
But the Tories argue a 360-hour (roughly nine-week) eligibility threshold -- replacing the patchwork of 58 thresholds across the country -- would cost a whopping $4 billion annually.
The Liberals counter the Tories have grossly inflated the numbers to make their rivals look spendthrift. And, the Grits add indignantly, the Tories' cost analysis was a private document, commissioned to embarrass the Liberals.
While all this skullduggery carries on in Ottawa's halls of power, another 45,000 people lost their jobs across Canada.
The national unemployment rate sits at 8.6%, the highest in 11 years. Since last October, 436,000 jobs were lost, almost two-thirds from Ontario manufacturing. Alberta is doing a little better than the nation, but our unemployment rate, at 7.2%, is still the highest since 1996.
Gil McGowan, head of the Alberta Federation of Labour, says there's no time to waste on fixing EI.
"Unemployed workers need help now, not six months or a year from now," he told The Canadian Press.
Economists warn that the very nature of the Canadian economy is changing and workers' skills must change with it.
"No one said it was going to be a smooth recovery and especially not for employment," warned BMP Capital Markets' Doug Porter.
That makes EI and retraining programs an even more critical part of getting the economy back on the rails.
Canadians don't need another federal election. We've already had four this decade. And we don't need politicians using the economic crisis to score cheap political points against their rivals.
Canadians do need leadership. We need politicians who will set aside their own ambitions and find a way to work together on getting us out of this recession.
The sooner, the better.
Calgary Sun, Mon Aug 9 2009
Byline: Andrew Hannon