A top executive at a petrochemical plant visited this summer by Donald Trump called on his industry not to fight a “wage war” for workers, in remarks that raised antitrust concerns with labor advocates and legal experts.
“Just driving up wage rates and focusing only on monetary attraction as a solution has impacts that outlast our projects long after they’re built,” Paul Marsden, a senior vice-president of Bechtel, which is currently building the Shell Pennsylvania Chemicals plant in Potter Township, Pennsylvania, said at an industry conference on 20 June. “But as an industry, my ask is that we’ve got to think broader than this.
“What we can’t afford, especially as an emerging and growing region, is a wage war,” Marsden added, during a talk at a petrochemical industry conference. “Because I can tell you, we will lose.”
Marsden’s remarks were made to a room full of executives from plastics and petrochemical companies, at a time when the petrochemical industry is planning a massive expansion into Appalachia, backed by the Trump administration, and US unemployment has hit a 50-year low.
Bechtel, which is the project manager for the Shell plant, also announced at the conference in Pittsburgh that it expects to play a major role in a second multibillion petrochemical construction job in the region. Marsden announced that his company was chosen to serve as the engineering, procurement and construction contractor at a $6bn petrochemical construction project planned in nearby Belmont county, Ohio, pending a final investment decision by Thailand-based PTT Global, expected later this year.
During his remarks in Pittsburgh, Marsden displayed a slide showing the logos of the 15 specific trade unions working for Bechtel at the Shell chemical plant.
“I believe there are real wage-fixing concerns here,” Sandeep Vaheesan, legal director of the corporate watchdog organization Open Markets Institute, told the Guardian.
“This type of activity is collusive or a prelude to collusion,” Vaheesan said. “At a minimum, the remarks should be treated as inviting rivals not to compete for workers.”
American laws prohibit companies from agreeing not to compete against each other and even extending that invitation to competitors.
Under the Obama and Trump administrations, the Department of Justice indicated that it intended to actively enforce rules barring wage-fixing agreements, which the department defines as “agreement with another company regarding employees’ salary or other terms of compensation, either at a specific level or within a range.”
Bechtel defended Marsden’s comments. “Bechtel believes competition in the marketplace is healthy and global trade creates opportunities for growth and economic prosperity,” Corey Dade, Bechtel’s head of corporate social responsibility and communications told the Guardian.
“In his speech, Paul clearly was addressing labor challenges facing our industry and encouraging companies to take a holistic approach to competing for talent, rather than focusing solely on wage rates,” Dade said. “We believe a holistic approach should include safe working conditions, training opportunities and company support for the communities in which our colleagues live, all of which are market solutions that can be sustained over the long term.”
Conference materials for the Petrochemical Update event, held in Pittsburgh, had cautioned attendees to refrain from discussing prices and related topics to avoid running afoul of those laws. “We are thrilled to host so many petrochemical professionals under one roof,” a digital program circulated by organizers said. “However, many of you compete with one another so in order to comply with antitrust rules, we should avoid any discussions or comments that may not be appropriate in fact or even in appearance.”
The Trump administration has sought to promote construction of petrochemical plants in the Ohio River Valley region, which would use fracked gas from shale wells in Pennsylvania and West Virginia as the raw materials to make chemicals and plastic.
On 13 August, Trump toured Shell’s Pennsylvania Chemicals plant, where construction remains under way, and made a speech to roughly 5,100 workers who were paid by their employer to attend.
“It’s one of the single biggest construction projects in the nation,” Trump said during that rally, adding that jobs at the plant would offer “great pay” and pensions. “When this great building company comes here and wants to build a plant, I want to make it easy for them, not hard for them.”
Workers who chose not to attend Trump’s speech were required to take the day off without pay, according to a report by the Pittsburgh Post-Gazette, and those who did attend were told how to behave during the event. “No yelling, shouting, protesting or anything viewed as resistance will be tolerated at the event,” said rules conveyed to workers by an unnamed contractor at the site, according to the Post-Gazette. “Your building trades leaders and jobs stewards have agreed to this.”
In addition to federal authorities, state attorneys general have legal power to investigate evidence of illegal collusion in the marketplace, said Professor Sanjukta Paul, who teaches labor and employment law at Wayne State University Law School.
“It’s something that would certainly in my mind warrant an investigation by appropriate agencies at a federal and state level,” she told the Guardian. Even if not considered an invitation to collude, remarks like Marsden’s could be relevant later, if evidence emerged that, say, wages offered on petrochemical construction projects are very similar, which could suggest employers reached a tacit agreement on rates, she said.
Construction jobs generally pay better in the Pittsburgh region than the rest of the US. In the spring of 2018, construction wages overall in Pittsburgh were roughly 5% higher than the national average, according to an analysis released this June by the Bureau of Labor Statistics, while wages overall in the Pittsburgh area ran 4% lower than the rest of the country.
Construction industry analyst Jeff Burd, founder of the Tall Timber Group, said that non-residential construction wages in the region had gone up with the arrival of the Shell plant, but at a rate that just kept up with inflation. “Non-union workers have probably seen a higher increase in wages but their share has been shrinking as the unions have organized more firms to meet the shortfall in skilled workers,” he said. “What has increased is the amount of hours worked and premium pay.”
Industry reports suggest Bechtel and PTT struggled to agree on a budget for the project earlier this year, with some observers citing labor rates as an issue. Bechtel declined to comment to the Guardian on its business discussions with customers.
Bechtel’s chairman and CEO, Brendan Bechtel, was among roughly 200 corporate leaders who signed a highly touted 19 August statement from the Business Roundtable on corporate social responsibility, including a commitment to “compensating [employees] fairly and providing important benefits”.