Manitoba Hydro should not force unionization on contractors bidding for work on the Bipole III transmission line. The line, to be built on the $1 billion more expensive western route by edict of the provincial government, is already a sink-hole of cash. The expansion of the Red River Floodway holds important lessons about the risks in making deals with labour councils promising to deliver construction projects on time and on budget.

The floodway was done pretty much on time, but it blew its budget. This despite a master agreement, signed in 2005 between the Floodway Authority and the Manitoba Building and Construction Trades Council, which was pursued to ensure the projects costs would be contained, while guaranteeing no work stoppage by workers. Originally set to cost $660 million, rising labour costs added $135 million to the budget. Rather than overspend, the then Doer administration scaled back, scrapping plans to replace numerous bridges over the floodway.

All firms who won contract work had to agree to pay union-set wages and benefits. Workers, in turn, had to pay union service fees for the representation they received from the council. The master agreement was said to have increased costs by an estimated $60 million.

Manitoba Hydro is insisting on unionization of labour, as it has done in the construction of its generating stations, but it is getting a bit of blowback this time around. Five workers and a contractors association are fighting Hydro's stipulation on the bipole construction project in court, arguing it tramples their right to work without being forced to join a designated trade union.

The argument bears a hearing. Construction associations that opposed the floodway's master agreement essentially argued the same case and a mediator convinced the government back down. Rather than force unionization, it imposed uniform work conditions and fees upon the non-unionized.

That is not legal precedent, but it is cautionary and instructive to Hydro. A court battle will add costs to Bipole III, a project starting $1 billion over cost because the NDP government shifted it from the logical site east of Lake Winnipeg. Manitoba Hydro's capital plans are steeped in controversy already as the utility's revenue projections tumble and costs soar. The floodway experience shows forced unionization can prevent work stoppages, but it naturally inflates costs and gives no guarantee of containing budget overruns.

Republished from the Winnipeg Free Press print edition June 29, 2012 A12