MINOT, N.D. — The wind energy industry's reliance on out-of-state construction labor is costing North Dakota's economy more than $62 million, according to a report released Wednesday by advocacy group Local Jobs North.
The Oct. 16 report found increasing the 10% to 30% hire rate for local construction workers to 50% to 60% would generate a $62 million greater economic impact, not including worker retirement benefits, which would increase the impact by $82 million.
"Catching the Wind 3.0: The impact of local versus non-local hiring practices on wind farms in North Dakota" was authored by Lucas Franco, research manager for LIUNA Minnesota & North Dakota, which represents more than 12,000 unionized construction laborers in the two states and is affiliated with the Laborers International Union of North America.
Developers, wind energy supporters and communities can't just assume that local jobs will happen without giving attention to it, said Kevin Pranis, marketing manager for LIUNA Great Lakes.
"In order to get people focused on solutions, we first had to describe the problem and see it in numbers," Pranis said of the Local Jobs North report.
Last June, labor unions asked the North Dakota Public Service Commission to require Ruso Wind Partners, a subsidiary of Southern Power, as part of its permit to file a report indicating how many of its laborers are from the local area, considered to be about a 150-mile radius. The PSC likely will act on the Ruso wind farm permit before the end of the year, said Commissioner Julie Fedorchak.
Fedorchak said local hiring is one of the criteria the PSC considers in permitting wind farms.
"We always talk about it and encourage them to hire locally," she said.
However, North Dakota has a low unemployment rate, which is a factor the PSC also considers in determining the feasibility of local hiring, she said.
The labor unions' request only seeks a reporting requirement, but unions believe transparency can prompt more local hiring.
The jobs report noted Minnesota's Public Utilities Commission now requires wind energy project owners to file quarterly reports on the use of local and nonlocal labor and considers local job impacts when permitting wind energy facilities. At the same time, utilities, wind energy developers and contractors have partnered with local building trades organizations to recruit, train and deploy Minnesota workers to build wind projects.
Between 2017 and 2018, building trades organizations estimate that local employed accounted for fewer than 20% of construction jobs on large Minnesota wind energy projects. In 2019, the same organizations say, local residents accounted for over 50% of the wind energy construction workforce, and they expect local workforce participation to be even higher in 2020.
The jobs report stated the experience of two projects in Minnesota in hiring a largely local construction force indicates finding employees isn't an issue. The number of North Dakotans in lower-paying, often retail, jobs also is cited as a potential labor pool if construction training is available. Representatives of building trades unions indicate they are ready to recruit and train North Dakotans for wind energy construction jobs.
"We have made progress in Minnesota and we think there's opportunities to make the same progress in North Dakota if developers come to the table and policy makers start looking at it seriously," Pranis said. "This is really just trying to get that conversation started in North Dakota."
The jobs report notes at least nine major wind farm projects are either seeking permits or in pre-construction across North Dakota. If 50% to 70% of work on all nine projects were performed by local workers, the total projected economic impact of wind farm construction employment, including the value of deferred fringe benefits, would fall between $170 million and $210 million. This would be reduced to between $87 million and $127 million if only 10% to 30% of the workforce is local.
The Aurora Wind Project, being developed by Enel Green Power northwest of Tioga, is expected to create about 300 jobs at the peak of construction.
Wind energy developers have relied on nonlocal construction workers for an estimated 86% of construction workforce on recent North Dakota projects, the jobs report stated. Pranis explained many contractors have traveling crews that move from project to project across state lines, accounting for the high number of out-of-state workers.
A 150- to 200-megawatt wind farm, consisting of 35 to 70 turbines, requires 135 to 200 construction workers to build, according to one renewable energy jobs model.
According to Local Jobs North research, a local wind energy construction worker can be expected to spend roughly three times more locally than a non-local worker over the short-term. Local is loosely defined and generally is considered within driving distance of a construction site.