Gateway Pacific Terminal details evolve as economic forecasts change

COURTESY TO THE BELLINGHAM HERALDJune 28, 2013 

A recent opinion piece from the Save Birch Bay group tried to pick apart economic estimates for the Gateway Pacific Terminal project, but the author misunderstands the data, in some cases reading the wrong sections of very long and complicated reports.

First, it should be noted that these estimates are continually refined as design work progresses; so a construction cost estimate that was given two years ago is going to be periodically updated with new knowledge. Just like building a house, costs always seem to go up, rather than down. These aren't discrepancies, just changes in the forecast. (When a weather forecast changes, we don't consider the prior one to have been "deceptive" just because we now have better information.)

Also, she criticizes Gateway Pacific Terminal for stating that the project may be built over two years instead of a previously estimated four years. There's no mystery here, because whether to build in one or two phases is being considered.

The author points out that the early estimates of overall beneficial economic impact to the community (construction plus initial 10 years of operation) would be $1.4 billion, not the $1.8 billion current figure. Actually, the way costs seem to escalate in these big projects, I wouldn't be surprised to see that number approach $2 billion before it's all over. But pick any number you want; they are all huge.

The Birch Bay writer also gets confused about the wage data, stating that the estimates of wages at the terminal vary. That's correct, because you are talking about different kinds of jobs. She claims that our earlier regulatory filings said that rail workers, tugboat crews, longshoremen, would make $36,000 per year, not over $75,000 per year as stated in our recent report to the community. She's reading from the wrong section of the filings, a section that accounts for anticipated clerical and office workers. I can assure you that the highly skilled rail and maritime tradespeople earn more than $36,000 per year, and Gateway Pacific Terminal will create many more of those precious family-wage jobs.

Let's set the jobs numbers straight. Two prominent sets of economists have estimated the job creation that would result from Gateway Pacific Terminal, using two different but nationally accepted economic forecasting models.

The first estimates were done by Martin Associates of Philadelphia, one of the world's leading experts on port economics. Their work was vetted by three highly regarded regional economists affiliated with Western Washington University (but working on their own time). Their results were similar, but not identical, and the two sets of employment forecasts have been merged into a single, most current estimate, as follows:

Construction phase (full build-out over two years): Direct construction jobs (full-time equivalents), 2,120; indirect and induced jobs, 2,310; total jobs generated during construction, 4,430.

Ongoing operations: Direct jobs, 430; indirect and induced jobs, 820; total permanent jobs, 1,250.

Economists measure both the direct economic impacts and those that result from the "multiplier effect" of economic activity. "Direct" employment involves workers who are engaged in terminal operations. "Indirect" employment includes jobs created through the purchase of goods and services from other businesses that would support Gateway Pacific Terminal's operations. As with the other industries at Cherry Point, this is a major generator of jobs in the economy. "Induced" employment results from workers spending their wages for clothes, cars, appliances, health care, etc.

As estimates are refined, we will report them to the public. Meanwhile, we are happy to provide the most current factual information to community residents upon request.

Finally, I need to remind myself that not all county residents share the same history.

Longtime residents will remember the decades-long efforts to set aside a place for water-dependent heavy industry to operate outside of population centers, so that we could have both the benefits of high-wage employment and some isolation of impacts. More recent arrivals to the community may not appreciate that the Cherry Point industrial area is the result of longterm economic, land use and shoreline planning.

With poverty rates higher than the rest of the state and nation, we badly need industrial job growth. That's one reason why Gateway Pacific Terminal is so important to the future of working families.

ABOUT THE AUTHOR

Craig Cole of Bellingham is a former member and chair of the Whatcom County Council and is the president and CEO of Brown & Cole, Inc., a real estate investment firm, and the owner of Straight Talk Consulting, LLC, focusing on corporate governance and public affairs. He is a consultant to the Gateway Pacific Terminal project for developer SSA Marine of Seattle. He retired as CEO from the grocery company, Brown & Cole Stores of Bellingham.

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