For Vale the math is simple: give millions of dollars to construction workers now and save millions of dollars in labour costs from missed deadlines.
As of July 15, Vale Newfoundland and Labrador is boosting pay for skilled trades workers at Long Harbour, the site of its new hydromet-processing facility.
Construction there is about 86 per cent complete.
The pay raise will be as much as $5 an hour to start, running to as high as $10 if company goals are met and project work comes in on schedule, to the end of October.
The initial raise will be paid out on regular cheques and the rest will come to workers as a bonus, once the project work is complete.
About 4,800 people are working on the Long Harbour project. Factoring in shift change and turnarounds, that amounts to about 3,600 on site each day.
The workforce is expected to drop to about a third of its current level by early 2014. The new pay incentive is meant to keep workers from jumping ship in the meantime.
It is also aimed at boosting overall productivity and reducing worker absenteeism.
“You have to be here in order to get paid and I think that’s a reasonable request,” said Michael O’Sullivan, Vale’s project director, speaking with reporters at the Long Harbour site Tuesday.
“We are paying out a big sum of money, but we need something in return.”
The incentive program will cost the company millions on top of its existing capital costs.
“It clearly has an impact on cost, but if you think of the number of people who are on our site, if we’re able to pull the completion deadline forward, it pays for itself,” said Vale spokesman Bob Carter.
He said the company has already worked to increase productivity outside of offering the pay incentive, including working with contractors for better materials management and logistics — making sure workers do not have to go hunting for what they need to do their work at any given time.
While a clear benefit, the new incentive program comes as the project is consolidating its existing workforce, laying off some workers and bringing in more foreign workers to deal with shortages in particular trades.
Carter said the company is working with the trade unions to source needed workers, including those coming from outside the country.
Of note, 250 welders are needed to finish the Long Harbour project.
As previously reported by The Telegram, Vale wound down work on the lower tier area at site, around the port, on Friday. It is shifting skilled workers from there to essential work elsewhere on site, including about 30 welders.
The shift will see 200-300 other workers laid off — not being in a trade in high demand.
Carter said a shortage of needed welders will mean Vale will likely bring in some or all of those workers from the United States or Ireland.
“In order to get a temporary foreign worker permit, these days in Canada, you have to be very clear with the federal government that you have exhausted all possibility to source any of those resources in the country,” he said.
He said the company wants to get construction completed, but will not compromise on safety — willing to fire unsafe workers if needed.
“We will be focusing on handing over construction, at the end of October, essentially to our commissioning and startup team,” he said.
That team will begin running the plant’s piping with water, stepping up to starting up the processing facility with high-quality nickel matte from Indonesia mixed in with Voisey’s Bay ore, allowing for operators to ease the system forward step by step toward full capacity on Voisey’s ore.
Looking ahead to operations, the mining company has received about 4,000 applicants for about 500 long-term technician positions at the site.
“The vast majority of those are from the province,” Carter said.
About 228 people have been hired for the long-term operational positions to date — about half of what the company needs once the facility is operational and at maximum capacity.