Were 9,000 jobs really ever at stake at SNC Lavalin?
March 18, 2019 9:02 am
While Justin Trudeau has repeatedly said he was just trying to save jobs when he went so far as to potentially attempt to obstruct justice in trying to stop the criminal prosecution of SNC Lavalin, you have to wonder about the 9,000 jobs figure that has been suggested by the Prime Minister and his former principal secretary.
9,000 is the total number of individuals employed by SNC Lavalin in Canada, out of 52,435 employees around the world.
SNC Lavalin is a Canadian-based global corporation. The majority of the company’s contracts are in other countries.
About one-third of SNC Lavalin’s $9.3 billion of revenue in 2017 came from Canada.
Some of SNC Lavalin’s Canadian revenue came from private sector, provincial, and municipal contracts.
About half of SNC Lavalin’s Canadian income came from federal contracts, most of which are major multi-year contracts for major infrastructure projects.
If SNC Lavalin is convicted of a criminal offence, it would be barred from bidding on federal contracts for 10 years.
Of course, it would continue to work on all the projects it has on the go.
If the Canadian government contracts are one sixth of SNC Lavalin’s business, let’s assume that the lack of new contracts over 10 years leads to the loss of one-sixth of its employees. This is assuming that a company of the size and expertise of SNC Lavalin can’t attract any new contracts in the private sector, from provincial governments, from municipal governments, and from customers all around the world, to make up for the lack of Canadian government contracts.
Assuming the current government contracts would expire one by one over the next 10 years, you’re looking at 1,500 job losses at SNC Lavalin over 10 years, so about 150 job losses per year.
But wait, there’s more!
If federal engineering contracts can’t go to SNC Lavalin, then those contracts will go to someone else, to another Canadian engineering firm.
Those other engineering firms will pick up those contracts, and if they are picking up a larger percentage of government contracts, they will have to either hire more engineers, or forego some other projects, that could then be taken up by SNC Lavalin.
Jobs associated with engineering projects for the Government of Canada aren’t jobs that, as Justin Trudeau seems to think, were magically created by SNC Lavalin. Those jobs are paid for by Canadian taxpayers. The funding for those jobs is built into the contract price for each project.
I don’t know a lot about economics (as a matter of fact I’m signed up to take an Economics for Journalists course later this spring so I can understand it better) but I knew from the first time Justin Trudeau started talking about the potential loss of 9,000 jobs, that just because one company might lose the right to bid on Canadian federal government contracts, he was suggesting something that simply wouldn’t happen. Those jobs would simply move from one engineering firm to another firm.
And the prospect of engineers out on the street because of this is ridiculous—engineers are in high demand and experienced engineers would be highly sought after by other firms.
SNC Lavalin might lose some jobs.
Montreal might lose some jobs.
But the net effect on Canadian jobs directly from SNC Lavalin’s loss of the ability to bid on Canadian government contracts would be absolutely zero.
So why is the Prime Minister of Canada worried about this, since the net effect might be to transfer some jobs from SNC Lavalin in Montreal to, say for example, Stantec in Edmonton or AECOM in Toronto?
Perhaps the Prime Minister answered that question when he told Jody Wilson-Raybould “I am an MP in Quebec. I am the member for Pappineau.”
Reportedly the Prime Minister told the Attorney General that SNC Lavalin could move its head office from Canada if the prosecution proceeded. This would be impossible, since SNC made a commitment to keep its head office in Canada until at least 2024 under a loan agreement with Quebec’s pension fund manager, La Caisse de dépôt et placement du Québec. Hmmm. Looks like someone was buying everything the lobbyists were selling without doing his homework.
Were any jobs really at risk? If SNC Lavalin could do what every other business does when faced with the loss of one client—if it went out and aggressively pursued new clients and used its world class engineers in Canada to find solutions for clients around the world, if it made up for that temporary loss of government business to expand its client base, while other Canadian engineering firms grew with the addition of the government contracts SNC Lavalin could no longer bid for, then we could easily see a net gain in jobs in engineering. Any way you look at it, 9,000 Canadian jobs are not and never have been at stake from prosecuting SNC Lavalin for the serious crimes it committed in bribing officials to win contracts.
That Justin Trudeau thinks otherwise is testament to either his gullibility, naivety, or lack of critical thinking skills.