3.1.10 Mobile Crane Operator
According to the results of the cost-benefit analysis for the Mobile Crane Operator trade, which are presented in Exhibit 3.10, employers incur a net cost of apprenticeship training during the first two years of the apprenticeship (if eligible tax credits are excluded). This is due in part to the relatively high wages paid to first year apprentices ($39,091). However, a net benefit is realized in years 3 and 4 of the apprenticeship period. Overall, there is a net benefit of apprenticeship training to employers of $8,250 per apprentice or $23,250 under the tax credit scenario.

Exhibit 3.10 Per Apprentice Costs and Benefits by Year of Apprenticeship – Mobile Crane Operator (n=16)

A. Excluding Eligible Tax Credits

B. Including Eligible Tax Credits (Ontario Case)

3.1.11 Motor Vehicle Body Repairer
The cost-benefit results for the Motor Vehicle Body Repairer trade are presented in Exhibit 3.11. The benefits of apprenticeship training exceed the costs during each year of the apprenticeship. According to the model, there is a total net benefit of $114,634 that accrues to employers over a four-year apprenticeship. If eligible tax credits are included in the model, the total net benefit increases to $129,634. The largest components of the training costs are wages and benefits (64.2%) and journeyperson time (33.0%). However, costs associated with wastage and cash disbursements are not significant.

Exhibit 3.11 Per Apprentice Costs and Benefits by Year of Apprenticeship – Motor Vehicle Body Repairer (n=21)

A. Excluding Eligible Tax Credits

B. Including Eligible Tax Credits (Ontario Case)

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3.1.12 Refrigeration and Air Conditioning Mechanic
As shown in Exhibit 3.12, the revenue generated by an apprentice is greater than the total costs for each year of the apprenticeship. As a result, the model estimates an overall net benefit of $76,124 over the four-year period. If the Apprenticeship Training Tax Credit is included, the total net benefit increases to $91,124. As a proportion of total costs, wastage (3.4%), disbursements (1.1%), and administration (1.0%) are not significant relative to wages and benefits (66.0%) and journeyperson time (28.4%).

Exhibit 3.12 Per Apprentice Costs and Benefits by Year of Apprenticeship – Refrigeration and Air Conditioning Mechanic (n=40)

A. Excluding Eligible Tax Credits

B. Including Eligible Tax Credits (Ontario Case)

3.1.13 Sheet Metal Worker
Similar to the Construction Electrician and Mobile Crane Operator trades, employers who train sheet metal worker apprentices incur a net cost during the first year of the apprenticeship. As shown in Exhibit 3.13, the total costs of apprenticeship training increase from year 1 to year 2; however, the increase in revenue during this period offsets the increase in costs. Consequently, a net benefit accrues to employers beginning in year 2 of the apprenticeship. Overall, the model estimates a total net benefit to employers of $48,320 that increases by $15,000 to $63,320 if eligible tax credits are included.

Exhibit 3.13 Per Apprentice Costs and Benefits by Year of Apprenticeship – Sheet Metal Worker (n=28)

A. Excluding Eligible Tax Credits

B. Including Eligible Tax Credits (Ontario Case)

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3.1.14 Sprinkler System Installer
The cost-benefit results for the Sprinkler System Installer trade are presented in Exhibit 3.14. As an apprentice progresses through the apprenticeship, revenue increases; wages and benefits increase; costs associated with journeyperson time decrease; and wastage costs decrease. A net benefit accrues to employers in each year of the apprenticeship, totaling $132,780 or $147,780 if eligible tax credits are incorporated into the model.

Exhibit 3.14 Per Apprentice Costs and Benefits by Year of Apprenticeship – Sprinkler System Installer (n=16)

A. Excluding Eligible Tax Credits

B. Including Eligible Tax Credits (Ontario Case)

3.1.15 Tool and Die Maker
As illustrated in Exhibit 3.15, the model estimates that a first year tool and die maker apprentice generates a net benefit to employers of $20,893. When an apprentice has progressed to the fourth year, the net benefit increases to $40,966. Although wastage costs are not necessarily a significant component of the training costs at 7.7% of total costs, this proportion is higher than that of the other 14 trades included in the analysis.

Exhibit 3.15 Per Apprentice Costs and Benefits by Year of Apprenticeship – Tool and Die Maker (n=16)

A. Excluding Eligible Tax Credits

B. Including Eligible Tax Credits (Ontario Case)

3.2 Summary of Cost-Benefit Results by Trade

To summarize, the following observations regarding the cost-benefit results can be made:

• For all 15 trades, the total benefits of apprenticeship training exceed the total costs over the apprenticeship period;
• The cost in terms of journeyperson time declines during the apprenticeship;
• Wastage, disbursements and administration are relatively small components of the total costs of apprenticeship training; and
• The revenue potential of an apprentice increases through each year of his/her apprenticeship.

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Exhibit 3.16 presents a summary of the cost-benefit results by each of the 15 trade areas. The figures presented represent the total costs and benefits to the employer over the entire period of apprenticeship training, which ranges from three to five years. Overall, all trades show a net benefit per apprentice over the apprenticeship period.

Exhibit 3.16 Total Per Apprentice Costs and Benefits by Trade

1. Source: Apprenticeship Survey (Q28)
   
2. Represents the total per apprentice costs incurred over the apprenticeship period.
   
3. Measured as the revenue generated by an apprentice.
   
4. Benefits – Costs
   
5. Benefits/Costs

As discussed in the preceding sections, the most significant cost components for employers who train apprentices are wages and benefits and journeyperson time. The lowest costs of apprenticeship training occur in the Cook trade at $77,601, which is well below the average total training costs of $207,425. Average annual wages paid to cook apprentices ($19,951) are significantly lower than the average across all 15 trades ($37,384) as are the costs associated with journeyperson time ($13,876 as compared to the average of $44,120). Trades where employers incur relatively high training costs include Construction Electrician ($275,424), Sheet Metal Worker ($251,698), and Mobile Crane Operator ($248,068). This is due in part to the relatively high wages paid to apprentices in these trades.

Excluding eligible tax credits, the largest monetary benefits accrue to employers who train apprentice sprinkler system installers ($338,933); construction electricians ($338,040); and automotive service technicians ($327,835). In these trades, the revenue generated by an apprentice far exceeds the total training costs. Overall, the model estimates an average net benefit of $74,206 over the apprenticeship period or $91,499 if the Ontario Apprenticeship Training Tax Credit is included.¹⁵

A standardized measure that can be used to compare the cost-benefit results by trade is the benefit-cost ratio. For example, the average benefit-cost ratio for the 15 trades (excluding tax credits) is 1.38, which indicates that for every $1 spent on training an apprentice, an employer receives a benefit of $1.38 or a net return of $0.38 per apprentice. Trades with the highest benefit-cost ratios include Tool and Die Maker (1.67); Sprinkler System Installer (1.64); Motor Vehicle Body Repairer (1.63); Cook (1.54); and Machinist (1.53). In other words, the return on apprenticeship training investment is relatively high in these trades. Conversely, trades with a low benefit-cost ratio include Mobile Crane Operator (1.03); Carpenter (1.12); Sheet Metal Worker (1.19); Industrial Mechanic (Millwright) (1.21); and Construction Electrician (1.23). Nevertheless, the model estimates that employers in these trades receive a net return on apprenticeship training investment. However, it should be noted that the results have not been discounted to take into account the time profile of the costs and benefits of apprenticeship training.

The next section presents a summary of the feedback received during the roundtable discussions with economists and employers.

3.3 Validation Roundtable Findings

A series of roundtable discussions were held with economists and employers representing four trade areas (Automotive Service Technician, Construction Electrician, Industrial Mechanic (Millwright), and Refrigeration and Air Conditioning Mechanic) to validate the methodological approach and to determine if the cost-benefit results were consistent with employers’ experience and knowledge of apprenticeship training. Detailed in the following sections is the feedback received during each of the roundtable sessions.

3.3.1 Economist Roundtable
The economist roundtable was intended to discuss the methodology of the study. The following issues were raised during the discussion:

Notwithstanding the concerns expressed by the economists who participated in the roundtable discussion, it was noted that the scope of the study (in terms of the number of trades examined) far exceeds any previous research in Canada and could be considered leading research on an international basis.

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3.3.2 Automotive Service Technician Roundtable
Roundtable participants representing the Automotive Service Technician trade indicated that the study did not address the costs associated with the provision of a service bay. Offsetting this service bay cost, however, is the revenue associated with the value of parts that would be used by apprentices when completing repairs. Overall, employers indicated that the omitted costs would be equivalent to the parts revenue associated with apprentice labour. In this context, the calculated net benefit is an accurate portrayal of the costs and benefits of apprenticeship training in the Automotive Service Technician trade.

Employers who operated larger facilities (with more sophisticated diagnostic equipment) indicated that a net benefit would not be realized until the second year of the apprenticeship as opposed to the first year as estimated by the model. All employers who participated in the roundtable, however, indicated that apprentices generate net benefits for their organization. However, employers indicated that there was considerable risk associated with hiring apprentices given the seriousness of poaching by public sector organizations and employers from other regions in Canada (e.g., Alberta).

3.3.3 Construction Electrician Roundtable
Employers representing the Construction Electrician trade raised concerns regarding the charge-out rates used in the study. For example:

Overall, roundtable participants indicated that the methodology would generally result in a close approximation of the net benefit of apprenticeship training in this trade. Employers agreed that there would be a negative return to employers during the first year of the apprenticeship, and many indicated that employers would likely incur negative returns during the second year. Employers noted that they do not generally hire apprentices solely for the net returns they generate, but rather to help ensure an adequate supply of qualified labour for their organization. In addition, employers indicated that there was a greater risk of poaching in Saskatchewan due to the close proximity to Alberta and British Columbia.

3.3.4 Industrial Mechanic (Millwright) Roundtable
Employers noted that for the Industrial Mechanic (Millwright) trade, considerable differences in findings would likely exist between those organizations that employed apprentices “in-house” to repair and maintain equipment or in a unionized plant setting as compared to employers who used apprentices in a service capacity. Employers who participated in the roundtable noted that the results of the research likely understate the actual returns on apprenticeship training to employers in Alberta, given the strength of the region’s economy. However, roundtable participants were in general agreement with the cost components such as wastage, disbursements and use of journeyperson time to supervise apprentices.

3.3.5 Refrigeration and Air Conditioning Mechanic Roundtable
Employers who participated in the Refrigeration and Air Conditioning Mechanic roundtable indicated that the study did not address a key cost for employers – namely the cost associated with the provision of a service vehicle. This cost was estimated at $6,000 per year and is a significant cost of apprenticeship training. However, the cost of the service vehicle would vary on an employer-by-employer basis. For
example, if apprentices worked as part of a construction crew, they would not require their own vehicle. If, however, the apprentice completed service calls, then employers would incur the costs associated with a service vehicle. Overall, employers agreed that the cost-benefit results were consistent with their experience and knowledge of apprenticeship training.

Employers who participated in the roundtable were concerned with poaching. It was noted that the Refrigeration and Air Conditioning Mechanic trade is unique in that apprentices are trained in pipefitting, sheet metal and electrical work. Therefore, the Refrigeration and Air Conditioning Mechanic trade competes for apprentice labour from several other trades. It was noted that in British Columbia, the majority of the industry is unionized which helps to reduce mobility and the likelihood of poaching (due to apprentices earning “seniority” rights).

3.3.6 Summary
In general, roundtable participants agreed with the methodological approach and the results produced by the cost-benefit model. The following is a summary of the key findings and common themes that emerged from the roundtable discussions:

The next section presents the results from the employer survey and includes additional measures of the costs and benefits of apprenticeship training.

15. The calculated average net benefit excludes the Cook trade as it is not eligible for the tax credit.
    

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