Labor Pains: Terry Nelson vs. Everybody Else

St. Louis Business Journal - by Evan Binns

Terry Nelson’s (right) efforts to launch a new electrical union have jolted the St. Louis construction industry and ignited a national battle between labor organizations.

Nelson, executive secretary of Carpenters’ District Council (CDC) of Greater St. Louis, began organizing Associated Electrical Contractors Local 57 about a year ago, recruiting independent electricians to his union’s ranks by offering lower rates to garner more business, according to International Brotherhood of Electrical Workers (IBEW) Local 1, the nation’s oldest chartered local union.

Nelson alleged in a radio interview May 21 that the cost of construction in St. Louis was 28 percent higher than larger markets, such as Chicago, due to unproductive practices on the part of local unions. That charge, he said, was the impetus to form Local 57.


“This is business 101,” he said. “Contractors want cost-effective work, so you have to become accustomed to this economy in order to survive.”

But members of Local 1, led by Business Manager Steve Schoemehl, counter that Nelson’s tactic is an example of “union raiding,” one union stealing work from another by undercutting prices. “(Local 57) are union raiders willing to do work that another trade has performed, for a lot less than the standard wage and benefit package,” Schoemehl said. “They signed non-union contractors to a union contract at a severely reduced wage and benefits package.”

The battle has drawn the attention of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), a national association of 56 member labor organizations.

On June 16, an estimated 3,000 to 3,500 people — including tradesmen from around the Midwest — rallied against Nelson and CDC in Forest Park, led by Mark Ayers, president of the AFL-CIO’s Building and Construction Trades Department, along with nine other AFL-CIO bosses. Throughout the metropolitan area, Local 1 has begun a media blitz against the carpenters union, including print, billboard and online advertisements warning against hiring allegedly poorly trained Local 57 electricians.

Now as the fight escalates, boiling over in the form of construction-site pickets, it threatens to disrupt the local construction industry at a time when union jobs are coming at a premium.

Ed Finkelstein, publisher of Labor Tribune, the official labor newspaper, wrote in the June 17 issue that, if the feuding continues, “the door will be flung open to major non-union contractors who flood into town with their own work crews. At that point, the livelihood of some 30,000 plus union workers and their families will be in serious jeopardy.” Finkelstein said the detriment to the local economy would be profound, given the impact of high unemployment among local construction workers. “Their current unemployment rates, which are over 40 percent in some crafts, are a major reason for the local recession,” he wrote.

Missouri lost 18,000 construction jobs during the past 12 months, a 15 percent decline, according to the Associated General Contractors of America. Missouri saw one of the highest percentage drops among 25 states to experience declines in construction work, according to the association.

Local 1 is struggling with an unemployment rate of about 35 percent among its active members. Schoemehl said added competition would only compound his members’ current employment woes. “It’s hard enough to secure projects today, and it’s hard to convince some owners to build 100 percent union,” he said. “All this (fight) does is drag everybody down.”

The carpenters also have been hit by high unemployment. CDC’s unemployment rate hovers between 25 percent and 30 percent for 18,000 members in Missouri and Illinois, according to Nelson. Nelson said Local 57’s affiliation with the carpenters would help create a one-stop shop for construction services in the wake of lagging activity.

“You have to compete (for work),” Nelson said. “I don’t have time to worry about anything other than man hours.”

Local 57 has about 100 members working for 12 contractors, including St. Louis-based Crown Electrical Contracting and Birkel Electric in Chesterfield. IBEW Local 1 represents 5,600 active members working for 147 electrical contractors in eastern Missouri and Illinois.

With construction activity slack throughout the industry and rampant unemployment among local unions, St. Louis construction workers would benefit from a resolution to the dispute, according to Jim LaMantia, executive director of PRIDE of St. Louis, a construction labor-management group. “The people out there are very hungry for jobs,” he said. “This (fight) should not be disrupting this town.”

In order to compete, Local 57 lowered its construction rates to entice contractors to hire its own electricians, rather than those of Local 1, according to Schoemehl. Local 57 electricians were recently hired by Chicago-based Ledcor Construction Co., which is building a Wal-Mart in Godfrey, Ill.

Members of IBEW Local 649 in Alton, Ill., the local union covering Godfrey, picketed June 16 against the St. Louis carpenters and Local 57, alleging that Nelson’s startup union was raiding work from Local 649’s electricians.

“Terry Nelson and these Local 57 contractors signed a sweetheart agreement that undercuts the wage and benefits standard that Local 1 members have bargained for over the years,” Schoemehl said. Local 57’s lower rates entice builders away from other unions, according to Schoemehl.

IBEW Local 1’s standard wage and benefits package is $51.43 per hour, as of June 1, according to Schoemehl. Local 57’s wage and benefits package is about 20 percent less, or about $41.14 an hour, Schoemehl said.

While Nelson maintains that local construction costs and unions’ “lazy” practices limit job opportunities, Labor Tribune’s Finkelstein wrote that too many variables went into Nelson’s calculating construction costs in order to find an overall higher average of 28 percent. Variables include financing, permitting costs and the cost of materials, according to Finkelstein.

Gerald Feldhaus, executive secretary of the St. Louis Building and Construction Trades Council, noted that the construction of the new Busch Stadium as well as the Highway 40 reconstruction, both union projects, were completed ahead of schedule. In the case of Highway 40, Feldhaus said, the project was completed one month ahead of schedule and $10 million under budget.

While the jurisdictional dispute has been simmering over the past year, it stems from a series of disagreements near the end of 2007. In November of that year, tensions erupted between the two local unions when the carpenters abolished a 53-year-old labor agreement with Local 1 and launched a new division, Associated Electrical Contractors Local 57. Local 57 was formed to help guarantee work for some 18,000 members in Missouri and Illinois after St. Louis city electrical inspectors issued stop work orders for unlicensed electrical work at CDC construction sites, according to the CDC’s Nelson.

“When an electrical inspector comes on a job and puts a red tag on my man hours and takes them away from me,” Nelson said “I’m going to retaliate.”