Crunch Time For Construction Unions

Click to enlarge.

This article was brought to my attention by a union brother.

Upcoming renegotiation of union labor agreements with contractors seen as a moment for change in the industry

By Daniel Geiger

Struggling amid the lingering effects of a deep recession that has strangled real estate development and eaten into the amount of government infrastructure and capital spending, construction contractors in the city are seeking to renegotiate agreements with the unionized labor they employ in order to cut costs.

Later this month, the Building Trades Employers’ Association, an organization that represents 1,700 construction managers, general contractors, and specialty subcontractors in the city, which in turn employ about 125,000 people, is set to circulate a letter seeking over 25 concessions from the roughly 30 unions whose labor contracts are set to expire later this year.

The changes take aim at adjusting work rules in order to make union labor more efficient and productive but could also include 25 percent wage or benefit reductions people familiar with the document say, the type of concession that unions have bitterly opposed in the past.

The unions, which individually represent construction trades such as steamfitters, laborers, electricians, carpenters, and crane, bulldozer, and hoist operators, are in a precarious position. The amount of construction jobs in the city has dramatically dropped since the economic downturn. And with the state facing a nearly $10 billion deficit, the pipeline of government contracts, a major source of work for the industry, has also markedly tapered off.

Contractors say they’re under pressure to cut labor expenses, which usually amount to about 50 percent of a construction project’s cost, in order to remain competitive and to pare the price of their services enough to make development palatable again to builders, who have to contend with an economy and real estate market far less buoyant than during the economic boom.

Already in the boroughs, construction jobs have become dominated by contractors who use non-union labor. Construction experts say that it if an agreement can’t be reached with the unions on the work rule or wage issues, non-union workers and the firms they work for could begin to capture increasing market share in Manhattan, what has been one of the last bastions for unionized labor.

“It’s a very serious discussion,” said Richard Anderson, president of the New York City Building Congress, a trade group not involved in the negotiations and that counts both unions and contractors among its membership. “This could determine the future of unionized construction in the city.”

The letter from the BTEA, people familiar with the document say, includes a number of seemingly straightforward rule changes that contractors believe will yield significant savings.

“You have workers who show up to the construction site and once they’re there, they’re on the clock, but they don’t actually start work until they’re lifted up in the hoist into the building they’re working on,” said a source who spoke on condition on anonymity because he wasn’t authorized to discuss the letter or the upcoming negotiations. “By the time they are actually working it’s 15 to 30 minutes later and then there’s coffee breaks and lunch and the process of just getting to their work station happens all over again. That all adds up to hours of lost time a week. We want guys to be punched in when they actually start working just like an office worker gets into work and goes straight to his or her desk and starts working.”

Other concessions being sought include aligning holidays between the different trades so that developers can mitigate having to pay time and a half pay for one group of workers at a construction site on a day that other union workers don’t acknowledge as a holiday, a loophole that essentially increases the amount of overtime pay builders have to hand out.

At least preliminarily, the proposed cuts to wages and benefits appear as if they could be a way to prompt unions to accept the work rule changes. A person involved in the contractors’ bargaining strategy said that pay cuts would be sought only from unions where little other cost savings could be reached by way of the work rule or other efficiency oriented concessions.

The effectiveness of the work rule changes has a recent precedent. During the depths of the downturn, project labor agreements were reached on specific construction jobs, keeping development on track for a few, such as Forest City Ratner's new residential tower at 8 Spruce Street and a large residential project being built by The Related Companies at 440 West 42nd Street.

The reaction among unions to news of the contractors’ stiffening bargaining posture has been mixed.

“Some unions understand the problems facing the industry and the need for change,” said John Cavanagh, a construction industry veteran who is the principal of the construction management firm Cavanagh Stewart International. “A few are very stubborn and have refused.”

Unions that have rejected the concessions that contractors are seeking attribute their opposition to the sense that the economy is rebounding and predictions that it could soon drive a resurgence of the real estate and construction markets.

Other unions have sought to engage at the negotiations more proactively.

Fresh from the black eye of corruption and racketeering allegations earlier this month, the District Council of Carpenters approached the contractors that employ its 25,000 members to see how it could help them become more competitive said Frank Spencer, the eastern district vice president of the organization.

“We put off a $2.13 wage increase this month and we’ve scheduled meetings for later this month,” Spencer said. “We’re way ahead of the curve. We’re looking at the entire industry, we know we need to gain more market share and that we need to increase the volume of work and man hours and are eager to engage what is it we can do collectively to move the industry ahead.”

The BTEA doesn’t bargain on behalf of its members but its letter is seen as a central strategy for individual contractors as they go to the bargaining table with the unions they work with. There is a sense of collectiveness to the process observers say, because if one or two unions cede to the contractors’ demands, it usually weakens the bargaining position of the rest.