Sunday, January 1, 2012

For construction companies, business is looking down

Firms seek union concessions as work dwindles.

By Geoffrey Decker

In a recent television appearance, the chief executive of one of New York City's oldest and most important construction and development companies was asked to assess his firm's prospects over the next few years. Dan Tishman was far from bullish.

“We can't compete in the marketplace,” the CEO of Tishman Construction Corp. told the hosts of CNBC's Squawk Box. “We've got to find a way to bring the unionized construction platform in New York back into some level of [nonunion] competitions.”

What made Mr. Tishman's comments so significant was that they came only weeks after developers, contractors and trade union leaders completed a highly anticipated round of negotiations for 23 contracts designed to address precisely the issues that Mr. Tishman raised. It is clear that despite some concessions, the unionized construction industry faces continued uncertainty as nonunion contractors erode its position.

The stakes for the city's economy could not be higher. Construction has declined by 12% from its 2007 peak of $31 billion, with the Building Congress estimating work at $27.7 billion for 2011. The drop would be more severe were it not for public infrastructure spending filling part of the gap of private work, which plunged to $2.2 billion in 2011 from $6.3 billion in 2008. In all, the number of construction jobs has declined by about 25,000 since then.


However, the Building Congress predicts a steeper decline as public capital budgets are cut and buildings are completed at the World Trade Center project. It estimates construction work will fall to $23 billion in 2013, and another 20,000 workers will lose their jobs, bringing employment down to as few as 91,000. If the predictions come true, the ranks of construction workers will have been pared by a third in just five years.

Against such a dismal backdrop, the real estate industry remains determined to seek concessions from the unions.

More showdowns expected

“The fundamental question is whether the costs for construction are at sustainable levels to encourage and promote new development,” said Michael Slattery, a vice president at the Real Estate Board of New York. “And I think the answer is they are not.”

Some union deals in the last round of talks yielded significant concessions, Mr. Slattery said. In particular, the operating-engineers' deal eliminated work rules that require developers to fill highly paid positions that weren't seen as productive. For instance, relief crane operators who make $82.15 per hour and oilers who make $66.50 are both required to accompany any engineer on a crane, but they rarely perform regular duties. In early 2011, REBNY estimated that there were 14 “unproductive workers” at the World Trade Center who were earning $400,000 or more in regular pay and overtime.

But new contracts with the carpenters' union and concrete workers increased wages and offered concessions only on buildings that were no higher than 20 stories.

If anything, the 23 new deals have set up more showdowns for this year, when 15 more contracts will expire, including those for the Operating Engineers and Allied Building Metal Industries, and the Mason Tenders District Council and Building Contractors Association.

Meanwhile, industry experts say the most significant development may be the decision of the Building Trades Employers' Association, a large general contracting group and chief negotiator, to opt out of a plan that required its contractors work exclusively with unions. This will allow for the use of both union and nonunion workers on the same site. “We haven't seen that in Manhattan,” said Hope Cohen, a director at the Regional Plan Association.

Worth the cost?

The share of nonunion construction jobs in New York City has quadrupled since the 1970s, but more than 60% of all projects— including the biggest sites—remain union-only. This is in part because union work sites are believed to maintain safer conditions, and union workers complete projects more quickly and with higher quality.

But developers say that nonunion work quality has improved and have begun questioning if the work premium is worth the costs, which are between 20% and 30% more. They say the shift is necessary in light of current economic woes.

“This is not the end of the story,” said Ms. Cohen. “There will be some drama next spring.”

20 comments:

  1. http://www.bteany.com/pages/about.html

    see pg-4. BTEA's own statistical analysis clearly shows the average Union Construction Wage & Benefits totaling $55,000 per year (Gross) which is hardly excessive for NYC.

    In fact, $55k is pretty much the minimum wage it takes to live in NYC.

    New Year & the same b.s. as last year. Every job at BTEA & RBNY are unproductive & highly compensated, and they produce nothing of tangible value for anyone....not a damn thing!

    Construction Tradesman build value and create wealth for the spoiled few which builds their individual empire's and they hate it when the peasant class has a decent meal or roof over their head, and one has to ask why?

    This is not about sustainability, rather - it involves pure greed, plain and simple.

    Developers & Project Owners are really after the illegal alien, cash worker, 1099 and look forward to the day when they can use foreign nationals as the Multi-National firms do overseas and import them to NYC. Afterall, they work like assholes and do it a lot cheaper than the aforementioned classes. Kill a few of them on a site & who cares right, they're expendable.

    ReplyDelete
  2. DROP DEAD UNITY TEAM !

    ReplyDelete
  3. Its such a coinidence that he gets on sqwuawk box at msnbc to fix the news for the REBNY advantage so people like Spencer can say i saw it on tv.Its propoganda by the ruling class.CEOs and owners salaries up 400% its still not enough it will never be enough its that simple. So Colletti Silverstein Go FCK URSELFES Game on Bitches!!!!

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  4. Labor Conquers AllJanuary 2, 2012 at 6:59 AM

    I guess Dan Tisch forgot to tell everyone that he doesn,t own Tischman anymore he sold it to Aeocom or some shit,probably have the multinationals waiting in a barge 5 miles out in the ocean so they can finish the trade center.Brothers and Sisters do not take this lightly these people couldnt care one bit about you.

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  5. These guys are full of shit anyone in the business can tell you that when the market slows non union surges alittle if you look at the non union job a out there they are the types of jobs that these idiots contractors laughed at for years Dan tish and the rest of the greedy boys club are starting to feel the pinch now so now they want to make up the difference by picking the working mans pocket just ask any of these bums to see their hands and then as a construction worker to see his hands and that will tell the whole story of whole did the heavy lifting and building in this city these suits couldn't even last an hour with us. Our commodity is our hands so stop the hands from working and bring these greedy bastards to their knees one one of our union guys dies on the job where are these bastards then I've never seen them they are all about their mistresses and Mercedes and big houses with non union gardners and carpenters working on them I say f--k them let's walk and when they really start losing money then we will have their undivided attention

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  6. I know construction projects are down now, but all the "experts" are saying that should change in the coming months... hopefully they are right this time!
    -Jackie @ Stormwater control

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  7. we all must learn to stick together to make something happen for the working class. if we do not the wealthy, greedy bastards who control will have us do the dirty work of destroying ourselves from within.

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