New Challenges

CAGNY Works Daily to Fend Off Non-Union Competitors

by Al Heller

New Yorkers often measure success by whether they conduct business in Manhattan or elsewhere. Yet members of the Contractors Association of Greater New York, whose high-rise expertise has given them command of many major Manhattan projects, are gazing across the waters at plenty of missed opportunities.

Non-union workers gained their foothold in the boroughs during the building boom of the 1950's and 1960's, then secured it in the 1980's - leveraging it into an estimated 50 percent share of the city's construction and renovation work.

Knowing that these building booms had set the stage for non-union encroachment - soaking up resources from the organized labor pool - CAGNY members wonder if history will repeat itself. They remember when it happened about 40 years ago, as unions concentrated on the World's Fair, Shea Stadium, the Sheraton Hotel, and big other projects. It surfaced again in the 1980's. And now, another 20 years later, with the city sizing up West Side redevelopment, the rebirth at Ground Zero, plans for a new arena for basketball's Nets in Brooklyn, and more, CAGNY wants to handle the big jobs but not take its eye off the ball. The simple goal: to reassert unionism throughout all the boroughs.

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To be sure, beyond the glamour projects, there should be considerable work citywide for the next decade, given the aging above-ground infrastructure of schools, hospitals, and bridges, as well as the underground infrastructure of mass transit, tunnels, water piping, and gas mains that must be maintained, expanded, and upgraded.

There is also the promise of more neighborhoods enjoying the fruits of revitalization. "If crime stays down, marginal areas will become more appealing," said Ray McGuire, CAGNY managing director. He cited construction growth in West Harlem, a possible new Marriott on Park Avenue and 125th Street, projects near the Hunts Point Market and Yankee Stadium in the Bronx, rezoning around Queens Plaza, and perhaps a dozen new structures around the planned Brooklyn arena.

LACKING RESOURCES

But the matters of a pending building boom and market-share losses to non-union contractors are inextricably tied. One central issue is already not having enough union resources to expand market share in the first place.

"We'll have problems with having enough skilled people," McGuire said. "Ironically, the only thing that might help us is if we continue to lose our market share in secondary construction to non-union contractors. We have an aging workforce, and not overly large apprenticeship programs."

He said that shortage of union workers in the pipeline results from a complex planning process, since the apprenticeships typically run four to five years, but the numbers of apprenticeships each year are negotiated between union and employee trustees. That setup makes job forecasts key.

"Unions don't want to take in more than they can actually use," McGuire said. "The city has always relied on out-of-town union members coming in to supplement our work force. But that's problematic when construction is booming elsewhere. We had serious problems three years ago when we were short by 1,000 to 1,500 electricians for over a year."

With that backdrop, establishing unions as a viable and strong partner for the future becomes even more important, said Richard Wood, vice president of CAGNY and president of Plaza Construction.

"New York City can be the model for the perpetuation and evolution of union construction projects," Wood said. "But if we don't work together and don't help each other in maintaining a credible, competitive platform, we could lose significant market share. If mega-projects occur and we don't work together in the outer boroughs, we'll be left with all union personnel only doing mega-jobs but losing market share in other areas. What will happen when all the mega-projects are complete is we'll hit the wall and it will end."

Though big projects get a lot of buzz, Wood cautioned that they eat up vast labor resources.

"We need to work together to promote the quality and safety of union projects for other work, so we aren't left without other work," he added. "We've made it clear to [union leaders], but it needs to filter through the rank-and-file. We've been their biggest supporter. We're interested in seeing them thrive. It will take some time for the rank-and-file to understand that, but they need to do that fairly quickly."

Underestimating non-union pressure holds significant danger, said John Cavanagh, chairman emeritus of CAGNY. "We've seen other cities such as Denver change from union to non-union within the past few years because of pricing and perceptions that the work was just as good," Cavanagh said. "In a lot of areas outside of New York, Chicago, and San Francisco, when these changes come about, most of the laborers working non-union are still card-carrying union members. They take these jobs because that's all they can get."

Indeed the perceptions of union and non-union work are already blurring, warned Frank Ross Jr., treasurer of CAGNY and senior vice president at HRH Construction. "Attempts to sway owners are becoming difficult," he said. "We're working with REBNY and others to demonstrate how union projects are safer, completed faster, and of top-notch quality. We guarantee it, but owners who go non-union are still gambling."

Wood said part of the risk in non-union work is the uncertainty of performance. "We all get hurt every time a project doesn't finish successfully or there's an accident" Wood said. "Insurance goes up and public perception diminishes."

STAYING COMPETITIVE

But the price advantage non-union workers enjoy can't be ignored. For that reason, momentum is growing to make union work more price-competitive. One example rests in the negotiations this spring between Electricians Local 3 and the New York City Electrical Contractors' Association, as well as between Plumbers Local 1 and the New York City Plumbing Contractors' Association, a process shaped to some degree by input from CAGNY.

The electricians made two adjustments to their contract that came up in June. First, it had no more "temporary light," which meant if lights were kept on after normal working hours, a standby electrician had to be present. Second, most restrictions on the use of certain components are now gone, for example, in favor of pre-assembled pieces that are less labor-intensive to use.

Plumbers also adjusted two aspects of their contract, which came up in July. First, it no longer requires "construction water." That referred to requiring a standby plumber to be present whenever a temporary riser was left on to allow other trades to use water after normal working hours. Second, more favorable conditions on small-scale residential work in the boroughs led, for example, to a better journeyman-apprenticeship ratio of 1 to 1, down from 4 to 1. That in turn could allow greater use of apprentices and a lower melded labor rate.

Depending on how much additional work union contractors can capture with such changes, the door opens for more apprenticeships to go through unions, McGuire said. But the more immediate impact of these contract adjustments "will hopefully be in persuading some of the other unions to give up inefficient work practices if they have any," he added.

Unions and their respective contractor associations typically form negotiating committees of five or six people on each side of the table. Among an estimated total of 20 trade unions, CAGNY deals directly with six, and of those, four contracts come due in 2005. They include: Elevator Constructors Local 1, which runs personnel cars up and down the building; Carpenters District Council, which maintains protection, particularly around elevator shafts; Teamsters Local 282, which controls truck traffic; and Mason Tenders District Council, the general purpose laborers who keep sites clean. Two others come due in 2006: Operating Engineers Local 14, which runs hoists and elevator cars on work sites; and Operating Engineers Local 15, which maintains pumps to remove groundwater.

The adjustments by electricians and plumbers are already significant enough to affect project costs, McGuire said. "If all trades follow suit, this could be a critical factor in keeping work we have, and capturing some non-union work," he said. "If we get all the reforms we're thinking of from all the unions, it could reduce project costs by $5 a square foot, or about 2 percent to 3 percent. On a $200 million job, we're talking about real money."

McGuire said no-one on the CAGNY side is underestimating the significance of these changes from the union perspective. "Everybody on our side realizes that the two business managers-Tom Van Arsdale for Local 3 and George Reilly for Local 1-went out on a limb and took significant risk for the sake of the bigger picture," McGuire said. "These are the first negotiations in anybody's memory where unions made significant concessions. It indicates more than virtually anything else that the building trades realize the seriousness of the non-union threat."

Even with those work rules removed, he said, skilled union craftsmen in New York City earn about $73 an hour in wages and benefits. "They're worth every penny of it," McGuire added. "The question is can we realistically be competitive with people who are paying half that? Does our skill level make up for that kind of differential?"

The answer is not always. "Non-union can do 15-story condominiums," McGuire said. "For the short-sighted developer who isn't here to reform the industry or make sure it is safe, he wants his building done as cheaply as possible. His interest extends as far as what his insurance company demands of him."

Interiors can also be vulnerable to non-union competition, said Susan Hayes, first vice president of CAGNY and president and CEO of Cauldwell Wingate. "On projects of $20 million to $40 million, we face lots of successful non-union contractors every day," she said. "For the most part, they create a positive experience for owners when initial numbers come in, but not necessarily when projects are completed. It's a hard sell to convey that concept."

Though she said union leaders are aware of these issues, Hayes added that it is imperative for them to manage through what could be "a very unpopular decade" in terms of membership sentiment. But she said if they don't sway their members, the marketplace can overtake the union model. "I don't envy them," she said. "They have to bring the big picture to each journeyperson. It has to be hard to explain to individuals that they have to change their expectations of what being a union member can mean to them."

Perpetuating growth of union jobs is essential to the economic health and social fabric of the city, said McGuire, whose father was a steamfitter and who saw first-hand how the trades "carved a path into the middle class for the early Irish, Italians and Jews." With minorities today making up about one-third of today's construction industry workforce, he said many in the industry agree on the importance of offering the same opportunities to African-Americans, Hispanics and other groups. "It's hard work," McGuire said. "You start by 7 in the morning so you have to go to bed at night. It's been a great transforming agent."

The city that once had seven major breweries, two large shipyards, and substantial manufacturing centers in Queens and the Bronx, "now doesn't offer much between a well-paid construction worker and a parking attendant," McGuire said. "The non-union person is more like the latter than a skilled craftsman.