Change Agents

CAGNY Reaffirms Mission to Bolster Union Contracting

by Al Heller

Twenty years ago, as New York City was entering its greatest building boom in modern times, the relationship between construction industry contractors and labor was dangerously strained.

Major contractors and developers contended they had too small of a voice in negotiations. They chafed under complaints of too many wasteful work rules, tough characters running the unions, and not enough collaboration between the companies erecting buildings and the unions supplying the skilled labor.

"The '80s had a crane on every block, out-of-towners in both the union and management, and not great communication between labor and management," said James McKenna, vice president and general manager of Turner Construction.

The city's construction industry managed to hurdle this impasse thanks to several major contributors. Many believe the efforts of then-prosecutor Rudolph Giuliani to root out bad players was instrumental. But another, longer-lasting factor was the budding work of the Contractors' Association of Greater New York, led by John Cavanagh, its first chairman, and Raymond McGuire, an attorney who was the founding and is the current managing principal for the group.

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That pair worked with industry heavyweights like Bert Resnick of Jack Resnick & Sons and Gene McGovern of Lehrer McGovern Bovis, predecessor to today's Bovis Lend Lease LMB. That core group developed a concentrated coalition of high-rise contractors to represent the interests of contractors and developers in dealing with six major unions. In this bubble of activity, CAGNY was born.

In the early days, Cavanagh was president and COO of Morse Diesel International, which AMEC later acquired. Having retired in 2004 from his 20-year tenure as CAGNY chairman, Cavanagh today serves as an active chairman emeritus and runs his own consultancy. He sees the history to date as a success story.

"It took time for unions to see that CAGNY was a force to reckon with, and that we'd live by the contracts we signed with no side deals," Cavanagh said. "We've fulfilled our mission."

CAGNY's founding members were intent on creating a professional approach to negotiations with the six trades with which it held collective bargaining agreements, and on using the "high-rise" negotiations to advance objectives deemed critical for the New York construction industry to prosper. Among these issues, which endure today, are the need to moderate expensive work rules and manning practices and the necessity of tying wage and benefit adjustments to productivity improvements. Another core issue is the ideal of a labor-management partnership in which each side seeks to further the interests of the industry as a whole.

"When we started, labor was surprised to see five or six of us at a negotiating session," said Cavanagh, adding that each CAGNY member company has a representative at every negotiation session today.

CAGNY members take their mission seriously, said James Abadie, current chairman of CAGNY and senior vice president and principal in charge at Bovis Lend Lease LMB. "CAGNY has maintained an ethical standard where we negotiate hard with unions to make sure the workers get wage increases, but that we also make inroads on eliminating antiquated featherbed work rules," he said. "We hold unions' feet to the fire on what they owe us for the wage we give them."

The group has strived for a bigger role in the industry, such as its collaboration with the Building Trade Employers' Association and the Building and Construction Trades Council to form the Construction Industry Partnership for the 21st Century, which is "a true collaboration between management and labor," Abadie said.

"We took an industry with a tarnished image and helped clean it up," he said. "We worked with unions and developers to where we now have the best qualified workers trained in safety procedures. The rest of the world envies New York because of them."

CAGNY has also brought cohesion to the industry, said Frank Ross, Jr., who is treasurer of CAGNY and senior vice president at HRH Construction. "We've progressed to the point where organized labor recognizes us as a partner, not as an enemy," Ross said. "Our common goal is strengthening the bond between management and labor and negotiating a fair price for a fair day's work. We need to keep laying this groundwork, not only against non-unions but against non-CAGNY members."

Another primary focus of CAGNY today is to keep enlightening developers about the consistent quality and safety of unionized construction, beyond the upfront cost gap today of $230 per square foot versus $185, Cavanagh said. "Older developers understand the difference beyond the dollar," he said.

BUILT IN NEW YORK

Today's CAGNY members are the companies that largely built New York City's iconic structures of great complexity while using union labor as their hiring halls. Today's roster of buildings include the AOL Time Warner headquarters, the Imperial Bank of Commerce, Bear Stearns, and 731 Lexington Avenue. The company names are among the industry's biggest: Bovis Lend Lease LMB, Turner Construction, Plaza Construction, Cauldwell Wingate, HRH Construction, and AMEC Construction Management and Builders Group.

These industry leaders emphasize core and shell high-rise construction and interiors. Other specialists command the city's infrastructure such as tunnels, bridges, highways, and power plants. But non-union contractors are increasingly taking over the vast, fragmented secondary project market of smaller buildings and renovations in the outer boroughs. That erosion of union share has been significant, CAGNY contends, estimating union labor accounts for a 50 percent share of ongoing construction work in New York City, down from a 50-year stretch in which virtually every construction project - even two-family homes - used union workers.

Stemming and possibly reversing this share loss stands as one of CAGNY's highest priorities in the coming decade. Susan Hayes, president and CEO of Cauldwell Wingate, who grew up the daughter of a Teamsters truck driver, steered her company to become the group's latest addition in 2001. "CAGNY takes a muscular approach to relationships with unions," she said. "They are absolutely as good as the written word. They live up to all of their obligations and expect that on both sides. These are the largest contractors in the city with the greatest longevity, and I think the best buying power, negotiating positions and experience."

Currently serving as first vice president of CAGNY, she regards her company's membership as "a privilege. It's not a commodity. It's a relatively small yet powerful group of contractors. This isn't a passive organization at the board level. You have direct involvement and therefore control over your own destiny. Our company's DNA is very similar to what CAGNY seeks in contractors."

Similarly, Plaza Construction joined CAGNY in the mid-1990s only after considerable thought, said Richard Wood, its president, who also now serves as vice president of CAGNY. "We're unique being owned by a real estate conglomerate," Wood said. "When we decided in the mid-80's to do third-party work, we weren't part of any third-party group. I avoided it because of the black cloud over the reputation of the construction industry. But having met Ray and others, we decided to join. We work very hard together as a team to promote unionism and fairness. That is a common thread throughout CAGNY."

CAGNY members contend that the spirit, camaraderie and shared industry goals of its members override the fierce competitiveness they demonstrate when vying for projects. "If anybody needs anything that doesn't interfere with competition, that's where we give help," Hayes said. "These people are the best in the business, and they're a very concentrated power force."

Despite the desire to win business, the membership has built trust, said Abadie. "We compete day-to-day, but we still call each other if we have an issue," he said. "We confer to make sure we're doing things the same way so there's consistency within the construction industry, especially on a CAGNY job."

Though CAGNY members won't share the same functions on a project, they can fill different roles. Bovis, for instance, built the core and shell of the AOL Time Warner building, and fitted out the condominiums, the hotel, and retail space, while other companies did the interior fit out. "It was great on-site," Abadie said. "We worked very well together. It's so easy working with the same engineers and hoisting."

GOOD TIMES AHEAD

Whether working together or separately, CAGNY forecasts its companies becoming even more dominant in the major project world over the next five to 10 years, lifted by a slightly broader membership in the near future, said McGuire. "For most developers, [CAGNY companies] are already the only players they'll look at," he said. "We'll always be here. There will always be a place for high-quality union contractors in New York City, although I'm not as optimistic about unionized construction in the secondary market."

Moreover, CAGNY members will likely raise their presence in interior construction, and assume roles in heavy construction project management. One of the first examples is Bovis Lend Lease LMB winning the project management assignment for the Fulton Street Transit Center. To be completed in 2009, this will be the first leg of an intermodal hub in which riders will be able to access any train in any system - LIRR, PATH, or MTA. The project includes a new station entrance on Fulton Street and tunnels that connect the 4 and 5, 1 and 9, and N and R subway lines. Bovis also intends to bid on the new Port Authority PATH station.

Cauldwell Wingate joined CAGNY as a company focused directly on interiors. Bovis's entry into infrastructure work may signal an oncoming CAGNY presence in that sector. And new members who may join the group could bring even further outreach.

CAGNY itself is eyeing a couple of Northeastern companies who have similar vision and ethics as CAGNY, and who belong to the Building Contractors Association, as possible new members.

Looking ahead, McKenna of Turner said CAGNY is in a positive position. "We have the strength, fortitude, strategy, potential, well-trained people, and a 20-year history of being a dominant leader for New York construction," he said. "Our partnership with unions has been so successful in recent years that I feel we're better than ever to handle this building boom better than the last. We've partnered this year with the electricians and plumbers unions to together eliminate non-productive positions and unproductive labor practices. This is a major statement to the other unions as well as the entire industry."

But as they look ahead, CAGNY members also laud McGuire, who has served as the group's managing director since its start. "He is irreplaceable," Hayes said. "He is the consummate negotiator. He knows how to behave in the boiler room and in the boardroom. He is as excited to talk with John Cavanagh about 35 years in the business as he is with a truck driver on a job site, and he'll recount stories with the same enthusiasm. He brings with him an energy that really defines us."