EAST LANSING - What may have been the first Michigan Construction Industry Labor-Management Economic Summit was held Nov. 8 at Michigan State University's Wharton Center.

No punches were pulled in describing the decline in market share experienced by the state's organized construction industry. Nor were any gloves worn in presenting the changes it should consider in sculpting its recovery.

The day-long event was organized by the Mid-Michigan Construction Alliance, which includes unions and contractor associations. While emphasizing that skilled building trades still deliver the highest level of quality and productivity found in construction, speaker after speaker pointed out that some 25 years of complacency among unions and signatory contractors has resulted in a profound blindness to shifting market conditions.

Declaring "the policies of yesterday are no longer workable as solutions today," Tom Boensch, secretary-treasurer of the Michigan State Building & Construction Trades Council, opened the program. The expansion of the state's economy during the 1990s masked some of the changes organized construction presently needs to make.

However, stated Boensch, the slump of the last couple of years has led to the worst industry conditions seen in his entire 38-year long career. Clearly, innovative and productive solutions must be generated, as soon as possible.

Fortunately, institutional and educational construction remains strong for construction unions in Michigan, providing it with a base to work from. But industrial construction - one of its major traditional markets - has suffered a huge fall, especially as the trend toward exporting factories to developing countries intensifies.

Though commercial construction has seen periods of growth, its many project owners have been implementing new project management methods unfamiliar to unions and their signatory contractors.

Boensch cited a hotel company's use of project managers supervising several projects at a time from the seat of a pickup truck, assisted by a laptop computer and a cellular telephone. Though open shop contractors have been quick to adapt, unions have not responded well to such radically evolving project delivery methods. As a result too often they've been finding themselves shut out of the game.

"We've got to change our way of thinking," Boensch said, adding that this even must apply to the crafting of collective bargaining agreements. Traditionally, they've been written by lawyers.

"Collective bargaining agreements are based on an arcane model drawn from labor law, not economics," Boensch declared. "They have been tested by economics, but not driven by it." What's needed is a reflection of current market realities, with language that overcomes regional differences. This approach must be designed to enable signatory contractors to compete on a broad scale while still achieving organized labor's goals.

The changes advocated by the Construction Users Roundtable, which has been revising project delivery processes and creating new markets for the industry, need to be studied and assimilated within the union movement. Unions and signatory contractors also have to work together on joint marketing efforts, to create a universally recognized union brand that signifies both quality and best value.

None of this requires any surrender by unions, Boensch emphasized. "I'm not saying capitulate," Boensch told the union representatives present in the forum's audience. "I'm saying collaborate."

Professor Dale Belman of the Michigan State University Department of Labor and Industrial Relations reported that during the 1990s the overall construction industry saw real, inflation-adjusted growth of approximately 60%. That's the good news. Unfortunately, it was concentrated in the residential, educational, institutional, and commercial markets, where union construction has typically been weaker.

During the same period the industrial and manufacturing markets, where construction unions traditionally has thrived, actually declined in real terms. Today they represent only about 3.5% of the total market. Heavy construction, another union dominated sector, has also fallen, dropping from 15.6% in 1997 to just under 14% in 2001, according to the latest data available.

When economic recovery finally returns to Michigan, "manufacturing is not going to come back very strongly," Belman warned, "if it comes back at all." To regain a better share of the overall market, unions are forced to look elsewhere.

Observing that construction employment in Michigan peaked at around the 200,000 level in the year 2000, and currently is around 175,000, Belman reported that around 70,000 of its workers consists of self-employed, single employee contractors.

Because there are so many, he continued, they pose a problem to unionized construction. Often living a marginal existence, the self-employed tend to undercut themselves when trying to gain work. They offer their labor at rates far below their true market value, just in order to survive until sheer luck provides them with something better.

The question for the future, Belman asked, is should unions do something to organize these workers, thereby improving their working conditions, wages, and benefits in the process? Or should they be considered a threat similar to those posed by open shop contractors that use highly exploitative labor practices?

Mark Breslin, author of the book Survival of the Fittest, gave a highly engrossing presentation on how unions need to develop sound business models to brand and aggressively market the services their highly trained and experienced members provide.

He emphasized development and implementation of the plan must not only involve labor and management but the rank and file as well.

Working with the audience, Breslin quickly developed a list of 28 qualities ascribed to unionized construction - 28 economically sound values of importance to project owners. He contrasted them with a list of negative attributes that have been dumped on the labor movement in general.

Most of these slurs are outdated, totally inaccurate, and even mythical in nature. Then he pointed out that the difficulty in marketing union construction is that it has to successfully deal with both lists.

While it is relatively easy to prove unions provide excellent returns on a project owner's investment, in order to be even considered for work unions still have to overcome a bad reputation.

"The sins of the past are hanging around your neck, and the neck of your contractors, every day you go out in the market," Breslin observed.

To counter this, unions have to concentrate on abandoning old school, adversarial methods. To bust through stereotyping, they must focus instead on presenting well-reasoned, logical business plans that map out project owner benefits in a polished, professional manner.

They must also stop beating up on the competition, if just because it reinforces negativity. Besides, Breslin pointed out, there are good open shop contractors who could be organized if they were approached by union organizers in a similarly professional way.

As part of this effort, unions need to take a hard look at their members, all of whom play crucial roles. Those with poor work attitudes, who are unprofessional and tend to generate anti-union sentiments by their bad behavior on the job, need to be transformed by education. Failing that, they then must be encouraged to leave their trade.

Unions no longer can tolerate bad apples. Regaining market share requires commitment from everyone involved. In the rapidly evolving markets of today, the lazy and oppositional are too often seized and used as weapons by organized labor's enemies. Unions can't afford that.

Unions also need to have well-researched, solid answers. Project owners have to know if unions can provide them with a viable return on their investment in construction. If they can't, project owners will - and successfully have - gone elsewhere. Unions should be able to present so compelling a business case that project owners would never consider an alternative.

To do so requires marketing professionalism and discipline that are currently not present in most construction unions today.

Rounding out the forum were John Beck, associate director of MSU's Department of Labor & Industrial Relations, and Don Power, from the U.S. Federal Mediation & Conciliation Service.

Beck acknowledged the solutions offered by earlier speakers were good but their implementation and success heavily rests on sound partnerships between labor and management. These can't be created over night. Without commitment, mutual respect, and hard efforts from all involved, they remain fragile and can easily fail apart.

"What does a partnership mean?" he asked. "It's an intentional choice where everybody brings something to the party. It's a recognition that by working together, we can do things we can not do alone."

The time to do this, however, is now, Power emphasized. Not only in the past, but even today, organized construction industry will block itself from taking action to recover markets. All it takes is the misperception that "it won't happen here."

Among industry leaders who are close to retirement, that same negative attitude too often is coupled with belief that issues can be allowed to drift until younger leadership takes over. The problem with that is, as in other industries, what today seems to be secure defined benefit retirement programs have - down the road - too often been suddenly stripped away. (See the front page article on retiree health benefits).

Future retirees really shouldn't count on construction union pensions not being adversely affected by the continuation of market declines. Disaster really can happen here, and if the industry's team members remain complacent, they may end up sealing a very dire fate.

"You can change," Power told the audience. "You can make the transition. The only thing that's holding you back is that you haven't seriously thought about it."

(Mr. Snyder is editor of MichiganConstructionNews.com)