The Building Tradesman Newspaper

Friday, August 23, 2013

Union value will lead trades’ road back to prosperity, BT chief declares

By Marty Mulcahy, Editor

DETROIT – Doing things the right way and consistently giving the customer what he wants is slowly starting to pay off for building trades unions and their contractors.

Long battered by owners and contractors embracing the low-wage, build-it-cheap strategy pushed by the anti-union Associated Builders and Contractors, the nation’s unionized building trades are now in a very good position to win back market share. And there’s growing evidence of a more union-friendly stance from what historically has been a most unlikely source: big energy owners and their contractors in places like Texas and Louisiana.

That’s the word from AFL-CIO Building Trades Department President Sean McGarvey, who spoke Aug. 7 to delegates of the 50th state convention of the Michigan Building and Construction Trades Council. Increases in North American oil production and natural gas finds, McGarvey said, “give us the single greatest opportunity probably since the space race to rebuild the middle class.”

He added: “The amount of capital that is slated to be spent building fertilizer plants, new chemical plants, crackers, all the adjunct operations that come with fuel supplies that are cheap and abundant are going to re-fire our economy.”

McGarvey acknowledged that Michigan and Nevada have been the nation’s basket cases in recent years when it comes to construction activity, although Michigan is climbing out of its hole. “At least there are hopeful signs here in Michigan that folks are going to be able to get back to work,” he said.

But the real action, McGarvey said, will be on the Gulf Coast, where refineries and other energy-related firms are going to be among the major sponsors of some $100 billion in construction in the Lone Star State alone beginning in the fall of 2015. And for the first time in decades, they’re looking into the business advantages of hiring unionized construction trades.

And the building trades are talking directly to owners, not necessarily contractors, about the value of hiring union. Now, McGarvey said those contractors are being told by some in the owner community – “the same owners who said 40 or 50 years ago that unions were a pain in our ass” – to give organized labor a look.

“We’re getting a second bite of the apple,” McGarvey said.

“An interesting thing has happened,” he continued. “Over the last five or six months I have had four-decades-long, never-been-union EPC (engineering, procurement and construction) contractors come and visit me in Washington in my office, call up and say, ‘Can we come in and see you, to say, hey, we want to expand our business. We want to see what you got to offer, because we don't have the capacity to grow, because we can't recruit, we can't train people on that scale and we can't carry people once we recruit them into our company when the work ebbs and flows.’

 “And I am confident. And some of them have started to set up the union operation. They have never been union contractors. In the heart of Texas and Louisiana they are setting up union operations to take advantage of the 21st century building trades' progressive labor relations and the ability to recruit and train. And they are being told to do it by the owner community.”

An agreement involving labor is in the works, McGarvey said, where the Gulf Coast owners are also demanding, and likely getting, more flexibility in how construction labor is used. He pointed out jurisdictional changes would be a much harder sell in states with a heavier union penetration.

He said the new response from unions when the answer from owners is “no,” shouldn’t be a picket line or an inflatable rat. “All we ask when the answer is ‘no’ is to give us a road map to get to ‘yes,’ ” McGarvey said.

He said the best thing unions did in Texas over these past decades was to maintain their training programs and standards. “Unions – unless we get in our own way – we’re going to re-establish ourselves in the South, because we bring value,” McGarvey said.

Port Arthur, Texas, he said was once the largest local union in the United Association of Pipe Trades. McGarvey said over the past few decades, “we had a lot of hubris, and we made a lot of mistakes.” But if Texas, of all places, can wear the union label once again, word will get around from owner to owner. “If we can help them down there, they can help us up here,” McGarvey said. 

Lessons unions can learn from approaching owners in Texas can easily be applied in states above the Mason-Dixon Line. Cheap, abundant natural gas is fueling the construction of new gas-fired power plants, plus no less than 15 fertilizer plants. Natural gas is a main ingredient in ammonia production, a key ingredient of fertilizer.

McGarvey said he has sat in boardrooms of companies like Dupont and Dow, where some $72 billion in capital construction is in the works. “We are no longer depending on our contractors to represent us in boardrooms,” he said. “We’re not sure they’ve been representing us properly, so we’re engaging them (the owners) directly. These are people who are sitting on hundreds of billions of dollars in cash, and we’re talking about our value proposition.”

The value proposition has been the unionized building trades’ mantra over the past few years. It emphasizes doing jobs the right way, the first time; a commitment to worker training for skills that owners need on their projects; a commitment to alcohol and drug-free work sites; verifiably safety-trained workers, and flexibility in work schedules.

And beyond the worksite, McGarvey said unions can also be valuable in lobbying lawmakers to support certain regulatory and political issues that are mutually important to owners and the trades.

“Our message is that we’re there for you, politically and regulatorally, to help get these projects passed,” McGarvey said. “That’s the conversation we’re having about value. We need to be completely engaged with the owner community about the value we bring.”