April 27, 2007
No easy answers
for state's budget - The Michigan Building and Construction
Trades Council Legislative Conference, 2007
out plan for 'investment' in Michigan
Budget crisis quickens
drumbeat for anti-labor legislation
For road work,
it may not get any better than this
Marketing, 101 - The rules have changed
reaches for the top
easy answers for state's budget - The Michigan Building and
Construction Trades Council Legislative Conference, 2007
By Marty Mulcahy
LANSING - Did you hear Michigan's state government is in a
Delegates to the 48th Legislative Conference of the Michigan
Building and Construction Trades Council got an earful on the
subject April 16-18, as Lansing lawmakers confirmed the bad news
everybody already knew, while telling the 100-plus delegates
what the crisis means to the state's Hardhats.
The bottom line: Michigan has a near-term, $900 million budget
deficit and later this year will face a long-term shortfall of
$3 billion. That comes on top of $3 billion in cuts that have
already been made during the last three years. This is with a
state general fund budget that amounts to $9 billion.
"It's an unprecedented state of affairs," said Lt.
Gov. John Cherry. "Unless we correct the overall budget
problems the future of state government the overall future is
dim. We need to have a fundamental debate on the purpose of state
Last year, Republican lawmakers allowed the expiration of
the Single Business Tax, without a plan to replace the money.
The tax, unpopular as it was for some in the business community,
accounted for $1.9 billion in state tax revenues. Since then,
Democrats took over control of the state House, and a stalemate
has ensured over how to replace the SBT and make up the widening
hole in the state's general fund budget.
Republicans have been disinclined to talk about raising taxes
- which in one form or another is probably inevitable. State
Dems have raised the subject - talking about sales, gas and inheritance
tax hikes - but know that even broaching the subject is going
to be hugely unpopular.
Freshman State Rep. Joan Bauer, (D-Lansing) said she is 13
weeks into her new job after winning her election in November.
"My husband told me, 'you worked your hide off in the election
and wanted this job?' Seriously, we're at a point in this state
where we're going to have to make some tough decisions."
She echoed comments by Cherry and others, who said the only
three major expenditure areas that the state has left to cut
are for "education, health and human services and corrections
- the rest of state government you can cut the heck out of and
still come up with only $30 million," she said.
Cherry said Michigan's "structural deficit" is due
in large part to the state's dependence on manufacturing jobs,
but noted that those losses are coupled with a series of tax
cuts made during the Engler Administration. "It was a whole
series of tax cuts - taxes were cut, but we did not cut state
spending," he said.
Sen. Mike Prusi (D-Ishpeming), told delegates that business
taxes have already been reduced by $500 million, and Senate Republicans
are calling for an additional $300-$400 million in additional
"I struggle to see the necessity to give them another
tax break when we're looking at cuts for K-12 education and higher
education cuts. These are the things you build a society on."
Prusi also urged more union members to become involved in politics.
"If you don't you get representation that doesn't share
your vision," he said.
House Majority Leader Andy Dillon (D-Redford Twp.) said "Back
in the 1960s, one wage earner could make enough to provide a
family of four, six or eight," he said. "That's not
the case any more. The erosion of the middle class is the reason
I ran for office." He said the current budget debate in
our state "is about whether Michigan will invest in itself
or keep cutting back and make us a Third-World state where no
one will want to work or play."
Pointing to the $3 billion in tax cuts Michigan has made in
the last three years, Senate Minority Leader Mark Schauer (D-Battle
Creek) said supply side economic theory pushed by Republicans
should translate into more investment in the state. "If
that were the case we'd have the most prosperous state in the
country," Schauer said.
He said continual cutting taxes and cutting wages "will
lead Michigan to competing with Mississippi, Alabama and South
Carolina," as part of a tax-cutting ideology "that's
bringing Michigan into a race to the bottom."
Sen. Randy Richardson, a moderate Republican from Monroe who
is vice-chair of the Senate's Economic Development Committee,
said the GOP plan to fix Michigan's budget is centered on a $942
million cut to K-12 education - which would result in state spending
$34 less per student.
He cited a survey that said three out of 10 people in Michigan
want to leave the state. "The things we should be concerned
about is that Comerica Bank (which announced last month that
it is moving its corporate headquarters from Detroit to Dallas)
wants to be where the action is," he said. "Some of
us believe that raising taxes will cause more people to leave."
Richardville left the door open to raising taxes -"there
is probably some need for revenue enhancement," he said.
"But we don't favor (the governor's) 2 percent service tax."
Doug Bennett, former business manager of Plumbers, Pipe Fitters
and Service Trades Local 174, serves as a Democratic House representative
in the 92nd District.
"The problem in this state is the lack of revenue for
the state government," he said. "There is not much
more this state can do when it comes to downsizing and privatizing
As an example, Bennett said he serves as chair of the Department
of Environmental Quality Committee, which is supposed to police
corporate factories and facilities to prevent polluting. He said
the state issues environmental permits - but doesn't have the
manpower to investigate to see if they're polluting.
Bennett agreed with a plan for the state to raise the state's
3.9 percent taxation rate to 4.7 percent - where it was before
Gov. Engler came into office. But he would agree to place an
end date on the tax so it isn't permanent, in order to allow
the state to get itself out of its financial hole. "We're
off on a tangent that somehow we can cut our way out of this,"
he said. "We're at the point where cuts aren't going to
do us any good."
lays out plan for 'investment' in Michigan
By Marty Mulcahy
LANSING - Gov. Jennifer Granholm told Michigan Building and
Construction Trades Council delegates that Michigan's job and
budgetary woes are rooted in a state that has 630 percent more
manufacturing jobs than any other.
And those manufacturing jobs are leaving Michigan in record
numbers, pushed out by global competition and lower wages abroad,
which is in turn causing a ripple effect in job losses in the
service economy and other areas.
"We have to have the courage to invest in our state,
in building the next Michigan," Granholm said in comments
directed at the building trades. "We can't make an investment
in roads, bridges and universities in our state without new revenue."
By "investment," Granholm meant raise taxes. It
isn't a popular idea with anyone, which the governor acknowledged.
But she said the proposal she has on the table, a 2 percent tax
increase on various services, was found to be the lesser of other
evils with Michigan voters by internal polling.
That service tax increase idea doesn't appear to be going
anywhere in the Republican-led Michigan Senate, or even the Democratic-led
Michigan House. But whether its greater "investment,"
or unprecedented cuts in state services, the state's lawmakers
will have to come up with a plan in a manner of weeks, since
the state's Constitution requires a balanced budget.
Granholm's told building trades delegates:
- The state government is already working with 30 percent less
revenue than when Gov. Engler left office in 2002. She said the
tax cuts initiated by Engler and the Republican-dominated legislature
"were supposed to lead to more investment in our state.
In reality these tax cuts have led to less and less investment
in our state. "The state's workforce has been cut so that
it's at the same size as it was in 1974, and we've leveraged
technology as much as possible to make up for it," Granholm
said. "But when state government gets leaner every year
we're cutting our ability to be competitive." She said if
there is an advantage to lower taxes in making the state more
attractive to investors, it would be offset by poor roads and
under-funded public education.
- She echoed what other speakers said at the conference - the
only significant places left to cut the state budget are in prisons,
public education and public health care funding. "We don't
want to release prisoners who may be a danger, but we have one
of the highest incarceration rates in the nation," Granholm
said, indicating that's a place to explore state cuts. In addition,
cuts in K-12 and university funding would push cost burdens on
to local school districts and individual students. And, cutting
public health care affects the people least able to afford health
care, and would push them toward costly emergency room visits,
- The governor's service tax plan would put a 2 cent tax on
everything from haircuts to movie tickets, costing the average
resident $1.33 a month. "No other plan has caught fire,
and we have to do something," Granholm said. "The tax
on services was tested as having the lowest impact on citizens."
The governor said as Michigan climbs out of its economic hole,
our state needs to look at opportunities to diversify. One of
the major areas she suggested was build on the state's burgeoning
alternative energy industry - ethanol plants are growing like
corn in the state, and Michigan has two plants that are solar
panel employers. "We need to re-brand as a post-industrial
state with opportunities in alternative energy," she said.
GOV. JENNIFER GRANHOLM talks to Michigan Building
and Construction Trades Council delegates. Seated (l-r) are council
President Patrick "Shorty" Gleason, CEO Patrick Devlin,
and State Rep. Doug Bennett.
crisis quickens drumbeat for anti-labor legislation
LANSING - With Democrats in control of the state House and
the governor's chair, passage of a right-to-work law and the
outlawing of project labor agreements in Michigan are not imminent.
But bills in the state House have been introduced that would
both make Michigan a right-to-work state and eliminate project
labor agreements, which generally favor hiring union contractors
on taxpayer-funded construction work.
In recent years such bills, as well as legislation to kill
the Michigan Prevailing Wage Act, have languished in the state
legislature for lack of votes. "And the bills aren't going
anywhere this time, either," said Todd Tennis, a lobbyist
for the Capitol Services who works with labor groups, to delegates
at the Michigan Building and Construction Trades Council Legislative
Conference. "We're in a good situation with Democratic friends
in control of the state House."
But Tennis cautioned delegates that Michigan's budget difficulties
have the potential to change public opinion, "Republicans
have their friends pounding the drum even louder, claiming that
the state would be much more attractive to corporations if we
were a right-to-work state. They're basically using economics
to scapegoat unions, and we have our work cut out for us to show
this is not the case."
As the Viewpoint column on Page 2 of this edition notes, no
less than three opinion columns have appeared in local and national
publications this month, calling to make Michigan a right-to-work
Michigan has its small share of Republican lawmakers who don't
support that anti-labor legislation - which is why it never passed
when our state was in complete control of the GOP during the
State Sen. Randy Richardville, a Monroe Republican, flatly
told delegates that he lost favor with his party a few years
ago for supporting prevailing wage, and not supporting making
Michigan as a right-to-work state. "I'm one of your best
Republican friends," he told building trades delegates.
State Rep. Doug Bennett (D-Muskegon), former business manager
of Plumbers, Pipe Fitters and Service Trades Local 174, told
delegates that as long as their Democratic friends control the
Michigan House, such legislation will continue to not move.
"Right to work won't get out of committee. Prevailing
wage repeal won't get out of committee. Any legislation that
would hurt our workforce is not going to get out of committee,"
road work, it may not get any better than this
LANSING - By comparison with what lies ahead, the year 2007
is looking pretty good for highway funding - and for the rating
of the condition of our state's roads and bridges.
Michigan Department of Transportation Director Kirk Steudle
told the Michigan Building and Construction Trades Council delegates
that just as the state has achieved a 92 percent "good"
rating for the condition of the entire state highway system in
2007, the state's budget and other factors will put a brake on
future highway spending hikes.
He said Michigan will spend $1.62 billion on highway work
in 2007, but that amount will decline to $1.2 billion in each
of the years 2009, 2010, and 2011. Those declining expenditures
mean that the "good" rating is projected to apply to
only 68 percent of the state's highways by 2014.
That percentage brings the state back to the dark years of
the mid-1990s - when only 64 percent of state roads were classified
in "good" condition - and when the public demanded
that more money be spend to fix the state's potholes.
State spending on roads, Steudle said, is one-third from federal
money and two-thirds generated from the state. And 53 percent
of state road improvement expenditures are generated from fuel
taxes - an area that's being explored for another tax increase,
which would directly help the building trades.
Steudle said the trend toward higher mileage cars will hurt
the state's gas tax income, since the trend is for less gasoline
to be consumed. And, given the state's financial condition, more
money for roads isn't likely to be allocated from the general
"We're going to need a greater revenue stream to keep
it going," Steudle said.
Michigan's gasoline tax is currently 19 cents per gallon.
It was last raised in 1997. Thirty-three states had higher gas
tax rates as of late 2006.
Todd Tennis, a lobbyist for Capitol Services, which serves
the IBEW and other unions, said there is going to be opposition
to any tax increase in Michigan - but the building trades would
be one of the primary beneficiaries. "You guys do so much
public construction," he said, "you can already see
that you're going to be doing less and less work because revenues
are going down."
Marketing, 101 - The rules have changed
Editor's note: across Michigan, local unions and contractor
associations are increasingly hosting management and workplace
consultants at seminars to talk to members about how to get an
edge over the competition in the construction marketplace.
Following are excerpts of an article written by Guy Snyder
of Michigan Construction News.com, that illustrates what contractors
can do to improve their firm's marketing efforts. Of course,
in many cases, their efforts will also depend on successful buy-in
from their construction workforce.
Want to get more work in the highly competitive construction
market? The simple answer, Scott Humrickshouse, a director and
shareholder of FMI Corporation, told the West Michigan Construction
Alliance, is to differentiate your contracting firm and showcase
its distinctive qualities through proactive marketing.
Humrickshouse hammered these themes during the WMCA's April
4th Construction Labor-Management Conference. Speaking before
an audience of organized labor representatives, contractors,
and executives from employer associations, he said significant
changes have occurred within the industry during the last ten
to 15 years.
They've made old models of marketing construction and design
services virtually obsolete. Instead, to succeed, a far more
comprehensive model must be used - a model that leverages all
of an organization's most qualified resources.
Following are some points to ponder from the conference:
*Construction has always been a "price-driven" industry.
Today, fast tracking, increased dependence on intelligent technology,
and strong movement toward negotiated contracting using construction
management and design/build project delivery systems, have all
but destroyed the traditional design-bid-build process.
The hard emphasis on price remains but the pace has accelerated
astronomically. At the same times plans and specifications have
become sketchier and more dependent on a "just-in-time"
philosophy, drawn as the building goes up. Not only construction
managers, architects, and engineers need to gain early knowledge
of upcoming construction, today's major subcontractors need to
as well, if just to provide input on constructability and cost
All of a project's major players must gain a position on the
construction team well before the work comes up for bid, or else
face being swept away in the mad rush. As a result, construction
professionals must develop very long range "sales radar"
to learn about potential projects before they've even been conceived.
*Under the old model, Humrickshouse said, marketing was a
function handled by a company's most senior management. There
was no real strategy or attack. The pace of project development
was slow enough that those who had a natural talent for such
work usually were able to sufficiently react to changing market
Potential clients were wined, dined, and driven to the golf
course. The most common question directed to a potential project
owner was, "what work do you having coming up?" The
project owner's typical answer was, "I don't know yet but
when something hits I'll tell you." There was very little
available for an inexperienced project owner to use to identify
contractors that consistently exceeded industry averages. Often
they could not tell the competition apart.
In today's market this approach is stale and no longer effective,
Humrickshouse said. Instead, generating name recognition due
to qualities or abilities that set a contractor or designer above
the mundane is what's important. The goal is to establish a reputation
for expertise so that owners will immediately think of involving
your company with their project as soon as the need arises.
*Because very few firms are large enough to do everything,
Humrickshouse discussed how contractors need to carefully target
their markets, identifying prime customers that will most likely
have a need for their particular services or products.
Rather than restricting project owner contact to a business
development manager or representative, he outlined a holistic
approach to market development, where key departments within
a contracting firm are trained to work directly with project
owners.. Many project owners, he emphasized, want questions answered
by the estimators, designers, schedulers, and project supervisors
who'll actually perform their project's work. "Team selling,"
Humrickshouse stressed, "has to become a significant part
of the business development process."
*He introduced the concept of the "Business Development
Pyramid" to the workshop and showed how various marketing
tools fit into it. Public relations, advertising, events, conventions,
and web sites are to be used to gain the attention of targeted
markets and identify potential customers within in. These potentials
- through applications of direct mail, telemarketing, and print
material distribution - can become prospects that welcome a visit
from your business development personnel.
From there a relationship can grow that, down the road, leads
to contracts and, hopefully, repeat business.
Focusing for a moment on just one tool, Humrickshouse placed
a heavy emphasis on public relations, especially the use of news
media for achieving recognition.
Construction industry firms, he recommended, should consistently
issue press releases about such developments as contract awards,
groundbreakings, and project completions. They should inform
reporters and editors about awards, community service contributions,
new services, the hiring of new personnel, and staff promotions.
Any positive feature articles written about them should be reprinted
and distributed to potential customers as direct mail pieces.
Stories appearing in the news media can be an extremely powerful
and positive force for marketing, Humrickshouse declared.
Always the goal of a contractor's marketing should be the
delivery of construction projects at the "best possible
cost," recognizing, as Humrickshouse said, "there's
a lot of parts in the term." Developing a long-range relationship
with project owners can lead to their understanding that "best
possible cost" includes high levels of productivity, quality,
on-time scheduling, and safety. Too heavy a weight given to lowest
bid price often overlooks these important elements. And overlooking
them when bids are first received can lead to delayed project
completions, expensive change orders, a higher end cost, and
dissatisfaction with the end result.
North Terminal reaches for the top
ROMULUS - The last major structural steel beam was lifted
into place April 18, signifying the topping out of the $426 million
Metro Airport North Terminal Redevelopment Project.
Iron Workers from Local 25 and Midwest Steel put the beam
into place. The new 26-gate terminal will open in 2008, replacing
the aging L.C. Smith and Berry Terminals.
"The Wayne County Airport Authority could not be more
pleased to celebrate this important milestone in the redevelopment
of the North Terminal-and in reality, a milestone in the redevelopment
of our region," said Authority Chairman Michael Glusac.
"The Smith and Berry Terminals have served our region well
throughout the past 50 years. It is now time for a brand-new
facility that meets the needs and standards for
efficiency and convenience set by today's airlines and travelers."
The joint venture of Walbridge-Aldinger and Barton Malow is
leading the construction process.
When it opens in 2008, the new 26-gate terminal will be Detroit's
home to Air Canada, American, AirTran, British Airways, Frontier,
Lufthansa, Royal Jordanian, Southwest, Spirit, United, US Airways,
and USA 3000. Northwest Airlines and partners Northwest Airlink,
Air France, Continental and Delta will remain in the McNamara
Terminal, which opened in 2002.
"Today we recognize not only the significance of this
new terminal for Southeast
Michigan, but also the skilled tradesmen whose hard work continues
to make this new
facility a reality," said Authority CEO Lester W. Robinson.
The North Terminal Redevelopment Project will create about
3,200 construction jobs during the project. Upon completion of
the new facility, the existing Smith and Berry terminals will
be decommissioned-making DTW one of the newest, most operationally
capable and efficient airports in North America, the authority
IRON WORKERS STAND behind the final major
structural beam to be put into place at the 26-gate Metro Airport
North Terminal. Midwest Steel is handling the steel erection
on the project, which is being led overall by the joint venture
of Walbridge-Aldinger and Barton Malow.
Photo by Anne-Marie Poltorak/Barton-Malow
Trades protest Belle Isle work
Building trades crafts want to prepare the Belle Isle for the
Detroit Grand Prix - but they can't get off the starting line.
The quasi-public Downtown Detroit Partnership has hired three
"no-contract contractors," according to sponsors of
picket lines at the entrance of Belle Isle this month, to perform
earth and paving work to set up the race course.
Laborers Local 1191 Vice President Bruce Ruedisueli said three
contractors have been pouring more than 100 yards of concrete
per day and will be making patches on the existing concrete course.
The total contract is worth about $5.5 million, he said.
"We've always done everything union associated with the
Grand Prix," he said. "But not here. We're just dealing
with a closed door."
Labor, lawmakers blast Korean free trade pact
WASHINGTON (PAI) - Organized labor and Democratic lawmakers blasted
the proposed U.S.-South Korea Free Trade Agreement, which the
Bush regime and the South Korean government signed at virtually
the last minute in the wee hours of March 31-April 1.
The pact, which Bush sent to Congress to get under a deadline
for bargaining free trade treaties under his so-called "fast
track" authority, would end tariffs and other barriers between
the U.S. and Korea, the world's 10th-largest economy. Like trade
pacts starting with NAFTA over a decade ago, the U.S.-Korea pact
has no enforceable labor rights.
And, like the other pacts bargained under "fast track,"
including pending trade pacts with Colombia, Peru and Panama,
both houses of Congress do not vote on the U.S.-Korea pact itself,
but on legislation to implement it. And all those votes are up-or-down
with no possibility for amendments that protect workers' rights,
or anything else.
Critical lawmakers were led by Sen. Debbie Stabenow and House
Trade Subcommittee Chairman Sander Levin (both D-Mich.). They
said the pact would do little if anything to open Korea's auto
market, while leaving the U.S. market wide open to Korean cars
and trucks. In 2005, the last year for which data is available,
the U.S. imported 731,000 Korean vehicles and exported 5,800,
due to Korean tariffs and internal barriers.
Labor's opposition to the U.S.-Korea FTA goes beyond cars.
AFL-CIO President John J. Sweeney said the pact would hurt U.S.
workers in apparel and electronics, too. And he cited news reports
that the pact would let in goods from the North Korean border
city of Kaesong, an industrial zone whose workers toil as "indentured
servants" to export products to South Korea.