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March 18, 2005

Revival plan for state focuses on construction spending

Race is on to complete MIS expansion

Study: PLAs are cost-neutral, but ultimately benefit unions

How budget hacks have put the state budget out of whack

Trades, Barton Malow help Whitmore Lake high school go green

Road money increase around the bend - and a fairer system, too?

News Briefs


Revival plan for state focuses on construction spending

By Marty Mulcahy
Managing Editor

LANSING - How can Michigan's workers survive and attempt to thrive in an incredibly difficult economic environment?

There weren't any easy answers to that question, but speakers at the 47th annual Michigan Building and Construction Trades Council Legislative Conference attempted to shed some light on the subject.

"We have been actively attempting to increase market share for our members," said Tom Boensch, the council's secretary-treasurer. "We have a lot of work ahead of us."

Indeed. Rocked by a statewide unemployment rate of 7.1 percent - the highest in the nation - Michigan is also beset by chronic budget deficits that hamper taxpayer-funded construction activity, a listless domestic auto industry, and the outsourcing of good jobs to foreign nations that has led to closed plants here and fewer work opportunities in the building business.

Politically, President Bush has chosen to first solve the future crisis in Social Security while Medicare, Medicaid, prescription drugs and other health care costs are eating away at wages and the U.S. economy right now.

On the state level, there are 40 new state lawmakers this year, whose agendas are unclear. Anti-prevailing wage legislation and proposals to make Michigan a right-to-work state are perennially in the hopper. There is also a proposal afoot to limit union-friendly project labor agreements on public-sponsored construction projects.

Such legislation wouldn't pass because of a certain veto by Gov. Granholm, but the anti-union proposals are continually brought up to remind everyone that those back-burner issues aren't far from the front burner.

In addition, the money available to rebuild Michigan's roads is significantly out of whack with the needs in the state.

Boensch said Granholm's January State of the State message provided a good starting point for improving Michigan's business climate. He urged support for Granholm's proposal to spend $800 million per year for three years on new construction activity - about half on state roads and half on state university upgrades

Over a longer term, he also pushed for support for Granholm's five-year, $2 billion bond proposal that will focus on improving state-owned facilities - "that means jobs for our members," Boensch said. He also called on supporting Granholm's proposal to increase the minimum wage.

On the federal level, Boensch said unions need to "support the strategies we already have," including those that support union pensions, good wages, Social Security and Medicare.

State Sen. Virgil Bernero (D-Ingham Co.) told delegates that he is often asked by constituents why state Democrats and Republicans can't get more done together.

"The reason is, there's a fundamental difference in philosophy between Democrats and Republicans," he said. "Democrats are for working men and women, Republicans are for the rich. That was true when I was in fifth grade and it's true today."

State House Democratic Leader Dianne Byrum said in Michigan, all the political news wasn't doom and gloom for Dems, who picked up five seats in the state House last November. She said House Democrats won seats in districts carried by President Bush.

"It takes a grassroots effort, it takes going door to door; it makes all the difference in the world," she said.

Even though Democrats continue to be a minority in the state House and Senate, Byrum said Dems still plan to "play offense," by pushing for an increase in the state minimum wage, lowering health care costs and getting the word out about why making Michigan a right-to-work state is a bad idea.

Kelly Keenan, legal counsel to Gov. Granholm, said Michigan is today faced with a "historic challenge" to make the state budget work and to lower statewide unemployment. Construction workers would be one of the main beneficiaries of a major portion of Granholm's spending plan.

"The governor's 'Jobs Today, Jobs Tomorrow' program is a simple plan to accelerate state spending on infrastructure, and to improve parks, brownfield sites, roads and bridges," Keenan told delegates. "Our plan to spend $800 million per year should result in the creation of 36,000 good-paying jobs over the next three years."

Keenan said the other part of the Granholm's plan is to "accelerate" the state's economy and create jobs is to institute a $2 billion bond issue that will pay for other infrastructure improvements.

"The plan is to build on Michigan's strengths: auto research and design, life sciences, homeland security," which will lead to diversifying the state's economy with good-paying jobs, Keenan said.

Former Plumbers, Pipe Fitters and Service Trades Local 174 Business Manager Doug Bennett retired from his union position and decided to run for the state representative in the 92nd District State House. He won the Muskegon-area seat - and became one of the few building trades workers to win such a high office.

"I wouldn't be here today if it weren't for you," Bennett told delegates. "I'm going to fight for what we believe in as organized labor. The things we fight for are good for everybody."

Bennett said the role of Democrats, "is to question what Republicans put forth - and that's a pretty easy thing to do." Using the attacks on prevailing wage and the tax structure as examples, he said Republicans have taken up the role of "taking from the least among us and giving to the most among us. My job is to see that government does the opposite."

MIOSHA Director Doug Kalinowski told delegates that a female electrician recently "got all defensive" when he asked her about wearing personal protection equipment. He said it's common for workers and employers to regard MIOSHA with suspicion.

"Working men and women in this state should not be afraid of MIOSHA," Kalinowski said. "MIOSHA is here to help."

He said MIOSHA is keenly aware that the construction industry accounted for more than half of all on-the-job fatalities in Michigan last year. The state safety agency, he said, is continually trying new outreach and education efforts to help workers, most recently in the areas of asbestos awareness, excavations and falls.


Race is on to complete MIS expansion

BROOKLYN - The largest sports venue in the state is about to get a little larger.

The building trades and Elrod Construction are in the process of erecting a new "front door" entrance for the Michigan International Speedway, as well as a superstructure that will support and contain luxury suites, track operations, club-level seating and a new "Skylounge."

The venue's seating capacity will be increased to 137,242 with the addition of 870 outdoor Champion's Club seats above the existing grandstands and below the new suite/club structure. Fans who purchase a Champions Club package will have access to an indoor entertainment area. The indoor area includes access to the club via elevator, an air-conditioned dining area, private restrooms, with food and bar area.

Above that will go the Skylounge, which will replace the original structure that has been in place high above the start/finish line since the track was originally built in 1968. The two-level Skylounge will hold areas for radio and television broadcasts, timing and scoring, a new press box, and 16 new suites, up from 10 in the now-demolished original structure. Each suite will hold 32 patrons.

"Race fans come to MIS and spend practically every minute at the track from dawn until dusk," said MIS President Brett Shelton. "Whether fans are enjoying the displays from our sponsors, shopping for merchandise, or just taking a break from the action on the track, this area will extend the enjoyment for the thousands of fans who come and spend the whole day and weekend with us."

The most recent expansion of the MIS was the addition of 10,800 seats prior to the 2000 race season.

The renovation project will include a reconfiguration of the front-stretch area, which will include new ticket gates, new vendor and display areas and several new concession stands. A plaza area outside the ticket gates will feature a "Legends Walk" with a tribute to many of Michigan International Speedway's past champions.

"Each year we have partners who want to purchase skylounge suites but haven't had the room to accommodate them in the past," said MIS Director of Marketing Keith Karbo. "We are excited about adding six new suites which will be new inventory to accommodate the demand in our market. The view will be spectacular. It's going to be a place where companies will be proud to entertain their clients, and I can assure you that the view will be spectacular."

The work is scheduled to be completed in time for the season opening NASCAR NEXTEL Cup Series, on June 17. With the additional seats, MIS becomes the eighth largest motorsports venue on the 2005 NASCAR NEXTEL Cup Series schedule.

"It's a very tight, ambitious schedule," said Zane Hubbard, an Operating Engineers Local 324 member operating a crane on the project. "We have a lot to do before they start racing in June."

THE IRON SUPERSTRUCTURE that will hold new suites, a press box and track operations nears completion at the Michigan International Speedway.

OPERATING ENGINEER Zane Hubbard works an American crane at the MIS project.


Study: PLAs are cost-neutral, but ultimately benefit unions

By Marty Mulcahy
Managing Editor

LANSING - Are construction industry project labor agreements the "Gift of God or Work of the Devil?"

That was how Associate Professor Dr. Dale Belman of the Michigan State University School of Labor and Industrial Relations summed up the construction industry's contrasting views of PLAs, in a presentation to the Michigan Building and Construction Trades Council's Legislative Conference on March 1.

Belman told delegates that he is taking part in two academic research projects on project labor agreements, and found that when all the hype and criticism are moved aside, "we found that PLAs don't increase costs, but don't reduce costs, either."

There are two ongoing studies on the use, or non-use of PLAs on school construction which were cited by Belman and will be completed this year. One is by researchers at Michigan State University and the University of Tennessee, the other is a group project by the research arm of the National Electrical Contractors Association, the University of Rhode Island and the University of Utah.

The results of these studies, Belman said, will run counter to a year-old "Beacon Hill Study" of schools in Massachusetts, which found that PLAs increase costs on public school projects by 14-17 percent. Belman said the Beacon Hill study was flawed because it looked at complex school projects that would tend to cost more, anyway.

Another recent study, by Hill International, found that a PLA saved 8 percent on labor costs on a freeway project in New York state.

Belman said that while the two ongoing studies found the cost factors involving PLAs are benign, it also highlighted many of the reasons the agreements are controversial - as well as who does and doesn't benefit.

While the agreements vary from job to job and state to state, most have basic premises. Project labor agreements are collectively bargained, pre-hire pacts between an owner or an owner's representative, and organized labor. Once negotiated, agreeing to the terms of the PLA becomes a requirement for contractors bidding for work on the project. Although PLAs seem to have been invented in the 1990s, Belman said their use dates to World War I.

Among the arguments for PLAs, typically made by the union side, are: no work disruptions; better scheduling; guaranteed access to skilled workers, and institutional support for training.

Unions also benefit by the use of unions as a hiring hall, collectively bargained compensation, union security provisions, and the implicit use of signatory employers and union labor.

With PLAs, unions typically give up: the ability to have strikes or slowdowns, neutral third party arbitration of disputes, sometimes harmonization of working times, some premium pay, favorable to journeyman-to-apprenticeship ratios, and drug/safety language.

Among the arguments against PLAs, using arguments typically made by the nonunion side: open shops are usually excluded, scheduling and training are no better; strikes are still possible, and projects cost more.

Project labor agreements can be standardized - or they can vary widely from project to project. Some owners shun them, others insist on them. When it builds plants in the U.S., for example, nonunion Toyota insists on the use of project labor agreements.

Without any built-in cost savings, Belman said, "unions need to learn to educate themselves and learn to use PLAs effectively."

For example, he said unions needed to decide when to be flexible for the greater good. One $7 million project that would have used a PLA fell apart because the owner insisted on using his own nonunion contractor for the $100,000 landscaping portion of the project.

While many union trades workers have little use for project labor agreements - especially the drug testing and restricted access to premium time - Belman maintained that the workforce predictability and standardization brought by PLAs "are very favorable to organized labor. A lot of open shop firms can't make money on PLA projects."

He said project labor agreements "are all about crafting a smoother project for the owner. And when one owner is happy, maybe he will tell six other owners."


How budget hacks have put the state budget out of whack

LANSING - The massive gap of revenues vs. income to fund operations of Michigan's government, said Lynn Jondahl, is "incredible - we have a structural deficit in Michigan that will continue to grow."

Jondahl, executive director of a public policy group called the Michigan Prospect, spoke to delegates at the Michigan Building and Construction Trades Council Legislative Conference on March 1.

There was no partisanship or call for tax increases - just an eye-opening, blow-by-blow look at just how much Michigan's budget structure is out of alignment. Jondahl cited research by Paul Rozycki, political science professor at Mott Community College in Flint.

Here are a few of the gory details:

  • In 2005, according to the House Fiscal Agency, Michigan is expected to receive $7.82 billion in tax revenues, but $1 billion in spending is expected to be cut compared to 2004. In 2000, the state spent $9.78 billion.
  • Over the next 10 years, based on current revenues and expenditures, Michigan can expect its deficit to grow by an average of $400 million per year - for a total of $4 billion.
  • Since 1990, Michigan's personal income (adjusted for inflation) has risen by about 27%.
    At the same time the state's tax revenue used to support General Fund programs has fallen by over 22%, according to the League for Human Services.
  • When inflation is taken into effect, Michigan is currently operating on general fund revenues that are below the levels spent in 1972. In real dollars, Michigan is spending less than it did in 1997.
  • The effects of the revenue shortfall have been "dramatic," Rozycki said in his report. He said the state workforce, which peaked at 70,000 in 1980, is currently at about 55,000, a level it hasn't seen since the mid-1970s.
  • Where does the state's income come from? The income tax is the largest single revenue source for the general fund and generated nearly 50% of the estimated general fund revenues in FY 2004-2005 - about $3.99 billion. Income tax cuts will reduce revenues by more than $800 million per year now that they are fully in place.

The Michigan League for Human Services estimates that total revenue lost due to the income tax reductions has been almost $2.5 billion from 1999 to 2004.

Rozycki's report said the second major revenue source for the general fund is the Single Business Tax (SBT) which produces about 25% of general revenue funds - almost $2 billion. The Single Business Tax, which has been in effect since 1975, modified or replaced 11 separate business-related taxes. The SBT is a tax levied on total compensation paid to labor and capital by business, not on profits.

It is a form of value-added tax meant to tax every step in the production of an item.

In 1999, the Michigan legislature supported Gov. Engler's proposal by which the SBT (then levied at the rate of 2.3%) was scheduled to be reduced by .1% per year and was to be phased out gradually over the next 23 years. Due to state budget deficits, however, the phase-out has been halted temporarily because the state's "rainy-day fund" fell below $250 million.

  • Cutting spending is not without other costs. An analysis last year by the W. E. Upjohn Institute for Employment Research indicates that a $1 billion in reduced spending would result in the loss of another 23,000 jobs statewide, with about half of the loss occurring in the public sector and the rest in the private sector.

"Ten years ago the state addressed some major tax concerns with Proposal A," Rozycki wrote, "which shifted the tax burden from the property tax to a greater reliance on the sales tax.

"It may be time to revisit the ever-changing needs of our state once again and review our overall tax system. At the very least Michigan's tax system needs to take into account the changing nature of our economy. We need to rely less on the manufacturing sector and rely more on the service economy as the state shifts its economic focus."

Jondahl concluded: "We really need to worry about tax revenues. When we cut spending, we cut jobs. There are consequences to everything we do. Are we willing to increasingly put our workers out of business in both the public and private sectors?"


Trades, Barton Malow help Whitmore Lake high school go green

By Marty Mulcahy
Managing Editor

WHITMORE LAKE - One of the foremost applications in Michigan for "building green" is shaping up in the form of this city's new high school.

A growing student population in this Washtenaw County community has led to the ongoing construction of a new $26 million, 155,000 square-foot Whitmore Lake High School.

The project began in late July and is expected to wrap up in early June, 2006. While not a mammoth, big-foot high school like those recently built in Holt (350,000 square-feet), or Saline (510,000 square feet), the new Whitmore Lake High School is sized for the community's needs, with room for expansion.

But the new school is plenty big on environmentally friendly construction concepts and technologies, which will set it apart from the vast majority of other buildings in Michigan.

"Initially, there is probably a bit of a higher cost factor," said Project Manager Arlene Samuel of construction manager Barton-Malow. "But there are a number of ways owners can get those higher costs back through the LEED system. I see LEED as being mandated for a lot of buildings in the future."

LEED refers to Leadership in Energy and Environmental Design, a certification provided by the United States Green Building Council. Currently there are only 188 buildings in the nation that have achieved LEED certification, and this high school would be one of the first in Michigan to get the designation.

During the construction process, some of the stringent LEED requirements include sorting waste into designated recycling dumpsters that hold steel, wood and glass. Super-efficient expanding foam insulation is used in the walls. There are specific wastewater requirements, including the installation of waterless urinals (they apparently work pretty well in terms of keeping down smells). The design also has to include an increased amount of glass on the south and west sides of the school to maximize heat gain in the winter, as well as provide natural lighting.

A 590-foot by 490-foot geothermal field of tubes and pipes buried near the school building will transfer heat from the ground to the high school through heat pumps, a system which is expected to save the school district a significant amount of utility dollars.

And, a 14-foot deep pond on the site will be used for site rain collection and as a supply of water for fire suppression.

Plans also call for the installation of additional bicycle racks and indoor areas for students to change clothes, to encourage pedal-powered transportation.

Samuel said she underwent an intensive course and difficult test to be LEED-accredited for construction projects, which helps her explain and enforce the standards with contractors.

"It's a fabulous system," she said. "You can see how much waste there is on a job site, and how easy it is to recycle. I give credit to the school district for thinking ahead. I think it shows pride in the building and it will have some long-term cost advantages."

Taryn Holowka, communications coordinator for the Green Building Council, said there are 1,800 projects "in the pipeline" for LEED certification.

"The biggest advantage in LEED construction for those who look at the bottom line, is utility savings," she said. "Building owners can save 20-50 percent on utility bills. But there are also 'soft costs,' - in the form of reduced absenteeism and increased productivity because of a building's better air quality and increased natural light."

She said extra costs associated with building green are anywhere from 0-7 percent, depending on the how stringent a LEED standard is used. There are four levels.

The Whitmore Lake project, like numerous others this winter in Michigan, has been beset by wet weather and damp ground. Still, Samuel said, structural steel arrived project quickly and in only six months the entire shell of the building was nearly complete.

Between 40-55 construction workers are on the job, with 10-15 more expected at peak employment. "This has not been a good winter to build," Samuel said. "Considering the conditions with the weather and the ground, the tradespeople have been doing a very good job."

The high school will include: 15 classrooms, two science labs and four science lecture rooms, a media center, a cafetorium and stage, a two-court gymnasium, an elevated walking/running track and a six-lane pool. A new football stadium and athletic fields will also be built on the site.

AN EXPANSE OF WINDOWS in a stairwell at Whitmore Lake High School is installed by Rick Almanza and Gary Clarkson of Glaziers & Glassworkers Local 357 and Madison Hts. Glass.

At the front of the school are Iron Workers Local 25 members Keith Downey (on the iron) and Tony Hernandez (near the rig), working for Sova.


Road money increase around the bend - and a fairer system, too?

Michigan will be receiving more money to fix roads and bridges, and spending fairness among the states may be on the way to becoming a little more equitable.

The House on March 10 approved a six-year, $284 billion transportation spending package that would provide Michigan an additional $185 million per year for road and bridge work. Michigan wanted a bill that would have provided about $300 million per year.

In addition, Congress seems poised to provide more equity to "donor" states like Michigan that sends more money in taxes to Washington than it receives in transportation benefits.

"While specific provisions that impact donor states were not changed in this particular version of the bill, donor state members have received a commitment from House leadership to work on raising the minimum guarantee rate-of-return to at least 92% at the conference committee," said Gary Naeyert, a long-time transportation advocate.

Michigan currently only receives a return of 88 percent of the money taxpayers send to Washington earmarked for road work - ranking us at No. 47 in terms of equity received.
The bill goes to the Senate, and President Bush has indicated he would be willing to sign off on the compromise legislation.

"This is not a final victory in making this bill equitable for donor states, rather our first significant accomplishment," said a statement from the Michigan Transportation Team, a lobbying group which includes unions.


News Briefs
Congress kills minimum wage hike

WASHINGTON (PAI) - By a 49-46 vote, the Republican-led Senate on March 7 voted not to raise the federal minimum wage to $7.25 an hour over the next two years. It also rejected a GOP plan for a $1.10 hourly hike, plus imposition of comp time for overtime.

The wage has been $5.15 per hour since 1997.

"It is interesting that Congress has not hesitated to vote itself a pay increase during this period of time, but not for the minimum wage earners," said Sen. Edward Kennedy. "The height of hypocrisy will be when senators say no to $7.25 an hour for hard-working Americans after they have accepted a $28,500 pay increase for themselves over the last eight years."

Top university jobs for two tradesmen
Two building trade union officers have been named board members of two Michigan universities.

Jack LaSalle was appointed by Gov. Jennifer Granholm to the Northern Michigan University Board of Trustees. LaSalle, a 1971 graduate of NMU in Marquette, is a business representative with the Michigan Building and Construction Trades Council.

LaSalle, said NMU President Les Wong, "will put the student experience before all else, and that, of course, is what Northern Michigan University is all about."

LaSalle also serves as chairman of the labor advisory and planning committee for the NMU labor education program and office of continuing education; chair of the Marquette County Democratic Party; and recording secretary for the Marquette County Labor Council, AFL-CIO.

I'm just happy to be part of the team that now sets policy for that great university," LaSalle said. "This appointment was a welcome surprise and I'm growing into the challenge of it."

Larry Tolbert, union organizer with Heat and Frost Insulators Local 47, was also tapped by Granholm for a board of trustees position - at Western Michigan University in Kalamazoo.

A 1975 WMU graduate, Tolbert said to the student newspaper, "I'm very familiar with the community and WMU and I think I'm pretty much in tune with the politics in the area and I think it will probably serve me really well."

The appointment for both trustees expires Dec. 31, 2012.

Kelly Keenan, legal counsel to Gov. Jennifer Granholm, said the appointment of two union officers to major university boards shows "we're putting people into place who can make a difference."


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