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May 11, 2007

Survival story: worker responsibility key to future of construction unions, strategist says

New pains for pension plans aims to limit funding liability

'Spirit of Solidarity' monument is worth the wait

State vows renewed vigor for Michigan's prevailing wage law

Motor City Casino on the rise

News Briefs

 

Survival story: worker responsibility key to future of construction unions, strategist says

By Marty Mulcahy
Managing Editor

SOUTHFIELD - Mark Breslin called his seminar "Survival of the Fittest," but from the outset, he suggested that there's a better name for the presentation.

"'What's in it for you' - that should be the title," said Breslin. "To be very blunt, no b.s., that's what this talk is all about this afternoon, the only thing that matters: what's in it for you in the union construction industry."

Breslin's spoke to an April 30 mid-day audience of 550, the vast majority of whom were construction worker apprentices. Also in attendance were contractors, contractor association reps and union officials. Breslin's name might be familiar: we've run articles in the past on Breslin's presentations in various locales in Michigan. Breslin is an author and a self-described trainer and strategist whose mission is to increase the value of union construction across North America. He is also the executive director of the Engineering and Utility Contractors Association in California.

His message can be pared down to this: the future of unionized construction in Michigan and the U.S. hinges on the ability and willingness of individual construction workers to provide value for the work they do. "If you think your union or the construction industry is going to take care of you, you're mistaken," Breslin said. "You have to take care of your own business."

What that means, Breslin said, is that workers must make themselves assets to their employers by learning their craft, working hard and doing the best job possible. It also means for the good of the industry, workers, unions and contractors must weed out the workers who don't pull their own weight, because they're the ones holding down the union brand.

Following is a lengthy set of bulleted points that summarizes Breslin's observations about - and suggestions for - the unionized construction industry.

  • "Vast areas of North America are completely nonunion," Breslin said. "Seventy percent of all building trades union members live in 13 states." He said having only "islands of unionism" in major American cities is not a healthy business plan for the future. "The trend line is going down," he said, with 13-15 percent of the nation's construction currently union, and about 85 percent going nonunion. Those numbers were reversed 40 years ago, Breslin said. "If I'm an apprentice that has to concern me," he said. "I'd be concerned that I'll be working at Home Depot in 10 years, because we didn't do the right thing today."
  • Owners in corporate America don't care if construction work is done union or nonunion, Breslin said. They care about how much it costs, the quality, and the schedule. Throw in the fact that unions only hold 13-15 percent of the U.S. market, plus polling shows that unions are viewed negatively by the public and construction decision-makers (over perceived high costs and excessive work rules), and unions have some big built-in problems.
  • It's instructive to learn what other organizations have done when faced with adversity. When American corporate icon Harley-Davidson fell into ownership by AMF, the bowling ball company, the once-proud motorcycle manufacturer "made junk" Breslin said. Harley was threatened by imports from Kawasaki and Honda, which were initially said to have poor quality and poor competition - "that's also what they first said about nonunion construction," Breslin said. Two decades later, with a re-commitment to quality, good design and worker training, Harley-Davidson is back. Breslin said their brand is now so good, they sold $350 million worth of apparel alone last year. "Harley reinvented their business model," Breslin said. "If I'm an apprentice, I want to make damn sure we have a Harley plan in place."
  • Kodak similarly reinvented itself. Throughout the 20th Century, the name Kodak was synonymous with film, cameras and picture-taking. Then along came digital photography. "Kodak was told 'we don't need your film products any more, you're irrelevant,' " Breslin said. "They changed in a very short period of time. They said this isn't working, and last year they shipped five million digital cameras."
  • *On the other hand, another American iconic brand, Oldsmobile, died a few years ago. The brand's death was caused in good part, Breslin said, by continuing to market to old people. "They were continuing to make boxy, old-people cars - but the problem is, Aunt Betty died," Breslin said.
  • *Breslin then turned the focus on union construction. "How can union construction go under? We've been going under for the last 40 years," he said. "We need to deal with reality." He said all the parties who have an interest in the delivery of union construction need to be on board and respect each other- while acknowledging that "we're all in this together." For example, he said construction workers may have the impression that contractors were "born with a wad of cash in their pocket." He said workers should consider the fact that contractors take "100 percent of the risk" on any given job, and probably put their own house up as collateral when their business was started. Breslin said on the job, contractors take the risk and organize the work, unions organize the workforce and provide the labor, and workers are responsible for the largest part of the business model: doing the work properly.
  • Time is a factor for getting the union construction industry turned around - and it's all about demographics. There are 155 million U.S. workers who were born prior to World War II and through the end of the Baby Boom generation in 1964. They are retiring en masse. There are only 46 million Generation Xers (born 1965-81) and 76 million "Millenials" (1982-2000) to support the previous generations' health care and pensions. In the near future a large portion of construction workers must be signed into unions in order to sustain the benefits that set unions apart. "You must secure the marketplace, you must grow and sustain this industry if you want it to be there for you," Breslin said.
  • How can the unionized construction industry turn its market share around? By focusing on its core advantages, Breslin said. Higher productivity. Higher worker skills. Safer job sites. Drug-free workplaces. Workers and their contractors must embrace those factors that add quality and value to jobs, and which set them apart from the nonunion - then take care of business on the job. "It's not always about what's cheapest," Breslin said, pointing out that consumers have no problem paying more for quality brand names - whether they're buying Trojan condoms or Harley motorcycles. "Top brands promise value and people pay more for a top brand because the brands promise something in return," Breslin said. "People don't think that unions offer a good product," and marketing efforts need to be revamped to convince them otherwise. Breslin suggested that the "Union Yes" campaign, or "Proud To Be A Union… (fill in the trade) on ubiquitous bumper stickers, is meaningless as a marketing tool. "Don't give me feel-good stuff, tell me about better value, faster and safer jobs, customer satisfaction, responsive, more productive and professional work," he said.
  • Most construction workers are already giving 100 percent every day. But audience participants, when asked by Breslin, said anywhere from 10 to 30 percent of workers are slackers. Even if it is 10 percent, Breslin said, what kind of condition would Red Wing Shoes be in, if 10 percent of their shoes had loose stitching? Or if 10 percent of Trojan condoms were defective? Or if 10 percent of Ford vehicles had a "check-engine" light on? "How can you ask for a premium price on your labor when you have a 10 percent failure rate?" Breslin asked. Absenteeism, particularly on Mondays and Fridays, is also a headache for contractors. He acknowledged that some unions, citing the IBEW, the pipe trades and heat and frost insulators, have instituted new on-the-job code of conduct standards in an effort to weed out those low-performing workers. "Some people think that having a union card equals entitlement," Breslin said. "Those days are over. How do you feel if you're giving your all and the other guy is goofing off? You guys are seeing this every day in the field, people telling you to slow down. You're going to be paying for their retirement. Who's going to care about yours?"

Mark Breslin addresses an audience of 550 in Southfield.



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New pains for pension plans aims to limit funding liability

By Marty Mulcahy
Managing Editor

LANSING - For better or worse, the pension plan administration business ain't what it used to be.

The 900-page Pension Protection Act (PPA) of 2006 has done a number on the numbers business involved with pension administration, imposing new accounting rules, changing funding requirements for plans, and establishing benchmarks for plans to show they are staying solvent.

The ultimate goal of the Pension Protection Act, said Randy DeFrehn, executive director of the National Coordinating Committee for Multi-Employer Plans (NCCMP), is simply to keep financially faltering pension plans away from being bailed out by taxpayers. DeFrehn gave a presentation on the pension administration business to the Michigan Building and Construction Trades Council Legislative Conference on April 16.

The NCCMP, a nonprofit group funded by unions, advocates and lobbies for multi-employer pensions, which includes all construction union plans. Life was easier for pension trustees until earlier this decade, when work opportunities dried up, workers retired at greater rates and the stock market took a dive. All those factors caused under-funding in some pension plans, and prompted Congress to look closer at how pension plans were being funded and managed.

DeFrehn said "the most onerous provisions" of the Pension Protection Act of 2006 apply to single-employer plans like those in the troubled steel and airline industries. "Multi-employer plans were treated more favorably because of labor-management support," he said.

Still, DeFrehn said, neither labor nor management multi-employer pension plan trustees would have endorsed the Pension Protection Act that was approved by Congress and signed by the president. He said the final plan is a mixture of compromises that are essentially aimed at beefing up the bottom lines of the relatively small number of plans that are "severely under-funded" - at a cost to more solvent plans.

About 70 percent of multi-employer pension plans "don't have a problem," with funding, DeFrehn said. Between 20-25 percent of such plans are in a "Yellow Zone" which means they may face a funding deficiency in less than seven years.

The "Red Zone" plans - 5-10 percent of multi-employer plans - "drove the Pension Protection Act legislation," DeFrehn said. Their solvency is in the 60 percent range, and they may be facing a situation of poor work prospects and a high number of retirees vs. active workers.

Depending on what zone they fall in, pension plans now face various levels of requirements in order to satisfy federal regulators. They can range from requiring adoption of a federal improvement plan, to the imposition of federal benchmarks for plan funding, to restriction of benefits for members, to the imposition of surcharges on contributions to the funds in order to improve the fund's bottom line.

Timetables for plan improvements are also spelled out. The PPA also requires additional disclosures to stakeholders. And added communication between plan stakeholders and pension trustees - even "Monday-morning quarterbacking" DeFrehn said - "is essential now. People need to be talking to each other in order to do the right things for members and their employees."

For pension trustees, DeFrehn said, the Pension Protection Act "inspires grave new obligations to learn as much as possible" about the financial and legal environment for pension plans.

Michael Asher, a trust funds attorney, agreed, and told building trades delegates that for pension trustees and the money professionals they rely on, the PPA is good in one sense because it requires more transparency on plan funding situations. "But it also triggers more accountability," he said.

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'Spirit of Solidarity' monument is worth the wait

By Marty Mulcahy
Managing Editor

LANSING - For better or worse, the pension plan administration business ain't what it used to be.

The 900-page Pension Protection Act (PPA) of 2006 has done a number on the numbers business involved with pension administration, imposing new accounting rules, changing funding requirements for plans, and establishing benchmarks for plans to show they are staying solvent.

The ultimate goal of the Pension Protection Act, said Randy DeFrehn, executive director of the National Coordinating Committee for Multi-Employer Plans (NCCMP), is simply to keep financially faltering pension plans away from being bailed out by taxpayers. DeFrehn gave a presentation on the pension administration business to the Michigan Building and Construction Trades Council Legislative Conference on April 16.

The NCCMP, a nonprofit group funded by unions, advocates and lobbies for multi-employer pensions, which includes all construction union plans. Life was easier for pension trustees until earlier this decade, when work opportunities dried up, workers retired at greater rates and the stock market took a dive. All those factors caused under-funding in some pension plans, and prompted Congress to look closer at how pension plans were being funded and managed.

DeFrehn said "the most onerous provisions" of the Pension Protection Act of 2006 apply to single-employer plans like those in the troubled steel and airline industries. "Multi-employer plans were treated more favorably because of labor-management support," he said.

Still, DeFrehn said, neither labor nor management multi-employer pension plan trustees would have endorsed the Pension Protection Act that was approved by Congress and signed by the president. He said the final plan is a mixture of compromises that are essentially aimed at beefing up the bottom lines of the relatively small number of plans that are "severely under-funded" - at a cost to more solvent plans.

About 70 percent of multi-employer pension plans "don't have a problem," with funding, DeFrehn said. Between 20-25 percent of such plans are in a "Yellow Zone" which means they may face a funding deficiency in less than seven years.

The "Red Zone" plans - 5-10 percent of multi-employer plans - "drove the Pension Protection Act legislation," DeFrehn said. Their solvency is in the 60 percent range, and they may be facing a situation of poor work prospects and a high number of retirees vs. active workers.

Depending on what zone they fall in, pension plans now face various levels of requirements in order to satisfy federal regulators. They can range from requiring adoption of a federal improvement plan, to the imposition of federal benchmarks for plan funding, to restriction of benefits for members, to the imposition of surcharges on contributions to the funds in order to improve the fund's bottom line.

Timetables for plan improvements are also spelled out. The PPA also requires additional disclosures to stakeholders. And added communication between plan stakeholders and pension trustees - even "Monday-morning quarterbacking" DeFrehn said - "is essential now. People need to be talking to each other in order to do the right things for members and their employees."

For pension trustees, DeFrehn said, the Pension Protection Act "inspires grave new obligations to learn as much as possible" about the financial and legal environment for pension plans.

Michael Asher, a trust funds attorney, agreed, and told building trades delegates that for pension trustees and the money professionals they rely on, the PPA is good in one sense because it requires more transparency on plan funding situations. "But it also triggers more accountability," he said.

BUILT ON THE GROUNDS of the Gerald R. Ford Museum in Grand Rapids, the Spirit of Solidarity monument denotes three figures in the Great Furniture Strike of 1911.


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State vows renewed vigor for Michigan's prevailing wage law

By Marty Mulcahy
Managing Editor

LANSING - The benign neglect of the Michigan Prevailing Wage Act of 1965 is a thing of the past - at least for now.

Keith Cooley, director of the state Department of Labor and Economic Growth, told delegates to the Michigan Building and Construction Trades Council's 48th Legislative Conference last month that the state officials are "reinvigorating the role of the state's prevailing wage law" to ensure construction workers are being paid fairly.

As we have pointed out in the past, the state's prevailing wage act, as well as the federal Davis-Bacon Act - are hands-down the most important laws on the books when it comes to supporting construction worker wages. The state and federal prevailing wage laws prevent unscrupulous contractors from winning bids by underbidding other contractors by paying workers a lower wage.

The laws require contractors to pay their employees a wage that "prevails" in a given geographic area - which makes it difficult for employers to import low-wage, unskilled labor from other regions or even outside the U.S.

But the law is only as effective as its enforcement. Unions charged that the administration of Gov. John Engler more or less ignored enforcement of prevailing wage. Cooley, who began his job in March, said that's not the case under Gov. Jennifer Granholm. He said in the last quarter of 2006, "prevailing wage investigations doubled compared to the year before, and collections (of prevailing wages for workers) were up 40 percent. Progress is being made through more aggressive enforcement."

Cooley said other improvements in prevailing wage enforcement include:

  • Third parties, like union representatives, can now file prevailing wage complaints with the state on behalf of workers, which can remove the intimidation factor.
  • Job sites must now post prevailing rage rate classifications.
  • Previously the state lacked jurisdiction when a project's prevailing wage rates were more than 90 days old. As a result, a contractor could time or "inadvertently" delay the start of a project beyond the 90 days from the date the prevailing wages were requested and thereby escape enforcement from the state. Now, the rule has changed to provide jurisdiction when rates are issued for the project.
  • If a construction project announces a start date with a certain prevailing wage rate, and work doesn't start within 90 days, and the prevailing wage changes during that period, the higher rate applies.
  • Prevailing wage rates are updated continuously, not quarterly or annually. In the past, some wage rates in some geographic areas were more than five years old.
  • Construction work at community colleges, like four-year institutions are now subject to the state's prevailing wage law.
  • The state's attorney general has been asked to prosecute employers who violate the Michigan Prevailing Wage Act.

A list of prevailing wage violators has been posted and is updated on the state's Wage and Hour website. http://www6.dleg.state.mi.us/prev_wage_violations/index.asp

The Michigan Department of Transportation on April 12 showed it is serious about enforcing the state's prevailing wage act, suspending the ability of a Grand Rapids-area contractor from bidding on state highway contracts.

MDOT rescinded the pre-qualification status of Martin J. Concrete Construction Co., effectively preventing the company from bidding on state highway work.

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Motor City Casino on the rise

The building trades are reaching for the top of the $275 million Motor City Casino, hotel and conference center.

The top of the 17-story, 400-room hotel was nearing completion last week, in a process that's expected to wrap up with the expanded facility opening this fall. The casino and hotel are an expansion of the existing "temporary" casino built into the old Wonder Bread factory along Grand River Ave. in Detroit.

The completed project, led by general contractor MIG Detroit, will add about 300 jobs to Motor City's current base of nearly 2,700 employees.

The hotel tower that includes a spa, retail outlets, restaurants and a lounge, as well as additional parking. The project will double gaming space to 100,000 square feet, and the current food service building will be remodeled and expanded to include additional dining options, meeting space and a 1,200-seat theater. A 204,000 square-foot convention center will also be included.

"We intend to build a quality hotel and entertainment complex far beyond anything that is currently available in the city" said Motor City Casino owner Marian Ilitch. "The expanded property will usher in a new era in the hospitality industry in Detroit."

THE 17-STORY hotel tower will be the landmark for the expanded Motor City Casino.

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News Briefs

Sheet Metal Workers Local 7: welcome
The Building Tradesman puts out the welcome mat for Lansing-based Sheet Metal Workers Local 7. With this issue it joins the long list of local unions subscribing to our paper.

One of the oldest and largest trade union papers in the country, the Tradesman is mailed every other week to about 50,000 construction workers in Michigan.

We're pleased to have Local 7's tinknockers aboard, and hope you enjoy receiving the paper.

Toyota goes to the land of cheap labor
According to the Construction Labor Report, Toyota Motor Corp. wants to build its eighth assembly plant in Mississippi, a $1.3 billion auto plant near Tupelo.

Toyota wants a project labor agreement with local unions before construction starts. But, the article said there is concern that the area won't be able to man the work. That's because a recently completed $2.5 billion Toyota truck assembly plant in San Antonio, Texas had to guarantee significant amounts of overtime wages to attract construction workers, because wage rates there were so low.

"Wages are even lower in Tupelo," said the president of the Central Mississippi Building Trades Council to the Construction Labor Report.

How low? Check out the local wage rates if you're interested in booming out of Michigan and may be eyeing Mississippi.

The article said prevailing wage determinations for Mississippi by the U.S. Department of Labor find hourly wage ranges from $5.30 for laborers to $10 for electricians. The prevailing wage for carpenters is $7.50 per hour, $8.79 for plumbers and $9.50 for backhoe operators. The data indicates there are no benefits paid for any of the crafts.

Footnote: both Texas and Mississippi are right-to-work states.

'Give 'em a brake' campaign starts
Michigan's Give 'em a Brake Safety Coalition (GEAB) kicked off its annual highway work zone safety campaign at a news conference held at the State Capitol May 3, releasing encouraging numbers along with a warning: Motorists should continue paying close attention in work zones and drive the appropriate speed.

The good news: In 2006, there were more than 5,000 crashes in work zones on Michigan roadways - a 20 percent decline over the previous year.

"We know our efforts, in collaboration with the statewide GEAB Safety Coalition, have saved many lives," said Kirk T. Steudle, director, Michigan Department of Transportation. "However, we must continue to promote work zone safety in order to reduce crashes, injuries, and deaths even further. Our goal is to make 2007 the safest yet."

Michigan's Give 'em a Brake Safety Coalition, representing union road workers, law enforcement, road builders, utility workers, and transportation interests, hopes that continued use of the "Where Workers Present 45" signing will continue to provide a more consistent application of speed limits in all work zones in order to protect workers and motorists.

"We believe the new speed rules are working," said Dennis Gillow, infrastructure director, International Union of Operating Engineers Local 324. "Our group (and other labor organizations) collaborated with Michigan's GEAB Safety Coalition on the work zone signing scheme. While 2006 was safer than 2005, we still have more work to do. The bottom line is this: Appropriate speeds save lives of workers and motorists."

In 2006, there were 5,216 crashes, 1,450 injuries and 18 fatalities in Michigan work zones, a 20 percent improvement over 2005 data. In 2005, there were 6,545 crashes, 1,811 injuires, and 20 fatalities.

"We don't want to rest on our laurels now," said Rob Coppersmith, vice president of membership services, Michigan Infrastructure & Transportation Association." The "Where Workers Present 45" signs seem to be working but we must focus on reducing crashes even more. Safety is serious business and motorists need to take their job behind the wheel as such."

Michigan's Give 'em a Brake Safety Coalition members include: Michigan Department of Transportation; Michigan Infrastructure & Transportation Association; Michigan Laborers' District Council; Michigan State Building & Construction Trades Council; and the International Union of Operating Engineers Local 324.

 

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